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THE BUSINESS OF NEUROPSYCHOLOGY

OXFORD WORKSHOP SERIES:


AMERICAN ACADEMY OF CLINICAL NEUROPSYCHOLOGY

Series Editors
Susan McPherson, Editor-in-Chief
Ida Sue Baron
Richard Kaplan
Sandra Koffler
Greg J. Lamberty
Jerry Sweet

Volumes in the Series


The Business of Neuropsychology
Mark T. Barisa

Neuropsychology of Epilepsy and Epilepsy Surgery


Gregory P. Lee

Adult Learning Disabilities and ADHD


Robert L. Mapou

Board Certification in Clinical Neuropsychology


Kira E. Armstrong, Dean W. Beebe, Robin C. Hilsabeck,
Michael W. Kirkwood

Understanding Somatization in the Practice of Clinical Neuropsychology


Greg J. Lamberty

Mild Traumatic Brain Injury and Postconcussion Syndrome


Michael A. McCrea

Ethical Decision Making in Clinical Neuropsychology


Shane S. Bush
THE BUSINESS OF NEUROPSYCHOLOGY:
A PRACTICAL GUIDE

Mark T. Barisa, PhD, ABPP

&&&
OXFORD WORKSHOP SERIES

1
2010
1
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Library of Congress Cataloging-in-Publication Data


Barisa, Mark T.
The business of neuropsychology : a practical guide / Mark T. Barisa.
p. ; cm. — (Oxford workshop series)
Includes bibliographical references.
ISBN: 978-0-19-538018-7
1. Clinical neuropsychology—Practice. 2. Clinical neuropsychology—Economic aspects.
I. American Academy of Clinical Neuropsychology. II. Title. III. Series: Oxford workshop series.
[DNLM: 1. Neuropsychology—economics. 2. Neuropsychology—organization & administration.
3. Practice Management, Medical—organization & administration.
WL 21 B253b 2010]
RC386.6.N48B37 2010
616.8—dc22
2009035254

1 3 5 7 9 8 6 4 2

Printed in the United States of America


on acid-free paper
Acknowledgments

The information presented here represents a conglomeration of years of


advice, guidance, cooperation, collaboration, and mentoring from numerous
individuals working in a variety of settings including clinical practice, hospital
administration, corporate compliance, managed care administration, quality
improvement, physician relations, and even consumers/patients. As such,
many of the ideas and concepts presented are the result of multiple perspec-
tives combined in a manner that hopefully blends information into a ‘‘usable’’
product for the reader. The collaborative and blended nature of the informa-
tion presented here at times made it impossible to cite specific references for
all aspects of this text. Suffice it to say that despite the ‘‘single author’’ nature of
this text, the information presented within reflects the knowledge and gui-
dance of multiple individuals, without whom this text would not be possible.
I would like to express my gratitude to Susan McPherson and other
members of the AACN conference program committee for allowing me the
opportunity to present at what has become one of the strongest neuropsy-
chology conferences and for the honor of translating this presentation into
book form. It has been a challenging undertaking, but it also has been a very
rewarding experience. Shelley Reinhardt, Joan Bossert, Aaron van Dorn, and
other staff at Oxford University Press have been very helpful and made this
process, which was new to me, smooth and worry-free. Additionally, the
reviewers provided excellent insight and their recommendations truly
improved the value and overall quality of this text.
While it would be impossible to acknowledge every person who assisted in
the development of this text, a few notable individuals are recognized for the
significant contributions they have made regarding the information contained
herein, as well as assisting in my own personal and professional development
in this area. Chuck Callahan’s knowledge and influence served as the catalyst
for my initial interest and subsequent passion for the business aspects of
clinical practice. It was his mentorship that started the journey which lead
to this text and his influence can be seen across many areas of this text. I greatly
appreciate all of the knowledge and influence he has provided over the years
and truly believe that had I not had the opportunity to work with him, I would
not be where I am today. Jon Thompson was invaluable as we worked together
at St. Vincent Hospital to put the concepts presented in this text into practice
as we partnered to redevelop the process and systems within our own depart-
ment. His work on many of the forms, documentation templates, and financial
spreadsheets presented herein certainly helped raise the bar as to the useful-
ness of this text. Robin Stickney and his guidance and work on departmental
process development, implementation, and quality auditing provided a model
for departmental process development as well as adding to the quality assess-
ment aspects of this text. Multiple others provided valuable insights and
activities that helped to make this text a reality, including India Brown, Kim
Springer, and Lydia Ball who were instrumental in the initial development and
‘‘trial runs’’ and modifications of the office processes described in these chap-
ters. Hopefully, the growing pains we felt along the way will minimize the
trials and tribulations others may face as they try to improve their own office
processes by using the suggestions in this text.
Numerous others helped along the way, providing insight, commentary,
reviews, and suggestions during the development of the AACN presentation
and subsequent transition to a book format. Shelley McDaniel served as a
primary reviewer, providing frank and honest feedback; making this a better
book than it would have been otherwise. Others who provided insight,
commentary, and review include David Christian, Christopher Bassin, Ann
Marie Warren, and the multiple interns and residents who have had to listen to
me endlessly discuss the various subject areas within this text over the years.
Finally, I don’t believe that we express enough gratitude and appreciation for
the work of Antonio Puente, Neil Pliskin, and the many others who have
contributed time and energy through the NAN/PAIO, AACN Leadership, APA
Practice Directorate, APA Divisions 40 & 22, and the many other individuals
and professional groups that work tirelessly on our behalf to try to keep us in
business.
In closing, I would like to express my sincerest gratitude to my wife, Mary;
my sons, Brian and Zachary; and even our dog, Elvis, who saw less of me while
I saw more of my computer during the preparation of this text. Their love,
support, patience, and understanding through this process have been immea-
surable, and I hope that I can demonstrate the same for them over the coming
years.

vi Acknowledgments
Introduction

On the surface, the premise of this text may seem peculiar to neuropsychol-
ogists who are accustomed to reading books designed to provide insight and
information to enhance clinical practice. Graduate school catalogs and
training program brochures reveal a broad array of educational opportunities
designed to prepare future professionals for independent practice in neurop-
sychology. However, little is offered to prepare neuropsychologists for the
business realities that await them in the workplace. The expectation that they
will simply see patients and do quality clinical work is often constrained by
institutional goals of making money so that the doors can remain open. The
result can be a cataclysmic ‘‘crash’’ when altruistic ideals meet capitalistic
needs. The concepts of ‘‘cash is king’’ and ‘‘no margin, no mission’’ are foreign
to most neuropsychologists until our own fiscal bottom line is affected. It is
that reality – our own fiscal bottom line – that sets the stage for this text.
During the preparation of this text and the CEU presentation at the AACN
conference in Boston, MA in 2008, I had commented to colleagues that I was
concerned that the basic business theories and ideas presented in this book
would be less than intriguing to neuropsychologists. I assumed that the
popularity of the presentation and this subsequent text would lie in the
fiscal aspects of the information rather than the process that gets us there. I
had planned several Tom Cruise ‘‘Show me the money!’’ lines to try to keep
audience and reader interested, but these colleagues advised against this,
stating that it would not be necessary. They assured me that the ‘‘how to get
there’’ aspect was going to be just as popular as the ‘‘where do we go from here.’’
I must admit that they were right. The positive comments I received following
the AACN presentation focused much more on the ‘‘process’’ aspects of my
presentation and less so on the ‘‘profit.’’ To this end, this text will take on a
similar approach to that noted in the initial workshop.
The purpose of this text is to provide an overview of basic business
principles and how they can be used to enhance the stability and fiscal
responsibility of neuropsychological practice. The principles discussed are
presented in a fashion that will include an overview of concepts as well as a
practical approach to promote application of the information. It is designed to
benefit professionals at varying levels of practice regardless of their work
setting, but focuses primarily on the issues related to neuropsychological
practice. Additionally, administrators that oversee neuropsychological prac-
tice may find this text useful to gain a better understanding of the interaction
between clinical activities and the fiscal responsibility of their department. The
reader will be exposed to a variety of basic business principles in a way that
will increase understanding of business process and system variables asso-
ciated with the practice of neuropsychology; basic budget and fiscal tracking
abilities; and communication strategies that are helpful in conveying depart-
mental information effectively to internal and external stakeholders.
Additionally, practice development and organization needs are discussed,
including the basics of front and back office flow and processes; accurate
and consistent billing, coding, and documentation activities; marketing and
referral relationship development; and staff growth and development. Issues
related to balancing the needs of training programs with fiscal responsibilities
of departments are presented briefly along with some other threats to the fiscal
bottom line. The text closes with discussions of professional roles based on the
professional’s level of experience.
The text is divided into three sections. After initial chapters present some
basic business principles and system processes that are applicable regardless
of setting, the second section focuses on applying the business principles
within the practice of neuropsychology. Where applicable, differentiation
between private and institutional settings is delineated along with specific
issues related to private, institutional, and government-based settings.
Throughout this text, there is an emphasis on applying a ‘‘private practice’’
model to the various settings in an effort to promote consistency and fiscal
responsibility, regardless of setting. Many chapters include practical examples
and tools to provide easy application of the information presented. The final
section of the text focuses on issues related to professional development based
on level of experience in the field of neuropsychology. Within this section
there is information for new professionals focusing on securing their first job,
including tips on professional development. The chapter aimed at the more
experienced neuropsychologist’s professional development includes a discus-
sion of increasing financial stature, diversifying practice referrals including
medico-legal sources, professional diversification, consideration of adminis-
trative roles, and end-of-career issues.
The goal of this text is to provide a unique resource to bridge the gap
between clinical practice and institutional/practice demands. As the

viii Introduction
economics of psychological and neuropsychological practice are being nega-
tively impacted by changes in reimbursement, new (and not necessarily
improved) rules for billing and documentation, insurance reimbursement
reductions, national economic trends, hospital budgetary strains, and compe-
tition from within as well as outside professionals, the need for greater under-
standing of business principles has become essential. This is demonstrated
through the growing popularity of lectures, seminars, and other educational
opportunities that touch on these issues at local, national, and international
conferences. Similar presentations are consistently well-received, demon-
strating the broad interest in this area as financial and business demands
creep into clinical practice. While the idea of learning business concepts
may seem daunting to many neuropsychologists, it is hoped that the informa-
tion provided in this book is presented in such a way that it is easily under-
stood and more importantly, applicable in daily practice. In essence, it is
designed to ease the pain of acquiring new concepts and stimulate a desire for
further learning by providing information in such a way to promote an easy
transition from knowledge to action.

Introduction ix
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Contents

PART ONE BASIC BUSINESS PRINCIPLES


Chapter 1 Basic Principles of Business 3

Chapter 2 Business Planning and Financial Basics 23

Chapter 3 Process, Quality, and Consistency 53

PART TWO BUSINESS PRINCIPLES APPLIED TO


NEUROPSYCHOLOGY

Chapter 4 Setting Up the Office Process 69

Chapter 5 Recordkeeping Guidelines and


Regulations 89

Chapter 6 Billing, Coding, and Documentation 111

Chapter 7 Show Me the Money! 135

Chapter 8 The Playground of Healthcare


Reimbursement 161

Chapter 9 Business Development and Marketing 167

PART THREE PROFESSIONAL DEVELOPMENT


Chapter 10 Where Did the Time Go? 183
Chapter 11 Survival Guide for the New Professional 193

Chapter 12 Professional Development for the ‘‘Seasoned’’


Professional 207

Index 217

xii Contents
PART ONE
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BASIC BUSINESS PRINCIPLES


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Basic Principles of Business

To understand the ‘‘business of neuropsychology,’’ there must first be a general


understanding of what ‘‘business’’ is. The etymology of ‘‘business’’ relates to the
state of being busy either as an individual or society as a whole. Business is also
known as doing commercially viable and profitable work. The term ‘‘business’’
has at least three usages:

• the singular usage (above) to mean a particular company or


corporation
• the generalized usage to refer to a particular market sector,
such as ‘‘the music business’’
• compound forms such as agribusiness, or the broadest
meaning to include all activity by the community of suppliers
of goods and services.

The American Heritage Dictionary (Picket, et al, 2000) outlines multiple


variations regarding the definition of ‘‘business,’’ including the type of work
a person is engaged, a specific occupation, a specific commercial enterprise,
the volume or amount of trade, dealings or patronage, personal areas of
involvement, serious work or endeavor, an activity, or even an informal use
as in a scolding (i.e., giving me the business for being late).
The ‘‘business of neuropsychology’’ also has many dimensions that are
covered throughout the course of this text. If you review the definitions
provided above, it is easy to see that many of them apply to neuropsycholo-
gical practice or business. In fact, as we move through the various aspects of
this book, the complex nature of business is realized to the point that most

3
aspects of this broad definition are included in the discussion. For now, let’s
hold on to that ‘‘definition’’ and get down to business.

The Structure of Business


Businesses are set up under some sort of framework or structure based on legal
and financial responsibilities and not necessarily on how clinical practice
occurs. It is vitally important to understand how a business relationship/
organization is structured to know the extent of personal and professional
liability and financial implications therein. A perusal through any bookstore’s
business section will uncover multiple books that can provide detailed insight
into the structure of business relationships and organizations. For the
neuropsychologist wanting more detailed information regarding business
structures, a few books prove most useful due to the simplicity of their
presentation and the usefulness of the ancillary tools provided. These include
Nolo’s The Small Business Start-Up Kit: A Step-by-Step Legal Guide (Pakroo,
2006), The Harvard Business Essential’s Entrepreneur’s Toolkit (Luecke, 2004),
Start Your Own Business (Lesonsky, 2007), and Small Business For Dummies
(Tyson & Schell 2008). All of these texts provide an overview of business
basics, including a ‘‘how to’’ format for those interested in embarking on a new
business. Additionally, there is substantial information available via Internet
searches that provides both general and specific information regarding busi-
ness organizational structures. For the purposes of this book, a brief overview
is provided based on the information obtained from these sources.
There are basically four primary types of business organizational structures:

• Sole Proprietorship: a business owned by one person.


• Business Partnership: two or more people operate for the
common goal of making profit.
• Corporation: a for-profit, limited liability entity that has a
separate legal personality from its members.
• Cooperative (Often referred to as a ‘‘co-op business’’ or
‘‘co-op’’): a for-profit, limited liability entity that differs from a
corporation in that it has members, as opposed to shareholders,
who share decision-making authority.

In a sole proprietorship, the business is owned by one person who may


operate on his or her own or may employ others. The owner of the business
has total and unlimited personal liability of the debts incurred by the business.

4 The Business of Neuropsychology


Profits ‘‘pass through’’ the owner in terms of tax purposes and the owner is
personally responsible for all of the practice’s debts and liabilities, as well as
the actions of employees. There is no limited liability in terms of protection
from both professional and personal assets.
In a partnership, two or more people operate for the common goal of
making profit. As with a sole proprietorship, each partner has total and
unlimited personal liability of the debts incurred by the partnership. There
is no limited liability unless the partners form a limited liability company
(LLC). This is discussed in the upcoming section. There are three typical
classifications of partnerships. General partnerships are formed by two or
more persons and the owners are all personally liable for any legal actions and
debts the company may face. From a legal standpoint, this is created by
agreement, proof of existence, and estoppel. Limited partnerships are different
in that the hierarchy within the partnership is not equally weighted. In
addition to one or more general partners, there are one or more limited
partners. The general partner(s) has the same role as that described in a
general partnership in controlling day-to-day operations and is personally
liable for business debts. The limited partner(s) contributes financially but has
minimal control over business decisions and operations and cannot bind the
partnership to business agreements. However, in return, the limited partner is
protected from personal liability. It is important to clearly define various
aspects of the relationship between partners and have an attorney draw up a
legal partnership agreement. In limited liability partnerships (LLP or LLC), all
partners have a form of limited liability similar to that of shareholders of a
corporation. Unlike corporate shareholders, the partners have the right to
manage the business directly. Limited liability is granted to all partners, not to
a subset of non-managing ‘‘limited partners.’’ As a result, the LLP/LLC is more
suited for businesses where all investors want to take an active role in manage-
ment. Like a general partner, any member of a member-managed LLP can
legally bind the entire LLP to a contract or business transaction. In a manager-
managed LLP, any manager can bind the LLP to an agreement. In an LLP,
limited liability is not absolute, so further investigation is warranted with
consultation from legal professionals before embarking blindly into an LLP.
Another form of an LLP/LLC is the S corporation (‘‘S’’ stands for subchapter
S of Chapter 1 of the Internal Revenue Service Code). Prior to the development
of LLP/LLCs, S corporations provided an option to limit personal liability
without incorporating. An S corporation is like a normal corporation in most
respects, except that business profits pass through to the owner (as in a sole

Basic Principles of Business 5


proprietorship or partnership), rather than being taxed to the corporation at
business tax rates. Some sources suggest that LLCs offer a better option
because they are not bound to the numerous regulations that govern S
corporations, such as ownership restrictions, allocation of profits and losses,
corporate meeting and regulation rules, and tax treatment of losses. Despite
the seeming ‘‘no brainer’’ decision to start an LLC over an S corporation or
other pass-through arrangement, some additional facts should be noted. An
LLC is more cost-intensive to start than a partnership or sole proprietorship.
The fees for filing for an LLC vary by state, so further investigation into this
might be warranted if a new business lacks start-up capital. However, corpo-
rations of any type will always have a higher cost, as well as additional legal
and accounting fees, and some LLCs must comply with securities laws.
The third primary type of business organization is the corporation. A
corporation is a for-profit, limited liability entity that has a separate legal
personality from its members. A corporation is owned by multiple share-
holders and is overseen by a board of directors that hires the business’s
managerial staff. Shareholders are normally protected from personal liability
for business debts, but some personal liability risk remains, including
personal guarantees on loans to the corporation, taxes (IRS or state tax
agencies may go after the personal assets of corporate owners for overdue
tax debts), liability for negligent or intentional acts, breach of fiduciary duty or
‘‘duty of care’’ (legal duty to act in the best interest of the company), and
blurred boundaries between corporation and its owners (occurs when corpo-
rate formalities are ignored and the company is run like an unincorporated
business). Risk regarding the latter can be minimized by maintaining appro-
priate protocol and recordkeeping. In a corporation, the corporation itself—
not just the shareholders—is subject to income tax. This increases the overall
tax burden and subsequently can reduce profitability. Publicly traded cor-
porations are a different matter altogether and will not be discussed here.
In discussing corporations, the S corporations need to be addressed again.
As noted previously, an S corporation is like a normal corporation in most
respects, except that business profits pass through to the owner, rather than
being taxed to the corporation at business tax rates. Owners are protected from
personal liability and business debts, just as are general corporations and
members of an LLC. Being structured as an S corporation avoids the two-
tiered tax structure of a general corporation. However, there remains the
‘‘corporate’’ complexities of ownership restrictions, allocation of profits and
losses, corporate meeting and regulation rules, and tax treatment of losses.

6 The Business of Neuropsychology


The LLC is a newer option and since its inception, fewer S corporations are
being organized.
The fourth business structure is the cooperative, often referred to as a
‘‘co-op business’’ or ‘‘co-op’’. A cooperative is a for-profit, limited liability entity
that differs from a corporation in that it has members, as opposed to share-
holders, who share decision-making authority. It is a business owned and
controlled by the people who use its services. They finance and operate the
business or service for their mutual benefit. By working together, they can
reach an objective that would be unattainable if acting alone. The purpose of
the cooperative is to provide greater benefits to the members, such as
increasing individual income or enhancing a member’s way of living, by
providing important needed services. The cooperative, for instance, may be
the vehicle for obtaining improved markets or providing sources of supplies or
other services otherwise unavailable if members acted alone. Even though
cooperatives are similar to many other businesses, they are distinctively
different in certain ways. Some differences are found in the cooperative’s
purpose, ownership, control, and distribution of benefits. Cooperatives
follow three principles that define or identify their distinctive characteristics:
user-owned, user-controlled, and user-benefited.
The user-owned principle means the people who own and finance the
cooperative are those who use it. ‘‘Use’’ means buying supplies, marketing
products, or using services of the cooperative business. Members finance the
cooperative through different methods by a direct contribution through a
membership fee or purchase of stock, by an agreement to withhold a portion
of net earnings (profit), or by assessments based on units of product sold or
purchased. The user-controlled principle (also called democratic control) says
those who use the cooperative also control it by electing a board of directors
and voting on major organizational issues. This is generally done on a one-
member/one-vote basis, although some cooperatives may use proportional
voting based on use of the cooperative. The user-benefited principle says that
the cooperative’s sole purpose is to provide and distribute benefits to members
on the basis of their use. Members unite in a cooperative to receive services
otherwise not available, to purchase quality supplies, to increase market
access, or for other mutually beneficial reasons. Members also benefit from
distribution of net earnings or profit based on the individual’s business
volume with the cooperative.
With so many options available, a neuropsychologist considering starting
or expanding a private practice must not do so lightly. Careful consideration of

Basic Principles of Business 7


these options is imperative to make the transition as smooth as possible.
The information presented here serves as a summary and overview and the
reader is encouraged to investigate all options carefully. Additionally, assis-
tance and guidance from outside legal and accounting professionals is strongly
recommended. A little investment on the front end can pay large dividends not
only from a financial perspective, but also from a reduction in sleepless nights.
In determining the most appropriate structure, two factors play major roles
in determining the best course of action. The first centers on the personal
liability for the owners. The degree of risk individuals are willing to bear goes a
long way in determining what options will even be considered. The second
factor is financial. Start-up capital can play a large role in determining what
business structure can be employed. When there is a need to control costs
early in a new business, the expense of corporations and even LLCs can be too
much to manage. The decision of ‘‘what structure is best for me’’ hedges on the
balance between personal liability risk and start-up costs. If the goal is to
minimize personal risk as much as possible, a sole proprietorship is less likely
to be considered, whereas individuals who are willing to take on more
personal risk as a means to decrease financial start-up costs are less likely to
look at more corporate options.
The legal structure of a business can change as the business matures, and it
is not uncommon for businesses to start as sole proprietorships or partner-
ships and later file for LLC or corporate status. Such expectations can be built
into business plans with a target for incorporation at a set time in the future
based either on financial success or possibly adding additional professionals to
the group. Whatever structure is employed should be based on personal
preference as well as consultation with an attorney or business advisor.

Hospital-Based Structures
The business structure of hospitals can be quite complex, the details of which
have been the subject of books, chapters, articles, etc. in their own right (e.g.,
Barocci, 1980; Barton, 2006; Burns, 2005; Griffith & White, 2006; Kovnar &
Knickman, 2008). For the purposes of this text, discussions are limited to the
issues of ‘‘for-profit’’ and ‘‘not-for-profit’’ (nonprofit) status and psychologist
structure within hospital settings.
To a large extent, hospitals are licensed as either ‘‘not-for-profit’’ or ‘‘for-
profit.’’ The terminology is somewhat misleading in that this implies that the
former is an organization that is not in the business of making money. This
could not be further from the truth. If any business truly does not have some

8 The Business of Neuropsychology


level of profit margin from year to year, it would simply cease to exist.
Hospitals under both structures are in the business of making sufficient
profit margins to remain not only open and viable for the future, but also to
allow for continued growth and expansion of services for years to come.
Consider this in the context of ever-developing technological, pharmaceutical,
interventional, and other scientific advances in medical diagnostic and treat-
ment options, and it is easy to see that if hospitals do not have capital to invest
in the future, their viability will diminish in an ever-growing competitive
market for the healthcare dollar. In short, the difference between the
for-profit and not-for-profit hospitals is not so much whether or not they
make money, but how they use the profits that are generated. Not-for-profit
businesses are typically operated by a religious entity or other nonprofit
organization. They certainly can, and hopefully do, make a profit, but they
do not pay it out to investors. Instead, they must reinvest profits, such as in
capital improvements or charity care. One large advantage and incentive for
licensing structures in this manner is that these corporations are exempt from
paying many taxes and this certainly adds to the potential for increased profit
margins.
Briefly, for-profit hospitals are operated by individuals, partnerships or
corporations with the intent of making money for those entities or their
investors. These institutions can sell stock and pay out profits to investors
based on profit margins. While dividends can be paid out based on profits, it
would be short-sighted for these organizations to simply distribute these
profits to investors without looking at re-investing a portion of these dollars
into the hospital for the reasons described above. These organizations do not
benefit from the same tax reductions/exemptions afforded to not-for-profit
entities and subsequently have a heavier tax burden. However, this is often
offset by local and state governments that offer tax benefits to the organizations
in return for opening the facility in their area, resulting in increased service
availability, jobs for the community, and secondary tax increases from addi-
tional businesses that open due to the presence of the hospital. Charity/
indigent care, as well as care for the underinsured, can be provided by these
facilities, but decisions regarding this are based on corporate business plans
and are not necessarily included in the mission of the hospital.
Whatever structure is the basis for the hospital, the need for profitability
remains – no margin, no mission. There is ever-increasing competition for the
healthcare dollar and this is seen not only in the technological and scientific
advances, but also in the environment where care is provided. Think about

Basic Principles of Business 9


your own community and the ways that healthcare is being marketed to you.
Many larger cities now build smaller hospitals in suburban communities in the
hopes of drawing business from a more lucrative population rather than
focusing on large facilities within the urban areas. This allows a better payor
mix regarding insurance versus Medicaid and charity care while also
expanding market share. Additionally, the land values are oftentimes much
lower in these areas and there frequently are tax incentives as these commu-
nities are looking for improved services and jobs for their areas. As these newer
and smaller hospitals open, they often are designed and built to look more like
hotels than hospitals, with all of the comforts of home. There also tends to be
an emphasis on more profitable or high-prestige valued services, again to
respond to market demands and customer perception. One example of this
can be seen in the marketing of maternity services.

Models of Psychology Practice in Hospital Settings


Psychologists and neuropsychologists often work in hospital-based settings.
The structure of their clinical activities from a business sense can be variable,
and many times psychologists and neuropsychologists are unsure of what
structure they are working under. How a neuropsychology service line is
organized plays a large role in the financial and reporting structure of a
department and in some ways the security and stability of the job of the
neuropsychologist. As described by Callahan (2008), three different models
of practice will be presented here:

• Hospital-employed psychologist – when the psychologist is an


employee of the hospital
• Consultant to hospital – when the psychologist is an
independent practitioner through a private practice or
possibly as a member of a physician’s group directly or
indirectly linked to the hospital/facility
• Independent psychologist – when the psychologist is distinct
from the hospital/facility

Hospital-based psychologists are direct employees of the hospital where


they work. They typically work under a salary arrangement with benefits the
same or similar to other employees of the hospital. Contracts are sometimes
utilized similar to those seen for some hospitalists, intensivists, radiologists,
and others in the medical field. Overhead costs such as risk management,

10 The Business of Neuropsychology


malpractice insurance, office space, administrative and technician staff, office
supplies, and equipment are incurred by the hospital/facility. Depending on
the structure, these are typically accounted for in departmental budgets and
carefully monitored in profit/loss statements. The departmental/reporting
structure can be quite variable for neuropsychologists in a hospital-based
practice setting and all iterations cannot be addressed here. Department
structure can range from a single identified ‘ Department of Neuropsychology’’
that reports directly to an upper level hospital administrator to a service line practice
where a neuropsychologist is subsumed as a supporting cast member within a
larger department such as Geriatrics, Physical Medicine and Rehabilitation,
Neurology, Neurosurgery, or Psychiatry. In some instances, a neuropsychologist
works within a larger Department of Psychology with a variety of doctoral
level psychology practitioners in the group providing a wide array of psychological
services. A final structure worth mentioning is that of neuropsychologists
being housed under an ‘ allied health services’’ or a ‘ behavioral health’’ department
that includes a variety of behavioral health professionals such as social work, case
management, and clinical nurse specialists. The supervisory lines in some of these
environments are quite variable, and in some situations the neuropsychologist
may be reporting to and evaluated by a professional from another discipline, a
paraprofessional serving as an office coordinator, or an administrator with a
business degree, but no clinical experience. Consider the possibility that you
are preparing for a yearly performance appraisal. Who is best qualified to
evaluate the quality of your clinical and professional activities?
For a hospital-based neuropsychologist, awareness of the departmental
structure and lines of reporting are very important in knowing expectations
for service provision, financial reimbursement, billing and coding activities,
professional responsibilities, and performance appraisal, just to name a few.
One particular point of concern is the fiscal security of the department and the
neuropsychologist. Details regarding the financial aspects of hospital-based
neuropsychologists are discussed in subsequent chapters describing billing
and coding and reimbursement issues. Briefly, in most cases, hospital-based
neuropsychologists are eligible for ‘‘provider based’’ billing, which allows the
hospital to bill additional ‘‘facility fees’’ for outpatient clinical work in addition
to the professional billing on the part of the neuropsychologist (some states do
not allow for professional billing by doctors employed directly by the
hospital). Implications for this are outlined in later chapters. Within hos-
pital-based settings, neuropsychologists are often called upon to perform non-
billable services such as team conferences and consultation, hospital

Basic Principles of Business 11


committee activities, hospital mandated safety and other joint commission
training activities. Neuropsychologists are also called upon to perform clinical
activities that may result in little or no direct reimbursement so that a more
lucrative clinical activity can be performed (e.g., completing a neuropsycho-
logical evaluation and Wada test on a patient with Medicaid so that a neuro-
surgical procedure can be completed at the hospital). The ‘‘value-added’’
services do little for the fiscal bottom line of the department, but may be
quite beneficial to the larger department or hospital as a whole. With
these considerations in mind, it is important to know how your value is
measured—service versus revenue generation or a combination of the two.
Some psychological and neuropsychological services are considered ‘‘value-
added’’ or ‘‘bundled’’ in terms of billing, with little or no inpatient billing, but
there is more consistent billing noted for outpatient services. This concept may
seem odd, but some psychologists and neuropsychologists are surprised to
find that they live under this arrangement and there is essentially no billing
and subsequently no revenue generated for their inpatient services. It is
important to be aware of the department’s value as a professional versus
service department in terms of financial expectations.
Under the second structure, neuropsychologist serving as a consultant to
hospital, the neuropsychologist is an independent practitioner through a
private practice or as a member of a physician’s group directly or indirectly
linked to the hospital/facility. Under this structure, the neuropsychologist is
paid by a practice rather than the hospital, but obtains privileges from the
hospital to allow patients to be seen in the hospital setting. Risk management,
malpractice insurance, benefit costs, practice overhead, etc. are incurred by
the practice group. Administrative structure and lines of supervision are
established within the practice, which can take on any of the business struc-
tures described previously. The coverage provided may consist solely of a
consultation-based practice or may include some contracted services to allow
for some of the ‘‘value-added’’ services described above or coverage for patients
with limited or no reimbursement prospects. Billing is done through profes-
sional charges by the provider through the practice group. Additionally, if
outpatient services are provided geographically on the hospital grounds, the
hospital is able to bill additional facility fees aside from the neuropsycholo-
gist’s professional charge. This resembles a surgeon or radiology practice
model where the patient is seen using hospital facilities and staff. The physi-
cian bills for the professional activity (the surgery or reading of MRI) and the
hospital bills associated facility charges.

12 The Business of Neuropsychology


A blended model of the hospital-based and consultation structures is
possible, where the psychologist is employed by the hospital, but professional
billing occurs through the hospital’s physician network group practice. The
structure here is more consistent with the hospital-based model described
above in terms of daily activities, risk management, malpractice coverage,
overhead, etc. The primary difference is that the clinician’s professional billing
and coding passes through the physician network group rather than the
general hospital billing department. As with both models, the hospital is
eligible for provider-based outpatient facility billing for services provided by
the neuropsychologist at the hospital location.
Under the third structure, the neuropsychologist functions as an indepen-
dent practitioner, providing their own office space, staffing, materials, and
overhead. The practice may actually rent space within the hospital, but it is an
independent entity in that it is separate both physically and financially. All risk
management, malpractice insurance, salary and benefit costs, overhead, etc.
are incurred by the individual or practice group. Professional and technical
components (global) are billed by the practitioner or practice group at non-
provider based (bundled) professional rates. The hospital is not eligible for
additional facility fees. This can be thought of as a private practice housed
within the hospital. The practitioners are again privileged through the hospital
to see patients, but the practitioner is not affiliated with the hospital.
As can be ascertained from the information above, further discussion of
billing and coding practices within these models is warranted and is presented
in detail in subsequent chapters. In particular, this will include a discussion of
the theoretical basis for the Centers for Medicare and Medicaid Services (CMS)
approach to billing and reimbursement and how that applies to neuropsycho-
logical practice in a variety of settings.

Purpose of Business and Strategic Planning


To be successful in any business, the purpose of that business needs to be
clearly defined. What a business does can be defined in a variety of ways from
general to specific. As examples, businesses might be categorized from a
general sense, or sectors, such as manufacturing, retail and distribution of
Within each of these sectors, there are more specific businesses such as
commercial properties in real estate, electricity in utilities, or internal medi-
cine in healthcare. No matter how the business is described or defined, it must
have some sense of purpose, whether it is to sell more houses or provide

Basic Principles of Business 13


consistent and reliable electrical service to a community. Whatever that
purpose is, it cannot be fully achieved without a plan.
This concept of ‘‘purpose’’ must also be defined in terms of neuropsycho-
logical practice. As we look to define the purpose of neuropsychology, various
questions are explored that range from the general or sector perspective to the
more specific. We need to ask ourselves, ‘‘What is the purpose of neuropsy-
chology?’’ Consideration of the following questions contributes to the final
defined purpose of our business in neuropsychology:
What is the purpose of business in neuropsychology?

• To help patients and caregivers?


• To contribute to the science research/knowledge base?
• To train future professionals in the field?
• To enhance the reputation/value of the discipline?
• To add value to our respective places of employment?
• To earn money to sustain the practice?
• To earn extra money to obtain my own needs, wants, and
desires?

We must decide what we do and why we do it. To formalize this process,


strategic planning is essential.
Strategic planning is the formal consideration of an organization’s purpose,
plan, and future course. Ginter, Swayne, and Duncan (2002, p. 14) define
strategic planning as ‘‘the set of organizational processes for identifying
the desired future of the organization and developing decision guidelines.
The result of the strategic planning process is a plan or strategy.’’ There are
multiple resources available to assist in the development and implementation
of a strategic plan, including books and Web sites that serve as guides or
companies that provide consultation to assist other businesses. A quick search
on the Internet reveals multiple Web pages that provide a wealth of informa-
tion and guidance in this area. For the purposes of this book, a summary of
strategic planning is provided.
All strategic planning deals with at least one of three key questions:

• What do we do?
• For whom do we do it?
• How do we excel? or How do we do it better than everyone
else?

