Medicare: Discrepancy in Hospital Outpatient Prospective Payment 
System Methodology Leads to Inaccurate Beneficiary Copayments and
Medicate Payments (06-OCT-03, GAO-04-103R).			 
                                                                 
Under the Medicare hospital outpatient prospective payment system
(OPPS), beneficiaries can be responsible for paying 50 percent or
more of the total payment for outpatient services they receive in
hospitals. The Balanced Budget Act of 1997 (BBA) introduced a	 
mechanism to gradually decrease beneficiary cost sharing to 20	 
percent of the payment rate for each hospital outpatient service.
The Centers for Medicare & Medicaid Services (CMS) published a	 
final rule that implemented, effective with the 2002 payment	 
rates, a methodology for calculating copayment amounts that was  
designed to ensure that even as certain changes affect the	 
payment rates for hospital outpatient services over time,	 
beneficiary coinsurance for services would eventually be 20	 
percent of the total payment rate for each service. Under this	 
2002 methodology, the copayment amount for each outpatient	 
payment group of services, called an ambulatory payment 	 
classification (APC) group, could not increase from year to year,
and the beneficiary coinsurance percentage would remain the same 
or decrease, eventually reaching 20 percent for each APC. When	 
CMS published the final rule updating the OPPS payment rates for 
2003, the agency stated that it used the methodology implemented 
in 2002 for determining 2003 copayments. However, in the course  
of other ongoing work, GAO found several APCs for which copayment
amounts increased from 2002 to 2003, contrary to the methodology 
implemented in 2002. For a federal agency to adopt a new position
or payment methodology that is inconsistent with existing rules  
and regulations, it must follow Administrative Procedure Act	 
rulemaking requirements, which generally include publishing its  
intentions and allowing for public comment. Because of our	 
concerns about this methodological discrepancy, we discussed the 
issue with CMS staff in May 2003. Thereafter, in its August 2003 
proposed rule setting forth the 2004 OPPS payment rates, CMS	 
stated that it would revise and clarify the copayment methodology
implemented in 2002, and that this revised methodology would be  
used to calculate copayment amounts beginning in 2004. In this	 
report, we present our complete analysis of the 2003 copayment	 
methodology and the implications its use holds for copayment	 
amounts in 2003 and future years. We also present the estimated  
financial impact this methodology has had on both beneficiary	 
cost sharing and Medicare payments in 2003.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-103R					        
    ACCNO:   A08670						        
  TITLE:     Medicare: Discrepancy in Hospital Outpatient Prospective 
Payment System Methodology Leads to Inaccurate Beneficiary	 
Copayments and Medicate Payments				 
     DATE:   10/06/2003 
  SUBJECT:   Beneficiaries					 
	     Federal regulations				 
	     Health care programs				 
	     Hospital care services				 
	     Medical fees					 
	     Medical services rates				 
	     Noncompliance					 
	     Health care costs					 
	     Managed health care				 
	     Medicare Hospital Outpatient Prospective		 
	     Payment System					 
                                                                 

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GAO-04-103R

United States General Accounting Office Washington, DC 20548

October 6, 2003

The Honorable Thomas A. Scully
Administrator
Centers for Medicare & Medicaid Services

Subject: Medicare: Discrepancy in Hospital Outpatient Prospective Payment
System Methodology Leads to Inaccurate Beneficiary Copayments and Medicare
Payments

Dear Mr. Scully:

Under the Medicare hospital outpatient prospective payment system (OPPS),
beneficiaries can be responsible for paying 50 percent or more of the
total payment for outpatient services they receive in hospitals. The
Balanced Budget Act of 1997 (BBA)1 introduced a mechanism to gradually
decrease beneficiary cost sharing to 20 percent of the payment rate for
each hospital outpatient service.2 The Centers for Medicare & Medicaid
Services (CMS) published a final rule that implemented, effective with the
2002 payment rates, a methodology for calculating copayment amounts that
was designed to ensure that even as certain changes affect the payment
rates for hospital outpatient services over time, beneficiary coinsurance3
for services would eventually be 20 percent of the total payment rate for
each service.4 Under this 2002 methodology, the copayment amount for each
outpatient payment group of services, called an ambulatory payment
classification (APC) group, could not increase from year to year, and the
beneficiary coinsurance percentage would remain the same or decrease,
eventually reaching 20 percent for each APC.5

1 Pub. L. No 105-33, S: 4523(a), 111 Stat. 251, 445.

2 Beneficiary cost sharing will decline to 20 percent at a different time
for each outpatient service depending on the service's initial
cost-sharing percentage. In 2000, the Medicare Payment Advisory Commission
estimated that achieving a 20 percent cost-sharing rate for services will
take an average of 30 to 40 years.

