Creating a Profitable APP Model: How To Get the Most From Your Investment

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Two large, integrated delivery systems recently quoted $10 million to $30 million dollar losses on their advanced practice provider (APP) programs. A hospital system in West Virginia had to let go of their entire APP team due to the expense. Other administrators describe their APP program as "a valuable investment" because it provides a better work-life balance for their physicians, but they do not feel the program brings monetary value to the organization. These scenarios are unfortunate and unnecessary. There is plenty of evidence to support APPs being integral – and therefore valuable – to a system's provider team. The capacity of a fully-utilized APP in a typical cardiology clinic allows for as much revenue that equates to twice the cost of that APP. So, where do these reported losses come from? Are they truly losses or the result of inefficiencies? Are APPs not working to the top of their licensure, billing appropriately for their work or accounting for their productivity correctly? It is likely a combination of all three. To create a profitable APP model, an organization has to evaluate and address these three areas: scope of practice and utilization, billing practices, and valuation.

Scope of Practice and Utilization

First and foremost, APPs should be practicing at the top of their licensure. They are providers and the majority of their work should be patient facing care delivery with E/M billable codes, which is reimbursable. An APPs scope of practice is dictated by their state license and the scope of practice of their supervising or collaborating physician. There are differences between nurse practitioner (NP) and physician assistant (PA) scopes of practice, with additional differences from state to state that make understanding the scope challenging. Fortunately, both NP and PA professional organizations have resources to assist in determining the scope for an APP in each state.

A full evaluation of current roles and responsibilities should be done to ensure that all are based on licensure, not convenience or lack of understanding of true scope. This means defining as part of the job description how the APP supports a particular team, patient panel, chronic disease management program or special population. It is through this definition that appropriate time allotment can be assigned to each encounter, whether that be routine follow-up visits, post-hospital visits or hospital-based rounding services.

It is important to take into account the support required to maintain an APP performing top-of-license patient care, similar to how physician utilization should be managed. If the expectation of the APP is to see a patient in 15 or 20 minutes and they have to spend 10 minutes hunting for records, this is not an appropriate expectation. Time studies can be helpful to better understand the scope of work being performed. Examples where a request was placed for an additional APP to a team, while what they really needed was additional team support for the Medical Record function, is a common scenario. A full evaluation of roles and responsibilities should be done any time an additional provider is requested.

Billing Practices

A colleague recently explained that the administrator of her program came to her six months after her hire date and revealed that no billing had been done for her work. I have heard other stories in which APPs were seeing patients on a limited basis because the organization did not want to lose the 15 percent reduction that would occur by billing under the APP NPI number. This means that the APP was not being fully utilized and working inefficiently – probably at a significant loss.

An organization should never be afraid to bill under the APP NPI number or avoid independent work; 15 percent may not equate to more than 10 to 20 dollars per encounter, and in most cases, there may very well be an ability to bill "incident to" or "shared" visits. In other cases, some private payers do not recognize APPs and will allow for the work to be billed under the supervising physician. The dollar difference ends up being minimal. In fact, a fantastic way to use an APP is to assist in managing a patient panel in which most of the visits are routine follow-up. Since a plan of care is already in place, many of these can be billed "incident to." A shared visit in the hospital-based setting can cut the physician rounding time by more than half, allowing their utilization to be shifted to procedures or testing interpretations. A review of the payer requirements, billing practices and APP utilization should always be performed to assure compliance, efficiency and successful revenue capture.


Finally, it is important to understand the ability to capture the value of the APP team – traditional RVU capture is not always accurate. Many commercial payers do not recognize APPs as service providers, and their services are billed under the supervising physician NPI. Experience indicates that in most cases, those RVUs are remitted to the physician because appropriate tracking for allocation was not performed. "Incident to" and "shared" visits are billed under the physician NPI number and the same issue can occur. Many APPs also perform required, supportive care during global periods and these are not typically billable, but they are necessary and contribute to the care of the episode. If the APP was not performing the visit, the physician would need to. When calculating the RVU value that is contributed to the practice by an APP, it is important to take into account these billing practices and make sure that all the services that an APP is performing are captured.

In addition to traditional reimbursement, there are many value-added, non-reimbursable components that only providers and APPs can do. They include early discharge facilitation, potential improved patient throughput in acute care settings, assurance of core measure fulfillment and appropriate documentation to capture acuity. If APPs were not performing these responsibilities, the physician would have to. These responsibilities can lead to physician utilization in higher reimbursable areas. By adding an APP to an interventional rounding service, a physician can go from a full-day rounding role to a half-day rounding role with an additional half day in the cath lab or office. The value can be seen in either more procedures or an increase in new patients and patient panel size. There are many additional areas of value that need to be accounted for to really understand all that an APP provides to the practice or system.

The emerging value-based landscape and payment reform will dramatically change the way we interact with our total patient population and how we get reimbursed for their continued well care. The appropriate and well-planned deployment of APPs is a requirement to optimally manage populations of patients. There is no reason that an APP program should be a loss or a drain on the health care system. Although there is certainly value to improved work-life balance for physicians, the value of an APP program is so much more. With a deliberate model of care and role in the care team, APPs can provide a good return on the investment. Even more, the value APPs add include patient satisfaction, improved outcomes, improved access and team satisfaction – which are all invaluable.

This article was authored by Ginger K. Biesbrock, PA-C, MPH, MPAS, AACC, vice president at MedAxiom Consulting.