14 The Business of Neuropsychology


The answers to these questions are found in well-developed strategic plans.
These answers are presented in a hierarchical fashion that ultimately flows
from general to specific. Strategic plans focus on three basic areas – vision,
mission, and values. Vision defines where the organization wants to be in the
future. It reflects the optimistic view of the organization’s future, defining
where it ultimately wants to be. The mission defines where the organization is
going now, basically describing the purpose or identifying why this organiza-
tion exists. Values reflect the main values and beliefs protected by the organi-
zation during the progression, reflecting the organization’s culture and
priorities. These values define how an organization will behave in achieving
its vision and mission.
Vision statements are used to present an organization’s vision to the
organization itself as well as to those outside of the organization. Multiple
principles are followed to aid in the development of an effective vision state-
ment. First and foremost, the statement should be concise, motivating, and
memorable. People should be able to remember and be influenced by
the statement. An effective vision statement is vivid, something you can
describe that people can picture in their minds. It should capture an image
of the future so clear that it seems lifelike and attainable. It should not only
capture the aspirations of the organization, it should be easy to remember and
therefore remain in focus. The language does not need to be complex, but
should reflect confidence. Simple language with passion is more compelling
than long formal statements including high level verbiage. Some examples of
strong vision statements include Henry Ford’s ‘‘A car every working man can
afford;’’ Microsoft’s ‘‘A computer on every desk in every home running
Microsoft software;’’ and Pepsi’s ‘‘Beat Coke.’’ These statements are short,
simple, memorable, passionate, and developed with confidence.
While the vision statement serves to unite people by pointing toward a
destination, the mission statement specifies how the organization will get
there. A well-formulated mission outlines the who, what, and why. It identi-
fies at a minimum the type of business it is, its markets, its customers, and its
goals. Unlike vision statements, which by definition are brief, mission state-
ments may vary in length, from a couple of sentences to several paragraphs.
Again, the language needs to be simple and the structure needs to be easy to
follow. The idea is not to show the intellect or formality of an organization, but
to convey the mission to the reader in an understandable and memorable way.
An example of this can be seen in the ‘‘unofficial’’ mission statement provided
by President John F. Kennedy on May 25, 1961, when he said, ‘‘I believe that

Basic Principles of Business 15


this nation should commit itself to achieving the goal, before this decade is
out, of landing a man on the moon and returning him safely to the Earth.’’ This
statement outlines the who, the what, and the when in very clear terms that
ultimately served as the driving mission not just for NASA, but for a nation.
If vision and mission statements supply the long-term direction of an
organization in terms of its business, markets, customers, and financial objec-
tives, then values express the ethics that will guide the behavior of the
organization and its members as they seek to achieve their vision and mission.
Values express the ethics that constantly direct an organization’s day-to-day
behavior and the unwavering beliefs of the organization’s leadership. These
are the principles that influence decisions every day at every level. They should
not be written as ideas, good thoughts, or statements that reflect the ‘ spirit’’
rather than fact. Instead, effective and meaningful values should clearly define
the way you treat your customers, workers, suppliers, and neighbors in tangible
ways. They define how you are willing to operate as you pursue your mission, by
outlining what behavior is appropriate or permissible, and what is not.
Once the vision, mission, and values are established, the organization and its
members can then focus on the goals and objectives necessary to reach the
mission and vision. Goals and objectives are specific targets of where an organiza-
tion or an individual wants to be within a specific time frame. They should be
built on a secure foundation in order to be meaningful and to help the organiza-
tion achieve its mission. They are designed to bring the vision and mission to all
levels within an organization by allowing individuals to see how their own
performance contributes to the overall vision and mission of the organization.
They also allow performance evaluation to be based on tangible behaviors that can
be directly related to the vision, mission, and values of an organization. For goals
and objectives to be motivating and useful they must have some key elements:

• Goals must be specific


• Goals must be measurable
• Goals must be targeted
• Goals must be time specific
• Goals must be meaningful and attainable by the department
and/or individual
• Goals should have an identifiable link to the identified vision
and mission
• Goals should be motivating and supportive rather than
pejorative

16 The Business of Neuropsychology


As an example, we can again look to the space program. Kennedy’s mission,
‘‘. . . before this decade is out, of landing a man on the moon and returning him
safely to the Earth,’’ was not achieved without the completion of some specific
goals that were both general and specific. Project Apollo’s goals went beyond
landing Americans on the Moon and returning them safely to Earth. They set
the tone for using this vision as a means for other activities:

• To establish the technology to meet other national interests in


space.
• To achieve preeminence in space for the United States.
• To carry out a program of scientific exploration of the Moon.
• To develop man’s capability to work in the lunar environment.

These goals, too, were built upon earlier goals set forth in March of 1958
when the Ballistic Missile Division proposed an 11-step program aimed at the
ultimate objective of ‘ Manned Space Flight to the Moon and Return.’’ The steps
included instrumented and animal-carrying orbital missions, a manned orbit
of Earth, circumnavigation of the Moon with instruments and then animals,
instrumented hard and soft landings on the Moon, an animal landing on the
Moon, manned lunar circumnavigation, and a manned landing on the lunar
surface. Ultimately this was summarized through the ‘‘Man-in-Space’’ program
that would be carried out in four phases (goals):

1. Man-in-Space Soonest
2. Man-in-Space Sophisticated
3. Lunar Reconnaissance
4. Manned Lunar Landing and Return

History indicates that these goals and objectives were met and the ultimate
mission was completed.

Strategic Planning in Healthcare


Models of healthcare strategic planning are presented in numerous healthcare
management textbooks (e.g., Begun & Heatwole, 2004; Ginter Swayne, &
Duncan, 2002; Griffith & White, 2006; Zuckerman, 2005). In healthcare,
hospital-based vision, mission, and values statements are very easy to find via a
quick perusal of an organization’s Web site or descriptive materials. The quality
and memorable nature of these statements vary across institutions and despite

Basic Principles of Business 17


the heavy emphasis placed on these statements during orientation for new
employees, they oftentimes are not remembered in such a way that promotes
grassroots understanding and buy-in. Still, these statements are very impor-
tant in understanding how a hospital will be managed from an administrative,
decision-making standpoint. There are some expected similarities in content
across various strategic planning documents, but how they are presented can
be quite different and provides insight into the motivation driving patient care
or the expectations that influence appraisal of staff performance. The fol-
lowing is used as an example and reflects the strategic planning information
for St. Vincent Health in Indianapolis, IN (available at www.stvincent.org):

St. Vincent Health Vision Statement:

St. Vincent Health will be the leading, values-driven healthcare


system in Indiana by promoting and advocating for a healthier
society, in strong partnership with communities, physicians,
associates and others who share compatible values - forging inte-
grated and aligned partnerships and community based networks.
Our partnerships will be known for having increased participa-
tion in leadership and decision-making that results in improved
outcomes of those served. Our partnerships with associates will be
based on our investments in professional, personal and spiritual
development to create a committed and effective work force.

St. Vincent Health Mission Statement:

Rooted in the loving ministry of Jesus as healer, we commit


ourselves to serving all persons with special attention to those
who are poor and vulnerable. Our Catholic health ministry is
dedicated to spiritually centered, holistic care, which sustains
and improves the health of individuals and communities. We
are advocates for a compassionate and just society through our
actions and our words.

St. Vincent Health Core Values:

Service of the Poor - Generosity of spirit, especially for persons


most in need
Reverence - Respect and compassion for the dignity and diversity
of life
Integrity - Inspiring trust through personal leadership

18 The Business of Neuropsychology


Wisdom - Integrating excellence and stewardship
Creativity - Courageous innovation
Dedication - Affirming the hope and joy of our ministry

The above statements, while being well-written, are quite lengthy and
complex, making it difficult to understand the specifics relating to the vision
and mission of the hospital system. In contrast, the following example pro-
vides the strategic planning information for Baylor Health Care System in
Dallas, TX (available at www.baylorhealth.com):

Our Vision: To be trusted as the best place to give and receive safe,
quality, compassionate health care.
Our Mission: Founded as a Christian ministry of healing, Baylor
Health Care System exists to serve all people through
exemplary health care, education, research, and community
service.
Our Objectives:

• Deliver safe, quality patient-centered care, supported by


education and research
• Be a leader in serving our communities.
• Be responsible financial stewards.
• Be the best place to work and to care for patients.
Our Values: Integrity, Servanthood, Quality, Innovation, and
Stewardship

Notice the difference in language, ease of understanding, and ease of recall of


the two examples provided. The purpose of these statements is to clearly
present the reason the organizations exist, how they are going to get there,
and what beliefs/values will guide their behavior in obtaining these objectives.
Both sets of statements clearly identify these elements, but the second example
does so in a more concise and memorable fashion with easier identification of
the specific as well as more general objectives.
These examples highlight the larger goals of a hospital organization.
However, in such a large system, the key is to create buy-in at departmental
and individual levels to promote the larger strategic plan within the smaller
groups that are charged with carrying out this mission. Helping individual
employees define how their individual performance influences the larger

Basic Principles of Business 19


vision and mission is very valuable in improving performance and employee
satisfaction. While working at St. Vincent Hospital, we worked to develop a
mission statement for our department that would allow the vision and mission
of the hospital to be identifiable for the individual members of the neuropsy-
chology department. The goal was to bring the larger hospital vision and
mission to the grassroots level including day-to-day operations:

St. Vincent Hospital Neuropsychology Department Mission Statement:

The mission of the Neuropsychology Department is to establish


and maintain the highest standards for neuropsychology practice,
training, and research. To this end, the department is committed
to providing the following services in the Spirit of Caring guided
by the core values of St. Vincent Health:

• The highest level of clinical care for patients across the lifespan
• Excellence in education and training for interns, residents, and
the community
• Enhancement of patient care by generating and implementing
innovative research
• Using the latest research and technological advances in the
practice of psychology and neuropsychology

This ‘ departmental’’ mission could then be used to develop specific goals and
objectives for each employee to guide the performance appraisal process and
identify key elements of performance that promote the mission of the department,
as well as the larger mission and vision of the hospital and ultimately, the hospital
system. The idea behind this more local mission statement is to create a level of
understanding and buy-in that results in individual employees understanding
how their job and their performance directly relates to the larger mission.
A great example of this is a service department such as housekeeping. What do
you think housekeeping has to do with the vision and mission statements described
above? Think about the number of infections that occur within a hospital setting.
Think about the recent increases in methicillin-resistant Staphylococcus aureus
(MRSA) infection in hospitals across the country. Now consider the role of house-
keeping in minimizing the number of infections in a hospital setting. As another
example, the perception of whether or not a hospital is ‘ clean’’ has a strong influence
on a customer’s perception of the quality of a hospital. Combine these examples
with basic customer service, timeliness, attitude, appearance, and other staff

20 The Business of Neuropsychology


behaviors within the housekeeping department and you can see how a single
individual directly contributes to the overall vision, mission, and values described
above.
To summarize, strategic plans are essential to define the objectives across
all levels of an organization from the largest hospital system to the individual
employee within a department. They serve to not only guide the direction of
an organization, but also define the manner in which objectives will be
reached. They provide an underlying structure and purpose for daily activities
and ultimately they serve to unify members of an organization.
While the usefulness and advantages of strategic planning are often discussed
in regards to large organizations, these activities are also useful for practitioners
functioning within a small private practice setting regardless of its cooperate
structures. Strategic plans help private practitioners define the purpose of their
business, how they plan to achieve it, and the values/beliefs that will guide their
professional behavior for both clinical and business-related activities. I dis-
cussed this with several private practitioners, and while this was certainly an
unscientific/informal survey with a small sample size, it was very enligh-
tening to discover that formal strategic planning was not a part of the
inception of their businesses. However, all could see how re-approaching
their business with such methods would be beneficial in defining not only
their purposes, but also their journey in private practice.
The hope is that this introductory chapter provides the reader with some
basic information to help define a business, identify the structure where the
business exists, and develop a strategic plan to define and achieve the vision of
the business. The subsequent chapters focus on putting the strategic plan into
action, beginning with setting up a business plan and understanding and
applying related financial forecasting and reporting tools.

References, Resources, and Suggested Readings


Barocci, T. A. (1980). Non-profit hospitals: Their structure, human resources, and
economic importance. Dover, MA: Auburn House.
Barton, P. L. (2006). Understanding the U.S. health services system, 3rd Ed.
Chicago, IL: Health Administration Press.
Begun, J., & Heatwole, K. B. (2004). Strategic cycling: Shaking complacency
in healthcare strategic planning. In A. R. Kovner and D. Neuhauser (Eds.),
Health services management: Readings, cases, and commentary. Chicago, IL:
Health Administration Press.

Basic Principles of Business 21


Burns, L.R. (2005). The business of healthcare innovation. New York: Cambridge
University Press.
Callahan, C. (2008). ‘‘Billing Reimbursement 2008 Update.’’ CE presentation
made at the 10th Annual Rehabilitation Psychology Conference in Tuscon, AZ.
Clousing, L. A. (1958). ‘‘Chronology of Early USAF Man-in-Space Activity,
1945-1958,’’ Memo from Lawrence A. Clousing to Dir., Ames Aeronautical
Laboratory, ‘‘Working Conference for the Air Force ’Man-in-Space Soonest’
Program,’’ held March 10-11-12, 1958 at the Air Force Ballistic Missile
Division Offices, Los Angeles, CA.
Ginter, P. M., Swayne, L. E., and Duncan, W. J. (2002). Strategic management
of health care organizations, 4th Ed. Malden, MA: Blackwell Business.
Griffith, J. R. & White, K. R. (2006). The well-managed healthcare organization,
6th Ed. Chicago, IL: Health Administration Press.
Griffin, D. (2006). Hospitals: What they are and how they work, 3rd Ed. Sudbury,
MA: Jones & Bartlett Publishers.
Kovnar, A. & Knickman, J. (2008). Health care delivery in the United States, 9th
Ed. New York: Springer Publishing.
Lesonsky, R. (2007). Start your own business, 4th Ed. Irvine, CA: Entrepreneur Press.
Luecke, R. (2004). Entrepreneur’s toolkit: Tools and techniques to launch and grow
your new business. Boston, MA: Harvard Business Publishers.
National Aeronautics and Space Administration – Apollo Goals accessed
online at: http://www-pao.ksc.nasa.gov/kscpao/history/apollo/apollo.htm
National Aeronautics and Space Administration. (1965). ‘‘Chronology of Early
Air Force Man-in-Space Activity, 1955-1960,’’ 41, 43 44; and ‘‘Chronology of
Early USAF Man-in-Space Activity, 1945–1958,’’ 21–22.
National Association of Public Hospitals and Health Systems Web site: http://
www.naph.org/
Pakroo, P. H. (2006). The small business start-up kit: A step-by-step legal guide,
4th Ed. B. K. Repa (Editor). Berkley, CA: Nolo.
Pickett, J. P. et al. (Eds). (2004). The American heritage dictionary of the English
language, 4th Ed. Boston, MA: Houghton Mifflin Company.
Tyson, E. & Schell, J. (2008). Small business for dummies, 3rd Ed. New York:
Wiley & Sons.
Zuckerman, Alan (2005). Healthcare strategic planning, 2nd Ed. Chicago, IL:
Health Administration Press.

22 The Business of Neuropsychology


2
&&&

Business Planning and Financial Basics

Once the strategic plan is set, subsequent efforts can focus on the meat and
potatoes of business. Strategic planning describes what the business aims to do
and what values will guide the process in a general sense. The business plan is
designed to lay out the specifics of the plan. The purpose of the business plan is
to identify the details of how things will come together as well as the overall
feasibility of the idea. It is designed to provide the key elements of the business
in a single document, including identification of the products or services that
will be sold, the costs associated with the generation of goods or services, the
number of ‘ sales’’ expected, and projected revenue associated with this process.
The business plan is a tool to predict the future of a business and as Yogi Berra
said, ‘ It is hard to make predictions – especially about the future.’’ These words
may seem simple, but it is easy to lose sight of this fact as we dream about our
future success. It has been said that the best predictor of future behavior is past
behavior, but what do you use to predict the future when there is no past
behavior? It is hard to make predictions without a history, and in those cases it is
crucial to obtain the best possible information to make an informed forecast of
future events. Therein lies the value of developing a good business plan.
Two basic goals drive the development of a good business plan. First, a
good plan describes the fundamentals of the business idea based upon the
strategic plan. The specifics of the business and how goods and services will
be generated, marketed, and passed on to consumers are outlined. Second, a
business plan provides financial calculations and projections to show
whether or not the endeavor will be profitable and to gauge the potential
for success. The development of a business plan provides an opportunity to
examine the costs and benefits of a business and to make changes as

23
necessary to maximize the potential for success. Additionally, a strong
business plan improves the likelihood of success if there is a need to
approach a lender or investor for start-up capital to start a business.
Sometimes the development of the business plan may show that the potential
benefit is not worth the cost and subsequently the business does not move
forward and potential failure is avoided. There is no guarantee for success of
any venture, but proceeding with an informed plan based on strong data
improves the chances for success.
Developing a business plan is not particularly difficult, but it does require
patience, open-mindedness, flexibility, staunch realism, disciplined thinking,
and dedication to the process. The process of creating one often brings up
issues and potential problems that may not have been initially apparent and
may result in a need to modify the plan in a variety of ways. A disciplined and
realistic approach to developing the business plan is important when financial
aspects are considered. Developing financial forecasts and projections often-
times can be disheartening, but identifying the financial limitations prior to
beginning a business allows the opportunity to make necessary changes to
make the plan realistic and fiscally responsible.
Numerous resources are available to direct the development or revision of a
business plan, many of which include computerized templates that guide the
description of the business and spreadsheets to ease the calculation of various
financial documents (see references and resources at the end of this chapter).
While helpful, these resources do not eliminate the need for good planning
and research, disciplined reporting, realistic projections, and flexibility in the
approach to setting up a business plan. It should be remembered that the
output of these templated programs is only as good as the data that is entered.
This chapter provides the basic elements of developing a business plan,
including some nuances related specifically to the practice of neuropsy-
chology, but the reader is encouraged to seek additional assistance as they
embark on this endeavor. While numerous sources were reviewed for this text
and information from a variety of references is included, the business plan
development model presented here is based on information found in Nolo’s
The Small Business Start-Up Kit by Pakroo (Table 2006). Where possible,
information specific to the practice of neuropsychology is presented as it
relates to the development of a business plan. The reader is also encouraged
to read Edward Peck’s chapter on the business aspects of private practice in
clinical neuropsychology found in Lamberty, Courtney, and Heilbronner’s
text The Practice of Clinical Neuropsychology (2003).

24 The Business of Neuropsychology


Development of a Business Plan
While there are various templates available to guide the development of a
business plan, they are very similar and virtually all of them follow a model
that includes two broad sections. The first section is used to describe the
business idea, while the second provides financial information to demon-
strate the projected fiscal success of the business. For neuropsychologists,
writing a business plan can be approached similar to a research design. It
should include a statement of the problem, development of a hypothesis for a
possible solution based on research and investigation, collection of data to
support or refute the hypothesis, and a conclusion of how well the interven-
tion provides a solution to the problem. In fact, this objective scientific
approach is useful in developing a solid business plan with reasonable
projections.

Section I – Describing the Business


When completing the first section (describing the business idea), it is
necessary to be detailed and to cover a broad array of information. First
impressions go a long way and this is the best opportunity to produce a
positive halo effect on the part of the reader. The goal is to have the reader
understand the idea, the need for the good or service, and why it will be
successful. Ultimately, a reader will be able to clearly see the positive nature
of the business idea and the reason why it can be successful. To accomplish
this, Pakroo (Table 2006) describes six content areas to be included in a solid
business plan:

• Statement of the business purpose


• Detailed description of the business
• Market analysis
• Analysis of competition
• Marketing strategy
• Resume or CV outlining your expertise and business
accomplishments

Each section does not need to be lengthy or complex, but should be compre-
hensive enough that the reader has very few additional questions to be
answered. Also, the information should be presented in a concise and cohesive
manner that is easy to read and understand.

Business Planning and Financial Basics 25


Statement of Purpose
To begin, there should be a clear and concise statement regarding the busi-
ness’s purpose (usually consisting of multiple sentences rather than a ‘‘state-
ment’’ per se). This includes the goods or services to be provided and why the
targeted business area needs this product. This statement should be concise
and it is best to state the obvious in a compelling way. It simply needs to
answer the questions of what will the business do and why it is necessary. If
the answers to these questions are vague or complex, more details may be
necessary to effectively convey this information or possibly further research is
needed to obtain better and more succinct descriptions.

Description of the Business Process


Once the need and product are successfully presented, the second step is to
describe the how the business will operate. Information included in this
section will vary depending on the nature of the business, as well as the
nature of the identified marketplace. Still, as with the description of the
business idea, information about how the business will operate should include
specific details. The difference is in the depth of explanation of how the
business activities will be accomplished. The ‘‘process’’ of the business must
be laid out in a manner that shows consistency, predictability, and quality
built into the business activities. Process control and quality evaluation are
discussed in detail in Chapter 3, but for now realize that it is necessary to
document how the goal of business will be accomplished from start to finish.
As can be surmised, the best business plans are quite inclusive in terms of
activities that are described. Pakroo (Table 2006) advises that the following
specifics should be included in this section of the business plan:

• How the product or service will be provided


• How and where supplies will be obtained
• How customers will pay you
• How many employees are required and what are their specific
roles and responsibilities
• When the goods or services are available (hours of operation)
• Where the business will be located and why

In the practice of neuropsychology, a good business plan includes all


activities from determining how referrals will be received to the ultimate
filing of the chart when all services have been completed. This includes the

26 The Business of Neuropsychology


specifics of neuropsychological practice including, but certainly not limited
to, scheduling activities, potential billing and coding services, identified
insurance panels and other payors, precertification needs, administrative
and clinical documentation procedures, charting activities, types of clinical
services provided, identified referral sources, the clinical work itself, and
HIPAA and other regulatory compliance procedures. These activities need to
be detailed. Further discussion of setting up neuropsychological practice
processes is presented in Chapter 4, but suffice it to say that it is easy to
overlook necessary aspects of the provision of neuropsychological services
without careful consideration and planning. It is amazing how something that
may seem small and trivial in the initial planning stages can turn out to be
quite significant as the business unfolds.

Defining the Marketplace


According to Pakroo, the third section of a business plan defines the proposed
market. This consists of identifying who will use or buy the goods or services
the business will provide and at what frequency. This section will require
research, including identifying similar businesses that have been successful
(or unsuccessful), reviewing marketing surveys or demographic reports that
may or may not document a need for the product in the targeted area, and
having conversations with potential consumers to gauge a need for the pro-
duct. For neuropsychology, this may involve surveying potential referral
sources to determine perceived need for neuropsychological services and to
establish some estimates of the number of referrals this might entail. The trick
here is to compile this information into a document that objectively shows a
viable market for the product or service with documentation to support the
need and desire for the business.
In addition to describing the general aspects of the market, it is helpful to
further define the identified consumer. In neuropsychology, this may include
demographic information for the identified patient population such as age,
diagnostic categories, and payment sources. Additionally, it is necessary to
identify all targeted referral sources such as physicians, social workers, nurses,
rehabilitation counselors, attorneys, worker’s compensation case managers,
and others. It is important to not over-specialize during initial business
planning. Exploration of a diverse range of possible services that extend
beyond traditional neuropsychological evaluations might identify other
patient populations and clinical services that would expand potential referrals
(e.g., pre-surgical evaluations for spinal cord stimulator placement, organ

Business Planning and Financial Basics 27


transplant or other surgeries; evaluation and treatment of chronic pain; etc.).
Finally, if there will be unique populations or specialties served via the
practice (e.g., epilepsy and Wada evaluations, worker’s compensation, specific
patient populations, etc.) it is beneficial to outline these activities and related
patient population and referral source information to gauge the potential need
and frequency of such services as well as reimbursement trends. The better the
market and customers are defined, the more confidence there will be that the
business venture can be successful and the more confident a potential lender
or investor will be in funding the idea.

Analysis of Competitors
Now that a marketplace and need have been identified, it is necessary to
analyze the competition from other businesses in the targeted area. If the
idea is so strong that it seems ripe for success, others may also have had similar
ideas and may already be providing the identified goods or services.
Additionally, others may be looking to start a similar venture in the targeted
area, furthering a potential lopsided supply/demand equation. This section of
the business plan is used to explain why the market is able to bear the addition
of the proposed business and how it will be able to secure sufficient market
share for success. Competitors’ strengths and weaknesses need to be detailed,
and where possible it is necessary to identify how your business will differ in
such a manner that you will be better able to meet the customers’ needs. This is
best accomplished by imagining that you are a consumer comparing your
business to the competitor’s and identifying the factors that are most impor-
tant in deciding which business to patronize. Some aspects to consider include
quality of services, access and convenience, reliability, customer service beha-
viors, and price.
In neuropsychology, major factors that affect referral streams include, but
are not limited to, timeliness for access, timeliness of report turn around,
usefulness of reports, patient’s perception of the service after the fact, and
acceptance of patients with a variety of payment sources. While as a profes-
sion, neuropsychologists may view prestige, board certification, and pub-
lications as markers for a qualified neuropsychologist, our consumers
oftentimes do not understand or even care about these concepts and instead
are looking for a provider that is recommended to them by physicians,
friends, or family. As a result, customer service factors cannot be emphasized
enough when you are looking at developing your business and comparing
it to the competition. Think for a moment about the neuropsychology

28 The Business of Neuropsychology


practices in your area. How many have a strong customer service emphasis or
track record? Two of the best questions regarding patient satisfaction and to
identify a competitive edge are simply, ‘‘Would you recommend this product
or service to a friend or family member?’’ and ‘‘How would you rate the
overall quality of care?’’ How a patient or referral source answers these
questions quickly determines your status in the marketplace, regardless of
your status in the field of neuropsychology.
It is necessary to make an objective analysis of the potential competition as
they likely excel in at least some of the areas that bring customers to their
doors. The key is to identify how your business will provide a level of service
or quality above or unique to the competition. This is based on a combination
of elements that the other businesses are not offering (e.g., ease of access,
patient satisfaction with the services, rapid report turn around). Using price as
a comparison point can be useful, but as a new business it is difficult to
compete based on price alone. In neuropsychology, this is even less of a factor
due to varying insurance coverage and established out-of-pocket expenses
typically based on the patient’s payor source rather than your specified
charges. It is far better to look for a better source of differentiation and
competitive edge using some of the factors described above, but especially
those that result in increased customer satisfaction on the part of the patient
and the referral source.

Marketing Strategies
A marketing strategy is simply a plan of how a business lets the target
customers know that it exists and how the business is able to provide
goods and services in the best way for the consumer. The idea is to reach
the largest number of targeted consumers with the least amount of cost. The
focus needs to be on the identified consumer groups described in the
marketplace section of the business plan, rather than a generalized mar-
keting strategy that may waste time and resources. There is no perfect
marketing strategy, but whatever methods are planned, they should be
presented as a well thought out plan along with an explanation as to why
they will be effective.
Marketing strategies and business development specific to neuropsy-
chology are discussed in greater detail in Chapter 9. Briefly, in developing
the marketing section of a business plan for neuropsychology, remember that
neuropsychology is defined as a specialty practice and marketing efforts
should be targeted at identified patient populations. Since patients typically

Business Planning and Financial Basics 29


come from physician referrals, marketing efforts will likely focus on this
group, at least in the early stages of setting up a practice. It is important to
note that while the physician writes the order for neuropsychological testing, it
is typically a nurse, office manager, or other office staff member that actually
sends the referral to a provider. As such, these individuals should be included
in any marketing strategy.

Business Knowledge and Accomplishments


To close out the descriptive section of the business plan, develop a description
of business knowledge and accomplishments. For neuropsychologists, there
may not be extensive knowledge and history in this regard, but efforts should
be made to demonstrate that the entrepreneur is embarking on this business
with at least some basic knowledge of the nuances of starting and subse-
quently running a business. The reader needs to know that you are the right
person to start this venture and that you have the knowledge base to see it
through. This is especially relevant if you need a lender or investor to provide
start-up capital. While a clinician may not have specific education and back-
ground in business administration, supervisory, managerial, and administra-
tive roles can help demonstrate basic leadership skills and, in some cases,
business and budgetary knowledge that will further support an ability to carry
out this venture. Background training and clinical experience are included
here to demonstrate that from a professional standpoint you are able to
provide all of the products and services outlined in the description of the
business. In this sense, clinical expertise, board certification, research and
training history, and reputation are quite useful to instill confidence in the
quality of services that will be provided.

Section II – Financial Aspects of the Business Plan


The financial portion of the business plan can be quite intimidating at first
glance, but projecting finances and the potential for financial success is rather
straightforward when there is a basic understanding of the steps involved. The
calculations themselves are relatively basic, and as long as the established
formulas are followed, successful accounting is relatively easy. As with any
mathematical calculations, it is necessary to make sure that the numbers put
into the formulas are as realistic as possible and based on solidly researched
information. To calculate the projected financial aspects of a business there are
some educated guesses that have to be made in terms of expenditures and
revenues, but if they are based on the best information available it is easier to

30 The Business of Neuropsychology


confidently determine whether or not a business venture can be sufficiently
profitable. Also, by completing the steps of a financial analysis, information
becomes available to determine what changes need to be made in the business
model in order to achieve financial success. It is important to realize that the
financial worksheets are dynamic documents and that changes in one location
have an impact on other areas. This allows for modifications of projections to
determine how projected changes can alter the overall financial bottom line.
While the numbers are not expected to be completely accurate, if realistic
predictions of expenses and revenues are utilized, a great deal of information
can be gleaned form the available numbers.
In this section, four financial analyses are presented to guide the financial
projections used in a business plan. These include a break-even analysis, a
profit/loss forecast, a start-up cost estimate, and a cash flow projection.
There are multiple software programs available to assist in these calculations,
including those that simply require the input of basic projections in a step-
by-step manner with all analyses and spreadsheets developed automatically.
This allows for quick modification of various projections with immediate
feedback on the results of those changes. During the early stages of financial
assessment, this is very useful in determining how changes in particular
expense or revenue projections will affect the fiscal bottom line. While these
software programs allow for quick and accurate calculations, it is still
beneficial to know how the numbers fall together in order to identify
which changes will be most effective and to make rational decisions when
alterations are made. Therefore, an overview of each of these documents is
presented.

Break-Even Analysis
A break-even analysis identifies the point at which the income from a business
just covers the anticipated expenses. It serves to provide a snapshot of the
business’s potential for profitability. It allows for adjustments to be made on
both sides of the equation in an attempt to improve the probability of a
profitable venture, but any such changes should be rational and based on
realistic information. ‘‘Fudging’’ the numbers to make the business look more
profitable will result in inaccuracies across all subsequent predictions and
only serve to mask underlying risk. Break-even analysis depends on the
following variables: the fixed and variable production costs for a product,
the product’s unit price, and the product’s expected or projected unit sales. It
is a tool to calculate the point where sales volumes are sufficient so that the

Business Planning and Financial Basics 31


variable and fixed costs of producing a product or service will be recovered.
Another way to look at it is that the break-even point is the point at which
providing the product or service stops costing money to produce and sell, and
starts to generate a profit for the company.
Before the steps of a break-even analysis can be discussed, the reader needs
to be familiar with the following terms and definitions:

• Fixed Cost: The sum of all costs not directly tied to the
product that is generated (e.g., rent, utilities, administrative
services, most salaries). This amount does not vary as unit
numbers increase or decrease. This is also known as
‘‘overhead.’’
• Variable Cost: Costs that vary directly with the production of
each unit of an item or service. These are also called product
costs, costs of goods, or costs of sale. These include packaging,
supplies, materials, and labor costs associated with each
product unit. Theses costs vary directly according to the
number of units produced.
• Expected Unit Sales: Number of units of the product or
service projected to be sold over a specific period of time.
• Unit Price: The amount of money charged to the customer for
each unit of a product or service.
• Total Variable Cost: The product of expected unit sales times
variable unit cost.
• Total Cost: The sum of the fixed cost and total variable cost for
any given level of production.
• Total Revenue: The product of expected unit sales times unit
price.
• Gross Profit by Category: The monetary gain (or loss)
resulting from revenues for an individual product after
subtracting all associated costs to provide or generate each
product or service.
• Average Gross Profit: The average profit for individual goods
or services based on the total product line.
• Average Gross Profit Percentage: The average percentage of
profit for all products and services generated.
• Gross Profit Percentage: The amount that each sales dollar
exceeds the cost of the product or service.

32 The Business of Neuropsychology


• Break Even Point: Number of units that must be sold in order
to produce a profit of zero while recovering all associated
costs.
• Gross Profit (or Loss): The resultant monetary gain (or loss)
from revenues after subtracting all costs (variable and fixed).

As is demonstrated in the definitions above, the steps of completing a break-


even analysis are rather simple and straightforward, but they can be painstak-
ingly detailed. Additionally, the process of estimating expenses and revenues
can be quite daunting. Revenue predictions are especially problematic in the
practice of neuropsychology where many different services are provided
under different charge categories and different payor sources vary in how
much (or how little) they reimburse for the individual services. These diffi-
culties are addressed in the appropriate sections below.
For the purposes of this discussion, completion of a break-even analysis
will follow these steps as outlined by Pakroo (Table 2006):

1. Define a schedule for estimating income and expenses


2. Identify related expenses for each product or service
3. Predict how much profit will be made on each sale
4. Calculate the ‘‘gross profit percentage’’
5. Estimate the fixed costs of the business
6. Calculate the break-even point
7. Analyze potential profits/losses

Other templates are available and multiple resources and references are
provided in the reference section of this chapter. Again, this book was devel-
oped to serve as a practical guide, but it is beneficial to consult an accounting
professional for assistance.
Given that much of the language used to describe the steps and formulas
involved in a break-even analysis focuses on general business practices,
attempts will be made to provide examples that apply to neuropsycholo-
gical practice as a model for application as much as possible. Specifically,
the steps will follow the examples provided in Tables 2.1 and 2.2 that
provide simplified spreadsheets designed around a single provider practice.
Where applicable, the financial numbers utilized are for ease of calculation
and understanding and are not based on any particular reimbursement
statistics.

Business Planning and Financial Basics 33


Steps 1 & 2: Getting Started and Estimating Expenditures
The first steps in setting the stage for a break-even analysis are defining the
timeframe to be considered and identification of fixed versus variable costs.
When making estimations for completing a break-even analysis, it is impor-
tant to cover a sufficient amount of time to account for seasonal variations and
related demand and staff availability influences. Using a weekly or monthly
timeframe added together to make yearly predictions may prove more useful
than trying to estimate yearly projections more generally. For initial estima-
tions, a single year or possibly a two year model is usually sufficient to account
for typical variations and potential growth, but to not be overly speculative as
in a five year span.
Projected business expenses will need to be itemized and documented in
detail and should be divided into two categories – fixed costs and variable
costs. To reiterate the definitions above, fixed costs include all regular
expenses not directly related to the production of a good or service. This
includes, but is certainly not limited to, rent, utility costs, accounting or
bookkeeping services, postage, scheduled marketing costs, and most salaries.
In neuropsychology, this also includes items such as malpractice insurance,
billing services, testing equipment (but not protocols), etc. Variable costs are
those expenses that are directly related to the provision/generation of goods or
services. They go up or down depending on product volumes. These costs
include materials, supplies, packaging, inventory, and labor. For neuropsy-
chology this includes the cost of specific test protocols and/or single use items,
stationary and paper supplies used for patient registration and documenta-
tion, pens and pencils, and in some cases, salaries.
Salaries are difficult to categorize because they can fit into both the fixed
and variable cost categories. Base salaries for clinicians, administrative assis-
tants, psychometrists, bookkeeping/accounting professionals, and manage-
ment staff that remain constant regardless of productivity or volumes would
be considered fixed costs. However, in some settings, psychometrists, insur-
ance coders/precertification professionals, and even clinical staff, may work
on a per diem basis and be paid in relation to the number of patients seen or
the time spent in patient-related activities. If this is the case, these could be
considered variable costs as they directly relate to the individual unit provision
of goods and services. Finally, clinician and psychometrist salaries can be
divided into fixed and variable cost categories. If predetermined billing pro-
ductivity expectations are built into the business plan, time (hourly salary)
related to specific billable patient activities could be considered a variable cost

34 The Business of Neuropsychology


while the remaining non-billable time (hourly salary) is considered a fixed
cost. While potentially adding a level of complexity to the overall calculations,
this division of salary costs may provide better clarification of category and
overall profit margins in future calculations described below.
It is imperative that all potential costs be considered, to eliminate failure
of a plan based on bad input. Even items that seem small or irrelevant
(e.g.,various office supplies or postage) contribute to the cost of doing busi-
ness and need to be included in estimations. This is a tedious undertaking and
visualization and mental role playing of service delivery regarding all of the
potential expenses needs to occur to minimize unexpected and unaccounted
for expenses that could limit the projected profitability in the future. Peck
(Table 2003) provides a good overview of detailed costs in neuropsychological
practice including minute details that may easily be forgotten.

