Written by Christa Shephard and Maureen Regan, President Elect, NYSSPA

Physician assistants (PAs), soon to known as physician associates and advanced practice registered nurses (APRNs), like nurse practitioners (NPs), midwives, CRNAs, and clinical nurse specialists, have been around for decades. The first class of PAs graduated from Duke University in 1967, and in 1965, the first training program for NPs began at the University of Colorado. Since then, for many reasons, both professions have become integral to the quality delivery of healthcare. Although they have different education, training, and scope (PAs trained in medicine and APRNs in an advanced theory of nursing practice model) integrating these professionals into a practice can elevate the patient experience, as their access to the healthcare services they need will increase, and there could be an increase to the bottom-line financials of a practice as a result. Physicians experience greater job satisfaction, as PA and APRN integration helps to alleviate overburdened work schedules, including on-call obligations. Through these benefits, interprofessional integration leads to better patient retention, patient referrals, physician satisfaction, and stronger financial health for practices and health systems.

The Centers for Medicare & Medicaid Services (CMS) certainly plays a role in the practice and reimbursement environment of PAs and APRNs; however, most of the legislative and regulatory environment for practice is determined at the state level. Due to the evolution of each profession and the historical and ongoing shortage of physicians, it’s important for health systems and practices to stay abreast of primary source legislative and regulatory guidance changes regarding scope, documentation, and billing compliance. These factors are also important to ensure an employer is capturing maximum reimbursement for clinical work done by both professions while minimizing their risk of an audit and resulting penalties. Systems and practices must uphold an ongoing, longitudinal review of Medical Staff Bylaws, delineation of privileges, policies, and processes.

Mastering Billing and Coding

CMS recognizes qualified billing providers to render services independently and establishes billing and coding rules for PAs and APRNs to ensure accurate reimbursement and quality care delivery within the Medicare program. These rules outline the scope of practice and reimbursement guidelines for nurse practitioners, physician assistants, certified nurse-midwives, clinical nurse specialists, and certified registered nurse anesthetists who must adhere to specific documentation requirements, including maintaining accurate patient records and submitting claims using appropriate evaluation and management (E/M) codes, like physicians. Additionally, CMS provides guidance on incident-to billing, which allows certain services provided by PAs and APRNs to be billed under a supervising physician’s National Provider Identifier (NPI). Understanding and following CMS billing and coding rules are essential to navigate the complexities of reimbursement and ensure compliance with Medicare regulations.

Because CMS recognizes PAs and APRNs as qualified billing providers but not as physicians, they fall into a separate reimbursement category. When billing under their own NPI, the reimbursement level is less than what it would be if the physician were to bill for the same services. This reimbursement differential does not adversely impact a practice’s bottom line, as remuneration for a PA or APRN is less than a physician and malpractice cost is less.

Physicians may bill for a service that was rendered by a PA or APRN with incident-to services and with split/shared E/M services. VMG Health Managing Director and coding and compliance expert Pam D’Apuzzo says, “There’s two rules, which is where everybody gets themselves into trouble… Those two rules have specific guidelines, both from a documentation and a billing standpoint. The patient type, the service type—everything needs to be adhered to.”  

To bill for incident-to and split/shared E/M services, practices must meet specific criteria outlined by Medicare. For incident-to services, the criteria include:

• The service must be an integral part of the physician’s professional service.
• The service must be performed under the physician’s direct (licensure) supervision.
• The physician must be physically present in the office suite and immediately available to provide assistance if needed.
• The services must be provided by qualified personnel, such as nurse practitioners or PAs, who are employees of the physician or the practice.

For split/shared E/M services, the criteria include:

• The service must be provided by a physician and a qualified PA or APRN during the same visit.
• The service must meet the requirements for both the physician and the PA/APRN to bill their respective service components.
• The documentation must clearly indicate the contributions of both the physician and the PA/APRN to the service provided.

These criteria ensure that incident-to and split/shared services are billed appropriately and in compliance with Medicare guidelines. Medicare also dictates that the “substantive portion” of a split or shared visit is more than half of the time a physician or non-physician practitioner spends performing the visit or a “substantive part” of the medical decision making. Practices must continually educate and train all medical staff so that they can successfully adhere to these criteria to avoid billing errors and potential audits. Additionally, practices must continuously monitor to ensure all documentation, billing, and coding processes are followed correctly.

Risk Reduction

There are tools and services that allow for easier monitoring. “We utilize a tool called Compliance Risk Analyzer, which provides us with statistical insight on coding practices,” D’Apuzzo says. “So, we can data mine ourselves and see what’s happening just based on our views. And this is what the payers, specifically, and the government does as well: They can see the [relative value units] RVUs are for a physician or off the chart, or that a physician has submitted claims for two distinct services at two different locations on the same day.”

This is more common than you might think.

“What’s normally happening in those interactions is that [a physician with two locations] realizes he can’t keep up with all of that patient flow in two places, so they hire a PA and put them at location number two,” D’Apuzzo says. “But now all that billing goes under the physician, so it flags for Medicare.”

With VMG Health’s Compliance Risk Analyzer (CRA), practices can see the same data mining and areas of risk, as the program would flag the RVUs as a potential audit risk. This gives practices the opportunity to self-audit and refine their processes to ensure they are billing and coding appropriately.

VMG Health offers multiple comprehensive services that help health systems and practices implement and follow new procedures and new provider utilization without issue, from honoring existing care models to ensuring provider compensation is fair, compliant, and reasonable.

Cordell Mack, VMG Health Managing Director, says, “We’ve spent a lot of time trying to make sure we get that right, both in terms of the underlying, practice-level agreements as well as the ways in which the compensation model works for both the physicians and the PAs and APRNs.”

Practice Earnings and Patient Enjoyment

In many practices, physicians struggle to handle their case load, which means their busy schedules can prevent them from seeing existing patients and from taking on new patients. Bringing PAs and APRNs into the fold allows physicians to create capacity in their schedules so that they can see new patients.

BSM Consulting (a division of VMG Health) Senior Consultant and subject matter expert Elizabeth Monroe provides an excellent example: “Let’s say we have an orthopedic surgeon who really wants to spend most of their time in surgery. We would want to have that physician in surgery because that’s what their skill set, and licensure permits. With a nurse practitioner or physician assistant providing follow-up, post-operative care, that oftentimes is a much better model. It allows the physician to do the surgical cases only they can do, but it also eases patient access to care.”

This realignment of a physician’s schedule creates an opportunity to provide more patient services, which easily translates to improved patient satisfaction when, without this, they would likely be unable to see their provider when they felt they needed to be seen. While PA and APRN–rendered Medicare services are reimbursed at 85% instead of 100%, our experts say that the 15% differential shouldn’t dissuade practices and health systems from leveraging the integration.

“It’s a very short-sighted approach to just think about, ‘But we could be making 100% instead of 85% if we bill under the doctor,’ because ultimately, we are never able to do that 100% of the time, and it’s a higher risk than it is reward,” says D’Apuzzo.

Additionally, physicians with packed schedules and no other scheduling options may inadvertently rush through appointments to see each patient scheduled for that day. Patients who feel rushed may leave an appointment feeling unheard and like their problem is unresolved.  Additionally, when a patient calls and asks for services but can’t be seen for multiple weeks or months, they may never make an appointment and instead turn to another provider for help.

