Outpatient Code Editor (OCE)

Outpatient Code Editor (OCE)

 I/OCE Purpose & Background

Purpose of the OPPS I/OCE functionality

The Integrated Outpatient Code Editor (I/OCE) software combines editing logic with the new APC assignment program designed to meet the mandated OPPS implementation. The software performs the following functions when processing a claim:

  • Edits a claim for accuracy of submitted data
  • Assigns APCs
  • Assigns CMS-designated status indicators
  • Assigns payment indicators
  • Computes discounts, if applicable
  • Determines a claim disposition based on generated edits
  • Determines if packaging is applicable
  • Determines payment adjustment, if applicable

Purpose of the non-OPPS I/OCE functionality

In addition to its editing function, the I/OCE program screens each procedure code against a list of approximately 2500 ASC procedures, and summarizes whether or not the bill is subject to the ASC limitation.

Appendix A contains lists of codes associated with program edits for both OPPS and non-OPPS processing.

I/OCE Product background

Prior to OPPS, the software focused solely on editing claims without specifying any action to take when an edit occurred. It also did not compute any information for payment purposes.

The OPPS functionality of the Integrated Outpatient Code Editor (I/OCE) software was developed for the implementation of the Medicare outpatient prospective payment system mandated by the 1997 Balanced Budget Act. CMS released the proposed OPPS rules using the Ambulatory Payment Classification (APC) system in the September 8, 1998 Federal Register. Final regulations were published in the April 7, 2000 Federal Register and the system became effective for Medicare on August 1, 2000.

The APC-based OPPS developed by CMS is the outpatient equivalent of the inpatient, DRG-based PPS. The APC system establishes groups of covered services so that the services within each group are comparable clinically and with respect to the use of resources.

Hospitals are required to use HCPCS when billing for outpatient services. HCPCS incorporates the following types of codes:

  • Level I - The American Medical Association's Physicians' Current Procedural Terminology (CPT®)
  • Level II - National codes developed by the Centers for Medicare and Medicaid Services (CMS)

Like the inpatient system based on Diagnosis Related Groups (DRG's), each APC has a pre-established prospective payment amount associated with it. However, unlike the inpatient system that assigns a patient to a single DRG, multiple APCs can be assigned to one outpatient record. If a patient has multiple outpatient services during a single visit, the total payment for the visit is computed as the sum of the individual payments for each service. 

While the software has maintained the editing logic of previous versions, assignment of APC numbers for services has been added to meet Medicare's mandated OPPS implementation. The revised program indicates what actions to take when an edit occurs, and the reason(s) why the actions are necessary. For example, an edit can cause a line item to be denied payment while still allowing the claim to be processed for payment. In this case, the line item cannot be resubmitted but can be appealed.

A major change is the processing of claims with service dates that span more than one day. Each claim is represented by a collection of data, consisting of all necessary demographic (header) data, plus all services provided (line items).

It is the user's responsibility to organize all applicable services into a single claim record and pass them as a unit to the software.

The I/OCE only functions on a single claim and does not have any cross claim capabilities. The software can accept up to 450 line items per claim.

Certain services (e.g., physical therapy, diagnostic clinical laboratory) are excluded from Medicare's prospective payment system for hospital outpatient departments. These services are exceptions paid under fee schedules and other prospectively determined rates.

The 'Integrated' Outpatient Code Editor (I/OCE) 

The 'integrated' Outpatient Code Editor (I/OCE) program processes claims for all outpatient institutional providers including hospitals that are subject to the Outpatient Prospective Payment System (OPPS) as well as hospitals that are NOT (Non-OPPS). Claim will be identified as 'OPPS' or 'Non-OPPS' by passing a flag to the I/OCE in the claim record, 1=OPPS, 2=Non-OPPS; a blank, zero, or any other value is defaulted to 1.

This version of the I/OCE processes claims consisting of multiple days of service. The I/OCE will perform three major functions:

  1. Edit the data to identify errors and return a series of edit flags.
  2. Assign an Ambulatory Payment Classification (APC) number for each service covered under OPPS, and return information to be used as input to a PRICER program.
  3. Assign an Ambulatory Surgical Center (ASC) payment group for services on claims from certain Non-OPPS hospitals.

Each claim will be represented by a collection of data, which will consist of all necessary demographic (header) data, plus all services provided (line items).  It is the user's responsibility to organize all applicable services into a single claim record, and pass them as a unit to the I/OCE. The I/OCE only functions on a single claim and does not have any cross claim capabilities. The I/OCE will accept up to 450 line items per claim. The I/OCE software is responsible for ordering line items by date of service.

The I/OCE not only identifies individual errors but also indicates what actions should be taken and the reasons why these actions are necessary. In order to accommodate this functionality, the I/OCE is structured to return lists of edit numbers. This structure facilitates the linkage between the actions being taken, the reasons for the actions and the information on the claim (e.g., a specific diagnosis) that caused the action.

In general, the I/OCE performs all functions that require specific reference to HCPCS codes, HCPCS modifiers and ICD-9-CM diagnosis codes. Since these coding systems are complex and annually updated, the centralization of the direct reference to these codes and modifiers in a single program will reduce effort and reduce the chance of inconsistent processing.

This integration does not change current logic that is applied to outpatient bill types that already pass through the OPPS I/OCE software.

Editing that only applied to OPPS hospitals (e.g., blood, drug, partial hospitalization logic) in the past will not be applied to non-OPPS hospitals at this time. However, with the integrated OCE, line items on claims from non-OPPS hospitals will be assigned specific edit numbers and dispositions, where in the past; this type of detail was not provided.

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Page Last Modified:
09/06/2023 04:51 PM