Step 3: Projecting Revenues


Now that the expenses have been identified and categorized, the next step is to
project financial revenues. Estimating revenues varies according to the type of
business involved, the types and number of different goods and services
provided, the various charges for the products, and finally the number of
products or services provided. The idea of predicting what will be provided,
how much revenue it will bring in and at what frequency, can be over-
whelming. This is worsened when you consider that very few businesses
generate and sell a single item, have a uniform price for all products, or have
a uniform demand for the various products. As a result, these projections will
never be 100% accurate. But by looking at realistic numbers, a basic idea of the
revenues and volumes necessary to increase the chances that the business can
be profitable is obtained.
For service-based businesses, like healthcare and neuropsychology, rev-
enue estimates are based on billed charges and this is related not only to the
number of hours a service provider works, but their level of billable produc-
tivity during that time. It is a given that not all of the time a provider is present
is equal to billable time. A realistic assessment of billable versus non-billable
time will make the estimation as accurate as possible. It is also important to
realize that whether or not the time is spent in billable activities, there is a fixed
cost for each hour that provider is present. Realistic, but responsible, expecta-
tions should be developed. This will be discussed further in some of the
examples.

Business Planning and Financial Basics 35


The next step is to determine what goods or services will be provided and at
what price. For neuropsychological practice the ‘‘products’’ or ‘‘services’’ are
identified via the various American Medical Association CPT (Current
Procedural Terminology; AMA, Table 2009) codes that identify the clinical
services provided. A starting point for this section is to develop a table of
the various CPT codes available to neuropsychologists that would be utilized
along with expected charges for each service (see columns 1 & 2 of Table 2.1).
Estimates then factor how many patients are seen on a weekly or monthly
basis; what CPT codes are billed; how many units are billed for each contact;
and the charges for each code. Peck (Table 2003) describes developing
charges based on a single hourly rate regardless of services provided. Others
vary charges based on the service provided. Either is acceptable and the
determination of set charges will be discussed in future chapters. For the
purposes of this chapter, how charges are set is essentially irrelevant, as
calculations are based on predicted reimbursements. As such, additional
calculations have to take place to estimate the expected actual revenue for
each service based on charges, payor source, and authorization of service,
remembering that sometimes payors will reduce or even deny payment for a
variety of reasons. In this sense, it is important to predict the unpredictable.
This is further complicated by the fact that different payors reimburse at
different rates, making it difficult to identify a single projected reimbursement
rate for each procedure code that is billed. Therefore, it is necessary to either
identify an average or estimated rate of payment per projected service pro-
vided or project an expected payor mix and base reimbursement rates around
that expectation.
Table 2.1 provides a sample spreadsheet to show projections of reimburse-
ment rates for various CPT codes. The first two columns provide the CPT
billing numbers and associated text descriptors of common services provided
by neuropsychologists. The ‘‘billed charge per unit’’ is simply a number based
on a rough estimate of rounded CMS Medicare 2008 reimbursement rates for
one geographic area multiplied by 2.5 as a starting point. Again, this number is
irrelevant since it is not used in any of the calculations described in this
section. For simplicity, the ‘‘estimated average received’’ numbers are based
on rounded CMS Medicare 2008 reimbursement rates for one geographic
area. Average variable costs were calculated based on the salary information
provided for the professional and the technician, plus additional variable cost
estimates. The numbers used are for demonstration purposes only and do not
reflect actual identified reimbursement rates or true variable cost values.

36 The Business of Neuropsychology


Table 2.1 Break Even Analysis Worksheet – Single Provider Example
Step 4: Calculating Average Gross Profit Percentage
After predictions are in place regarding projected revenues, attention is turned
to calculating the difference between these revenues and what it costs to provide
the products. Once the average gross profit percentage is calculated, it is easy to
determine what revenues and volumes are necessary to cover business costs.
The average gross profit is calculated in a step-by-step manner from micro to
macro aspects of the business, including calculations of the following:

1. The average gross profit for each individual product category


2. The average gross profit for all products and services
combined
3. The overall average gross profit divided by the average selling
price

Since neuropsychology services are billed at one price, but paid at multiple
different rates, some set standard will be needed so that a uniform level of
‘‘payment’’ can be established prior to Step 1. This could consist of a prede-
termined projected contractual percentage of billed charges based on research
on potential payor mix and typical payment rates or using a set projected
reimbursement rate (possibly using the Medicare Physician Fee Schedule).
Whatever decision is made, this adds error to the calculations so a conservative
method is recommended.
Gross profit is the amount of money that is made on each sale above what it
costs to provide the good or service (sales price – variable costs). In the
neuropsychology example, sales price is equal to the projected reimbursement
for the service provided (gross profit = reimbursement – variable costs). When
specific products are involved it is relatively easy to determine the variable
costs as described in the previous section. With services, as in neuropsy-
chology, this is sometimes more difficult, but good planning in the identifica-
tion of these costs is beneficial at this point. In the previous cost determination
section, there was discussion of dividing clinician salary costs into both fixed
and variable cost categories. Here is where that may be beneficial. If the
clinician’s salary is included in the determination of gross profit for each
service provided, a more realistic gross profit figure is obtained rather than
having large fixed costs erase what looked to be large profits for each service on
the initial calculation. Non-billable time that is categorized as a fixed cost can
be subtracted along with other fixed costs during later calculations to deter-
mine the break-even point of the business.

38 The Business of Neuropsychology


Given the broad array of available CPT procedures that make up neurop-
sychological practice, it is necessary to calculate a gross profit for each service
unit. It is reasonable to combine various codes into categories with similar
reimbursement rates and variable costs (e.g., health and behavior intervention
codes, but not including group treatment because of the large difference in
reimbursement rate and variable costs). Once the provided services are listed,
the next step is to estimate the average selling price (reimbursement rate) and
average variable cost for each service. This should be based on information
obtained in previous sections. In the neuropsychology example shown in
Table 2.1, these are shown in their respective columns identifying the proce-
dures, projected revenues, projected variable costs, and the estimated gross
profit for each service (simple calculation of revenues – costs). The gross profit
percentage for each service can be found by dividing the item’s average gross
profit figure by the average reimbursement rate (or by billed rate, but this
profit percentage will be significantly deflated).
Now that the average profits for individual services have been calculated, it
is easy to determine the average gross profit for the business as a whole. To
begin this process, estimates of the annual sales revenue (received reimburse-
ments) for each of the items and categories are made. This is done by
predicting the number of units of each service that will be completed for the
year and multiplying that figure by the identified average reimbursement. This
provides overall yearly sales revenues for that item. The next step is to multiply
this yearly sales revenue by the gross profit percentage for that service or
category.
As an example using Table 2.1, the expected units of service for neurop-
sychological evaluation – professional (96118) for a clinician is 18 units per
week for 48 weeks (accounting for vacations, holidays, sick leave, etc) for a
total of 864 units per year, and it is expected to be reimbursed at $118 per unit.
The gross profit percentage for that item is 38.64%. So to calculate the total gross
profit for that item (CPT – 96118), the calculation would be as follows:

Estimated sales revenue of 96118 : $101; 952


X Gross Profit Percentage for 96118 : 38:64%
¼ Total Gross Dollars for 96118 : $39; 398

The next step is to add all of the gross profit amounts for each category
together to arrive at a total annual gross profit for the business and to add

Business Planning and Financial Basics 39


the total estimated sales (reimbursement) revenues to arrive at a total annual
sales figure. The average gross profit percentage for the business is found by
dividing the total annual gross profit figure by the total annual sales. For our
example, the results of these calculations are as follows:

Total Annual Est: Gross Profit : $110; 782


= Total Annual Est: Gross Sales : $255; 888
¼ Average Gross Profit Percentage : 43:29%

As practice patterns are examined, it is easy to see that some procedures


provide higher reimbursement and higher gross profit percentages. As a result,
clinicians may choose to alter their practice patterns to emphasize the more
lucrative procedures to allow for improved financial saliency, but care should
be taken in this regard. Projected practice patterns should reflect the informa-
tion provided in the business strategic plan and activities described in the
initial section of the business plan. Additionally, considerations need to
include competitors practice patterns, desires of potential referral sources,
potential patient preferences, and the need for a diverse referral base. It is
sometimes best to maximize the higher revenue-producing services without
completely eliminating valued services that may not provide equal revenues.

Step 5: Estimating Fixed Costs


Compared to calculating the gross profit percentage, estimating fixed costs is
quite simple. This step consists of identifying monthly fixed expenses,
including salary and benefits, rent, utilities, office supplies and expenses,
budgeted marketing costs, and any other regular expenses that will be
incurred. It is likely that some expenses will be overlooked during this
process, so it is important to include a 10% additional cost for miscellaneous
expenses. Since most of these costs occur throughout the year, it is best to
estimate them on a monthly basis and then total them for the year. The total
estimated fixed expenses are subtracted from the gross profit obtained in the
previous section. While it can be somewhat satisfying to see a profit margin
while calculating the gross profit figures, this margin can diminish rapidly or
even disappear when fixed costs are subtracted. As such, it is important to
keep expenses as low as possible to minimize the impact on the profit margin
of the business. This is especially true for new businesses where sales will
initially be limited until the business is firmly established. Expenses can be

40 The Business of Neuropsychology


Table 2.2 Estimated Fixed Expenses – Single Provider Without Office Staff

increased as a business grows and the volumes and revenues grow sufficiently
to support the added expenditures.
Table 2.2 provides a sample fixed expense list for the single clinician practice
noted in Table 2.1. It is worth noting that in this model, the practice consists of
one full-time clinician making a yearly salary of $99,840 and one full-time
technician making $24,960. An additional 30% of these salaries are budgeted to
account for benefits and other payroll expenses. No additional staff is included,
so these two individuals will be responsible for handling referral calls, regis-
tering patients, completing the precertification needs, billing and coding activ-
ities, and management of the clinical records. This may or may not be realistic
for some individual practice settings. Additional figures are included based on
information available to the writer, but are included for demonstration purposes
only and are not necessarily consistent with true costs.

Steps 6 & 7: Calculating the Break-Even Point and Analyzing the Results
After some painstaking work, all of the numbers are available to determine
whether or not the proposed business is projected to make or lose money. As
the calculations have been completed, the answer has already been realized,
but it is important to finish to formal calculations. To find the amount of
revenue necessary to break even, you divide the estimated annual fixed costs
by the gross profit percentage. The result is the amount of sales revenue that
will be needed to exactly cover the costs of doing business. This may seem
intuitively backward at first. Instead of determining your profit based on your
projected sales, fixed costs are used to determine the necessary gross revenues

Business Planning and Financial Basics 41


to break even. This allows you to see necessary volumes and changes that may
be needed in either revenue projections or reduced costs.
For our example, the annual fixed costs were $90,164 and the average gross
profit percentage was 43.29%. Using this calculation (estimated fixed
expenses/average gross profit percentage) it can be determined that the
break-even point for gross revenues is $208,279.

Estimated Fixed Expenses : $90; 164


= Avg Gross Profit Percentage : 43:29%
¼ Break Even Point ðGross RevÞ : $208; 279

On the surface, analyzing the obtained information from this point seems
very simple. The business is either projected to be profitable or not. However,
there are a few more calculations that must be made. The first is to subtract the
estimated revenue from the break even point:

Estimated gross revenue $255; 888


 Break Even Point $208; 279
¼ Excess Net Revenues $47; 609

This excess revenue figure is then multiplied by the previously obtained gross
profit percentage of 43.29%, resulting in a projected net profit of $20,610.
Another way to get at this figure is to subtract the annual estimated fixed costs
from the total estimated gross profit. The noted differences reflect rounding
error that occurs during the various calculations:

Total Annual Est: Gross Profit : $110; 782


 Estimated Fixed Expenses : $90; 164
¼ Excess Net Revenues $20; 618

Either calculation is acceptable, but additional ‘‘qualitative’’ information is


obtained by taking the additional steps described above, where calculations
are based on actual receivables and profit percentages rather than a simple
subtraction of net figures. Also, it is important to note that this reflects pre-tax
net profit and is subject to applicable federal, state, and local taxes. The final
profit is the net amount after taxes have been subtracted.

42 The Business of Neuropsychology


As can be seen in this example, this business venture is not demon-
strating a great return, but it is projected to at least break even with a small
profit margin even after reasonable salaries are paid. It is emphasized that this
practice model does not include any administrative, scheduling, accounting,
billing/coding, or other assistance, so these activities would have to be com-
pleted by the clinician and the psychometrist or calculated as additional costs in
the model.
Tables 2.1 and 2.2 are provided on the Web page associated with this
book and the reader is encouraged to modify these to meet individual
practice patterns, reimbursement rates, and volumes. Additionally, spread-
sheets are provided that include practice models with additional providers,
technicians, and office staff.

Profit & Loss Forecast


Completing the break-even analysis sets the stage for the remainder of the
calculations in this section. Similar to the break-even analysis, the profit and
loss forecast (P&L forecast) provides estimates for expected revenues and
expenses. The difference is in the timing of the projections. While the
break-even analysis projected yearly figures, the P&L forecast projects these
values on a monthly basis. Given the manner in which the break-even analysis
was completed for the neuropsychology example, this was already completed
from a general standpoint. For our purposes, the P&L forecast breaks down
the numbers into monthly increments.
The steps for completing this process are relatively simple and a completed
profit and loss forecast is provided in Table 2.3. First, the annual revenue
estimates are broken down into monthly increments. For our example, the
annual gross revenues were simply divided by 12 to account for each month,
even though revenues were based on a 48-week period of billing. With
additional information, monthly projections can account for seasonal fluctua-
tions in terms of referral volume, staff leave time, or other factors that may
influence the monthly figures. Once the monthly revenue projections are
completed, the gross profit for each month is calculated by multiplying the
projected monthly gross revenues by the previously calculated gross profit
percentage. Next, monthly fixed expenses are added together to get a monthly
total fixed expense figure. This was simplified for our example, and there is a
need to build fluctuations into this model to account for monthly variation in a
true business model. Finally, a simple subtraction of monthly expenses from
revenues is completed to determine the net monthly profit.

Business Planning and Financial Basics 43


Table 2.3 Example Yearly Profit & Loss Forecast for Single Provider Practice with No Staff
It is important to understand that the monthly P&L forecast does not
include the entire financial picture of the business. It is based only on revenues
and expenses that are directly related to the production of goods/services and
revenue receipts. Income and costs from start-up loans, investment capital,
transfers of personal money, and start-up expenses are not accounted for in
the P&L forecast. These will be included in the upcoming projected cash flow
analysis. The P&L forecast outlines the potential profitability on a month-
to-month basis. When a business is beginning, there is some expectation that
volumes will not reach target levels and this will need to be accounted for with
some indication of how much time will pass before the business becomes
profitable. The knowledge obtained from these early projections can also assist
in determining the need for start-up capital to start and sustain the business
during the early months of its existence.

Estimating Start-Up Costs


Looking at long-term projections can be encouraging when a business looks
like it will be a profitable venture. However, give attention to initial expenses
that must be paid before any revenue is generated. Careful consideration of
these costs will help determine whether or not a start-up loan or investment
capital is required before the business begins. These estimates can also guide
the determination of where these dollars come from, be it a start-up loan from
a bank, a government grant, or from other investors (including you). It is
important to project how long external assistance will be needed. The amount
and timeliness of the need can play a role in these decisions. If a business is
slow to achieve small profits, start up costs must remain low to offset the slow
growth toward profitability.
It is important to be realistic in determining start-up costs and that a
business plan includes purchasing only necessary items in a fiscally conserva-
tive manner. If an item is necessary to produce a product or service, it is a
necessary expense. If it does not directly relate to the product or service,
decisions need to be made regarding its necessity or possibly the quality of
the item purchased. For the items that are needed, explore inexpensive
options and consider the ‘‘value’’ of the items purchased. For example, a
mahogany testing table with matching wing chairs from Ethan Allen can be
quite beautiful, but is functionally no different than a basic open table with
chairs that could be purchased at Ikea, Target, Wal-Mart, or similar retailer.
This is of particular importance when purchasing items that will not be
directly involved in the provision of the service. If a neuropsychologist sees

Business Planning and Financial Basics 45


patients only in a testing/treatment room, the desk in his or her office can be
basic and functional rather than appearance-driven. However, these ‘‘func-
tional’’ purchases must be made with issues of patient and referral source
perception of quality service and comfort with the services provided in mind,
so some balance in this mindset should be included. This must also be
considered in the location of the business. Rental costs will certainly be
lower in less desirable areas, but it is less likely that a patient or referral
source would be comfortable coming to such an area for care.
To estimate the start-up costs, all items necessary to provide the service are
listed along with other indirect costs that contribute to the business. This
includes any cost that must be paid prior to opening the doors of the business,
such as security deposits, licensing fees, insurance, initial rent, test equipment
and protocols, office supplies, office equipment, and furnishings. These are
itemized and the costs totaled to get an estimate of how much money will be
needed prior to beginning a business. After completing this calculation, if it is
determined that there is not enough cash on hand to start the venture, other
financing options will have to be considered including a business loan, capital
from another source, renting some items rather than purchasing, or a combi-
nation of options. If investment or loaned dollars are to be considered, the
business plan will serve as the basis for justifying the investment of others.
Table 2.4 provides a sample start-up cost spreadsheet. Notice that in
addition to the start-up costs described above, the spreadsheet also includes
expenses to account for slowed revenue projections for the first month of the
practice. Specifically, 20 hours per week of salaries and benefits for the
clinician and psychometrist are included since it is unlikely that the profes-
sional and technician will be billing at full capacity in the first month of
business. It is important to think critically and creatively, as this spreadsheet
is created to account for as many potential expenses as possible.

Cash Flow Analysis


The cash flow analysis helps a business to plan and manage the incoming and
outgoing cash flow so that expenses can be predicted and covered as they
come due. The profit and loss forecast is similar in that it projects whether or
not the cash from sales will cover projected expenses, but it does not include
non-product based costs and revenues and does not clearly demonstrate the
time that revenues are received and bills are paid. The cash flow analysis is
meant to show a ‘‘real time’’ picture of a business’s financial situation. It also
allows for planning for slow periods so that loans or other investments are in

46 The Business of Neuropsychology


Table 2.4 Sample Business Start-Up Cost Itemized List

place to cover initial start-up costs and slow initial sales or where saving
during high profit months allows for continued cash flow during leaner
times. In either case, if cash flow needs are identified in advance, it is easier
to plan for both the good and bad times.
The development of a cash flow analysis will use many of the same figures
and formulas developed earlier in the profit and loss forecast. The main
difference is that the focus is now on how cash flows into and out of the
business in real time instead of being based on projected sales revenues and
expenses. Additionally, expenses and revenues are accounted for in the month
where they occur rather than equally spread over a 12 month period. In most
new businesses there will be some negative values (placed in parenthesis) early
in the business that may be accounted for with planned start-up loans or other
investments. As the business becomes profitable, tax payments will need to be
included as well. This document will serve as a blueprint of the business’s
financial health from month to month and will help highlight areas and
timeframes where adjustments will need to be made.
The steps of developing a cash flow analysis are relatively simple, but
obtaining all of the information can be difficult. The process begins by starting
with the available cash on hand. For a new business this will be a zero value.
Cash-ins for the month are then calculated. This should include all sources of
income for the business, including the projected revenues, but also start-up
loans, investments, transfers of personal money, and any other money that
comes into the business. Adding these together provides the incoming revenue
for the month. The next step is to enter all of the projected payments out of the

Business Planning and Financial Basics 47


Table 2.5 Sample Cash Flow Analysis
business, including the fixed and variable costs as well as any loan payments or
other moneys that are being paid out. The total cash outs are then subtracted
from all revenues for the month to determine the remaining financial balance.
That number serves as the starting point for the next month and the process
begins again.
A particular problem encountered in developing a cash flow analysis in
neuropsychological practice is the fact that revenues are not all received at the
time the service is provided. Aside from fee-for-service payments directly from
the patient or partial payments through patient co-pays, there is typically a
delay in receiving payment for the services that are provided. As a result, the
inflow of revenues typically runs two to three months behind, and possibly
more depending on the payor source. As a result, early in the life of a
neuropsychology practice expenditures arrive well before revenues, making
it difficult to keep adequate cash flow to meet financial responsibilities. High
patient and billed volumes are not useful when the revenues do not arrive in a
timely manner. ‘‘The check is in the mail’’ will not cover the rent and other bills
that have identified due dates, making delayed reimbursement a tremendous
problem as a neuropsychological practice is starting. As a result, planning
should include additional start-up funds to carry the business until the
revenue cycle catches up to expenditure needs. This also highlights the need
for timely billing and accurate documentation to minimize these delays as
much as possible. This will be discussed further in future chapters.
Table 2.5 uses the information derived previously from the sample neu-
ropsychological practice to show an example of a cash flow analysis that
attempts to account for some of the difficulties described above. These num-
bers are by no means exact, but serve to demonstrate the principles presented.
As with the other tables, this is available on the Web site associated with this
text to provide a starting point for readers who want to experiment with
different numbers.

Completing the Business Plan


The above sections provide an overview of the descriptive and financial
aspects of a basic business plan. From this point it is necessary to put all of
the information into a final package that meets the needs of the entrepreneur.
This may be a document that is used to secure start-up funding through a bank
or other investors or it may simply be a guide for a smaller scale business that
has no outside involvement. The format of the final document(s) is based on
whatever next steps are to be taken. Additionally, the spreadsheets that have

Business Planning and Financial Basics 49


been developed can serve as useful guides for further budgeting and
accounting activities as the business matures.

Some Final Thoughts about Business Plans and Accounting Basics


The utility of the worksheets included in the previous section is not limited to
those who are planning to start or grow a private practice. The ability to
understand the financial aspects of business and to project revenues and
expenses will serve neuropsychologists well, regardless of work setting. As
any business or department looks to embark on program development or
expand into new areas or services, these worksheets can be used to project the
potential value of a new service line. This information allows the neuropsy-
chologist to present ideas to administration in a credible and fiscally respon-
sible fashion and in a language that administrators will understand. It is not
uncommon for neuropsychologists to dismiss or give up on program devel-
opment ideas when managers ask for a business plan or financial projections
for the new service to justify moving forward. The worksheets provided can be
applied to these and many other situations and settings. Additionally,
applying this knowledge through the development of financial statements
and reports allows the neuropsychologist to communicate with stakeholders,
be they investors in a private practice or managers or administrators in an
institutional setting.
Understanding the financial worksheets for the business plan also sets the
stage for ongoing budgeting for a business or a department. The ability to
understand and use budgets and budget-related information is crucial to the
success and longevity of any business. The overview of the basic worksheets
provided in this chapter should set the stage for improved budgeting over the
long-term of a department or business. A budget is a plan for future financial
activities for a specified period of time. It captures projections in terms of
expenses as well as revenues and provides a measure of success relative to
those projections. This is very similar to the steps that were taken in com-
pleting the break-even analysis and the profit and loss forecast above. Most
budgets also include organizational plans for assets and liabilities (budget
balance sheet) and time-based estimates for monetary receipts and payments
(budgeted cash flow). These concepts are not new in relation to the informa-
tion already covered in this chapter. The format is slightly different due to the
fact that the projections are compared to actual figures on a regular basis and
adjustments are made in real time with real data rather than in speculative
fashion.

50 The Business of Neuropsychology


Future chapters relate to many of the principles presented in this chapter in
direct application to neuropsychological practice. This includes examination
of how payor mix can directly influence the fiscal bottom line of a department
or business, discussion of contractual rates and managed care payment in
private and institutional settings, how to maximize reimbursement, and
creation of fiscal ‘‘dashboards’’ and other documents to communicate the
fiscal status of a department or business, among other topics. A good under-
standing of the principles presented here will provide a strong foundation as
practice financial affairs are further explored. Additionally, having a good
understanding the financial aspects of a business allows for better decision-
making and ‘‘smart growth’’ as a business or department matures.

References, Resources, and Suggested Readings


Abrams, R. (2000). The successful business plan: Secrets and strategies, 4th Ed.
Palo Alto, CA: Running ‘R’ Media.
American Medical Association (2009). CPT 2009 professional edition. Chicago,
IL: American Medical Association Press.
American Psychological Association. (2002). Ethical principles of
psychologists and code of conduct. American Psychologist, 57, 1060-1073.
Brookson, S. (2000). Managing budgets. New York: Dorling Kindersley.
Palo Alto Software (2009). Business Plan Pro. Palo Alto, CA: Palo Alto Software
DeThomas, A., Derammelaere, S. (2001). Writing a convincing business plan, 3rd
Ed. Hauppauge, NY: Barron’s Educational Series.
Ernst & Young LLP, Siegel, E. S., Ford, B. R., & Bornstein, J. M. (1993). The
Ernst & Young business plan guide, 2ndEd. New York: John Wiley & Sons.
Lamberty, G. J., Courtney, J. C., & Heilbronner, R. L. (Eds.) (2003). The
practice of clinical neuropsychology. Exton. PA: Swets & Zeitlinger.
Lesonsky, R. (2007). Start your own business, 4th Ed. Irvine, CA: Entrepreneur Press.
Nova Development US (2005). Nova Business Plan Writer Deluxe.
Pakroo, P. H. (2006). The small business start-up kit: A step-by-step legal guide,
4th Ed. B. K. Repa (Editor). Berkley, CA: Nolo.
Peck, E. A. (2003). Business aspects of private practice in clinical
neuropsychology. In Lamberty, Courtney, & Heilbronner (Eds.), The Practice
of Clinical Neuropsychology. Exton. PA: Swets & Zeitlinger.

Business Planning and Financial Basics 51


Peterson, S. D., Jaret, P.E., & Schenck, B. F. (2005). Business plans kit for
dummies. Hoboken, NJ: Wiley Publishing. Includes CD-ROM
Rule, R. C. (2004). Rule’s book of business plans for startups: Create a winning plan
that you can take to the bank, 2nd Ed. New York: Entrepreneur Press.
Tyson, E. & Schell, J. (2008). Small business for dummies, 3rd Ed. New York:
Wiley & Sons.

52 The Business of Neuropsychology


3
&&&

Process, Quality, and Consistency

Throughout educational programs, neuropsychologists are trained in scientific


techniques, statistics, and research methodology. This may continue in our
clinical training, where programs often subscribe to a scientist-practitioner or
practitioner-scholar model in which research and science are presented as the
basis for appropriate clinical practice. The 1949 Boulder Conference defined
the doctoral clinical psychologist as a scientist–practitioner who was (a) a
consumer of new research findings, (b) an evaluator of clinical interventions
through empirical methods to increase accountability, and (c) a researcher who
produced data from his or her own clinical ‘ laboratory’’ to inform the rest of
the scientific community (Barlow, Hayes, & Nelson, 1984). The goal was to
produce professionals who ‘ would combine clinical practice with an empiricism
and a research methodology particularly suited for clinical work’’ (p. 10).
Inherent to this formulation was the belief that the diagnosis and treatment
of each individual case was to be regarded as a single and well-controlled
experiment (Thorne, 1947). The practitioner-scholar model of training pro-
motes the productive interaction of theory and practice in a primarily practice-
based approach to inquiry (Hoshmand & Polinghorne, 1992). As such, psy-
chologists are expected to conduct their clinical practice in a manner that is
informed by psychological theory and current research.
While these approaches certainly are valuable in terms of our clinical
practice, psychologists are not taught the basics of process control, analysis,
improvement, and outcome measurement. These areas traditionally have been
reserved for business and management programs, specifically in courses
looking at quality and process consistency. This chapter provides an overview
of process, quality, and consistency from a business perspective, but with a

53
specific emphasis on healthcare process, quality, and outcome measurement.
The application of these practices is presented in the context of neuropsy-
chology practice in the following chapter, with an emphasis on setting up
practice/departmental processes and procedures.

What Is Process?
According to the American Heritage Dictionary (Picket, et al, 2000), ‘‘process’’
refers to:

• A series of actions, changes, or functions bringing about a


result
• A series of operations performed in the making or treatment of
a product
• Progress or passage, as in the process of time or events now in
process

Process is not necessarily about the outcome, but instead refers to the activities
that lead to the outcome. This is more clearly seen in the definition of process
in business settings. Davenport (1993) defines a (business) process as a
structured, measured set of activities designed to produce a specific output
for a particular customer or market. Again, this implies a strong emphasis on
‘‘how’’ work is done within an organization in contrast to a product emphasis
or an emphasis on ‘‘what’’ is produced. Process is a specific ordering of work
activities across time and space, with a beginning and an end, and clearly
defined inputs and outputs. In essence, processes are the structure by which
an organization does what is necessary to produce value for its customers
(Davenport, 1993).
This sense of ‘‘value’’ in terms of process outcome is furthered by Hammer
and Champy (1993) as they define process in business as a collection of
activities that takes one or more kinds of input and creates an output that is
of value to the customer. The outcome of a process is not necessarily tangible
goods. Processes may also produce intangible services. In either case, the
purpose of the process is to produce value for the customer. To make this
idea more clear, Hammer and Champy describe ‘‘primary processes’’ as those
that result in a product or service that is received by a customer, while
‘‘support processes’’ produce products that are invisible to the customer but
essential to the effective management of the business. Rummler and Brache
(1995) go further to state that most processes ‘‘are cross-functional, spanning

54 The Business of Neuropsychology


the ‘white space’ between the boxes on the organization chart.’’ This highlights
the often times ‘‘unseen’’ nature of processes that produce outcome.
When the gestalt of the business process is broken down into its individual
elements, the following characteristics emerge as the basis for defining busi-
ness process (Johansson, et al, 1993):

• Definability: Must have clearly defined boundaries, input and


output
• Order: Consists of activities that are ordered according to their
position in time and space
• Customer: There must be a recipient of the process outcome
• Value-adding: The transformation taking place within the
process must add value to the recipient, either upstream or
downstream
• Embeddedness: A process cannot exist in itself, it must be
embedded in an organizational structure
• Cross-functionality: A process regularly can, but not necessarily
must, span several functions

These factors can be recognized in virtually any process, whether it is the


manufacturing of a specific product or the provision of a specific service or set
of services.

Process Control, Evaluation, and Quality


As can be gleaned from the above discussion, processes in business are meant
to be stable, consistent, and predictable. Again, the focus is not on the out-
come (or the ‘‘what’’), but on the process (or the ‘‘how’’ it was achieved). With
that in mind, process control, evaluation, and quality focus on evidence-based
process steps that produce outcome and value, with an understanding that we
have more control over processes than outcomes. In administrative or man-
agerial settings, the effectiveness of a process is understood through measure-
ment and auditing. The process control and evaluation literature indicates that
‘‘we manage what we measure’’ and that processes that are unmanaged move
toward chaos (entropy).
The American Heritage Dictionary (Picket, et al, 2000) defines ‘‘quality’’ as
having a high degree of excellence such as the importance of quality health-
care. In a business or quality management sense, quality is the elimination or
reduction of process and outcome variation. Some words used to describe

Process, Quality, and Consistency 55


quality include consistent, predictable, stable, systematic, surprise-free, in
control, compliant, 100% conformance, and zero defects. The practices of
process control and quality center on the reduction of variance and the
development of stable, consistent, and predictable activities in the provision
of services or manufacturing of a product.
In the realm of quality and process evaluation, certain terms are
frequently encountered and will run throughout the literature in this
area. The reader is encouraged to become familiar with the following
terms:

• Statistical Process Control (SPC)


• Six Sigma Quality
• Total Quality Management (TQM)
• Continuous Quality Improvement (CQI)
• The International Organization for Standardization - ISO 9000
family of standards for quality management systems
• Constant Compliance

Each of these terms refers to management and control of the process that
produces the desired outcome. The goal is to reduce variance and sub-
sequently improve quality. Albert Einstein has been given credit for the
quote, ‘‘Insanity is doing the same thing over and over and expecting to
get a different result.’’ Whether or not that truly came from Einstein, the
basis of the statement certainly applies to process control and manage-
ment. Similarly, in psychology, we often report that the best predictor of
future behavior is past behavior. This was captured more formally by
Shewart (1931, p. 6) in his discussion of process control: ‘‘A phenom-
enon will be said to be controlled when, through the use of past
experience, we can predict, at least within limits, how that phenomenon
will behave in the future.’’ This is the essence of statistical process
control. Quality is achieved through the elimination or reduction of
process and outcome variation.
In order to measure and subsequently control process variation, there must
first be an understanding of what process variation is. Every process or
behavior has some level of variability. In process control, the goal is to
distinguish common cause variation from special cause variation (Deming,
1986). A good example to demonstrate this concept is your signature. If you
write your signature on a piece of paper five times in succession, there will be

56 The Business of Neuropsychology


subtle differences between each sample, but overall there will be agreement
that all of the samples are in fact your signature. All processes exhibit this
common cause variation where no two things are exactly alike or no two
people perform the same process in exactly the same way. This variation is
predictable, somewhat expected, random, and essentially a part of the process.
This common cause variation is the ‘‘noise’’ in the system. To change things up,
if you wrote your signature with your nondominant hand under the five
signatures you previously wrote with your dominant hand, there would be a
significant difference between this sample and the previous samples. Here,
special cause variation is introduced into the process by utilizing the non-
dominant hand in the signature writing process. Special cause variation is
unpredictable, unexpected, and not part of the normal process. Using the
nondominant hand introduces a ‘‘signal’’ error in the process, indicating that
something has influenced the process in a unique fashion. Hence, the goal of
process evaluation and management is to distinguish ‘‘signal’’ from ‘‘noise’’ in
the presenting system. Ideally, the goal is to recognize special cause variation
in real time so it can be prevented, fixed, standardized, or ignored rationally
based on data rather than hunches. It is also important to distinguish common
cause from special cause variation to avoid tampering and chasing ghosts that
really do not exist.
To put this process evaluation in more traditional statistical terms,
Callahan & Barisa (2005b) described process evaluation using Type I and
Type II error as the premise. In process control, Type I error occurs
when common cause variation is misinterpreted as special cause varia-
tion. In other words, it is normal variation that does not necessarily
impact the process or subsequent outcome, but efforts are made to
correct this variation. This misinterpretation leads to ‘‘chasing ghosts’’ in
the system or tampering with a process that may actually be in control.
This intervention without process knowledge may result in special cause
variation that leads to problems with a process that was already under
good control. Type II error results when special cause variation is mis-
interpreted as being common cause variation. In essence, this leads to
doing nothing. In process control, sometimes it is better to do nothing
than to tamper with the system. If this error is made and the variation
was due to a special cause, it will likely happen again and the evaluation
process will be provided additional data to better identify the special
cause variable and to take steps to eliminate that process variation.

