REIMBURSEMENT FOR OUTPATIENT DEVICES featuring NIC ANDERSON

Hey, Nick.

Hey? How's it going.

Good! How are you?

I'm alright.

Gotta let everybody in.

Bet.

Sorry I was running late.

No problem.

Do this, their attendees panelists more promote panelists, more promote panelists, more promote panelists, more and analyst. Where's Joe? There's Jeff.

There he is. He was going in and out, and I was trying to log in as you when I didn't see you. Hello, friends.

Hi friends.

Hi friends.

Oh! La!

Jane. You're not in space today. You're in your space.

I can. I can go there.

No, no, we like it when you're back home. It's it's lonely, and just ask Major Tom. He knows.

Oh, yeah. Control.

So beautiful.

Sean, we're seeing in the upper half of your head today. There we go best. What best Dad ever. Wow! Lot of competitors in that field.

Well, you know best one in the room in this. My room.

George. We haven't seen you in a while.

I've been muted. No, I've been I've been busy went to the device talks Boston Conference this week pretty good energy there, and the connections.

Good. Well, that doesn't excuse the last month of Fridays, though.

So we're not shaming. We're not shaming.

We're not shaming. We're.

That's some nice weather. I've been deciding to step outside more often than screaming into the void.

Fair enough. Hey, Eddie, how are you?

I'm alright. I was in Paris last week.

Why were you doing there? Just holidaying.

My wife's birthday.

Very nice. Did you channel over.

No, no, we we flew but we were. We happened we we were there as well, of course, for the the Pope's funeral.

Oh!

In Notre Dame.

Hmm.

It's pretty cool. It was a simulcast, simulcast thing, you know.

Okay, I was gonna say.

No, he was in Rome. Yeah, no, they didn't fly that over just for us.

Yeah, I thought. well, you know, it's a good day when Nick Anderson is your featured speaker.

Yeah, absolutely really.

We're not going to be doing his full time job or any of a number of side jobs. We're gonna have his attention for an hour. which is a blessing. In fact, we're gonna have his attention for 2 days next week.

Yeah. Am I the only speaker? At 10 x.

No, you're not the only one.

Like 2 days like. All right, here we go.

And you're bringing your son. Yes.

It might just be me.

Oh, yeah.

Yeah, it's we've got babies at home, and we don't know that I'm gonna be able to bring Holly or anybody.

Alright. Well, if you stop procreating, this wouldn't be a problem.

I know. Too late! Yeah.

What are you gonna teach us today, Nick.

Let me share my screen. This one's kind of a unique one. I think I did in the past reimbursement for inpatient products. We can do it again if if my memory doesn't serve me correctly, or if everyone's forgotten But today I want to talk specifically about outpatient products and how they get paid for. And I'm going to use the word reimbursement in particular. But there's many ways to get paid for your medical device outside of reimbursement. Yesterday, in fact, I had 2

2 call kind of 2 and a half calls with venture capitalists that said, I want to invest in this thing. But, Nick, what do you think? And the second of those calls, I said, don't even try to get reimbursement, don't! Or actually it was the it was the sec. It was the 2.5 call. It's kinda it wasn't really a venture capitalist, but it was somebody in in that space, and I said, don't even try to get reimbursement. Just go direct to consumer. Sell the thing on Amazon. Don't try to get Aetna Cigna Blue Cross involved in this. Just sell this direct to consumer all the money you would spend to get the health insurance companies on board and the hospitals Value Analysis Committee on board. You could just sell the dumb thing on Amazon and dedicate all that money to doing a TV commercial on Nbc. News at 6 30 pm.

So the 10 million you would spend to get Aetna Cigna Blue Cross. You could spend that much on marketing and go to market today and start making money tomorrow night, tomorrow afternoon. So I'm going to speak this morning specifically about reimbursement and just the good old fashioned way that you need to bring a medical device to market in that setting of care. So I've got maybe 13 slides. I'll go through it relatively quickly. I hope to be done by 9, 45 or so. So about 40 min. And if anybody has any pressing questions, just interrupt me because I won't be checking the the chat. So the 1st thing I talk about when I.

One.

Yeah. Joe.

And it's for Mark's benefit. Mark, this is off topic. But you have a need, and that's what we're here for. Who do you need? Who do you hope we know someone who can talk to about what.

Specifically. I have a client that I'm doing. Documentation for. Mhra has published their annexes and the Udrelex chapters that has to do with documentation? I have a Qp. That is sort of off the rails in how they want things done, as far as signing off of the documents, and it's totally unworkable. There's just no way any client would want to do what they're talking about. So I'm looking at the Regs and reading it one way. But I need somebody who knows a little more about Mhra and what the Regs actually say, and what the Mhra are expecting, because I could be dead right.

you know. Sometimes you have to do. You have to put the answers that the teacher wants, not necessarily what the answer really is. So I need somebody who knows Mhra, and specifically about manual documentation, not electronic signatures.

George Carrie, is that an area of expertise for you? No.

Mark, if if I may, are because the Mhra kind of like FDA is this in relation to trying to get a clinical study or get a device approved. Which direction are we going.

It's just a Qms, it's just initially.

Okay.

The documentations that they need to be in their Qms is basically releasing documents through change control and getting them in just to set up the Qms. Themselves, so I've got it organized ready to go, but I don't need them. The Qp. Just let you know they have 3 dates up in the header. They want to actually have them right in these dates, issue date effective date. review, date, write handwrite this in on every page of every document in their Qms. And went. No, that ain't happening.

Let me stop you!

No.

Far field. Nelly, you're on now. Is that something I hear the letters? Magic letters? Qms. Is that something you can help.

Yeah, that's so. I would love to have a conversation to understand what they're requesting, because.

I'm gonna stop you there! Hooray!

Yeah, yeah. Very antiquated question. So that's.

