Feature Story

Labs waver on whether to bill for POC tests

August 2001
Anne Paxton

Baystate Health System does it across the board, but Sentara Healthcare doesn’t do it at all. Christus Santa Rosa Health Care used to do it, while Johns Hopkins never did it. What is it?

It’s point-of-care test billing. Despite the intense pressure on hospital departments to tap revenue streams, if you talk to point-of-care testing coordinators around the country, you’re likely to find little consistency. While some have found POCtest billing can bring in seven-figure revenues, many have shied away from it.

It’s not just small community hospitals that have opted against billing for POC tests. Some large university medical centers with a thousand beds have done the same, says POC testing consultant Christopher Fetters. He receives calls two or three times a week from people who report, "My finance person says, ’Don’t bill.’"

"An awful lot of hospitals out there aren’t ready to bill," says Fetters, who is president of Nextivity, a consulting firm in York, Pa., dedicated to POC testing issues. "It’s either because they don’t understand how to set up billing, or they’ve been told by somebody in finance that they can’t bill for it, it’s not worth it, or it might not be covered."

Many of those were issues at Sentara Healthcare in Norfolk, Va., which used to bill for all of its POC testing, some 700,000 units of service. But after a Medicare program memorandum on glucose monitoring was issued Oct. 24, 2000 (transmittal AB-00-99), "That caused some people to think maybe we should not get reimbursed for bedside glucose," says Lou Ann Wyer, MT (ASCP), point-of-care testing coordinator. "So our chief financial officer made the decision not to bill for it," even though it might potentially be covered under Medicare Part B for some patients not eligible for Part A. "It’s just considered part of the daily room rate and gets absorbed into overhead." Other hospitals in her region, she adds, have made the same move.

Henry Ford Health System, on the other hand, is an institution that has successfully implemented POC test billing in outpatient areas, even though many of its test results are entered manually. The flagship of the five-hospital system, Henry Ford Hospital in Detroit, uses a preprinted encounter form that includes patient demographics, a diagnostic code, physician code, and a site code indicating which clinic or department should receive the revenue. Those forms have bubbles to fill in to charge for the most commonly performed tests and procedures. The appropriate bubbles are filled in, the forms are then run through an optical scanner, and the charges are run overnight through the hospital financial system.

Deanna Bogner, MS, MT(ASCP), Christus Santa Rosa Health Care POC testing coordinator, has seen several other systems successfully bill for POC testing as well. "I know some hospitals are billing a ton of money in POC, but either they have their own health maintenance organization or a totally different payer mix," Bogner says. Christus Santa Rosa Health Care, based in San Antonio, decided to stop billing for POC testing three years ago.

Bogner says a key reason for the decision was Medicare’s Correct Coding Initiative. "There was no iron-clad mechanism to do away with duplicate billing," she says. With a heavily government-funded payer mix, the system feared it would run into compliance problems. Medicare’s move to ambulatory patient classifications, or APCs, to pay for outpatient care brought even more potential billing problems to light, she adds.

As a result, the laboratory absorbs the costs of POC testing. "We had actually proposed a cost tracking mechanism" to distinguish between POC testing and laboratory testing, Bogner says, but it was rejected by finance. Explains Alan Green, manager of reimbursement and financial analysis for the health care system: "Unfortunately, the cost is big enough to be material, but not big enough to alter our accounting systems. We prefer to minimize the new line items and new cost centers."

In Bogner’s view, at her hospital "it’s too complicated to say this patient is in the ER and we’re going to get paid for this but not for others. There’s an ethical issue: If you don’t charge everybody, you can’t charge anybody. So either you have to decide your system is good enough to charge all comers, or the amount of money is not worth your time and trouble to recover."

Hospital finance departments sometimes perceive POC testing as a nursing procedure, like putting in an IV, says Fetters, who is former vice president of the Connectivity Industry Consortium, which has completed a proposed industry standard for POC testing connectivity. "We know it’s lab testing because, number one, it falls under CLIA and, number two, Medicare considers it lab testing."

But laboratories frequently encounter snags in the billing process. Medicare will reject the charge if the CPT code is in the 80000 series but the department code is not the laboratory’s. "They check the department code against the CPT and procedure code you send, and if the bill comes with the nursing department code, it will get rejected," Fetters notes. Typically, laboratories want to bill for POC testing, but "these nuances lead to rejections. Then people drop it," he says.

One hospital Fetters worked with, however, set up its data management system to skirt this problem. "When we built the system, we captured and credited whatever unit placed the charge for the POC test." So if a nursing department had done the test, the revenue actually went back to the nursing group. "But when the bill goes to Medicare, the code that goes in is the general laboratory."