3 We use the term "coinsurance" to refer to the percentage of the Medicare
payment amount that beneficiaries are responsible for paying for a service
under the OPPS. We use the term "copayment" to refer to the dollar amount
that beneficiaries are responsible for paying for a service under the
OPPS.

4 66 Fed. Reg. 59,856, 59,888 (2001).

5 Under the OPPS, outpatient services with clinical and resource use
similarities are grouped into APCs for payment purposes. Each service
within an APC is paid at the same rate. The total payment rate for an APC
is composed of two parts: an amount that the beneficiary is responsible
for paying and an amount that Medicare is responsible for paying. As the
beneficiary coinsurance proportion declines to 20 percent, the proportion
that

When CMS published the final rule updating the OPPS payment rates for
2003, the agency stated that it used the methodology implemented in 2002
for determining 2003 copayments.6 However, in the course of other ongoing
work, we found several APCs for which copayment amounts increased from
2002 to 2003, contrary to the methodology implemented in 2002.7 For a
federal agency to adopt a new position or payment methodology that is
inconsistent with existing rules and regulations, it must follow
Administrative Procedure Act rulemaking requirements, which generally
include publishing its intentions and allowing for public comment.8
Because of our concerns about this methodological discrepancy, we
discussed the issue with CMS staff in May 2003. Thereafter, in its August
2003 proposed rule setting forth the 2004 OPPS payment rates, CMS stated
that it would revise and clarify the copayment methodology implemented in
2002, and that this revised methodology would be used to calculate
copayment amounts beginning in 2004.9

In this report, we present our complete analysis of the 2003 copayment
methodology and the implications its use holds for copayment amounts in
2003 and future years. We also present the estimated financial impact this
methodology has had on both beneficiary cost sharing and Medicare payments
in 2003.

To estimate the impact of the 2003 copayment methodology on beneficiary
cost-sharing obligations, we used 2001 Medicare outpatient claims data10
together with the 569 APC groups in 2003 and the 2003 payment rates. We
calculated the 2003 copayment amount for each of the APCs according to the
2002 methodology and calculated the difference between that amount and the
amount published in the 2003 OPPS final rule. We compiled a list of the
differences, multiplied the difference by the respective service volume
for each APC from the 2001 claims, and then summed them across all
affected APCs to estimate the total amount of inaccurate copayments. See
Enclosure I for more details on our methodology. We performed our work in
accordance with generally accepted government auditing standards from May
through October 2003.

In summary, we found that use of a copayment methodology in 2003 that
differed from the copayment methodology in 2002 has resulted in inaccurate
2003 copayment

Medicare is responsible for will increase. Once the coinsurance percentage
is 20 percent of the payment rate, the copayment amount will increase to
maintain the 20 percent coinsurance rate if the payment rate increases.

6 67 Fed. Reg. 66,718, 66,788 (2002).

7 In this report we will refer to the methodology CMS implemented for 2002
as the 2002 copayment methodology. We will refer to the methodology used
for 2003, but not implemented through the rulemaking process, as the 2003
copayment methodology.

8 See, e.g., Shalala v. Guernsey Memorial Hosp., 514 U.S. 87, 100 (1995).

9 68 Fed. Reg. 47,966, 48,006-07 (2003).