In the, In, the, in the Qa, I have my email address. Please send me an email. We can hook up and talk about this offline, appreciate it.

Sounds great mark.

Returning to our already scheduled programming. But that is why this group exists so. Hooray, Nicholas, teach us more.

You bet!

Very very small type.

Yeah. And and this isn't nobody needs to memorize this or anything. I just took a screenshot of about 65 different places of service. So the 1st question for me, when I either, I don't just ask it outright, but I'll just let somebody talk for a few minutes, and then I go? Oh, okay, I know what your products for your product is designed for the inpatient setting or the outpatient setting. Or maybe this ambulance one. I did a little phone call with a guy out of Switzerland a few years ago, and he had a stroke diagnostic tool that was designed to be used in the ambulance. So the ambulance pulls up. They run this test on you in the ambulance, and they know by the time they get to the hospital, whether or not you had a stroke.

And so I said, Okay, that would be site of Service 41. This number up here at the very top. If it was designed for independent clinic as defined by this over here, then that side of service 49, and so on a prison. Yesterday the phone call. I had during my lunch break. I I had this quick phone call, and the guy. The 1st thing he said is, he goes. My device would be very well received in the prison setting. and he had this whole explanation. Why? Well, if I could scroll up, if this wasn't a screenshot, that site of Service 9. So a prison has its own site of service. So the reason why this is important is principally because each of these sites of service. Those are the 4 most important ones for what I deal with, 99% of the time. Probably most of the products people on this call develop would fit into one of those places of service. Site of Service 11 is the office. Then you have inpatient, outpatient, and Asc.

Well, each of those have dramatically different reimbursement mechanisms, the the amount of money they pay, the medical policies that health insurance companies have set up pay differently, and so on. that these 4 site of service 1121, 22, and 24 constitute. I don't know. 98% of all the products. Medtronic, Boston, Scientific, Smith and nephew, Myriad genetics. You know any one of those companies, any of the products that they commercialize probably fit into one of those 4 sites of service, and the one that I want to talk about. Well. we could have a debate, and maybe there is a legal answer. But how do you define outpatient? Because the slide up here is for outpatient devices.

Some people would define. Outpatient as 1122, or 24 is an ambulance. Outpatient is a life flight helicopter, outpatient. You know that you? You can see some of these up here. Ambulance air or water. Is that outpatient? Well, strictly speaking, outpatient Asyta service 22. But let's dive into this a little bit more, and not get into the weeds on. Technically, what is outpatient versus what's not. Let's just call anything other than site of service 21 outpatient. So I've I've shown this before. During this webinar. I just copied it over to this slide deck again, and I want to show you this, because if you screenshot this, you'll save yourself a ton of heartache in trying to figure out. You know, what are all these different codes that we deal with in reimbursement? Let's go through them quickly. Icd-ten-cm is the disease.

Pcs is the inpatient procedure cpt is the verb that the doctor or the hospital did. Hcpcs is the noun. and Drg is the bundled payment that a that a hospital receives after they bill a bunch of Pcss. And the Apc. Is the bundled payment that a hospital receives after they bill a bunch of Cpts. So every Cm. Code is a letter, 2 numbers, a decimal, and another number. So this is I, 73.9, and it's always the same thing. It could be Q 92.0. But it's always going to be a letter, 2 numbers, a decimal, and another number. So that's the disease or the disorder

that needs to go on the bill. The hospital will put I 73.9 on the bill. If the patient was treated in the inpatient setting, as defined by a stay in the hospital during 2 midnights. It's not 24 h. It's not overnight. It has to be 2 midnights to be inpatient. Anything less than I'm I'm very literal. If you show up at the hospital at 12 0. 5 Am. You miss the 1st midnight you have to stay all night all day and the next night to hit. You have to be there another 23 h and 55 min to hit that 1st midnight. Then you'd need to stay another day and another night to hit the second midnight in order for it to be considered an inpatient setting of care.

So 2 midnights that rule changed in 2015, Medicare said, it's no longer, you know, 24 h. You need to be there 2 midnights. If they did, a dilation of the right femoral artery with drug eluting, intraluminal device sustained release, percutaneous approach. They would put 0 4, 7 k. 3, 4, 2 on the bill. The doctor would put 3, 7, 2, 2, 6 on their bill. and so on, and so forth. and then the hospital would either be paid. Drg. 252. If this was an inpatient procedure, or they'd get paid. Apc. 5,193 if this was outpatient. So let's let's show you a. This is actually a real example. The patient shows up.

How would the hospital be paid? Well, they don't get paid for the diagnosis code. The diagnosis code just tells the Health Insurance Company was the thing that you did to our member appropriate for the diagnosis that they had. So this, I 73.9 is peripheral. Vascular disease.

Okay.

If they did a 0 4, 7 k. 3, 4, 2, which is the dilation of the right femoral artery. then the health insurance company goes. Okay, that's the appropriate therapy for the appropriate diagnosis. We will pay the hospital 22,286, and we'll pay the doctor 489. So the doc will send their bill with Cpt. Code 3, 7, 2, 2, 6. They get 489 bucks. The hospital will bill i. 73.9 and 0 4, 7 k. 3, 4, 2, and they get 22,000. So 2 different bills go. 2 different payments are paid. What if the hospital did 10 different Pcss.

