The juice to squeeze ratio for E&M services: follow up visits pay best.

John Nelson writes…

Which Evaluation & Management visit (E&M code, or CPT code) commonly billed by a hospitalist provides the most attractive reimbursement for the work performed?  I think follow up codes (99231, 99232, and 99232) reimburse better than most others, but from what I can tell most hospitalists see it differently.  Here is my reasoning…

To make this exercise easier, I’ll consider only the most common CPT codes for hospitalists – those dealing with inpatient admission, inpatient follow up, and inpatient discharge.  I’ll leave out critical care, observation, consultative, and procedural CPT codes.  While the latter are important, they are billed by hospitalists much less often than inpatient codes.  And I’ll also limit the discussion to Medicare reimbursement rates and not take into account rates paid by commercial insurance plans since they may vary more than Medicare rates.

Of the inpatient CPT codes, the highest level admission (99223) pays the most (has the highest Medicare allowable), leading some hospitalists to conclude the most effective way to generate revenue is by admitting patients.  But my own experience and observation of others suggests that reimbursement per amount of time spent is actually lower for admitting patients than for providing follow up (rounding) visits.    Put differently, I think the compensation compared to the time and work effort, or the “juice to squeeze ratio,” for admissions is worse than for follow up visits.  And I think discharge visits have the worst “juice to squeeze” ratio of all.

Have you ever had a day when you had no new admissions and no discharges?  I’ve had such days once or twice a year during my career, and found that they usually go very quickly.  And at the end of that day I have usually generated more revenue per hour than on the typical day that I admit and discharge several patients in addition on rounding on many more.

Such an imbalance in the “juice to squeeze ratio” is an issue in every field in medicine.  Years ago a radiologist explained to me that interpreting plain films like chest X-rays is the most efficient way to generate revenue.  While reimbursement for plain film interpretation is far less per study than more complex studies like CTs, a radiologist can usually go through a set of plain films very quickly and generate more total revenue in a fixed amount of time than if reading CTs.  Radiology reimbursement schedules may be very different now, but this anecdote illustrates that from an economic perspective it is important to look at more than just which service has the highest reimbursement, and to also think about the time and effort required for that service.

Whether you generate revenue most effectively by rounding rather than admitting or discharging will depend on your own personal work habits, the way you document and choose CPT codes, and your patient population.  My point is that you shouldn’t simply assume the services (CPT codes) that provide the highest reimbursement have the best “juice to squeeze ratio.”

And I also want to be clear that I am not suggesting that you analyze reimbursement to influence how you choose CPT codes, or change patient management simply to allow billing different codes.  But when thinking about something like whether a rounding shift or admitting shift pays better, be sure to do a “juice to squeeze” analysis.  There is significant regional variation in Medicare reimbursement by CPT code, and you can learn the rates for your area here or simply by looking at some EOBs (explanation of benefits) from your own practice.

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