10 The 2001 Medicare outpatient claims contain all outpatient claims for
services furnished on or after April 1, 2001 and on or before March 31,
2002.

amounts for 75 APCs.11 For 28 APCs, this methodology has resulted in
beneficiaries being responsible for higher copayments than they would have
been under the 2002 methodology. For 47 APCs, beneficiaries are
responsible for lower copayments, and, therefore, Medicare is making
higher payments than it would have under the 2002 methodology. Moreover,
under this methodology, copayment amounts for some APCs may never decline
to 20 percent of the APC payment rate. Although CMS is proposing to revise
the copayment methodology for 2004, the agency did not recalculate the
2003 copayment amounts using the 2002 methodology before using them as the
basis for calculating the 2004 copayment amounts. Thus, certain proposed
2004 copayment amounts are higher and others are lower than they would
have been if CMS had used the 2002 methodology in 2003. In addition, the
time it will take for the copayment amounts for some of these APCs to
reach 20 percent of the APC payment rate will increase. We estimate that
in 2003 the methodology used by CMS will result in about $414 million in
inaccurate copayments, with a net of $192 million in Medicare program
overpayments. Specifically, we estimate beneficiaries will be overcharged
by approximately $111 million for certain services, and Medicare will
overpay by approximately $303 million for other services.

We recommend that, for the purpose of calculating the 2004 OPPS
beneficiary copayment amounts, the Administrator of CMS first apply the
2002 copayment methodology to the 2003 APCs for which beneficiaries were
inaccurately charged. The 2004 copayment amounts should then be based on
these revised 2003 copayment amounts. In written comments on a draft of
this report, CMS stated that it would take the information we provided
into consideration as part of issuing its 2004 final rule.

Background

The initial OPPS payment rates that went into effect August 1, 2000 were
based on hospitals' median costs in 1996. The initial copayment amounts
were based on hospitals' median charges for the same year, but were to be
no lower than 20 percent of the payment rate for each APC. Because
hospitals' median charges usually exceeded hospitals' median costs, the
copayments for most APCs were set at levels well above 20 percent of the
payment rate.

BBA provides the methodology by which copayment amounts were to be
initially determined and specifies that a copayment amount for an APC
would be held constant as the payment rate increases for that APC with the
annual inflation adjustment until the copayment amount declines to 20
percent of the payment rate. However, BBA does not specify how copayments
are to be determined when CMS reviews and revises the APCs, as it is
required to do at least annually in accordance with section 1833(t)(9)(A)
of the Social Security Act.12 CMS takes into account changes in medical
practice and technology and the addition of new services, cost

11 Enclosure II contains a list of these APCs.

12 42 U.S.C. S: 1395l(t)(9) (2000).

data, and other relevant information and makes revisions in the services
assigned to a particular APC, known as reclassification, and in the
relative payment weight for an APC, known as recalibration. Thus, although
the payment rates are annually adjusted upward for inflation, an APC's
payment rate could either increase or decrease from one year to the next
because of reclassification and recalibration or recalibration alone.

In the final rule that established the 2002 OPPS rates, CMS set forth a
methodology for calculating copayments that was designed to take
reclassification and recalibration changes into account and ensure that
the copayment amount for a particular APC would not increase from one year
to the next due to these changes, until it represented 20 percent of the
total payment rate. CMS stated that if an APC's payment rate increased,
the copayment dollar amount would remain the same, causing the coinsurance
percentage to decrease. If an APC's payment rate decreased, the
coinsurance percentage for the APC would remain the same, causing the
copayment amount to decrease. If two or more APCs were combined to make a
new APC, the lowest of the contributing APCs' coinsurance percentages
would apply to the new APC.13 According to the 2002 copayment methodology,
the transfer of a service from one APC to another is not considered the
creation of a new APC. The proposed 2004 copayment methodology confirms
this position.14

Change in 2003 Copayment Methodology Affects Beneficiary Copayment Amounts
in 2003 and Future Years

In the final rule that established the 2003 payment rates, CMS stated that
it calculated the copayment amounts using the 2002 methodology.15 However,
when the 2003 copayment amounts were calculated in that final rule, CMS
made unexplained modifications that were inconsistent with its rules. As a
result, the 2003 copayment amounts for 28 APCs increased compared to the
2002 amounts, and the copayment amounts for 47 other APCs decreased more
than they would have using the 2002 methodology. In addition, under the
2003 methodology, copayment amounts for some APCs may not have eventually
declined to 20 percent of the APC payment rate. Finally, certain proposed
2004 copayment amounts are higher and others are lower than they would
have been if CMS had consistently applied the 2002 methodology in 2003.

