The Gamble: Buying And Billing For Outside Medical Treatments in The Clinic

A Significant New Revenue Stream or a Path to Financial Ruin?

In this turbulent healthcare environment, administrators and providers are always looking for simple add-ons to clinic revenue sources, in order to improve bottom-line performance.

In-clinic selling to patients for procedures or items that patients usually buy anyway would seem to be a no-brainer. But buyer beware, this is not always the case

Take for example, three common buy and bill in-clinic procedures in Urology: Urolift and Rezum for Benign prostatic hyperplasia and Provenge, for metastatic castrate-resistant prostate cancer. 

In theory, the Urology clinic can generate more revenue from the BPH procedures in one in-clinic 30-minute patient visit than the total reimbursement for a Radical Prostatectomy in the operating room. 

For Provenge, though the time frame for the treatment is longer and patient care coordination is complicated, almost no doctor is required for the actual treatment. An LVN in the clinic, for example, is able to handle the actual administration of the drug in the clinic. Reimbursements for the full course of Provenge is a multiple of even the highly profitable (on paper) BPH treatments, Rezum and Urolift.

What could possibly go wrong? In short, everything. Vendors, though they are your best friends, get paid by how many of each item they sell, not by how much profit your clinic generates. For example, a local Rezum rep offered these wonderful changes to a standard purchasing agreement:

1). Buy the Rezum machine for $15,000, which was previously given for no charge for a period of two plus years,  or the price per Rezum treatment would increase 7%

2). Sign a minimum monthly buy of the treatment or the cost of the treatment would increase 7%

3). Pay for all purchases within 30 days, though actual full reimbursement from insurance payers for any procedure would take up to 90 days

If payment for all treatments for all in-clinic procedures were a slam dunk, then maybe the buy and bill option would always be the right choice, regardless of the endless hurdles and rule changes vendors seem to put the clinic through. 

But the reality is that the problem with billing for these treatments is the same as any medical billing, with the caveat that there is an extra cost of goods and inventory management element added to the equation.  Not only does the clinic need to worry about the usual co-pays, deductibles, co-insurances and insurances refusing to pay claims for a myriad of reasons, there is also the inventory management and cash flow issue that accompanies the buy and bill medical treatments. 

Using Urolift as an example, a patient may need from 4-7 Urolift “staples” for his treatment. The provider will not know how many Urolifts are needed until he or she treats the patient. To be on the safe side, the clinic should order the worst-case scenario 7 staples per patient, otherwise the provider will be unable to do the treatment in the worst-case scenario. The cost of the 7 staples could be about $6,000 with the potential full reimbursement of about $7,500 , a potential net profit of $1,500 for 30 minutes worth of work, which sounds good.

So what are the down sides? 

1). The patient is a no -show. The clinic has to pre-purchase the Urolifts, so if the patient no-show and purchased Urolifts are not properly accounted for, there will a $6,000 bill due from Urolift Inc., with no possibility of revenue to offset the cost of the purchase.

2). The insurance company does not pay in 30 days or ever.

3). The insurance company needs to get re-billed because of an issue  with the first bill.

4). The receptionist in the clinic did not get the note that  she was supposed to collect 20% of the cost of the procedure or the $1,0000 deductible from the patient.

5). The Prior Authorization clerk forgot to do the prior authorization for the procedure, or she received a verbal authorization but now has no documentation to back the claim up. 

The only thing that the clinic can actually count on is that the bill for the Provenge, the Urolift or the Rezum is going to come right on time, and the vendor a/r department will be calling right on the due date.  Even worse, the clinic will not be called for payment, since  a prepayment to cover the cost of the treatment, was required.