Revenue Cycle-The growing trend of outsourcing in oncology

Revenue Cycle – The Growing Trend
of Outsourcing in Oncology

Direct & Indirect Costs & Benefits
In an effort to decrease overhead and increase efficiency some oncology practices are turning to third-party companies to manage all or part of their revenue cycle. Some practices are outsourcing the collecting of aged accounts and still others are contracting with companies that provide the entire billing and collection process.

Conversely, there are oncology practices seeking to diversify their revenue stream by acting as a third-party billing company for other oncology offices. When evaluating these practices and their ability to perform the services for your practice apply the same operating and compliance standards to them as you would any other third-party entity.

Outsourcing all or part of your billing and collections process requires careful consideration. Individual practice and market factors along with a detailed study of costs and benefits will help you determine whether outsourcing is a good option for you.

Revenue cycle costs include personnel, operations and technology. Direct costs include, telephone bills, information systems such as computer hardware and software, equipment including printers, fax machines etc., office space, personnel salaries, benefits, payroll taxes, training and supplies.

When comparing the costs of in-house billing to outsourced billing don’t neglect the cost of uncollected or aging accounts receivables, inappropriate write-offs, services unbilled and claims that are not appealed. Efficiency in the billing and collection process directly impacts revenues so that while the cost may not be less, the return on investment (ROI) may be higher.

Measure and track efficiency through key indicators:

  • Days outstanding in A/R
  • Percentage of collections - based on expected reimbursement determined through payer fee schedules
  • Month over month & year over year report broken down by payer, patient and CPT/HCPCS
    • Charges
    • Collections
    • Credits – broken down by category
      • Contractual obligations
      • Bad-debt
      • Timely filing write-off
    • Denials – broken down by category
      • No prior authorization
      • Bundled service
      • Incorrect coding, modifiers etc.
      • Registration error (patient demographics)
      • Medical necessity – diagnoses, etc.,
  • Time from denial or underpayment to resolution
  • Percentage of claims paid on first submission

Claims should be submitted electronically, when available payments should be posted electronically, Electronic Remittance Advice (ERA), and payments should be posted by line item.

Measuring Performance
When determining the efficiency of your in-house billing department or that of a third-party billing company it is important to understand the parameters and limitations of reports.

Collection Percentage
Collection reports based on the percentage of accounts receivables collected may be very misleading. If you are comparing the collection percentage of your practice to another (or to the collection percentage reported by a billing company) keep in mind that the following variables may significantly impact this measurement:

  • Provider fee schedule – the closer the fees charged are to the lowest payers allowable the higher the collection percentage will be
  • Payer mix – contracted allowables, volume by payer
  • Services – practices who are early adopters of new therapies and/or off-label therapies often experience a dip in their collection percentage rate
  • Report parameters
    • Is the collection percentage based on only those claims that are paid?
    • Does the report take into account the write-offs for claims that should have been payable?
    • Are overpayments and refunds accounted for and subtracted?

Aging Report
This report is used to determine outstanding claims and how long the balance has been outstanding. This is usually run in thirty day increments 30, 60, 90, 120+ days.

  • Payer mix – some payers are traditionally slower payers than others
  • Services – practices who are early adopters of new therapies and/or off-label therapies can expect a delay in payment on these services
  • Report parameters
    • Is the report run by date-of-service or date last billed?
      • If the system has been set up to re-age all rebilled claims and/or the report parameter is set up to age based on date last billed the report would not be an accurate account
    • Credit balances may cause the aging report to inaccurately reflect the outstanding balance in each aging category

Days in Accounts Receivable
This report is used to determine how quickly claims are paid. This measurement can be used to evaluate payer performance as well as billing staff performance. Days in A/R is most often calculated by dividing Ending A/R by the Average Daily Charges. Average Daily Charges are calculated by dividing Gross Charges by number of days in a period.

When monitoring this report keep in mind that if you have unusually high charges one month this report will reflect an incorrect increase in the days in A/R, while unusually lower charges in a month will reflect an incorrect decrease in the days in A/R.

Compliance with all billing rules and regulations including HIPAA is essential and increases the value of the service. Practices that perform the billing in-house should develop and maintain a billing compliance plan based on the guidance issued by the Department of Health and Human Services Office of Inspector General (OIG).

Outsourcing the billing operations does not relieve the provider of responsibility for compliance. Prior to engaging a third-party billing company, ask them to provide you with a copy of their Compliance Plan.

