3M™ Ambulatory Patient Grouping System (EAPGs)

1. 3M™ Ambulatory Patient Grouping System (EAPGs) Innovating Language the Health of Washington State Hospital Association Feb 26, 2013

2. Agenda • Introductions • 3M role • Rationale for EAPG • EAPGs compared to DRG, APC, APG • EAPG Grouping Features • EAPG Reimbursement Features • Service mix index • Questions and discussion

3. 3M’s Role • 3M HIS specializes in classification systems (groupers) using coded claims data for health data analysis and payment • Provider market focus: the clinical record • Creating (dictation/transcription) and managing it (document management and abstracting) • Coding, coding compliance, managing coding process • Grouping and reimbursement for managing expected reimbursement • Payer market focus: help payers bend the cost curve by deploying groupers for payment and for quality-based payment incentives

4. 3M’s Role with Payment Initiatives We: • Create payment weights • Create payment policy “levers” (outlier thresholds, policy adjustors (e.g. DSH) • Provide instructions and support • Share information about what other states have done • Create state-specific grouper and payment formula We do not: • Require the use of 3M weights • “Pull the levers”

5. More on 3M’s Role with Payment Initiatives (Cont.) • Grouper Logic is transparent • Availability of EAPG Definitions Manual to all at N/C • Provider Education involving WSHA, WHA, 3M

6. Rationale for Use of EAPG for Payment • Payers can best understand and manage outpatient costs by implementing an outpatient prospective payment system (OPPS). There are only two OPPS available: APCs and EAPGs • EAPGs are superior to APCs especially for Medicaid programs: • Designed for a all-patient rather than for just a Medicare population • Cover all outpatient services rather than aligning with Medicare payment policy that uses fee schedules for certain services (e.g., therapies, clinical labs, chemotherapy drugs ) • Classify medical outpatient visits based on diagnoses-not E&M codes matching payment to need and permitting service site neutrality of payment • Bundling features create incentives for efficiency

7. EAPGs In Use Today OK BC/BS (2009) NY Medicaid (2010) VA Medicaid - ASCs (2010) IA BC/BS (2010) SD BC/BS (2010) Announced: VA Medicaid – Hospitals (2013) IL Medicaid (2013) WI Medicaid (2013) MN BC/BS (2013) In Consideration for 2013: (2) Medicaid (2) BC/BS Plans

8. Enhanced Ambulatory Patient Groups (EAPGs) Defined • EAPGs are a patient classification system designed to explain the amount and type of resources used in an ambulatory visit. Patients in each EAPG have similar clinical characteristics and similar resource use and cost. • EAPGs were developed to encompass the full range of Ambulatory settings including same day surgery units, hospital emergency rooms, and outpatient clinics. • EAPGs can not address nursing home services, inpatient services or miscellaneous services like transportation. • EAPGs developed to represent ambulatory care across all payers, not just Medicare.

9. Case Mix Complexity in EAPGs • Surgeries, other procedures, tests • Different EAPGs based on expected resource use (similar operating time, medical surgical supplies, etc) • Example: (4) EAPGs for differing levels of laceration repair differentiated by extent and complexity of repair • Medical • Different EAPGs based on expected resource use (similar visit time, medical supplies, etc) • Example: extreme acute manifestation of disease (ketoacidosis in a diabetic) are categorized into a separate medical EAPG

10. Case Mix Complexity in EAPGs (Cont.) Patients may be assigned, and paid for, more than one EAPG per visit • One for medical visit including routine ancillary services (e.g. chest x-ray, urine test) assigned and paid • Additional EAPG(s) may be assigned and paid for non-routine services (blood clotting factor test) • Multiple distinct procedures have separate EAPGs assigned and paid

11. EAPG Based Payment System • Each EAPG has an associated relative weight for payment • Weights indicate the relative resource utilization among all ambulatory services • Resource intensive services have higher weights • EAPG payment for a visit is computed as the sum of the payment weights for all non consolidated, non packaged EAPGs with applicable multiple procedure discounts applied. • Incentive for efficient use of routine ancillary services is created by significant procedure consolidation and by the packaging of routine ancillaries into base visit payment • No incremental payment for routine, low cost ancillaries (blood chemistry, chest x-ray, ekg, etc.)