For an i 7 3.9? The health Insurance Company's algorithm will say, okay for an i 7 3.9, this Pcs code, and this one and this one and this one and this one. We're all done paid them. Drg. 2, 52. Now the hospital could go well, what the heck, I mean. We did 20 different things to this guy while he was here for 3 midnights, and that there's an algorithm that says, Okay, 0 4, 7, k, 3, 4, 2 is the highest. And then this and this and this. So this is the one that's paid. So let me give you an example. All of you know the actress gal gadot she played. Wonder woman. let's use her as an example. There was news just a couple of weeks ago. She had a baby, and she had a cerebral infarct of some sort. She like a

something bad happened after she delivered the baby. Well, if she showed up at the hospital in Los Angeles or New York, or wherever she gave birth, if she showed up at the hospital to give birth. The present on arrival. Poa that goes on the bill. The present on arrival was this, this woman is pregnant. She goes in. She gives birth either Vaginal or Cesarean. and 5 h later she's unconscious and they go. -Oh! You know she got a pulmonary embolism, or she had a stroke or something. They take her into the Cath lab. They treat her for the stroke. Stroke was not present on arrival. She didn't go to the hospital for a stroke. She went to the hospital for having a baby.

so the hospital might spend $90,000 treating her, you know, 10,000 to deliver the baby 80,000 for the stroke treatment. They're only going to get paid for this because the Health Insurance Company says, sorry we, the present, on arrival, was labor and delivery, or pregnancy. We pay Drg. 805, or 806. I can't remember which which it is for a vaginal delivery or C-section.

She then had a stroke or a pulmonary embolism, or something.

The hospital could bill an outlier payment. You know. There's all these other things, but, stylistically speaking, they're only gonna, get paid. Drg. 8 0. 5, which pays like 7,000 bucks.

That's crazy.

So it you could say, it's crazy, Joe and the the it's not this cut and dried. I'm being a little stylistic for the phone call this morning. There's outlier payments where the hospital goes. It's not our fault. She had a stroke that that's a 1 in a million. She's clearly healthy. She's a young woman. This was an incidental.

Guys fucked up while you were delivering the baby.

Yeah, that's the idea. The idea is what this does is, it prevents. It disincentivizes the hospital from keeping the patient 7, 8, 9, 1015 days and go, hey? While you're here, let's do another thing, so we can add it to the bill and get paid. The Health Insurance Company says. why did the why did our members show up at your hospital? Well, they showed up because they had a broken leg. Okay, did you treat the broken leg. Yes. Okay. So why are you billing us $900,000? And why did you keep them there 6 days? And the hot? If without this type of a rule the hospital would be incentivized to keep the patient there, to bilk the insurance company as much as possible.

That makes sense. But I mean so perhaps. What if you get Mrsa or staph infection while you're there? That's on you?

Yeah, so there's the it sort of, there's a there's something called a global period, which would say, anything that happens during this period, or 72 h before you come to the hospital. The 72 h after you go to the hospital is all the same billable event. So it's more in the weeds than I want to get on this because I want to get into the outpatient setting. But, but, Joe, what the idea with this is. Let me go back a little bit. I'm sure that the hospital was able to build some sort of an outlier thing for gal Gado stroke, and they would say, it's not our fault. This was a 1 in a million thing. This doesn't happen every time. It's not our fault. Our doctors here at cedar, Sinai, or Mass general, or wherever great doctors.

This was a 1 in a million thing. It was an incidental Oma, and they would bill the $250,000, then, based off the hospital's contract with her. With her insurance, they would get a percentage of build charges, most likely. So they'd recuperate $85,000 of that, or whatever it is. So the reason why I say that is what I'm showing on this screen is very stylistic. Nick shows up with an I 73.9 diagnosis. They do a 0 4 7 k, 3 4 2. Which is this treatment down here, and the hospital gets 22,286. Well. yes, if I have one diagnosis and one procedure, and my hospital has negotiated with my health insurance company the exact national rate for reimbursement. Yeah, stylistically, they're going to get this. But if I go in for this procedure, they're going to do 5 or 6 different things to me.

and the Hospital's Value Analysis Committee and their Finance department are going to put restraints on the doctor to say you can't do a 0 4, 7 k, 3, 4, 2 and a 4, 3 and a 4, 4 and a 4, 5 and a 4, 6, because we're only going to get $22,000 if you keep adding on treatments, and we only get paid for the the highest complexity procedure. You're going to bankrupt our hospital. because all we're getting is $22,000.

Marlin.

What about piling on diagnosis?

Yeah.

I mean that that's what's ha! That's what's happening to do. The end around.

Yeah. And so Arlen, that's that's a great question. We could put multiple diagnoses on here, i 7 3.9 and i 7 3.2, and you know, whatever it is that can absolutely happen. But rest assured, Medicare's algorithms at Medicare or at Cigna or Aetna are going to adjudicate that and say, what is the principal diagnosis, and what was the present on arrival there? You can. You can be allowed secondary diagnoses on the bill, but on this slide I'm showing the principal diagnosis, and we're presuming that peripheral vascular disease, unspecified was poa.

Well, particularly with Medicare advantage. Isn't that the problem? They're up coding, particularly home care and saying you have Xyz. which are really peripheral diagnoses that have nothing to mean have it clinically or clinically, but they up code it so that they're gonna list all the Icd possible realm of Icd 10 codes.

Yeah, yeah, and I, I.

And then that subsequently leads to a Medicare audit which costs you several 1 million dollars.

That's what I was gonna that's that was my next point is, if anyone does that they're playing with fire. and you know, to be audited, and to risk. you know, going to Federal prison for shenanigans and billing. Now they could always argue and say the patient did, have I? 73.9. They did have i 7 4.9. And they did have I 76.9. So I wasn't lying. And in fact, I was being incredibly thorough by placing all of the diagnoses on the bill. It's the health Insurance Company to, you know, their algorithm that matches the diagnosis with the procedure to determine the payment. That's their fault if they build the wrong thing.

I was being beyond transparent. So if I was a defense attorney in this space. That would be my argument is put everything on there. But all the all of that. Just be careful what you're billing in terms of procedures and costs, and that type of thing.

And one final question is, what is the impact of all this on the patient? So in the case you gave the pregnant woman, etc, etc, etc. I mean, there's a gross disparity between what gets charged and actually what is allowable. Now, someone who is a Hollywood movie Star may not have the same issue, but someone who is uninsured or underinsured in the middle of nowhere winds up with a bill of several $100,000 that now we're unhook. So how does that work.

