College of American Pathologists
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POC Glucose: More Hospitals Choose to Bill

January 2003
Anne Paxton

“We lose money on every test—but we make up for it in volume.”

For laboratory managers, that line used to be a joke. But it’s oddly close to the truth when it comes to billing for point-of-care glucose tests.

The majority of hospitals indeed lose money on their point-of-care testing programs because they still don’t bill insurers for those tests, says POC testing consultant Christopher Fetters. That’s largely because, for inpatients, Medicare won’t cover them separately from the diagnosis-related group, or DRG, payment.

Yet with the huge volume of glucose testing conducted at most medical centers, even a small amount of income on a portion of the tests would add up to significant revenue. “There has to be a sea change to help laboratory managers, nursing administrators, and finance people understand what kind of volumes are at stake here,” says Fetters, who is president of Nextivity in York, Pa.

POC glucose testing is unique, says consultant Joan Logue, president of Health Systems Concepts/Clinical Laboratory Concepts Inc., Longwood, Fla. “I know of no other specific ancillary service that is included with the cost of the room rate.”

Why don’t most hospitals take advantage of the opportunity to bill separately? It’s partly a case of the Medicare tail wagging the hospital dog.

“The Medicare rule is, you don’t get to bill different payers different amounts or use different billing methods,”Fetters says. “Every charge has to be the same regardless of the payer or status of the patient. The only exception is between inpatients and outpatients—and some people even challenge that. But certainly for the inpatients, you must charge all payers the same.”

As a result, Medicare’s nonpayment policy leads directly to the nonbilling of the whole payer mix—even those that would pay.

Concerns about compliance in recent years have unfortunately overshadowed the need to bill appropriately, Fetters believes. “Billing is where people are falling short. They’re worried about meeting regulatory requirements and end up saying, ‘We’ll decide about billing later,’” he says. Lost opportunities to bill are not unique to point-of-care testing. Fetters worked at a health care system only a few years ago that was billing out large numbers of Pap tests at around $14—but getting reimbursed for only a fraction of them. “Our billing department would not resubmit a bill for anything under $50 because it was not considered worth the effort,” he recalls. “We were losing hundreds of thousands of dollars because if the payer was rejecting it the first time, they were getting away without paying.” This, he adds, is the “plight of the modern-day, high-volume laboratory.”

Originally, nurses didn’t consider POC glucose tests laboratory tests, and POC glucose more or less slipped under the laboratory’s radar. “It wasn’t until CAP and the Joint Commission really started inspecting hospitals under CLIA. Then the nurses went to the laboratory, saying, ‘They’re telling us this is a laboratory test,’” Fetters says.

People forget, however, that the whole patient population is not Medicare and not covered by DRGs. “The national average is probably 15 percent to 20 percent that is fee-for-service. Those are people who will actually pay for virtually everything you invoice them for. So even if you can only get a small amount of income, multiply that by hundreds of thousands of glucose tests,” Fetters points out.

Further, he argues, hospitals cheat themselves out of future DRG increases by not billing for POC glucose testing. “If you’re not billing Medicare, then you’re devaluing the DRG, because Medicare doesn’t know what it actually costs to treat Medicare patients in this country. If you just put it in the overhead, Medicare never sees it, so our average DRG payment is not rising at the rate that true costs are increasing.”

Every year there is a “settling up” process that hospitals go through with Medicare, and either the hospital owes Medicare or Medicare owes the hospital, says Diana Voorhees, principal of DV & Associates Inc., Salt Lake City. “On the outpatient side, these procedures may be billed with CPT codes and reimbursed under the clinical laboratory fee schedule,” she says. “But on the inpatient side, there are costs for supplies, personnel, salaries, benefits, and they all go in the cost report. So the costs are likely reported as part of the year-end settlement. You just aren’t immediately reimbursed throughout the year, so it’s not as transparent as outpatient billing.”

Room charge rate increases also cannot keep pace with the steep rise in use of POC glucose, Fetters says. “When a nurse administrator or finance person says we just include POC glucose in the room charge, I believe they’re just doing some calculation based on the hospital’s overhead—operating costs divided by patient days. I don’t think they’re discretely adding in POC glucose costs,” he says. “The problem is, the way they increase room charges is usually commensurate with the inflation rate, say, three percent per year. So if POC testing is growing at 12 to 15 percent per year, five years from now you’re way out of whack.”

“Unfortunately,” he adds, “the stumbling block for implementing POC glucose billing is, if you don’t have data management, you’re kind of stuck.”

Based on Fetters’ visits with hundreds of hospitals during the year, he estimates that five to 10 percent are billing for glucose already. “Another 25 percent are working very seriously on it. They’re working with the finance and information technology people on how to do this, and they’re waiting for data management to come in so it’s easier.”