12. DRGs Describes an inpatient admission Uses discharge date to define code sets Based on Dx and Pxcodes Each admission assigned only 1 DRG EAPGs Defines ambulatory visit Uses from date to define code sets Based on Dx and Px codes Multiple EAPGs may be assigned per visit – meaning more than a single line item receives payment EAPGs vs. DRGs • Note: • Non-routine and high resource services are paid separately. • More complex outpatient visits have more non-routine services and have more payable EAPGs assigned.

13. Outpatient prospective payment system (OPPS): A brief history • Today - Other major payers continue to adopt 3M EAPGs. 3M Health Information Systems consistently delivers quarterly regulatory updates to the 3M EAPG methodology and grouping software and also continues to refine the 3M EAPG products to reflect current outpatient clinical practice. • 1990 - 3M Health Information Systems delivers an OPPS under contract with HCFA (now CMS) —APGs are introduced • 2007 - Non-Medicare cost controls renew interest in APG-based OPPS. 3M undertakes a major clinical update and introduces 3M™ Enhanced APG System. • 1994 - Iowa Medicaid implements the first APG-based OPPS, and other payers follow. APG v2.0 released. • 2008 - New York Medicaid implements the first 3M EAPG-based OPPS. • 2012 - Massachusetts Medicaid implements 3M EAPG-based OPPS. • 3M EAPGs are ICD-10 ready. • 2000 - CMS implements APCs (an APG derivative) as the Medicare OPPS. APCs are Medicare-focused and not fully prospective. Payers move to APC-based OPPS.

14. APGs vs. EAPGs • Updated for clinical relevancy • More flexibility for implementing options within grouper • Number of classifications • APGs: 273 • EAPGs: 553 (version 3.8) • Increased number of medical and significant procedure groupings • Modifier usage • APG Types • EAPGs include significant increase in drugs groups • Provides more granularity • Addresses issues of high cost drugs • EAPGs include DME

15. EAPG types (Version 3.5, January 2011) EAPG TypeDescription • 1 Per Diem • 2 Significant Procedure • 21Physical Therapy & Rehab • 22Mental Health & Counseling • 23Dental Procedure • 24Radiologic Procedure • 25Other Diagnostic Procedure • 3 Medical Visit • 4 Ancillary • 5 Incidental • 6 Drug • 7 DME • 8 Unassigned All treated as significant procedures for consolidation and discounting purposes

16. Types: APGs vs. EAPGs (version 3.4)

17. Category APCs EAPGS Number of groupings 802 APC groups 553 EAPG groups Multiple service lines Each reviewed Each reviewed individually individually and assigned to EAPGs, as • Paid by APC appropriate, all lines assigned a • Paid by fee schedule EAPG • Packaged • Rejected/denied – OCE edits Editing Extensive edits – Almost no editing within • Claim denials 83 OCE edits grouper • Claim rejections • Claim suspensions • Claim RTP • Line item denial • Line item rejection EAPGs vs. APCs: Grouping

18. Category APCs EAPGS Status indicators Many Not used Examples: • A – service paid by fee schedule • S – paid by APC: sign. px • T – paid by APC: sign. Px with discounting • N – packaged service; no separate payment • V – paid by APC: medical visit Types None 13 EAPG types Examples: Significant Procedure Medical Visit Ancillary Categories None 54 Examples: • Musculoskeletal system procedures • Pulmonary system procedures EAPGs vs. APCs: Grouping; p2

19. Category APCs EAPGS Condition codes Moderate use Very limited use • G0 • 20 • 21 Value codes Used: Not used • Ambulance • Blood deductible Inpatient only list Used – defined by CMS Used – defined by select agency Packaging Packaging by line item – Extensive status indicator N • Significant procedure consolidation • Ancillary packaging EAPGs vs. APCs: Grouping; p3