"There can’t be any ambiguity anymore," says Joan Logue, president of Health Systems Concepts/Clinical Laboratory Concepts Inc., Longwood, Fla. "The program memorandum on POC glucose says there must be evidence the physician reviewed the results before a reorder, and there has to be some notation of that." As she interprets the guidance, which refers to inpatient tests that are not covered under Medicare Part A but may be covered under Part B (for example, for a nursing home patient), there must be some indication in the patient chart that results were communicated to the physician before another test was ordered.

Inertia, of course, plays a major part at many hospitals, Fetters says. "Typically, POC coordinators tackle issues that will come up in the next inspection. Since billing is not one of those CAP/JCAHO issues, at many hospitals this is one reason why it may be back-burnered indefinitely," he says. But even if manual entry is required, that should not be an obstacle when POC test billing can bring so much potential revenue, he says. "I look around at hospitals and say there are thousands of things you bill for that you have to bill for manually, from booties to meals. If you didn’t bill for anything in the hospital that you had to enter manually, you’d be out of business."

At one large university hospital in the southeastern United States, Fetters says, the finance department was surprised to discover that more than 150,000 POC glucose tests were being performed each year and not being billed. After figuring out the hospital’s payer mix, Fetters estimated that roughly $7.4 million per year in charges were at stake and that this would result in over $3 million in actual revenue for all of the POC analytes, or 1.5 percent of everything the hospital bills for. "The director of finance was floored that the laboratory had chosen not to bill for POC tests," Fetters reports. "The program was costing them over $250,000 in disposables alone. I’m not sure whether each nursing unit was absorbing the disposable cost, or the laboratory. It really doesn’t matter because it was costing the whole health care system; the POC testing had become a charity service."

A frequent misconception, Fetters says, is that "we have all these inpatient Medicare patients and we receive DRG reimbursement, so it really doesn’t matter whether we bill or not." Inpatient POC test billing is not a moot issue, however. "Typically around the country we see anywhere from half to two thirds of patients are Medicare," he estimates, noting that 20 percent of the remainder are usually private payer while the rest are mostly managed care. "But if you just look at private pay, often just among the inpatients, they can completely pay for the whole POC testing program if you just bill them." The hitch is that for compliance reasons, everybody has to be billed, whether or not they are likely to pay.

There is another reason to bill for inpatient POC tests, he adds: Medicare’s end-of-year modifiers to DRG payments. If one hospital receives more money than another for the same DRG, it probably would be a university hospital that has demonstrated to Medicare by line item charges that its costs are higher. "The only way Medicare knows the acuity level of a particular hospital is by what you charge. So if you leave out the bills, then you’re not letting Medicare know what it costs to run your hospital and Medicare is not going to change the modifiers at the end of the year.

"You’re cheating your own hospital by not submitting charges for all the stuff you do," he adds.

At least potentially, compliance problems could also result from not billing, Fetters says. "The Medicare Payor Manual says POC testing is ancillary testing and therefore should be billed separately, and Medicare has said in program memos that POC analytes are discretely chargeable tests. Now, yes, you need medical necessity, and the physician has to be made aware of the test result, but those are much the same rules as for other lab testing."

Roseanne Dolega, BS, MT(ASCP), alternate site testing coordinator for the Department of Pathology at Henry Ford Hospital, agrees "it’s a very sticky issue, absorbing POC testing into overhead. As far as compliance you have to be really careful. You should try to bill or at least track the volume of testing, because if you just do the tests and don’t bill for them, then it could be seen as inducement, as doing free tests."

At Emory University Hospital, Atlanta, laboratory operations manager Marilea Grider says, "There’s been a lot of confusion regarding what you can and can’t bill Medicare in POC testing." In many cases at Emory, the tests just fall under nursing services. "If you have a nurse on the floor doing a glucose test, you have to consider how to get that information into the hospital billing system. There’s just not an easy way to capture that revenue on inpatients." Consultants have also given her laboratory conflicting recommendations on when to bill Medicare for outpatient POC testing, so except for POC prothrombin time testing which is only done on clinic patients, "we just don’t do a lot of POC billing."

Logue says most of her client hospitals in the past were the same. "It’s not that laboratories didn’t recognize the potential revenue, but capturing the data has been a real problem."

Logue, who is author of "Billing and Payment of Point-of-Care Testing," a chapter in Principles and Practices of Point-of-Care Testing (Lippincott Williams & Wilkins, forthcoming), says many diabetes clinics have done POC testing for a long time but have not billed for it because they didn’t have the ability to download the information to the laboratory information system. "The other issue is, where is that revenue going to be credited? If, for instance, the ER is performing the POC test, then they may want to see the cost and revenue of that service credited to their department."

