How to get the most out of selling to a hospital

March 12, 2013

When negotiating with a hospital to purchase your practice, there are many questions that you should review in addition to the dollar per unit you are paid or measured against as an employed physician.

I am negotiating with a hospital to purchase my practice. The salary contract could be based on relative value units (RVUs). A multiplier will need to be agreed upon. Do you have any guidelines for what a multiplier should be in order to conform to a reasonable reimbursement?

We will address this question in general terms, since it’s similar to others we commonly receive. Contracts with hospital systems present an interesting issue when they are based on productivity. General thinking says that a pure work value contract should pay between $55 and $75 per unit depending upon your location. Often, the dollar per unit conversion for payment is balanced against a salary or used as a comparison for production over a longer period of time (eg, a year) to determine bonuses.


However, there are many questions that you should review in addition to the dollar per unit you are paid or measured against as an employed physician:


• Are you given credit for what you bill or only for those services for which the entity is paid? If based solely on what you bill, then collections are not your concern yet. However, under our current fee-for-service structure, even if you are given credit for what is billed, the employing entity is measuring the value of your contract based on what is obtained in payment for your services.


In the end, this means that billing and collections are very important and your employer will need to develop billing and collection services that accurately reflect the services you provide regardless of how you are paid today. Poor billing practices will cost you. Pay attention to what codes you are selecting or your contract will not measure up to your goals. Watch those people (hospital-employed compliance, coding, and billing staff), departments, and systems (EMRs) that select codes for you. Hospital-based employees are rarely paid based on production and may not understand urology; many lose revenue.


As collections will be a measuring stick if they are not already, watch the bottom line. Poor follow-through on collections affects your production; although the impact may not be as immediately visible as it is to the solo practitioner, you will notice eventually.


• Are you given credit for services provided “incident to”? Urologists are used to providing many services under “incident to” guidelines. Luteinizing hormone-releasing hormone agonists, catheter changes, urodynamic studies, and testosterone injections are just a few of the services that are often provided by a non-physician employee. If you are not compensated for “incident to” services, your overall production numbers will be lower. Add to this some other items that generate revenue in a urology practice such as post-void residual and urinalysis, which do not have work values assigned to them. Take these into account as you measure your potential revenue under a contract tied to work RVUs.


• Are you given some type of credit for ancillary services? Pathology and radiology services and other tests that are commonly provided in a stand-alone urology practice will likely be referred to others in a hospital or multispecialty group. You will not get credit for these services in a typical work RVU-based contract and will need to take these into account.


Likewise, the value of providing a service in the office instead of going to an ambulatory surgical center or outpatient surgery center is now reversed in revenue incentives for the employing entity. You will be encouraged to take many of your services out of the office. Take into account the increased time it will take to provide these services and the fact that these services will count the same in work RVUs as they do in an office setting.


As you look at your value as a provider when negotiating or renegotiating your contract, demand that the revenue received by the entity for services you drive is counted in the value you bring to the institution. ASC, outpatient, pathology, and imaging revenue, as well as referrals to others all add value to the employer and may help in getting or maintaining a contract that pays what you are worth.

I was told by a friend that I should bill code 64561 bilateral for an InterStim testing phase. I was also told that I could bill code 64581 in addition to 64561 and get paid for it. What is the best and most correct way to bill for this procedure?

Your friend was partially correct. The code 64561 (Percutaneous implantation of neurostimulator electrodes sacral nerve [transforaminal placement]) should be billed as bilateral if the procedure was performed bilaterally, which is normally the practice. This bilateral reporting was not allowed originally; however, the AUA and the Centers for Medicare & Medicaid Services have since clarified that code 64561 is, at this point, a unilateral code.


Code 64581 (Incision for implantation of neurostimulator electrodes; sacral nerve [transforaminal placement]) should only be billed if there was an incision made to insert the electrodes. Some have found that the code 64581 is not included in the bundling edits of the Correct Coding Initiative relative to 64561. We are not aware of a clinical circumstance in which code 64561 was used for one side and 64581 was used for the second side; however, based on the code descriptions and current CCI, if this was indeed performed, it would be appropriate to report 64561 and 64581 for the same session. We would recommend using the –RT and –LT modifiers to clarify reporting even though it is not technically required.