20. Category APCs EAPGS Discounting • Discontinued • Multiple EAPGs procedures • Discontinued procedures • Multiple T-type procedures • Multiple levels available(e.g.. 100%; • 50% 50%; 25%) allowed Pass-through devise Paid @ cost (charge Concept not used payments times CCR) EAPGs vs. APCs: Reimbursement

21. Summary EAPG vs. APC Used with permission: G. Allen, NY DoH and adapted by DNFee

22. 3M™ Enhanced Ambulatory Patient GroupsLogical Functions within Products Reimbursement Calculated* Grouping function performed What will be paid? Editing if defined *Policy decisions made by implementing payer

23. Significant procedures or therapies present Major SSF EAPG Type of procedure or therapy Major signs, symptoms or findings present Error EAPG Types of ancillary tests or procedures Medical visit indicator EAPG present Primary dx code Assignment of additional SP or therapy EAPGs Significant procedure or therapy visit EAPG Ancillary tests or procedures present Ancillary only visit EAPG Assign ancillary (additional) EAPGs Medical visit EAPG EAPG Logic YES NO YES NO NO YES NO

24. Sample EAPG Assignments 543 EAPGs defined

25. EAPG Types EAPG TypeDescription • 1 Per Diem • 2 Significant Procedure • 21Physical Therapy & Rehab • 22Mental Health & Counseling • 23Dental Procedure • 24Radiologic Procedure • 25Other Diagnostic Procedure • 3 Medical Visit • 4 Ancillary • 5 Incidental • 6 Drug • 7 DME • 8 Unassigned

26. EAPG Categories (examples) EAPG CategoryEAPG Category Description • 1 Skin and integumentary system procedures • 2 Breast procedures • 3Musculoskeletal system procedures • 4 Pulmonary system procedures • 5 Cardiothoracic procedures • 6 Hematopoietic system procedures • 7 Gastrointestinal system procedures • 8 Genitourinary system procedures • 9 Male Reproductive system procedures • 10 Female Reproductive system procedures • 11 Neurologic system procedures • 16 Mental illness and substance abuse therapies • 30 Incidental procedures and services • 71 Mental diseases and disorders • 99 No EAPG assigned • Total of 54 categories

27. Three Types of Procedures in the EAPG System SIGNIFICANT PROCEDURES: Normally scheduled, constitutes the reason for the visit and dominates the time and resources expended during the visit Example: excision of skin lesion, stress tests ANCILLARY TESTS AND PROCEDURES: Ordered by the primary physician to assist in patient diagnosis or treatment Example: immunizations, plain films, laboratory tests INCIDENTAL PROCEDURE: An integral part of a medical visit and is usually associated with professional services Example: range of motion measurements

28. Medical EAPGs Describe patients who receive medical treatment but do not have a significant procedure performed during the visit. Medical patients are described using the diagnoses of the patient coded in ICD-9-CM.

29. Medical visit EAPG – Assigned with Primary Dx Code Assigned based on primary dx code UB-04 form locator 67 (field attributes: 1 field; 1 line) X12, 837 Loop ID – 2300; Reference Indicator – H101-C022-02; X12 Element # – 1271; Data Element Qualifier – 1270-BK or ABF for ICD10 Definition: “The ICD-9-CM code for the diagnosis, condition, problem, or other reason for encounter/visit shown in the medical record to be chiefly responsible for the services provided. List additional codes that describe any coexisting conditions. In some cases the first-listed diagnosis may be a symptom when a diagnosis has not been established (confirmed) by the physician..” (ICD-9-CM Official Guidelines for Coding and Reporting, October 1, 2008, Section IV.H, Page 102) Requires a medical visit indicator code E&M CPT code The medical visit EAPG is assigned to the E&M code

30. Medical visit - Angina

31. Medical Visit - Heartburn

32. Packaging • Sometimes referred to as bundling • General concept:For payment purposes, the inclusion of payment for certain services within payment for significant procedures or medical services. • A concept/phrase to learn and know • Just because something does not have separate payment, does not mean it receives no payment • A bundled/packaged service receives no separate payment

