If it sounds too good to be true, it probably is

August 17, 2021
In assessing new products, consider first what is best for your patients and practice—but also consider reimbursement related to new equipment.
If it sounds too good to be true, it probably is

Excerpted from page 44 of the July/August 2021 edition of AOA Focus; written by AOA’s Coding & Reimbursement Committee.

Considering what equipment to invest in to support optimal clinical care in a practice is a priority for every physician. With all the research and development going into clinical practice tools related to eye health and vision care, doctors of optometry have many wonderful options and innovations from which to choose. In assessing new products, the priority is to consider what is best for your patients and practice, but it’s also important to carefully consider reimbursement related to new equipment.

In recent years, it has been more common for companies to provide coding guidance or advice related to their equipment or tools. This information can be helpful to assess whether CPT codes already exist for a certain product or service that can be billed to insurance and Medicare. However, because the codes reported by any physician are ultimately the responsibility of the billing physician, it is critical to confirm whether company guidance on coding is truly appropriate. Care provided must always be medically necessary to be reimbursed. If a procedure or service is done as a screening or medical necessity cannot be demonstrated, a service may be considered noncovered or elective.

To be a knowledgeable purchaser of equipment and to best review coding recommendations and estimated reimbursement for use of a tool or devices, it is useful to understand the anatomy of the valuation of CPT codes. CPT codes are “valued” based on a number of factors, and from that valuation a reimbursement amount is determined.

In assessing the value of a CPT code certain factors are considered:

  • Physician work (including the time and intensity associated with a service).
  • Clinical staff time.
  • Supplies and equipment.
  • Professional liability insurance associated with performing a service.

The physician work component accounts for an average of 50.9% of the total valuation; while the practice expense component accounts for an average of 44.8% of the total valuation; and the professional liability insurance component accounts for approximately 4.3% of the valuation.

Given that the work of the physician is the most significant component in determining code valuation, if the physician work required to use a particular device is not extensive, the physician work value associated with the service will be lower. If the physician work involved in the operation of an instrument, the collection of data or the performance of a procedure is minimal, then reimbursement ultimately may be lower. An example of this in optometry would be for a procedure such as corneal pachymetry (CPT code 76514), which is not as demanding to the physician as procedures such as YAG posterior capsulotomy (CPT code 66821) or insertion of punctal plugs (CPT code 68761), both of which are reimbursed at a higher rate.

There are many great tools that can be used in practice that provide incredibly insightful clinical information and have a great value to a practice. However, it is important to recognize that if the physician work involved in use of a particular test or procedure is minimal for the doctor, the reimbursement may ultimately be lower. Understanding coding and code valuation is just one aspect of evaluating equipment purchases but can be very useful as doctors assess what is best for their practice.

Learn about the RUC

The American Medical Association/Specialty Society Relative Value Scale Update Committee (RUC) is an expert panel of physicians that makes recommendations to the federal government on the resources required to provide medical services. When making recommendations to the federal government, the RUC considers physician work (including the time and intensity associated with a service), clinical staff time, supplies and equipment, and professional liability insurance associated with performing a service.

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