The fundamental difference between the 2002 and 2003 methodologies was
that, according to CMS documentation, for 2003, CMS deemed any APC that
had one or more services added to it to be a "new" APC. In 2002, an APC
was not considered to

13 66 Fed. Reg. 59,856, 59,888 (2001).

14 68 Fed. Reg. 47,966, 48,006 (2003).

15 67 Fed. Reg. 66,718, 66,788 (2002).

be new if it had services added to it.16 Under the 2002 methodology, CMS
calculated the copayment amount of an APC containing reclassified
services, referred to as a "revised" APC, from its own copayment amount or
coinsurance percentage from the previous year depending on whether the
payment rate increased or decreased. Under the 2003 methodology, CMS
calculated the copayment amount of an APC containing reclassified services
by adopting the lowest coinsurance percentage from the previous year of
any APC that contributed a service to that APC. This change, when coupled
with payment changes, led the copayment amounts for some APCs to
inaccurately increase or decrease between 2002 and 2003. In order to
illustrate how the methodology used in 2003 affected copayment amounts, we
present two simplified hypothetical examples below.

Example 1: Demonstration of How the 2003 CMS Copayment Methodology Led to
Inaccurately High 2003 Beneficiary Copayment Amounts

In 2002, hypothetical APC 1 had a payment rate of $50.00, a coinsurance
percentage of 50 percent, a copayment amount of $25.00, and included
services A, B, and C (see fig. 1). Hypothetical APC 2 had a payment rate
of $65.00, a coinsurance percentage of 45 percent, a copayment amount of
$29.25, and included services D, E, and F.

Figure 1: Hypothetical APCs in 2002

For 2003, service D was reclassified to APC 1, and the payment rate of APC
1 increased to $60.00 through recalibration and application of the annual
inflation adjustment (see fig. 2). Applying the 2002 methodology, the 2003
copayment amount should have remained $25.00 because this APC was not
considered new, and the 2003 coinsurance percentage should have decreased
to 42 percent.

16 According to the 2002 methodology, a new APC would be one that is
either composed of new outpatient services or is created from some or all
of the services from two or more existing APCs. (66 Fed. Reg. 59,856,
59,888 (2001).)

Figure 2: Update to the Copayment Amount for a Hypothetical APC with a
Payment Rate Increase for 2003 If the 2002 Methodology Had Been Used

However, because service D was reclassified to APC 1, CMS would have
considered it a new APC under the 2003 methodology. Therefore, the 2003
coinsurance percentage for APC 1 would have been 45 percent, the lowest
2002 coinsurance percentage of all APCs contributing services to it, in
this case, APC 1 and APC 2 (see fig. 3). However, the payment rate for APC
1 increased enough so that 45 percent of $60.00 ($27.00) is higher than
the $25.00 the copayment should have been.

Figure 3: Update to the Copayment Amount for a Hypothetical APC with a
Payment Rate Increase for 2003 Using the 2003 Methodology

Example 2: Demonstration of How the 2003 CMS Copayment Methodology Led to
Inaccurately Low 2003 Beneficiary Copayment Amounts

This example uses the same hypothetical APC 1 and APC 2 as presented in
figure 1. For 2003, service D was again reclassified to APC 1; however, in
this example, the payment rate of APC 1 decreased to $45.00 in 2003 (see
fig. 4). Applying the 2002 methodology, the 2003 coinsurance percentage of
APC 1 should have remained 50 percent, because this APC was not considered
new, and the 2003 copayment amount should have decreased to $22.50.

Figure 4: Update to the Copayment Amount for a Hypothetical APC with a
Payment Rate Decrease for 2003 If the 2002 Methodology Had Been Used

However, under the 2003 methodology, CMS would have considered APC 1 a new
APC. Because the 2002 coinsurance percentage of APC 2 (45 percent) was
lower than the 2002 coinsurance percentage of APC 1 (50 percent), CMS
would have used 45 percent to calculate the copayment amount for APC 1
(see fig. 5). In this example, because the payment rate for APC 1
decreased, the lower coinsurance percentage in conjunction with a lower
payment rate would have resulted in a copayment amount of $20.25, instead
of the $22.50 calculated using the 2002 methodology.

