Practice Management: The Game Changer

Abstract

The reimbursement landscape is undergoing significant changes. Practice management, which encompasses reimbursement, is becoming increasingly more important in securing business success. Each practitioner within a facility is responsible for fortifying the practice through thoughtful business protocols. Knowing legislation that impacts health care along with understanding the foundational components of reimbursement is key for keeping a practice financially healthy. Change is good, but making the changes is what counts! Legislation such as the Medicare Access and Chip Reauthorization Act defines the new payment models. Correcting current business practices might seem difficult on the surface, but implementing change is rewarding and an obligation of the practitioners within a facility to their patients. Financial stability for a practice occurs when sound business practices are routine. Today's audiologist must not only be proficient at performing his or her scope of practice, but must also accept that performing best business practices is part of the job. In the end, the patients seeking the services of the audiologist benefit most when a practice has the financial stability to be best in its class.

Learning Outcomes: As a result of this activity, the participant will be able to (1) list the two new payment models defined within the Medicare Access and Chip Reauthorization Act of 2015; (2) list the differences between the Current Procedural Terminology Editorial Panel and the Relative Value Update Scale Committee.

There was a time when it was relatively easy to run a successful business/facility/audiology department. Those days are gone. Legislation impacting business practices is complex and robust. Change can cause angst, but it need not be overwhelming. Contemporizing business policies is mandatory and an ongoing behavior. Third-party payers continually update their providers with changes. These alerts need to be read, and if they are too unrealistic or prohibitive, it may be propitious to discontinue a contractual relationship with that insurance carrier. It is unrealistic to assume that our role as an audiologist is to solely be a global-thinking practitioner who meets the diagnostic and treatment needs of our patients. The audiologist's professional and ethical obligation to the patients is to learn and honor federal and state mandates. It is an expectation of the patient that a doctoral professional know and implement coding and reimbursement protocols specific to the patient's insurance plan. Government initiatives change annually requiring practitioners to gather best performance information. The rules of engagement are different for private insurance companies compared to Medicare or Medicaid. Practitioners and insurance carriers typically have a mutually signed contract solidifying a legal responsibility for adherence to the specifics of the document. Ignorance of the content of the insurance contract is not an excuse to absolve the practitioner from being financially penalized or even prevented from participating in the plan. Best coding and reimbursement practices/directives must be learned and applied: this is the responsibility of both the owner/director as well as the audiologist employee. The American Academy of Audiology's Coding and Reimbursement Committee works to provide reimbursement, coding, and compliance resources. These resources are available on the Academy's Web site.¹

Paradigm Shift

At one time, practitioners established a fee schedule and billed the insurance company. The third-party payer paid what it felt was reasonable and customary and the patient was billed for the difference. Simply, the audiologist was always paid in full for the billed amount. This describes the fee-for-service model. Managed care changed this. The patient contracted with the insurance company and agreed to an allowed amount to be billed, which was a discounted amount from the practitioner's fee schedule. The patient could not be balance billed for the difference of the allowed amount by the insurance contract and the practitioner's typical fee schedule. Although the audiologist agreed to be paid less, the mind-set was if the audiologist increased the number of patients seen, the effects of reduced reimbursement would be overridden by the increase in the number of patients evaluated/treated and the associated increase in services provided. The most recent focus is to measure the quality of patient care better known as pay-for-performance. The thought is that practitioners performing quality care will be incentivized, or stated differently, those not engaging in quality patient care would be penalized. Medicare created the Physician Quality Reporting System (PQRS). The provider can earn a higher rate than the listed reimbursement amount found within the Medicare Physician Fee Schedule (MPFS) based on how the practitioner performed predetermined quality measures.

