Integrated Outpatient Code Editor

Purpose of the OPPS I/OCE functionality

The Integrated Outpatient Code Editor (I/OCE) software combines editing logic with the new Ambulatory Payment Classification (APC) assignment program designed to meet the mandated OPPS implementation. When processing a claim, the software:

• 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

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

Appendix A within the I/OCE Quarterly Release Files contains lists of codes associated with program edits for both OPPS and non-OPPS processing.

I/OCE Product background

Before OPPS, the software edited claims without specifying any action to take when an edit occurred. It also didn't compute any information for payment purposes.

The OPPS functionality of the I/OCE software was developed for the implementation of the Medicare OPPS mandated by the 1997 Balanced Budget Act. CMS released the proposed OPPS rules using the APC system in the Federal Register on September 8, 1998. We released final regulations in the Federal Register on  April 7, 2000, 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, Diagnosis Related Groups (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 these types of codes:

• Level I - The American Medical Association's Physicians' Current Procedural Terminology (CPT®)
• Level II - CMS developed national codes

Like the inpatient system based on DRG's, each APC has a pre-established prospective payment amount associated with it. But, unlike the inpatient system that assigns a patient to a single DRG, multiple APCs can be assigned to 1 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, we've added assignment of APC numbers for services to meet Medicare's mandated OPPS implementation. The revised program indicates what actions to take when an edit occurs, and why the actions are needed. 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 can't be resubmitted but can be appealed.

A major change is the processing of claims with service dates that span more than 1 day.

Certain services (for example physical therapy and diagnostic clinical laboratory services) 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

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)
• Not subject to OPPS (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 defaults to 1

This version of the I/OCE processes claims with multiple days of service. The I/OCE will perform 3 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 consists of all necessary demographic (header) data, plus all services provided (line items).  The user must 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 doesn't have any cross claim capabilities
• The I/OCE accepts up to 450 line items per claim
• The I/OCE software will order line items by date of service

The I/OCE is set up to return lists of edit numbers. The structure allows the I/OCE to:

• Identify individual errors
• Indicate what actions you need to take
• Explain the reasons the actions are needed

In general, the I/OCE performs all functions that require specific reference to HCPCS codes, HCPCS modifiers and ICD-10-CM diagnosis codes. Since these coding systems are complex and annually updated, integrating these functions in the I/OCE reduces effort and the chance of inconsistent processing.

This integration doesn't change current logic that's applied to outpatient bill types that already pass through the OPPS I/OCE software.

Editing that only applied to OPPS hospitals (for example, blood, drug, or partial hospitalization logic) in the past won't be applied to non-OPPS hospitals at this time. But, with the I/OCE, line items on claims from non-OPPS hospitals will be assigned specific edit numbers and dispositions. In the past this detail wasn't provided.

AHA Disclaimer

Copyright © 2013-2019, the American Hospital Association, Chicago, Illinois. Reproduced by CMS with permission. No portion of the American Hospital Association (AHA) copyrighted materials contained within this publication may be copied without the express written consent of the AHA. AHA copyrighted materials including the UB-04 codes and descriptions may not be removed, copied, or utilized within any software, product, service, solution or derivative work without the written consent of the AHA. If an entity wishes to utilize any AHA materials, please contact the AHA at 312-893-6816. 

Making copies or utilizing the content of the UB-04 Manual, including the codes and/or descriptions, for internal purposes, resale and/or to be used in any product or publication; creating any modified or derivative work of the UB-04 Manual and/or codes and descriptions; and/or making any commercial use of UB-04 Manual or any portion thereof, including the codes and/or descriptions, is only authorized with an express license from the American Hospital Association.

To license the electronic data file of UB-04 Data Specifications, contact Tim Carlson at (312) 893-6816. You may also contact us at ub04@aha.org.

The American Hospital Association (the “AHA”) has not reviewed, and is not responsible for, the completeness or accuracy of any information contained in this material, nor was the AHA or any of its affiliates, involved in the preparation of this material, or the analysis of information provided in the material. The views and/or positions presented in the material do not necessarily represent the views of the AHA. CMS and its products and services are not endorsed by the AHA or any of its affiliates.