Figure 5: Update to the Copayment Amount for a Hypothetical APC with a
Payment Rate Decrease for 2003 Using the 2003 Methodology

In the proposed rule updating the OPPS payment rates for 2004, CMS stated
that, effective with the 2004 payment rates, it would revise and clarify
the copayment methodology. Our review of the proposed methodology
indicates that it would be consistent with the statute because it would
not allow copayment amounts to increase from year to year, and they would
eventually decline to 20 percent of the APC payment rate. However, CMS did
not recalculate the 2003 copayment amounts using the 2002 methodology
before using them as the basis for calculating the 2004 copayment amounts.
Thus, certain 2004 copayment amounts are higher, and others are lower,
than they would have been if CMS had consistently applied the 2002
methodology, and the time it will take for the copayment amounts for some
of these APCs to reach 20 percent of the APC payment rate will increase.

2003 Copayment Methodology Results in Inaccurate Beneficiary Copayments
and Medicare Payments

We estimate that in 2003, the copayment methodology used by CMS will
result in about $414 million in inaccurate copayments, with a net of $192
million in Medicare program overpayments. More specifically, we estimate
that beneficiaries will be overcharged by approximately $111 million for
certain services. Beneficiaries will be undercharged for other services,
and therefore we estimate that Medicare will overpay by approximately $303
million for these other services. The exact amounts will depend on the
actual number of services provided in the affected APCs in 2003.

For some APCs, the beneficiary is being overcharged. APC 0291, Level II
Diagnostic Nuclear Medicine Excluding Myocardial Scans, is an example of
an APC for which the beneficiary is responsible for paying a higher
copayment as a result of the 2003 copayment methodology. We determined
that the 2003 copayment for this APC is more than $14 higher than it would
have been had the 2002 methodology been used. Multiplying that amount by
the total number of 2001 claims for this APC results in an

estimated $1.7 million in beneficiary overcharges for 2003. For the APCs
for which beneficiaries were overcharged, we estimate that the sum of
those overcharges is approximately $111 million.

For the majority of the miscalculated APCs, however, Medicare is
overpaying. For example, for APC 0110, Transfusion, we determined that the
2003 copayment amount for this APC was $46 lower than it would have been
had the 2002 methodology been used and, therefore, the Medicare payment
portion was that much higher. Multiplying that amount by the total number
of 2001 claims for this APC results in an estimated $15.2 million in
Medicare overpayments for 2003. Summing the Medicare overpayments of all
APCs for which beneficiaries were undercharged results in an estimated
total of approximately $303 million.

Conclusions

The methodology that CMS used to calculate beneficiary copayment amounts
in 2003 is inconsistent with (1) the methodology published by CMS in its
final rule setting forth the 2002 OPPS payment rates and (2) the statutory
objective of steadily decreasing all copayment amounts until they are 20
percent of the total payment rate for each service.

Though CMS has proposed clarifications to its methodology for 2004, there
are reasons for concern. First, some beneficiaries continue to be
inaccurately charged and Medicare continues to overpay for certain
outpatient hospital services delivered in 2003. In addition, although CMS
has proposed a methodology for 2004 and later years that would not
increase copayment amounts for an APC from one year to the next and that
would eventually decrease copayment amounts to 20 percent of the payment
rate, CMS would be using the miscalculated 2003 copayment amounts as the
basis for these and future copayment amounts. Finally, the time it will
take for the copayment amounts for certain APCs to reach 20 percent of the
APC payment rate will increase.

Recommendations for Executive Action

For the purpose of calculating the 2004 OPPS beneficiary copayment
amounts, we recommend that the Administrator of CMS first apply the 2002
copayment methodology to the 2003 APCs for which beneficiaries were
inaccurately charged. The 2004 copayment amounts should then be based on
these revised 2003 copayment amounts.

