CLINICAL DIABETES
VOL. 17 NO. 2 1999

These pages are best viewed with Netscape version 3.0 or higher or Internet Explorer version 3.0 or higher. When viewed with other browsers, some characters or attributes may not be rendered correctly.

THE BUSINESS OF DIABETES

Cost Structure of Outpatient Diabetes Care

Steven B. Leichter, MD, FACP, FACE

The advent of managed care has limited fees for outpatient care.¹ Comprehensive standards of care have enhanced the complexity of service necessary to meet guidelines for adequacy in the office environment.^2,3 These two trends conflict in their economic impact on providers or provider organizations. To meet these challenges, prudent management of the financial aspects of care delivery for diabetic patients is essential. This brief review looks at options to evaluate and manage the cost structure for rendering necessary care.

Components of Care
To a large degree, components of outpatient diabetes care are structured by guidelines for diabetes care^2,3 and reimbursement.⁴ These components permit diabetes care to be rendered in a range of services, from a simple office visit, in which only one alteration of insulin or medication dosage is provided, to a complex session involving a complete history and physical examination and patient instruction or dietary counseling. The compensation for these services varies widely, depending on whether the visit is an initial or follow-up session and whether the services involve simple interventions or complex assessments. However, at all levels of service, the addition of diabetes education and management services in a practitionerís office results in only a small incremental increase in reimbursement. This may change with the diabetes legislation of 1997, but only under certain circumstances.⁵

Minimum Personnel Resources for Care
To render this care, each practitioner or practitioner group requires at least the personnel resources listed in Table 1. Up to a point, these resources are used more efficiently with increased caseload. In my experience, the number of patients that each resource can handle are shown in Table 1.

These caseloads also face one additional and important limitation: the number of patients a physician may see per hour, under Medicare guidelines.⁶ These are limited to no more than six brief follow-up evaluations or one comprehensive evaluation and one brief follow-up visit. If a physician sees outpatients for 6 hours/day, the maximum number of patient visits would be 36/day, or <7,500 visits per year. Since diabetic patients see their physician an average of two to four visits per year, the caseload for one physician would be expected to require one receptionist, one nurse or nursing assistant for patient assessment, and one-half or less of a full-time equivalent (FTE) on the billing staff.

Educational Services
Whether care is rendered in accordance with the educational program guidelines of the American Diabetes Association² or those of other organizations,³ diabetic patients require management support and education to maintain proper health status. These services are often rendered in an office setting by a nurse, a dietitian, or both. The ideal qualifications include certification as a diabetes educator (CDE). While there are no published standards defining the minimum contact time for each session between these health professionals and their patient clients, we consider the minimum visit time adequate to provide minimum instruction on one topic area to be 30 minutes. By this criteria, one health professional educator cannot see more than 20 patients per day.

For practitioner office settings, reimbursement for these services is limited to brief or minimum visits by the criteria of the Medicare Resource-Based Relative Value Schedule (RBRVS) system.⁴ If a patient is seeing a health educator alone as the office visit, it is carried out under the supervision of an affiliated physician. Levels of service are limited to brief or minimum. These payment levels are different for independent or institutional education programs, and new levels are being determined under the 1997 Diabetes Act.⁵

Management of Cost Structure
These characteristics of care components and payment structure suggest important considerations about managing the costs of care. The personnel resources listed above are considered essential to the process of care. Therefore, the ability to manage costs must be done within these confines. For any fixed patient base, some opportunities for cost management relate to the professional characteristics of the personnel, the optimal scheduling of patients, reduction of unreimbursed staff utilization, and consideration of the intensity of services rendered.

Characteristics of Personnel
Options exist for structuring an office staff in terms of characteristic and cost. The consideration of personnel characteristics may entail distinct sorts of assessments for nonhealth professionals versus health professionals. The cost of personnel may make the cost structure more adverse, particularly for health professionals, or it may improve the overall structure, as in certain types of nonhealth professionals. Professional degree may be important for certain work applications but not for others.