Yeah, it. It depends on on their situation. Of course. I mean, if they're underinsured, you know, they can always petition. You can appeal any any insurance company decision. I was involved with appeal decisions. When I was at the Health Insurance Company here in Utah. You can appeal, and they can say. Well, why was the bill 300 grand like this is ridiculous, that the hospital billed my health insurance company $300,000 that did not cost the hospital $300,000. They upcharged at 3 to 5 x, which is standard. By the way, hospitals buy things from companies for $100. They bill your health insurance Company 3 to $500, 3 to 5 X markup is the standard for what the hospital bills, the health insurance company across the United States. So if I was that patient I would go. Why is this a $300,000, Bill?

Why, why did the hospital bill $90,000 for something that clearly cost them $20,000, and then I could get on a payment plan or whatever to pay that Bill, but I ain't paying 300 grand. The hospital's the one doing the shenanigans upcharging 3 to 5 x. So let me let me get on to. I'll show you this one with at the hospital outpatient. So contrast these 2 as I click between them. So this one same bill, same codes and everything. But in the hospital outpatient department the doctor is going to Bill 3, 7, 2, 2, 6. The hospital's going to Bill 3, 7, 2, 2, 6. The facility. You see it bolded and underlined there under Cpt. The hospital's going to build that same code as the doctor in the outpatient setting

when the hospital bills. 3, 7, 2, 2, 6. The health insurance company is going to map that to Apc, 5, 1, 9, 3. Okay. So everybody pause for a second. Inpatient pays drgs, which are a bundled patient payment. Outpatient pays apcs that are a bundled payment. So Apcs are to the outpatient setting. What drgs are to the inpatient setting. The hospital's going to get 11,000 bucks. The doctor is going to get the 489, which is the same as what they got in the inpatient inpatient setting. So the doc gets paid the same amount. The hospital isn't going to get Drg 2, 52, because that's inpatient. They're going to get 11,341

in the in the Asc. Ascs pay about 70% of what hospitals pay or get paid. I should say so. In the ambulatory surgical center the facility is going to get about 7,300. So notice, it's about 70%. That's kind of the back of the envelope rule. If your product is designed to be used in the Asc setting, you need to know that the facility is going to get about 70% of what your same product would reimburse the hospital and notice the device is bundled in the Asc payment just as it's bundled in the Apc payment. Unless you have Tpt. If you have translational pass-through status. you can have a little kicker. So the hospital would get 11,341 plus 2,000 bucks for your device. Otherwise it's bundled. It gets bundled in this setting.

So let me show you the office in the office. This code. The doctor's going to Bill 3, 7, 2, 2, 6, and the doc's going to make $7,300. So if they do it in the hospital they make 4, 89. If they do it in their own office they get 7,000. Why, the difference? Well, they had to buy the device they had to hire all the nurses they had to build the building. They got to pay the water and sewage and garbage bill they got to pay for Internet. They have to hire everybody. They have to pay the property taxes. so they get 7,300. But they had to pay for everything they had to pay for all the all the stuff. Arlen, did you have a question.

Yeah. And this, the the question is, an ambulatory surgery center is, is a free standing entity, a hospital affiliated day surgery center is technically a hospital facility correct, and the and the coach track to that.

That's right. And there's 2 different outpatient hospitals you have on campus and off campus. So yeah, there's deceit. There's differences between those 2 and a hop D on campus and a hop d. Off campus and an Asc. Are technically 3 different things.

And what is the present status of banning facility? Fees in various states.

I don't know. That's a good question. I don't know the answer.

We tried that in Colorado. I I used to operate in all 3 entities my office ambulatory surgery Center Hospital day surgery facility. So I wasn't nearly as knowledgeable as you are, but I kind of got the point like, what? How does this work? And the University, of course, has an extraordinarily expensive facility fee. So the State tried to ban it, and of course all the lobbyists got together, and it didn't work. But I I think there's a movement to ban facility fees.

So I wonder if if that's similar to site neutrality payments site, neutrality payments comes up all the time where the grossly oversimplified idea is, if you do a 3, 7, 2, 2, 6, you get 5,000 bucks, whether you do it in the inpatient outpatient, the Asc. The hospital airplane, a boat, a prison. You get this amount of money, why should it matter? And then what would happen? Is people like Dr. Myers would say, Okay, I'm no longer incentivized to send all of my 3, 7, 2, 2 sixes to the Asc. And all of my 3, 7, 2, 2, 7 s. To the Hopd. And you're having patients go to where you can optimize payment and revenue.

And I'm it doesn't matter. It takes away the incentive and you go. Okay. Now, just where's the correct site of service to do this procedure? There's no need to do a hip replacement in the inpatient setting anymore. You can perfectly do those in the outpatient setting, and there's no need to do a tonsillectomy anymore in the hospital. I can do it in the office. I no longer have to go to where I'm optimizing reimbursement. I could do a tonsillectomy right here on this table, here in my living room. Why am I doing this at a 400 million dollars hospital, you know.

Right, and from a strictly forget the patient quality and all the other issues just from a strictly revenue cycle management, optimization perspective are P. What are people using with artificial intelligence from the provider side to optimize? Where should I do this operation?