In order to promote “a higher level of ethical and lawful conduct throughout the entire healthcare industry” the Office of Inspector General (OIG) published The OIG Compliance Program Guidance for Third-Party Medical Billing Companies December 18, 1998 in the Federal Register Volume 63, No. 243.

The compliance plan for third-party medical billing companies is as of yet still voluntary as is the suggested compliance plan for physician practices. Practices and billing companies that develop and maintain a “living” compliance plan that includes the seven essential elements identified by the OIG, are practicing a “best practice.”

According to the OIG, the development and adherence to a voluntary compliance program shows “good faith efforts to submit claims appropriately.”

Title 42 of the United States Code Section 1320a-7a (a) prohibits providers from contracting with individuals and entities that the providers know or should know have been excluded from participation in federal health care programs.

The OIG maintains a Web page on the Exclusion Program that allows providers to look up individuals and entities that have been excluded from federal health care programs. The online searchable database allows for a search by name, business name or general classification.

After searching the OIG exclusion database, it is recommended that you also obtain a written warranty from the billing company stating that neither they nor their employees are excluded from state or federal program participation. Include in this written warranty the billing company’s obligation to inform you if any member/employee of the company becomes excluded during the contracted period.

For more information:

Contracting tipsContracting Tips
A careful evaluation of the billing company and their services should be completed prior to signing an agreement. Use the following list as a starting point for items to be included in the agreement:

  • Detailed list of services to be provided and method of providing the service
    • Claims processing and remittance
      • Timeline for submitting claims
      • Electronic submission
  • Exceptions
  • Compensation
    • Pricing structure
    • Price of services including any potential add-on fees:
      • Hardware/software updates/maintenance
      • Software license
  • Conversion process
    • Length of process
    • Costs
  • Method of information transmission between practice and billing company
  • Allocation of staff dedicated to the account
    • Credentials and education/training of staff
  • Warranty of compliance with all state and federal billing/reimbursement laws and third party payer requirements
  • Ongoing training and education to ensure compliance with billing/reimbursement rules & regulations
  • Responsibilities of physician/practice
  • Reports to be provided
    • Parameters of reports
    • Practice access to information through computer
  • Provision for prospective internal and/or third party audits
  • Record retention in accordance with state and federal laws
  • Security issues
    • System back-up
    • Access
  • Resolution of compliance concerns
  • Right to terminate
    • Right to immediate termination for compliance issues
    • Conversion process upon termination

If you are considering outsourcing all or part of your revenue cycle and would like sample forms for evaluating and selecting a billing company contact Risë at Rise@Oplinc.com or by phone at 360-695-1608.


Billing Challenges

Prolonged Services – With Direct Patient Contact
Many oncology offices are not billing for prolonged services even though this is a service that is frequently performed in the oncology office. The most commonly cited reasons for not reporting these codes are:

  1. The codes are not listed on the encounter form and/or;
  2. The physician is unsure how to appropriately document and bill for this service.

Those practices that are successfully reporting these services have conducted an in-service to the physicians on the correct use of the codes as well as providing reference materials that the physicians can use as cheat sheets while they familiarize themselves with the time and documentation requirements.

Prolonged service codes 99354-99357 are used when a physician provides a prolonged service involving direct face-to-face patient contact that is beyond the usual service. Prolonged service codes must be billed in addition to the E/M service provided on that day.

99354 1st hour prolonged services, office or outpatient must be billed with one of the following companion codes:

  • 99201-99205    99341-99345
  • 99212-99215    99347-99350
  • 99241-99245

Prolonged services are billable by qualified non-physician practitioners. Medical record documentation must show the duration and content of the E/M visit billed. The duration of the visit must extend 30 minutes past the normal time for the E/M service provided and be beyond the usual service. When calculating the duration of the visit only count the direct face-to-face time between the physician and patient, the face-to-face time need not be continuous.

For example, CPT 99215 typically involves 40 minutes of physician involvement. If the physician service requires an hour beyond these 40 minutes, then one unit of CPT code 99354 may be billed. If 99354 is billed without 99215, 99354 will be denied.

99355 prolonged services each additional 30 minutes, office or outpatient. The first unit of 99355 is billable after an additional 45 minutes spent past the threshold time for 99354. 99355 must be billed with 99354 & one of its companion codes:

  • 99201-99205    99341-99345
  • 99212-99215    99347-99350
  • 99241-99245

You may bill additional units of 99355 for each additional increment of 30 minutes of prolonged services.

