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* From Interventional Pulmonology, Baylor College of Medicine, Houston, TX.
Correspondence to: William W. Lunn, MD, FCCP, 1709 Dryden St, Suite 950, Houston, TX 77030; e-mail: wlunn{at}bcm.tmc.edu
Key Words: ambulatory care • bronchoscopy • facility • practice • reimbursement
It was not until after Dr. Ikeda’s introduction1 of the flexible bronchoscope in 1968 that bronchoscopy spread beyond the confines of the university medical centers. The flexible bronchoscope quickly eliminated the need for a general anesthetic to perform bronchoscopy. Indeed, after gaining experience performing flexible bronchoscopy on hospitalized patients with sedation and local anesthesia of the airway, physicians realized that bronchoscopy could be safely performed under the same conditions in an outpatient facility.2
Inspired by the rapid development of endoscopic ambulatory surgical centers (EASCs) and by our colleagues in gastroenterology and otolaryngology who routinely perform office-based endoscopy,34 some chest physicians are wondering if we are standing at the threshold of the next revolution in bronchoscopy: the advent of office-based bronchoscopy. This article will discuss the feasibility of office-based bronchoscopy with a focus on potential advantages for patients and a discussion of regulatory and practice management issues.
Potential Advantages for Patients
Office-based bronchoscopy may offer patients the advantages of lower cost, convenience, and higher comfort. In order to appreciate the potential cost savings in providing bronchoscopy services in the office, it is necessary to review the Medicare payment system since it has great influence on third-party payers who often construct fee schedules based on a percentage of Medicare reimbursement.
Historically, Medicare physician reimbursements were based on "usual and customary" charges that doctors employed in their practices over the years. Beginning in 1992, Medicare switched to the resource-based relative value scale system, which bases physician reimbursement on a standardized methodology for measuring physician work, practice expense, and malpractice expense.5 There is mounting evidence, however, that these calculations do not provide an accurate measure of the actual costs of providing services to our patients.6 Physicians are reimbursed for bronchoscopy services by Medicare depending on the location where the services are performed. Medicare fee schedules can be viewed on the Centers for Medicare and Medicaid Services Web site.7 Physician reimbursements are displayed as either "facility" (the procedure is performed in the hospital or in a certified EASC) or "nonfacility" (the procedure is performed in the office). Nonfacility fees are generally higher in order to take into account that physicians experience a higher practice cost in order to provide those services. For example, a diagnostic bronchoscopy (current procedural terminology [CPT] 31622) performed in Houston, TX, in 2006 has a facility reimbursement of $149.51 compared to a nonfacility reimbursement of $318.62. This "site of service" payment schedule, first released in 1998, may encourage physicians to perform services in their offices, and may actually result in reduced costs to the system.
In a similar fashion, Medicare switched from reimbursing hospitals for outpatient services based on the cost of providing services to a prospective payment system, which established what are now known as ambulatory payment classification (APC) groups for outpatient services. The prospective payment system is designed to control costs to beneficiaries by reimbursing hospitals on a "rate per service" basis that depends on the APC group to which the service has been assigned.8
Third-party payers have followed the example of Medicare by reimbursing physicians differently based on the site the services are performed. Gastroenterologists have enjoyed success negotiating "supply fees" or "tray fees" with private insurers in order to compensate for the cost of performing an endoscopy in the office. Our GI colleagues have proven that endoscopy performed in a physician’s office, with the addition of a supply fee, can be less expensive than that performed in an outpatient hospital setting.3 As a result, third-party payers have paid less for services in the physician’s office than they would have under the APC system. This has resulted in physicians having their office endoscopy units designated by third-party payers as preferred providers of endoscopic services due to the quality of the services provided and the cost savings realized over the hospital.3 Both the patients and their insurers have been the beneficiaries of the reduced cost. Bronchoscopists might not enjoy the same bargaining power with third-party payers as gastroenterologists because they perform far more endoscopic procedures each year. For most pulmonologists, outpatient bronchoscopy is not a high-volume procedure.6 In my hospital, for example, 12 pulmonologists performed a total of 638 bronchoscopies in our unit in 2005, of which 227 were outpatients. This translates to an average of approximately 19 outpatient bronchoscopies per year, or 1.6 per month, for each physician.
