Business Briefs: Is This Wound Clinic Financially Successful? And Where Can I Find Medicare Payment Regulations?

  Information regarding coding, coverage, and payment is provided as a service to our readers. Every effort has been made to ensure the accuracy of the information. However, HMP Communications and the author do not represent, guarantee, or warranty that the coding, coverage, and payment information is error-free and/or that payment will be received. The ultimate responsibility for verifying coding, coverage, and payment information accuracy lies with the reader.

  At the SAWC reimbursement post-conference and at the first three of six 2009 Wound Clinic Business all day seminars (woundclinicbusiness.com), this author learned that wound care professionals do not 1) totally understand how to measure their wound program’s financial success, and 2) always feel that they have access-to and understand the Medicare payment system(s) that applies(y) to them and to the facility. When questioned “why?” the response was either “no one tells me”, or “I don’t know where to find the information.”

  This appears to stem from one major problem: a lack of understanding of the various business models of wound clinics. To begin, wound care professionals must clearly define if they are:
    • A physical or occupational therapist in the rehabilitation department.
    • An MD, DO, DPM, NP, or PA in their own clinic that rents space from the hospital.
    • An MD, DO, DPM, NP, PA, PT, and wound certified nurse in a hospital-owned outpatient wound care department (HOPD) that is always staffed by an MD, DO, or DPM.
    • An MD, DO, DPM, NP, PA, PT, and wound certified nurse in an HOPD that is not always staffed by an MD, DO, or DPM.
    • An MD, DO, DPM, NP, or PA in an ambulatory surgery center: hospital owned or provider owned.

  Although all of these professionals manage wounds, they are not always able to perform the same services due to their professional degrees, state practice acts, and hospital by-laws; they cannot always use the same CPT® and HCPCS codes; and they are not reimbursed by the same Medicare payment system.

  Then the wound care professionals must discuss the business’ payment arrangement with Medicare, eg:
     • Are they paid as a regular hospital?
     • Are they paid as a critical access hospital center?
     • Are they paid as a federally qualified health center?
     • Are they paid as a rural health clinic?
     • Are they in Maryland and exempt from the normal Medicare payment system?
     • Are they in a Veteran’s Administration hospital and paid under their own unique payment system?

  Armed with the business model payment information, wound care professionals must research the appropriate CPT® and HCPCS codes that define the work performed and the products used. They also must research the national and local coverage policies that apply to them and to their business. They will then have the building blocks that will help their wound clinic be financially successful.

  Next the wound care professionals must create a business plan. Like most good businesses, developing a budget is one of the first steps in developing and implementing a business plan. Wound care professionals must be sure that their budget is realistic and will support the state-of-the-art-wound care program that they are planning to offer. All too often wound care professionals accept budgets that are too small. For example, the use of state-of-the-art skin substitutes are very important tools for wound care professionals. Yes, they drive up the budget, but they also have billable procedures attached to them. Wound care professionals must add together the Medicare reimbursement of the procedure and the skin substitute, subtract the cost of the product, and see if there is sufficient dollars remaining to pay the wound clinic’s costs for that visit. If that billable procedure generates sufficient dollars, the finance officer should not have a problem increasing you budget to purchase the products. Many wound care professionals receive a monthly report that shows their expenses in comparison to their budget. Many of them feel that the business is financially successful if their expenses do not exceed their budget. Unfortunately, the monthly budget report does not provide any information about claims paid/unpaid, revenue generated by the wound clinic for itself, and revenue generated by the wound clinic for ancillary departments. Therefore, wound care professionals MUST also work with the billing and finance departments to obtain monthly financial reports that answer the following questions:
    • What was the actual amount of revenue collected for each line item billed?
    • Did the patients pay their coinsurance?
    • If a claim was not paid by the primary or secondary insurance, what was the reason specified on the explanation of benefit?
    • How did the revenue collected compare to the actual costs of operating the entire wound clinic?
    • How much revenue did the wound clinic generate for the ancillary departments?