All of this culminates in poor patient retention, which equals a loss of revenue for the practice. Dissatisfied patients will seek treatment elsewhere. However, when practices and health systems embrace an interprofessional team, patients are more likely to be able to schedule appointments when they feel they need to be seen, feel heard in an appointment and even spend less time in the office overall as they are not impacted by OR cases running late, and so on.

“Practices are better able to meet patient demand, and they’re able to really allow physician assistants, nurses… to add a tremendous value for the patients, offering them outstanding care,” Monroe says.

Strategic Rollout

With both patient demand and physician scarcity placing the U.S. health system in crisis, many practices and health systems know they need to integrate PAs and APRNs into their workflows, but they don’t know how. VMG Health offers strategic advisory services that can guide this implementation to ensure practices are educated, compliant, and working within the care model they prefer.

“Our team would want to spend time really trying to identify the underlying care model that practices are trying to, you know, work inside of,” says Mack.

One approach is to assess patient needs and practice capabilities to determine the most effective roles for PAs and APRNS, such as providing primary care, specialty care, or supporting services like telemedicine. Implementing policies and workflows can ensure efficient PA and APRN utilization while maintaining quality and safety standards.

Finally, ongoing training, quality monitoring are essential to ensure their interprofessional integration into the practice or health system effectively meets patient needs, and care provided by PAs and NPs should be included into physician quality and compliance review processes.

“It starts with getting your appropriate documentation in place… [with] supervisory responsibilities and collaborating physician agreements,” says Mack. “It migrates to, ‘What’s the operational agreement among the team?’ and how cases are presented, or how the physician is consulted. So, it’s getting an underlying clinical service agreement among those professionals.”

Optimal PA and APRN utilization shows up in the numbers. When practices increase patient access to care without overburdening physicians, they can accommodate more patients, leading to increased revenue generation. Moreover, because PAs and APRNs often bill at a lower rate than physicians, integrating them efficiently can improve cost-effectiveness, thereby enhancing the overall financial performance of the practice.

“It should realize an ROI, and that ROI should be something more in terms of duties and tasks that other teammates can’t do,” says Mack. “Meaning, it would be unfortunate if a qualified healthcare professional is working at such a capacity whereby duties some of the day-to-day responsibilities should probably be done by teammates working at a higher level of their own individual license.”

Physician Engagement

Changing existing workflows can be difficult, but the rewards heavily outweigh the risks. Physicians must support interprofessional integration to successfully navigate the transition. Physicians are typically the leaders and decision-makers within medical practices, and their support is essential for implementing any significant changes in workflow or care delivery models, which includes having front office staff, medical assistants, nursing and administrative staff rely and respect the roles of PAs and APRNs. Without physician buy-in, resistance to change may arise, hindering smooth integration and retention.

Physicians play a vital role in collaborating and ensuring a seamless care model is implemented and sustained. By endorsing and supporting the integration of PAs and APRNS, physicians can foster a culture of teamwork and mutual respect within the practice. This collaborative approach promotes a cohesive care team to provide high-quality patient care.

It’s important for physicians to trust and communicate that PAs and NPs are qualified and capable of providing excellent patient care. Allowing them to care for an established patient does not sever the relationship between the physician and the patient; it can actually enhance the patient’s experience and trust in the practice.

“We want patients who have had a long-standing relationship with an MD to be able to see that doctor, and then we want to help the doctor know and understand how to appropriately transfer care over to an APRN within their system or within their practice,” says Monroe. “So, that provider can be still linked to the doctor, and the doctor can still be linked to the patient.”

Furthermore, physician buy-in is essential for maintaining continuity of care and ensuring patients feel confident in receiving treatment from both physicians and PAs and NPs. When physicians actively endorse interprofessional integration and communicate the benefits of team-based care to their patients, it builds trust and acceptance of the practice model. It also fosters billing transparency if a patient gets an EOB with the name of someone other than the physician as the rendering provider.

Physician engagement is critical for the long-term success and sustainability of integration initiatives. When physicians recognize the value that PAs and APRNs bring to the practice, including increased efficiency, expanded access to care, and improved patient outcomes, they are more likely to champion these initiatives and advocate for their continued support and development.

The Path Forward for PAs and APRNs

The integration of PAs and APRNs into medical practices and health systems presents a strategic opportunity to optimize patient care delivery and operational efficiency. By expanding access to healthcare services and alleviating the workload of overburdened physicians, integration improves patient and employee satisfaction, and enhances patient retention. However, successful integration requires careful attention to regulatory compliance, billing, and coding practices. VMG Health offers comprehensive billing, coding, and strategy advisory services to support practices in navigating the complexities of integration, ensuring compliance with Medicare regulations, and maximizing reimbursement while minimizing audit risk.

Optimal PA and APRN utilization yields tangible benefits, including increased patient access to care, improved patient satisfaction, and enhanced financial performance. By understanding their education, training, and scope, and by leveraging their unique skill sets, practices can accommodate more patients, reduce wait times, and deliver high-quality care cost effectively. Physician engagement is essential for the successful implementation of integration initiatives, as physicians play a pivotal role in endorsing and supporting interprofessional responsibilities within the care team. Through collaborative leadership and effective communication, physicians can foster a culture of teamwork and mutual respect, driving the long-term success and sustainability of integration efforts.

In summary, strategic integration presents a transformative opportunity for medical practices and health systems to meet evolving patient needs, enhance operational efficiency, and achieve sustainable growth. By partnering with VMG Health for expert guidance and support, practices can navigate the complexities of interprofessional integration with confidence, realizing the full potential of this innovative care delivery model.

Maureen C. Regan, MBA, PA-C, FACHE, DFAAPA, is the President-Elect and Past President of the New York State Society of Physician Assistants (NYSSPA) and a Delegate for the American Academy of Physician Associates (AAPA). She is recognized as a Fellow of the American College of Healthcare Executives (FACHE) and a Distinguished Fellow of the American Academy of Physician Associates (DFAAPA). The views expressed in this article are her opinion and do not represent the opinions of any organization or association she is affiliated with.

Sources

American Academy of Physician Associates. (n.d.). History of AAPA. Retrieved from https://www.aapa.org/about/history/

American Medical Association. (2022). AMA president sounds alarm on national physician shortage. Retrieved from https://www.ama-assn.org/press-center/press-releases/ama-president-sounds-alarm-national-physician-shortage

Centers for Medicare & Medicaid Services. (2023). Advanced practice nonphysician practitioners. Medicare Physician Fee Schedule. https://www.cms.gov/medicare/payment/fee-schedules/physician-fee-schedule/advanced-practice-nonphysician-practitioners

Centers for Medicare & Medicaid Services. (2023). Advanced Practice Registered Nurses (APRNs) and Physician Assistants (PAs) in the Medicare Program. Retrieved from https://www.cms.gov/medicare/payment/fee-schedules/physician-fee-schedule/advanced-practice-nonphysician-practitioners

Centers for Medicare & Medicaid Services. (2023). Incident-to billing. Medicare. https://www.cms.gov/medicare/payment/fee-schedules/physician-fee-schedule/advanced-practice-nonphysician-practitioners

Centers for Medicare & Medicaid Services. (2023). Medicare Physician Fee Schedule final rule summary for calendar year 2024. https://www.cms.gov/files/document/mm13452-medicare-physician-fee-schedule-final-rule-summary-cy-2024.pdf

Mujica-Mota, M. A., Nguyen, L. H., & Stanley, K. (2017). The use of advance care planning in terminal cancer: A systematic review. Palliative & Supportive Care, 15(4), 495-513. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5594520/

Written by Christa Shephard

As new tools come to the forefront of healthcare delivery, staying compliant with updated billing and coding policies is crucial. VMG Health’s Compliance Risk Analyzer (CRA) is designed to help health systems and practices navigate the shifting healthcare landscape with ease, ensuring they remain compliant and avoid small mistakes that can lead to big consequences, like audits. Additionally, the financial returns from the undercoding of E&M codes and the potential FTE savings through improved efficiency, resource reduction, and cost-effectiveness underscore the value of implementing CRA. 