Coding Total Duration of Prolonged Services 99354 & 99355
Less than 30 minutes of prolonged services are not reported separately

30-74 min (1/2 hr. - 1 hr. 14 min.) 99354 x1
75-104 min (1 hr. 15 min. - 1 hr. 44 min.) 99354 x 1 99355 x1
105-134 min (1 hr. 45 min. - 2 hr. 14 min.) 99354 x 1 99355 x2
135-164 min (2 hr. 15 min. - 2 hr. 44 min.) 99354 x 1 99355 x3
165-194 min (2 hr. 45 min. - 3 hr. 14 min.) 99354 x 1 99355 x4

Threshold Time for Prolonged Visit Codes 99354 & 99355
The typical times associated with the office/outpatient and consultation E/M codes and the threshold times for billing prolonged visit codes 99354 and/or 99355 listed below can be found in the Medicare Claims Processing Manual Chapter 12

BILL 99354
99354 & 99355
99201 10 40 85
99202 20 50 95
99203 30 60 105
99204 45 75 120
99205 60 90 135
99212 10 40 85
99213 15 45 90
99214 25 55 100
99215 40 70 115
99241 15 45 90
99242 30 60 105
99243 40 70 115
99244 60 90 135
99245 80 110 155

99356 1st hour prolonged services, in the inpatient setting, requiring direct face-to-face patient contact that is beyond the usual service. Report this code in addition to the appropriate inpatient evaluation and management code.

  • Must be billed with companion code:
  • Time spent waiting for test results, for changes in the patient’s condition, for end of a therapy, or for use of facilities cannot be billed as prolonged services.

99357 prolonged services each additional 30 minutes, (1st unit not billable until additional 45 minutes spent past threshold time for 99356).

  • Must be billed with 99356 & one of its companion codes:
    99221 - 99233
    99251 – 99255

Threshold Time for Prolonged Visit Codes 99356 & 99357
The typical times associated with the inpatient hospital and consultation E/M codes and the threshold times for billing prolonged visit codes 99356 and/or 99357 listed below can be found in the Medicare Claims Processing Manual Chapter 12

BILL 99356
99356 & 99357
99221 30 60 105
99222 50 80 125
99223 70 100 145
99231 15 45 90
99232 25 55 100
99233 35 65 110
99251 20 50 95
99252 40 70 115
99253 55 85 130
99254 80 110 155
99255 110 140 185

The AMA CPT® Assistant, November 2005, Volume 15, Issue 11 states that if time is considered the key or controlling factor in choosing the level of E/M service, then the prolonged services codes (99354-99357) can not be used unless the service has exceeded 30 minutes beyond the highest level of E/M in the appropriate category of E/M services.

If the service does not exceed 30 minutes beyond the highest level of E/M in the category, then modifier 21, Prolonged evaluation and management services, should be appended to the E/M code to indicate the extended service rather than reporting the prolonged services codes.

According to Transmittal 808 - CMS Manual 100-04 Section 30.6.13 H prolonged service codes can be used when the E/M service provided was a split/shared E/M visit:

“…split/shared E/M visit applies only to selected E/M visits and settings (i.e., hospital inpatient, hospital outpatient, hospital observation, emergency department, hospital discharge, office and non facility clinic visits, and prolonged visits associated with these E/M visit codes). The split/shared E/M policy does not apply to consultation services, critical care services or procedures.”

Prolonged Services – Without Direct Patient Contact

Prolonged service codes 99358 and 99359 are used for prolonged services not involving direct (face-to-face) patient contact. These codes are not payable by Medicare but may be payable by private payers.

Code 99358 is used to report the first hour of prolonged services without direct (face-to-face) patient contact, spent before and/or after direct (face-to-face) patient care for such activities as the review of extensive records and tests, communication with other professionals and/or the patient or family. This code must be reported with the E/M service provided on the same date of service.

Code 99359 is to be reported for each additional 30 minutes of prolonged physician services without direct (face-to-face) patient contact, list this code in addition to 99358.

As with the face-to-face prolonged service codes these codes are to be reported in addition to the E/M service provided on the same date. The time spent by the physician on that date need not be continuous.

The CPT® codes used in this newsletter are developed and maintained by the American Medical Association. CPT® is a Trademark of the American Medical Association Current Procedural Terminology (CPT) is copyright 2006 American Medical Association. All Rights Reserved. No fee schedules, basic units, relative values, or related listings are included in CPT. The AMA assumes no liability for the data contained herein. The AMA CPT, CPT Assistant & CPT Changes 2007: An Insiders View are available on the AMA website at: www.ama-assn.org/cpt/online


Risë Marie Cleland is the founder and President of Oplinc, a national organization of oncology professionals. Through Oplinc Ms. Cleland publishes the weekly Oplinc Fax Tracts focusing on the timely dissemination of information pertaining to billing, reimbursement and practice management in the oncology office and Oplinc’s Best Practices Review, which provides a more in-depth look at the issues and challenges facing oncology practices. Ms. Cleland also works as a consultant and advisor for physician practices, pharmaceutical companies and distributors.