All of the larger hospitals have some kind of data management, and the glucose POC vendors are good at making sure there is a computer to capture their data. “Unfortunately,” Fetters says, “it’s often a laptop you have to walk around with in a lot of institutions, or a modem download to a PC not interfaced with the laboratory information system.” He estimates that this restrictive level of data management still exists in 4,500 to 5,000 of the nation’s 6,000 hospitals. “We need a fully interfaced system you can download and pass on to the LIS. It’s really hard to meet regulatory concerns if you’re walking around once a month with a laptop and not getting the final results to patients’ records. And it means you probably aren’t going to be able to drop a bill.”

Smaller facilities like community hospitals are less likely to have a connectivity interface. “I don’t think it’s a top priority for a lot of facilities,” Voorhees says. “When they’re faced with HIPAA [Health Insurance Portability and Accountability Act] and general compliance and other state and national regulations, tracking POC testing when it doesn’t mean any more reimbursement on the inpatient side isn’t something they want to do.”

Yet many hospital departments are disappointed in their productivity statistics because they know they do more than the statistics show, she says. “Most professionals, whether in the laboratory or radiology or pharmacy or physical therapy, really aren’t familiar with cost reporting. If they actually billed line-item services using the Charge Master, then they would at least have accurate data, and they probably could—if nothing else—track productivity.” Budgetary assignments for departments are partly based on productivity, she says. So if you need to hire more staff and replace more instruments, this kind of line-item billing could have the added benefit of helping you make your case to the hospital management.

While the hospital’s finance staff is frequently cited as the obstacle, the staff generally grasps the value of POC billing quickly, Fetters says. “A POC coordinator can sit in presentations and say ‘I have a history as a laboratorian and I hear what you’re saying, but I still don’t have the authority in the hospital.’ So I encourage them to bring along the finance people, and 80 to 90 percent of the time the finance people see the point. The trouble is convincing them it’s a laboratory test—and letting them know the volume of testing actually being done.”

It’s worth the trouble, however, says Voorhees. She suggests there’s a serious management problem because of not billing for POC glucose. “Because POC glucose is still not routinely billed on the inpatient side in the hospital, I don’t think a lot of hospitals even know how many are performed,” she says. At a recent seminar she conducted, a manager said that the laboratory had just spent many hours trying to get a handle on how many inpatient glucose tests were being done. “I asked, if you track on your Charge Master by billing line items, could you not have on your revenue and usage report that distinction between inpatient and outpatient and how many times per year they are performed, and would that not save a lot of time and effort?” she says.

The prevailing argument, of course, is that routine POC glucoses are a nursing department expense. But Voorhees says in many hospitals the laboratory carries most responsibility for the entire procedure. “That means in some facilities it actually purchases the test strips and supplies, then sends them to the floors where the service is provided,” she says. “So while the nurses actually do the fingerstick and test, it’s the laboratory that does the training, provides the supplies, and conducts all the quality control and followup related to quality assessment.”

Nevertheless, billing for inpatient POC glucose is not completely clear sailing, warns Logue. Although she supports billing, she understands why many hospitals hesitate: Medicare’s program memorandum requiring each test to have documented medical necessity. “Do they have the ability to fulfill the requirements of the program memorandum to have a specific glucose order for each test and to validate that those results are reported to the physician?” Logue asks. “The reality is, I think, with the limitations on nursing staff in today’s world, nurses just do not have the time to fulfill those requirements. So with something as frequent as POC glucose testing, it’s just easier to spread the cost across all patients.”

“It appears when you look at Medicare’s cost report instructions that it’s not appropriate to include POC glucose in the cost of the room,” she adds. “But if a diabetic comes in and we do a POC glucose, say, every four hours, or every six hours, it’s cheaper for us to spread that cost across all the patients than to try to chase down the physician each time to order the test. The medical necessity issue is what makes it not worthwhile. ‘Specifically ordered’ means specifically by the physician—not just as part of a nursing protocol.”

Fetters questions this rationale. “I don’t think it’s easier to spread the costs,” he says. “If a physician calls in with a verbal order, then you’d better be getting them to sign that order when they come in and see the patient next time, and your hospital should have policies to back that up. I think it’s a shame if we say nurses are too busy to do what they’re required to do.”

He maintains the physician-order argument is a red herring. “You’re not allowed to do laboratory tests in this country in a JCAHO-approved institution without a physician order. So it’s not a billing issue. It’s a compliance issue for any institution that’s accredited,” he says.

The hospital has to be careful of sliding scales and standing orders, to make sure orders are reviewed every three days, and to rescind and rewrite orders when appropriate. “That keeps you in compliance with both the Joint Commission and Medicare,” Fetters notes. “Anybody who says they’re not doing POC billing because of Medicare medical necessity requirements is also saying they’re not going to meet JCAHO standards.”