So, to demonstrate, let us assume that an audiologist performs CPT code 92557, comprehensive air, bone, speech audiometry. The facility values this service as $85. For the fee-for-service model, the insurance company would be billed $85. The insurance company may assume a reasonable and customary fee is $55, in which case they would pay $55, leaving a $30 difference. The patient would then be responsible to pay the $30 difference in compensation. In contrast, for managed care, the practitioner has a contract with the third-party payer agreeing to an allowed amount. For sake of example, let us state it as $55. The insurance company would pay $55, but the provider cannot bill the patient for the $30 difference. This amount would have to be written off. In the case of pay-for-performance, which is essentially a Medicare initiative, the MPFS would determine what Medicare would pay for performing 92557. Assume the MPFS indicated that 92557 was valued at $35. Medicare statute states that Medicare pays 80% of the listed value (most Medicare beneficiaries have secondary insurance to cover the 20% Medicare does not reimburse). Based on how an audiologist performs on the key performance measures, Medicare will reimburse a given percentage above (for meeting or exceeding PQRS reporting requirements) the $35 allowed amount listed in the MPFS. Regardless of what is paid, the audiologist can never bill the patient for the difference between what Medicare and the secondary insurance pays. With this scenario, the audiologist's customary and usual amount is $85; Medicare (and secondary insurance) only pays $35, so the practice must write off the $50 difference. If the provider had a good performance rating, she might receive an additional 2% over the MPFS, so instead of $35, Medicare/secondary would pay approximately $35.57. The provider cannot bill the patient for the remaining difference of $49.43. It would have to be written off.

Should it be deemed business smart to not participate in Medicare, Medicare statute states that audiologists cannot opt out of Medicare.² If a patient requests that covered audiology services be billed to Medicare, the audiology facility must comply with the patient request. This is part of the Center for Medicare and Medicaid Services (CMS) mandatory reporting requirement.² This does not apply to noncovered services such as testing for the purpose of a hearing aid, when a patient is tested without physician referral, or when medical necessity cannot be documented. (Medicare covers services deemed medically necessary, which is defined as “health care services or supplies needed to prevent, diagnose, or treat an illness, injury, condition, disease, or its symptoms and that meet accepted standards of medicine.”³) However, if it is speculated that a Medicare beneficiary may be eligible for Medicare reimbursement, a formal Medicare determination must be granted. To bill Medicare, the audiologist must have a national provider identifier (NPI), a 10-digit number that is supplied by Medicare once a provider is successfully credentialed. Medicare assumes that its credentialed providers be familiar with and implement all aspects of Medicare law. Ignorance is never an excuse!

Federal Mandates

Federal mandates are essentially reinventing reimbursement payment models. The landscape is changing fast and furiously. A prudent facility will be mindful of legislative changes and incorporate new policies proactively. The changes are the result of the Affordable Care Act, which is encouraging quality of care at reduced costs. The Medicare Access and Chip Reauthorization Act of 2015, signed into law in April 2015, defines a new quality payment program under Medicare. It establishes: (1) the merit-based incentive payment system (MIPS) which focuses on the delivery of high-quality, low-cost health care, and (2) alternative payment models (APMs)—a multidisciplinary approach for improving quality of care and cutting costs. The provider is incentivized if the APM is successful in meeting its charge. A concise description of these payment models follows:

Merit-Based Incentive Payment System

This new program streamlines existing quality reporting systems under Medicare, including PQRS, the value-based payment modifier, and meaningful use of electronic health record (EHR). To make this transition, PQRS will sunset at the end of 2016, and 2017 will serve as the first performance year for MIPS, with payment adjustments distributed in 2019. (Medicare has a 2- year lag from the year it collects the data, to the year the data establishes the compensation level.) The MPFS will serve as the foundational level of reimbursement. Performance in four categories will determine increased (bonus) or lessened (penalty) compensation from what is listed in the MPFS.

MIPS rates providers utilizing a 100 point system. Points are accumulated from four distinct categories:

Quality

Performance measures will be evaluated and based on practitioner performance, which can earn up to 30 points.

Resource Use

Practitioner resource use within episode-specific measures will be tracked and will result in up to an additional 30 points. Practitioners are encouraged to order fewer tests/use less resources without compromising quality of patient care.

Clinical Practice Improvement Activities

Practitioners will select activities to report from a list containing a variety of categories with some examples being how effectively they feel practitioners: handle same-day appointments, coordinate care with other practitioners including using telehealth, engage Medicare beneficiaries, and ensure patient safety. This category can earn up to 15 points.