Nonhealth professionals. It is my observation that the larger the caseload per employee, the more beneficial experience is. Seasoned receptionists, transcriptionists, and billing personnel may more than justify moderate additions in salary cost. Experience may enable such personnel to efficiently and effectively manage larger caseloads. Here, the added cost may be more than balanced by greater efficiencies. Physicians and practice managers should assess this for each nonhealth professional position.

Additions in personnel for these positions are driven by excessive workloads or unacceptable reductions in patient satisfaction. Restraining undesirable growth in employee head count as much as possible is important. Therefore, objective measures of workload per employee and, separately, of patient satisfaction are important management tools for the practice. We have used simple measures of these aspects of practice function, as shown in Table 2, although these are by no means definitive.

These are all relatively simple measures, adaptable to most practice situations. Rising rates of one or more parameters might suggest consideration of additions of personnel. Inefficiencies in staff performance and rising rates of patient loss are the risks of poor recognition of these practice issues.

Before additional personnel are engaged, tools to enhance the performance and efficiency of existing staff may be considered. As with personnel decisions themselves, decisions of cost versus benefit may be important here. Examples of some tools we have used include desktop dictating stations in every exam and consult room, a computer-based nutritional assessment program, a patient database with diagnoses and medications listed, and mobile headsets for our receptionists. These allow our staff to talk on the phone while moving around a large area that includes our reception station and medical records section.

Health professionals. We have learned to carefully match the skills and credentials of our employed health professionals with their primary work functions. We use medical technologists to escort, assess, and chaperone our patients. They prepare urinalyses and carry out venapunctures, when performed in the office. The administration of parenteral medications, follow-up patient counseling and education, and other nursing functions are provided by a registered nurse. We work in partnership with outpatient diabetes education programs in our community to provide comprehensive diabetes education. These staffing decisions have yielded a reduction in personnel cost, while preserving quality of service.

These sorts of considerations about the pattern of staffing with health professionals are examples of the decision-making required to provide diabetes care services within a reasonable cost structure. Examples of the common decisions most providers have to make, as reflected by our personnel structure, are shown in Table 3.

Our answers to these questions resulted in approximately $ 90,000 in cost savings per year for our practice situation. Other provider organizations have considered the loss of revenue from outsourcing patient education to be greater than the potential cost savings. Others have also decided to do more in-house testing functions than we do, for the same reasons. The more in-house testing functions an organization does, the greater the skill mix it may require in its health professional employees.

Considerations for the Future
Increasing emphasis on quality in diabetes care will be challenged by decreasing reimbursement per patient visit. The considerations demonstrated in this paper may represent only part of the concerns providers and provider organizations may have to deal with as these two opposite challenges press upon them. It is my hope that this presentation at least provides examples of the sorts of decision-making needed to meet these challenges.

REFERENCES

¹Kolata G: Location affects medical costs and treatments. New York Times, Jan. 30, 1996.

²American Diabetes Association: Clinical practice guidelines. Diabetes Care 22 (Suppl 1):S1-S114, 1999.

³National Committee for Quality Assurance: HEDIS 3.0: Health Plan Employer Data and Information Set. Washington, D.C., National Committee for Quality Assurance, 1996.

⁴Murray D: Medicare changes you need to know about. Medical Economics Jan. 29, 1996.

⁵Medicare program: expanded coverage for outpatient diabetes self-management services training services. Federal Register 64:6827-49, 1999.

⁶US Department of Health and Human Services: Medicare Bureau fraud and abuse information. http://www.hcfa.gov/medicaid/mbfraud.htm. 1999

 Steven B. Leichter, MD, FACP, FACE, is a clinical professor of medicine at Mercer University School of Medicine in Macon, Ga., and president of Columbus Metabolic Foundation in Columbus, Ga.

Copyright © 1999 American Diabetes Association
Updated 4/99
For ADA Related Issues contact CustomerService@diabetes.org

For Technical Issues contact webmaster@diabetes.org