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Policy and Billing GuidanceAmbulatory Patient Groups (APGs)PROVIDER MANUALREVISION 2.1August 2012Please Note: Red text indicates new policy clarifications and additions to the manual since the issuance ofthe July 1, 2009 revision. Although every effort has been made to keep this policy manual updated, the chartsand lists are subject to change. The actual payment amounts and whether or not a service will be reimbursedthrough the APG payment methodology is based on the current version of the grouper/pricer and the APGdata dictionary.

TABLE OF CONTENTS1.CHAPTER 1: BACKGROUND AND INTRODUCTION TO AMBULATORY PATIENT GROUPS1.1Purpose . .51.2Statutory Authority for New Payment Methodology .51.3Overview of New Payment Methodology 61.4Scope of Services . . .61.5Implementation Schedule . 71.6Blending of APG Payment 82.CHAPTER 2: APG GROUPING LOGIC AND USE OF MODIFIERS2.1More on the APG Payment Methodology 92.2APG Types .102.3APG Classification Logic .102.4Grouping Elements of the APG Payment System 122.5Use of Modifiers in APGs . . .133.CHAPTER 3: PROVIDER BILLING CHANGES3.1Use of APG Rate Codes . .153.2Services Not Paid Under APGs . .163.3Importance of Accurate Medical Coding .163.4Visit/Episode of Care – Basic Units of Payment Under APGs .173.5Use of Visit and Episode Rate Codes . . .173.6Units of Service .203.7Emergency Room – Episode of Care 203.8Use of Modifiers in APGs .213.9Utilization Thresholds 213.10Remittance 213.11Billing Edits 223.12Sample Remittance Format .233.13EAPG Definitions Manual and EAPG Group/Pricer 24Policy and Billing Guidance Ambulatory Patient Groups (APGs) Provider ManualPage 2

TABLE OF CONTENTS4.CHAPTER 4: NEW YORK SPECIFIC POLICY AND PAYMENT RULES4.1Physician Billing 254.2Dental Billing 264.3Vision Care Billing .274.4Ancillary Laboratory Services and Radiology Procedures 274.5Radiology Services – Professional and Technical Component . 324.6Inpatient‐Only Services 324.7Ambulatory Surgery Services 334.8Pre‐Admission Testing .344.9Dialysis .344.10Medicare/Medicaid Dually Eligible Beneficiaries .344.11Special Base Rate for Traumatic Brain Injury (TBI) Waiver Recipients 354.12Recurring Therapies 354.13Billing for Physician‐Administered Drugs Under APGs .364.14Immunizations in APGs 374.15MRIs in APGs . . . 374.16Uniform Packaged APGs . . 384.17“Never Pay” or “Zero Payment” APGs . . .394.18Ordered Ambulatory Services .394.19“If Stand Alone, Do Not Pay” APGs . .404.20Services Carved‐Out of APGs 404.21Optional Carve‐Outs . . .414.22Specialty Rate Codes Not Subject to APGs . .414.23Managed Care Plans . . .424.24Dually Licensed Clinics Authorized to Deliver Mental Hygiene Services .434.25Out‐of‐State Providers . . . .444.26Newborn Screening 45Policy and Billing Guidance Ambulatory Patient Groups (APGs) Provider ManualPage 3

TABLE OF CONTENTS5.CHAPTER 5: SPECIAL CLINICS5.1Federally Qualified Health Centers – FQHCs 455.2Products of Ambulatory Care (PACs) .465.3Prenatal Care 465.4HIV Designated AIDS Centers (HIV DAC) .475.5School‐ Based Health Centers (SBHC) .485.6Indian Health Centers .485.7Free Access to Family Planning & Reproductive Health ServicesFor Managed Care Enrollees .485.8Family Planning Benefit Program (FPBP) .486.CHAPTER 6: PRIMARY CARE ENHANCEMENTS6.1Mental Health Services by Licensed Clinical Social Workers & Licensed MasterSocial Workers in Article 28 Clinics 496.2Expanded ‘After Hours’ Access 516.3Asthma and Diabetes Self‐Management Training .526.4Smoking Cessation Counseling 546.5Patient Encounters with a Registered Nurse or Licensed Practical Nurse . .556.6Screening, Brief Intervention, and Referral to Treatment (SBIRT) .566.7Cardiac Rehabilitation 576.8Medical Home .607.CHAPTER 7: CONTACT INFORMATION .628.CHAPTER 8: FREQUENTLY ASKED QUESTIONSAND OTHER IMPLEMENTATION MATERIALS 62CHAPTER 9: GLOSSARY OF TERMS .639.SUMMARY OF TABLES AND CHARTS: Blending of APG Payment . APG Payment Calculation Overview Overview of the APG Assignment Logic APG Rate Codes . Difference Between Visit and Episode Rate Codes . Modifiers . Billing Edits . . Sample Remittance Format . Uniform Packaged APGs Out‐of‐State Rate Codes Policy and Billing Guidance Ambulatory Patient Groups (APGs) Provider Manual891115192122233844Page 4

