"Get Paid for New Technologies and Services"

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"Get Paid for New Technologies and Services"

Don't let third-party payors "wiggle out" of compensating you fairly for state-of-the-art patient care.

by Gil Weber, M.B.A.

Adapted with permission from Ophthalmology Management
© Copyright, 2007. All rights reserved.
November 2007


It's conventional wisdom across the broad spectrum of businesses that technological advancements drive down costs and increase profitability. They do this by making it possible to work faster and more economically, thereby increasing efficiency and productivity. The end result is better, less expensive "widgets."

For example, in the auto industry, robot welders have become common. Though robots represent a significant front-end capital investment for an automaker, their ability to work faster and more accurately than human welders means that more and better cars can be produced in a given time and at a lower cost per unit. That all translates to better margins.

But medicine seems to be a unique animal. Among all forms of business, medicine seems to be the one where wonderful technological advances drive up the costs of doing business rather than bring them down. Examples are everywhere. Let's review how to keep this from happening to your practice.

Getting What You Pay For

In ophthalmology the new technology might be a laser, an innovative phaco tip, or injectibles for age-related macular degeneration (AMD). All of these examples certainly can mean better patient care and better outcomes, but, inevitably, not at lower costs for the physician, for the patient, or for an insurer. So there's this conundrum. On the one hand, through the use of new technologies physicians have the ability to care for their patients in a manner than could be less intrusive and result in less pain, allow for quicker recovery, and deliver clinically superior results. Yet on the other hand the insurance companies look at the added costs and say essentially this to physicians, "Why can't you do it the older, less expensive way? The results have been acceptable — to us."

In a classic example not that long ago, Aetna refused to pay for Scanning Computerized Ophthalmic Diagnostic Imaging (SCODI, CPT 92135) by deeming it "experimental" even though there was plenty of clinical documentation demonstrating the added patient benefit over doing things the "old way." But physicians who may have invested quite a few dollars purchasing the equipment for SCODI found that, at least as it applied to Aetna members, they could not submit a claim for use of the new and improved technology and, therefore, could not get a return on their investments. (See this article in Ophthalmology Management's sister publication, Optometric Management, at: www.optometric.com/article.aspx?article=71121 )

In these times of relentless pressure on reimbursements, a physician facing similar circumstances must wonder about the wisdom of purchasing costly new technologies. It is one thing to provide better care – that is the goal, of course, and that's what all payors expect and patients demand. But it is quite another matter to invest in providing a higher standard of care only to be told in essence by the payor, "Thanks for putting so many of your dollars into giving our members the best possible care and benefiting our plan overall, but we don't care enough to pay you incrementally more for those extraordinary expenses."

Should I Make the Investment?

The issue is whether you invest in technologies to provide better patient care. This is a tough question. I reviewed a myriad of "When-and-what-should-I-purchase?" issues in the December 2005 issue of Ophthalmology Management (see: www.ophmanagement.com/article.aspx?article=86521 ).

If you invest in technologies and the payor refuses to negotiate added compensation (or refuses to cover the service at all), you could be stuck with a substantial expense. So to preclude this costly scenario from unfolding, how about being proactive and negotiating provisions into your provider agreements that would compel payors to negotiate with you in the event costly new technologies become the accepted standard of care? Let's look at how to do this.

Getting It In Writing

It is crucial that you get payors to agree contractually to revisit reimbursements on services impacted by the added costs of new technologies. The idea behind this is twofold. First, it reduces the financial risk when investing in your practice's ability to provide the best quality care. You must be comfortable that if you are going to add technology to provide higher quality care, you have something in writing that allows you to recoup on the outlay. Otherwise, it makes no sense to spend unrecoverable dollars simply to have the latest "toys" in your office. After all, "Thanks" won't pay your office operating expenses.

Second, it memorializes in a binding document the payor's obligation to participate in good-faith negotiations for reimbursements on new services and technologies deemed by the medical community (and perhaps CMS) to be the standard of care. So it is to ensure that you're not forced into a position of having to terminate the agreement due to impossibly low or no compensation for care that in your professional opinion is necessary and that can only be provided through an investment in new technology.

In brief, here is what you want to cover in the added wording. An attorney experienced in managed care and your state's contract law can help with this, which you should then present to the payor as part of on-going contract maintenance.

You'll need to define some parameters for initiating negotiations. In other words, under what circumstances can you demand the payor come back to the negotiations table?

Describe a short but comprehensive list of initiating events. One might be if a new technology comes onto the market and increases practice costs beyond what was anticipated in the originally negotiated fee schedule. Another "trigger" might be if a CPT or other recognized code is adopted for the technology and is deemed payable by CMS. Yet another might be if site-of-service changes for a technology or service affect reimbursement.

Define what constitutes a "new technology" to be included in matters subject to renegotiation. Your definition should include things obvious to anyone (e.g., equipment and instrumentation) and also those things that might not be so obvious (e.g., injectibles, drugs, or tissue).

Expect that the payor will insist on excluding "experimental" and "investigational" technologies. On the surface, that is probably fine. However, the challenge then will be agreeing on who decides which technologies are deemed "experimental" or "investigational," and what standards and protocols will be used to make such decisions.

That was the heart of the nightmare for so many practitioners vis-à-vis Aetna and SCODI. Whereas the insurance world generally accepted SCODI as the standard of care and as a payable, covered service, Aetna in its infinite wisdom stubbornly insisted it was "experimental" and refused to pay even when presented with scientific evidence, and despite the fact that Medicare, medicine's benchmark, approved SCODI.

Getting agreement here is essential. You don't want to get into a contentious battle with payors where they are free to say, "We've made up our minds — don't confuse us with the facts."

Define some parameters that qualify a new technology for added reimbursement. In other words, if you're going to ask the payor to raise reimbursements, perhaps there should be a formalized methodology for showing the payor how your costs will increase, and for establishing that these are not simply normal increased costs of doing business but, rather, are extraordinary costs.

Finally, as with all material changes to a provider agreement, you should have the option of a quick and painless "out" (termination) if the parties cannot come to a satisfactory understanding. If you're facing extraordinary costs of a new technology necessary to provide appropriate care, and if the payor will not adjust your reimbursements to allow you a fair return on the outlay to acquire such technology, then maybe that's the time to get out of the contract — before adverse financial consequences befall the practice.

After all, you're running a business. That business is medicine — and you are not in business to provide care at a loss or for free.


Gil Weber, Ophthalmology Management's contributing editor, is a nationally recognized author, lecturer and practice management consultant to practitioners and the managed care and ophthalmic industries, and has served as director of managed care for the American Academy of Ophthalmology.

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