Largest Physician Site-of-Service Fee Differential

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In 2011, the physician coding and reimbursement for lower extremity revascularization changed.  When the professional physician service codes and payments for angioplasty, atherectomy, and stent placement were bundled, it created the largest payment differentials of any physician procedures between facility and non-facility settings.

Atherosclerosis is a disease characterized by the buildup of fat and cholesterol (plaques) on artery walls. Atherosclerosis is responsible for heart attacks, strokes, and peripheral artery disease (“PAD”).  PAD affects 8 to 12 million Americans and the prevalence increases with advanced age, smokers, and diabetics.  As the population ages, 10 to 16 million Americans may be affected by PAD.

Up to 90% of PAD sufferers do not experience any symptoms.  The most common symptom is leg pain.  When the disease is diagnosed, PAD patients require intensive cardiovascular risk reduction and referral to a supervised exercise program.  Endovascular revascularization by balloon angioplasty, atherectomy, and stent placement may also be required.

When the CPT codes for lower extremity revascularization were changed in 2011, several individual services were bundled together, including vascular access, catheterization, imaging guidance, closure, and sedation.  This bundling had the side effect of intensifying the existing payment differential between facility and non-facility physician reimbursement.

In other words, the professional physician fees for revascularization services are substantially higher when the services are performed in a physician-owned vascular laboratory than when the same services are performed in a hospital or ambulatory surgery center setting.  In fact, six of the seven largest site-of-service payment differentials for all Medicare reimbursed physician services are for lower extremity revascularization.

2015 Medicare site-of-service payment differential – Lower extremity revascularization

Healthcare attorney Thomas Shapira of the firm Harrison & Held LLP in Chicago has been involved with several physician-operated vascular laboratories.  Shapira has found that physician control is a major motivation for starting a vascular lab, while the additional revenue to the physicians is secondary.

Thomas B. Shapira
Thomas B. Shapira

“From a clinical standpoint, the physicians have more control over the environment, because they established the lab,” says Shapira.  “They are responsible for equipment, maintenance, and ancillary personnel who assist.  All of these are advantages on the clinical side to the patient, as opposed to hospital personnel and equipment. Oftentimes, patients feel more comfortable in their doctors’ offices than having a procedure in the hospital.”

Shapira also acknowledges the potential risks and complications of performing revascularizations in an outpatient setting.  It may be more difficult to address those complications if those procedures are not done in a hospital.  The staff need specialized training to address complications and have a process in place to transfer patients to a hospital when necessary.

Shapira has observed vascular labs operated by solo practices, as well as groups.  In addition to the equipment, they often need to get accredited.  They also may need assistance from a third party to manage the facility for them, and there are specialized consultants to meet this need.

The practice’s electronic health record system may also need to be expanded to include vascular lab services.  The practice’s existing software may not account for the additional records and claims.

“The physician is making a significant investment in building out the office space lab.  If the utilization of that lab is infrequent it is going to be harder to recover the cost,” says Shapira.  “If you have a group of physicians it may be easier to utilize the lab to a greater capacity.  That being said, because the reimbursement right now is favorable, it is possible that a single physician can recover the cost without having to do a significant number of procedures.”

PAD prevalence is highest among individuals over 75 years of age.  As with other forms of cardiovascular disease, the growth of PAD and the demand for revascularization services will only increase in the coming years as the U.S. population ages.  Hopefully, the economics of the reimbursement will enable physician-operated vascular labs to persevere in the future.

Shapira says, “Outpatient vascular labs create an opportunity to improve patient access to clinical services, while enabling physicians to control the environment, increase revenue, and continue to maintain an independent medical practice.”

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Thomas B. Shapira is a partner with Harrison & Held, LLP.  He can be reached at (312) 621-5232 or tshapira@harrisonheld.com.