The Analytical Edge in Healthcare Compliance 

Analytics are increasingly driving healthcare and its delivery. Government agencies and private payors use advanced statistical models to identify improper claims and target providers for audits. To balance the scales, healthcare managers need a fundamental understanding of these statistical practices. A manager does not need to be an expert statistician, but a foundational understanding of statistics is critical to properly coding, billing, and understanding common mistakes. A fundamental understanding of trending analysis, time series, confidence intervals, and other factors empowers providers and managers to maximize the benefits of CRA’s data analytics. 

Health systems and practices should closely monitor their billing and coding processes. It is crucial to efficiently perform internal, risk-based audits that produce accurate results that mimic how the government audits. Catching and addressing mistakes early is key. 

How CRA Levels the Playing Field 

CRA employs artificial intelligence to simplify the compliance process. Instead of requiring managers to become statisticians, CRA handles the heavy lifting. Through its sophisticated algorithms, CRA automates the complicated task of data analysis, allowing healthcare providers to conduct risk-based audits as efficiently and accurately as possible. It also employs predictive analytics to identify which claims or services will be most likely to be audited, allowing providers to take proactive, preventive measures, saving time and money.

Typically, organizations use about 1.3 full-time employees (FTEs) per 1,000 providers just to start identifying audit targets. CRA completely eliminates this step, saving much of the upfront work and boosting the accuracy of risk prediction by reviewing 100% of claims. Creating and implementing an audit plan usually takes 0.8 FTEs per 1,000 providers; CRA handles it in seconds with just one click. Finally, practices usually spend about 20% of their resources just digging through claims within the EHR to choose which claims to audit. CRA automates this process, picking claims based on statistically valid, random samples or non-probability convenience samples. This data-driven, proactive technology allows healthcare organizations to address potential issues before they escalate.

Empowering Healthcare Providers 

Ultimately, CRA is about empowerment. Understanding the basics of statistics and data analytics is vital to fully capitalizing on its services. CRA is designed to help healthcare providers protect themselves from unwarranted audits and compliance issues. By integrating advanced analytics into everyday operations, health systems practices can enhance their compliance strategies and focus on delivering exceptional patient care. 

Stay tuned for more insights on how CRA and other VMG Health solutions are transforming healthcare compliance. 

Written by Christa Shephard, Maureen Regan

Physician assistants (PAs) and advanced practice registered nurses (APRNs), like nurse practitioners (NPs), midwives, CRNAs, and clinical nurse specialists, have been around for decades. The first class of PAs graduated from Duke University in1967, and in 1965, the first training program for NPs began at the University of Colorado. Since then, for many reasons, both professions have become integral to the quality delivery of healthcare. Through advanced practice nonphysician provider (APP) integration, patients experience increased access to the healthcare services they need, and they are more satisfied with the care they receive. Physicians experience greater job satisfaction, as APP integration helps to alleviate the burden on overburdened work schedules. Through these benefits, APP integration leads to better patient retention, physician satisfaction, and stronger financial health for practices and health systems overall.  

The Centers for Medicare & Medicaid Services (CMS) certainly plays a role in the practice and reimbursement environment of PAs and APRNs; however, most of the legislative and regulatory environment for practice is determined at the state level. Due to the evolution of each profession and the historical and ongoing shortage of physicians, it’s important for health systems and practices to stay abreast of primary source legislative and regulatory guidance changes regarding scope, documentation, and billing compliance. These factors are also important to ensure an employer is capturing maximum reimbursement for clinical work done by both professions while minimizing their risk of an audit and resulting penalties. Systems and practices must uphold an ongoing, longitudinal review of Medical Staff Bylaws, delineation of privileges, policies, and processes.  

Mastering Billing and Coding 

CMS recognizes qualified billing providers to render services independently and establishes billing and coding rules for APPs to ensure accurate reimbursement and quality care delivery within the Medicare program. These rules outline the scope of practice and reimbursement guidelines for nurse practitioners, physician assistants, certified nurse-midwives, clinical nurse specialists, and certified registered nurse anesthetists. APPs must adhere to specific documentation requirements, including maintaining accurate patient records and submitting claims using appropriate evaluation and management (E/M) codes. Additionally, CMS provides guidance on incident-to billing, which allows certain services provided by APPs to be billed under a supervising physician’s National Provider Identifier (NPI). Understanding and following CMS billing and coding rules are essential for APPs to navigate the complexities of reimbursement and ensure compliance with Medicare regulations. 

Because CMS recognizes APPs as qualified billing providers but not as physicians, APPs fall into a separate reimbursement category. When APPs are billing under their own NPI numbers, the reimbursement level is less than what it would be if the physician were to bill for the same services. Physicians may bill for a service that was rendered by an APP with incident-to services and with split/shared E/M services. 

VMG Health Managing Director and coding and compliance expert Pam D’Apuzzo says, “There are two rules, which are where everybody gets themselves into trouble… Those two rules have specific guidelines, both from a documentation and a billing standpoint. The patient type, the service type—everything needs to be adhered to.”   

To bill for incident-to and split/shared E/M services, practices must meet specific criteria outlined by Medicare. For incident-to services, the criteria include: 

• The service must be an integral part of the physician’s professional service. 

• The service must be performed under the physician’s direct supervision. 

• The physician must be physically present in the office suite and immediately available to provide assistance if needed. 

• The services must be provided by qualified personnel, such as nurse practitioners or physician assistants, who are employees of the physician or the practice. 

For split/shared E/M services, the criteria include: 

• The service must be provided by a physician and a qualified nonphysician practitioner (NPP) during the same visit. 

• The service must meet the requirements for both the physician and the NPP to bill their respective service components. 

• The documentation must clearly indicate the contributions of both the physician and the NPP to the service provided. 

These criteria ensure that incident-to and split/shared services are billed appropriately and in compliance with Medicare guidelines. Practices must continually educate and train so that they can successfully adhere to these criteria to avoid billing errors and potential audits. Additionally, practices must continuously monitor to ensure all documentation, billing, and coding processes are followed correctly.  

Risk Reduction

There are tools and services that allow for easier monitoring. “We utilize a tool called Compliance Risk Analyzer, which provides us with statistical insight on coding practices,” D’Apuzzo says. “So, we can data mine ourselves and see what’s happening just based on our views. And this is what the payors, specifically, and the government does as well: They can see the [relative value unites] RVUs are for a physician or off the chart, or that a physician has submitted claims for two distinct services at two different locations on the same day.”  

This is more common than you might think.  

“What’s normally happening in those interactions is that [a doctor with two locations] realizes he can’t keep up with all of that patient flow in two places, so they hire a PA and put them at location number two,” D’Apuzzo says. “But now all that billing goes under the doctor, so it flags for Medicare.”  