I don't know it with AI yet, but that's around the corner. and and I think it's also going to be well, let me. Let me rephrase this. There are consulting companies who do this for a living, who go into the doctor, and they have a a meeting with them, and go. Give us all of your billing records for the last 10 years. and we will tell you you need to do all of your tonsillectomies here. You need to do all of your rhinoplasties here. You need to do all of your jaw reconstructions in this side of service. and you've probably missed out on 6.5 million dollars worth of revenue, because you did all of your jaw surgeries in the wrong side of service.

and so as distasteful as that may sound like golly! I just wish that the doc would do the right thing in the right set of you know, and it's like, sure. Have you ever had to pay 10 nurses a hundred $1,000 a year like? Have you ever had to pay property taxes on a 5 million dollars ambulatory surgical center that yeah, you have to play the game, and there's no jeopardization of the patient quality. The doctors aren't saying they're not that dubious. But you're saying I could get $7,000, $7,312 to do a 3, 7, 2, 2, 6 in the Asc. Or I could do it in my office and get. you know, practically the same amount of money

to do it in in my office. It's easier on the patients. Most of my patients are over the age of 80 years old. It's easier for them to come to my office. I have a ground level office, so they don't have to go up any stairs or elevators. I'm gonna I'm gonna do these in this office and get paid the same amount as I would in a hop, d, or inpatient, or whatever.

And I'll ask one final question, and that is from the medical device perspective cause. That's who's on this call. What? What is the message. So if if you are working to produce a medical device. would you be the one that would provide this service to optimize the revenue.

Yeah. So if I was working. So take Ed Coppa, Bianca, that's on the call. So Ed's got a device. And if Ed and I were talking, and he said, Nick and I go, Ed, where could you use your where? Where would your? Where would 80% of these devices be used, and Ed says they've got to be done in a ambulatory surgical center or in a hop d, so they would never be done in the inpatient. It's quick enough, you know, it's a 1 h procedure. Blah, blah, blah. And I go. Okay. So we just pretty much solve that. It's gonna be one of these 2 sites of service. Hey, Ed, would it ever be done in the office? And Ed may say, No, it wouldn't, because you gotta have this and this and this, and

and at that point Ed would know. Okay, the doctor stands to make $489 pretend as though this is the Cpt code. That's correct for for Ed's procedure. And I go. Okay, Ed, is 4, 89 enough juice for the doctor to do it. Would they do it for 4, 89, and Ed may say, no. I mean, currently, they're getting paid $600 because they use Cpt. Code 3, 7, 2, 2, 6, and I go. We may need to apply for a new Cpt code. We may need to go to the American Medical Association, get a new Cpt code, and then are we sure it will be valued at the value you want it after it goes through the Ruc Committee, the Ama's Ruck Committee

so that this these are months long discussions to go. What site of service are you in? Does the current? If there is a current code? Does that code pay appropriately? Is the descriptor of the code, the appropriate descriptor? If it's done in a hop d. Is the hospital going to get the correct. Apc. 5, 1, 9, 3, 4, 1, 2, 3, you know, whatever it is. Is the hospital going to make enough money to do? Ed. Capa Bianca's device in that side of service. And this is why I had a conversation several weeks ago, and I said if it was up to me all devices would be invented with these slides. Then you would go to R&D, and say, Hey, guys, develop me a product that is a 3, 7, 2, 2, 6. That'll map to a 5, 1, 9, 3. Because then, you know, reimbursements done. Then you have the engineers develop you a thing that you you have. As I. I've told Joe this I've said

people should be making reimbursement devices that treat migraines. not medical devices that treat migraines that get reimbursed? No, no, no, no! Develop reimbursement devices that treat hemorrhoids and macular degeneration. So if you do this scenario, if you map this out for your own product, inpatient hop, D, Asc and office. If you map this out and then do this for 3 months while you stare at your computer screen and go. I think this will work. Then go do your research and development and create the device, because you know, it'll get paid for. You know that hospitals will benefit, doctors will benefit patients will benefit. Health insurance companies will benefit that. All the major players will go. This is a sweet device that reimburses everyone. Well, the health insurance companies aren't like. Why, the heck, are we paying a trillion dollars for this thing when the standard of care is pretty much just as good, and it only costs this much.

Sorry, Carrie. I noticed your hands up. I get going. Sorry you're on mute.

Sorry about that. Most of the FDA product codes are based on the Cpt code and the Hcpc. Code, and so a lot of clients with new devices will come to us and say, we want to clear this. But then the product code is associated again with that Cpt or the Icd-ten-cm code. And so, you know. And then, if you're doing a De novo device or a Pma device, there's nothing associated with the Icd 10 Cm. Or Cpt. Or Hc. Code and the FDA. Or you know you have to petition medicaid Medicare for those codes or avimed, and it's a whole other political to even get into this game. And so we can't do it that way. Like you just said in the real world to build the device.

Yeah, you can. I do it all the time.

You do it all the time. That's good. So now we can send it off. We used to be able to do that.

Can, and it depends on, you know a lot of this stuff is, how much money do you have? I mean, if you've.

That's the problem with these little doctors, who have, you know, fabulous ideas, who want to do it right the 1st time. But.

Yeah, it's a trick. Because if you go, let's say your device is close to 3, 7, 2, 2, 6, for example. And you read the descriptor of that code which is right there. Revascularization, endovascular, open, or percutaneous, femoral popliteal artery, unilateral transluminal stent blah blah and you go well, i'm not in the femoral popliteal. I'm in a different artery or something like that. And you go. Okay. Is there a code for that? And let's say there's not, and you go. Well, then, you're going to have to get a new Cpt code. So do you want to go develop that device? Because it's not for femoral popliteal. It's for the iliac.

or it's for the tibial perineal artery, or something like that. And you go. Are you sure you want to do this?

Have to show of hands. Who fucking loves your smartest Guy? Where is the boundary of your knowledge? I was wondering when you was going to stop this conversation, Joe. I mean, I do this all the time whenever you're on.

But it's unbelievable.

No, thank you, Joe.

He's got a full time job, and he's married. Lady. Yeah, sorry. You're really something.

No.

If I may, just to put things in. So years ago I was involved with a company, and we thought we had a great idea. We had an imaging device that gave you, for one example, the exact boundaries of a basal cell carcinoma, or any sort of skin cancer.