  Because Medicare is often the major payer for patients with chronic wounds, providers must learn about the Medicare coding, coverage, and payment system(s) that pertain to their entire wound clinic. Luckily, the Centers for Medicare & Medicaid Services (CMS) make its regulations transparent by publishing them on the CMS website. Therefore, wound care providers should not have to wait for someone to tell them about the regulations that pertain to them. For example, they will learn:

    • When physicians perform work in their office, they are paid 100% of the Medicare Physician Fee Schedule rate; they are paid less than 100% when they perform the same work in a hospital-owned outpatient wound care department (HOPD) because they do not incur any office expenses

    • When nurse practitioners perform work in a physician’s office and the physician is present in the office suite, the office can choose to 1) bill under the physician’s provider number (if all the rules are followed) and receive 100% of the Medicare Physician Fee (MPFS) Schedule rate, OR 2) bill under the nurse practitioner’s provider number and receive a reduced rate

    • When nurse practitioners perform work in a physician’s office and the physician is not present in the office suite; the office must bill under the nurse practitioner’s provider number and receive the MPFS reduced rate

    • When physical therapists write a physical therapy plan of care and perform therapy services in a hospital-owned outpatient rehabilitation department or in an HOPD, the hospital must bill under a 42X revenue code and will be paid under the MPFS.

    • When physical therapists are working as certified wound specialists, are not performing any therapy services, and are following the plan of care written by a physician in an HOPD, the hospital must bill under an HOPD revenue code such as 51X and will be paid under the Outpatient Prospective Payment System (OPPS), as long as a physician was present in the HOPD at the time when the service was performed. NOTE: Watch for 2010 changes to the supervision portion of this regulation!

    • When a physician is present in an HOPD and performs a service for the patient, the physician and the HOPD can bill Medicare separately. NOTE: The patient will owe coinsurance to both the physician and the HOPD

    • When a physician is present in an HOPD, but a nurse practitioner (who gave the hospital permission to use his/her Medicare provider number) provides a service ordered in the physician’s plan of care, the hospital can bill Medicare separately for the HOPD work and the nurse practitioner’s work. NOTE: The patient will owe coinsurance for both the nurse practitioner’s work and for the HOPD’s work.

    • When a physician is present in an HOPD, but only the certified wound nurse provides a service ordered in the physician’s plan of care, only the hospital can bill Medicare for the HOPD work

    • When a physician is not present in an HOPD and a nurse practitioner (who gave the hospital permission to use his/her Medicare provider number) provides a service ordered in the physician’s plan of care, the hospital can bill Medicare for the nurse practitioner work, but cannot bill Medicare for the HOPD work. NOTE: Watch for 2010 changes to the supervision portion of this regulation!

    • When a physician is not present in an HOPD and a certified wound nurse provides a service, the HOPD may not be able to bill Medicare per the 2009 OPPS Final Rule

  As you can see, payment rules change as business models change. Therefore, Table I has been prepared as a service for our readers to help you find the Medicare payment regulations that pertain to you and to your wound clinic. You and your management staff should frequently visit the web site(s) that pertain to your business model. CMS has released drafts of the 2010 HOPD and Physician Medicare Payment systems for public review and comment. Link to 2010 HOPD draft: https://www.federalregister.gov/OFRUpload/OFRData/2009-15882_PI.pdf. Link to 2010 Physician draft: https://www.federalregister.gov/OFRUpload/OFRData/2009-15835_PI.pdf. Be sure to review the draft document(s) that pertain to your business model. That will provide you with a preview of the changes that you will most likely have to incorporate into your 2010 business plan. Be sure to encourage your hospital to submit comments regarding proposed changes that you favor and proposed changes that are unreasonable for good patient care. After the open comment period is over, CMS will review all the comments and take them into consideration when they prepare the final 2010 regulations. In October or November CMS will release the Final Rule for each payment system. Be sure to visit the Federal Register and download the 2010 Final Rule(s) that pertain to your wound clinic business model. Then make any changes to your business model, which will assure your financial success in 2010.

  Armed with an appropriate description of their business model, their Medicare payment system, codes that appropriately represent work performed and products used, coverage policies, and a full set of monthly financial reports, wound care professionals will be able to determine if the wound clinic is financially successful.

  Kathleen D. Schaum, MS, is President of Kathleen D. Schaum & Associates, Inc., Lake Worth, FL. Ms. Schaum can be reached for questions and consultations by calling (561) 964-2470 or via her email address: kathleendschaum@bellsouth.net.