With VMG Health’s Compliance Risk Analyzer (CRA), practices can see the same data mining and areas of risk, as the program would flag the RVUs as a potential audit risk. This gives practices the opportunity to self-audit and refine their processes to ensure they are billing and coding appropriately. 

VMG Health offers multiple comprehensive services that help health systems and practices implement and follow new procedures like APP utilization without issue, from honoring existing care models to ensuring provider compensation is fair, compliant, and reasonable. 

Cordell Mack, VMG Health Managing Director, says, “We’ve spent a lot of time trying to make sure we get that right, both in terms of the underlying, practice-level agreements as well as the ways in which the compensation model works for both the physician and the APP.” 

Practice Earnings and Patient Enjoyment 

In many practices, physicians struggle to handle their case load, which means their busy schedules can prevent them from seeing existing patients when they need services and from taking on new patients. Bringing APPs into the fold allows physicians to offload some of their patient care so that they can see new patients while APPs see more established patients.  

BSM Consulting (a division of VMG Health) Senior Consultant and subject matter expert Elizabeth Monroe provides an excellent example: “Let’s say we have an orthopedic surgeon who really wants to spend most of their time in surgery. We would want to have that physician in surgery because that’s what their skill set and licensure permits. With a nurse practitioner or physician assistant providing follow-up, post-operative care, that oftentimes is a much better model. It allows the MD to do the surgical cases only they can do, but it also eases patient access to care.” 

This expansion of a physician’s schedule creates an opportunity to provide more patient services, which easily translates to improved patient satisfaction when, without this expansion, they would likely be unable to see their provider when they felt they needed to be seen. While APP-rendered services are reimbursed at 85% instead of 100%, our experts say that missing 15% shouldn’t dissuade practices and health systems from leveraging the APP integration.  

“It’s a very short-sighted approach to just think about, ‘But we could be making 100% instead of 85% if we bill under the doctor,’ because ultimately, we are never able to do that 100% of the time, and it’s a higher risk than it is reward,” says D’Apuzzo. 

Additionally, physicians with packed schedules and no APP support may inadvertently rush through appointments to see each patient scheduled for that day. Patients who feel rushed may leave an appointment feeling unheard and like their problem is unresolved. Alternatively, when a patient calls and asks for services but can’t be seen for multiple weeks or months, they may never make an appointment and instead turn to another provider for help.  

All of this culminates in poor patient retention, which equals a loss of revenue for the practice. Dissatisfied patients will seek better treatment and better outcomes elsewhere. However, when practices and health systems embrace APP support, patients are more likely to be able to schedule appointments when they feel they need to be seen, feel heard in an appointment with an APP who has the time to sit and listen, and even spend less time in the doctor’s office overall, as patient wait times significantly decrease with APP appointments. 

“Practices are better able to meet patient demand, and they’re able to really allow physician assistants, nurses… to add a tremendous value for the patients, offering them outstanding care,” Monroe says.  

Strategic Rollout 

With both patient demand and physician scarcity placing the U.S. health system in crisis, many practices and health systems know they need to integrate APPs into their workflows, but they don’t know how. VMG Health offers strategic advisory services that can guide this implementation to ensure practices are educated, compliant, and working within the care model they prefer. 

“Our team would want to spend time really trying to identify the underlying care model that practices are trying to, you know, work inside of,” says Mack. 

One approach is to assess patient needs and practice capabilities to determine the most effective roles for APPs, such as providing primary care, specialty care, or supporting services like telemedicine. Implementing standardized protocols and workflows can ensure efficient APP utilization while maintaining quality and safety standards.  

Finally, ongoing training, supervision, and quality monitoring are essential to support APPs and ensure their integration into the practice or health system effectively meets patient needs. 

“It starts with getting your appropriate documentation in place… [with] supervisory responsibilities and collaborating physician agreements,” says Mack. “It migrates to, ‘What’s the operational agreement among the APP and the doctor?’ and how cases are presented, or how the physician is consulted. So, it’s getting an underlying clinical service agreement among those professionals.” 

Optimal APP utilization shows up in the numbers. When practices increase patient access to care without overburdening physicians through APP utilization, they can accommodate more patients, leading to increased revenue generation. Moreover, because APPs often bill at a lower rate than physicians, utilizing them efficiently can improve cost-effectiveness, thereby enhancing the overall financial performance of the practice.  

“It should realize an ROI, and that ROI should be something more in terms of duties and tasks that other teammates can’t do,” says Mack. “Meaning, it would be unfortunate if an advanced practice professional is working at such a capacity whereby duties some of the day-to-day responsibilities should probably be done by teammates working at a higher level of their own individual license.” 

Physician Engagement 

Changing existing workflows can be difficult, but the rewards heavily outweigh the risks. Physicians must support APP integration to successfully navigate the transition. Physicians are typically the leaders and decision-makers within medical practices, and their support is essential for implementing any significant changes in workflow or care delivery models. Without physician buy-in, resistance to change may arise, hindering the smooth integration of APPs into the practice. 

Physicians play a vital role in collaborating with APPs and delegating tasks effectively. By endorsing and supporting the integration of APPs, physicians can foster a culture of teamwork and mutual respect within the practice. This collaborative approach promotes a cohesive care team where APPs work alongside physicians to provide high-quality patient care. 

It’s important for physicians to trust that their APPs are qualified and capable of providing excellent patient care. Allowing an APP to care for an established patient does not sever the relationship between the physician and the patient; it can actually enhance the patient’s experience and trust in the practice.  

“We want patients who have had a long-standing relationship with an MD to be able to see that doctor, and then we want to help the doctor know and understand how to appropriately transfer care over to an APP within their system or within their practice,” says Monroe. “So, that provider can be still linked to the doctor, and the doctor can still be linked to the patient.” 

Furthermore, physician buy-in is essential for maintaining continuity of care and ensuring patients feel confident in receiving treatment from both physicians and APPs. When physicians actively endorse the role of APPs and communicate the benefits of team-based care to their patients, it builds trust and acceptance of APP-provided services. 

Physician engagement is critical for the long-term success and sustainability of APP integration initiatives. When physicians recognize the value that APPs bring to the practice, including increased efficiency, expanded access to care, and improved patient outcomes, they are more likely to champion these initiatives and advocate for their continued support and development. 

The Path Forward

The integration of APPs into physician practices and health systems presents a strategic opportunity to optimize patient care delivery and operational efficiency. By expanding access to healthcare services and alleviating the workload of overburdened physicians, APP integration improves patient and employee satisfaction, and enhances patient retention. However, successful integration requires careful attention to regulatory compliance, billing, and coding practices. VMG Health offers comprehensive billing, coding, and strategy advisory services to support practices in navigating the complexities of APP integration, ensuring compliance with Medicare regulations, and maximizing reimbursement while minimizing audit risk. 

Optimal APP utilization yields tangible benefits, including increased patient access to care, improved patient satisfaction, and enhanced financial performance. By leveraging APPs’ unique skill sets, practices can accommodate more patients, reduce wait times, and deliver high-quality care cost-effectively. Physician engagement is essential for the successful implementation of APP integration initiatives, as physicians play a pivotal role in endorsing and supporting APPs within the care team. Through collaborative leadership and effective communication, physicians can foster a culture of teamwork and mutual respect, driving the long-term success and sustainability of APP integration efforts. 

