The bottom-line case for making house calls

This old-fashioned service pleases patients, combats burnout, and can even pay well, depending on the care you provide.

By Susan Harrington Preston
SENIOR ASSOCIATE EDITOR

"You really feel like a doctor when you make house calls," says Alexander L. Okun, a pediatrician who works with the Children's Hospital at Montefiore Medical Center in New York City. "It's a great remedy for physician burnout."

Such good feelings lead many doctors to make house calls on a casual basis. (See "Freshen your practice—make house calls," Dec. 6, 1999, also available at www.memag.com). But unless you plan on doing significant doctoring on a house call, good feelings are apt to be all the profit you get. The vast majority of house calls involve elderly patients with limited mobility. While Medicare's fees are higher than a few years ago, they're still too low to make house calls financially viable—unless the visits rank relatively high on the evaluation and management scale or include ancillary services, like diagnostic tests.

One way to do house calls profitably is to sign up with a house call agency, one that matches you up with patients who telephone to request a doctor's visit. Often, these calls come from elderly patients who've put off seeing a doctor for so long that they need a great many services. But not always: Some agencies, such as HotelDocs of La Jolla, CA, have carved out a lucrative niche by focusing on travelers who'd otherwise have to go to an emergency room for basic medical care.

The single greatest financial benefit of house calls, however, lies in their effect on overall health care costs. Because home visits can dramatically cut hospital readmissions, mobile doctors can potentially bring huge savings to physician groups—and health systems—that accept global capitation. (For more on these savings, see below) This article focuses on how doctors in private practice can make house calls a profitable part of their professional lives.

Old-fashioned house calls: Financially, an iffy prospect

Decades ago, a house call involved little more than a black bag and a bedside manner. Do that kind of visit today, and you're making a charity call.

Take FP Thomas A. Cornwell, whose home visits are reminiscent of the house calls of old. They're longer on emotional support than on reimbursable services. His house-call-only practice, HomeCare Physicians, is subsidized by Central DuPage (IL) Hospital and by donations from the hospital's fundraising auxiliary. The service consists of Cornwell, another FP who works 80 percent of full time, and a nurse practitioner, who are accompanied by a technician.

Cornwell's patients are all homebound, with an average age of 80. The FP provides much palliative and spiritual care; he often prays with his patients, who are so sick that one in four dies during a typical year. "Ninety-year-olds don't want to go back to the hospital," he says. "They want to die at home."

Cornwell started the program at DuPage in 1997 after spending three years doing house calls exclusively. "My wife supported me for part of that time," he says. Now, with HomeCare Physicians getting outside financial support, Cornwell draws a salary of $130,000 a year. A technician drives Cornwell from home to home while the FP fields telephone calls and does paperwork. During visits, the technician takes vital signs, gets insurance data, draws blood, phones pharmacies, and performs ECGs and pulmonary function tests.

"Our typical visit pays about $100, which is not enough," says Cornwell, who expects HomeCare Physicians to lose $100,000 in 1999.

Rick Brown, president of a Rockford, IL, house call agency called MediCall, says Cornwell does fewer ancillary services than most house call doctors. And since Cornwell also travels with a technician, his visits cost more than traditional black-bag visits. But Brown points out, too, that DuPage's accounting for HomeCare Physicians doesn't include savings at the hospital. If it did, what looks like a loss might prove to be a substantial gain.

"If a hospital can get patients discharged earlier and into the hands of a guy like Tom Cornwell, the likelihood of readmission decreases significantly," he says. "And readmission with a similar diagnosis within a 30-day period doesn't pay a hospital squat."

The pay equation for E&M services

In 1998, Medicare added six to its list of reimbursable CPT codes for house calls, dropped three, and raised reimbursement for one. But the changes merely turned house calls from money losers into opportunities for modest gain.

Indeed, you may run into the red on Medicare house calls—even without a technician—if they're billed at lower-level evaluation and management codes. Take a 99348 visit—established patient, low-complexity decision making. Medicare pays about $72 for this service, a fee that includes travel time and expenses. On such calls, your profit hinges on what geriatrician Peter Boling of Richmond, VA, calls "windshield time." The less of it you log, the more money you make.

But Boling, who is past president of the American Academy of Home Care Physicians, says that his own house calls tend to run to the higher end of the E&M scale, and that such calls offer a reasonable, if not generous, return. "In my conventional black-bag practice, most visits are at the 99349 and 99350 level," says Boling. "I average one hour per visit, including travel." For the biggest-ticket house call, 99350, Medicare currently pays in the neighborhood of $164. Boling estimates that his typical house call grosses $110.

Watching the bottom line means watching where you provide services

You'll increase your house call income from Medicare by keeping an eye on the county line. That's because pay is based on the location of the service, not the location of your office. The same 99348 visit that Medicare pays $74.10 for in Fort Lauderdale goes for $70.53 outside the county. Within Miami, it pays $77.08. In Fort Lauderdale, a 99350 pays $168.11. In Miami, it's $174.84. But elsewhere in Florida, you'll get $160.23.

