Hospital outpatient physical and occupational therapy is one of the few levels of care that has not been forced into a capitated environment. For most hospitals, this service is paid either on a fee schedule or as a percentage of charges. That said, one might think that hospitals would invest resources to ensure there were no missed charges, visits, or referrals. After all, closing the gap on these potential opportunities equates to real revenue for the hospital, and for the latter two, it represents improved access to care. Our experience has been that many hospitals have not invested in this area and see the services more as a cost center versus a potential profit center. And after all, there are certainly larger areas, departments, centers of excellence, etc., with more dollars at stake that must be attended to first. We understand that. But perhaps now, when hospitals are looking for every opportunity to improve their margin, is a perfect time to unveil what opportunities may lie here.
Charge Capture
In outpatient therapy, for most payers, a missed charge is truly missed revenue. Very few payers we work with have any meaningful per-visit rate or any semblance of a capitated rate. It is not unusual for us to co-validate anywhere from a ten to a twenty percent charge capture opportunity. Take even a small hospital that generates, for example, two million in net revenue per year. A ten to twenty percent improvement in charge capture equates to $100,000 to $200,000 net revenue per year. This is for work that is already being done. You might ask why we consistently find such opportunities. The answer is quite simple. The rules for how therapists capture charges are complex. So, if a therapist is not 100 percent sure how to convert all of their skilled treatment minutes to the appropriate CPT code, they tend to be conservative. In short, they go down, not up.
Visit Capture
If you have ever been to outpatient therapy before, you know that the number of times you are suggested to be seen is a product of the first visit, when the evaluation occurs.
For example: “Mr. Britt, based on the findings of the evaluation and the goals that you and I have discussed, I will need to see you twice a week for six weeks.”
And so, there is always a frequency and duration that is arrived at in the evaluation. In this case, the frequency and duration result in a projected number of visits of twelve. As you might imagine, different diagnoses and issues have different projections. That said, one can, within a degree of reason, pinpoint the average projected number of visits. We consistently find significant gaps between the planned visits projected and the actual number of visits that occur. In some practices, the actual visits are fifty percent or less than the planned visits. When this happens, we conduct a root cause analysis to determine the sources of this shortfall.
Let’s use the ‘Mr. Britt’ example above where the projected number of visits is twelve. Remember, this is the first time Mr. Britt has heard how often and how long he needs to come, and he is behind closed doors with just the therapist.
He responds: “Look, I have a $60 co-pay. I can’t do that.”
For this recurring service (PT and OT), many hospitals have not implemented a point-of-service financial alternative. Even if they have some path for this patient in their policy manual, the therapist has not been given the permission, scripting, or process to execute it. Now, a patient whose best chance of complete and sustainable recovery with 12 visits is being put on a home program and told to call back if they have issues. Implementing policies, processes, tools, and education to address this could yield hundreds of thousands of dollars in revenue for hospitals, not to mention improved access to care.
Referral Integrity
Did you know that if patients go to a hospital-sponsored outpatient therapy clinic, their chances of getting one-on-one care are dramatically higher than if they go to a freestanding therapy clinic? It is not meant as a criticism of the freestanding clinics. The difference is driven by how they get paid. With that said, I know where I want my family to go for care if they need it – a clinic where one clinician can provide 100 percent of their attention during their appointment time.
We find that there are several points in the hospital environment where patients could and should be identified as potential outpatient therapy candidates. We have been able to work with these hospitals to gain stakeholder buy-in for the candidacy of these patients, to systemize the identification and referral of candidates, and to address capacity issues and opportunities that come with growth. Shouldn’t we give our patients the right of first refusal to access our services, where they will receive one-on-one care?
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Now is the time to rethink outpatient therapy as more than a cost center. By implementing proven processes for charge capture, visit integrity, and referral optimization, you can transform outpatient therapy into a strategic profit center while enhancing patient outcomes. Reach out to one of our experts to start uncovering these opportunities today.
Liz Barlow, RN, CRRN, RAC-CT, DNS-CT, QCP, Senior Consultant