Agency Comments

In written comments on a draft of this report, CMS stated that in 2003 it
treated reconfigured APCs as if they were new APCs. CMS also stated that
in the 2004 OPPS proposed rule, it proposed to change the method of
copayment calculation to treat reconfigured APCs in the same manner as
recalibrated APCs, consistent with the methodology that we stated should
have been used in 2003. However, CMS noted

that it did not propose to recalculate the 2003 copayments, which must be
used in
part as the basis for the calculation of the 2004 OPPS copayments. In its
comments,
CMS stated that it would carefully consider the information we provided to
it as part
of issuing its final rule.

CMS's comments about its methodology are generally consistent with the
information
in our draft report. We believe that CMS should apply the 2002 copayment
methodology to the 2003 copayment amounts before calculating the 2004
copayment
amounts to ensure that they are accurate. CMS's comments appear in
Enclosure III.

We are sending copies of this report to interested congressional
committees. We will
also make copies available to others upon request. In addition, the report
will be
available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff have questions, please contact me at (202) 512-7119.
Another
contact and key contributors to this report appear in Enclosure IV.

Sincerely yours,

A. Bruce Steinwald
Director, Heath Care-Economic

and Payment Issues

Enclosures-4

                            Enclosure I Enclosure I

                             Scope and Methodology

We obtained the 2001 Medicare outpatient prospective payment system (OPPS)
claims data, the latest data available, directly from the Centers for
Medicare & Medicaid Services (CMS).17 We used these claims data together
with the 569 ambulatory payment classification (APC) groups in 2003 and
the published 2003 OPPS copayment amounts to estimate the impact of the
2003 copayment methodology on copayment amounts. We calculated the 2003
copayment amount for each of the APCs using the 2002 methodology and
calculated the difference between that amount and the published 2003
copayment amount. The copayment amounts we analyzed were those published
in the final rules setting both the 2002 and 2003 payment rates. We did
not take wage index adjustments into account, and thus our estimates are
based on national APC payment rates.

We determined that 75 APCs had inaccurate copayment amounts in 2003;
however, 6 of these 75 APCs are not included in our financial impact
estimate because, while they existed in 2002, they did not exist in 2001
and were not in the 2001 Medicare claims data. We multiplied the
difference between the two 2003 copayment amounts by the frequency of each
APC in the 2001 Medicare hospital outpatient claims data and summed the
beneficiary overcharges for the affected APCs. We then summed the
beneficiary undercharges (Medicare overpayments) for the other affected
APCs. We applied the CMS rule that payment rates and copayment amounts for
certain APCs are discounted by a factor of 50 percent when these services
are performed more than once or with certain other procedures during a
single operative session by using the discounted rates as appropriate in
our analysis when these APCs appeared in the claims data.

17 The 2001 outpatient claims data file contains all final action
outpatient claims for services furnished on or after April 1, 2001 and on
or before March 31, 2002. As it is the file that CMS used to set the 2003
OPPS payment rates, we consider it reliable for the purpose of our
estimate, which is to count the frequency with which outpatient services
were performed.

                           Enclosure II Enclosure II

 List of APCs for Which Beneficiaries Are Overcharged or Medicare Overpays for
                                 2003 Services

Table 1: List of APCs for Which Beneficiaries Are Overcharged for 2003
Services

       APC                                                              Title 
      0010                                      Level I Destruction of Lesion 
      0012                                  Level I Debridement & Destruction 
      0022                                           Level IV Excision/Biopsy 
      0025                                               Level II Skin Repair 
      0035                   Placement of Arterial or Central Venous Catheter 
      0148                                      Level I Anal/Rectal Procedure 
      0155                                     Level II Anal/Rectal Procedure 
      0156                               Level II Urinary and Anal Procedures 
      0164                                Level I Urinary and Anal Procedures 
      0192                            Level IV Female Reproductive Procedures 
      0214                                               Electroencephalogram 
      0216                                   Level III Nerve and Muscle Tests 
      0230                                     Level I Eye Tests & Treatments 
      0231                                   Level III Eye Tests & Treatments 
      0232                            Level I Anterior Segment Eye Procedures 
      0234                          Level III Anterior Segment Eye Procedures 
      0247                                Laser Eye Procedures Except Retinal 
      0248                                           Laser Retinal Procedures 
      0254                                            Level IV ENT Procedures 
      0260                                    Level I Plain Film Except Teeth 
      0265                      Level I Diagnostic Ultrasound Except Vascular 
      0266                     Level II Diagnostic Ultrasound Except Vascular 
      0286                                                   Myocardial Scans 
      0290     Level I Diagnostic Nuclear Medicine Excluding Myocardial Scans 
      0291    Level II Diagnostic Nuclear Medicine Excluding Myocardial Scans 
      0343                                                 Level II Pathology 
      0344                                                Level III Pathology 
      0360                                           Level I Alimentary Tests 