Process, Quality, and Consistency 57


Statistical Process Control and Process Management
The measurement of process variation typically involves the utilization of
statistical process control (SPC). Like any other statistical method, SPC is a
tool to help identify and distinguish significant changes (special cause varia-
tion) from normal fluctuations (common cause variation). There are multiple
books, chapters, articles, white papers, etc. on SPC, particularly in the busi-
ness and management literature. In fact, it would be extremely rare to bring up
SPC process evaluation methods to a manager or business school graduate and
have him or her not understand the topic or methods. It is the language of
process evaluation and quality improvement. A complete discussion of SPC
techniques and statistics is beyond the scope of this text, but the reader should
become familiar with some aspects of SPC to enhance discussions with
management/business colleagues as well as develop the skills to use the
concepts and ideas within their own departmental/practice structures.
Callahan and Barisa (2005b) and Callahan & Griffin (2003) include a brief
primer on SPC and its application to healthcare management and clinical
settings. The following summary provides a brief overview of some SPC
principles and techniques to allow the reader to gain some familiarity with
this powerful tool. Further reading of the references provided above, as well as
other readings in the reference section of this chapter, is recommended for
those who want to gain a greater understanding of SPC.
Statistical Process Control was developed by Walter Shewart and his
colleagues at Bell Laboratories in the 1920s as a means to understand and
reduce variability in the manufacturing process (Berwick, 1991). SPC gradu-
ally developed as a tool to provide real-time, analytically robust, graphic
portrayal of process information that quickly and meaningfully identifies
trends, problems, and issues. This information can then be used to correct
problems or standardize variable processes in real time so that the process can
become stable and predictable. SPC utilizes a ‘‘control chart’’ to display the
independent variable (x axis – often a time variable) and the dependent
variable (y axis – process to be measured) in a time series line graph. This is
referred to as a ‘‘run chart’’ to reflect the multiple consecutive data points in a
time series. Upper and lower ‘‘control limits’’ are defined at equal points above
and below the mean, based on statistical analysis of the process data obtained
from the individual data points. The control limits define the statistically-
derived confidence intervals representing normal variance within the mea-
sured process. This allows the examiner to distinguish common cause from

58 The Business of Neuropsychology


special cause variation. These control limits are calculated in such a manner
that they always yield a confidence interval of three standard deviations
around the distribution of the data (thus creating a six sigma range of total
common variance). This covers 99.73% of the normal distribution, making
the likelihood of an observation falling outside of these control limits only
0.27% or 3 of 1,000 observations (Plsek, 1992). Any such observation cer-
tainly would reflect the influence of special cause and would not be associated
with common cause or chance variation. This shows the powerful nature of
this statistic and the emphasis on recognizing special cause variance and
minimizing the misidentification of common cause as being special cause.
While multiple control charts can be developed using SPC, the power of
SPC can be obtained from a few manageable concepts built around a single
type of individual control chart called the average moving range (XmR). It has
broad-based utility and has been referred to as the ‘‘Swiss army knife’’ of
control charts. Using the XmR chart, very specific rules exist for examining
the data and empirically identifying special cause variation. Three primary
rules are employed as defined by the work of Shewart and his colleagues and
often referred to as the ‘‘Western Electric Rules’’ (Carey & Lloyd, 1995; Hart &
Hart, 2002; Shewart, 1931; Wheeler, 2000). The mnemonic ‘‘ones, runs, and
trends’’ can be used to identify these three rules. As presented in Figure 3.1
from Barisa and Callahan (2005b), ‘‘ones’’ refer to any single point falling
outside of the upper or lower control limits; ‘‘runs’’ refers to seven or more
consecutive points all above or below the center line (mean); and ‘‘trends’’
refers to seven or more consecutive observations moving up or down bisecting
the center line (mean). By using these rules, the examiner can use this simple
charting tool to identify special cause variation and make empirically derived
decisions. To summarize, process control and management improves the
quality of outcomes by minimizing variance in the processes leading to out-
come; reducing surprises; minimizing the intermittent problems that can lead
to errors and mistakes; avoiding decision errors; and ultimately saving time,
energy, and stress.
The question arises, ‘‘when a special cause variation is identified, what do
you do?’’ The key is to realize that errors and mistakes are more likely related to
a process rather than a person. Berwick (1989) states, ‘‘defects in quality could
only rarely be attributed to a lack of will, skill, or benign intention among the
people involved in the process.’’ The ultimate goal is to identify the error/
variance in the process and make adjustments based on fact (data) rather than
irrationally tampering with a system.

Process, Quality, and Consistency 59


One

Any one point falls outside the control limits


(i.e., above the UCL or below the LCL).

Run

3
Seven or more consecutive points all above
7
1 5 or below the center line (the mean).
6
2 4

Trend

1
2
Seven or more consecutive points moving
3 up or down bisecting the center line.
4 5
6
7

FIGURE 3.1 Determining Special Cause in SPC: ones, runs, and trends
From Callahan, C.D., & Barisa, M.T. (2005). Statistical process control and
rehabilitation outcome: The single-subject design reconsidered. Rehabilitation
Psychology, 50, 24–33. Used with permission.

The Healthcare Process


To better understand the concept of process management and its application,
healthcare process will be used as an example due to its relevance to neurop-
sychological practice. Bente (2005) provides a model of healthcare processes
that is based on the previous definitions (see Figure 3.2 from Bente, 2005).
The model starts with inputs which could be the presenting complaints of the
patient as he or she enters the healthcare system. These can be compared to the
raw materials used in a manufacturing process. From the point of presenta-
tion, combinations of administrative and clinical functions are triggered by the
presenting symptoms. This process reflects the interaction of people, equip-
ment, policies, and procedures. Evaluation of this process could be quite
variable as individual, group, and interactive elements of the process are
evaluated in terms of consistency, competencies, equipment reliability and
maintenance, clarity of policies and procedures, whether or not the clinical
procedures are based on evidence based practice, etc. Once the symptoms
(inputs) go through the healthcare process, they become an output. The
output may well be an additional action taken by the individuals or organiza-
tion, such as an admission order, a medication or procedural intervention, or

60 The Business of Neuropsychology


PEOPLE EQUIPMENT

INPUT HEALTH CARE OUTCOME


OUTPUT INPUT PATIENT
PROCESS

PROCEDURES POLICIES

FIGURE 3.2 Health Care Process Model


From Bente, J. (2005). Performance measurement, health care policy, and implica-
tions for rehabilitation services. Rehabilitation Psychology, 50, 87–93. Used with
permission.

other activity. At this point, the output becomes a new input that instead of
going back through the healthcare process, goes back to the patient and
ultimately results in an outcome.
The outcome is based on how the patient reacts to his or her course of
intervention, the nature of which can be quite variable. The result of the
intervention may be favorable in that the patient is cured or the symptoms
are relieved. Alternatively, the result may not be favorable as the patient may
not receive relief or cure as a result of the interventions and may in fact die
despite the care provided. Traditionally, outcome would be the measurement
of the quality of care provided, whereas improvement in the presenting
condition would be a successful outcome and a lack of improvement or
worsening of the condition would equate to poor quality. However, patient
outcome research has shown that the positive or negative outcome of health-
care is not necessarily reflective of the quality of care provided. We know that a
patient can have a favorable or good outcome even in the absence of quality
care and that, conversely, a patient can have a negative or poor outcome even
in the context of quality care. Bente (2005), based on the work of Mark (1995),
contends that there is a unidirectional relationship between the quality of care
provided and the subsequent outcomes. In other words, if quality care exists,
one can conclude that the outcomes will be more favorable. However, if the
outcomes are favorable, one cannot automatically conclude that quality care
was provided in the healthcare process.
This is further highlighted in Bente’s healthcare control model (Figure 3.3
from Bente, 2005). This unidirectional relationship is presented with discus-
sion of the degree of direct control healthcare providers have on either the
process or the outcome. Those caring for the patient have little control over the

Process, Quality, and Consistency 61


MAY HAVE
LIMITED
CONTROL

INPUT HEALTH CARE


PATIENT OUTCOME
PROCESS

VIRTUALLY
100%
CONTROL

FIGURE 3.3 Health Care Control Model


From Bente, J. (2005). Performance measurement, health care policy, and implica-
tions for rehabilitation services. Rehabilitation Psychology, 50, 87–93. Used with
permission.

actual outcome because this is influenced by multiple factors related directly to


the patient, such as general health condition, treatment adherence, reactions
to treatments, and other factors outside of the health professional’s control.
However, within the healthcare process, these individuals have virtually 100%
control of what happens in the process of the treatment. In other words,
healthcare providers can control what happens to the patient within the process
of service provision, but they have only limited control over the effectiveness
(outcome) of that intervention. The interested reader is encouraged to read
the work of Bente (2005) and Mark (1995) for more detailed discussion.
This model of heathcare control and quality is seen in the shift
from outcome indicators to process indicators by Centers for Medicare &
Medicaid Services (CMS), the Joint Commission of Accreditation of Healthcare
Organizations (JCAHO), the National Voluntary Hospital Reporting Initiative
(NVHRI), and other organizations responsible for the accreditation, regula-
tion, and ultimately, payment for healthcare. As an example, the NVHRI
selected ten indicators under the three major conditions of heart failure,
acute myocardial infarction, and community acquired pneumonia to evaluate
performance (Centers for Medicare & Medicaid Services, 2004). All ten of the
performance indicators were process variables controlled directly by the
organization’s leadership or by the direct care providers. Similar to this, the
JCAHO Core Measures have identified 21 indicators for the conditions of
heart failure, acute myocardial infarction, community acquired pneumonia,
and pregnancy-related conditions to evaluate performance in healthcare orga-
nizations (JCAHO & CMS, 2004, p. v). Although not all of the indicators are

62 The Business of Neuropsychology


process variables, the vast majority (81%) is under the control of the organiza-
tion or caregivers. Performance on these indicators have a direct effect on the
identified quality of an organization as well as on payment received via the
new ‘‘pay for performance’’ model developed through CMS. This pay for
performance model is discussed further in subsequent chapters, but suffice
it to say that neuropsychological practice will not be immune from its effects.

Outcome Measurement in Psychology and Neuropsychology Practice


It is worthwhile to provide a discussion of the current state of outcome
measurement in psychological practice. Despite our underpinnings in the
scientist-practitioner and practitioner-scholar models of training and prac-
tice, there is little evidence to support that psychologists are using outcome
measurement in their clinical practice. In a national survey of APA clinical
psychologists, Hatfield & Ogles (2004) defined outcome measurement as
‘‘routinely collecting data regarding client progress.’’ Of the 874 participants
(44% response rate), only 37% reported using outcome measurement in
their practice. The reasons cited for conducting outcome measurement
included track client progress, determine need to alter treatment, ethical
practice, determine own strengths and weaknesses, required by payer,
required by work setting, research publication, and business marketing.
Reasons cited for not conducting outcome measurement included comments
such as adds too much paperwork, takes too much time, extra burden on
clients, feel it is not helpful, do not have enough resources, a simple measure
distorts effects of treatment, do not know how to implement, concerns about
confidentiality, feel that it will be misused by others, interferes with my
autonomy as provider, do not know how to interpret scores, and client
refusal. Callahan (presented as part of Callahan, Barisa, et al., 2005) sum-
marized these reasons into four categories: 1) Too much trouble; 2) Risk of
personal harm/loss; 3) Do not know how; and 4) Client burden. The first
three, Callahan suggested, reflect avoidance on the part of the psychologist.
Callahan adapted the Hatfield and Ogles methodology and surveyed APA
Division 22 (Rehabilitation Psychology) members through a pilot survey in
March of 2005. Of the 89 respondents, 42% reported using OM in their
practice. Of those that use outcome measurement, 71% reported using some
measurement at the beginning of treatment and 54% used measurement at
the end of treatment.
There is no good indication that psychologists and specialists in psychology
are routinely using outcome or process measurement in their clinical practice.

Process, Quality, and Consistency 63


While there is a reasonable belief that our ‘‘outcomes’’ are too complex to
measure or that the efficacy of our evaluations and interventions are intuitively
sound, that will hold little weight as our payors ask us to show our value
before they will provide approval/payment for our services. There is a need to
demonstrate consistency and quality processes in our clinical activities as we
develop strategies to demonstrate that our services provide reliable functional
benefits that are consistent with the goals of the person(s) served and exceed
those achieved through passage of time, natural healing, and/or chance alone
(Callahan & Barisa, 2005a). We should develop methods to measure things
we can/should impact; intervene in ways shown to work (Seligman, 1994);
measure with sensitive, quick, easy, repeatable metrics; and be able to present
this information graphically for maximum meaning and impact. This could be
completed by focusing on the areas of effectiveness (e.g., through objective
measures of symptom presentation); efficiency (e.g., length of stay; cost per
evaluation; time for report generation); usefulness (e.g., documented reduced
need for further evaluation, decreased hospital stay, treatment recommenda-
tions that reduce symptom presentation or caregiver difficulties); outcome
measurement for the larger organization (e.g., development, implementation,
and analysis of broader outcome measurement tools), and customer satisfac-
tion (Callahan, Barisa, et al, 2005). Given the time and expense involved in an
average neuropsychological evaluation, the need for scientific documentation
of the relative value of such services will be paramount for future authorization
and payment.
While these areas of ‘ outcome’’ are of great importance, there also is a need to
demonstrate consistency, timeliness, and quality in how we deliver these
services. The process factors affecting the administrative and ‘ practice’’ aspects
of neuropsychology are discussed in detail in Chapter 4, but it is important to
note that focusing on our own office and clinical processes is of great importance
as we look to demonstrate these constructs. For a moment think, about your
own clinical setting and how patients transition through the various aspects of
your office process – from initial call for referral until the time the patient is
discharged from care and the chart is filed. Is it stable, consistent, predictable,
and of the highest quality at all levels? Does the report reflect information that is
useful to the referral source and the patient? Was it completed in a timely
manner? How would the patient as well as the referral source rate you and your
department in terms of customer service? Most importantly, would they recom-
mend your practice/services to a family member or friend? These questions are
addressed as we look to set up the office process in the next chapter, but these

64 The Business of Neuropsychology


areas of quality and process play a large role in determining our future success
and staying power as a practice/department.

References, Resources, and Suggested Readings


Barlow, D.H., Hayes, S.C., & Nelson, R.O. (1984). The scientist-practitioner: Research
and accountability in clinical and educational settings. Elmsford, NY: Pergamon Press.
Bente, J. (2005). Performance measurement, health care policy, and
implications for rehabilitation services. Rehabilitation Psychology, 50, 87–93.
Berwick, D.M. (1989). Continuous improvement as an ideal in health care.
New England Journal of Medicine, 320, 53–6.
Berwick, D.M. (1991). Controlling variation in health care: A consultation
from Walter Shewhart. Medical Care, 29, 1212–25.
Callahan, C.D., & Barisa, M.T. (2005a). Introduction to the special issue on
outcomes measurement. Rehabilitation Psychology, 50, 5.
Callahan,C.D.,&Barisa,M.T.(2005b).Statisticalprocesscontrolandrehabilitation
outcome:Thesingle-subjectdesignreconsidered.RehabilitationPsychology,50,24–33.
Callahan, C.D., Barisa, M.T., Ware, J.E., Hunsley, J., & Boon, B.J. (August,
2005). The 6 P’s of outcome measurement. Symposium Co-Sponsored by
Divisions 12 (Clinical) and 22 (Rehabilitation) at the 113th Annual
Convention of the American Psychological Association, Washington, DC.
Callahan, C.D. & Griffin, D. L. (2003). Advanced statistics: Applying
statistical process control techniques to emergency medicine: A primer for
providers. Academy of Emergency Medicine, 10 (7). 1–8.
Carey R.G., & Lloyd, R.C. (1995). Measuring quality improvement in healthcare:
A guide to statistical process control applications. New York: Quality Resources.
Centers for Medicare & Medicaid Services. (2004). National voluntary
hospital reporting initiative fact sheet. Retrieved from http://www.cms.hhs.
gov/quality/hospital/NVHRIFactSheet.pdf
Davenport, T. (1993). Process innovation: Reengineering work through
information technology. Boston, MA: Harvard Business School Press.
Deming, W.E. (1986). Out of the crisis. Cambridge, MA: MIT Press.
Donabedian, A. (1966). Evaluating the quality of medical care. Milbank
Memorial Fund Quarterly, 44, 166–203.
Hammer, M. & Champy, J. (1993). Reengineering the corporation: A manifesto
for business revolution. New York: Harper Business.

Process, Quality, and Consistency 65


Hart, M.K. & Hart, R.F. (2002). Statistical process control for health care. Pacific
Grove, CA: Duxbury.
Hatfield, D.R., & Ogles, B.M. (2004). The use of outcome measures by psychologists
in clinical practice. Professional psychology: Research and practice, 5, 485–491.
Hoshmand, L.T., & Polinghorne, D.E. (1992). Redefining the science-practice
relationship and professional training. American Psychologist, 47, 55–66.
Johansson, H.J., McHugh, P., Pendlebury, A.J., & Wheeler, W.A. (1993).
Business process reengineering: Breakpoint strategies for market dominance.
New York: John Wiley & Sons.
Joint Commission on Accreditation of Healthcare Organizations and the
Centers for Medicare & Medicaid Services (2004). Specification manual for
national hospital quality measures. Retrieved from www.jcaho.org/pms/care
+measures/aligned_manual.htm
Mark, B. (1995). The black box of patient outcomes research. Image: Journal of
Nursing Scholarship, 217 (1), 42.
Phelps, R., Eisman, E.J, & Kohout, J. (1998). Psychological practice and
managed care: Results of the CAPP practitioner survey. Professional Psychology:
Research and Practice, 29, 31–36.
Pickett, J. P. et al. (Eds.). (2004). The American heritage dictionary of the English
language, 4th Ed. Boston, MA: Houghton Mifflin Company.
Pieper, S. K. (2004). Good to great in healthcare: How some organizations are
elevating their performance. Healthcare Executive, May/June, 20–26.
Plsek, P.E. (1992). Tutorial: Introduction to control charts. Quality
Management Health Care, 1 (1), 65–74.
Rummler, G.A. & Brache, A. P. (1995), Improving performance: How to manage the
white space on the organizational chart, 2nd Ed. San Francisco, CA: Jossey-Bass, Inc.
Seligman, M.E.P. (1994). What you can change and what you can’t. New York:
Knopf/Random House.
Shewhart, W.A. (1931) Economic control of quality of manufactured product.
New York: Von Nostrand.
Thorne, F.C. (1947). The clinical method in science. American Psychologist, 2,
161–166.
Wheeler, D.J. (2000). Understanding variation: The key to managing chaos, 2nd
Ed. Knoxville, TN: SPC Press.

66 The Business of Neuropsychology


PART TWO
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BUSINESS PRINCIPLES APPLIED TO NEUROPSYCHOLOGY


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Setting Up the Office Process

To revisit an idea from the previous chapter, quality was defined as the
elimination or reduction of process and outcome variation. Some words
used to describe process quality included consistent, predictable, stable,
systematic, surprise-free, and zero defects. For a moment, think about the
office ‘‘process’’ in your workplace and ask yourself the following questions:

• How stable and predictable are your scheduling, pre-certification


activities, charting, office flow, etc.?
• Are there ever errors?
• Are they repeated over and over?
• Are there ever surprises and crises that could have been
avoided?
• How do your patients perceive the quality of your department?
• How do your referral sources perceive the quality of your
department?
• When errors are made, who is responsible for correcting them?
• How much time is spent correcting mistakes or providing
service recovery?
• How much billable time is lost due simply to variations/errors
in the office process?

In a similar vein, Peck (2003) described two common questions he is asked


regarding neuropsychological practice, with the first relating to how to
monitor and manage insurance information for patients to determine precer-
tification needs and the second relating to how to train office staff to collect

69
and mange the obtained information. The answers to all of these questions
highlight the importance of a stable process within a neuropsychological
practice or department.
This chapter focuses on the office system or process and how to set up or
alter the office processes with the goal of reducing variation and errors, while
improving consistency and quality, and ultimately, increasing profitability.
The office flow or system encompasses the entire process, from taking the
initial call to filing the chart after the patient has been seen and payment has
been received. In essence, the office process is made up of four major compo-
nents: people, process, paperwork, and (clinical) practice. This chapter
explores each of these areas with a focus on the development of a consistent
and predictable office system.

Overview of the Office System


People
Personnel are the most expensive and the most valuable aspect of any
business. From top to bottom in any organization, people drive the process
and having the right person for each job sets the stage for success. To begin
setting up an office process there must be an understanding of types of
activities and personnel involved in the system. These include what are
traditionally thought of as front office and back office activities. Front office
activities are those involving direct contact with patients and family members,
referral sources, insurance providers, etc. The front office and associated
personnel are the ‘‘face’’ of the office. Back office activities refer to the indirect
work that promotes and supports the work of the clinician and the ‘‘flow’’ of
the patient and chart through the office system. Pre-authorization, chart
creation, mailing and receiving of registration materials, reminder contacts,
faxing/mailing of reports, chart filing, and other activities reflect the behind
the scenes work of the back office and related personnel.
In neuropsychology and healthcare, clinicians and their related activities are
also a part of the office process: seeing the patient; scheduling and carrying out
technician activities; completing required documentation; and scheduling and
seeing the patient for follow-up to discuss the test results as necessary. This
highlights the fact that office systems involve multiple people with multiple
responsibilities. Clinicians are not exempt from responsibility in maintaining
the office process and structure. All too often clinicians view office staff as
working ‘ for’’ them. In a successful system the idea is that the office staff and

70 The Business of Neuropsychology


the clinicians work ‘ with’’ each other. This promotes a culture based around
mutual respect and appreciation for all activities that go into building a suc-
cessful office process and providing excellent clinical care. The clinician’s
primary role is to provide optimal patient care, but in reality other tasks related
to the office process must be included in the daily activities of a clinician, be it
completing documentation, completing accurate billing forms, clarifying
referral questions, or assisting with preauthorization/precertification activities.
There are multiple roles and responsibilities that need to be managed for an
office process to be successful, and there are specific needs regarding office, as
well as clinical, personnel. It is imperative to have the right people in the right
places. Before setting up the office process, roles and responsibilities need to be
assigned to specific individuals. The following descriptions of various personnel
‘ titles’’ are meant to highlight specific activities under a position description, but
these activities may be carried out by one or more individuals with different
identified position titles. Additionally, one individual may be designated to
carry out the activities of more than one of the positions described below. The
number of personnel needed is dependent upon the size and setting of the
clinical practice and the unique strengths and weaknesses of personnel.

Patient Liaison/Administrative Assistant


The patient liaison is essentially the voice or face of the department at point of
first contact. Often, this is the receptionist in terms of phone and in-person
contacts with patients, as well as referral sources. This individual has many
responsibilities and all need to be completed with an emphasis on customer
service. Activities may include, but not be limited to:

• Obtaining all pertinent referral information including insurance


information
• Scheduling all appointments
• Mailing initial patient information forms for completion prior
to the appointment
• Placing confirmation calls to patients at a designated time prior
to the scheduled appointment
• Greeting and checking-in patients on the day of service
• Making copies of insurance card and patient identification
• Collecting appropriate co-pays
• Reviewing the HIPAA policy and other appropriate information
with patients

Setting Up the Office Process 71


• Notifying providers when patients arrive
• Checking patients out and scheduling follow-up appointments
if necessary
• Faxing or mailing follow-up letters, forms, and/or completed
reports to the referral source or others

As noted, these are just some examples of activities. Depending on the setting,
this individual may also serve as a general administrative assistant with
responsibilities that include typing dictation, obtaining medical records
from other providers, or other secretarial/administrative roles.

Pre-Certification Representative
The Pre-Certification representative works to obtain the optimal financial
reimbursement for the patient’s clinical services. To accomplish this, a variety
of activities must take place. As such, this individual has multiple responsi-
bilities, including the following:

• Verifying patient demographic and insurance information


• Processing paperwork and documentation for pre-certification
• Making phone contacts as necessary to clarify coverage and
pre-certification needs
• Working with the clinicians to appeal decisions or to attempt
to increase allowable services
• Explaining benefit coverage to patients and providers
• Developing and maintaining database of preauthorization/
precertification requirements and patterns for the most
common payors for the practice/department
• Negotiating (or arguing) allowable services and approved
times when coverage contracts indicate that an ordered
service should be covered
• Working with the clinicians to obtain necessary information to
assist in negotiations for reimbursed services
• When payment is denied after preauthorization, contacting the
payor and arguing the claim in attempts to secure appropriate
payment
• If the practice or department provides inpatient services,
expediting authorizations or seeking approval for services
after the fact may be necessary

72 The Business of Neuropsychology


It is imperative that this individual be well-trained in the nuances of medical
billing and coverage, including a very strong understanding of appropriate
CPT codes and ICD-9 diagnostic information. Prior experience in this area can
be very useful even if it was not in neuropsychological billing. As with the
patient liaison position, there is a need for strong interpersonal skills and an
emphasis on customer service. In contrast, this individual must also possess
strong negotiating skills to manage resistance that may be encountered in the
precertification process.

Billing/Coding Representative
While similar, the responsibilities of the Billing/Coding Representative are
different from those of the Precertification Representative. In some offices it
may well be the same individual, depending on the department/practice size
and structure. The primary responsibility for this individual is to ensure a
consistent financial flow for the department. A cooperative relationship with
clinicians and payors is required as this person serves as a liaison between the
clinician and subsequent payment. Activities include:

• Ensuring provider compliance with billing and coding policies


established within the department/practice to meet requirements
of the various reimbursement sources
• Reviewing the CPT codes and diagnoses submitted to ensure
they are consistent with the preauthorized services
• Entering CPT codes, patient diagnosis codes (ICD-9), and
billing charges into the charge system of the practice/
department
• Assisting in the resolution of billing and coding errors and
questions
• Organizing and coordinating appeals for all denied payments
including collaborating with clinicians to obtain supporting
documentation
• Developing and maintaining reconciliation data to ensure that
all services were provided and billed accordingly in a timely
manner

It is imperative that appropriate training be provided for this individual to


maximize performance in the areas above. Additionally, it is crucial that
clinicians view this individual as a partner in the effort to receive appropriate

Setting Up the Office Process 73


payment and not view them as a ‘‘critic’’ of their billing, coding, and docu-
mentation activities. If animosity develops between clinicians and precertifi-
cation and billing/coding representatives, it will negatively impact office
relationships and ultimately, department/practice reimbursement.

Medical Records Officer


The Medical Records Officer assists with and monitors medical record com-
pliance. Activities focus on maintaining and securing appropriate records in
terms of registration and administrative materials, clinical documentation, and
completed test protocols according to departmental/practice policies and
HIPAA and other regulatory requirements. Activities include:

• Duplicating and maintaining an adequate quantity of all


patient forms
• Preparing and maintaining an adequate quantity of pre-assembled
patient charts for easy front office access
• Assembling and labeling charts for all new patients
• Pulling charts for scheduled appointments, clinics, and specific
clinical requests
• Filing all charts and patient information
• Ensuring department compliance with medical record policies
• Accurately filing patient information
• Managing release of information requests, ensuring that
proper authorization was obtained before releasing records
• Performing spot-audits of patient charts for compliance
verification
• Organizing and maintaining the chart room for ease of use

The Medical Records Officer works directly with all office staff and serves
as the ‘‘expert’’ in regulatory requirements. Training, with regular updates,
is necessary in departmental/organizational policies regarding chart devel-
opment and management as well as compliance with HIPAA and other
regulatory guidelines. This individual serves as a privacy monitor for all
patient information and is responsible for knowing where each record and
related information is located. Participation in the development and
implementation of departmental/office policy and procedures regarding
records is an additional role for the Medical Records Officer and this
includes in-services for all office and clinical staff on a regular basis to

74 The Business of Neuropsychology


insure that all personnel understand the policies, procedures, and any
changes in related regulations.

Customer Service Representative


The idea of an identified customer service representative as it relates to patient
care may seem atypical in a clinical practice or department, but it is beneficial
to have a designated person who is responsible for logging, triaging, tracking,
and resolving patient concerns/complaints in accordance with an established
service recovery plan. If clinician or managerial contact is required for resolu-
tion, this individual maintains involvement and follows up with staff members
to document the resolution of the concern or complaint. By identifying a
responsible person for customer service issues and building these responsi-
bilities into the office process structure, an emphasis on customer satisfaction
is clearly delineated. It is likely that these responsibilities will fall under the
duties of a different position title, but should be clearly delineated in the roles
and responsibilities of that position.

Clinical Staff
The roles and responsibilities of clinical staff will not be discussed in detail.
Suffice it to say that it is expected that professional activities will be
performed in an ethical and clinically appropriate fashion. The emphasis,
for the purpose of this chapter, is that clinicians are aware that their
activities occur within an office process or system and that they are not
exempt from functioning within its parameters. To use a common phrase:
‘‘It’s not about you.’’ Collaboration and teamwork are essential for an office
system to function smoothly and work-arounds and exceptions should be
unacceptable to all — not just the office staff. It is the responsibility of
professional staff to support decisions made by office staff that are in line
with the office process even when they are inconvenient to the clinician.
Finally, it is important that clinical staff be involved in the development
and implementation of the office process so that there is mutual under-
standing and appreciation of how and why activities occur in the defined
manner.

Department/Practice Manager
I’ve heard it said that the second happiest day in a person’s life is when they
buy a boat — the happiest being the day that they sell it. Sometimes manage-
ment positions can work this way as well. Many people want to be in charge,

Setting Up the Office Process 75


until they are. The buck has to stop somewhere within a department or
practice, so when it comes down to it, someone has to be the designated
leader. The manager is the identified person responsible for planning and
directing the work of a group of individuals, monitoring their work, and
taking corrective action when necessary. Ideally, a manager is able to ‘‘oversee’’
the development, implementation, and modification of the office process, but
ultimately problems arise and difficult decisions must be made. While as
subordinates, we would like to think of the office system as a democracy, in
reality that is not a very effective structure and essentially someone has to be in
charge and serve as the primary decision maker.
In terms of the designated manager, this individual does not necessarily
need to be a clinician. In fact, a clinician may not be the best choice for this
position. The manager should possess the necessary business knowledge,
leadership attributes, and temperament to insure stability and success for
the department or practice. Additionally, managerial prowess is a develop-
mental process, so continued growth, development, and mentorship in this
regard is necessary. Careful selection of the practice/department manager is
essential for success. Such designation should not be taken lightly or for
personal/individual gain or popularity. To be successful, the focus for this
individual should be on the practice, the process, and the people. In larger
institutions/departments, there may be an identified clinical coordinator who
handles clinical practice issues, leaving the administrative responsibilities to a
department/practice manager who may have little or no clinical background.
This structure can be effective, provided appropriate two-way communication
exists.
To summarize, when it comes to departmental/practice personnel there
are multiple people in multiple positions with multiple responsibilities. The
number of office personnel needed is variable depending on several factors,
including practice setting, departmental/institutional requirements, prac-
tice/department size, external support, patient volumes, billing arrange-
ments, and efficiency of the office process. The goal in developing a
systematic office process is to develop collaborative relationships among
all of the personnel and to create a team approach to the process. Identifying
specific roles and responsibilities and completing initial and ongoing
training to maximize performance in those activities builds stability and
consistency within the department and allows people to continually
develop their skills in their identified areas. All personnel must buy in to
the fact that it’s not about you, it’s about the process and patient care. The

76 The Business of Neuropsychology


office/department culture is dependent upon the people and their commit-
ment and ownership of the process.

Process
While the specifics of office processes vary depending on the nature and
setting of neuropsychology practice, the general process of the practice must
be laid out in a manner that shows consistency, predictability, stability, and
quality built into all activities. It is necessary to document how the patient
moves through the office system from start to finish, including all activities
from determining how referrals are received to the ultimate filing of the chart
when all services are completed. This includes receiving the referral, sche-
duling activities, potential billing and coding services, identifying insurance
panels and other payors, determining precertification needs, administrative
and clinical documentation procedures, charting activities, types of clinical
services provided, and the clinical work itself. Additionally, activities must be
consistent with HIPAA and other regulatory compliance requirements. This is
no small undertaking, but with appropriate planning and process develop-
ment, a smooth, orderly, and predictable flow of seeing patients is achieved.

Identifying the ‘‘Process’’ of Seeing Patients


All successful journeys start with good planning. To develop a stable and
consistent office process, the process itself must be defined. Peck (2003) offers
several flowcharts about how patients are precertified and billing activities
occur. This same approach can be used to develop a flowchart that includes all
of the various aspects of the office system. Initially, this may be created by
developing smaller flowcharts that outline various steps of the process,
including how referrals will be received, precertification activities, registration
activities, etc. The responsibility for the development of these flowcharts
should not fall on a single individual, but should include multiple individuals
who play various roles in the identified activities. Brainstorming with all
department/practice employees is helpful so that no steps of the process are
overlooked. At first, all steps are included, from the simple to the complex. As
the process is better defined, some aspects can be combined or minimized if
the process chart becomes overly specific. Once the steps are defined, respon-
sible parties for each step are identified, including specific activities to be
completed. Timeframe requirements and expectations are specified where
applicable. At some level, built-in error checks and re-routes are recom-
mended as a means to plan for the unexpected or atypical situations.

Setting Up the Office Process 77


As the process is developed, it is important to map it out through a Visio
chart or other flowchart mechanism. This allows for easy modification, as
testing the process finds holes, errors, or unnecessary elements that can be
altered or removed. Also, creating a text ‘‘flowsheet’’ that becomes a part of the
non-clinical area of the patient chart is helpful during the early stages of office
process development and implementation. Each step of the process can then
be initialed and dated by the responsible party to insure accurate ‘‘flow’’ and
timeliness of activities, to help audit the accuracy of the process, and to
identify redundant or missing steps.
Sample Visio flowcharts for varying office processes in a hospital depart-
ment, based on varying payment sources, are available on the companion Web
site to this text for further examples. Appendix A shows an example of this
same information in a text-based checklist or flowsheet that can be used as a
guide for developing the flowcharts or putting the process into an adminis-
trative portion of the chart to insure completion of the process.

Putting the Process to the Test


Early in the development of the office process it is important to audit and
revise the flowchart in a group format with all staff present to identify ‘‘holes’’
or redundancy in the system that may result in variance and error. Initially,
audits of the process and discussions can be scheduled at specific time
intervals, with meetings becoming less frequent as fewer needs for changes
are identified and the process is deemed more stable and predictable. At that
point, the process or system is defined and the office/department adopts the
final version of the process flowchart. Once established, there will be a need to
regularly audit the process at specified intervals. Further review or auditing of
the process includes all personnel working together as a system where all
players have an equal voice in process evaluation and improvement. By
utilizing all staff in these audits, multiple perspectives are considered and
the information is evaluated from multiple ‘‘directions.’’
After all the work that went into the development of a stable, consistent,
and quality-minded office process or system, it would be a shame to allow it to
slowly drift into disarray. As discussed in the previous chapter, unmanaged
processes move toward chaos (entropy). Therefore, continued monitoring of
the system is recommended, with adjustments made to the process as needed
when real data indicate a need to modify the system. This reduces the like-
lihood of tampering with a process that is stable and predictable. The best

78 The Business of Neuropsychology


process is only as good as its implementation and it is important that all staff
(clinical and support staff) buy into the system.
When errors/variance occurs it is important that the process is reviewed
more so than the personnel. It is a very rare occasion when someone comes to
work with a plan to make an error. When an error occurs it should be
recognized as a problem with the process and not the person. The process is
either flawed or was not followed. Berwick (1989) again is cited: ‘‘defects in
quality could only rarely be attributed to a lack of will, skill, or benign
intention among the people involved in the process.’’ Removing perceived
problem individuals based on process failures disrupts the department/prac-
tice and creates a culture of fear, demoralization, and reduced productivity as
personnel focus more on self-preservation than quality work. A good manager
evaluates the error (variance) for special cause and works with the staff
member to identify solutions together rather than identify blame. In this
way, the person has the opportunity to explore the process to find where
the variance occurred and work with management to identify a ‘‘fix’’ or ‘‘patch’’
to the process to eliminate the need for a work-around or variation in how the
activity is completed. In this manner the staff member becomes part of a
solution rather than a problem and can be recognized as such. This improves
office/department culture and ultimately can improve employee satisfaction
and retention while improving the process.

Paperwork
It is important to store and file patient-related information in an organized way
that promotes easy acquisition and auditing as necessary. Therefore, the
record or chart should be thought of as a specific component of the office
process and its structure should also be consistent and predictable. Depending
on the practice setting, the structure of a chart is quite variable. However, for
any given setting, chart development and management should be consistent
across all patients and providers. Information should be well organized with a
system that allows for easy location and access of necessary information.
For the purposes of this chapter, three main components of the patient
record will be presented: the administrative record, the medical documenta-
tion record, and supporting materials. For some hospital/institution-based
practices, the administrative record and medical record documentation are
part of the hospital medical record system (possibly through an electronic
medial record) with a separate ‘‘soft chart’’ containing test protocols and other
patient-related information specific to a neuropsychological evaluation. For

Setting Up the Office Process 79


those in private practice, all information is kept through the practice record
keeping system and is structured in a way to promote easy access while
appropriately protecting confidentiality and security of patient records
according to HIPAA and other regulatory guidelines. This next section incor-
porates the three sections described above and provides a suggested layout for
a practice-based patient record. Maintaining records according to the various
legal, regulatory, institutional, and ethical requirements will be discussed in
greater detail in Chapters 5 and 6.
The administrative portion of the record contains two types of information.
The first is the patient-related financial and insurance information. Within this
section, paperwork and the multiple forms included in the registration/
administrative aspects of seeing a patient are filed. These include, but are
not limited to, registration/financial paperwork, precertification documents,
copies of patient identification and insurance cards, consultation requests/
referral forms, informed consent forms, release of information documentation,
and other administrative information. It is important that the various registra-
tion, consent, release of information, and other forms be consistent across
patients and providers. They should be defensible in terms of following
appropriate documentation requirements of regulatory agencies and reviewed
by legal consultants as necessary. This section of the record may also include
patient tracking information such as scheduling/rescheduling information,
copies of correspondence, documentation of services provided and dates,
time monitoring forms for services provided, and chart tracking forms
(including the office process flowsheet described previously). No patient
clinical service documentation is included in this section. Inclusively, this
section becomes the administrative portion of the chart and is distinctly
separate from the identified ‘‘medical record.’’
The Medical Record section of the chart includes only clinical documenta-
tion related to patient clinical contact. Documentation activities are discussed
in Chapter 6. For the purpose of the patient chart, documentation of activities
includes evaluation reports, any follow-up therapeutic or feedback notes,
letters to patients or physicians describing clinical results, informational
notes containing patient relevant information, and documentation of missed
appointments. This may be divided into two sections, one for evaluation
reports and one for intervention notes, but this section of the chart is distinct
from the other areas to clearly identify it as the patient ‘‘medical record.’’
The final section of the patient chart includes supporting patient docu-
mentation or the ‘‘soft chart.’’ Information in this section includes completed

80 The Business of Neuropsychology


protocols and test-specific information, completed patient background
questionnaires, interview forms, behavioral observation forms, clinician notes,
and copies of obtained medical records. A time monitoring form may be
included here as well to document the dates and actual start and stop times of
clinical services to support billing documentation as needed. Again, this section
is unique and distinct from the medical record and should be identified as such.
An example of a chart layout using a 3-section/6-page clinical chart with
identified documentation on each page and sample forms for the three sections
described above is available on the supplemental Web page for this text.

