Can You Afford A Femtosecond Laser?

Transcription

1 Can You Afford A Femtosecond Laser? Stephen C. Sheppard, CPA, COE Managing Principal Medical Consulting Group, LLC Kevin J. Corcoran, COE, CPC, CPMA, FNAO President, Corcoran Consulting Group Founder, Corcoran Compliance Connection Financial Disclosures Stephen C. Sheppard, CPA, COE is a Managing Principal of Medical Consulting Group, LLC. He acknowledges a financial interest in the subject matter of this presentation. Kevin J. Corcoran is president of Corcoran Consulting Group and founder of Corcoran Compliance Connection, LLC. He acknowledges a financial interest in the subject matter of this presentation. FS Laser Guidance January 2012 ASCRS/AAO joint guidance Providers may not balance bill a Medicare patient or his or her secondary insurer for any additional fees to perform covered components of cataract surgery with an FS laser. The patient must be informed about, and consent to, the additional out-of pocket-costs in advance. A refractive lens exchange is not medically necessary and therefore is not covered FS Laser Guidance A surgeon may use the FS laser for the cataract surgery, but neither the surgeon nor the facility may obtain additional reimbursement from either Medicare or the patient over and above the Medicare-allowable amount. Neither the surgeon nor the facility should use the differential charge allowed for implantation of a premium refractive IOL to recover all or a portion of the costs of using the FS laser for cataract surgical steps. Source: ASCRS/AAO Guidance FS Laser Guidance Patient-shared pricing with one cost for a premium IOL, and a higher cost for the additional use of the FS laser to perform the cataract surgical steps, should not be offered. Medicare patients may be charged a fee for performing astigmatic keratotomy, assuming that they were informed about, and consented to, the non-covered charges in advance. FS Laser Guidance Because astigmatic keratotomy for refractive indications is a non-covered service, a higher fee can be charged for performing it using the FS laser, instead of with a metal or diamond blade. While most astigmatism treatment is not covered, Medicare does cover the treatment of large degrees of astigmatism that were the result of previous ocular surgery. Local coverage determinations may apply.

2 FS Laser Guidance Advertising: Promotional claims must be consistent with the best available clinical evidence and should not be deceptive or misleading to patients. Transparency: Patient-shared pricing should be discussed openly with the patient. Increased charges should be explained and documented. Simple Language Laser-assisted cataract surgery Precise Refractive surgery Reduced dependence on glasses and/or CLs Laser-Assisted Cataract Surgery and CMS Rulings and 1536-R Laser-Assisted Cataract Surgery and CMS Rulings (cont.) Medicare coverage and payment for cataract surgery is the same irrespective of whether the surgery is performed using conventional surgical techniques or a bladeless, computer controlled laser. Under either method, Medicare will cover and pay for the cataract removal and insertion of a conventional intraocular lens. If the bladeless, computer controlled laser cataract surgery includes implantation of a PC-IOL or AC-IOL, only charges for those non-covered services specified above may be charged to the beneficiary. These charges could possibly include charges for additional services, such as imaging, necessary to implant a PC-IOL or an AC-IOL but that are not performed when a conventional IOL is implanted. Performance of such additional services by a physician on a limited and non-routine basis in conventional IOL cataract surgery would not disqualify such services as non-covered services. This guidance does not apply to the use of technology for refractive keratoplasty. Approaches to CMS Guidance BEST: Charge patient for use of the FS laser for arcuate incisions to correct pre-existing regular astigmatism, which is not covered, for any type of IOL. INSUFFICIENT: Charge patient for use of the imaging element of FS laser to plan for ATIOL, which is not covered (assuming it is not used routinely with conventional IOLs). TROUBLESOME: Charge patient with a conventional IOL without astigmatism for use of the FS laser for arcuate corneal incisions just in case they later develop astigmatism. AVOID: Patient charges without a rational basis that are not defensible, or may be misleading. Key Considerations Define covered and noncovered items and services Charges are proportional to products and services Charges must be fair and reasonable Document financial responsibility Separate physician and facility Use caution with co-management

3 Patient Understanding Key While payment for non-covered services is the beneficiary s responsibility, Medicare Law ( 1879) contains a provision that waives that liability if the beneficiary is not likely to know and did not have a reason to know that the services would not be covered. Charges for Non-covered Services Need To Be Defensible (for non-covered services) the physician s charge to the patient is not limited to the Medicare physician fee schedule. Nevertheless, the physician must be able to justify the charge to the patient. If the patient is charged for a series of diagnostic tests, the charge for those tests must be defensible. One way to assess the propriety of the charge is whether they are consistent with what the physician would otherwise charge a self-pay patient for the same services. Source: Arnold & Porter Legal Opinion Logic of Professional Fee 1. List of tasks appropriate for the patient s needs 2. Include contingency for enhancements 3. Frequency of task(s) based on protocol, experience 4. Assign usual and customary charge 5. Calculate weighted average for each task 6. Sum for global fee Surgical Correction of Astigmatism Non-covered professional services Refraction to determine refractive error Corneal topography for regular astigmatism Contact lens trial fitting to assess refractive error Intraoperative wavefront aberrometry (ORA) Corneal pachymetry associated with refractive surgery Marking the eye for axis of toric IOL Femtosecond laser to make arcuate corneal incisions Enhancement (i.e., AK, LRI, CRI, PRK, LASIK) Where do you start determining a price? Analyze your internal costs (equipment, patient interface, etc.) Consider non-covered, additional diagnostic tests involved in refractive treatment = FMR Goal = package service Why Acquire an FS Laser? 1. Our practice embraces new technology 2. It s a good story for our referral base 3. We could lose market share without it For every complex problem, there is a solution that is simple, clear and.wrong!