Bronchoscopy in the office could be a more pleasant experience for the patient. The physician would already have all of the patient’s information so that additional paperwork could be kept to a minimum. The preregistration process for the patient could be handled during a time when the patient is already in the doctor’s office, such as after a consultation. Finally, the physicians’ office would be dedicated to providing bronchoscopy services on low-risk outpatients so the chance of procedure delays would be much lower.
Chest physicians view bronchoscopy as a routine procedure, and we often do not appreciate that it can be stressful for our patients. When asked, patients requiring bronchoscopy often complain of significant anxiety regarding the procedure. A minority even complain that bronchoscopy is so unpleasant that they would not consent to a repeat examination.9 Few studies1011121314 have been conducted regarding patient comfort during bronchoscopy, but factors found to influence patient comfort include the experience of the endoscopist, the patient’s anxiety level before the procedure, and the presence of music in the bronchoscopy unit.
Could location have an effect on patient comfort during bronchoscopy? Gardner et al15 studied the effect of location on 47 patients undergoing outpatient surgery at either a hospital-based ambulatory surgical center (ASC) or a freestanding ASC, finding no differences in perioperative anxiety or overall satisfaction with care in the two groups. They concluded that location may not be an important factor in determining patient comfort and anxiety in surgical patients. Nevertheless, it is possible that a patient-friendly bronchoscopy suite located in a doctor’s office may serve to decrease patient anxiety levels. A familiar environment staffed by people with whom the patient is already acquainted might be less threatening. Moreover, the endoscopist might feel greater comfort and ease in his or her office. Together, all of these may serve to enhance the experience and comfort for the patient.
Could location have an effect on the type of procedures performed during bronchoscopy? For example, consider a patient with suspected sarcoidosis undergoing bronchoscopy in the office. One might argue that the physician could be tempted to perform bronchoscopy with transbronchial needle aspiration biopsy (TBNA) and endobronchial biopsy and omit transbronchial lung biopsies in order to avoid complications. If so, there is the potential that a procedure is performed on the patient with less risk at the expense of lesser yield. There are no data examining office-based bronchoscopy, patient selection, and procedure efficacy. Therefore, until such data are available, this concern will remain conjecture, but still important to keep in mind. Rather than performing low-risk procedures in the office, some of our ear, nose, and throat colleagues are currently performing office-based laser and debulking of airway tumors with a flexible bronchoscope.16 However, they have not reported on safety, efficacy, and patient selection.
Regulatory Issues
Office-based bronchoscopy is not currently subjected to as many layers of certification and regulatory requirements of an outpatient hospital-based ASC or an EASC. Although every physician’s office has to deal with a wealth of regulatory issues, ranging from the Health Insurance Portability and Accountability Act to federal fraud and abuse statutes, there are some unique considerations that must be addressed with office-based endoscopy. The salient regulatory issues affecting office-based endoscopy include professional society guidelines, state licensure requirements, the Occupational Health and Safety Act of 1970, third-party accreditation, and payer requirements.
Our professional societies last published bronchoscopy guidelines during 1982 to 2001.17181920 Only the American Thoracic Society and the Thoracic Society of Australia and New Zealand gave recommendations on the location of bronchoscopy, stating that an out-of-hospital location was acceptable as long as such a facility could adequately respond to an emergency and properly handle collected specimens. This is in sharp contrast to our colleagues in gastroenterology, whose professional societies have established strict guidelines for performing office-based endoscopy.2122 It is important to note that the American Society for GI Endoscopy supports a "site neutral" policy for endoscopy. The same standards for training, safety, and emergency management are applied regardless of the site the endoscopy is performed.22 This demand for excellence protects the interests of patients; our professional societies would do well to adopt a similar policy for office-based bronchoscopy.