Advancing Care Information

This government initiative compensates physicians for using the EHR by following specific patient management guidelines allowing for the collection of data that will be used to improve quality patient care and streamline health costs. Unfortunately, as with many allied health providers, audiologists are excluded from the meaningful use initiative despite Medicare being lobbied to change the exclusion. This category can earn up to 25 points.

For now, CMS is unknowing as to how a provider who is unable to earn the full 100 points will be paid. Audiologists are not eligible for participation in MIPS in the first 2 years (2017, 2018). The secretary of the U.S. Department of Health and Human Services, however, has the authority to include other professionals, including audiologists, beginning in 2019. The 2019 providers include physicians, physician practitioners, and nurse anesthetists. Assuming that audiologists are included in 2021, performance measures will begin to be tracked for audiologists in 2019 to accommodate the 2-year lag. PQRS measures are part of the MIPS initiative, so for audiologists, PQRS reporting requirements for 2017 and 2018 are currently unclear. It has been hypothesized that audiologists will be reimbursed according to the MPFS for those 2 years without the ability to earn an incentive. CMS has developed new resources and materials to address the new Quality Payment Program, including MIPS and APMs.⁴

Alternative Payment Models

The specifics of how audiologists will be part of an alternative payment models (APM) are still being determined. Currently, but subject to change, there are six APM models being proposed. Although all structured differently, the underlying goal of an APM is to engage a team of expert providers to manage a given diagnosis. The team will have a gatekeeper who will manage costs and quality of patient care. If the APM is successful in lessening costs, members of the APM will be paid a bonus commensurate with the degree of saved expenses. Audiologists, like many specialty providers, are not yet included to be part of the team of professionals who comprise the APM. Should the services of an audiologist be required, the APM will most likely pay the audiologist at a rate negotiated by the APM and the audiologist. The downside is that the audiologist is not able to participate in the design of the APM, which removes the barriers for improving care so that providers can improve outcomes for patients while achieving savings for third-party payers. “Hot” diagnoses for creating APMs include the treatment for angina, asthma, cancer, kidney disease, diabetes, pregnancy, and stroke to name a few. The APM will be coordinated to essentially focus on a diagnosis. Considering the increased utilization and high costs for diagnosing and treating patients with vertigo, perhaps an APM will be created with audiologists as a recognized provider member!

MACRA currently appears to be physician centric, but even some physician specialties feel that APMs are exclusive as designed. It will take time for the specifics to be fully understood and inclusion deemed to be fair to all. In the meantime, reimbursement is in a state of flux and for audiologists specifically, reimbursement, as defined by the MPFS, is not positioned to increase in the near future. It is important for audiologists to monitor the MPFS regardless of whether or not they are evaluating and treating Medicare patients. The MPFS is the template for all third-party payers because the MPFS is used to set reimbursement for the current procedural terminology (CPT) codes performed within the audiologist's scope of practice. Audiology is a dynamic profession with patients increasingly seeking the services of the audiologist for hearing and vestibular health care. Despite this increased utilization, the audiologist must embrace the art of being business smart. The cost of doing business continues to increase while reimbursement levels remain stagnant at best. Audiologists, regardless of their type of employment or position within a facility, must understand the complexities of keeping a practice financially viable. The changing reimbursement landscape conjures up many ponderables. We think of key performance indicators for tracking hearing aid performance especially for marketing purposes, but there should also be key performance business indicators that are measured. Examples include:

• What is the cost of free? Simply, total the cost of everything that is given away such as batteries, professional services, hearing aid evaluations, and so on. Be prepared for the result of tracking this indicator, it will be an impressive number. Patients do not necessarily stay loyal because of what is given to them for free. Beyond all else, they cherish friendly and exemplary patient care.