Computerized Medical Records


Electronic medical records (EMR), or electronic health records (EHR), are
increasingly becoming the norm in terms of storing and managing patient
information as technology advances and new ‘‘all-inclusive’’ software packages
become more readily available and less cost-prohibitive. It is important to
realize that these systems are not simply a repository for patient clinic notes
and registration materials, but have developed into very complex tools that
perform a multitude of tasks. Some functions include registration; managing
referral sources; scheduling, billing and coding activities; clinical documenta-
tion; order entry and medication prescribing; regulatory paperwork; and
even report generation with a few clicks of a mouse. The move toward EHRs
will certainly increase due to the demand for increased efficiency and quality
in patient documentation. In fact, Medicare, some states (Minnesota for
e-prescribing and New York for health information technology grants), and
even the federal government are moving toward requiring EHRs for all provi-
ders. While EHRs are not mandatory at this time, preparation for the future is
recommended.
There are many options available in the marketplace, and there is no one
product that will meet the needs for all practices. The American Academy of
Neurology provides an overview of several available products in their 2006,
2007, and 2008 Electronic Health Record Vendor Reports. The strengths and
weaknesses of various systems are presented to assist neurologists in identi-
fying the best program for their practice. Additionally, the Certification
Commission for Health Information Technology (CCHIT) regularly reviews
products to determine the quality of various EHR systems. The stated aim of
CCHIT is to encourage adoption of EHRs by establishing standards of func-
tionality and rigorously evaluating which EHR products meet those standards.
CCHIT reviews are designed to improve consumer confidence in certified

Setting Up the Office Process 81


products so that medical practitioners will be more willing to invest in this
technology. Besides functionality, the CCHIT has implemented standards of
interoperability and security to minimize the need for buyers to research
whether a certified product possesses these features. CCHIT certified products
have a clear-cut market advantage, but there is no objective information as of
yet that would substantiate whether the CCHIT has been successful in its
mission.
For neuropsychologists in healthcare centers or larger practice centers, an
EHR may have been selected for the institution as a whole, making it necessary
to learn a system that may not be set up for your specific practice needs. The
VA Medical Centers have already adopted a national computerized medical
record system across all facilities. For those in private practice settings, there
are a few programs that are specifically equipped to manage the needs of
psychological, psychiatric, and neuropsychological practices including
ChartEvolve, TherAssist, and others. Several available products are listed in
the References and Resources section of this chapter.

Practice
Process control ideas can be applied to neuropsychological clinical practice.
Think about how neuropsychological tests are administered and scored.
Clearly, neuropsychologists develop a certain (yet appropriate) level of ‘‘anal
retentiveness’’ when it comes to standardized administration of neuropsycho-
logical measures. In a similar vein, this strict adherence to a process can be
applied to all aspects of clinical practice including the patient flow described
above, as well as how clinical services are provided and documented. Clinical
documentation is discussed in detail in Chapter 6, but a consistent and
redundant form of accurate charting ensures that documentation is appro-
priate and consistent with CMS requirements. Finally, a clinical practice based
around a stable and predictable office process allows for greater focus on
clinical care rather than managing variance or errors that occur in the day-to-
day office system.
In terms of clinical care, it is important to establish a process to maximize
consistency and quality in the care provided to each patient. Think briefly about
a hamburger from McDonald’s or any other major chain. No matter where you
buy that hamburger you know exactly how it is supposed to look, smell, feel,
and taste. That is consistency and quality. Whether you like the product or not
you know exactly what you are going to get. That same consistency and quality
focus can apply to clinical care and neuropsychological practice, so that no

82 The Business of Neuropsychology


matter who the patient is, how they make their payment for services, or how the
evaluation will be used, the clinical service always meets the same standard and
level of quality. This aids the overall office process by minimizing variance
among different patients and making clinical practice stable and predictable.

Unique Issues Based on Setting


The development and implementation of a stable office process is important
regardless of setting. The following discussion provides some brief considera-
tions related to the office process in private practice, institutional, and VA/
government-affiliated settings.
In private practice settings, implementation of a stable office process is
influenced by a variety of issues. First and foremost, there is a need to identify
leadership and a ‘‘chain of command.’’ This includes identifying a practice
manager as well as the general office structure. Some of these decisions may be
influenced by the practice’s corporate structure, but again should be deli-
neated appropriately. For a sole practitioner, the development of the office
process often results from the realization that one person may not be able to
complete all of the activities required in a complete, stable, and consistent
office process and still find time to actually see patients. It is important to
realize that all of the identified activities require time, but not all that time is
billable. In developing an office system it is important to determine the
associated costs related to the time and effort that go into the office process
and system. For clinicians that consider joining an existing practice, it is
worthwhile to examine the office processes within the practice before signing
on, to determine the stability, consistency, and quality of the practice pro-
cesses to make sure that your investment has the maximum return with the
smallest amount of surprises and stress.
Clinicians working in institution-based practice settings can use the pro-
cess control techniques discussed above to develop a private practice model
within an institution setting. This is dependent upon location of the depart-
ment as well as the administrative ‘‘chain of command’’ and support structure.
With appropriate modification, a stable and consistent process to seeing
patients can be established. Hospital administration typically supports such
quality improvement and may ultimately use the department as a guide for
applying these techniques to other departments or systems. Improving and
stabilizing departmental processes result in a more cost-effective approach to
seeing patients and the private practice model may also improve reimburse-
ment and overall fiscal responsibility.

Setting Up the Office Process 83


In a similar sense, clinicians in government/VA based facilities can also use
process control techniques to streamline office system processes even within
what is typically thought of as a rigid and bureaucratic institution. It comes
down to fitting a private practice model within a structured setting. The larger
VA system already works to obtain third party reimbursement for services
provided to veterans, but difficulties have occurred in this regard typically due
to documentation variability, billing and coding problems, and limited precerti-
fication activities. It is important to note that any reimbursement obtained
through the billing practices of individual VA hospitals stays within that hospital
rather than flowing up to the central office. As a result, any efforts to increase the
financial bottom line of a psychology service ultimately provide financial benefit
for the hospital where the clinician works. As a result, VA administration would
likely be supportive of efforts to improve the overall process of seeing patients
within a VA system and improve third party reimbursement potential.

Closing Thoughts
The previous discussion of setting up the office process is based on using
process development and control applied to the practice setting. Review the
opening questions of this chapter again and think about how an improved
office process will result in better answers to these questions. Process control
application can be seen across all aspects of a department or practice office
flow. While it seems intuitively simple to develop and implement a stable and
consistent office process, without appropriate buy-in and leadership it can
quickly turn into an experience similar to herding cats. To be successful, a
strong commitment to process development and control is necessary by all
personnel involved in the department/practice.

References, Resources, and Suggested Readings


American Academy of Neurology (July, 2008). 2008 Electronic health records
vendor update. - http://www.aan.com/globals/axon/assets/4207.pdf
American Academy of Neurology (August, 2007). 2007 Electronic health
records vendor update. - http://www.aan.com/globals/axon/assets/3107.pdf
American Academy of Neurology (September, 2006). Electronic health records
vendor report. - http://www.aan.com/globals/axon/assets/2290.pdf
Berwick, D.M. (1989). Continuous improvement as an ideal in health care.
New England Journal of Medicine, 320, 53–56.

84 The Business of Neuropsychology


Certification Commission for Healthcare Information Technology (CCHIT) –
http://www.cchit.org
Lamberty, G. J., Courtney, J. C., & Heilbronner, R. L. (2003). The practice of
neuropsychology. Exton, PA: Swets & Zeitlinger.
McKesson Corporation (2007). EMR return on investment: Improving efficiency
and quality with an electronic medical record. White paper published by
McKesson Provider Technologies; Alpharetta, GA http://www.practicepartner.
com/doc/EMR_Return_on_Investment.pdf
National Institutes of Health National Center for Research Resources (April, 2006).
Electronic health records overview. McLean, Virginia: MITRE Center for Enterprise
Modernization – http://www.ncrr.nih.gov/publications/informatics/EHR.pdf
Peck, E. A. (2003). Business aspects of private practice in clinical
neuropsychology. In Lamberty, Courtney, & Heilbronner (Eds.) The Practice
of Neuropsychology. Exton, PA: Swets & Zeitlinger.
Electronic Medical Records Company and Related Web Sites
Advantage EMR – http://www.advantageemr.com
AdvancedMD – http://www.advancedmd.com
ChartEvolve – http://www.thecimsgroup.com
ChartLogic – http://www.Chartlogic.com
TherAssist – http://www.therassist.com

Setting Up the Office Process 85


Appendix A: Flowsheet of Office Process
PATIENT NAME: __________________ DOB: ___________
OUTPATIENT REFERRALS ~ Insurance & Medicare
CONSULTATION TRACKING FORM ~ SAMPLE

ACTION DATE SIGNED


1. Call or fax received for patient referral
2. Consultation request form completed to
obtain demographics & insurance info
from referral source
3. Notes and necessary information from
referral source requested
4. Patient contacted to verify information
and scheduled for initial appointment
5. Technician time scheduled for initial visit
if applicable
6. Patient scheduled for 2-week follow-up if
applicable
7. Forms sent to patient
8. Prior authorization for services obtained
9. Patient chart assembled
10. Chart provided to clinician one week prior
to visit
11. Confirmation call placed to patient two
business days prior to visit
12. Patient checked in for initial appointment
13. Patient and chart ‘‘roomed;’’ clinician
notified
14. Clinician performed initial clinical
evaluation and planned testing activity
15. Clinician documented visit and
completed time monitoring form
16. If testing was not ordered, clinician coded
visit on encounter (billing) form and
submitted to the front office for billing
entry.
(continued )

86 The Business of Neuropsychology


(Continued)

17. If testing was not ordered, clinician sent follow-


up note to referral source
18. If indicated, technician performed and scored
testing ordered by clinician
19. Technician documented testing (recorded activity
for later coding by clinician) and completed time
monitoring form
20. Technician returned chart to clinician the day of
testing
21. Clinician completed quick summary report and
sent to referral source within 24–48 hours of
chart return from technician
22. Clinician prepared neuropsychology report within
two weeks of testing
23. Clinician coded all clinician and technician
work on encounter (billing) form and
submitted to the front office for billing entry.
24. Patient checked out; received 2-week follow up
appointment reminder if applicable
25. Front office entered encounter (billing)
information into billing system
26. Clinician (or front office) sent neuropsychology
report to referral source
27. Clinician returned chart to front office
28. Front office provided chart to clinician the day
of the 2-week follow-up appointment, after the
patient checked in
29. Clinician discussed report with patient at
2-week follow-up and planned further activity,
if any
30. Patient checked out; received follow up
appointment if applicable
31. Clinician documented clinician visit and coded
visit on encounter (billing) form
32. Front office entered encounter (billing) information
into billing system
33. Chart filed in medical records room when
complete

Setting Up the Office Process 87


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&&&

Recordkeeping Guidelines and Regulations

Appropriate clinical documentation and maintenance of patient records is


beneficial both to the neuropsychologist and the patient. Records provide a
basis of communication between the neuropsychologist and referral source;
ensure continuity of care amongst various care providers; provide a basis for
billing and reimbursement; and protect the practitioner in the event of legal
proceedings. In short, appropriate recordkeeping is crucial for a successful
and ethical clinical practice. Patient records are subject to numerous legal,
regulatory, institutional, and ethical requirements whether these records are
used for administrative, research, or clinical purposes. These regulations
apply not only to the information contained in the record, but also the use,
storage, dissemination, retention, and protection of the information therein.
This chapter provides an overview of ethical and regulatory requirements,
including recordkeeping guidelines set forth by the American Psychological
Association and legal requirements related to the Health Insurance
Portability and Accountability Act of 1996 (HIPAA). The chapter will close
with a brief introduction to the newer Red Flags Identity Theft Protection
legislation.
As a disclaimer, the information presented in this chapter is by no means
exhaustive, but does provide a good synopsis to help guide recordkeeping
activities. Neuropsychologists are encouraged to obtain current and detailed
information regarding institutional, local, state, federal, and professional
statutes, guidelines, and policies pertaining to medical record storage and
protection of confidential information.

89
APA Ethics and Recordkeeping Guidelines
Ethical recordkeeping starts with an understanding of the APA Ethical
Principles and Code of Conduct (APA, 2002). While various portions of the
Ethics Code apply to patient confidentiality, privacy issues, and appropriate
recordkeeping, Standard 4 (Privacy and Confidentiality) and portions of
Standard 6 (Record Keeping and Fees) are the most specific in regards to the
development and maintenance of patient records. In particular, Standard 4
outlines the obligation to protect the confidentiality of patient information:

4.01 Maintaining Confidentiality


Psychologists have a primary obligation and take reasonable
precautions to protect confidential information obtained through
or stored in any medium, recognizing that the extent and limits of
confidentiality may be regulated by law or established by institu-
tional rules or professional or scientific relationship.

Additional sections within this standard highlight the relevance of these


principles to specific activities and settings and demonstrate the wide applic-
ability of this standard. Two sections of Standard 6 pertain to documentation
and maintenance of patient records:

6.01 Documentation of Professional and Scientific Work and


Maintenance of Records
Psychologists create, and to the extent the records are under
their control, maintain, disseminate, store, retain, and dispose of
records and data relating to their professional and scientific work
in order to (1) facilitate provision of services later by them or by
other professionals, (2) allow for replication of research design
and analyses, (3) meet institutional requirements, (4) ensure
accuracy of billing and payments, and (5) ensure compliance
with law.

6.02 Maintenance, Dissemination, and Disposal of


Confidential Records of Professional and Scientific Work
(a) Psychologists maintain confidentiality in creating, storing,
accessing, transferring, and disposing of records under their con-
trol, whether these are written, automated, or in any other
medium.
(b) If confidential information concerning recipients of psy-
chological services is entered into databases or systems of records

90 The Business of Neuropsychology


available to persons whose access has not been consented to by
the recipient, psychologists use coding or other techniques to
avoid the inclusion of personal identifiers.
(c) Psychologists make plans in advance to facilitate the appro-
priate transfer and to protect the confidentiality of records and
data in the event of psychologists’ withdrawal from positions or
practice.

These standards, along with other aspects of the APA Ethical Principles and
Code of Conduct, set the stage for appropriate patient documentation and
maintenance of records. This is a good starting point, but does not account for
the various legal statutes and institutional policies that can provide more
specific and, at times, conflicting responsibilities regarding patient records.
The management of these discrepancies is well laid out in the ethics code and
other statements put forth by the APA. In general, when there are conflicts
between institutional policies and procedures and the Ethics Code, psychol-
ogists appropriately address these issues as outlined in the Ethics Code
(Standard 1.03 – Conflicts Between Ethics and Organizational Demands),
clarifying the nature of the conflict, making known their commitment to the
Code, and, to the extent feasible, resolving the conflict in a way that permits
adherence to the Code. In terms of patient records, specific state and federal
laws and regulations govern psychological recordkeeping. In the event of a
conflict between the Ethics Code and any state or federal law or regulation, the
law or regulation in question typically supersedes the ethical principles and
standards.

APA Recordkeeping Guidelines (2007)


To provide specific application of the APA Ethics Code to patient records, the
APA Committee on Professional Practice and Standards developed ‘‘Record
Keeping Guidelines,’’ first published in 1993 (APA, 1993). These guidelines
were updated in 2007 and provide a framework for making decisions
regarding professional recordkeeping with the understanding that the nature
and extent of the records vary depending upon the purpose, setting, and
context of the services provided. As Captain Barbossa said in Pirates of the
Caribbean, ‘‘The code is more what you’d call guidelines than actual rules.’’ As
such, the ‘‘guidelines’’ are just that – guidelines, and neuropsychologists
should become familiar with the legal and regulatory requirements for record-
keeping in their specific professional contexts and jurisdictions. For the

Recordkeeping Guidelines and Regulations 91


purposes of this chapter, these guidelines will be presented in their published
form, followed by a brief summary of the rationale and application where
applicable. Across all of the guidelines, remember that in cases when there is
conflict between these guidelines and state or federal law, the law supersedes
these guidelines. Additionally, in accordance with Ethics Code Standard 2.05
(Delegation of Work to Others), the psychologist is responsible for ensuring
that all parties handling patient records are appropriately trained and knowl-
edgeable in terms of the ethical, legal, and institutional standards regarding
the creation, maintenance, dissemination, and confidentiality of patient
records.

Guideline 1. Responsibility for Records


Psychologists generally have responsibility for the maintenance and reten-
tion of their records.
In accordance with Ethics Code Standard 6.01, psychologists have a
professional and ethical responsibility to develop and maintain records. This
provides information as to what activities were completed and why, as well as
the pertinent outcome. Recording should be legible, accurate, completed in a
timely fashion, and stored in an appropriate manner to ensure confidentiality
and security.

Guideline 2. Content of Records


A psychologist strives to maintain accurate, current, and pertinent records of
professional services as appropriate to the circumstances and as may be
required by the psychologist’s jurisdiction. Records include information such
as the nature, delivery, progress, and results of psychological services, and
related fees.
A neuropsychologist is responsible for the information put into the
patient’s records, and as such should only include information relevant to
the purpose of the service provided with an appropriate level of detail.
Information included in the record may be influenced by the patient’s
wishes, agency/setting policies, situational demands (e.g., emergency or dis-
aster relief settings), legal/regulatory statutes, third party contracts, or other
variables.

Guideline 3. Confidentiality of Records


The psychologist takes reasonable steps to establish and maintain the con-
fidentiality of information arising from service delivery.

92 The Business of Neuropsychology


Confidentiality of records is mandated by law, regulation, and ethical
standards. As such, neuropsychologists must maintain familiarity with the
various ethical and regulatory standards (e.g., HIPAA, state laws, mandated
reporting of abuse, etc.) and maintain records in accordance with these
requirements. It is important to remember that ignorance of the law is no
excuse when it comes to responsibility.

Guideline 4. Disclosure of Record Keeping Procedures


When appropriate, psychologists inform clients of the nature and extent of
recordkeeping procedures.
Obtaining informed consent for psychological services is an ethical obliga-
tion, and this may include disclosure of recordkeeping activities as they relate
to patient privacy and confidentiality. This may be especially relevant in
settings where recordkeeping procedures differ from the standard procedures
(e.g., school settings, hospital computerized medical records with multiple
points of access, forensic settings).

Guideline 5. Maintenance of Records


The psychologist strives to organize and maintain records to ensure their
accuracy and to facilitate their use by the psychologist and others with
legitimate access to them.
As described in the Paperwork section of Chapter 4, it is important to store
and file patient-related information in an organized way that promotes easy
acquisition and auditing as necessary. Therefore, the record or chart should be
thought of as a specific piece of the office process and its structure should be
consistent and predictable. Additionally, the information contained in the
records should be structured in such a way that retrieval of necessary informa-
tion is efficient and consistent. This allows for easy access of patient records for
purposes of dissemination as well as to monitor changes over time in terms of
assessment and/or intervention.

Guideline 6. Security
The psychologist takes appropriate steps to protect records from unauthor-
ized access, damage, and destruction.
This guideline highlights two areas of application. The first is ‘ maintenance.’’
Patient records are to be stored in a secure manner that will safeguard against
damage whether they are paper or electronic records. This means that paper
records should be stored in a manner that protects them from physical damage/

Recordkeeping Guidelines and Regulations 93


destruction due to a variety of physical threats (e.g., fire, mold, insects, water).
Electronic records must also be protected from sources of damage or loss (e.g.,
power surges or outages, hardware malfunctions, computer viruses).
The second aspect of this guideline is ‘‘access.’’ Neuropsychologists must
take steps to control access to patient records by storing them in a secure
location, such as a double-locked system with a locked cabinet in a locked
office. Electronic records must also be protected from unauthorized access via
firewall protections, passwords, encryption, etc. Electronic records, the reg-
ular use of computerized word processing for report writing, and various
portable memory devices (e.g., USB flash drives, CD ROMs, portable hard
drives) have raised new challenges in terms of maintaining patient privacy and
limiting access to patient records. As a result, some institutions have imple-
mented policies that no longer allow portable memory devices to be used on
facility computers. These policies, accompanied by the additional electronic
medical record security systems, are implemented with the goal of limiting
access to only those who are authorized to use patient information. Whatever
methods used are subject to legal and regulatory requirements and ethical
standards, including the HIPAA Privacy and Security rules described later in
this chapter.

Guideline 7. Retention of Records


The psychologist strives to be aware of applicable laws and regulations and
to retain records for the period required by legal, regulatory, institutional,
and ethical requirements.
Numerous listserv discussions arise regarding the length of time required to
maintain patient records. This question often comes up due to the space
constraints and various costs incurred in maintaining neuropsychology
records in an appropriate fashion over an extended period of time. As noted
in this guideline, it is important that neuropsychologists know the appropriate
legal statutes for their state and/or institutional policies in this regard. There is
significant variability between states regarding the length of time required for
record retention, with some states having no documented requirements at all.
In the absence of a superseding requirement set forth by state or federal
statute, APA guidelines suggest retaining full records until seven years after
the last date of service delivery for adults or until three years after a minor
reaches the age of majority, whichever is later. In some circumstances, neu-
ropsychologists may wish to keep records for a longer period, weighing the
risks associated with obsolete/outdated information or privacy loss versus the

94 The Business of Neuropsychology


potential benefits associated with preserving the records. This is particularly
common in institutions where large data sets are maintained for research
purposes.

Guideline 8. Preserving the Context of Records


The psychologist strives to be attentive to the situational context in which
records are created and how that context may influence the content of those
records.
The application of this guideline lies in the understanding that patient
records often include information that is situation specific. For example, a
geriatric patient seen for a neuropsychological evaluation to determine deci-
sion-making capacity had been under general anesthesia for a surgical proce-
dure and was under the influence of several sedating medications at the time of
testing. The results of that evaluation should include the situational context (i.e.,
sedation and confusion related to medications) to prevent misuse of the test
results at a later date when the patient’s mental status may be markedly different.

Guideline 9. Electronic Records


Electronic records, like paper records, should be created and maintained in a
way that is designed to protect their security, integrity, confidentiality, and
appropriate access, as well as their compliance with applicable legal and
ethical requirements.
As already described under Guideline 6 (Security), maintenance and
security of electronic records are subject to the same confidentiality and
security protections as paper records. As noted, the increasing advances in
technology make the maintenance of these records much easier, but the
security issues remain and efforts to minimize threats to security are high-
lighted across all regulatory, legal, and ethical standards.

Guideline 10. Record Keeping in Organizational Settings


Psychologists working in organizational settings (e.g., hospitals, schools,
community agencies, prisons) strive to follow the recordkeeping policies
and procedures of the organization as well as the APA Ethics Code.
Organizational/institutional recordkeeping policies and requirements may
differ significantly from those noted in more traditional clinical settings. As a
result, neuropsychologists working in some settings may encounter conflicts
between the practices of the institution and established professional guide-
lines, ethical standards, or legal and regulatory requirements. Additionally,

Recordkeeping Guidelines and Regulations 95


record ownership and responsibility is not always clearly defined. To increase
the complexity, in some settings multiple service providers may access and
contribute to the record. This can limit the degree to which the psychologist
may have control of the record and its confidentiality. As noted previously in
this chapter, when there are conflicts between institutional policies and
procedures and the Ethics Code, psychologists appropriately address these
issues as outlined in the Ethics Code (Standard 1.03 - Conflicts Between Ethics
and Organizational Demands), clarifying the nature of the conflict, making
known their commitment to the Code, and, to the extent feasible, resolving the
conflict in a way that permits adherence to the Code.

Guideline 11. Multiple Client Records


The psychologist carefully considers documentation procedures when con-
ducting couple, family, or group therapy in order to respect the privacy and
confidentiality of all parties.
When services are provided to more than one patient at a time (e.g., family
therapy) recordkeeping is complicated by the fact that records include infor-
mation about more than one person. As a result, disclosure of information
related to one person may compromise the confidentiality of another. Records
can be maintained either jointly or separately, depending upon need in terms
of potential privacy/confidentiality concerns, practical concerns, ethical
guidelines, and third-party reporting requirements. However, informed con-
sent regarding the manner in which records will be kept should be provided to
all parties involved. Additionally, when a release of information is requested
for an individual in this setting, it will be necessary to release only the portions
relevant to the party who is covered by the release.

Guideline 12. Financial Records


The psychologist strives to ensure accuracy of financial records.
Accurate and complete financial recordkeeping is consistent with the APA
Ethics Code (Standards 6.04 and 6.06). The accuracy of financial records is
dependent upon the collection and maintenance of pertinent information for
purposes of billing and reimbursement. Financial records may include, as
appropriate, the type and duration of the service rendered, the name of the
patient, fees paid for the service, and agreements concerning fees, along with
date, amount, and source of payment received. This information is also subject
to confidentiality and security regulations, and informed consent is provided
for its collection, maintenance, and dissemination.

96 The Business of Neuropsychology


Guideline 13. Disposition of Records
The psychologist plans for transfer of records to ensure continuity of treat-
ment and appropriate access to records when the psychologist is no longer in
direct control, and in planning for record disposal, the psychologist endea-
vors to employ methods that preserve confidentiality and prevent recovery.
As described in the rationale of this guideline, client records are given
special treatment in times of transition (e.g., separation from work, relocation,
death). In accordance with the APA Ethics Code (Standard 6.02) and laws and
regulations governing healthcare practice, a record transfer plan is necessary
to provide continuity of treatment and preservation of confidentiality. Such a
plan includes the identification of a qualified individual or agency to assume
the control and management of the records. Various guides for this plan and
subsequent transition are found in the reference section at the end of this
chapter (specifically Halloway, 2003; Koocher, 2003; McGee, 2003).
In addition to the plan for transition of records described above, this
guideline includes the requirement that psychologists dispose of records in a
manner that preserves confidentiality and limits recovery at a later date. For
paper records this may include shredding and/or burning the documents.
Disposal of electronic records poses unique challenges due to the technical
expertise needed to fully delete or erase records from electronic storage
devices. As such, consulting from technical experts or companies set up for
this purpose is recommended to ensure the complete destruction of electronic
records.

Health Insurance Portability and Accountability Act (HIPAA)


There are numerous resources available that describe HIPAA rules and regula-
tions along with strategies to implement them into your practice. For the
purposes of this chapter, a general overview highlighting the applicability of
HIPAA to neuropsychological practice is presented. More detailed information
is available from the various references and resources provided at the end of
this chapter. The following overview is based on information from a variety of
sources, but most of the information provided came from the HIPPA Fact
Sheet for Neuropsychologists developed by Division 40 of APA (2004), the
‘‘Getting Ready for HIPAA’’ document series developed through the APA
Practice Organization, and numerous transmittals from the Department of
Health and Human Services. As a result, no specific references are cited in the
overview, as the information contained in this section was derived from a
combination of these sources.

Recordkeeping Guidelines and Regulations 97


Overview
HIPAA refers to the Health Insurance Portability and Accountability Act of
1996 that established rules governing the use and disclosure of health infor-
mation and the criminal and civil penalties for improper use and disclosure.
The act was initially designed to protect individuals who were previously ill
from losing their health insurance when they changed jobs or residences.
Another major intent of the law was to streamline the healthcare system
through the adoption of consistent standards for transmitting uniform elec-
tronic healthcare claims. As a means to this end, it was necessary to
adopt standards for securing the storage of that information and for protecting
an individual’s privacy. It was hoped that this would result in standardized
procedures involved in the transmission of electronic claims with increased
privacy and security protection for the electronic dissemination of healthcare
information. While HIPAA’s primary privacy concern is health information
transmitted by or maintained in electronic media, it also reaches to
information transmitted or maintained in any other form or medium
by covered entities, including paper records, fax documents, and all
oral communications.
To understand the applicability of HIPAA, there must first be an under-
standing of the types of information regulated under its auspices. HIPAA
defines health information as any information (oral or recorded in any form
or medium) that is: 1) created or received by a healthcare provider, health
plan, public health authority, employer, life insurer, school or university, or
healthcare clearinghouse; and 2) relates to the past, present, or future
physical or mental health or condition of an individual; the provision of
healthcare to an individual; or the past, present, or future payment for the
provision of healthcare to an individual. Protected health information (PHI)
under HIPAA refers to individually identifiable health information.
Identifiable refers not only to information that is explicitly linked to a
particular individual (i.e., identified information), but also includes
health information with data that reasonably could be expected to allow
individual identification. This results in wide applicability to not only
electronic and written records, but also verbal communications, formal
and informal.
As with the information protected through HIPAA, the rules and regulations
themselves are broad in terms of their coverage. The rules and regulations are
divided into four components:

98 The Business of Neuropsychology


• Privacy Rule focuses on when and to whom confidential
patient information can be disclosed
• Security Rule seeks to assure the security of confidential
electronic patient information
• Electronic Transaction Rule (and Code Sets) addresses
technical aspects of the electronic healthcare transaction
process and requires the use of standardized formats whenever
healthcare transactions, such as claims, are sent or received
electronically
• Employer Identifier Standards refers to the adoption of a
system of unique identifiers for providers and payers

Privacy Rule
While HIPAA’s primary privacy concern is health information transmitted by
or maintained in electronic media, the Privacy Rule reaches to data transmitted
or maintained in any other form or medium by covered entities as well as oral
communication. In short, the Privacy Rule focuses on when and to whom
confidential patient information can be disclosed. It focuses on the application
of effective policies, procedures, and business service agreements to control
the access to and use of patient information. In contrast, the Security,
Transaction, and Identifier rules only cover electronic information.
For neuropsychologists, it is important to note that the Privacy Rule
requires practitioners to:

• Provide information to patients about their privacy rights and


how that information can be used.
• Adopt clear privacy procedures for their practices.
• Train employees so that they understand the privacy
procedures.
• Designate an individual to be responsible for seeing that
privacy procedures are adopted and followed.
• Secure patient records.

Complying with these requirements can appear to be a daunting task, but the
Privacy Rule was developed with the understanding that the rules apply to a
large variety of healthcare providers and settings, ranging from large multi-
hospital systems to individual solo practitioners. As a result, the administrative

Recordkeeping Guidelines and Regulations 99


and procedural requirements are designed around the notion of ‘‘scalable
compliance.’’ This means that the administrative requirements of the Privacy
Rule are ‘‘scalable,’’ in that a covered entity takes ‘‘reasonable’’ steps to meet the
requirements according to the size and scope of the organization. In other
words, the administrative burden on a neuropsychologist who is in a solo
practice will be less intensive relative to that imposed on a larger practice or
hospital system.

Security Rule
While the Privacy Rule outlined to whom and under what circumstances PHI
can be disclosed, the Security Rule addresses the provider/organization’s
physical infrastructure and outlines the steps that are taken to protect con-
fidential information from unintended disclosure through breaches of
security. The Security Rule applies only to protected health information
stored electronically, including any reasonably anticipated threats or hazards,
such as a computer virus, and/or any inappropriate uses and disclosures of
electronic confidential information (e.g., confidential patient information
e-mailed or faxed to the wrong person due to human or technical error). In
short, the Security Rule requires that steps be taken to ensure the confidenti-
ality, integrity, and availability of electronically stored PHI. The following
standard electronic transactions are specified by the Security Rule and trigger
the need to be HIPAA-compliant:

• Healthcare claims
• Healthcare payment and remittance advice
• Coordination of benefits
• Healthcare claim status, enrollment or disenrollment in a
health plan
• Eligibility for a health plan
• Health plan premium payments
• Referral certification and authorization
• First report of injury
• Health claims attachments

The covered modes of electronic transmission are quite broad and essen-
tially include all electronic means of communication/dissemination of infor-
mation, networking systems, and electronic storage devices. To ensure
compliance with the Security Rule, providers need to complete a risk analysis.

100 The Business of Neuropsychology


The risk analysis is a careful and thorough documented evaluation of
whether the organization’s administrative activities, physical environment,
and computer systems are secure, and whether electronic PHI is accessible
only to appropriate and authorized individuals. The risk analysis helps
identify and document any security threats or vulnerabilities by comparing
current organizational activities with the administrative, physical, and
technological requirements of the Security Rule. As part of the risk analysis
process, it is necessary to assess the likelihood and impact of identified
threats and vulnerabilities and take necessary preventive and corrective
action to bring the organization into compliance in the event of a security
breach. Information regarding the steps to complete a risk analysis is
available via the resources and references provided at the end of this
chapter.

The Transaction Rule and Code Sets


The Transaction Rule and Code Sets rule addresses technical aspects of the
electronic healthcare transaction process and requires the use of standar-
dized formats whenever healthcare transactions, such as claims, are sent or
received electronically. The stated purpose of this rule is to simplify the
processes involved in submitting electronic claims and to decrease the costs
associated with paying for healthcare services. There is no provider obliga-
tion to engage in electronic claims submission, but for those who choose to
transmit claims electronically, practice management software or an outside
party such as a healthcare clearinghouse will be needed to handle the
conversion of data to meet the requirements. Specifically, the Rule estab-
lishes standards for eight types of electronic transactions and for specific
‘‘code sets’’ to be used in those transactions. The transactions cover a broad
array of communications, not all of which are applicable to the practice of
neuropsychology:

• Healthcare claims or equivalent encounter information


• Eligibility for a health plan
• Referral certification and authorization
• Healthcare claim status
• Enrollment or disenrollment in a health plan
• Healthcare payment and remittance advice
• Health plan premium payments
• Coordination of benefits

Recordkeeping Guidelines and Regulations 101


The ‘‘code set’’ is defined as any set of codes used to encode data elements,
such as medical diagnostic codes or medical procedure codes. The two
identified code sets for HIPAA are not new to neuropsychologists. The stan-
dard diagnostic code set for health related problems is the International
Classification of Diseases, 9th edition, Clinical Modification (ICD-9). Those
who use DSM codes will need to ensure that the codes are converted into the
ICD-9 standard code set if they file claims electronically. The standard proce-
dural code set, required as part of the transaction standards, is the Current
Procedural Terminology (CPT-4).

Employer Identifier Standard


The Employer Identifier Standard was put in place to adopt a system of unique
identifiers for providers and payers for certain electronic transactions. Initially,
the HIPAA statute proposed four national and unique identifiers to be used in
the healthcare system: providers, employers, health plans, and individuals. Over
time, only three were adopted with the ‘ individual’’ number being placed on
hold for now, due to privacy concerns. The three adopted identifiers include:

• National Provider Identifier (NPI): the identifier assigned to an


individual health care provider
• National Employer Identifier (NEI): the identifier assigned to
the employer/organization.
• National Health Plan Identifier: It is expected that a 9-digit
number will be assigned to all health plans.