4 Where do we start this discussion? Identify key assumptions Do the math Qualitative considerations Make a decision or not Key Assumptions How many laser procedures will you perform? How many laser procedures will generate revenue? What is your penetration rate for: Astigmatism-correcting IOLs? Presbyopia-correcting IOLs? LRIs? Will the FS laser increase your penetration rate? Key Assumptions What are the total costs of the laser? Purchase of the laser Patient interface Annual maintenance costs Other operating and financing expenses Which entity will pay these costs? ASC? Practice? Other? Are there potential partners to mitigate some of the risk? See appendix Excel Worksheets Qualitative Considerations Is the FS laser a marketing tool? Can we market competently? Are we good at integrating new technologies? Are we assuming new professional liabilities? What if the manufacturer offers to bundle the FS laser with other products? What is our exposure to the changing CMS landscape and/or the PPACA? Is RORO a better option for our practice? Can We Afford A FS Laser? Is this the right time to commit? Should we wait for new lasers or business models? What is the rush?

5 More help For additional assistance or confidential consultation, please contact us at: Stephen C. Sheppard (417) Kevin J. Corcoran (800)

6 APPENDIX

7 OPHTHALMIC ASC, LLC Femtosecond Laser Economic Proforma and Sensitivity Analysis Years One Through Five Of Operations Current Procedures: Refractive Lens Procedures- Facility 2,000 2, % 2, % 2, % 2, % 2, % Conversion Rate to Laser 12.5% 12.5% 12.5% 12.5% 12.5% Total laser procedures: Facility Limbal Relaxing Incisions - Facility Conversion Rate to Laser 12.5% 12.5% 12.5% 12.5% 12.5% Revenues: Revenues:- Facility Fee for Laser Refractive Lens Procedures $ 620 $ 155, , , , ,940 Fee for Limbal Relaxing Incisions $ , , , , , , , , , ,806 Expenses: Maintenance Fee - 0.0% 45, % 45, % 45, % 45, % Insurance on Equipment % % % % % Total fixed costs % 45, % 45, % 45, % 45, % Technician Labor (per hour) $ 30 7, % 7, % 8, % 8, % 8, % Minutes per Case 30 Interface - Lens Case $ , % 84, % 87, % 90, % 93, % Interface - LRI $ , % 32, % 33, % 34, % 35, % Supplies $ 25 12, % 12, % 13, % 13, % 14, % Total variable costs 132, % 137, % 142, % 146, % 152, % Total operating expenses 133, % 182, % 187, % 192, % 197, % EBITDA 177, % 138, % 144, % 151, % 158, % Depreciation and amortization (in years) (70,000) -22.6% (112,000) -34.9% (67,200) -20.2% (40,320) -11.7% (40,320) -11.3% Interest Expense (14,225) -4.6% (8,828) -2.7% - 0.0% - 0.0% - 0.0% Income before income taxes $ 92, % 17, % 77, % 110, % 117, % Analysis of cash flow - Owners: Income before taxes $ 92,775 17,449 77, , ,896 Add depreciation 70, ,000 67,200 40,320 40,320 Less- prinicipal (equipment) (111,182) (116,579) (122,239) - - Cash flow from operations $ 51,593 12,869 22, , ,216

8 EQUIPMENT LOAN AMORTIZATION Years One through Five of Operations Equipment Purchased $ 350,000 Less: Partners' Capital 0.00% - Equipment Loan Amount $ 350,000 Equipment Loan Rate 4.75% Loan Term In Years 3 Additional Principal $ - Quarterly Monthly Payment $10,451 AMORTIZATION TABLE Beginning Additional Ending Year Month Balance Principal Interest Principal Balance 1 1 $ 350,000 9,065 1, , ,935 9,101 1, , ,834 9,137 1, , ,697 9,173 1, , ,524 9,210 1, , ,314 9,246 1, , ,068 9,283 1, , ,785 9,319 1, , ,466 9,356 1, , ,110 9,393 1, , ,717 9,430 1, , ,286 9, ,818 Year One Totals $ 350, ,182 14, , $ 238,818 9, , ,313 9, , ,770 9, , ,190 9, , ,571 9, , ,914 9, , ,219 9, , ,486 9, , ,714 9, , ,904 9, , ,055 9, , ,166 9, ,239 Year Two Totals $ 238, ,579 8, ,239

9 Years One through Five of Operations 3 1 $ 122,239 9, , ,272 10, , ,266 10, , ,220 10, , ,135 10, , ,009 10, , ,844 10, , ,638 10, , ,392 10, , ,105 10, , ,778 10, , ,409 10, Year Three Totals $ 122, ,239 3, $ Year Four Totals $ $ Year Five Totals $ Medical Consulting Group, LLC 4/9/2014