Policy and Billing GuidanceAmbulatory Patient Groups (APGs)CHAPTER 1: BACKGROUND AND INTRODUCTION TO AMBULATORY PATIENT GROUPS (APGS)1.1 PURPOSE:The purpose of this document is to provide Medicaid policy and billing guidance to Article 28 providers billingunder the Ambulatory Patient Groups Payment methodology to the extent this methodology is applicable tohospital‐based outpatient, ambulatory surgery, and emergency departments, and to free‐standing diagnostic andtreatment centers and free‐standing ambulatory surgery centers.1.2 STATUTORY AUTHORITY FOR NEW PAYMENT METHODOLOGY:Chapter 53 of the Laws of 2008 amended Article 2807 of the Public Health Law by adding a new Section (2‐a).Public Health Law 2807 (2‐a) required a new Medicaid payment methodology based on Ambulatory Patient Groupsthat would apply to most ambulatory care services provided by hospital outpatient departments, emergencydepartments and ambulatory surgery departments, and free‐standing diagnostic and treatment centers and free‐standing ambulatory surgery centers. The law specified that the new payment methodology be fully phased‐inover a four year period, starting the later of December 1, 2008, or upon approval of federal financial participationby the Centers for Medicare and Medicaid Services. The law specifically exempted from the new APG paymentmethodology payments for services made on behalf of persons enrolled in Medicaid managed care or FamilyHealth Plus, and payments for services certified under the Mental Hygiene Law (i.e. OMH, OMRDD, OASAS).In 2009, Article 2807 (2‐a) was further amended to permit the application of the APG payment methodology toservices provided by facilities licensed under the Mental Hygiene Law. The law also authorized the Department ofHealth to adopt and amend rules and regulations to establish an Ambulatory Patient Group (APG) methodology.The latest version of the Department’s regulations are available online at:www.nyhealth.gov/health care/medicaid/rates/apg/docs/apg regulations.pdf.Policy and Billing Guidance Ambulatory Patient Groups (APGs) Provider ManualPage 5

1.3 OVERVIEW OF NEW PAYMENT METHODOLOGY:The Ambulatory Patient Groups or APG payment methodology is based on the Enhanced Ambulatory PatientGroups classification system, a product of the 3M Health Information Systems, Inc. APGs categorize the amountand type of resources used in various ambulatory visits. Patients within each APG have similar resource use andcost. APGs group together procedures and medical visits that share similar characteristics and resource utilizationpatterns for payment purposes. APGs are designed to predict the average pattern of resource use of a group ofpatients in a given APG. The APG payment methodology pays differential amounts for ambulatory care servicesbased on the resources required for each patient visit.The APG payment methodology provides greater reimbursement for high intensity services and relatively lessreimbursement for low intensity services. This new payment methodology also allows for greater paymenthomogeneity for comparable services across all ambulatory care settings (i.e., outpatient department, ambulatorysurgery, emergency department, and diagnostic and treatment centers). By linking payments to the specific arrayof services rendered, APGs make Medicaid reimbursement more transparent and rational.The APG reimbursement methodology replaces a reimbursement system for ambulatory care services which is amix of outdated methodologies that has been frozen or not updated to realistically reflect the cost of providingcare. These methodologies were often based on fixed dollar payments that do not vary by severity of illness orcomplexity of procedure. These antiquated reimbursement methodologies have thwarted the appropriatemigration of services from costly acute care settings to less costly primary and preventive care settings.The APG methodology covers most medical outpatient services. It reimburses based on patients’ conditions andseverity, and packages the cost of certain ancillary lab and radiology services into the overall payment. Itaddresses the inadequacies of the previous system by paying varying amounts per visit, based on service intensity.Coupled with new investments in primary care and primary care enhancements described in Chapter 6 of thisdocument, the goal of the APG reimbursement methodology is to incentivize providers to improve the quality ofand access to preventive and primary health care services for Medicaid enrollees.1.4 SCOPE OF SERVICES:The APG payment methodology is applicable to outpatient, ambulatory surgery and emergency departmentservices provided by general hospitals and to ambulatory care services provided by diagnostic and treatmentcenters and free‐standing ambulatory surgery centers.The APG payment methodology is not applicable to: services provided outside of a facility’s licensure under Article 28 of the Public Health Law (e.g. APGs arenot currently applicable to services certified under the Mental Hygiene Law)capitated payments made on behalf of Medicaid managed care or Family Health Plus enrollees;payment for Ordered Ambulatory servicespayment for physicians’ services in hospital settings billed using the Physician Fee Schedule;payment to Federally Qualified Health Centers (FQHCs), except when the FQHC has voluntarilyagreed to participate in the APG reimbursement system, or;payment for long term care, home care, personal care.Policy and Billing Guidance Ambulatory Patient Groups (APGs) Provider ManualPage 6

1.5 IMPLEMENTATION SCHEDULE:Approval of federal financial participation by the Centers for Medicare and Medicaid Services (CMS) is requiredprior to implementing the APG payment methodology in different settings.{APGs were implemented in hospital outpatient departments and ambulatory surgery centers onDecember 1, 2008.{APGs were implemented in hospital emergency departments on January 1, 2009.{APGs will be implemented in freestanding diagnostic and treatment centers and freestanding ambulatorysurgery centers upon CMS approval, retroactive to September 1, 2009.APGs will be implemented in facilities licensed under the Mental Hygiene Law in SFY 10/11, upon CMS approval.For additional information on implementation, please contact the following NYS agencies which govern mentalhygiene:Office of Mental Health (517) 474‐6911http://www.omh.state.ny.us/omhweb/clinic restructuring/.e‐mail: [email protected] of Alcohol and Substance Abuse Services (518) 485‐2207e‐mail: [email protected] of Mental Retardation and Developmental Disabilities(518) 474‐3558 Policy Issues – Bureau of Behavioral and Clinical Solutions(518) 474‐1745 Rate Setting Issues – Bureau of Cost and Revenue Solutions(518) 402‐4333 Provider Enrollment and Claiming Assistance – Bureau of Central OperationsFor the full implementation schedule, please visit:www.nyhealth.gov/health care/medicaid/rates/apg/index.htm#training schedule.Policy and Billing Guidance Ambulatory Patient Groups (APGs) Provider ManualPage 7

1.6 BLENDING OF APG PAYMENT:Both hospital‐based ambulatory surgery and emergency department services received 100% APG pay