That's what I.

And we thought, yeah, we we.

Agreement with.

Thought we thought we were great, because we would speed up the throughput of doing all of these. You know, removals in these dermatologists, offices. Bad idea, because they're also what we didn't understand is they're all set up. and they get a certain amount of money for the and a big amount of money for the 1st incision. Each subsequent incision they get paid, but less and less.

Yeah.

But their labs are more busy if they don't do it right the 1st time. And so we did not understand their incentives.

And that's a perfect example. 3, 7, 2, 2, 0 is like that in comparison to 3, 7, 2, 2, 1, 2, 2, 1, if I remember right, is each additional vessel. So then, if Ed, if Ed invents a device that goes well, we can do all the vessels at once, and the doc's like, I don't want to. I get $400 for each additional vessel that I you know. So yeah, it's crazy, isn't it? Thanks. That's a great example. Let me let me show you this. So let's talk about these Apc bundled payments down here. Just remember Apc is outpatient. Drg is inpatient, and it is a bundled payment. It's where the Health Insurance Company says, what did you do? And they go. We broke. We fixed Nick's broken arm.

And they say, great. What cpt codes did you do? And they say, 3, 7, 2, 2, 6, 2, 2, 7, 2, 2, 8, 2, 2, 9, and they go. Okay, all of those with this Icd 10 cm. Code means we're going to pay you 5, 1, 9, 3. Well, where does this? 5, 1, 9, 3 is just a code. It's not a payment or anything. So where does this come from? So Apcs are a whole list of Cpt codes. So this is real. What I'm showing you is, are these are actually the Cpt codes that map to Apc, 5, 1, 9, 3. So here's 3, 3, 9 0 0 whatever that is, I don't know. 3, 3, 9, 0, 1, 3, 3, 9, 0 3, 3, 6, 9 0 5. All of these. Here's our friend. 3, 7, 2, 2, 6, which is this one right there, that falls into Apc. 5,193. And then you keep coming down here. Any one of those procedures, or any combination of those procedures would map to Apc. 5,193, which pays $11,000 this year.

And where's that? 11,000 from? That's Medicare's fee schedule that they established last year. So last year they came out and said, Hey, in 2025. Any of those Cpts will go to Apc. 5,193, which is the hospital payment, and the hospital will make $11,000. Well, Ed, let's say, for example, your technology is 3, 7, 2, 3, 8, whatever that is, I could. If I was a certified professional coder, I would probably know pretty close to what these are, but I don't know what they are. So let's say, Ed's is 3, 7, 2, 3, 8. That means when a hospital uses Ed's device, they're going to get 11,000 bucks. And then I go. Ed, how does that shape out? And Ed's like, that's fine. Our device only costs

$400, or $2,000, or whatever, and and I don't think that that's going to be that's not going to eat so much of their 11 that of their $11,000 payment that their Value Analysis Committee would tell me to pound sand. Now, what if this was Apc, 5,192. That only pays $7,000. And Ed's like, Oh, crap! Like, we're 2,000 of that 7,000. Yeah, that's a problem, you know, because that's, you know, 30% of their payment. There's no way a value analysis committee is, gonna allow for this now, maybe they would if I'm arguing with Ed as we go through this process. And I go, Ed, what are they? Currently Billing? And he goes. Oh, they're only they're only getting. Apc, 5, 1, 9, 1.

And I go. Oh, okay. So your device enables them to get 5, 1, 9, 2. So they get an extra few 1,000 bucks. Your device enables them to build this new suite of Cpt codes that get this Apc. So, Ed, you're enabling hospitals to make an extra 5,000 bucks, so they're willing to pay the 2,000 to get the extra 5,000. So let me show you this. Who decided that these Cpts should map to this Apc. Well, it's math. What Cms does is they look at the costs to perform each of these Cpt codes, and then they put them into this Apc. and it's not a committee. It's not a a group of people. It's strictly math. And they go okay. So to do a 9, 2, 9,

2, 8, or a 9, 2, 9, 3, 7, or a 9, 2, 9, 4, 3. Those all cost about the same. So they go to 5, 1, 9, 3, which pays 11 grand. Now watch this little snafu here. Cms came up with this thing called the 2 Times rule that says that the highest calculated cost of an individual cpt procedure assigned to any given Apc. Bundled payment cannot exceed 2 times the calculated cost of the lowest procedure. So let me show you what this looks like. Let's pretend that this last 1, 9, 2, 9, 9, 7. Let's say that the cost to do that is 205 bucks. Well, that's more than 2 times $100. So it's going to get bumped out of this Apc. And it's going to go up a level. So for Apcs, the last number 5, 1, 9, 3, 5, 1, 9, 4 is the level. So this

can all of you see my mouse. By the way.

Move it around.

Yeah.

Yeah, we can see.

Okay, okay, I I was nervous. I've been doing this whole time, and you can't. Apc, 5, 1, 9, 3 is a level 3 apc. So any of these codes from 3, 3, 9 0 0 to 9, 2, 9 9 0 will map to this Apc. And it'll pay pay the hospital 11. Grand. But let's say this, next year Medicare analyzes these codes, and they go. Oh, boy, 9, 2, 9, 9, 7 went up an extra 5 bucks. That disqualifies it from being a level 3 Apc. And it now has to go to a level. 4 Apc. Well, if you're a company that has a 9, 2, 9, 9, 7 Cpt. Code.

Christmas came early. because now you get to change your reimbursement guide on your website and say, Hey, guess what we're now at level 5, 1, 9, 4, level 4 Apc. And your hospital is going to make 17,900. So the hospital makes way more money from doing that procedure than they used to back when it was a stupid old level. 3 Apc. So let me show you these are these are some considerations that if your product is outpatient, follow these several steps, and we could subdivide each of these, but for the sake of of argument, step one what Cpt Code best describes the procedure in which your device will be used. So notice the 2 different. We're talking verbs and nouns.