Source: CMS.
Note: GAO analysis of 2003 OPPS copayment rates and 2002 OPPS final rule.

Enclosure II Enclosure II

Table 2: List of APCs for Which Medicare Overpays for 2003 Services

     APC                                                                Title 
    0002                                        Fine Needle Biopsy/Aspiration 
    0003                                        Bone Marrow Biopsy/Aspiration 
    0006                                          Level I Incision & Drainage 
    0015                                  Level III Debridement & Destruction 
    0021                                            Level III Excision/Biopsy 
    0041                                                  Level I Arthroscopy 
    0045                             Bone/Joint Manipulation Under Anesthesia 
    0049              Level I Musculoskeletal Procedures Except Hand and Foot 
    0050             Level II Musculoskeletal Procedures Except Hand and Foot 
    0051            Level III Musculoskeletal Procedures Except Hand and Foot 
    0052             Level IV Musculoskeletal Procedures Except Hand and Foot 
    0054                             Level II Hand Musculoskeletal Procedures 
    0058                               Level I Strapping and Cast Application 
    0070                                      Thoracentesis/Lavage Procedures 
    0072                                      Level II Endoscopy Upper Airway 
    0081                              Non-coronary Angioplasty or Atherectomy 
    0083                  Coronary Angioplasty and Percutaneous Valvuloplasty 
    0084                                Level I Electrophysiologic Evaluation 
    0090                   Insertion/Replacement of Pacemaker Pulse Generator 
    0099                                                   Electrocardiograms 
    0110                                                          Transfusion 
    0113                                            Excision Lymphatic System 
    0114                                   Thyroid/Lymphadenectomy Procedures 
    0115                                     Cannula/Access Device Procedures 
    0141                                                  Upper GI Procedures 
    0147                                               Level II Sigmoidoscopy 
    0153                                  Peritoneal and Abdominal Procedures 
    0162       Level III Cystourethroscopy and other Genitourinary Procedures 
    0163        Level IV Cystourethroscopy and other Genitourinary Procedures 
    0182                                       Insertion of Penile Prosthesis 
    0183                                         Testes/Epididymis Procedures 
    0218                                      Level II Nerve and Muscle Tests 
    0220                                             Level I Nerve Procedures 
    0251                                               Level I ENT Procedures 
    0253                                             Level III ENT Procedures 
    0256                                               Level V ENT Procedures 
    0261  Level II Plain Film Except Teeth Including Bone Density Measurement 
    0263                           Level I Miscellaneous Radiology Procedures 
    0264                          Level II Miscellaneous Radiology Procedures 
    0288                                         Bone Density: Axial Skeleton 
    0292     Level III Diagnostic Nuclear Medicine Excluding Myocardial Scans 
    0300                                            Level I Radiation Therapy 
    0340                                           Minor Ancillary Procedures 
    0345                            Level I Transfusion Laboratory Procedures 
    0346                           Level II Transfusion Laboratory Procedures 
    0368                                             Level II Pulmonary Tests 
    0689                   Electronic Analysis of Cardioverter-defibrillators 

Source: CMS.
Note: GAO analysis of 2003 OPPS copayment rates and 2002 OPPS final rule.

                          Enclosure III Enclosure III

           Comments from the Centers for Medicare & Medicaid Services

                          Enclosure III Enclosure III

                           Enclosure IV Enclosure IV

                     GAO Contact and Staff Acknowledgments

GAO Contact

Nancy A. Edwards, (202) 512-3340

Acknowledgments

Beth Cameron Feldpush, Joanna L. Hiatt, Maria Martino, and Jonathan
Sclarsic made major contributions to this report.

(290326)

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