Risë Marie Cleland

300 West 8th Street, Unit 419
Vancouver, WA 98660-3440
580.695.0632 phone
360-993-5065 fax




Please note that this newsletter is presented for informational purposes only. It is not intended to provide coding, billing or legal advice. Regulations and policies concerning Medicare reimbursement are a rapidly changing area of the law. While we have made every effort to be current as of the issue date, the information may not be as current or comprehensive when you review it. Please consult with your legal counsel for any specific reimbursement information. For Medicare regulations visit: www.cms.hhs.gov.


OIG Work Plan 2007

The Office of Inspector General (OIG) publishes a yearly Work Plan that details projects to be addressed during the fiscal year by the Office of Audit Services (OAS), Office of Evaluation and Inspections (OEI), Office of Investigations (OI), and Office of Counsel to the Inspector General (OCIG).

The goal of the OIG Work Plan is to improve the efficiencies and effectiveness of the programs and activities of the Department of Health and Human Services (HHS) in each of the Department’s major entities: the Centers for Medicare & Medicaid Services; the public health agencies; and the Administrations for Children and Families, and on Aging.

The Work Plan should be reviewed by health care providers, administrators, compliance officers and billing managers. This document outlines the OIG’s priorities and concerns and will provide a useful resource for those who wish to keep abreast of the OIG’s ongoing fraud and abuse initiatives.

The Work Plan includes sections on hospitals, skilled nursing facilities, Medicaid and physicians and other healthcare providers. The following is a brief summary of some of the focus areas of interest to oncologists:

Medicare Hospitals

Rebates Paid to Hospitals
The OIG will visit several large vendors to determine the amount of rebates paid to hospitals in a given year. They will then examine a sample of Medicare hospital cost reports to determine whether hospitals are properly identifying purchase credits/ rebates as a separate line item in their Medicare cost reports. Investigations have found that some hospitals are not properly reporting rebates causing Medicare and Medicaid to pay the hospitals more than their cost for drugs and supplies.

Department Payments

A review of payments to hospital outpatient departments under the outpatient hospital PPS will be undertaken to determine whether the payments were made in accordance with Medicare laws and regulations. Payments made for multiple procedures, repeat procedures, and global surgeries will also be examined.

Unbundling of Hospital Outpatient Services
The unbundling of services can lead to inappropriate Medicare payments. A review of claims submitted by hospitals and other providers will focus on services that should be bundled into outpatient services.

Medicare Skilled Nursing Facilities

Skilled Nursing Facility Consolidated Billing
The OIG will determine whether controls are in place to prevent duplicate billings under Medicare Part B for services covered under the SNF PPS and the effectiveness of Common Working File edits established in 2002 to prevent and detect improper payments. Under the PPS, the SNF has the Medicare billing responsibility for virtually all of the Medicare-covered services that its residents receive. With the exception of services that are excluded from Consolidated Billing (CB) the outside supplier must receive payment from the SNF, rather than the Medicare Part B carrier.

Medicare Hospice

Hospice: Plans of Care and Appropriate Payments
A review will be performed in order to determine if assessments were completed and if the plans of care correctly reflect the assessments for Medicare beneficiaries receiving hospice care. The review will also look at the services billed versus services received and the accuracy of the level of care billed for. A medical record review will be undertaken to determine if the plans of care accurately reflect patient assessments, and whether all patients received a plan of care documenting all required services including their location, frequency, and level of care.

Medicare Physicians
& Other Health Professionals

Billing Service Companies
The OIG will continue to identify and review the relationships between billing companies and the physicians and other Medicare providers who use their services. The types of arrangements that physicians and other Medicare providers have with the billing services and the impact of these arrangements on physicians’ billings will be studied.

Physician Pathology Services
The OIG reports that Medicare pays physicians more than $1 billion annually for pathology services. They will review these services to determine whether the billings for pathology laboratory services performed in physicians’ offices comply with Medicare Part B requirements. They will also study the relationships between physicians who furnish pathology services in their offices and outside pathology companies.

Evaluation of “Incident to” Services
The OIG continues their study of the appropriateness of Medicare services performed “incident to” the professional services of physicians. They seek to identify services performed “incident to” physicians’ professional services and to determine the extent to which the services met Medicare standards for medical necessity, documentation, and quality of care. A number of oncology offices are reporting that they are currently being audited with a focus on the “incident to” billing. Practices should review the “incident to” billing rules to ensure that all requirements are met.