The national identifier for individuals was initially proposed in the early
1990s as part of comprehensive healthcare reforms that would have supplied a
universal healthcare credit card for individuals to use. The implications of
national individual identifiers, especially in light of the Privacy Rule provisions
and the concern of privacy advocates over the idea of assigning identity
numbers to individuals, became controversial and as a result, the development
of the individual identifier was subsequently placed on indefinite hold
pending further review.

Applicability and Action


Neuropsychologists are typically required to follow HIPAA regulations as a
‘‘covered entity’’ in their clinical and research practice, whether they are in
private practice or employed by an agency. Under Section 1172 (a), covered

102 The Business of Neuropsychology


entities include but are not limited to Healthcare Providers, Healthcare
Plans, and Healthcare Clearinghouses. To put this in more practical terms,
a neuropsychologist would become a covered entity if he or she is a health-
care provider who: 1) furnishes, bills, or receives payment for healthcare;
2) conducts one of the eight covered transactions discussed previously; and
3) conducts any of those eight transactions electronically. Neuropsychologists
are a covered entity only if all three of these requirements are met. However, if
these are not met, but the neuropsychologist interacts with other covered
entities, he or she still must comply with the Privacy Rule to properly provide
treatment while protecting PHI. As a point of exclusion, if a neuropsychologist
engages exclusively in forensic private practice where no electronic transmis-
sion of client information is conducted, then that neuropsychologist would
not be considered a covered entity.
Given the nature of their work, most neuropsychologists are subject to the
HIPAA rules and regulations and as such must take action to comply with
the Privacy and Security Rules. The ‘‘Fact Sheet’’ developed by Division 40 of
the APA (2004) is an excellent resource for specifics in this regard. First and
foremost, under the Privacy Rule, neuropsychologists must provide informa-
tion to patients about their privacy rights and how that information can be
used. This cannot be accomplished unless the practitioner or organization has
established policies and procedures in place. Some simple steps to meet this
requirement are to adopt clear privacy policies and procedures, train
employees and supervisees so that they understand privacy procedures,
designate an individual responsible for addressing HIPAA privacy questions
and complaints, and secure patient records (e.g., test reports, raw data, clinical
interview notes). The policies and procedures can be documented in either
written or electronic form, but must be tangible and available. Additionally,
providers are required to have a plan to mitigate any known harmful effects in
the unauthorized use or disclosure of patient health information and this
should be documented as well. Finally, neuropsychologists with a direct
treatment relationship with a patient are required to use reasonable efforts to
obtain a written acknowledgment from the patient of receipt of the provider’s
notice of privacy practices. In that notice, direct providers are required to
describe in specific detail the uses and disclosures of health information that
will be made.
Under the Security Rule, there are a series of administrative, technical, and
physical security procedures outlined to assure the confidentiality of elec-
tronic protected health information. The standards are delineated into either

Recordkeeping Guidelines and Regulations 103


required or addressable implementation specifications. As with the Privacy
Rule, neuropsychologists need to develop clear written policies and proce-
dures to establish physical safeguards and technical security services to guard
data integrity, confidentiality, and availability; and establish technical security
mechanisms to guard against unauthorized access to data that is transmitted
over a communications network. In line with the ‘‘scalable compliance’’ notion
described previously, providers are given some discretion in deciding the
feasibility of implementations beyond those that will be required and take
reasonable steps given the nature, size, and scope of their practice.

Access and Disclosure


The HIPAA Privacy Rule, in general, grants patients (or their representatives)
broader access to their PHI than was afforded to them prior to HIPAA. This
includes access to their entire record, including neuropsychological reports,
test responses, and raw data. What is troubling to some is that, according to
HIPAA, this access is granted regardless of the referral party (e.g., IME,
worker’s compensation) or reason for referral, unless state law allows for
more stringent access limitations in these cases. There are some limited
defined instances for denying such access within the HIPAA Privacy Rule
and neuropsychologists are encouraged to seek out additional information
and guidance from applicable state laws and the APA Ethics Code (2003) in
this regard. It is important to note that when HIPAA rules are in conflict with
other applicable rules, laws, standards, statutes, etc., the more stringent rule
typically takes precedence with regards to safeguarding PHI.
Only under a few well-defined circumstances can a healthcare provider
deny a patient request for access, and even then, in some of these cases, the
denial can be reviewable by a third party. Important to neuropsychologists,
HIPAA specifically excludes ‘‘psychotherapy notes’’ from the rules governing
patients’ access to their records. However, psychotherapy notes are narrowly
defined in the Privacy Rule as personal interpretive notes of discussions
during therapy sessions that are kept separate from the medical record.
Information about session start/stop times, and summary of diagnosis, treat-
ment plans, progress with treatment, results of clinical tests, symptoms,
functional status, and prognosis are not considered psychotherapy notes.
Additionally, any notes placed in the patient’s record, regardless of content,
are no longer considered psychotherapy notes and are available to be accessed
by the patient. It is important to note that test reports and raw test data do not
fall under the provisions pertaining to ‘‘psychotherapy notes.’’

104 The Business of Neuropsychology


In addition to increased access to medical records, under the Privacy Rule
an individual has the right to request an accounting of certain disclosures of
PHI made by a covered entity. This accounting must include disclosures of
PHI that occurred during the six years prior to the individual’s request, and
must include specified information regarding each disclosure. Disclosures
made pursuant to an individual authorization or disclosures of a limited
data set under a data use agreement are exempt from this accounting require-
ment. In short, the individual has a right to know the type of information that
has been sent, for what purpose, and who received it.

Consent and Authorization


In general, consent is a general document that gives healthcare providers
permission to use and disclose all PHI for treatment, payment, and healthcare
operations. It must include patient’s right to revoke consent in writing, and is
separate from informed consent for treatment or testing. While HIPAA allows
providers to communicate PHI to other healthcare entities without authoriza-
tion, they may choose to obtain consent prior to using PHI to carry out
treatment, payment, and healthcare operations. Additionally, some aspects
of the APA Ethics Code and many states may have a consent requirement.
Consent is not time-limited and does not need to specify the particular
information used or disclosed, nor the recipients of the information.
Authorization refers to the use of PHI for purposes other than treatment,
payment, or health care operations, and written patient authorization to release
the information is required. In other words, authorization is permission above
and beyond the general consent that permits further use for specified purposes.
It is required by the Privacy Rule for use and disclosure of PHI for marketing or
research, disclosure of psychotherapy notes, and any other uses/disclosures that
are not for treatment, payment or healthcare operations.

HIPAA in Research Settings


The Privacy Rule defines research as ‘‘a systematic investigation, including
research development, testing, and evaluation, designed to develop or con-
tribute to generalizable knowledge.’’ It is expected that in the course of this
work that a researcher may obtain, create, use, and/or disclose PHI. Under the
Privacy Rule, covered entities are permitted to use and disclose PHI for
research with individual authorization, or without individual authorization
under limited circumstances set forth in the Privacy Rule. Under HIPAA, use
and disclosure may occur without patient authorization if the information has

Recordkeeping Guidelines and Regulations 105


been de-identified by someone not involved in the research, there is an
approved waiver from an institutional review board (IRB), the information is
being used only as a preparatory form of research, or the PHI being used is that
of deceased individuals. In other cases, PHI may be used in research when a
research participant authorizes use of his or her PHI, providing the authoriza-
tion satisfies certain specified requirements.

Final Caveats Regarding HIPAA


The HIPAA privacy rule establishes a minimum level of privacy protection.
The weight of HIPAA relative to state law is not entirely clear. Numerous
sources imply that it only takes precedence over state laws that provide less
privacy protection or that provide patients with less access to and control over
their health information. In that sense, state laws that provide better protection
from the consumer’s vantage point are not pre-empted by HIPAA. In those
situations, psychologists should follow state law in an effort to provide better
protection for patients. This also implies an expectation that healthcare pro-
viders must be aware of all state laws where they practice that pertain to the
privacy of healthcare information. Work on better understanding the varying
weights and jurisdiction, as well as further analysis of the state preemption
options, continues to be conducted by the APA and other organizations.
It is important that neuropsychologists know the various aspects of HIPAA
and how the provisions apply to their specific practice and setting. There are
posted fines and penalties that can be quite substantial for failure to comply
with HIPAA rules. As noted above, there is scalable compliance expectation
based on setting and type of practice. Similarly, there are scalable penalties,
with consideration for reasonable effort to comply. Nonetheless, the best
defense against such penalties is to avoid them altogether by understanding
HIPAA and its application relative to a provider’s given setting.

Red Flags Rule


The Red Flags Rule is a new statute that requires businesses and organizations,
including many doctors’ offices, hospitals, and other health care providers, to
implement a written Identity Theft Prevention Program designed to detect the
warning signs (i.e., ‘‘red flags’’) of identity theft in their day-to-day operations.
This rule will be enforced by the Federal Trade Commission and is different
from HIPAA in terms of information to be protected. Whereas HIPAA pro-
tected the privacy of individuals by limiting release of PHI, the Red Flags Rule
is designed to limit the release of information that could result in identity theft

106 The Business of Neuropsychology


for patients as well as employees. The implementation of this law has been
delayed on three occasions to give additional time for organizations to develop
and implement written identity theft prevention programs. The most recent
implementation date is set for November 1, 2009. Toporoff (2009) provides a
good overview of this rule and its application to healthcare providers. This
source was a primary resource for this section, along with the final Red Flags
Rule published through the Federal Trade Commission Web site.
Application of this law is based on whether or not the practice or organiza-
tion’s activities fall within the law’s definition of two key terms: ‘‘creditor’’ and
‘‘covered account.’’ The law defines ‘‘creditor’’ as any entity that regularly defers
payments for goods or services or arranges for the extension of credit. For
example, if a practitioner, practice, or organization bills patients after services
have been completed, allows patients to set up payment plans for services, or
assists the patient in getting credit from other sources, they would be con-
sidered ‘‘creditors.’’ If a provider requires payment before or at the time of
service, they are not creditors under this rule. Additionally, if the provider/
practice accepts only direct payment from a third party organization where the
patient is not responsible for any additional payment (i.e., Medicaid) they are
not a creditor. A ‘‘covered account’’ is defined as a consumer account that
allows multiple payments or transactions or any other account with a reason-
ably foreseeable risk of identity theft. The accounts that are opened and
maintained for patients are considered ‘‘covered accounts’’ under the law. As
such, if your organization or practice meets either of these definitions, you
must create a written Identity Theft Prevention Program to identify and
address the red flags that could indicate identity theft in those accounts.
There is flexibility regarding the implementation of an Identity Theft
Prevention Program provided that it conforms to the Rule requirements. In
fact, many organizations already have a fraud prevention or security program in
place that can be used as a starting point. To be compliant, the program must:

1. Identify the kinds of red flags that are relevant to the practice
2. Explain the process for detecting them
3. Describe how the organization will respond to red flags to
prevent and mitigate identity theft
4. Spell out how the program will be kept up-to-date

Specific warning signs and threats to identity theft are available in Supplement
A to the Red Flags Rule available at ftc.gov/redflagsrule.

Recordkeeping Guidelines and Regulations 107


Once developed, some auditing/hypothetical testing of the program should
be conducted to assess its usefulness and integrity. The final program is to be
approved by the Board of Directors of the organization or a senior employee,
whichever is most applicable for the setting, and implementation, auditing,
and adjustments to the program are managed accordingly. While there are no
criminal penalties for failing to comply with the Rule, violators may be subject
to financial penalties.
It is expected that additional information regarding the Red Flags Rule and
its application to healthcare and psychology will be more readily available in
the future. In the meantime, customizable Red Flag Identity Theft policy and
attendant forms can be downloaded from: www.physicianspractice.com/
index/fuseaction/tools.main.htm. Additional information can be obtained
from the references and resources provided at the end of this chapter.

Final Thoughts
While this chapter was exhausting, it is certainly not exhaustive. As can be
determined from the information provided in this chapter, recordkeeping
activities can be quite detailed and cumbersome when it comes to compliance
with the numerous statutory, regulatory, and ethical provisions and guidelines
that govern the development, maintenance, and dissemination of patient
records. For better or worse, we have moved far away from the days when a
patient’s record was simply a folder with progress notes housed in a file
drawer. As such it is imperative that neuropsychologists stay up-to-date in
their knowledge regarding the various regulatory and legal requirements for
recordkeeping.

References, Resources, and Suggested Readings


American Psychological Association. (2002). Ethical principles of
psychologists and code of conduct. American Psychologist, 57, 1060–1073.
American Psychological Association, Board of Professional Affairs Committee
on Professional Practice and Standards (2007). Record keeping guidelines.
American Psychologist, 62, 993–1004.
American Psychological Association, Committee on Professional Practice and
Standards. (1993). Record keeping guidelines. American Psychologist, 48, 984–986.
American Psychological Association Legal and Regulatory Affairs Staff (2005).
A Matter of Law: Patient Record Keeping. Retrieved July 1, 2009, from http://
www.apapractice.org/apo/insider/practice/pracmanage/legal/record.html#.

108 The Business of Neuropsychology


American Psychological Association Practice Organization. (2002). Getting ready
for the HIPAA privacy rule: A primer for psychologists. Retrieved July 1, 2009,
from http://www.apapractice.org/content/apo/hipaa/apapractice.GenericArticle.
Single.articleLink.GenericArticle.Single.file.tmp/Getting_Ready_for_the_ HIPAA_
Privacy_Rule:_A_Primer_for%20Psychologists.pdf.
American Psychological Association Practice Organization. (2003). Getting
ready for HIPAA: What you need to know now: A psychologist’s guide to the
Transaction Rule. Retrieved July 1, 2009, from http://www.apapractice.org/
apo/hipaa/trans.html#.
American Psychological Association Practice Organization. (2005). The
HIPAA Security Rule primer. Retrieved July 1, 2009, from http://www.
apapractice.org/apo/hipaa/hipaa_security_rule.html#.
American Psychological Association Practice Organization, & American
Psychological Association Insurance Trust. (2002). Getting ready for HIPAA:
What you need to know now: A primer for psychologists. Retrieved July 1,
2009, from http://www.apapractice.org/apo/hipaa/apapractice.html#.
Benefield, H., Ashkanazi, G., & Rozensky, R. H. (2006). Communication and
records: HIPAA issues when working in health care settings. Professional
Psychology: Research and Practice, 37, 273–277.
Division 40 of the American Psychological Association (2004). Health
insurance portability and accountability act (HIPPA): Fact sheet for
neuropsychologists. Division of Clinical Neuropsychology Newsletter 40, 22
pp 12–19. Available online at http://www.div40.org/Announcement/
HIPAA_Fact_Sheet_Final.pdf.
Federal Trade Commission (2009). Fighting fraud with the Red Flags Rule: A
how-to guide for business. Published on the website of the Federal Trade
Commission. Retrieved July 9, 2009 from http://www.ftc.gov/bcp/edu/
microsites/redflagsrule/index.shtml.
Halloway, J. D. (2003). Professional will: A responsible thing to do. APA
Monitor, 34, 34–35.
Knapp, S. J., & VandeCreek, L. D. (2006). Confidentiality, privileged commun-
ications, and record keeping. In Practical Ethics For Psychologists: A Positive
Approach (pp. 111–128). Washington, DC: American Psychological Association.
Koocher, G. P. (2003). Ethical and legal issues in professional practice
transitions. Professional Psychology: Research and Practice, 34, 383–387.
Luepker, E. T. (2003). Record keeping in psychotherapy and counseling: Protecting
confidentiality and the professional relationship. New York: Brunner-Routledge.

Recordkeeping Guidelines and Regulations 109


McGee, T. F. (2003). Observations on the retirement of professional
psychologists. Professional Psychology: Research and Practice, 34, 388–395.
Toporoff, S. (May, 2009). The ‘‘Red Flags’’ Rule: What health care providers
need to know about complying with new requirements for fighting identity
theft. Published on the Federal Trade Commission’s website. Retrieved July
9.2009 from http://www.ftc.gov/bcp/edu/pubs/articles/art11.shtm.
U.S. Department of Health and Human Services (1996). Health Insurance
Portability and Accountability Act of 1996, Pub. L. No.104-191, 110 Stat.
1936. Retrieved July 1, 2009, from U.S. Department of Health and Human
Services, Office for Civil Rights Web site: http://www.hhs.gov/ocr/hipaa.
U.S. Department of Health and Human Services (2003). Health Insurance
Reform: Security Standards; Final Rule, 45 C.F.R. Parts 160, 162, and 164.
Retrieved July 1, 2009, from http://www.cms.hhs.gov/SecurityStandard/
Downloads/securityfinalrule.pdf.

For additional information:


HIPAA
www.APApractice.org
www.div40.org/Announcement/HIPAA_Fact_Sheet_Final.pdf
www.cms/hhs.gov/hipaa/hipaa2/regulations/transactions/finalrule/txfinal.pdf
www.hhs.gov/ocr/combinedregtext.pdf
cms.hhs.gov/hipaa/hipaa2/support/tools/decisionsupport/default.asp

Red Flags Rule


www.ftc.gov/bcp/edu/microsites/redflagsrule/index.shtml
http://ftc.gov/opa/2009/07/redflag.shtm
www.ftc.gov/bcp/edu/microsites/redflagsrule/index.shtml
www.physicianspractice.com/index/fuseaction/tools.main.htm

110 The Business of Neuropsychology


6
&&&

Billing, Coding, and Documentation

Billing, coding, and documentation issues are often overlooked in clinical


training settings, but are necessary evils that must be mastered, or at
least understood, for successful (i.e., financially responsible and beneficial)
clinical practice. There are stacks of CMS, private insurance, and other third
party documents that ‘‘outline’’ appropriate billing, coding, and documenta-
tion policies, procedures, and requirements. At times these include incon-
sistent or unclear information that can change rapidly and without notice.
Additionally, these ‘‘standardized’’ policies are subject to interpretation from
local and regional organizations that manage payments to providers. This
results in additional inconsistencies and disagreements regarding appropriate
activities. Finally, there is a wide array of folklore and mythology available on
various professional e-mail listservs and through informal conversations, as
neuropsychologists attempt to discern the best way to manage this aspect of
their practice. As a result, there is prominent variability in how neuropsychol-
ogists conduct billing and coding activities and document their clinical
service.
In an effort to avoid getting bogged down with the minutiae regarding the
rules and regulations associated with CMS, private insurance, and other third
party payors, this chapter presents billing, coding, and documentation infor-
mation in a relatively conservative fashion, focusing on what we know and
alluding to assumptions and concerns where limited or unclear information is
available. Since Current Procedural Terminology (CPT) procedure codes and
International Statistical Classification of Diseases and Related Health Problems
(ICD) diagnostic codes are the basis of billing and coding activities, these will
be presented through general and specific descriptions to better understand

111
their application to neuropsychological practice. Billing submission activities
will then be presented, including some of the more challenging areas. Finally,
clinical documentation do’s and don’ts will be presented along with some
suggestions for templates for appropriate documentation. Chapter 7 addresses
reimbursement issues and exploring the financial impact of billing, coding,
and documentation activities.
As a disclaimer, the information provided in this chapter is based on a variety
of sources and resources including documents and transmittals from CMS;
several books, articles, and white papers covering billing and coding in health-
care; various documents from regional Medicare carriers and insurance com-
panies; and workshops provided by Antonio E. Puente and Charles Callahan
(see references and recommended readings at the end of the chapter for detailed
citations). It is impossible to provide complete coverage of these activities and
related issues in a single book chapter. The following is not meant to be
exhaustive, but instead provides an overview to stimulate thought and further
reading and research in this area. Given the rapid rate of change in this area,
continuous monitoring of this information is recommended as it is likely that
some of the information presented here is already outdated since its publication.

Current Procedural Terminology (CPT)


Current Procedural Terminology (CPT) describes medical or psychiatric pro-
cedures performed by physicians and other health providers. A history of the
CPT is available through many documents and Internet sites, including a
description of how codes are developed (see references). The American
Medical Association (AMA) first developed and published CPT in 1966.
The first edition contained primarily surgical procedures, with limited sec-
tions on medicine, radiology, and laboratory procedures. The second edition,
published in 1970, presented an expanded system of terms and codes to
designate diagnostic and therapeutic procedures in surgery, medicine, and
the specialties. The third and fourth editions were introduced in the 1970s
with various updates made over the years. In 1983, CPT was adopted as part of
the CMS Healthcare Common Procedure Coding System (HCPCS) and was
mandatory in reporting services for Part B of the Medicare program. In 1986,
this requirement was extended to state Medicaid agencies in the Medicaid
Management Information System. The use of these codes for this purpose has
since expanded to most managed care and other insurance companies.
CPT codes have evolved over the years under the direction of the AMA, but
continue to be used to describe the medical, surgical, and diagnostic services

112 The Business of Neuropsychology


provided and to communicate uniform information about medical services and
procedures among physicians, coders, patients, accreditation organizations,
and payers for administrative, financial, and analytical purposes. The fourth
edition is the most current, but CPT-5 is coming very soon. Two versions are
published: the first is the most common – CPT Physician’s Current Procedural
Terminology. The second publication is the CPT Physician’s Current Procedural
Terminology Specially Annotated for Hospitals. This version contains all of the
information in the original version with the addition of special CMS guidelines
and notations for identifying criteria applicable to outpatient hospital billing
(discussed further in the next chapter). Additionally, the AMA offers numerous
publications for sale related to CPT and related coding activities as well as a
personal, non-commercial search of current CPT CMS values on its Web site.

CPT for Neuropsychological Practice


While the above information is useful from a historical perspective, for
neuropsychologists it is important to know what specific codes are available
for use on a more specific level. There are a total of over 7,500 CPT codes;
about 50 of which are possible codes for psychologists and neuropsycholo-
gists. For the purposes of this chapter, the more common codes are presented
along with a few less common codes that may be useful in neuropsychological
practice settings. The presented codes fall into two categories: assessment and
intervention. Where appropriate, the codes will be presented as written in the
CPT manual (2009) with additional information provided where applicable.
In particular, codes are presented in terms of their congruence with medical
versus mental health conditions. This will be discussed further as actual
coding and documentation issues are presented.

Assessment Codes
For neuropsychologists, the most commonly used assessment CPT codes are
those associated with neuropsychological and psychological testing. These are
described in ‘‘sets’’ due to the fact that in 2006 the CPT codes for these activities
were further specified to differentiate the work of professionals from that of
technicians and computer administration. The testing codes are as follows:

96118: Neuropsychological Testing by Professional


Neuropsychological testing (eg., Halstead-Reitan Neuropsycho-
logical Battery, Wechsler Memory Scales, and Wisconsin Card
Sorting Test), per hour of the psychologist’s or physician’s time,

Billing, Coding, and Documentation 113


both face-to-face time with patient and time interpreting test
results and preparing report.
(96118 is also used in those circumstances when additional
time is necessary to integrate other sources of clinical data,
including previously completed and reported technician- and
computer-administered tests)
96119: Neuropsychological Testing Administered by Technician
Neuropsychological testing (eg., Halstead-Reitan Neuropsycholo-
gical Battery, Wechsler Memory Scales, and Wisconsin Card
Sorting Test), with qualified healthcare professional interpretation
and report, administered by technician, billed per hour of techni-
cian time, face-to-face
96120: Neuropsychological Testing Administered by Computer
Neuropsychological testing (e.g., Wisconsin Card Sorting Test),
administered by computer, with qualified healthcare professional
interpretation and report.
96101: Psychological Testing by Professional
Psychological testing (includes psychodiagnostic assessment of emo-
tionality, intellectual abilities, personality and psychopathology, e.g.,
MMPI, Rorschach, WAIS), per hour of the psychologist’s or physi-
cian’s time, both face-to-face time administering tests to the patient
and time interpreting test results and preparing report.
(96101 is also used in those circumstances when additional
time is necessary to integrate other sources of clinical data,
including previously completed and reported technician- and
computer-administered tests)
96102: Psychological Testing Administered by Technician
Psychological testing (includes psychodiagnostic assessment of
emotionality, intellectual abilities, personality and psycho-
pathology, e.g., MMPI, Rorschach, WAIS) with qualified health-
care professional interpretation and report, administered by
technician, per hour of technician time, face-to-face
96103: Psychological Testing Administered by Computer
Psychological testing (includes psychodiagnostic assessment of
emotionality, intellectual abilities, personality, and psycho-
pathology, e.g., MMPI), administered by a computer, with quali-
fied healthcare professional interpretation and report

Since these codes were adopted in 2006, they have been a source of
confusion and frustration for neuropsychologists as CMS and many other
payors do not reimburse combinations of these codes for the same patient

114 The Business of Neuropsychology


on the same day unless the codes clearly represent different tests or services. To
allow for the simultaneous use of professional and technician/computer codes
some use a -59 modifier to identify the multiple codes as being distinct and
separate services. When professional codes and technician/computer codes are
used simultaneously, the modifier is used with the non-professional code (e.g.,
96119 & 96120 or 96102 & 96103). This practice was recommended and
outlined by the APA Practice Organization through an Information Alert in
October of 2006 (APA, 2006). The acceptance of this practice has been incon-
sistent and variable by region and provider. In 2008, the AMA CPT manual
included revised language, stating that the professional codes were ‘ also used in
those circumstances when additional time is necessary to integrate other sources
of clinical data, including previously completed and reported technician- and
computer-administered tests.’’ However, Transmittal 85 published by CMS in
February of 2008 continued to state the professional codes should not be paid
when billed for the same tests or services performed under technician or
computer test codes. So again, there remained inconsistencies and confusion
regarding the simultaneous use of these codes.
In June of 2008, CMS approved a series of responses to frequently asked
questions that provided clarification regarding the billing of both professional and
technician codes for the same patient on the same or alternative days. To
summarize, the new language implies that technician codes account for the testing
and interpretation of individual tests, while professional codes account for the
time spent integrating the various tests and other clinical data and developing an
integrated summary and impressions. There is still room for variable interpreta-
tions, but one way to think about the new language is that test results are similar to
lab test results. They can be included in the report, but there is no additional
billing (payment) for ‘ listing’’ the test results in the report. The professional billing
is for the time spent completing the integrative portion of the report. The full text
of these FAQs and related answers can be found at the Web site listed in the
reference section (specifically FAQ #’s 9180, 9181, & 9182).
Despite this ‘‘clarification,’’ payment decisions are still determined by local
carriers, and their interpretations can be far more rigid than the national
policy. As a result, at least for now, difficulty remains in maximizing reimbur-
sement for the psychological and neuropsychological testing codes.
An additional source of difficulty in the use of neuropsychological evalua-
tion codes is the expected amount of time spent for the evaluation. Most of the
CMS documentation in this regard indicates that a neuropsychological evalua-
tion typically requires a total of five to seven hours to perform. If testing time is

Billing, Coding, and Documentation 115


greater than eight hours, the report should document the medical necessity for
the extended testing period. There is understanding that an evaluation and
subsequent report may occur across more than one day. If testing and report
are completed over several days, CMS and other guidelines suggest that the
clinician combine testing and report time together with all billing submitted
on the last date of service. There is no documentation to support estimating
total time and submitting charges prior to the completion of the report.
Another ‘‘assessment’’ code commonly used by neuropsychologists is
the Neurobehavioral Status Examination (CPT – 96116). This code is
described as:

96116: Neurobehavioral Status Examination


Neurobehavioral status exam (clinical assessment of thinking,
reasoning and judgment, e.g., acquired knowledge, attention,
language, memory, planning and problem-solving, and visual-
spatial abilities), per hour of the psychologist’s or physician’s
time, both face-to-face with patient and time interpreting test
results and preparing report.

Activities involved in this service can include an interview by the professional;


testing by the professional, technician, and/or computer; and interpretation
and report writing by the professional. Regardless of the activities, the time is
billed together under the professional code, assuming that different services
are provided (no double billing) and a comprehensive/integrative report is
generated. Some use 96116 as a neurocognitive ‘‘screening’’ prior to discharge
from inpatient or rehabilitation units or as an admission assessment for out-
patient rehabilitative programs, thus preserving the neuropsychological
testing codes for later comprehensive follow-up evaluation. If this is the
case, it is important to note the language that is used in the report. CMS
typically does not reimburse for ‘‘screening’’ exams, so the better terminology
would be ‘‘abbreviated neurocognitive assessment’’ or similar verbiage. Finally,
96116 is also used as a non-psychiatric (i.e., medical) interview to determine
the need for further testing and what tests would be given rather than a testing
code. In this sense, 96116 is sometimes used in conjunction with the neu-
ropsychological evaluation test codes (96118–96120). If this is the case,
distinct documentation for each code is necessary to differentiate the services.
The psychological testing, neuropsychological testing, and neurobeha-
vioral status exam codes are administered once per illness condition or
when a significant change in behavior and/or medical/health condition

116 The Business of Neuropsychology


necessitates re-evaluation. If a repeat evaluation is to be attempted for the
same condition, documentation should indicate why the service is medically
reasonable and necessary (AMA CPT Assistant, November, 2006). As such, a
re-evaluation should only occur when there is a potential change in diag-
nosis or the nature and/or severity of symptoms. Medical necessity is dis-
cussed in greater detail later in this chapter.
While the codes described above are the most frequently used in neurop-
sychology, there are some additional assessment codes that warrant discus-
sion. The first set of codes presented is most common in pediatric settings.
CPT codes are available for developmental tests (limited or extended) to
address childhood developmental diagnoses or specific difficulties. The avail-
able codes are as follows:

96110: Developmental testing; limited


Developmental testing; limited (e.g., Developmental Screening
Test II, Early Language Milestone Screen), with interpretation
and report
96111: Developmental testing; extended
Developmental testing; extended (includes assessment of motor,
language, social, adaptive and/or cognitive functioning by stan-
dardized developmental instruments) with interpretation and
report

The use of developmental screening instruments of a limited nature is reported


using CPT code 96110. This code is often reported when performed in the
context of preventive medicine services and is commonly performed with other
evaluation and management (E/M) services, such as acute illness or follow-up
physician office visits. An office nurse or other trained non-physician staff
member typically performs this service, and, as a result, the relative value
of these codes is very low as it reflects only the practice expense of the office
staff and nurses, the cost of the materials, and professional liability, with no
physician work value published on the Medicare physician fee schedule.
Extended developmental testing (CPT – 96111) using standardized instru-
ments may be reported independently or in conjunction with another code
describing a separate patient encounter provided on the same day as the
testing, such as an evaluation and management code for outpatient consulta-
tion. A physician, psychologist, or other trained professional typically
performs this testing service. As of January, 2004, there are physician work
RVUs published on the Medicare physician fee schedule for this code.

Billing, Coding, and Documentation 117


However, in 2005 the CPT code descriptor of 96111 was revised to reflect the
deletion of test examples as well as the "per hour" designation. The service is
now reported without regard to time. The typical testing session, including the
time to perform the interpretation and report, was determined to be slightly
over an hour based on a survey conducted by the American Academy of
Pediatrics (AAP). This places a significant limitation on possible reimburse-
ment for neuropsychologists using this code.
The final code presented here is likely the newest code available to neu-
ropsychologists. It is a code used for functional brain mapping (CPT – 96020);
it was adopted for use in 2007 and is described as follows:

96020: Functional Brain Mapping


Neurofunctional testing selection and administration during non-
invasive imaging functional brain mapping, with test adminis-
tered entirely by a physician or psychologist, with review of test
results and report.

Busis (2007) provides a very good overview of this code and its potential use.
The codes were established to report neurofunctional mapping of blood flow
changes in the brain by magnetic resonance imaging in response to tests
administered by physicians and psychologists correlating to specific brain
functions. This code includes time for selection and administration of testing
of language, memory, cognition, movement, sensation, and other neurologic
functions when conducted in association with functional neuroimaging; mon-
itoring of performance of this testing; and determination of validity of neuro-
functional testing relative to separately interpreted functional magnetic
resonance images. These activities are independent and are not reported in
conjunction with the psychological or neuropsychological testing codes
(96101–96103, 96116–96120).
This evaluation is most commonly performed pre-operatively for patients
with brain tumors, arteriovenous malformations, intractable epilepsy, and
other brain lesions that may require invasive (e.g., surgical excision) or focal
treatment (e.g., irradiation). The information derived from functional brain
mapping is utilized to predict the potential for neurologic deficits that may
arise from tumor growths and surgical interventions, thus making it possible
for the physician and patient to make informed decisions concerning the
feasibility and risk of intervention, determine the extent of surgical interven-
tion (e.g., subtotal vs. total resection) and identify expendable and nonex-
pendable cortical regions.The testing component is performed during the

118 The Business of Neuropsychology


imaging procedure, and communication between the patient and the
administrator of the test is essential to assure or monitor whether the patient
is correctly performing the required activities. This testing entails the pro-
fessional’s understanding of expected function of the involved or adjacent
cortex, and the patient’s ability to perform cognitive tasks. There is a direct
interaction between the examiner and the patient. The testing professional
summarizes the patient’s performance on the neurological tasks and the
behavioral/cognitive components in a written report.
While it seems that this code could also be used by neuropsychologists for
WADA testing (typically CPT – 95958: Wada activation test for hemispheric
function, including electroencephalographic (EEG) monitoring), this has not
been established due to the ‘‘noninvasive imaging’’ language used in 96020.
Neuropsychologists who wish to explore this option should do so with their
local carriers before assuming that this is applicable.
As a final discussion of the assessment codes, it is important to discuss the
range of professionals that are deemed ‘ qualified’’ to use the previously
described CPT codes. In addition to physicians and psychologists, the above
codes are also available for use by nurse practitioners, clinical nurse specialists,
and physician assistants ‘ to the extent authorized under State scope of practice.’’
Additionally, physical therapists (PTs), occupational therapists (OTs), and
speech language pathologists (SLPs) are authorized to bill three test codes as
‘ sometimes therapy’’ codes. Specifically, CPT codes 96105 (assessment of
aphasia), 96110, and 96111 may be performed by these therapists. However,
when PTs, OTs and SLPs perform these procedures, it must be done under the
general supervision of a physician or a psychologist. According to the American
Speech and Hearing Association’s Web site (www.asha.org), their Health Care
Economics Committee is currently pursuing language that would allow for
SLPs to use the neurobehavioral status exam code (96116) when performing
evaluations that are primarily cognitive-communicative in nature. When the
code was revised in 2006 (eliminating the old 96115 code and adding 96116)
the phrase, ‘ per hour of the psychologist’s or physician’s time’’ was added,
limiting the code’s availability to SLPs.

Intervention Codes
While extensive detail was provided in the earlier descriptions of CPT codes used
for assessment activities, the discussion of intervention codes will be briefer, as the
codes, their descriptions, and their acceptance are somewhat more straightforward.
This is not to suggest that they are without controversy and inconsistency in terms

Billing, Coding, and Documentation 119


of use and acceptance. This is particularly noted for the newer Health and Behavior
codes that were adopted for use in 2002 and are presented here in greater detail
than the traditional psychotherapy codes. This is also the basis for using the word
‘ intervention’’ to describe this section rather than ‘ therapy.’’