So what what Cpt. Code best describes the procedure that your device will go to. Let's say the answer is, 3, 7, 2, 2, 6. Okay. Step 2. How much will the doctor make? Well in the hospital they'll make 400 in the office. They'll make 7,000. To what Apc. Does that Cpt. Map? 5, 1, 9, 3. How much does that Apc. Pay? The hospital for the episode of care? 11. Grand. Because it's a level. 3 Apc. Step 5. Do the answers from steps 2 and 4 wet the beak of docs and hospitals. That's a question mark that's up to you. I don't. It depends on in this case, Ed's technology. And if Ed goes, Nick my products, $17,000, and I'm like you're in trouble because the hospitals only getting 11 grand, and then the doctor, if they use your device in the office, they're only getting 7,300. If your device is 17,000, you're you're in huge trouble.

so if not for the hospital. If this doesn't wet the beak for the hospital, you may need to get a translational pass through, so you may need to go to Cms and apply for a translational pass-through payment, so that the doctor will get or the the hospital will get, their 11,000, plus a little kicker. Now an interesting thing with Tpt and with ntap, which is a little kicker payment in the inpatient setting, is, it depends on when you get FDA approval. So all of you, FDA. Consultants, regulatory affairs, consultants. You may want to tell your clients like, Hey, are you sure you want to get FDA approval right here. You may want to wait a few months, so that you can apply for Tpt and Ntap.

because Abbott Abbott Medical. They have a product called Esprit, which is a bioresorbable below the knee. Stent so the stent is about this big. When you implant it below the knee in the tibial arteries it bioresorbs over time. They got FDA approval in April of 2024. They just got proposed to receive ntap last month. which means their ntap. Add-on payment will only last through September of 2027 instead of September of 2028. They got n tap too far after their their their FDA approval

ideally, you want your FDA approval and ntap to start almost concurrently, so that your customers get 3 years of ntap or tpt, not just 2 years of ntap or tpt. so that's my last slide I could divide steps one through 5 into 29 other steps, I'm sure. but these are just some for a little, 1 h. Webinar, some some points to consider. If you screenshot this and start to fill it in yourself. If you have an outpatient product or an office product or an Asc product. This is a really helpful little procedure to go through and then go. Okay. I just met with my board of directors. We think our average sell price is going to be 600 bucks.

We're going to make a killing because hospitals get 11 grand doctors get 7,300, and they only have to pay 600 bucks for my device. Well, our competitor has a product at Medtronic. That is. $7,000 were only 600, so we could take the market by storm. So there you go. I'll stop. I'll stop talking if anybody has questions, and I'm sorry if.

Instead of screenshotting. I put his email address. But he's a very busy man, but he's also very giving. So expectations managed. You're not gonna find a better 15 min call to get you pointed in the right direction. and for those of you fortunate enough to be joining us next week. just sit next to him at breakfast, I mean, and bring a pen or bring your phone and just put on the voice record thing.

Reimbursement.

Graphs and autographs.

Doc. Most doctors that I work with are curious, concerned, but clueless when it comes to what you just very eloquently and remarkably presented what is the best way to educate them? In your opinion.

I wish that. So I go to a conference in not in Las Vegas every year called the Viva and Veins Conference. and Viva Las Vegas. The Viva Conference is vascular surgery interventional radiology. You can tell from my slides that most of the work that I do is in endovascular stuff. That's why I put these codes up here, because that's where my head is. Again. We could swap these out for obgyn or ophthalmology, or whatever. But I get a little frustrated Arlen at these meetings, because these are huge Las Vegas ballrooms at the Wynn or the Encore Hotel. I went to one at the Paris Hotel a couple of years ago, and gave a speech and or a little, a little lecture thing, and

and that's it. It's like we have. We have every major, vascular surgeon or interventional radiologist from around the world that fly into Las Vegas every October November to go to this meeting, and there's not one session on payment. There's not one session on the difference between a Pcs code and a Cpt code. Yeah, they're they don't have a a breakout where you could educate 702,000, whatever interventional radiologists in a 1 h thing and go, guys, this is boring. I get it. But this is how you get paid. And you might think that Boston scientific's product is really expensive. No, it's not. Look at how you get reimbursed for it in this side of service, and 86% of the procedures you do are in that side of service.

It would be great for industry. It would be great for physicians. It would be great for hospitals and for value analysis committees to know how reimbursement works and they go. Oh, we've flippantly not been acquiring these pacemakers or these neurovascular coils, because we thought they were too much money. But little did we know? Yeah, they're too much money in this side of service. But they're not in this, and this is where most of those procedures are so arlen. I wish that more of these money talks were hosted at these major conferences and to say, we highly encourage you. Go to the clinical sessions. We understand that you need to know the latest and greatest techniques.

But please schedule 25% of your time at the Conference in Orlando or Boston, or New York, or Las Vegas, to go to these money discussions.

So I have some ideas how to do this. But the so we agree. There's a large unmet need to educate physicians about how to get paid for for the using these things. but does this also does this analysis you just gave similarly to apply, for example, to software as a medical device.

Hmm, yeah, it does.

Okay.

Simply put, yes, it would apply.

It's great!

Nick. I have 2 quick questions, one. You've talked about offices, you talked about hospitals. Where do nursing homes care homes fit into the spectrum. My second question is, again, selfish. Our device is competing will be competing against when we get to the Us. Some really low value things. And so a big component of what our value is is reducing other costs like indirect cost, like the cost of infections that hospitals have to have to bear. Yeah.

Yeah, so that there is a site of service for skilled nursing. Let me.

Sure.

You. Here's this sorry, everybody to make you seasick as I click around. So this is where I got that screenshot from site of service number one. Pharmacy 3, you know. Here's the prison that I mentioned earlier. Sniffs are in here. I don't know where, right there.