In summary, strategic APP integration presents a transformative opportunity for physician practices and health systems to meet evolving patient needs, enhance operational efficiency, and achieve sustainable growth. By partnering with VMG Health for expert guidance and support, practices can navigate the complexities of APP integration with confidence, realizing the full potential of this innovative care delivery model. 

Sources

American Academy of Physician Assistants. (n.d.). History of AAPA. Retrieved from https://www.aapa.org/about/history/  

American Medical Association. (2022). AMA president sounds alarm on national physician shortage. Retrieved from https://www.ama-assn.org/press-center/press-releases/ama-president-sounds-alarm-national-physician-shortage 

Centers for Medicare & Medicaid Services. (2023). Advanced practice nonphysician practitioners. Medicare Physician Fee Schedule. https://www.cms.gov/medicare/payment/fee-schedules/physician-fee-schedule/advanced-practice-nonphysician-practitioners  

Centers for Medicare & Medicaid Services. (2023). Advanced Practice Registered Nurses (APRNs) and Physician Assistants (PAs) in the Medicare Program. Retrieved from https://www.cms.gov/medicare/payment/fee-schedules/physician-fee-schedule/advanced-practice-nonphysician-practitioners 

Centers for Medicare & Medicaid Services. (2023). Incident-to billing. Medicare. https://www.cms.gov/medicare/payment/fee-schedules/physician-fee-schedule/advanced-practice-nonphysician-practitioners  

Mujica-Mota, M. A., Nguyen, L. H., & Stanley, K. (2017). The use of advance care planning in terminal cancer: A systematic review. Palliative & Supportive Care, 15(4), 495-513. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5594520/ 

At VMG Health, we’re dedicated to sharing our knowledge. Our experts present at in-person conferences and virtual webinars to bring you the latest compliance, strategy, and transaction insight. Sit down with our in-house experts in this blog series, where we unpack the five key takeaways from our latest speaking engagements.

1. Can you provide a high-level overview of what you spoke about at the American Society of Ophthalmic Administrators/American Society of Cataract and Refractive Surgery Annual Meeting? 

The course itself, Physician Compensation Trends for Employed and Owner Providers, had two main focal points. We discussed current compensation and benefits trends for employed providers in group practices, as well as tips for assessing the feasibility of adding new providers in today’s challenging recruitment environment. We also discussed common income and expense sharing models for owner providers in group practices. 

2. What do you think the audience was the most surprised to learn from your presentation?

The biggest surprise for attendees was just how competitive the current recruitment environment is for practices looking to hire new providers. There truly is a supply and demand imbalance, meaning that there are more practices looking to hire providers than there are available ophthalmologists looking for positions. The combination of this challenge with influences from private equity–backed companies has resulted in higher, guaranteed starting salaries for providers on the job market.

All of this is happening while practices are facing declining reimbursement and ever-increasing operating expenses, making the challenging decision to hire a new provider even more complicated.

Many practices I work with feel that this is a challenge to them specifically, based on geography or practice situation. However, the reality is that ophthalmic practices across the country are all struggling to recruit.

3. How do you think your presentation helped healthcare leaders better prepare for challenges? 

One of the key topics of discussion focused on developing a thorough feasibility analysis when determining whether the timing is right to hire a new provider. Practices can exponentially increase their likelihood of making the right decision by taking a disciplined approach in assessing the revenue opportunity for the new provider, their estimated compensation, and other incremental overhead costs. The hiring decision should not be made based on a gut feeling, but instead through a review of objective data points given the potential positive (or negative) impact to the practice.

4. What resources would you suggest for those interested in learning more? 

BSM Connection for Ophthalmology has a several fantastic resources for practices in the recruitment process, including the New Provider Feasibility Analyzer and the Key Contract Considerations Guide for ophthalmologists and optometrists, which provide guidance on compensation and benefit trends. The Provider Recruitment section of the website also includes a Contract Review Worksheet and a sample Letter of Understanding, although we always recommend practices work with legal counsel to ensure appropriate documentation is completed.

For information regarding income and compensation models, our experts have written articles related to income-sharing models for group practices. VMG Health also offers a Provider Needs Assessment.

5. If someone takes only one message from your presentation, what would you want it to be?  

With all areas of practice management, leaders must make business decisions using a disciplined approach. That starts with being educated and realizing the challenges that exist right now when it comes to provider recruitment.

As it relates to owner income and expense-sharing models, the takeaway is the need for transparency. Practice administrators and executives are often the ones charged with administering the compensation model, so the key is to remain neutral and transparent throughout the entire process.

Our team serves as the single source for your valuation, strategic, and compliance needs.  If you would like to learn more about VMG Health, get in touch with our experts, subscribe to our newsletter, and follow us on LinkedIn.  

Written by Carla Zarazua, Preston Edison, and James Tekippe, CFA

Radiopharmaceutical drugs (RPs) are “radioactive substances used for diagnostic or therapeutic purposes.” To effectively diagnose and treat diseases, physicians need to have access to radiopharmaceutical agents that will assist with detecting and treating medical conditions. The current pricing methodology for RPs under the Centers for Medicare and Medicaid Services (CMS) has created a financial burden on hospitals and health systems. In addition, it has created a barrier to patient access when considering the utilization of diagnostic RPs in hospital outpatient departments. This article will outline the challenges created by the current CMS payment structure and outline steps hospitals and health systems can take to remain compliant with fair market value (FMV) and commercial reasonableness (CR) while CMS reconsiders its position. 

In the 2008 Hospital Outpatient Prospective Payment System (HOPPS) final rule, CMS opted to categorize all diagnostic RPs as supplies rather than drugs. Under this current pricing structure, the reimbursement for diagnostic RPs is bundled into the technical procedure rate, known as a “policy-packaged drug.” CMS categorizes procedures with similar costs and clinical work effort into an ambulatory payment classification (APC) group. All procedures in an APC group are reimbursed at the same rate based on the average cost of all the procedures within that APC, inclusive of the primary service, ancillary service, and drug. As such, there is a set price for procedures in an APC group regardless of the policy-packaged drug in use. Unfortunately, this pricing methodology can create a misalignment in the expense incurred to acquire an RP and the reimbursement received from CMS, especially for high-cost drugs.  

A report issued by the U.S. Government Accountability Office indicated that CMS will encourage hospitals to use the most effective resource that minimizes costs while still being able to meet the patient care needs. In addition, the structure does not incentivize medically unnecessary services and encourages hospitals to negotiate drug purchase pricing with manufacturers.

There is a temporary exception to the pricing for RPs for new and high-costs drugs, which can qualify for a pass-through period of two to three years. Under the pass-through methodology, the RP will be paid separately from the technical procedure rate at the average sales price + 6% incurred by a provider for the RP. Although this provides some relief to the misalignment of costs and reimbursement for RPs, the pass-through period is finite for an RP, and once outside of the pass-through period, an RP will be bundled or “packaged” within the APC procedure rate. Although CMS’ intent is understandable, under the current pricing model, hospitals may face a challenging financial burden, and providers may be confronted with difficult decisions that may impact patient care.  