A requirement for state licensure for office-based procedures may be present, depending on local state and medical board policies. Individual states may require permits, accreditation, inspections, and adherence to specific policies and procedures before granting certification. In Texas, there is currently no licensing requirement for office-based bronchoscopy. However Texas, like many other states, has guidelines related to performing office-based anesthesia, including moderate sedation (formerly known as conscious sedation), and this would affect office-based bronchoscopy if performed with the use of anxiolytics and/or narcotics. The Texas State Board of Medical Examiners reports rules and regulations that govern medical practice in the office on their Web site.23 The State of Connecticut requires that an office endoscopy unit must be accredited by a nationally recognized agency if sedation is employed. The State of Florida is required to inspect an office-based endoscopy unit unless it has already been accredited by a nationally recognized accrediting agency even if no sedation is employed. Suffice it to say that each state has its own requirements relating to office based endoscopy.24 Though some report performing office-based bronchoscopy without the use of moderate sedation, employing moderate sedation in an office setting would certainly be acceptable as long as a safe environment for the patient is provided.
The Occupational Health and Safety Act of 1970 requires that employers take measures to protect workers from known health hazards that may be encountered on the job.25 Cleaning and disinfecting endoscopic equipment can lead to exposure to noxious fumes and should be performed with adequate ventilation and protection according to current guidelines.26 Additionally, bronchoscopy personnel may be exposed to communicable diseases, such as Mycobacterium tuberculosis, and adequate protection is required including appropriate ventilation in the endoscopy area as well as adherence to universal precautions.
Third-party agencies such as the Joint Commission on Accreditation of Health Care Organizations and the American Association for Accreditation of Ambulatory Surgery Facilities offer accreditation for office-based endoscopy units. Attaining third-party accreditation may not be necessary for an office-based bronchoscopy unit, depending on state rules and regulations. Attaining accreditation is a laborious and expensive process that involves an application, an initial survey after documenting compliance with mandatory policies and procedures, and a reinspection every 3 years. The entire process may take 12 to 18 months to complete and may cost upwards of $10,000.22 Avoidance of these extra costs and consultations may be part of what could make office-based bronchoscopy a better value for the patient and insurance carriers. Yet, such national standards and guidelines could be very useful for a group of physicians starting a bronchoscopy unit in their office. An alternative to third-party certification would be for physicians to utilize Joint Commission on Accreditation of Health Care Organizations or American Association for Accreditation of Ambulatory Surgery Facilities standards of practice in their office bronchoscopy units without seeking accreditation.
Local insurance companies, however, may require third-party accreditation of an office bronchoscopy unit in order to qualify for reimbursement. A physician wishing to start an office-based bronchoscopy unit would do well to visit with the top 10 insurance carriers in their practice to briefly discuss their policies regarding office-based surgery. Insurance company requirements may vary from state to state and from payer to payer.
Practice Management Issues
Once the applicable local, state, and federal regulatory issues are completely understood, interested physicians should construct a detailed business plan to determine if an office-based bronchoscopy unit would be economically viable. There are any number of business consultants who specialize in helping physicians create office-based surgical and endoscopy units. A caveat is that many times physicians provide business consultants with information that results in an overly optimistic assessment of a potential venture. The physician must provide conservative and detailed input into every part of the business plan so that unexpected costs and unrealized procedure volume are avoided.3
The first step in formulating an accurate financial analysis is to determine the total fixed and variable costs. Fixed costs are independent of procedure volume, while variable costs are altered by the volume of procedures performed. Examples of fixed costs include space (such as rent and build-out costs), major equipment (bronchoscopes, video towers), and emergency equipment (code cart, defibrillator). Examples of variable costs include minor equipment (IV starter sets, crystalloid), cleaning supplies (gloves, enzymes), and drugs (lidocaine, midazolam). Personnel costs (salary and benefits) can be fixed if the staff is dedicated to bronchoscopy services only or variable if they function elsewhere in the office when bronchoscopy services are not being performed. The cost of each item and the cost per case should be determined. A physician might begin accumulating a list of required items by taking note of and recording everything that is employed in a hospital-based bronchoscopy unit.