Of course, the Medicare hassle factor is compounded if your practice straddles service areas. That's the situation of Call Doctor Medical Group of San Diego. Begun in 1985 by emergency physician C. Gresham Bayne, Call Doctor is an eight-physician group whose clinical facilities are entirely on wheels.

Although Call Doctor is based in San Diego, it also does house calls in the greater Los Angeles area. In all, the practice serves patients in four different Medicare payment localities. One of those locations is in a health professional shortage area in inner-city San Diego, notes Bayne. "Those visits are billed under a separate, higher reimbursement schedule, even though our office is not in an HPSA," he says. Call Doctor has its own management services organization to handle billing.

Be aware, too, that payment varies depending on the "house" in which you provide services. Bayne notes that visits to "rest homes," which offer limited nursing care, are reimbursed at a significantly lower rate than visits to private homes. "Reimbursement is less than the cost of providing care," he says.

For house calls not covered by Medicare, the trick can be getting any payment at all. New York City pediatrician Alexander Okun's half-day-a-week of home visits is subsidized both by Montefiore Medical Center and by the Arnold P. Gold Foundation of Englewood, NJ. "Medicaid pays $7 for a house call, maybe $10," he says. "Whatever it is, it's nothing." (A state Medicaid administrator affirms that the figure is "about right.")

What about private insurance? "I can tell you from conversations with our doctor members that, in general, they're not being reimbursed," says Constance F. Row, executive director of the American Academy of Home Care Physicians. "The pediatricians, in particular, are having a terrible time getting paid."

If the insurer doesn't pay automatically for house call codes, you may be able to bill for the services you provide on a house call, suggests Don White, a spokesman for the American Association of Health Plans. He says, "I don't see how an insurer would know the location of a service if it's just a code on a bill."

The sicker the patient, the higher the pay

Both Gresham Bayne and Rick Brown report that complex house calls offer strong financial rewards. "Our typical new patient is as sick as a dog and has fallen through the cracks of the health system," says Brown. "These people have been out of the system for years—decades, even. They need full-blown workups."

Since many elderly homebound people are chronically ill, with multisystem ailments, ancillary services may well be called for even with established patients. The AAHCP suggests taking a portable ECG machine, a pulse oximeter, and a centrifuge and cooler for blood samples, along with basic black-bag equipment and forms.

None of the ancillary services are lucrative in themselves—indeed, oximetry, unless it's an overnight study, must be bundled—but they can add up to a meaningful sum. Depending on where your patient lives, a complete electrocardiogram (93000) will add about $26.36 to your visit reimbursement; the professional component of an echocardiogram (93307) pays about $48.70. You can also provide, and bill for, in-home pulmonary function testing, a Holter monitor, ultrasound, X-rays, hyperbaric wound care, hearing testing, and so forth.

The elderly patients Call Doctor serves are sick enough to need these services, and the fact shows up in doctors' compensation. "Our doctors earn more per visit than doctors get for Medicare managed care," says Bayne.

"It's so exciting what we can do in a house call, it just blows my hair back," Bayne continues. "I can even measure your cardiac output on a house call and tell you what your ejection fraction is, noninvasively," he says. The machine that works this wonder, a BioZ.com thoracic bioimpedance monitor, sells for $22,900 to $27,900. It weighs 12 pounds.

Most portable equipment is considerably less expensive. A spirometer from Spirometrics of Gray, ME, will set you back $2,055. Most mobile ECG systems are in the $1,000 to $4,000 range, according to a representative of Scan Tech of Columbia, SC. Mobile X-ray machines from XTEC of Columbia City, IN, cost $8,000 to $14,000. One firm sells a portable hyperbaric oxygen chamber for about $10,000. You can also find used versions of many of these machines.

Will an investment in this equipment pay off for you? Do a simple cost-benefit analysis. Tot up the cost of purchase, maintenance contracts, supplies, and so forth. Then estimate how often you'd use the machine, and how much you'd receive per use, by analyzing your billing and referral records. Then figure in the tax benefit.

Take an ECG machine that would cost you a total of $4,500 ($4,000 to buy and $500 for other expenses). Suppose you plan on using it yourself, and that you'd use it twice a week for an average reimbursement of $25 per use. If, say, you're a solo practitioner paying 39.6 percent in federal taxes, you'd dock close to $1,600 from your federal tax tab by deducting the purchase price. The machine would pay for itself in only 58 weeks. (During the year 2000, you can write off a total of $20,000 in expenditures for qualified business equipment before you have to begin depreciating your equipment purchases.)

You'd recoup your costs even faster if you used the machine more often—not unlikely if you're in a small group and your colleagues also use the machine. Or you can log more use if you add services to your practice that involve using the machine in your office.

The analysis is more complex, of course, if you add equipment that requires a second pair of hands or a bigger vehicle than you ordinarily drive. The method for analyzing the financial benefit is the same, however. You'll just need to take the extra step of counting in the technician's time and your cost for travel.