In the post-COVID era, hospitals have increased focus on increasing margins and reducing costs, and the current payment structure for RPs is putting increased pressure on the hospitals’ and health systems’ bottom line. Various stakeholders have voiced concerns about the economic burden resulting from CMS’ payment structure for RPs. For example, the American Medical Association indicated that, for financial reasons, hospitals may need to limit or end the use of radiopharmaceuticals, especially the high-cost or newer ones, given the misalignment in reimbursement. In addition, the American Hospital Association has put out a statement that the 2024 HOPPS final rule is an “inadequate update to hospital payments.” Hospitals and health systems unfortunately face heavy financial risk if a provider chooses to select a policy-packaged, high-cost drug that is more than the APC payment rate for a procedure. For this reason, hospitals may want to limit the use of the high-cost drugs by its providers, which may cause patients to receive sub-optimal care.   

Given this dynamic, providers may choose not to utilize more expensive or advanced RPs, although it may be better off for a patient in the long term. As indicated by the Medical Imaging & Technology Alliance (MITAS), utilizing an advanced RP would be more beneficial in the patient’s overall treatment management, as these RPs have earlier, more accurate detection and can actually reduce the use of other unnecessary treatments because physicians will be in a better position to understand and treat the disease. Even more challenging, some advanced RPs truly have no alternative or substitute, so concerns about costs may result in the use of a less effective RP, which could result in misdiagnoses and ill-tailored treatment plans. Lastly, the lack of reimbursement inhibits innovation and development of new drugs because drug manufacturers would not be incentivized to continue the research and development if the drugs have a low clinical use.

As demonstrated above, there are several issues with the current pricing structure for RPs, but CMS has asked for comments on potential remedies. In the 2024 CMS proposed rule, CMS outlined the following five alternative payment models for RPs:

• Paying separately for diagnostic radiopharmaceuticals with per-day costs above the OPPS drug packaging threshold of $140 
• Establishing a specific per-day cost threshold that may be greater or less than the OPPS drug packaging threshold 
• Restructuring the ambulatory payment classification (APC), including by adding nuclear medicine APCs for services that utilize high-cost diagnostic radiopharmaceuticals 
• Creating specific payment policies for diagnostic radiopharmaceuticals used in clinical trials 
• Adopting codes that incorporate the disease state being diagnosed or a diagnostic indication of a particular class of diagnostic radiopharmaceuticals. 

While various stakeholders appreciate CMS requesting and seeking recommendations on changes to the structure, many stakeholders such as MITAS and the American College of Radiology (ACR) recommend that “CMS establish separate payment for diagnostic radiopharmaceuticals, including a per day cost threshold based on average sales price (ASP) + 6% methodology.” Stakeholders believe this method will allow for adequate reimbursement and treatment access options for patients.  

Unfortunately, CMS did not make a decision on how to move forward with the reimbursement structure for radiopharmaceuticals in the 2024 HOPPS final rule. Given the potential, pending changes in reimbursement, and the fact that CMS reimburses some RPs at a lower amount than it costs to acquire them, it is important for hospital outpatient departments to document and outline a plan with their care teams on how best to use RPs within their organization to remain compliant when it comes to FMV and CR. As such, VMG Health has outlined some important factors to consider for each compliance component in the interim.  

Fair Market Value:  

• Review any existing or new agreements with vendors and negotiate pricing when able.  
• Engage a third-party valuator to review any existing or new agreements and determine market comparable pricing of the services. 

Although, the price paid for the drug may be within market range upon determining FMV, CMS may not reimburse at this rate for certain RPs. As such, given that CMS is the most widely cited market comparable and a market maker in terms of how these drugs are reimbursed, hospitals may find that they are losing on these types of arrangements. For this reason, it is important to document the legitimate business purpose of the use of the RP: 

Commercial Reasonableness:   

• Document reasons for medical necessity of higher-priced drugs. 
• Have a documented process “decision tree” for deciding which radiopharmaceuticals to use on patients. 
• Consider the frequency and volumes of how often these drugs are used and document it. 

While CMS hasn’t reached a solution on the changes to reimbursement for RPs, it is important for hospitals and health systems to consider the financial and patient care implications of what RPs providers use. Developing compliance protocols around how best to determine the utilization of these RPs can minimize the risk placed on patients and hospitals.

Sources

GAO. (2021). Medicare Part B Payments and Use for Selected New, High-Cost Drugs. United States Government Accountability Office. https://www.gao.gov/assets/720/712727.pdf

SNMMI. (2008). Radiopharmaceutical Reimbursement Under Meidcare: Recommendations for Reform. Socity of Nuclear Medicine and Molecular Imaging. https://s3.amazonaws.com/rdcms-snmmi/files/production/public/docs/Radiopharmaceutical_Reimbursement_Policy_Ltrhd_5-22-08.pdf

Klitzke, A. (2023). Passage of the Facilitating Innovative Nuclear Diagnostics (FIND) Act. American Medical Association Organized Medical Staff Section. https://www.ama-assn.org/system/files/i23-omss-resolution-7.pdf

https://www.aha.org/news/headline/2023-11-02-opps-rule-cms-increases-payment-rates-31-modifies-price-transparency-rules

American Hospital Association. (2023). In OPPS rule, CMS increases payment rates by 3.1%, modifies price transparency rules. AHA. https://www.aha.org/news/headline/2023-11-02-opps-rule-cms-increases-payment-rates-31-modifies-price-transparency-rules

Hope, P. (2023). Comments on CMS–1786–P: CY 2023 Medicare Program: Hospital Outpatient Prospective
Payment and Ambulatory Surgical Center Payment Systems; etc. MITA. https://www.medicalimaging.org/docs/librariesprovider3/mitadocuments/2023.09.11-mita-comments-on-cy-2024-hopps-proposed-rule.pdf?sfvrsn=7c8627e_3/

Stempniak, M. (2023). CMS seeks feedback on issuing separate payment for diagnostic radiopharmaceuticals. Radiology Business. https://radiologybusiness.com/topics/healthcare-management/healthcare-policy/cms-seeks-feedback-issuing-separate-payment-diagnostic-radiopharmaceuticals

American College of Radiology. (2023). ACR Submits Radiology-Specific Comments About the 2024 HOPPS Proposed Rule. ACR. https://www.acr.org/Advocacy-and-Economics/Advocacy-News/Advocacy-News-Issues/In-the-Sept-16-2023-Issue/ACR-Submits-Radiology-Specific-Comments-About-the-2024-HOPPS-Proposed-Rule

At VMG Health, we’re dedicated to sharing our knowledge. Our experts present at in-person conferences and virtual webinars to bring you the latest compliance, strategy, and transaction insight. Sit down with our in-house experts in this blog series, where we unpack the five key takeaways from our latest speaking engagements.

1. Can you provide a high-level overview of what you spoke about at Caribbean Eye?

I was part of a panel discussion called, “Regulatory Compliance and Insurance Trends for ASCs.” Representing Progressive Surgical Solutions (PSS): A Division of VMG Health, I focused on two new regulatory issues in the ambulatory surgery center (ASC) space: the new water quality standard and putting together a whole program for water quality inspection, testing, and maintenance requirements throughout the year; and then I gave an update on Medicare’s mandatory quality reporting requirements for surgery centers.

The big thing that I focused on is the Outpatient Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) requirement, which is now 34 questions. This assessment will be mandatory as of January 1, 2025, and ASCs must work with a vendor approved by the Centers for Medicare & Medicaid Services (CMS). There are only so many CMS-approved vendors, and there are thousands of surgery centers, so it’s important to get on it and decide which vendor you’re going to work with, and then start the implementation process.