The next step is to determine the break-even volume: the number of procedures that must be performed in order to cover the costs of performing the services in the office. Diamond et al27 offered the following simple formula for the break-even volume and made modifications to adjust for differing payers and services performed:
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Let us put these principles to work and calculate a break-even volume for a hypothetical office-based bronchoscopy service. A physician group is able to acquire 1,000 square feet of office space adjacent to their office that can be incorporated into the existing space as a bronchoscopy unit. The group plans to perform bronchoscopy 5 days a week with a maximum of 10 procedures performed per day. Two personnel have been identified to work in the unit: a respiratory therapist and a nurse, both of whom shall work full time in the bronchoscopy unit. The group has elected to lease all equipment, including one video tower, two videoscopes, and cleaning supplies, instead of purchasing the equipment. Two types of bronchscopy services will be performed in the office: simple and complex. The group defines simple bronchoscopy as diagnostic bronchoscopy with BAL with brushing (CPT 31623 and 31624). Complex bronchoscopy is defined as diagnostic bronchoscopy with the following procedures alone or in combination: TBNA, transbronchial lung biopsy, and endobronchial biopsy (CPT 31629, 31628, and 31625). The group has elected to offer these services to patients covered by their two largest private third-party payers, preferred provider organization (PPO)-a and PPO-b. Favorable global fees have been negotiated with these carriers. PPO-a has agreed to a fee of $1,500 for simple bronchoscopy and $2,000 for complex bronchoscopy. PPO-b has agreed to a fee of $1,200 for simple bronchoscopy and $1,800 for complex bronchoscopy. The group has analyzed its past procedure volume by payer to determine that 40% of the bronchoscopies would be performed on PPO-a patients and 60% would be performed on PPO-b patients. Finally, the group estimates that half of its bronchoscopy services would be simple and half would be complex.
In the above scenario, fixed and variable costs are estimated and depicted in the Tables 1, 2
. The group calculates a variable cost of $59.80 per simple bronchoscopy and $87.95 per complex bronchoscopy. Based on the above data, a break-even analysis can be completed employing the following formula:
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Perhaps the most difficult task is to give a realistic estimate of the volume of procedures that could be done in the office. A physician group interested in providing office-based bronchoscopy might determine the total number of outpatient bronchoscopies they performed in a 12-month period and estimate that half of these might be appropriate for the office. Once the volume has been estimated, the payer mix should be studied in order to determine if enough procedures are performed on patients covered by third-party payers to reach the break-even volume. Knowing the costs of providing bronchoscopy services is essential in the successful negotiation of global fees with third-party payers.
Summary
There are many reasons that office-based bronchoscopy may be attractive for chest physicians, ranging from improved quality of service to the increased efficiency that a doctor may realize by consolidating outpatient procedures in the office. Medicare "site of service" reimbursement initiatives have resulted in a steady rise in the number of procedures moving to the outpatient setting. Unlike our GI colleagues, office-based bronchoscopy may not be an attractive option for the majority of bronchoscopists who generally perform less procedure volume on sicker patients. However, bronchoscopy in the office could be financially viable for astute physician groups who perform outpatient bronchoscopy frequently and can negotiate favorable global fees with their local insurance carriers.
Footnotes
Abbreviations: APC = ambulatory payment classification; CPT = current procedural terminology; EASC = endoscopic ambulatory surgical center; PPO = preferred provider organization; TBNA = transbronchial needle aspiration biopsy
The author has reported to the ACCP that no significant conflicts of interest exist with any companies/organizations whose products or services may be discussed in this article.
Received for publication January 31, 2006. Accepted for publication April 12, 2006.
References
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