Nursing. Okay, yeah.

Site of service 31 cms. Puts out a different fee schedule for sniffs than they do for site of service 1121, 2224. So it has its own fee schedule. I've never worked with it, Ed, so I wouldn't be your guy to help you on that. But there are. There are people that can help you with side of service 31 and 32. That would say. Yeah, your product fits into this fee schedule. At this rate. I just don't work on it. It's not. It's not something I'm familiar with, but there's other health, economic consultants that could work with you on that. And then.

Importantly, I just put in the chat, and I encourage you all to copy it and paste it, for later is every Nick Anderson talk on this channel since 2020.

Oh, wow! I definitely.

If you want to make something really valuable available for your members, send them that.

Thanks, Joe. I think that I think that means if you take those, and and I'm never gonna be able to run for office.

I know.

You take all the stuff I've said since 2020.

You don't even swear.

Yeah, I know I've never even tied my dog to the roof of my car. None of it. Mitt, Romney. So, ed you asked one more thing.

How does health economic comparators fit into this? And is that part of the justifying a whole new cost? Cpt. Code.

Yeah. So the that's a tough one. So hospitals have. let's say, a hospital buys a device for $1 from a supplier Medtronic Boston Scientific, whoever they buy this for for $100. Let's say they have a chargemaster which you can now look up on their website. I don't have much faith in them. I think the law that President Biden put through that said, you have to make these public. I don't think it helps anything. None of us believe the chargemaster. so you can go look up the charge, master, and get an idea of what they say. They pay for such and such. Pick any hospital. Xyz hospital in Nashville, Tennessee. Click on their charge, master, you can download it. It's a huge file.

You can go look at that and go. Okay. I know what they're paying. I know what I'm or what they're yeah. I know what they're paying. I know what I'm charging. Do I think that that would fly with this hospital's Value Analysis Committee. Do I need to raise or lower the price? What does that Cpt code pay, regardless of what they what they buy my device for. Their idea is, I want to buy it from Ed for a hundred. I'm gonna build the hospital or build the insurance company 300. I know what I'm going to get reimbursed for this Cpt code regardless. So the more meat on the bone Ed leaves me. Ed, could you charge me 90, you know, and you go? Yeah, we could do 90 for the 1st 3 years, and then I got to go up from there, and you know you can work that out with the hospitals team.

But it all kind of comes back to those slides of really, how much do these codes pay? And then we could talk about pricing separately so that you're obeying the law. You're not going into a hospital and get embarrassed, and they're like we only pay $30 for the standard treatment. The below the knee stint that I mentioned currently to do below the knee stenting doctors are using a coronary stent. They're 500 bucks. Abbott's bioresorbable stent is thousands of dollars. So same Cpt code so it could be a tough one for them. I'm sure they'll make money. Abbott's not dumb, I'm sure they have great health economists that have figured this out, but it would be a hard sell for the hospital to go below the knee. Stent. I use coronary.

500 bucks. Why would I spend 2,000 to use your bioresorbable below the knee. Even if you have an N top n tap, add on payment. It's not worth it. Maybe it is. Maybe it is. I'm not. I don't work at Abbott.

Worked at Abbott, and you helped me understand why we had a big celebration when we got a a new code for reimbursement on products.

There you go!

I didn't understand it.

Yes.

As I gave you his email address, I gave you a link to all of his talks. If you're coming in person next week, you know where to find him. and next week we are going to recap for the less fortunate who can't be with us next week. Everything that we covered at Sean's meeting, where I am helping Sean closing comments for our friends here.

Oh, you know just trying to make sure that everybody has what they need. Jan, give me a call anybody else that, you know, doesn't feel 100% ready. Let me know. And I think we might have a couple more sponsorship opportunities for startups. So if you're interested in that, just shoot me an email or Linkedin message, or whatever.

Don, let's talk at the bottom of the hour.

The bottom of the hour. 30 afternoons. Yeah. Okay.

And Arlen. I'll see you in 5 min. and the rest of you. I'll see either next week. But no, I'll see you all next week, whether in person or otherwise. have a great weekend. Bye, everyone, bye, everyone you next.

Bye, bye, thanks, Dave.

Thank you.

Sean, what's your email? You're on? You're on mute.

Here, let me put it in the chat.

Okay, figure out what? Yeah? Cause you mentioned startups. That's kind of what I'm doing right now. I've got a software that I'm developing for medical device, pharma all the regulated industries that use clean rooms. So I'm actually looking for people who are interested in supporting us somehow, whether it's investing strategic partners. clients, things like that. So you know of anybody like that is interested in software. We'd love to talk to them.

Okay, hang on one sec. I just gotta hit. Send on this thing. And then, oh, sent. Okay. One thing at a time. My.

Take your time.

My email. Why is this thing? Let's see the chat button. Is there, Sean at me? Hard to say, hard to type? Don't ever make up a company name like this.

Yeah, it's actually funny. As as Nick was talking, I went back in time to a day when back in the nineties I was working for Cordes Corporation. We literally sat around the table as an R. And D. Engineer. Sales and marketing people would come in and say, this is what the doctors want. This is how much they're willing to pay. So these are the kind of products we want you to try and put together and build so that we can get the most amount of money and make it, you know, juicy for the for the doctor, so that really kind of hit home took me back to a day. But I I really appreciate. I want to send you a message just to

say Hi, and send a message and get my contacts. If you've got any kind of investors or funding, or anything like that could could really use an introduction. If you know, somebody thanks.

Well, investors are not my strong suit, since I hate them. I'm company, is bootstrapped. But I will certainly keep my keep my eye out. I do have a lot of people in my network and happy to make introductions where I can.

That's all I can ask. I appreciate that. Thanks.

Yeah. Happy. To help.

Good to see you have a good have a good day.

Thank you.