2. What do you think the audience was the most surprised to learn from your presentation?

I think many people were just unaware of this new water quality standard, and I don’t think they had a good grasp on what is involved in administering this survey. ASCs must work through one of the CMS-approved vendors, and there is a process to getting set up to be able to implement it.

3. How do you think your presentation helped healthcare leaders better prepare for challenges? 

Knowledge is key. Many attendees took pictures of my slides, and I provided resources for them to find the most updated information of the OAS CAHPS program. It was imperative to give them that knowledge and empower them to stay a step ahead as the new requirements are implemented.

4. What resources would you suggest for those interested in learning more? 

Our eSupport membership program contains a wide array of resources. The PSS team has intimate knowledge of ASC operations from years of hands-on experience. We constantly update eSupport so ASCs can remain compliant, successful, and confident—even when regulations change.

To dive into the continued evolution of ASCs, check out VMG Health’s ASCs in 2023: A Year in Review article, which includes everything from market dynamics to provider reimbursement.

5. If someone takes only one message from your presentation, what would you want it to be?  

Be prepared. The downside of being unprepared with this water management program is that you could get a deficiency citation on a survey, announced or unannounced. As for the OAS CAHPS survey, if an ASC fails to submit the required number of surveys in 2025, it will be hit with a 2% penalty on its Medicare reimbursement in 2027. Both situations should be avoided at all costs, and staying prepared is key.

Our team serves as the single source for your valuation, strategic, and compliance needs.  If you would like to learn more about VMG Health, get in touch with our experts, subscribe to our newsletter, and follow us on LinkedIn.  

At VMG Health, we’re dedicated to sharing our knowledge. Our experts present at in-person conferences and virtual webinars to bring you the latest compliance, strategy, and transaction insight. Sit down with our in-house experts in this blog series, where we unpack the five key takeaways from our latest speaking engagements.

1. Can you provide a high-level overview of what you spoke about at AHLA’s webinar, “University Brand Value and Health Care Transactions”?

My portion of the presentation was about the valuation of academic healthcare brands. I talked through different valuation methodologies, which are the income cost and market approach, by discussing the specifics related to brand valuation. Additionally, I spoke about the key things to consider in a brand valuation or in a transaction involving a brand, like how to structure the payment—whether it’s through a variable or fixed license rate—and some of the pros and cons to different affiliation structures.

2. What do you think the audience was the most surprised to learn from your presentation?

In academic brand valuations, the owners of the academic brands tend to think their brand is extremely valuable. However, from an actual fair market value transaction perspective, the value of that brand is based on the licensee’s return, even if the brand is powerful and may drive allocations higher. If the licensee can’t make a monetary return on it, there won’t be a huge value that they have to pay. Otherwise, they’d be negative.

3. How do you think your presentation helped healthcare leaders better prepare for challenges? 

Leaders can look for opportunities with this knowledge. Brands are not a common part of a joint venture arrangement. Adding a health system’s brand to a joint venture may result in an additional return or credit for something that the system is contributing to the joint venture. Historically, leaders may not have valued brands, but they can.

4. What resources would you suggest for those interested in learning more? 

The blog, Healthcare Brand Valuation: Purpose, Strategy, and FMV Implications, is a great supplemental resource for those looking to learn more about incorporating brand in healthcare transactions. Additionally, another article is coming to the VMG Health website soon, and it will focus on brand valuation. Watch our site for that upcoming content.  

5. If someone takes only one message from your presentation, what would you want it to be?  

Brands can and should be considered, and possibly included, in healthcare transactions.

Our team serves as the single source for your valuation, strategic, and compliance needs.  If you would like to learn more about VMG Health, get in touch with our experts, subscribe to our newsletter, and follow us on LinkedIn.  

Pam D’Apuzzo

At VMG Health, we’re dedicated to sharing our knowledge. Our experts present at in-person conferences and virtual webinars to bring you the latest compliance, strategy, and transaction insight. Sit down with our in-house experts in this blog series, where we unpack the five key takeaways from our latest speaking engagements.

1. Can you provide a high-level overview of what you spoke about at the FMHA/NEHIA Compliance & Internal Audit Conference?

I spoke about the 2024 regulatory changes from the Centers for Medicare & Medicaid Services (CMS) as well as the American Medical Association (AMA) CPT changes. These changes are important to stay up to date on to avoid audits and noncompliance.

2. What do you think the audience was the most surprised to learn from your presentation?

For telehealth, the relaxations of those regulations and what’s permissible post-pandemic may be surprising. For example, Federally Qualified Health Centers can serve as distant site providers for behavioral health telemedicine services; Medicare patients can receive their behavioral health care through telehealth in their homes; behavioral and mental health services can be received through audio-only platforms.

For evaluation and management (E&M) services, the CMS and AMA shared/split E&M guidelines may be surprising to providers. In 2024, AMA redefined “substantive portion” and CMS adopted the CPT definition. Organizations should educate providers on these changes and establish ongoing monitoring and auditing of shared/split services to ensure compliance with revised guidelines.

3. How do you think your presentation helped healthcare leaders better prepare for challenges? 

The most impactful way for leaders to prepare is by concentrating on upcoming audit risks and identifying areas for improvement through internal audits.

4. What resources would you suggest for those interested in learning more? 

To really ensure your practice is billing and coding correctly, using technology can remove some of that heavy lifting from your staff. VMG Health’s Compliance Risk Analyzer (CRA) is a suite of tools that analyzes every insurance claim your practice submits. The CRA identifies high-risk providers, services, and procedures. The solution provides your practice with a risk-based audit workflow that is easy to access and understand, allowing you to focus on patient care rather than audits and recoupment demands.

5. If someone takes only one message from your presentation, what would you want it to be?  

Monitor, monitor, monitor. All regulatory changes lead to greater audit risk when people don’t pay close attention to every requirement of those changes. Implement regular monitoring of coding and billing practices to mitigate risk and enhance revenue integrity for your organization.

Our team serves as the single source for your valuation, strategic, and compliance needs.  If you would like to learn more about VMG Health, get in touch with our experts, subscribe to our newsletter, and follow us on LinkedIn.  

Written by Debra Rossi, CCS, CCS-P, CPC, CPMA

Joint Replacement Surgery

Prior to approving reimbursement for joint replacement surgery, CMS (and most commercial payers) typically require patients to undergo a period of conservative therapy or non-surgical treatments. The purpose of this requirement is to ensure that surgery is considered only when other treatment options have been exhausted or deemed ineffective.

The specific requirements for conservative therapy may include:

1. Duration of Conservative Therapy: CMS may specify a minimum duration for conservative therapy, typically ranging from three to six months. During this period, patients are expected to undergo and document their participation in various non-surgical treatments aimed at managing joint pain and functional limitations. The duration requirement may vary depending on the specific joint being treated.
2. Documentation of Non-Surgical Treatments: Providers are required to document the patient’s participation in conservative therapies, such as physical therapy, occupational therapy, use of assistive devices (e.g., canes, braces), weight loss programs, pharmacological interventions (e.g., nonsteroidal anti-inflammatory drugs), and other appropriate interventions. The medical records should reflect the type, frequency, and duration of these treatments.
3. Lack of Improvement: Documentation should include that the conservative therapies have failed to provide significant or sustained improvement in the patient’s joint pain, activities of daily living, and overall quality of life. This may involve objective measurements, such as range of motion, functional assessments, pain scales, or patient-reported outcomes.
4. Physician Assessment and Documentation: The surgeon is responsible for evaluating the patient’s response to conservative therapy and documenting the lack of improvement or inadequate response despite adherence to the recommended treatments. The physician should provide a clear clinical rationale for proceeding to joint replacement surgery.