• What is the cost of discounting professional services and/or hearing aids and supplies? This too, will be an impressive number. Successful practices have a fee schedule that is followed without exception. Discounting of hearing aids by $200 an aid becomes $400 for binaural amplification. Five patients a week totals $2,000, or $8,000 in a month. Does the discount maintain patient loyalty? A facility must establish if this is an affordable policy. What is the motivation for discounting? Is it a reaction to being uncomfortable with the price of hearing aids? Simply, will a change in policy that requires adherence to a fee structure compromise patient loyalty?

• Can a practice perform any test within the audiologist's scope of practice without financially measuring what it costs to perform that service? It is good business practice to analyze the diagnostic structure by measuring the business costs associated with performing all tests and services by a facility. If the cost of performing a test or test battery exceeds the financial yield for performing the test(s), consideration for changing the diagnostic mix is warranted. For example, if an auditory brainstem response test (ABR) reimburses $95, and it costs the practice $150 an hour to perform the ABR, it may not be a viably affordable test. In contrast, a hearing test may not pay for itself as a stand-alone service, but it is foundational for determining patient care/needs and is the conduit for other profitable services. The correct answer, therefore, is not just in the numbers. It entails understanding the diagnostic value as well, which is another aspect of assessing value.

• What is the requisite hourly billable rate for an audiologist? If, for example, the audiologist's salary including benefits supports billing $140 an hour as a break-even figure, then the audiologist must understand the financial impact of meeting, and hopefully exceeding, this figure. As ethical practitioners, we only perform tests that are indicated, and dispense supplies judiciously, but practitioners must bill and collect more than their salary for the facility to remain solvent.

• What is the collection policy? Patient services and products should be billed to insurance on a timely basis, with best practices being within 24 hours. Once there is an insurance determination, the patient must be billed for any collectable amounts that are in compliance with the insurance contract. For example, if a patient has insurance, but has not met the deductible, the patient should be billed for this service immediately. It is meaningful billing policy to send two or three statements with your company financial policy (that should have been signed by the patient before services or products were rendered) reminding the patient of the consequences for not paying a bill. After a given amount of time, often 90 days, if a patient ignores the billing statement, collection proceedings should be initiated. What is the amount of outstanding services? Can this number be reduced by asking for payment at the time of service without exception?

This reinforces the old adage: “if you don't measure it, you can't fix it.” Every facility—private practice, university clinic, hospital, Easter Seals, pediatric/educational audiology centers, and so on—should function at a profit. These key performance indicators, when measured, will often provide a facility with the needed cash flow to run a successful business. Without running at a profit, businesses cannot remain state-of-the-art. They cannot afford quality professionals, continuing education becomes burdensome, if not impossible, and the professional environment becomes stale. Tracking key business indicators is grassroots for providing the infrastructure for being best in class. Successful practices benefit from everyone understanding the health of the practice. That does not mean that management/owners have to share specific dollar numbers about profit and loss. Employees benefit from knowing what is financially punitive to the practice, as well as what is a financially effective service/product. The high profit margin items underwrite the financial success of the practice (it is because of them that services that do not provide profit might be able to be sustained). Strong leaders purge the behaviors, and sometimes the services, that drain a practice. They are replaced by successful options that keep the practice energized and the staff challenged.

Current Procedural Terminology Codes and Giving Them Value

It is often asked, “Who gives value to the codes health care professionals perform? How does a CPT procedure listed within the MPFS become a code and given monetary value?” These are excellent questions, and the answers should help empower professionals to have a realistic understanding of the reimbursement process. The answers, however, are a bit complicated, but intriguing. Essentially, the values published in the MPFS are the result of the American Medical Association (AMA) creating an advisory panel of experts representing key professions to provide guidance to CMS as to the worth of what we perform. This process is specifically for diagnostic and treatment services (CPT). Hearing aids and related products are not part of this process.

In general, all CPT codes are part of the resource-based relative value scale system, which established the algorithm for determining the relative value unit (RVU).⁵ Simply, every CPT code has an RVU that represents the cognition, practice expense, and malpractice expense necessary for performing the CPT code. There is also a geographical component that recognizes that the cost of doing business is different throughout the country. It essentially allows for a higher RVU in parts of the country where it is more expensive to practice, and a lower RVU applies when procedures are performed in rural areas, for example. The AMA has created two separate and distinct advisory panels for CMS. One is CPT Editorial Panel and the other is known as the Relative Value Update Scale Committee more commonly referred to as the RUC.