The billing regimen at Rush Presbyterian-St. Luke’s Medical Center in Chicago started changing about six months ago when Abbott Diagnostics’ Medisense product, Precision PCx, was installed, and billing for POC testing has become part of the routine. “Before this system, as at most hospitals, if the patient needed a glucose, it was done and written on a flow sheet,” says the director of laboratories, Robert DeCresce, MD, MBA. “Now we order it, document that it was done, document who did it and the result, and with that system in place those are the ones we are billing for. We’re treating POC glucose like any other laboratory test.” At this point, everyone is using the new glucose meters and about a third are using the entire system, he says.

The potential revenue is significant. “We did a quarter of a million glucoses last year, so that was a quarter of a million tests no one paid anything for built into the costs of the medical center,” Dr. DeCresce notes.

But Rush Presbyterian’s approach was not to view the system as a money-making scheme. “The medical center is going to make money, but we believe the proper management of these tests requires an order, the identification of the result, the time of day, and where it’s done, and it belongs in the medical record. And because we document who and when, we have a charge for that as a glucose. Now if the insurance company chooses not to pay, that’s okay. I’m using it as documentation,” says Dr. DeCresce.

The patient records at Rush Presbyterian-St. Luke’s Medical Center may not be any more electronic than those of most hospitals, but some areas at Rush, such as the emergency room, are fully electronic. “In terms of laboratory records, we want to be 100 percent electronic,” Dr. DeCresce says. Toward that end, all nurses and patients are bar-coded, and those codes go into the laboratory results.

Patients have worn the bar-coded wristbands, in fact, for 10 years, but the bands haven’t been fully exploited. “We tried a variety of systems, but the technology just was not there,” Dr. DeCresce says. “The scanners were heavy and bulky. It’s only been in the last couple of years that the equipment has really become miniaturized.”

Despite the inevitable difficulties of integration, the new system has bar codes that the glucose system can read and medical records administrators can use. “I don’t want to pretend we’re there,” he cautions. “This is an incremental process. But from a laboratory standpoint, I’ve always felt POC testing has had a lot of potential, but there have been a lot of barriers to making it practical. I believe this system actually addresses all of them.”

Using medical necessity as an excuse not to bill for POC glucose is a stretch, Dr. DeCresce says. “Think of it another way. I don’t think Medicare asks hospitals if every urine dipstick or blood glucose strip used is medically necessary when they look at the cost report. You could argue that some insurance companies are not going to pay for these because they consider them part of the routine room-and-board charge. But that doesn’t change the need for having some kind of computerized system to record results.”

Indeed, Rush Presbyterian’s laboratories are choosing to bill not to make money but because it’s an appropriate way to treat patients. Says Dr. DeCresce: “I think that’s far more important than charging someone for the test. So my thrust on this is, it’s a medical issue and a management issue. I’ve taken responsibility for these tests. I want to know who did them, if the training was done, if the machine was working properly. If, later down the road, someone asks why a decision was made, I can point to this.”

This documentation benefit alone makes the system worthwhile, he contends. “Whether you collect a dime doesn’t really matter because you’re preventing a lot of problems. If you collect money, great. But it’s more important that you have the result in the chart. To say no, you won’t bill POC glucose because it’s built into the room rate is fine—but you still have poor documentation. I elected to do this whether or not a charge was going to be assessed because the real issue is better patient care.”

Dr. DeCresce does not yet know how many of the POC glucose bills are being paid. But Fetters suggests that hospitals like Rush Presbyterian stand to bring in more revenue than they might expect. He says some areas of the country may have a larger geriatric population and are more subject to Medicare, while others have more private-pay patients. “Let’s say you have a really high population of geriatric patients,” Fetters says. “Under the 2003 fee schedule, Medicare pays $3.27 per glucose. If you do 100,000 outpatient glucoses that are Medicare, you’re getting $327,000 just from that, and that doesn’t include the $15 per glucose from fee-for-service patients.”

Volume is the key, he emphasizes, not any one glucose test. “You’re already sending out a bill to the patient’s payer, and you’re already spending money on gloves and gauze and strips and the time to do the POC tests,” Fetters explains. “With data management, the process becomes seamless, and because you have a whole bunch of tests, you are talking hundreds of thousands of dollars.

“The finance people don’t know you’re doing a quarter of a million glucoses and they don’t see it as a huge revenue opportunity. To them, it’s an inconsequential task done by some nurses on the floor. But when you look at some little thing done 250,000 times, that’s when they sit up and take notice,” he says.

More hospital laboratories should take advantage of that law of large numbers by billing for POC glucose tests. Says Dr. DeCresce: “I don’t know why people aren’t doing it. It’s a lot of work; it’s a hassle. But once it’s going, it’s great.”

Anne Paxton is a writer in Seattle.