Please note that the requirements outlined in the CMS NCD are specific to Medicare coverage for joint replacement surgeries. Private insurance plans may have their own coverage policies and criteria. Additionally, these requirements may be subject to updates and revisions, so it’s essential to consult the most current CMS guidelines or to seek guidance from the relevant healthcare authorities for the most up-to-date information.

Assistant At Surgery

When a primary surgeon utilizes an assistant at surgery documentation plays a vital role in ensuring proper communication, accountability, and compliance with regulatory requirements.

Documentation elements that a primary surgeon should provide when utilizing an assistant at surgery include:

1. Surgical procedure documentation should include a detailed description of the surgical procedure provided including the preoperative diagnosis, specific steps taken, techniques employed, instruments used, and any modifications made during the surgery along with the surgical team, anesthesia details, significant findings, and post-operative diagnosis.
2. Document the identity and credentials of the assistant at surgery. This includes their name, professional title (e.g., physician assistant, nurse practitioner), and any relevant certifications or qualifications. This documentation helps establish the qualifications and authority of the assistant.
3. The primary surgeon should clearly outline the roles and responsibilities assigned to the assistant during the surgical procedure. This may include specific tasks, such as tissue handling, suturing, retracting, or other support functions. Documenting these roles helps clearly establish the medical necessity for the assistant and allows for supporting documentation needed for payer clarification when reimbursement is questioned.

It’s important to note the specific documentation requirements may differ based on local regulations, facility policies, and the requirements of insurance providers or regulatory bodies. Surgeons should consult the relevant guidelines and protocols specific to their jurisdiction and healthcare facility to ensure compliance with documentation requirements when utilizing an assistant at surgery.

Written by Stephen H. Schulte, CVA, and Madison Higgins

The following article was published by VMG Health’s Imaging & Radiology Affinity Group

In recent years, the healthcare industry has experienced a shift toward freestanding sites of service as more patients opt for lower-cost, convenient, and specialized care. This trend is particularly evident in outpatient imaging services where patients are increasingly opting for the comfort and accessibility of freestanding imaging centers over hospital outpatient departments (HOPDs). As a result, hospitals and health systems are becoming increasingly eager to partner with established operators of freestanding imaging centers. These partnerships often include the acquisition of an ownership interest in an existing freestanding center but may also include the contribution of their HOPD imaging operations to an existing freestanding center or potentially to a new joint venture (JV). When considering the conversion of an imaging HOPD to a freestanding center, there are several important factors to consider from a fair market value (FMV) valuation perspective. These include the proper identification of the volumes to be included in the conversion, the potential impact on patient volumes and reimbursement, changes to the operating expense structure, and the contribution of necessary equipment.

Scan Volume

Correctly identifying the specific volumes that would be a part of this transition is one of the most critical factors to consider when valuing an imaging HOPD that will convert to a freestanding imaging center. Imaging volumes within an HOPD may include volumes related to different service lines such as emergency room visits, outpatient surgical procedures, routine outpatient imaging services, etc. Based on our experience in these situations, the volumes related to routine outpatient imaging services are the most likely to transition. With that said, the volumes related to emergency room visits and outpatient surgical procedures are less likely to transition due to logistics and other clinical factors.

Once the appropriate volumes have been identified, it is important to understand what impact, if any, there would be upon the transition to freestanding operations. The operations of an imaging HOPD may have a large volume of high-acuity scans for patients with more severe health conditions which could be at risk in a freestanding setting. Alternatively, freestanding imaging centers typically provide more convenience for patients since they are generally located closer to residential areas, have their own dedicated parking areas, and patients do not have to navigate the larger hospital environment. This convenience factor can lead to an increase in patient volumes across all modalities but is particularly evident for routine imaging procedures such as X-rays, mammography, and bone density scans. Additionally, as mentioned above, freestanding imaging centers tend to be the low-cost provider compared to an HOPD which may also positively impact volumes. Due to the complexity surrounding these factors, future volume expectations should be discussed in detail with those who are familiar with the current volumes, area demographics, and the competitive landscape in the local marketplace.

Reimbursement/Net Operating Revenue

Another key consideration is the potential shift in reimbursement rates and the impact on the net operating revenue. Reimbursement rates at an HOPD level may not be directly achievable for a freestanding center for a variety of reasons. HOPDs receive Medicare reimbursement rates according to the Outpatient Prospective Payment System (OPPS) set forth by the Centers for Medicare & Medicaid Services (CMS), while freestanding facilities receive Medicare reimbursement rates according to the Medicare Physician Fee Schedule (MPFS).

In general, OPPS rates tend to be higher than MPFS rates for the same service and can result in an expected decrease in Medicare reimbursement that must be accounted for in a valuation. Additionally, commercial payors typically reimburse at rates equal to or higher than Medicare. For valuation purposes, the assumed commercial payor rates should be theoretically achievable by any hypothetical market participant. The reimbursement rate for a given service will depend on many factors, including the location of the provider, local market dynamics, and changes in federal and state healthcare regulations.

Operating Expenses

Imaging HOPDs are typically accounted for as distinct operating units within the internal framework of the hospital. In many instances, the hospital will track certain elements of the cost structure to operate the unit, but detailed operating expenses are not available. The operating expenses accounted for may include costs that are simply allocated to the unit from the overall hospital operations and may not represent the true operating expenses needed to fully run the business. Additionally, the operating expenses that are reported internally may simply represent the direct costs that are easily identified and would not include the full picture. For instance, the internal financial statements for an HOPD typically do not include certain expenses such as facility rent, utilities, janitorial, and administrative functions such as billing and collection services, legal services, etc. In these situations, it is important to remember the intention of the valuation analysis is to simulate the business as if it were operating on a freestanding basis. Accordingly, the valuation will likely include adjustments to the operating expense profile to match the projected net revenues and volumes. In many cases, this will include a full build-up of operating expenses to include all applicable staff salaries and wages, benefits, occupancy costs, supplies, etc. This may be an iterative exercise that could include input from both the appraiser and the hospital to be certain the appropriate operating expenses are fully accounted for and are consistent with both industry and local market dynamics.

Equipment

When valuing an imaging HOPD, it is critical to account for the equipment needed to provide the projected volumes and net revenues. This equipment includes the imaging machines, computers, and software required to perform the imaging procedures. Depending on the structure of the imaging HOPD, certain pieces of equipment may be utilized to service both the outpatient and inpatient volumes of the hospital. In this case, the hospital may choose to retain the equipment and not contribute it as part of the potential transaction since it will continue to provide services at the hospital even after the properly identified outpatient volume is transitioned out of the HOPD. If the hospital chooses to retain the equipment or certain pieces of equipment, it is essential for the valuation to make a deduction to account for the equipment not being contributed. In addition, this dynamic has both operating and transaction implications since the freestanding imaging center will either need to be able to service the projected volumes with existing equipment or it will need to adequately plan for the capital purchase to acquire the additional equipment.

In summary, outpatient imaging joint ventures have been common in recent years with many hospitals and health systems considering the contribution of their HOPD imaging operations. With the continued focus of patients on convenience and their desire to utilize lower-cost options, it is expected that this type of transaction will continue to be a consideration for hospitals and health systems in the future.