Laboratories can accede to this wish by carrying the hospital specific ER department code in their LIS, which could allow the revenue to be appropriated back. But POC testing is usually more centralized under the responsibility of the lab, Logue says. "If the lab is in charge, orders all the kits, conducts QC, validation, and training, then the lab is incurring the majority of the costs and should get the revenue."

Mt. Sinai Medical Center in New York is transitioning to a new POCtesting data management system in conjunction with an upgrade of its laboratory information system, reports Ellis Jacobs, PhD, director of stat laboratories and POC testing and chair of the American Association for Clinical Chemistry’s Point-of-Care Testing Division. As a result, more POC billing may be around the corner. Currently, most of the 450,000 to 500,000 POC tests the medical center does each year are treated as part of overhead. Urine dipsticks, for example, go into the general supply costs of the nursing unit for materials they need for patient care, just like gauze and tongue depressors.

Although U.S. Medicare will pay for outpatient POC glucose testing, New York Medicare has no code at all for it, Dr. Jacobs notes, and those 300,000 tests are not getting into Mt. Sinai’s LIS right now. His laboratory plans to start billing for most tests, including occult blood testing, when they’re not used for screening, however. "That’s one of the areas we’re still trying to figure out how to handle."

Other laboratorians, too, mention the vagaries of state regulation in explaining why they don’t bill for POC testing. James Nichols, PhD, medical director of clinical chemistry at Baystate Health System, Springfield, Mass., is now at an institution that bills for all POC testing. But at Johns Hopkins Medical Center in Baltimore, where he formerly worked, "We didn’t bill for any POC tests."

The main reason was that Maryland’s Health Cost Regulatory Commission, which has historically set prices for laboratory tests, regularly issued comparisons of hospitals’ cost for testing services with their patient outcomes. "When CLIA came about, in 1992, we realized that, with the volume of POC testing we were doing, if we suddenly added one or two million tests to our billable tests each year, our volume would have skyrocketed without any additional patients. It would have looked like we inflated the costs. That led us to never charge for them."

Some hospitals, he notes, have tried to "creep" the POC test charges in 10 percent at a time, and their strategy may have been successful. "But basically your RVU [relative value unit] is worth less when you start adding tests, so rather than decrease reimbursement for other laboratory tests and shift RVUs, we decided not to bill."

Dr. Nichols, who is past chair of the AACCPOC Testing Division, believes most states don’t share Maryland’s history of micromanaging health care. "At Baystate we bill for everything. Even though there may be no reimbursement on the patient, we still give credit for doing the work." In this way, billing is useful as an internal accounting measure, and Baystate also views it as documentation for compliance purposes.

That, in fact, is a major marketing feature for manufacturers of POC devices, he adds. "If you have connectivity and are capable of capturing the data, it helps you close that compliance loop and make sure the test gets billed for." This does not mean, of course, that the payment for POC testing covers the fully loaded cost of providing it. "The way users look at it is they are thankful to get paid anything for it."

Connectivity is making it possible for many hospitals to change their approach to POC test billing, Logue agrees. "Now, with a download interface, you can immediately load onto the LIS, which automatically orders, receives, reports, and generates a bill."

"The problem I see now that they are getting that technology on POC testing is the issue of training people in the ER and in the clinics, making sure that the physician has a written order for the test and that there’s valid documentation of the reason for ordering," she cautions.

Fetters has practical advice for hospitals that want to improve reimbursement for POC testing. "Glucose is becoming easier and easier, because many hospitals implemented data management for it, but it will be a long time before we see people correctly and completely billing for urine. They often use urine dips just to see if there’s blood in the urine." Hemoccults, he adds, are usually the third highest-volume test, "but I would suggest they are the hardest to bill for because they are typically used as screening."

Larger institutions that may be doing lots of catheterizations for surgery are performing more activated clotting times, then following up in CCUs and ICUs with activated partial thromboplastin times, often at the point of care. "If they are, I would suggest the hospital look at coagulation as the next thing on their punch list for setting up billing, because usually you have more qualified people performing the tests, the reimbursement rates are higher, and it should be easier to get reimbursed."

With outpatient prospective payment bringing down copayments, hospitals will want to look at every revenue source, and POC testing is a prime opportunity, Logue says. Hospitals are legally entitled to be paid for POC testing."If it’s properly set up, if the staff is properly trained, and physicians are aware of their responsibilities, there’s no reason why hospitals shouldn’t go after this revenue." As a side benefit, Fetters says, POC testing programs will get increased respect. "Having some revenue attached to your area of the hospital," he says, "makes people sit up and take notice."

Anne Paxton is a freelance writer in Seattle.