Traditional Mental Health Psychotherapy Codes


The AMA CPT Manual (2009) states, ‘‘psychotherapy is the treatment for
mental illness and behavior disturbances in which the physician establishes
a professional contract with the patient and through definitive therapeutic
communication, attempts to alleviate the emotional disturbances, reverse or
change maladaptive patterns of behavior and encourage personality growth
and development.’’ There are a variety of codes used for the initial assessment
and treatment of mental health problems.
Two diagnostic interview codes are available to initiate mental health
services for a patient and they are as follows:

90801: Psychiatric diagnostic interview examination


This procedure is described as the elicitation of a complete his-
tory, establishment of tentative diagnosis, and an evaluation of the
patient’s ability and willingness to work to solve the patient’s
mental problem
90802: Interactive Psychiatric Diagnostic Interview Examination
using play equipment, physical devices, language interpreter, or
other mechanisms of communication
Includes the same components as the psychiatric diagnosis
interview examination which includes history, mental status, dis-
position, and other components as indicated

These are not time-based codes. They are billed as a single unit regardless of
time spent (valued at approximately one and a half hours). Additionally, they
can be used one time per illness, incident, or bout. The evaluation involves a
comprehensive analysis of records, observations, structured and/or unstruc-
tured clinical interview, and may include communication with family or other
sources and the ordering and medical interpretation of laboratory or other
medical diagnostic studies. This evaluation also includes a complete mental
status examination. Documentation includes history, presenting complaints,
mental status examination, impression, and disposition. The interactive diag-
nostic interview code (90802) may be applied to the initial evaluation of
children, or in some cases adult patients with organic mental deficits or who

120 The Business of Neuropsychology


are catatonic or mute. The medical record and documentation must indicate
that the person being evaluated does not have the ability to interact through
normal verbal communicative channels.
Mental health intervention (psychotherapy) codes are described as being
‘‘insight oriented, behavior modifying and/or supportive’’ and differentiated
primarily based on face-to-face time and location of service (inpatient versus
outpatient). Inpatient is defined as being in an inpatient hospital, partial
hospital, or residential care setting. Interactive psychotherapy again requires
documentation indicating that the person being treated does not have the
ability to interact through normal verbal communicative channels. The indi-
vidual psychotherapy codes are as follows:

Inpatient/Outpatient
90816/90804 – Individual Psychotherapy (20–30 minutes)
90818/90806 – Individual Psychotherapy (45–50 minutes)
90821/90808 – Individual Psychotherapy (75–80 minutes)
90817/90810 – Individual Psychotherapy, interactive, (20–30
minutes)
90819/90812 – Individual Psychotherapy, interactive, (45–50
minutes)
90822/90814 – Individual Psychotherapy, interactive, (75–80
minutes)

Family therapy codes are described as reflecting ‘‘psychotherapy directed


toward an individual and family to address emotional, behavioral or cognitive
problems, which may be causative/exacerbating of the primary mental dis-
order or have been triggered by the stress related to coping with mental and
physical illness, alcohol and drug abuse, and psychosocial dysfunction.’’ There
is also a code for a multiple family group, described as ‘‘therapy sessions for
multiple families when similar dynamics are occurring due to a commonality
of problems.’’ This code is rarely reimbursed, but is available for use under
appropriate conditions. The group psychotherapy code is available for indi-
viduals being treated in a group session where ‘‘personal and group dynamics
are discussed and explored in a therapeutic setting when similar dynamics are
occurring due to a commonality of group problems.’’ Family and group
psychotherapy codes do not have a time or location component. They are
billed in 15 minute units. Family psychotherapy codes are differentiated based
on whether or not the patient is present. Keep in mind that Medicare typically

Billing, Coding, and Documentation 121


does not reimburse for services provided without the patient present. The
family and group CPT codes are as follows:

90846 – Family Psychotherapy without patient present


90847 – Family Psychotherapy with patient present
90849 – Multi-Family Group Psychotherapy
90853 – Group Psychotherapy
90857 – Group Psychotherapy – interactive

To close out this section, the following additional codes are presented
despite being less commonly used. Medicare and other payors may or may
not recognize these as reimbursable codes, but they may serve for documenta-
tion for private pay, forensic, or other settings. In institutional settings these
codes may be useful in documenting productive time despite reimbursement
limitations.

90875 & 90876 – Psychophysiological Therapy including Biofeed-


back
90880 – Hypnotherapy
90882 – Environmental intervention for medical management
purposes on a psychiatric patient’s behalf with agencies,
employers, or institutions
90887 – Interpretation or explanation of results of psychiatric, other
medical examinations and procedures, or other accumu-
lated data to family or other responsible persons, or
advising them how to assist patient (no patient present)
90889 – Preparation of report of patient’s psychiatric status, history,
treatment, or progress (other than for legal or consultative
purposes) for other physicians, agencies, or insurance
carriers
90899 – Unlisted psychiatric service or procedure
99366 – Medical team conference with interdisciplinary team of
healthcare professionals, face-to-face with patient and/or
family, 30 minutes or more, participation by nonphysician
qualified healthcare professional – newly added in 2008
99368 – Same as 99366 except that the patient is not present

Health and Behavior Assessment and Intervention Codes


The focus of the intervention codes described thus far has been on patients
with mental health (psychiatric) diagnoses. In 2002, new CPT codes were
added that focus on acute or chronic medical illness rather than mental health

122 The Business of Neuropsychology


disorders. This matches the biopsychosocial understanding of health and
allows psychologists to provide services for medical patients without having
to make a psychiatric diagnosis. The purpose of the codes is to assess and
manage medical issues such as adherence to medical treatment, symptom
management, promotion of health-enhancing behaviors, reducing health-
related risk taking behaviors, and coping and adjustment to physical illness
or injury. The rationale for these new codes was to reflect a more accurate,
refined way of billing for services provided to patients with a physical health
diagnosis. The purpose of treatment for a health and behavior code is the
alleviation or mitigation of a medical condition. It is not for prevention,
personal growth, or in response to a legal question.
It is not uncommon for a medical patient to have a co-morbid psychiatric
condition, and if the patient is being treated for a psychiatric problem and a
medical problem at the same time, the psychiatric code (90801–90899) and
health and behavior code cannot be used on the same patient for the same
date of service. If both psychiatric services and health and behavior services
are required on the same date, report the principle service being provided as
determined by the primary reason the patient is being seen. Table 6.1,
adapted from Casciani (2004) simplifies the distinction between health
and behavior interventions and traditional psychotherapy and can be used
as a guide to determine the appropriate CPT code to use.
The health and behavior codes include both assessment and intervention
services. It is important to remember that unlike the psychotherapy codes,
they do not have specific time parameters associated with each code. Instead,

Table 6.1 Differentiating Health and Behavior and Psychotherapy Codes


PSYCHOTHERAPY H&B
Diagnosis Mental illness (use DSM-IV) Physical illness/injury
(use ICD-9)
Primary Insight and/or behavior Education and/or behavior
Focus change change
Goal Alleviate emotional pain or Improve health & well being
maladaptive behavior
Context Emphasis on privacy & Emphasize collaboration with
confidentiality medical team & family

Adapted from Casciani (2004).

Billing, Coding, and Documentation 123


health and behavior services are billed in 15 minute increments of face-to-face
time for all of the available codes. The health and behavior CPT codes
descriptions are as follows:

Assessment
96150: Initial Health and Behavior Assessment
The initial assessment of the patient to determine the biological,
psychological, and social factors affecting the patient’s physical
health and any treatment problems.
96151: Health and Behavior Re-Assessment
A re-assessment of the patient to evaluate the patient’s condition
and determine the need for further treatment. A re-assessment
may be performed by a clinician other than the one who con-
ducted the patient’s initial assessment.
Intervention
96152: Individual Health and Behavior Intervention
The intervention service provided to an individual to modify the
psychological, behavioral, cognitive, and social factors affecting
the patient’s physical health and well being. Examples include
increasing the patient’s awareness about his or her disease and
using cognitive and behavioral approaches to initiate physician-
prescribed diet and exercise regimens.
96153: Group Health and Behavior Intervention
The intervention service provided to a group. An example is a
smoking cessation program that includes educational informa-
tion, cognitive-behavioral treatment and social support. Group
sessions typically last for 90 minutes and involve 8 to 10 patients.
96154: Family Health and Behavior Intervention with Patient
Present
The intervention service provided to a family with the patient present.
A psychologist could use relaxation techniques with both a diabetic
child and his or her parents to reduce the child’s fear of receiving
injections and the parents’ tension when administering them.
96155: Family Health and Behavior Intervention without Patient
Present
The intervention service provided to a family without the patient.
An example would be working with parents and siblings to shape
the diabetic child’s behavior, such as praising successful diabetes
management behaviors and ignoring disruptive tactics.

124 The Business of Neuropsychology


While the health and behavior codes have been a useful addition for psy-
chologists and neuropsychologists working in medical settings, they are not
without their problems. Over the years, there have been and continue to be
some difficulties with payor misunderstanding of the codes and denying
or requesting a mental health diagnosis since service is performed by a psychol-
ogist. Despite the efforts of the APA Practice Directorate, NAN PAIO, and other
professional organizations, this has not yet been totally resolved. Additionally,
intermediaries/carriers may interpret the language differentiating health and
behavior from psychiatric codes as meaning that a professional cannot bill the
health and behavior code if the patient has a current or any previous psychiatric
diagnosis. Finally, there has been some clinician misunderstanding that the
codes are billed in 15 minute increments of face-to-face time only and there is
no allowance for additional information gathering and report writing.
As with the other codes, the health and behavior codes are not for the
exclusive use of psychologists. These codes are also open to nurse practi-
tioners, clinical nurse specialists, licensed social workers, and some other
clinicians. They are not for use by masters level counselors. Physicians do
not use these codes because they typically would submit services under the
medical evaluation and management codes.

Putting It All Together – CPT Procedures and ICD Diagnoses


To submit ‘‘charges’’ for any of the CPT codes described above, the procedures
are linked to a diagnosis. CMS and virtually all other payors use the
International Classification of Diseases, Clinical Modification (ICD-9-CM)
diagnostic coding system to classify diseases and a wide variety of signs,
symptoms, abnormal findings, complaints, social circumstances, and external
causes of injury or disease. These conditions include medical as well as
psychiatric diagnoses. The key for neuropsychologists is to make sure that
they link the appropriate diagnostic codes with the CPT codes submitted for
reimbursement. Simply put, medical procedures require medical diagnoses
and mental health interventions require mental health diagnoses. However,
things are not always as easy as they appear.
Neuropsychology/Medical/Rehabilitation psychology assessment and inter-
vention services typically involve patients with medical diagnoses. A variety of
CPT codes are available for use to document these services, some of which are
clearly for use with patients with medical diagnoses and some are clearly for use

Billing, Coding, and Documentation 125


with patients with psychiatric diagnoses. For example, the health and behavior
codes are to be used exclusively for medical conditions and psychiatric intakes
and psychotherapy codes are to be used exclusively for mental health condi-
tions. Some codes are available for use with patients with either medical or
psychiatric diagnoses. These codes fall in the 96xxx series, including the
psychological testing and neuropsychological evaluation codes. As of 2006,
these codes could be used for the assessment of medical patients without
there being a diagnostic code mismatch. This is an important (and potentially
valuable) distinction that allows for use of the psychological testing codes for
presurgical evaluations for bariatric surgery, spinal cord stimulator placements,
or organ transplants; initial evaluations for chronic pain conditions; or other
medical referrals.
In determining the proper CPT and diagnostic code to use, it is important
to consider the services provided as well as the condition being treated. As
noted previously, it is possible that a patient will have both medical and
psychiatric diagnoses and the professional will need to identify the principal
service being provided and the associated diagnostic group to determine the
appropriate codes to assign. Using multiple diagnoses can be useful, but
understand that the ‘‘first diagnosis listed’’ has taken the place of ‘‘primary
diagnosis.’’ For most payors this first diagnosis will serve as the basis for CPT/
diagnosis determinations. Also, in some circumstances, adding a psychiatric
diagnosis as a secondary to a medical condition may result in mismatch issues
for some CPT codes and may result in a charge being transferred to a
behavioral health carve-out rather than paid through medical benefits. This
can result in a reduction in reimbursement or a denial depending on the
service and the payor. Finally, it is important to note that CMS and third party
payors typically have limited accepted diagnostic codes for given procedures
and knowing their diagnostic ‘‘formulary’’ can save time, energy, stress, and
money as appropriate reimbursement is sought.

Documentation
Once the CPT and diagnostic code groupings are mastered, the real work
begins. According to the Office of the Inspector General investigating
Medicare fraud, two of the primary problems encountered during audits are
inappropriate/incomplete documentation and failure to document medical
necessity. It is possible to address both of these issues simultaneously
by developing a clinical documentation system that automatically and consis-
tently incorporates appropriate documentation for the various CPT codes and

126 The Business of Neuropsychology


related medical necessity. Several computerized documentation systems are
available and while helpful, a provider does not have to use such programs to
have appropriate and consistent documentation. The key is to develop a
consistent structure for all documentation that includes the required informa-
tion. Templated notes can be developed for the CPT codes that are typical for
any given practice or department, and once finalized this will result in more
accurate as well as efficient documentation.
Information and guidelines for appropriate documentation are available
through a variety of sources including Web sites of local carriers and third
party payors. In particular, local carriers list many of their documentation
requirements under the ‘‘audit’’ sections of their Web sites. Antonio Puente
provides an excellent general overview of documentation guidelines every year
as part of his Billing and Coding Update presentations at the National
Academy of Neuropsychology annual meeting (Puente, 2008). The informa-
tion presented in this chapter includes some of his summations for ease of
reading, consistency, and completeness. For his detailed presentation, the
reader is encouraged to download his most recent presentation from the NAN
website. Additionally, it is important to remember that these are general
guidelines and local carriers and other payors may have some variations that
will need to be explored.
Before good clinical documentation can be achieved, there must first be a
broader understanding of the reason services are documented. While discus-
sions focus on the need to submit claims and receive payment, there are other
reasons for documentation. These follow a logical progression, including
determining medical necessity for services; maintaining records of a patient’s
evaluation results, plan of care, and progress in treatment; and documenting
the outcome of the services provided. When the bigger picture of documenta-
tion is considered, good documentation may not seem so tedious. Still, there is
a need to consider claims review and reimbursement in terms of how doc-
umentation is completed and what information is included. There are some
general principles that apply to all documentation, including the rationale for
service, the procedure provided, the results or progress since previous contact,
an impression and/or diagnosis, a plan of care or case disposition, and time
(if applicable).
One of the most important pieces to the documentation puzzle is the
‘‘rationale for service,’’ which includes documentation of medical necessity.
According to various CMS documents, medical necessity is defined as ‘‘services
which are reasonable and necessary for the diagnosis and treatment of illness

Billing, Coding, and Documentation 127


or injury or to improve the functioning of a malformed body member.’’
Services or supplies are considered medically necessary if they:

• Are proper and needed for the diagnosis or treatment of the


patient’s medical condition;
• Are furnished for the diagnosis, direct care, and treatment of
the patient’s medical condition;
• Meet the standards of good medical practice; and
• Are not mainly for the convenience of the patient, provider, or
supplier.

Keeping these guidelines in mind as you document the reason a patient is


receiving services and when documenting outcomes, sets the stage for quality
documentation. Additionally, it is important to note that for every service
billed, the specific sign, symptom, or complaint necessitating the service must
be listed.
The structure, layout, and style of a professional’s documentation are not as
important as the content of the information. Some basic information is
required across all codes whether they are assessment or intervention-based.
These include:

• Identifying Information
• Date(s) of Service
• Time, if applicable (total time or actual time - to be discussed
further)
• Identity of Observer (professional, technician, or other
provider)
• Reason for Service (including medical necessity)
• Status
• Procedure(s)
• Results/Findings
• Impression/Diagnosis
• Plan for Care/Disposition

This structure serves as the basis for all notes regardless of the CPT code being
used. The patient’s primary complaints as they relate to the presenting illness
are documented in terms of description of the symptoms present, the fre-
quency and intensity, context of the complaints, modifying variables, and

128 The Business of Neuropsychology


other associated signs. It is best to present these in the context of medical
necessity for services. Across contacts it is important to document any changes
in the illness/condition as well as adherence to treatment recommendations.
For assessment/evaluation documentation, the same parameters are used
with some additional specifics. The following is a guide for assessment
documentation:

• Identifying Information
• Reason for Service (including medical necessity)
• Date(s) of Service
• Time (amount of service time - total versus actual time)
• Identity of Tester (professional, technician, other)
• Tests and Protocols (include names and editions)
• Narrative of Results
• Impression(s) or Diagnosis(es)
• Disposition or Plan of Care

With the change in psychological and neuropsychological testing codes some


additional aspects of documentation need to be considered. If more than one
CPT code is used for an evaluation, each code should generate a separate
report or at least a separate section that is appropriately and clearly labeled.
For the technician component (96119; 96102), the technician’s name is
included along with the tests administered and the time for the face-to-face
testing time. For the professional component (96118; 96101; 96116), appro-
priate labels should be used for the various sections including obtained history
(record review, interview, etc.), behavioral observations and mental status
exam, tests completed by the professional, integration of findings, interpreta-
tion, and impressions/diagnosis. Again time is included based on the total time
for the professional’s activities.
Documentation for interventions is somewhat clearer as there is typically a
single code for a single service. Still, appropriate documentation is necessary.
Intervention documentation typically includes:

• Identifying Information
• Reason for Service (including medical necessity)
• Date of Service
• Time (typically face-to-face time; again total versus actual
discussed later)

Billing, Coding, and Documentation 129


• Status of Patient/Changes Since Previous Intervention
• Intervention Performed
• Results Obtained
• Impression(s) or Diagnosis(es)
• Disposition/Plan of Care

If a computerized template is used for intervention documentation, it is easy to


pull the most recent therapy note and use it as a basis for the current note. This
allows a clinician to easily see the patient’s previous status in comparison to
the current status and make appropriate documentation easier and more time
efficient.
Briefly, the issue of time is increasingly becoming a topic of conversation in
discussions of documentation activities. Generally speaking, time is measured by
face-to-face contact for purposes of intervention (and health and behavior
assessment/re-assessment) and most intervention codes are time pre-determined
or billed in 15 increments of actual face-to-face time. For assessment purposes,
time is less well-defined. While the technician codes are specific in terms of time
being the actual face-to-face time with the patient, the professional codes can
include time spent before, during, and after the actual face-to-face assessment. As
a result, it is helpful to develop a time-monitoring form to document the
provider, date(s) of service, service provided, and the start and stop times of
each activity. This will allow for more accurate reporting of actual time and will
provide supporting documentation if questions arise. There will likely be an
increased emphasis on the documentation of time in the future, which could
possibly mean the final report will include exact start and stop times of all
activities, as well as a date and time for the signature on the final documentation.
Complete and appropriate documentation does not have to be lengthy or
cumbersome; concise documentation can be achieved using this information
as a guide. Consider using a multi-level system as previously described in
Chapter 4 where there are routing sheets for monitoring time (including
dates and start/stop times) of technicians and professional services, separate
chart areas for test protocols and time tracking information, and a distinct
area for the final report (medical record). Additionally, specific templates for
each CPT code ensures consistency in terms of the ‘‘types’’ of information
included. These can be designed in a manner that allows for individual
differences amongst clinicians within a practice or department while main-
taining consistent documentation. Using a secured system or network drive
allows for a word processing version of a back-up computerized medical

130 The Business of Neuropsychology


record with this type of documentation. Similar documents can be created
that can be completed via handwritten entries, but typed documentation is
preferred by most payors. Finally, these documents can be formatted in such
a way as to also serve as marketing tools, with departmental/practice logos
and contact information included as a letterhead. Once the documentation
process is established, departmental audits can be completed through peer
review to insure that appropriate documentation is maintained. Examples of
templated documentation, time monitoring forms, and billing encounter
forms are available on the Web site associated with this text.

References, Resources, and Suggested Readings


American Medical Association (2008). CPT 2009: Standard edition. Chicago,
IL: American Medical Association.
American Medical Association (2008). CPT assistant. Chicago, IL: American
Medical Association.
American Medical Association (2008). CPT handbook for office-based coding:
AMA and CMS perspectives. Chicago, IL: American Medical Association.
American Medical Association. CPT process: How a code becomes a code.
Chicago, IL: American Medical Association. Available online at www.ama-
assn.org/ama/pub/category/3882.html.
American Psychological Association Practice Directorate (2009). Do these
coding book changes for 2008 affect your practice? Washington, DC: American
Psychological Association. Available online at www.apa.org/about/division/
dialogue/nd07practice.html.
American Psychological Association (2007). Record keeping guidelines.
American Psychologist, 62, 993-1004. Available online at www.apa.org/
practice/recordkeeping.pdf.
American Psychological Association Practice Organization (October, 2006).
New Medicare billing rules for testing services: Information alert. Washington, DC:
American Psychological Association. Available online at www.apapractice.
org/apo/in_the_news/new_medicare_billing.GenericArticle.Single.
articleLink.GenericArticle.Single.file.tmp/New%20Medicare%20Rules%
20for%20Testing%20Services%202006.pdf.
American Psychological Association (2000). Medicare handbook: A guide for
psychologists. Washington, D.C: APA Available online at www.apa.org/
practice/medtoc.html.

Billing, Coding, and Documentation 131


Barnett, J. (1999). Documentation: Can you have too much of a good thing?
(Or too little?) Psychotherapy Bulletin, 34, 19–21.
Blount, L. L. & Udell, C. J. (1998). Mastering the reimbursement process.
Chicago, IL: American Medical Association.
Busis, N. A. (Spring, 2007). CPT coding of procedures including new and
changed codes for 2007. In The Official Newsletter of the Clinical
Neurophysiology Section, 13, American Academy of Neurology. Available online
at www.aan.com/globals/axon/assets/2847.pdf
Casciani, J. M. (October, 2004). How health and behavior services differ from
traditional psychotherapy. Monitor on Psychology, 35, p. 59.
Centers for Disease Control and Prevention (2005). ICD-9-CM official
guidelines for coding and reporting. Available online at www.cdc.gov/nchs/data/
icd9/icdguide.pdf.
Centers for Medicare & Medicaid Services. (February, 2008). CMS
Manual System Transmittal 85. Subject: Psychological and Neuropsycho-
logical Tests. Available online at www.cms.hhs.gov/Transmittals/downloads/
R85BP.pdf.
Centers for Medicare & Medicaid Services. (October, 2008). Medicare
physician guide: A resource for residents, practicing physicians, and other health
care professionals. Available online at www.cms.hhs.gov/MLNProducts/
downloads/physicianguide.pdf.
Centers for Medicare & Medicaid Services. (2008). CMS Frequently asked
questions numbers 9176–9183 (FAQ for Neuropsychological and
Psychological Testing Codes. Available online at https://questions.cms.hhs.
gov/cgi-bin/cmshhs.cfg/php/enduser/print_alp.php?
faq_array=9177,9179,9176,9180,9181,9182,9183,9178.
Fulero, S. M., & Wilbert, J. R. (1988). Record-keeping practices of clinical and
counseling psychologists: A survey of practitioners. Professional Psychology:
Research & Practice, 19, 658–660.
Harrington P. S. (1997), What you need to know about 1997 Medicare
payment changes. Medical Economics February 10, pp 69–72.
Kessler, R. (2008). Integration of care is about money too: The health and
behavior codes as an element of a new financial paradigm. Families, Systems, &
Health, 27, 207–216.
Kessler, R. & Stafford, D. (2008). Collaborative medicine case studies: Evidence in
practice. New York: Springer.

132 The Business of Neuropsychology


Mirkin, D. P., Piacentini, K. K., & Pyenson, B. (2000). Getting paid in the
managed care workplace: The basics of physician compensation. Hospital
Physician, 69–79.
Moline, M. E., Williams, G. T., & Austin, K. M. (1998). Documenting
psychotherapy: Essentials for mental health practitioners. Thousand Oaks, CA: Sage.
Peek, C. J. (2008). Planning care in the clinical, operational, and financial
worlds. In Kessler & Stafford (Eds.) Collaborative Medicine Case Studies:
Evidence in Practice. New York: Springer.
Puente, A. E. (2008). Coding, documenting & billing clinical psychological
services. Presented at the Division of Independent Professional Practice North
Carolina Psychological Association. Available online through the NAN PAOI
webpage – www.nanonline.org/paio.
Soisson, E. L., VandeCreek, L., & Knapp, S. (1987). Thorough record
keeping: A good defense in a litigious era. Professional Psychology: Research and
Practice, 18, 498–502.

Additional Resources
Consult the Federal Register for ongoing updates – www.gpoaccess.gov/fr/
Regular review of regional Medicare carrier/intermediary websites
National Correct Coding Initiative – www.cms.hhs.gov/NationalCorrectCodInitEd.
The Medicare Learning Network (MLN) is the brand name for official CMS
educational products and information for Medicare fee-for-service providers.
For additional information visit the Medicare Learning Network’s on the CMS
website at www.cms.hhs.gov/MLNGenInfo.
Searchable CPT manual available free of charge on line from AMA at https://
catalog.ama-assn.org/Catalog/cpt/cpt_search.jsp.

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&&&

Show Me the Money!

‘‘Money matters are treated by civilized people in the same way as


sexual matters – with the same inconsistency, prudishness and
hypocrisy.’’
Freud (1913/1958, p. 131)

Even the most altruistic clinician who became a psychologist or neuropsy-


chologist to ‘‘help people’’ reaches a point where he or she realizes that in order
to keep the doors open to help those in need, there must be some financial in-
flow. Peek (2008) describes the clinical, operational, and financial facets of
healthcare as being in collaboration to create a successful healthcare system.
He states that for long-term success, healthcare organizations must succeed in
all three of these areas. Great outcomes for a particular patient require not only
clinical quality, but also operational excellence and good resource steward-
ship. The previous chapters of this text outlined the system/organization
aspects of neuropsychological practice with an emphasis on setting up a
stable, consistent, and predictable office system that guides the entire process
of seeing patients and results in appropriate billing and coding activities. The
aim of the current chapter is to translate these activities into payment and to
look at the financial repercussions of neuropsychological practice.
As much as we may enjoy providing beneficial clinical services to patients,
there is a need to charge for these activities and receive payment for the
services rendered. Of course, there is a need to cover the cost of providing
the service, but also there is a goal to make a profit and stay in business. There
are other reasons to be financially successful in the practice of neuropsy-
chology, including allowance for improvements in the quality of care;

135
reducing the risks inherent in clinical practice; establishing a value in the
marketplace for the service; meeting an institutions definition of value for a
department; and ultimately, survival of the department or practice.

Medicare as a Model for Reimbursement


For the purposes of this chapter, reimbursement issues are discussed using
Medicare as the model for payment. While neuropsychologists interact with a
variety of payment sources, Medicare is the best model for a general discussion
of billing and reimbursement for a variety of reasons. Medicare essentially
functions as the standard for universal healthcare. Most payors follow the
same system of coding and valuation developed through Medicare as their
basis for payment. As noted in the previous chapter, Medicare provides
guidelines for documentation and auditing of services for medical necessity
and appropriateness. As a result, Medicare policies and procedures reflect the
general trends in billing and reimbursement for most payors within the
healthcare system, as well as workers compensation, forensic applications,
contractually based healthcare, and even private pay. To further demonstrate
the basis of Medicare in setting healthcare policy and payment procedures,
The Henry J. Kaiser Family Foundation (2007) reported that in 2006,
Medicare benefit payments totaled $374 billion, accounting for 13 percent
of federal spending. According to the Congressional Budget Office, that figure
is projected to increase to $564 billion by 2012. It is estimated that by 2015,
Medicare will represent approximately 50% of all healthcare payments in the
United States.
As can be noted in current political promises and news coverage, it does
appear that at some point in the not-so-distant future, some form of a national
health insurance system will be established in the United States. A precursor to
this is seen in the expansion of the State Childrens Health Insurance Program
(SCHIP) through the passage of the Childrens Health Insurance
Reauthorization Act of 2009, expanding the provision of healthcare for chil-
dren (and others). As healthcare costs and demands continue to rise, steps will
be taken to maximize coverage while reducing costs as much as possible.
Ultimately, Medicare, or some other federal healthcare program, will come to
be an even more predominate force in setting the standard for all of healthcare.
It is increasingly important to develop and maintain a good understanding of
Medicare policies and procedures, including those related to billing and
reimbursement.

136 The Business of Neuropsychology


For a detailed description of Medicare services, the reader is encouraged to
download and read Medicare Physician Guide: A Resource for Residents,
Practicing Physicians, and Other Health Care Professionals, available online
from CMS. This publication provides a detailed overview of the Medicare
system, including how to become a provider, eligibility requirements for
benefits, how to become a Medicare provider, Medicares approach to pay-
ment, documentation guidelines, an overview of the Medicare trust fund, and
how overpays and appeals are managed. This publication serves as the pri-
mary source of the information provided in this chapter with additional
information obtained from the various CMS postings and publications and
other resources listed in the reference section of this chapter.

Medicare’s Benefit Structure


Medicare benefits are divided into four areas, or ‘‘parts,’’ that vary in terms of
coverage and qualifications for beneficiaries: Parts A, B, C, and D. Medicare
Part A is described as ‘‘hospital insurance.’’ This benefit helps pay for medically
necessary inpatient hospital care, inpatient skilled nursing care following a
covered hospital stay, some home healthcare, and hospice care. This benefit is
funded by payroll taxes through the Federal Insurance Contributions Act
(FICA) and the Self-Employment Contributions Act, as well as through the
Railroad Retirement Act. The federal government contracts with private insur-
ance companies called ‘‘intermediaries’’ to administer the Medicare Part A
program.
Medicare Part B is medical insurance for Medicare beneficiaries. This helps
pay for medically necessary physician/non-physician services, ambulance
services, durable medical equipment, clinical labs and other diagnostic ser-
vices, and services furnished by non-physician practitioners with limited
licensing. These benefits are funded by monthly premiums paid by benefici-
aries (typically deducted from beneficiaries monthly Social Security checks),
contributions from general federal government revenues, and interest earned
on the Medicare Trust Fund. The federal government contracts with private
insurance companies called ‘‘carriers’’ to administer the Part B program.
Medicare Part C, also called Medicare Advantage (MA), is a program in
which organizations that contract with CMS provide, or arrange for the
provision of, healthcare services to Medicare beneficiaries entitled to Part A
and enrolled in Part B, permanently reside in the service area of the MA Plan,
and elect to enroll in an MA Plan. Medicare Advantage beneficiaries choose to
enroll in an HMO or PPO option for management of their healthcare services.

Show Me the Money! 137


Medicare pays a fixed capitated rate to the HMO provider and in turn, the MA
organization then reimburses providers and suppliers who participate in the
MA Plan(s) offered by the MA organization for services furnished within the
terms of the agreement/plan. For providers, services are not billed through
Medicare directly. Arrangements are made through the MA organization and
payment rates are determined through contracts with these organizations.
Medicare Part D refers to the prescription drug benefit plan within
Medicare and will not be covered here due to its lack of applicability to
neuropsychology practice.
As previously mentioned, Medicare Part A and Part B benefits are managed
through local area ‘‘intermediaries’’ and ‘‘carriers,’’ respectively. The Medicare
Advantage (Part C) benefits are managed through the contracted HMO or PPO
organization. There are over 40 provider service areas and multiple organiza-
tions are involved in the management of these benefits. As a result, policies,
procedures, and interpretations are quite variable across the different regional
and local areas. The local organizations interpret and refine the national
Medicare policy and set policies relative to their regional or local direction.
These interpretations and decisions set the precedent for payment and other
activities within that region. They tend to be more restrictive than the national
policy and actually over-ride the national policy. Changes are made fre-
quently, oftentimes without warning, notification, or publicity. The guidelines
and updates for the regional organizations are available on their respective
Web sites, and it is important to become familiar with the nuances the regional
intermediaries and carriers.

Provider-Based Status
Facilities and organizations operated by a hospital, including remote locations
and satellite facilities, operate under provider-based status. This means that they
are a part of the hospital and are eligible to bill facility fees under Medicare Part
A. For inpatient services, this is bundled into the Diagnosis-Related Group
(DRG) payment. For outpatient services, payments are paid through the
Outpatient Prospective Payment System (OPPS) and are essentially payments
to the hospital for use of the facility for these services. The provider-based billing
and payments serve as a safety net for hospitals, allowing them to maintain
services that are necessary for the public, but are not revenue-producing (e.g.,
ER, OB/GYN, charity care, etc). It also allows for payment to the facilities
themselves in outpatient settings where the professional billing alone does not
capture all of the ‘ services’’ provided (e.g., outpatient surgery, radiological

138 The Business of Neuropsychology


procedures, laboratory services). This OPPS can have an impact on the viability
of a neuropsychology service within a hospital setting.
As described in Chapter 1, neuropsychologists can work in hospital-based
settings under one of three models:

• Hospital-employed psychologist
• Consultant to hospital – an independent practitioner through a
private practice or as a member of a physicians group directly
or indirectly linked to the hospital/facility, but seeing patients
in the hospital facilities
• Independent psychologist – distinct from the hospital/facility

The hospital-employed psychologist is considered provider-based, as he or


she is a direct employee of the hospital. As such, the psychologist bills for a
professional component for clinical services to Medicare Part B (using the
psychologists Medicare provider number) on a CMS 1500 form. The hospital
subsequently can bill a technical/facility component for the services to Medicare
Part A using the UB-92 or the new UB-04 form. Similarly, the neuropsychologist
working as a consultant to hospital bills the professional component to Medicare
Part B using his or her Medicare provider number and billing through their
external practice group (separate tax ID number). For outpatient services, the
hospital can bill for the technical/facility component to Medicare Part A provided
that the hospital provides room, staff, and/or materials. This is similar to how
services are billed for outpatient surgery or radiological exams. If the neuropsy-
chologist is renting space from the hospital, the hospital is not eligible to receive
facility payments since the services are not technically occurring under the
hospitals geographic location. Neuropsychologists practicing independently,
providing their own office space, staff, materials, etc., bill both the professional
and technical component (‘‘global’’ or ‘ bundled’’) at non-provider based rates on
CMS 1500. These differential rates are presented later in this chapter.

Medicare’s Approach to Payment


Medicare payments are determined by the assigned Relative Value Unit (RVU)
for the service. The RVU is made up of three components of professional
resource cost:

• Professional Work: Mental effort/judgment, technical skill,


physical effort, psychological stress (52% of the RVU)

Show Me the Money! 139


• Practice/Overhead Expense: Staff salaries, supplies, equipment,
rent (44% of the RVU)
• Malpractice Expense: Cost of liability insurance per service
(4% of the RVU)

Added together, the components comprise the total RVU for the service.
Within 5-10 years, another major component will be added based on perfor-
mance, where a component of payment will be based on outcome, not just the
service provided. The RVU is not just used for Medicare reimbursement, but
also serves as the basis for Medicaid, private payors, managed care, and other
third party payors.
To provide some perspective, the average work RVU is 1.00. Prior to 2005,
psychological testing and neuropsychological testing had a work RVU of 0.00
or no work value. RVUs were re-calculated for 2005 and the work value for
codes used in psychology and neuropsychology were significantly increased.
The current (2008) outpatient RVUs for psychological testing (96101) and
neuropsychological testing (96118) are 2.56 and 3.43 respectively. This is
important because the RVU is a primary value in the payment formula used by
Medicare. While increased, these values still fall well below many physician-
based services. Table 7.1 provides RVUs for select CPT codes commonly used
in neuropsychology.

Translation to Payment
Medicare-allowed payment amounts are found in the Medicare Physician Fee
Schedule (MPFS) that is updated annually based on a specified formula. The
formula consists of multiplying the service RVU by a geographic cost index
(adjustment factor based on geographic location) and the RVU conversion
factor (a dollar amount set by Congress annually to convert RVUs to payment
amounts). The product of these values provides the level of payment.
However, since 2007 this final figure is ‘‘modified’’ by a Budget Neutrality
Adjustor to adjust payments to meet budget requirements. Current MPFS
values for individual CPT codes by region are available at https://catalog.ama-
assn.org/Catalog/cpt/cpt_search.jsp.
The calculation of provider-based facility fees is slightly more complex.
Under Medicares hospital outpatient prospective payment system (OPPS),
facility fee reimbursement to hospitals for outpatient services are paid
through Ambulatory Payment Classifications (APC). The APC reimburse-
ment formula has three components: geographic adjustment, adjustment

140 The Business of Neuropsychology


Table 7.1 RVUs for Select CPT Codes Commonly Used in Neuropsychology
WORK PRAC/ PRACTICE/ MALPRACTICE NON- PB
NON- PB PB TOTAL
PB TOTAL RVU
RVU

96101 1.86 .50 .48 .05 2.41 2.39


PT-Psych.
96102 .50 .88 .13 .01 1.39 .64
PT-Tech
96118 1.86 1.11 .48 .18 3.15 2.52
NP-Psych.
96119 .55 1.27 .14 .18 2.00 .87
NP-Tech
96120 .51 1.21 .13 .02 1.27 .66
NP-Comp
96116 1.86 .68 .52 .18 2.72 2.56
Neurobehav
Status
90801 2.80 1.33 .76 .06 4.19 3.62
Psychiatric
Interview
96150 Initial .50 .14 .13 .01 .65 .64
96152 .46 .13 .12 .01 .60 .59
Individual
90806 1.86 .61 .46 .04 2.51 2.36
45-50 Opt
90847 2.21 .78 .63 .05 3.04 2.89
Fam w pt

for complexity of service, and policy adjustments for qualifying hospitals.