House call companies corral the patients

Another way to add house calls to your practice profitably is to let a house call agency find patients for you. These companies tend to attract patients in need of fairly extensive services—or patients who can bring in a premium for care.

HotelDocs of La Jolla, CA, is among the latter. The company maintains a nationwide network of about 2,500 doctors, all of whom have active office practices. HotelDocs assures the sick travelers who contact the company that a doctor will arrive within about 35 minutes—and offers a guarantee: "If you don't like the doctor who treats you, we'll send you another for free!"

When a call comes in, HotelDocs contacts a nearby doctor who visits the patient, fills out an invoice, and sends it to HotelDocs. HotelDocs sends the physician a check and bills the insurer. It's up to HotelDocs to collect, but founder Ian Becker notes that insurers are usually happy to pay. "It's a lot cheaper than an emergency room, which is where these people would go otherwise," he says.

For doctors, trips to sick travelers are at least as remunerative as office practice. While HotelDocs charges physicians $60 per visit for administration, the insurers' tab is $175 per visit, plus the usual and customary fees for procedures and medicines that a doctor provides. On average, doctors in the network make $30,000 to $45,000 a year from this part-time work.

"The usual visit takes 45 minutes, including travel time," says Becker, who was a marketing consultant when he started the service in 1988. "The doctor typically earns $130 to $145. To make that much in an office practice, he'd have to gross upward of $500 an hour."

Perhaps best of all, doctors can specify when and where they're willing to see patients. "We have one doctor who is only available to do calls between 3 and 10 pm on Fridays," says Becker. "We have another who wants to see only three patients a week."

It's also possible to provide extensive services through an agency. Consider MediCall, a network of physicians who supplement their practice income with house calls, many of which involve Medicare patients. Because the typical MediCall patient suffers from complex ailments, the visits are scheduled several hours in advance, and MediCall provides the doctor with technical equipment during the visit, as well as support (usually a paramedic). Medicall's President Rick Brown won't divulge what the agency charges doctors for support and administration, but he will say that the expense ratio is comparable to that for office practice. "Typically, our doctors make $30,000 to $40,000 a year, working part time," he says.

Playing by Medicare's rules

Medicare's safe harbors for billing agreements and referral fees do impose some conditions on the agency that provides them. For instance, the agency's pay must be flat rather than volume-related, and the agency can't tell you how to do your doctoring if it charges for a referral.

Suppose a Medicare patient phones you directly with a request for a house call. Just as with Medicare services you provide in your office, HCFA requires you to submit the claim yourself, whether you accept assignment or not. If you don't accept assignment, you collect from the patient, though you needn't wait for the patient to be reimbursed before you bill. As with other services, you can charge no more than 115 percent of what Medicare allows.

Unsure whether the house call is covered? Get the patient's (or his representative's) written agreement to pay if Medicare denies coverage. If you don't submit the claim to Medicare first, however, you can run afoul of the statute governing private contracting.

With global risk, house calls bring a gain

The single greatest financial benefit of physician house calls is only beginning to be recognized: their effect on overall health care costs.

CareMore Medical Group, a 350-physician, 25-site group practice based in Downey, CA, began its Physician Housecall Program early in 1999. The program is one of several the group has initiated to care for the frail elderly, who constitute 15 percent of the 11,000 Medicare patients for whom the group accepts global risk.

"By adding the house call program, we decreased our one-day readmission rate by 70 percent and our one-week readmission rate by 40 percent," says Sheldon Zinberg, a gastroenterologist who serves as the group's chairman.

Before the program began, CareMore records showed that among patients who'd been admitted to a hospital, 53 percent were readmitted within a week of discharge. Nearly one-fourth of those returned within a day. An analysis of the reason for readmissions produced a common sense discovery: "We found that it wasn't the patient's health, but confusion about medication instructions," explains internist Donald S. Furman, the group's medical director. "That's true even with thorough instructions."

Hence, the house call program is really a follow-up program that involves oversight but not ancillary services. Residents visit a patient's home in conjunction with the patient's home health care nurse. (Half the patients live alone, and most are ambulatory.) The program's first months saw a marked reduction in readmissions, and in July, CareMore doubled the number of house calls its physicians made. Taking stock in November, the doctors realized that on average, only one in three of the discharged patients was back in the hospital within a week.

The house call program is only part of a constellation of senior care programs at CareMore, such as a "comprehensive care clinic," a preoperative clinic, a diabetes clinic, and an anticoagulation clinic. "Before we started our comprehensive care clinic, our readmission rate was the same as the Medicare fee-for-service population," says Zinberg. Now, the rate is much lower—and so are hospital days. "Our length of stay is 2.5 days for seniors, which is less than half that of the Medicare fee-for-service population in the same hospital," he adds. Overall, says Zinberg, CareMore has reduced the number of hospital days by 200 to 300 per 1,000 patients per year.

. The bottom-line case for making house calls.

Medical Economics

2000;4:114.