Profit centers are CMS targets: How to plan accordingly

August 1, 2006

Physicians' cost efficiency is being judged by all costs, not their individual service fees alone.

As is common in any market, urologists, seeing a potential for profit, tend to expand into profitable areas. Medicare sees the billing pattern change and begins to investigate. Once an area is identified as being unreasonably profitable, Medicare begins to adjust regulations, coding combinations, and the allowed amount paid. These adjustments take many forms.

Limiting payment for PSA testing to certain specific diagnoses is an example of an NCD. Both NCDs and LCDs can address payment through price regulation, such as the policies for LCA for LHRH agonists (currently an LCD only). Policies also can limit the frequency of certain tests, such as number of times per year a bone or bladder scan can be done. LCDs and NCDs also can provide coding restrictions dictating which codes should be used for a particular procedure or limiting the diagnoses for which payment is allowed. Policies concerning intensity-modulated radiation therapy, which are being developed, are an example of this type of policy.

CCI. The Correct Coding Initiative (CCI) is developed nationally by CMS. The CCI bundling package is adjusted quarterly, adding coding combinations for services provided at the same time for which one CPT code payment is considered adequate.

PE. The practice expense (PE) value is the value assigned to each CPT code to pay for supplies and office expenses. It regulates part of the total allowed amount reimbursed by Medicare. It has been used to provide and to remove incentive for services delivered in the office setting.

Urologists must pay close attention to all of the above rules in order to bill appropriately for their services and to perform strategic planning for the future.

OIG. When all else fails, Medicare resorts to punitive measures through channels such as the Office of Inspector General. The actions taken by the OIG are well publicized to serve as a deterrent.