Place of Service Errors
Medicare payments for physician office services are higher than those services provided in ambulatory surgical centers and hospital outpatient departments. A review will be performed to determine whether physicians are properly coding the place of services on claims. The proliferation of physician-hospital joint ventures may be one of the reasons for scrutiny in this area.

Long Distance Physician Claims Associated with Home Health and Skilled Nursing Facility Services
A previous OIG inspection identified cases where physicians ordered or billed for services normally requiring a face-to-face examination for beneficiaries who lived a significant distance from the physician’s office. This study will be continued to determine if Medicare Part B long distance physician services are inappropriately billed for beneficiaries of home health and skilled nursing facility services.

Violations of Assignment Rules by Medicare Providers
Medicare Providers must accept Medicare’s payment and beneficiary co-payment as payment in full for all covered services. Providers cannot bill beneficiaries for amounts in excess of the Medicare allowed amount. The OIG will examine the extent to which providers are billing beneficiaries in excess of amounts allowed by Medicare requirements and beneficiary awareness of their rights and responsibilities regarding potential billing violations and Medicare coverage guidelines.

Advanced Imaging Services in Physician Offices
The growing utilization of advanced imaging services provided in physician offices has prompted the review of the appropriateness of these services. The OIG reports that the utilization of advanced imaging services, such as MRI, PET, and CT scans, has grown on average by 20 percent per year. They will examine the nature of the growth of these services and examine billing patterns in certain geographic areas and practice settings.

Medicare Part B Drug Reimbursement

Computation of Average Sales Price
The OIG will continue to study drug manufacturers’ methodologies for computing the average sales price (ASP).

Review of Part B Drug Reimbursement Methodology
They will examine the impact on the Federal Government if CMS reimbursed multi-source Part B drugs based on the ASP of individual National Drug Codes (NDC). CMS currently calculates the reimbursement amount for a Healthcare Common Procedure Coding System (HCPCS) code, which is often composed of multiple NDCs, by weighting the reported ASPs based on the amount of each NDC sold during the quarter. For multi-source drugs, the inclusion of higher priced brand name drugs in the weighted average may increase the amount of Federal reimbursement. The OIG will analyze the top 10 multi-source drugs purchased by a sample of oncology practices during the first quarter of 2005 to illustrate the reimbursement differences between the ASPs of individual NDCs within a HCPCS code and the weighted average ASP for a HCPCS code.

Medicare Payments for Oral Antiemetic Medications
The OIG will review Medicare payments for oral antiemetic medications. Certain oral antiemetic medications are covered by Medicare when they are used as a full therapeutic replacement for the intravenous antiemetic medication and they are administered immediately before or within 48 hours after chemotherapy treatment.

Monitoring Part B Drug Prices: Average Sales Price to Widely Available Market Prices
The MMA mandates that OIG conduct studies to determine widely available market prices for Part B drugs. The market price will then be compared to the ASP.

Monitoring Part B Drug Prices: Average Sales Price to Average Manufacturer Prices
The MMA mandates the OIG compare ASPs to average manufacturer prices (AMP) for Medicare Part B prescription drugs. The OIG must notify the Secretary if the ASP for a particular drug exceeds the AMP by a threshold of 5 percent.

Duplicate Payments for Part B Drugs Under the Competitive Acquisition Program
They will determine if duplicate payments are being made to physicians for Part B drugs purchased from CAP vendors and those directly reimbursed under the average sales price system. The will also examine the systems CMS has in place to prevent duplicate payments for Part B drugs.

Adequacy of Reimbursement Rate for Drugs Under the Average Sales Price
The OIG will continue to study the adequacy of the Medicare Part B reimbursement rate on drugs and whether physicians’ practices in the specialties of hematology, hematology/oncology, and medical oncology are able to purchase drugs at the reimbursement rates.

Intravenous Immune Globulin: Medicare Reimbursement and Availability
Current market prices and product availability for Intravenous Immune Globulin (IVIG) will be evaluated. Manufacturer pricing and perspectives on IVIG and other links in the IVIG supply chain, i.e., distributors, Group Purchasing Organizations, and physicians will be examined.

The 2007 OIG Work Plan was released September 26, 2006 and is available at this link.


Comments and suggestions for future issues are welcome, please forward correspondence to Risë Marie Cleland by email at: Rise@Oplinc.com







Remove me from this distribution list | Sign up to receive this newsletter