33. Packaging – The General Concept • EAPG standard logic includes • Consolidation (significant procedure consolidation) • Ancillary packaging

34. EAPG Packaging – Standard Grouping Logic • Significant procedure consolidation • Same EAPG • Clinical (related procedures) • Ancillary packaging • Uniform list of ancillary EAPGS • Always packaged when other EAPG is present

35. Uniform Packaging List EAPGEAPG Description 373 LEVEL I DENTAL FILM 374 LEVEL II DENTAL FILM 375 DENTAL ANESTHESIA 376 DIAGNOSTIC DENTAL PROCEDURES 377 PREVENTIVE DENTAL PROCEDURES 380 ANESTHESIA 390 LEVEL I PATHOLOGY 394 LEVEL I IMMUNOLOGY TESTS 396 LEVEL I MICROBIOLOGY TESTS 398 LEVEL I ENDOCRINOLOGY TESTS 400 LEVEL I CHEMISTRY TESTS 402 BASIC CHEMISTRY TESTS 406 LEVEL I CLOTTING TESTS 408 LEVEL I HEMATOLOGY TESTS 410 URINALYSIS 411 BLOOD AND URINE DIPSTICK TESTS 412 SIMPLE PULMONARY FUNCTION TESTS EAPGEAPG Description 413 CARDIOGRAM 423 INTRODUCTION OF NEEDLE AND CATHETER 424 DRESSINGS AND OTHER MINOR PROCEDURES 425 OTHER MISCELLANEOUS ANCILLARY PROCEDURES 426 PSYCHOTROPIC MEDICATION MANAGEMENT 427 BIOFEEDBACK AND OTHER TRAINING 428 PATIENT EDUCATION INDIVIDUAL 429 PATIENT EDUCATION GROUP 448 EXPANDED HOURS ACCESS 449 ADDITIONAL UNDIFFERENTIATED MEDICAL VISIT/SERVICES 457 VENIPUNCTURE 471 PLAIN FILM

36. Ancillary Packaging • Ancillary service is packaged when: • The EAPG into which the service is groups is on the packaging list • A medical visit EAPG is present, OR • A significant procedure is present • If ancillary service is provided alone • No packaging is done

37. Example of Ancillary Packaging

38. Ancillary Packaging P. dx: 38300 Ac mastoiditis w/o complication

39. Ancillary service w/o Medical Visit or Significant Px EAPG PDX: 38300 Ac mastoiditis w/o complication

40. Packaging • Includes a packaging algorithm. • Users will have the option to turn off/on packaging. • Users will be able to make modifications to the packaging lists. • Users will be allowed to change (add to / delete from the packaging list).

41. EAPG Packaging Controls

42. EAPG packaging – Standard Grouping Logic • Significant procedure consolidation (bundling) • Same EAPG • Clinical (related procedures) • Ancillary packaging • Uniform list of ancillary EAPGS • Always packaged when other EAPG is present

43. Significant Procedure Consolidation • When a patient has multiple significant procedures, some of the significant procedures may require minimal additional time or resources. Significant procedure consolidation refers to the collapsing of multiple related significant procedure APGs into a single EAPG for the purpose determining the payment. • Example: If both a simple incision and an complex incision are coded on a patient bill, only the complex skin incision will be used in the EAPG payment computation.

44. Consolidation Controls • Types of consolidation • Multiple same procedure • Clinical (based on clinical algorithm)

45. Clinical Significant Procedure Consolidation Example

46. Example of Clinical Significant Procedure Consolidation PDX: 9562 Inj posterior tib nerve

47. Example of same SP consolidation Diagnosis: 9100 Abrasion head

48. Consolidation Controls

49. Never Pay Services • Carve outs • Services that are just not covered by the payer • Examples: cosmetic surgery • Services are just paid through another mechanism – billed differently • Possible example: vaccines that are paid through federal grants and not included in the PPS • Grouper allows never pay services to be defined by HCPCS code or EAPG

50. Never Pay Services