Current Procedural Terminology Editorial Panel

This 17-member panel is responsible for maintaining, revising, and updating CPT codes. Eleven members are physicians nominated from specialty societies; there is a physician each from Blue Cross and Blue Shield; an American Hospital Association representative; a performance measure representative appointed by the AMA; and two members of the CPT Health Care Professional Advisory Committee (HCPAC), the advisory board for allied health professionals. Audiology, for example, is part of the CPT HCPAC.⁵ The CPT Editorial Panel updates a CPT as technology and or protocols change. Every CPT has a descriptor and that is what is listed in the CPT manual describing what has to be performed to meet the requirements for billing the code. The CPT Editorial Panel also reviews new codes and ensures that the new procedure has been peer reviewed for safety and efficacy. Food and Drug Administration approval is confirmed when applicable. A new code can only be proposed, and ultimately approved, if the CPT Editorial Panel agrees that current codes do not apply or adequately support the newly proposed procedure. A proposed code is first reviewed by AMA staff to make sure a new code is indicated. If they find a code is warranted, it is sent to the CPT Editorial Panel for this group of experts to ultimately approve or reject.

Relative Value Update Scale Committee

There are 31 members, 21 of whom are appointed by medical specialty societies. The AMA board of trustees picks a chair. The RUC recommends a relative value for any new or revised CPT code. RUC recommendations to CMS are based on presentations by specialty societies who engage the opinions of subject experts. Additionally, a code needing valuation is surveyed by specialty societies who perform the procedure. Audiology is represented at the RUC HCPAC, which focuses on allied health procedures. If, however, a physician specialty has a level of interest in a code and alerts the AMA, the code is presented at the RUC and not the RUC HCPAC. The surveys are invaluable in securing a reasonable and appropriate valuation (RVU) for a code. Surveys are sent to practitioners performing a code and it is the audiologist's professional responsibility to respond to the survey. The RUC reviews the results of the survey and listens to the specialty expert(s). The RUC panel may either accept or modify the recommendation of the specialty representative(s). Ultimately, a recommendation is submitted to CMS. CMS reviews the recommendation with Medicare medical directors. It should be noted that because the RUC only serves as an advisory panel, CMS is under no obligation to accept the RUC recommendation. CMS entertains the information gleaned at the RUC, but CMS eventually applies whatever value it feels is appropriate for a code. CMS prints the proposed values for CPT codes in the MPFS proposed rule. This rule is published in the federal register each July, and the rule is open to public comment. CMS reviews the public comments and then publishes the final list of values in the MPFS final rule. The MPFS is published annually and is effective for the entire calendar year.

Summary

Maximizing reimbursement is a complex process, and in its own way, can be a full-time job. Legislative mandates are time sensitive and have very specific rules of engagement. Practice management is the business term that encompasses reimbursement and every other leg of running a successful business. Practice management is an art and excelling at it is core for allowing a facility to prosper and grow. Every practice needs an owner, director, head of the department, and so on to take ownership of managing the fiscal health of the practice, but this is made easier when all service providers and ancillary staff are engaged in the process. The financial health of a facility should be transparent. It empowers everyone to make sound business decisions. The services of an audiologist are required more than ever before as our patient population becomes older and their needs become more comprehensive. Hearing loss can be diagnosed essentially at birth and early intervention is requisite for minimizing its effects. Vestibular diagnostics and intervention play a growing role in our senior population. So, regardless of patient age, the role of the audiologist continues to increase. A facility must prepare itself to meet this increase in utilization of audiologic services, but with it comes the responsibility for respecting the business side of audiology. Reimbursement and stellar practice management are no longer terms solely specific to private practice. They transcend all types of practice settings. It is not as hard as it seems. Knowledge is power and resources are plentiful. The business aspect of audiology can be very rewarding; excelling at it is no longer multiple choice. Enjoy the experience!