Typically, only the first two components are needed for the calculation
since the third applies to rural or other qualifying adjustments. These
components are then calculated using the national APC conversion factor
(CF – a dollar amount set by Congress annually) for outpatient facility

Show Me the Money! 141


reimbursement. The formula for calculating associated facility payments is
as follows:

½ðCF  60%Þ  Geo Wage Index þ ðCF  40%Þ  Relative Weight


for each CPT ¼ Wage adjusted APC Payment

For demonstration purposes, Table 7.2 provides MPFS-allowable amounts


for select CPT codes commonly used in neuropsychology, including provider
and non-provider based values and associated facility payments. The values
presented are estimates for 2008 for the Boston Metropolitan area along with
non-geographic corrected provider based facility fees.
It is important to note that Medicare has an Outpatient Mental Health
Limitation where mental health services provided in outpatient settings are
subject to a 62.5% limitation. This applies to claims for professional mental
health treatment (not diagnostic) services by physicians, clinical psychologists,
social workers, and other providers. This can be avoided by using the health and
behavior intervention codes where appropriate as these codes are specifically for
use with medical diagnoses and are not subject to this reduction in payment.

To Be or Not To Be Provider-Based
On the surface, the values presented in Table 7.2 indicate that it is a relative no-
brainer to bill both professional and facility charges when this is possible. Under
the provider-based designation, hospitals have the ability to supplement profes-
sional fee reimbursement with facility fees. Provider-based professional fees are
discounted by Medicare because it is recognized that the hospital is carrying
practice expenses which are typically borne by individual providers in an office-
based setting. The reduction in professional fees is commonly referred to as a
site-of-service differential. In a provider-based environment, the hospital can
bill a facility fee to offset costs attributable to services performed in the hospitals
outpatient department. Typically, the aggregate reimbursement amount
improves under a provider-based model because the reduction in professional
fees is more than offset by the additional reimbursement associated with facility
fees. The reimbursement advantage is shown in Table 7.2.
However, the answer is not as simple as the numbers indicate. Essentially, two
bills are generated for the service that is provided. The professional fees represent
payment for the neuropsychologists professional time and effort. The facility fees
represent payment to the hospital for the use of the institutions resources. It is

142 The Business of Neuropsychology


Table 7.2 MPFS Allowable Payments for Select CPT Codes Commonly Used in Neuropsychology
MEDICARE NPB MEDICARE PB MEDICARE MEDICARE TOTAL MEDICARE
PRO FEE PRO FEE TECHNICAL FEE NPB PYMT TOTAL PB PYMT
96101 PT-Psych. $90.74 $89.74 $166.68 $90.74 $256.42
96102 PT-Tech $61.48 $24.04 $166.68 $61.48 $190.72
96118 NP-Psych. $125.09 $93.64 $166.68 $125.09 $260.32
96119 NP-Tech $87.62 $31.20 $166.68 $87.62 $197.88
96120 NP-Comp $78.65 $24.73 $79.29 $78.65 $104.02
96116 $103.62 $95.63 $166.68 $103.62 $262.31
Neurobehav
Status
90801 Psychiatric $165.00 $136.55 $102.19 $165.00 $238.74
Interview
96150 Initial $24.53 $24.04 $19.92 $24.53 $43.96
96152 Individual $22.86 $22.36 $19.92 $22.86 $42.28
90806 45-50 Opt $95.93 $88.44 $102.19 $95.93 $190.63
90847 Fam w pt $116.87 $109.38 $150.42 $116.87 $259.80

Values presented are estimates for 2008 for the Boston Metropolitan area along with non-geographic corrected provider based facility fees.
important to note that while the professional fees will be shown as revenue
generation for the department, the facility fees may or may not be linked to the
departmental budget because these are fees paid to the hospital, not to the
provider. Not every hospital bills the facility fees associated with neuropsycho-
logical services, for a variety of reasons. Billing and departmental geographies
must comply with requirements and this may mean a loss in hospital revenue for
previously paid rent for space and an increase in utilization of hospital billing/
coding resources. This can be problematic given the increased billing complexity
as two bills are generated for each service and the separate billing can be difficult
to integrate. Provider-based billing also results in increased patient financial
responsibility as the two bills generated for the service can lead to an increase
in co-payments (co-pay for both the professional and technical component of the
bill). This may result in patient dissatisfaction and a negative perception that the
hospital is double-billing for services. Additionally, some payors do not pay the
facility fee portion of the bill, further adding to the financial burden on the
patient. As a result, providers and hospitals must explore this option carefully
before adopting a provider-based billing model. However, when these charges
are not billed, Medicare dollars are left on the table and given the tight budgets in
most departments and hospitals, the additional dollars can significantly enhance
the fiscal value of a department or service.

Putting the Financials Together


Developing a Charge System
The dollar values presented in Table 7.2 are based solely on Medicares ‘ reported’’
or ‘ allowable’’ reimbursement rates. This payment is quite variable across other
payors, and can even be variable within the Medicare system when denials and
reductions are factored in. Having an established RVU (or even precertification)
does not guarantee reimbursement by Medicare or other insurance carriers. It is
important to regularly review carrier Web sites to stay up to date on reimburse-
ment policies. Suffice it to say, there is a difference between what you charge and
what you receive. The question remains – where do you set the charge?
There are some basic rules to follow when developing a charge system. First
and foremost, one charge amount is assigned for each procedure. The estab-
lished charges for a given procedure cannot vary among payors. Some payors
will pay more than the established Medicare rates, but only if you charge more.
Reimbursement levels are variable dependent upon payor (e.g., commercial
insurance, managed care, workers compensation, forensic cases, independent

144 The Business of Neuropsychology


medical examinations), so the charge system should reflect the expected payor
sources. It is important to note that providers cannot impose a limitation on a
Medicare or Medicaid patient that is not imposed on other patients. However,
noncovered services can be charged directly to the patient if the patient knows
and agrees ahead of time.
Providers can and should set charges at somewhat higher levels than
Medicare so that appropriate reimbursement is received across payment
sources. Charges should reflect the market value unless you can demonstrate
expertise above and beyond your competitors (e.g., board certification, specialty
experience, etc.). If you are only charging at Medicare rates, you are leaving
legitimate dollars on the table. There are various formulas that are used in setting
charges, but the common practice seems to be 1.5 to 3 times the Medicare MPFS
allowable charges for each CPT, depending on geographic location and level of
specialty. These rates may be higher on the coasts or in large metropolitan areas
where costs are generally higher. Peck (2003) presents a model of a set hourly
charge regardless of service provided. This figure is based on identifying the
average hourly cost of doing business and adding an appropriate dollar amount
to maintain a profit. Either method of setting charges is appropriate. It is
important to note that fee schedules need to be updated annually in response
to RVU changes, business costs, and market changes.
Providers working in practices with a set ‘‘fee-for-service’’ system in place
lack the noted variability described previously, but other factors are consid-
ered in setting charges. The idea behind the fee-for-service model is that you
do not have to expend the time and resources filing insurance paperwork and
chasing reimbursement. In this way the practice overhead is decreased.
Additionally, the delay in payment is substantially reduced, making your
financial books much easier to maintain, again reducing time and resource
utilization. In essence, less time, energy, stress, and expense are encountered.
This is a great benefit, but every benefit has a cost. Not all patients have the
financial resources to pay out of pocket for services provided. While weekly
psychotherapy costs can be relatively low, the cost of a comprehensive neu-
ropsychological evaluation may be more than a patient is able to bear.
Providers in a fee-for-service model may charge lower rates to maintain high
enough volumes to make ends meet. Also, there may be a need to consider
sliding scales in order to make the services available for patients who cannot
afford the full cost of service. Finally, if a patient has some form of health
insurance and they are doing their own filing, they are essentially increasing
their own overhead cost and will expect some lower rates as a result.

Show Me the Money! 145


In a hospital system, charges are typically set by the institution, but it
is important to know how your services are being charged. These rates
are not set in stone and with appropriate discussion and debate can be
changed to better serve the departments fiscal needs. Additionally, reim-
bursement rates are often influenced by contracts between some payors
and the institution. This can be a percentage of the set charges or may be
specific to a CPT code or type of service. In some cases, neuropsychology
services are included in the psychiatry or behavioral health contracts,
resulting in decreased reimbursement and mental health carve-out issues
for some carriers. It is important to know how these contracts and the set
charges affect the department.

Receivables and Financials


Whether you set charges specific to each CPT code or use a flat hourly rate, net
revenue is dependent on your charge structure and relative adjustments based
on payor mix, negotiated rates, and the department/practice billing and
coding efficiency. Reimbursement percentages are quite variable, but it is
important to know your average reimbursement percentage to forecast
future performance and for basic budgeting. Typically, an average reimburse-
ment rate of 60% or higher is ideal, while 50% or less means trouble for the
department/practice. Examining data will allow you to predict receivables and
remain aware and in control of budget parameters. This may require increased
communication with fiscal departments, accountants, or other players
involved in the billing and receiving aspects of your department or practice.
A variety of data is needed to predict revenues accurately, but these can be
simplified to the parameters that are most influential. The key is to focus on
variables where there is some level of control (managed care contracts are not
likely to be under departmental control).
Variables to be followed most closely are dependent on the practice and
respective need. Some data points for consideration include:

• Gross charges
• Net receivable per charge
• Number of visits
• CPT codes charged
• Units of service per CPT
• Units of service per visit
• Average charge per unit of service

146 The Business of Neuropsychology


• Date of service to billing time
• Lag days for accounts receivable
 Including 30, 60, 90, and 120+ day periods

• Cancellation/No-Show rates

This information is typically found on a variety of financial spreadsheets


developed by departmental accounting staff or department/practice manage-
ment in cooperation with accounting professionals. For providers who do not
have assistance in the development of such spreadsheets, various accounting
software packages are available, and for the Excel-savvy individuals, spread-
sheets can easily be developed to calculate and track the data points listed
above. Common financial tracking spreadsheets include departmental budget
spreadsheets, profit and loss statements, cash flow spreadsheets, and financial
projection plans. Perhaps the most useful and complete is the department/
practice dashboard. This document includes a summary of multiple data
points for consideration and review that show the status of the practice for
the specified period of time. Appendix A includes an example of a department
dashboard. Additional sample financial spreadsheets are available on the Web
site associated with this text.

Influences to the Bottom Line


Payor Mix
One of the biggest influences to the financial security of a neuropsychology
practice or department is the payor mix. The payor mix is simply the percen-
tage of services provided based on the payor source. Ideally, a practice wants
the highest percentage of patients seen to be associated with the payor source
that has the highest reimbursement rates, but this is not always the case.
Reimbursement amounts are quite variable and the financial bottom line
will be heavily dependent upon the percentage of patients across the various
payors. Knowing and controlling the payor mix where possible is essential in a
successful practice. For more information about variability in reimbursement
across payors, the reader is encouraged to review Moores (2006) article in
Physicians Practice ranking the top payers in healthcare. It is a sobering, but
necessary review of payments based on each companys financial performance,
administrative performance, and medical policy compliance. Of note,
according to this article, Medicare is now a better reimbursement source
than some commercial payers. This is further demonstrated through

Show Me the Money! 147


information available from www.athenapayerview.com, where the reimburse-
ment rates and other indices of some of the top payers are compared.
To combat the negative impact of payor mix on the financial bottom line, some
providers have adjusted their schedules to limit the number of appointments
available in a given week or month for patients with some of the lower reimbur-
sement payers. For example, they may have blocked available appointments for
Medicaid or charity patients only twice monthly. This may result in a longer wait
list for these slots, but it allows the provider to continue to see these patients
without putting the financial stability of the department or practice in jeopardy.

Pre-Certification Process
The precertification process is an important step in securing appropriate
reimbursement from many payors. This process is not necessarily compli-
cated, but the steps required for each organization must be followed as there
really are no shortcuts to make the process any easier. Keeping notes about the
steps and nuances of each organization can be useful in streamlining the
process as much as possible and regular training of precertification staff is
essential. While the specific steps for each organization can be quite varied,
several factors can make the process easier, more time efficient, and in general
more successful and consistent. First, it is important to make sure that pre-
authorization paperwork is completed in a timely manner and that the patient
is seen within the required time parameters. Second, it is important that the
obtained authorization reflects the service to be provided (CPT code) and the
appropriate allowable amounts (units of service). If these are not correct, it is
necessary to re-file or appeal the decision to obtain the correct authorization. It
is almost a guarantee that if the preauthorization is incorrect, the payment will
reflect only what is authorized. For neuropsychology services, it is also
important to make sure that services are authorized under the medical com-
ponent of the policy to maximize reimbursement potential. In some cases,
negotiations will be required to keep the authorization on the medical side of
the insurance.
Some additional questions may need to be answered during the precerti-
fication process. First, it is important to know whether an initial interview/
neurobehavioral exam is required prior to the authorization process. If this is
the case, the patient should be notified in advance so they do not expect all
services to be completed on the initial date of service. Additionally, it is
important that this initial contact be documented, as soon as possible, in a
manner that fully demonstrates the medical necessity of the service in order to

148 The Business of Neuropsychology


expedite the approval process for the full evaluation. Second, it is important to
learn any possible charge limits and patient co-pay obligations so that the
patient can be notified in advance of any expected financial obligations.
Additional information regarding the successful navigation of the precertifica-
tion process is presented in Chapter 8.

Collection of Co-Pays
Co-pays are an obligation and part of the agreement between the insurance
company and the beneficiary. In the same sense, providers are contractually
required to bill for co-pays. Most patients with Medicare or insurance coverage
have a primary care and a specialist co-pay amount. In medicine, primary care
physicians typically require co-payment at the time of service and have this
information posted in clear view in their waiting rooms. Specialists either
collect co-payments at the time of service or may bill the patient later. This is
due to the fact that some specialty care services often require only one co-
payment that covers the entire service, even if multiple contacts are required.
Psychologists and neuropsychologists have a history of being reluctant to
collect co-pays and co-insurance payments. It is important to remember that co-
pays are not optional. It is the patients responsibility to pay their portion of the
medical bill. Typically, co-payment amounts are listed on the patients insurance
card, but if it is not printed there this information can be easily obtained by a
phone call to the insurance company or via a visit to the carriers Web site.
During the pre-authorization process for benefits you can easily obtain specialist
co-pay information. It is a good practice to inform the patient of expected co-
pays when the initial appointment is scheduled (particularly if this is done
through a written scheduling letter) and during reminder calls. In this way the
patient is well aware of the co-payment and is prepared to pay such at the time of
service. The $25 co-pay may not seem much at the time of service, but for a
small practice that serves up to ten patients a week, collecting the $25 co-pay
every week will result in an additional $12,500.00 annually.
Edward A. ‘‘Ted’’ Peck III (2009) provided a useful approach to managing
the co-pay issue. This is summarized and modified to fit the purposes of this
book as follows:

• Maintain a 3-ring binder, spreadsheet, or other list of the main


patient referral insurance plans and variable contract lines (e.
g., Aetna, Anthem, etc.) and know what the contractual co-pay
is for each of these plans.

Show Me the Money! 149


• Check each referral in advance of the appointment date by a
designated office staff person so that (1) the insurance shows as
valid for the patient and (2) it shows whether they have/have
not met their deductible for the year.
• Inform each patient what their payment is to be at the time they are
called to confirm the appointment. If they are not willing to pay
the co-pay or deductible due then, the appointment is cancelled.
• Understand that most non-Medicare, non-forensic cases require
two appointments in some offices. The first is for the interview
and the second is the actual testing. Typically, a specific
insurance preauthorization for the testing appointment is
obtained between the 1st and 2nd appointments.
• If the patient does not pay the co-pay at the time of service, the
patient may be seen for the first appointment service (e.g., the
interview) and a bill is provided for that service that must be
paid in advance before the second appointment is scheduled
(e.g., testing appointment). If the test appointment date is
scheduled and pending, but the co-pay is not received, the
upcoming appointment is confirmed via a telephone contact
and it is explained that the co-pay has not been received, per
the a priori agreement, and the appointment will be postponed
until this matter is cleared up.
• If the patient arrives and claims that they do not have a check/
credit card/debit card/cash to pay the co-pay, despite all of the
prior notifications, they are given the option to call a family
member or someone else to get the necessary credit card
information. If this cannot be acquired, they are rescheduled.

Medicare also provides benefits under a co-pay/co-insurance agreement.


Medicare pays 80% of the allowable fee for the initial diagnostic interview,
psychological and neuropsychological testing, and health and behavior inter-
ventions. The provider is required to attempt to collect the remaining 20% from
the patient, except in the case of indigent patients who are covered under state-
funded Medicaid. In some instances, the patient has a private co-insurance
policy that frequently covers the remaining costs. This is not recovered if it is not
billed correctly. In addition, Medicare now allows the patient to be billed (not
Medicare) for lost time/no shows. It is important to make certain that the
Medicare announcement for this (as well as co-pays) is posted in the office.

150 The Business of Neuropsychology


No Pays/Zero-Pays
There will be occasions when a claim receives either a denial or a ‘ zero
payment.’’ The reasons for this reflect some level of ‘ shared liability’’ on the
part of the provider and the insurance company. Denials often occur due to a
lack of documentation of medical necessity or inappropriate billing/coding on
the part of the clinician. However, patient denial rates also occur due to errors or
interpretation problems on the part of the carrier. Martirosov (2006) and
Delinsky (2006) provide rates of patient denials and zero payments. It is
important to note that many of these denials and zero payments are appealable,
but appropriate processes for appeal must be followed. The more information
you have regarding the reasons for denial or reduced payment and its discre-
pancy with actual services/coding the better chance for payment resolution.

Charity Care and Write-Offs


If a patient is unable to pay charges, be it deductible, coinsurance, copayment,
or fee-for-service full payment, a waiver that explains the financial hardship
must be signed. If the waiver is not assigned, the medical/administrative record
should reflect normal and reasonable attempts to collect the charges before they
are written off. The same attempts to collect charges must be applied to both
Medicare beneficiaries and non-Medicare beneficiaries. Consistently waiving
deductibles, coinsurance, and co-payments may be interpreted as program
abuse. On unassigned (non-waivered) claims, the beneficiary is responsible
for unmet deductibles; applicable coinsurance and copayments; and charges
for services and supplies that are not covered by Medicare.

Administration Factors
As threats to reimbursement are considered, it is easy to overlook the decisions
made by administrators/managers regarding the billing/coding activities and
reimbursement of a department or practice. It is important to be aware of who
is actually doing the coding/submission and how accurately it reflects the
services and diagnosis provided by the clinician. Claims may be submitted by
the provider, a billing service or consultant, a hospital-based coding depart-
ment, or other entity on behalf of the provider. No matter who is actually
submitting the claim, the provider is responsible for any payments generated
by these claims so it is important to ensure accuracy and consistency with
clinical records. It is important to know how your claims are being filed and it
is appropriate to ask questions about that persons knowledge base for nuances
of psychological and neuropsychological billing. It is also important to know

Show Me the Money! 151


how denials are handled. Some hospital-based providers are shocked to learn
that some hospitals do not pursue payment on unpaid or denied claims below
a certain dollar amount (e.g., $1,500 or $2,000). This is based on a cost-
benefit ratio regarding the cost to pursue versus what is ultimately received.
Many neuropsychology claims fall under this set amount, thereby limiting
pursuit of available dollars. Over the course of a year this ‘‘bad debt’’ can be
detrimental to a department budget so it is important to know the policies
surrounding claim denials and no-pays.
Additional administrative threats to the bottom line involve managed care
contracts and mental health carve-outs. Managed care contracts that are
negotiated within a large system (hospital or similar organization) are nego-
tiated for the greater good of the facility. The emphasis in these negotiations is
on the larger payment items (e.g., surgery, maternity, etc.) with less discussion
regarding smaller departments or service lines. As a result, psychology and
neuropsychology portions of these contracts tend to be low priority during
negotiations and thus may be simply signed off as part of the larger process. As
such, neuropsychology services often get included in the general psychiatry/
behavioral health portion of the contracts, putting these providers at a sig-
nificant disadvantage when it comes to maximizing reimbursement. This may
include agreement that claims will be managed through a separate mental
health benefit organization or ‘‘carve-out.’’
Many managed care or other private insurers (even Medicaid in some
states) have mental health carve-outs or separate organizations that manage
the claims of patients with mental health diagnoses. Neuropsychology claims
are often automatically placed into these organizations due to the ‘‘psycholo-
gist’’ label. For some select carriers it is difficult, if not impossible, for psychol-
ogists to be paneled on the medical side of the insurance policy. Instead,
separate ‘‘behavioral health plans’’ are used for management of all mental
health or perceived mental health claims. When payments are made through
the behavioral health component of a patients insurance, the ultimate reim-
bursement tends to be lower and the financial responsibility of the patient can
be significantly higher. As a result, efforts to manage neuropsychological
services through the medical side of the insurance organization provide
better reimbursement and improved patient satisfaction.
The key to managing the administrative/departmental threats to the bottom
line is communication. It is vitally important to have open lines of communica-
tion with management and administration and to be aware of how the policies
and procedures of the larger organization affect the individual department or

152 The Business of Neuropsychology


practice. Knowledge of departmental budget information, trends, forecasts, etc.
found in the spreadsheets discussed previously allows for better communication
based on facts and figures rather than impressions or emotions.

Clinician Factors
It is imperative that clinicians understand appropriate billing and coding pro-
cesses and how they influence the financial bottom line of the department or
practice. In the same manner that billing and coding activities need to reflect the
correct code, time, and diagnosis, clinician documentation must also be accurate
and in accordance with Medicare requirements. Documentation of time is critical
to ensure that the service provided is fully captured and is consistent with the
submitted claims. If the activity is billable it should be documented and the bill
should be dropped. This should be built into department/practice policy and the
office staff should not accept a bill without documentation or documentation
without a bill. Regular training in billing, coding, and documentation activities
for clinicians is recommended, especially when updates/changes in policies have
occurred. This may also include reviewing quarterly financial reports so that
clinicians see how their activities affect the overall financial numbers. Finally,
scheduled audits for billing, coding, and documentation are recommended with
a culture or expectation of ‘ constant compliance.’’

Use of Trainees and Students


Contrary to the beliefs and practices of many practitioners in psychology and
neuropsychology, including some with large training programs, Medicare has
never reimbursed clinical services provided by students in training in any
health discipline. This is documented in several CMS manual sections, but was
documented specifically in the context of psychology services in Transmittal
85 (February, 2008), ‘‘Under the physician fee schedule, there is no payment
for services performed by students or trainees. Accordingly, Medicare does not
pay for services represented by CPT codes 96102 and 96119 when performed
by a student or a trainee.’’ The basis for this is that CMS dollars are provided for
Graduate Medical Education (GME) and additional reimbursement for ser-
vices provided by trainees would be considered ‘‘double-dipping.’’ Psychology
training programs have traditionally not received GME dollars, but in recent
years some programs have applied for and received CMS reimbursement
through the Allied Health training programs. The reader is encouraged to
read the article by Stuckey, et al (2008) outlining steps to secure CMS funding
for postdoctoral training in psychology.

Show Me the Money! 153


For the purposes of CMS billing activities, a ‘‘trainee’’ is any provider in
training at any level – practicum student, intern, post-doctoral resident, or
even a licensed provider completing a re-specialization residency. This provi-
sion applies to Medicare billing and does not necessarily apply to other payors,
but further investigation in this regard might be helpful to avoid difficulties.
This does not preclude billing for a graduate student hired as a psychometrist,
provided that he or she is not receiving training and the activity is not
considered part of an educational program.

Managing Threats to the Bottom Line


While many threats to the financial security of a department/practice were
presented, most of these are at least partly manageable through consistent and
stable departmental processes or through improved communication. To sum-
marize the recommendations embedded in the previous sections the following
reminders are offered:

• Pre-certify whenever possible and do so with accurate


information
• Collect all co-pays, co-insurance, and deductibles at the time of
service
• Know your payor mix and control it as much as possible
• Get involved in managed care negotiations if possible
• Make friends with your finance, billing/coding, managed care
players
• Be aware of how your billing is being coded/submitted
• Ask about denial rates and levels of reimbursement
• Ask to review the cost center documentation for errors
• Minimize clinician billing and documentation errors
• Document, Document, Document – in a timely manner
• Constant compliance – minimize variance
• Audits to insure accurate and consistent billing, coding, and
documentation

Medicare Fraud and Audits


Increasingly, Medicare is working to seek out and eliminate fraud and abuse
regarding payments for healthcare services. While the brevity of this text limits
a detailed discussion, it warrants mentioning, as psychology is identified as
one of the problematic areas. Errors resulting in fraudulence are quite variable,

154 The Business of Neuropsychology


but areas that were noted to be ‘‘particularly problematic’’ in psychology by the
Office of the Inspector General (OIG) included services that were:

• Medically unnecessary (23%)


• Billed incorrectly (41%)
• Rendered by unqualified providers (11%)
• Undocumented or poorly documented (65%)

The, processes laid out in this text should be helpful to avoid errors and risk of
future audits. Additionally, it is helpful to become familiar with the updated
information provided by Medicare and the OIG regarding fraud and abuse at the
Web site listed in the reference section. Briefly, Medicare and the OIG provide
the following suggestions to increase the probability of successful audits:

• Establish formal internal auditing system


• Engage in informal internal peer review
• Consider periodic external peer review
• Keep abreast of carrier changes
• Understanding of medical necessity
• Match procedure codes
• Match diagnostic & procedure codes
• Document properly
• If audited, comply (thoroughly & quickly)
• If trial, appreciate & appraise situation

Final Thoughts – Why Should You Care?


Revenues are based on reimbursement, not on billed charges. Even the most
productive clinician that is billing 40 hours per week with high charges or the
department/practice that has a steady flow of patients coming through the door
may be making little-to-nothing when it comes to reimbursement if the billing,
coding, and documentation activities are not properly completed. Ultimately,
reimbursement, not charges, determines the ‘ income’’ of a department or practice
and its profitability. If it is profitable enough, there is greater room for increased
salaries for employees and departmental/practice growth. If it is not profitable,
then cutbacks or closure are necessary. Maximizing reimbursement potential is a
key element in job/practice security and stability and increasing bargaining power
in salary and other negotiations. So the simple answer to the question ‘ Why
should you care?’’ is that your business, your job, and your salary depend on it.

Show Me the Money! 155


Appendix 7.A – Department Financial Dashboard Example

Indicator Jul-07 Aug-07 Sep-07 Oct-07 Nov-07


FINANCIAL
Charges 126,090 191,715 138,330 178,518 189,744
P a y me n t s 58,994 52,563 54 , 4 0 6 63,788 56,581
Contractuals 81,130 75,014 90 , 8 3 3 98,482 109,931
Write offs -2,536 9,491 2,155 10,988 25,068
Bad Debt 7,735 6,726 6,322 8,787 8,474
Held in Edits 16,875 13,661 3,744 7,709 9,451
Average Charge per Unit of Service 157.02 147.47 142.90 158.68 167.47

ACTIVITY
Volume
Office Visits 600 700 550 715 65 0
Inpatient Visits 203 600 418 405 440
Procedures 0 0 0 0 0
O t h er 0 0 0 5 43
Units of Service (CPT Code) 803 1,300 968 1,125 1,133

BILLING AND A/R


Average Lag Days
Date of Service to Entry
Physician Office 20.0 51.5 23.8 13.3 26.3
Hospital (I/P and O/P) 12.5 7.4 5.1 7.1 7.2
Date of Service to Billing
Physician Office 18.5 55.3 26.2 17.2 27.9
Hospital (I/P and O/P) 17.0 9.0 6.0 8.3 13.8
Accounts Receivable
Current 109,175 171,918 1 33 , 1 1 3 140,125 149,804
Greater than 30 Days 70,524 40,936 75, 007 57,012 54,574
Greater than 60 Days 117,988 61,058 31 , 2 4 2 56,037 41,606
Greater than 90 Days 30,409 85,962 46,152 23,406 39,356
Greater than 120 Days 26,286 42,810 104,066 110,127 91,403
Total AR 354,382 402,684 389,581 386,707 376,743
Days in A/R 47.4 76.8 77.8 69.9 68.1

Payor Mix (% of Gross Charges)


Medic aid 21.1% 15.2% 13.7% 18.5% 13.8%
Medic are 29.1 % 23.7% 21.6% 24.3% 26.0%
Managed Care 22.7% 28.0% 29.3% 19.5% 27.0%
Anthem 22.4% 25.6% 25.0% 33 . 9 % 28.9%
Commercial 2.1% 3.6% 6.2% 2.3% 0.8%
Self Pay 2. 6% 3.9% 3.0% 1. 5 % 2. 4%
Other 0.0% 0.1% 1.2% 0.0% 1.1%
Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 F Y 2008

168,622 13 3 , 5 5 8 119,601 129,871 1 7 1 , 4 07 15 5 , 13 1 1,702,587.00


57,867 50,215 45,102 45,946 52 , 7 0 6 49 , 1 4 0 587,307.69
88,168 72,909 77,809 78,334 93,281 81,506 947,395.13
4,038 1,910 5,449 32,632 1,247 7,430 97,873.03
5,331 5,458 5,019 5,573 2,163 7,039 68,625.75
196 0 2,253 6,225 3,479 2, 05 6
161.67 157.87 185.14 170.43 189.19 1 81 . 8 7 163.95

550 40 0 346 400 500 300 5,711.00


493 446 300 362 406 553 4,626.00
0 0 0 0 0 0 0.00
0 0 0 0 0 0 48.00
1,043 84 6 646 762 906 853 10,385.00

6.8 12.1 31.5 14.3 12.5 16.0


21.3 5.5 18.0 4.9 7.4 5.2

21.6 12.2 30.1 15.7 13.1 15.9


4.6 5. 9 18.9 6.2 7. 3 6.3

Note 1
129,446 11 8 , 1 5 8 98,926 100,773 13 9 , 11 7 1 3 2 , 40 5 34.34%
63,035 58,574 53,126 45,686 42,913 63 , 9 6 2 16.59%
47,375 47,518 41,762 40,747 36,723 31,340 8.13%
36,974 38,101 36,475 32,406 27,993 29 , 9 4 3 7.76%
113,169 132,770 153,657 132,296 1 2 7 , 59 3 12 7 , 9 6 9 33.19%
389,998 395,121 383,946 351,909 374,339 3 8 5, 6 1 9
66.9 73.9 82.4 83.6 80.1 77.7

14.5% 11.6% 11.5% 9.0% 9.3% 12.0% 13.7%


21.1% 15.4% 27.0% 27.7% 30.0% 26.6% 24.8%
35.7% 27.1% 30.4% 23.7% 22.2% 22.1% 26.1%
22.9% 36.6% 16.9% 30.8% 29.7% 28.0% 27.6%
2.5% 4.3% 10.8% 3.9% 4.9% 6.6% 4. 1 %
3.2% 5.0% 3. 4% 4 . 9% 3.9% 3.9% 3. 4%
0.0% 0.0% 0.0% 0.0% 0.0% 0.8% 0.3%
References, Resources, and Suggested Readings
American Medical Association (current). Searchable CPT manual with
allowable Medicare payments according to the current MPFS available free of
charge on line from AMA at https://catalog.ama-assn.org/Catalog/cpt/
cpt_search.jsp.
Athena Health (2009). Payerview: Healthcare payer performance overview.
Available online at www.athenapayerview.com.
Borger, C., Smith, S., Truffer, C., Keehan, S., Sisko, A., Poisal, J. & Clemens,
M. K. (2006). Health spending projections through 2015: Changes on the
horizon. Health Affairs, 25, w61-w73. Published online 22 February 2006
available at http://content.healthaffairs.org/cgi/content/full/25/2/w61
Callahan, C. (2008). Billing reimbursement 2008 update. CE presentation
made at the 10th Annual Rehabilitation Psychology Conference in Tucson, AZ.
Centers for Medicare & Medicaid Services. (February, 2008). CMS Manual
System Transmittal 85. Subject: Psychological and Neuropsychological Tests.
Available online at www.cms.hhs.gov/Transmittals/downloads/R85BP.pdf.
Centers for Medicare & Medicaid Services. (October, 2008). Medicare
physician guide: A resource for residents, practicing physicians, and other health
care professionals. Available online at www.cms.hhs.gov/MLNProducts/
downloads/physicianguide.pdf.
Delinsky, J. (2006). Practice management lab: You call that a payment?
Physicians Practice, Available online at www.physicianspractice.com/index/
fuseaction/articles.details/articleID/843.htm.
Department of Health and Human Services Office of the Inspector General
(current) – OIG Compliance Program Web site is available at www.oig.hhs.
gov/fraud/complianceguidance.html.
Department of Health and Human Services Office of Inspector General
(2005). State Medicaid Fraud Control Units Annual Report: Fiscal years 2004
and 2005. Published online at http://oig.hhs.gov/publications/docs/mfcu/
MFCU%202004-5.pdf.
Freud S. (1913). On beginning the treatment. In The Standard Edition of the
Complete Psychological Works of Sigmund Freud, Vol 12, translated and edited by
Strachey J. London, Hogarth Press, 1958, pp 123–144.
The Henry J. Kaiser Family Foundation (March, 2007). Medicare: A primer.
Published by the Henry J. Kaiser Foundation and available online at: http://
www.kff.org/medicare/upload/7615.pdf.

158 The Business of Neuropsychology


Martirosov, J. (2006). Verifying eligibility: How predetermining patient
coverage can save you money and hassle. Physicians Practice, page 49-52.
Available online at www.physicianspractice.com/index/fuseaction/articles.
details/articleID/808.htm.
MedPac (October, 2008). Outpatient hospital services payment system.
Available online at http://www.medpac.gov/documents/
MedPAC_Payment_Basics_08_OPD.pdf.
MedPac (October, 2008). Hospital acute inpatient services payment system.
Available online at http://www.medpac.gov/documents/
MedPAC_Payment_Basics_08_hospital.pdf.
Mirkin, D. P., Piacentini, K. K., & Pyenson, B. (2000). Getting paid in the
managed care workplace: The basics of physician compensation. Hospital
Physician, 69–79.
Moore, P. (2006). The 2006 fee schedule survey: Power to the payers.
Physicians Practice, available online at www.physicianspractice.com/index/
fuseaction/articles.details/articleID/933/page/1.htm.
Peck, E. A. Business Aspects of Private Practice in Clinical Neuropsychology
for 2009. Workshop Presented At AACN Meeting, San Diego, California, June
18, 2009.
Peck, E. A. (2003). Business aspects of private practice in clinical
neuropsychology. In Lamberty, Courtney, & Heilbronner (Eds.) The Practice
of Neuropsychology. Exton, PA: Swets & Zeitlinger.
Peek, C. J. (2008). Planning care in the clinical, operational, and financial
worlds. In Kessler & Stafford (Eds.) Collaborative Medicine Case Studies:
Evidence in Practice. New York: Springer.
Stucky, K., Buterakos, J., Crystal, T., & Hanks, R. (2008). Acquiring CMS
funding for an APA accredited postdoctoral Psychology Fellowship program.
Training and Education in Professional Psychology, 2, 165–175.

Show Me the Money! 159


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The Playground of Healthcare Reimbursement

‘‘Play the Game Tonight’’


Kansas (Ehart, et al., 1982)

At some point in our lives we have all encountered the schoolyard rule maker:
the kid that makes all of the rules for the games, and then frequently changes
the rules as needed to make sure that he or she wins the game. These rule
changes are impulsive, spontaneous, inconsistent, and at times completely
contradictory to a previous rule change. They come without notice and are
presented in such a way that no one can understand them well enough to ask
questions that might challenge their legitimacy. Additionally, the new rule is
stated with such confidence and in such a demeaning way that it seems that
you are the only person in the world who did not know that this is how the
game is played. Welcome to the world of healthcare preauthorization and
reimbursement! However, there is more on the line than playground bragging
rights, and it is not financially responsible to simply pick up your toys and find
a new playground (the same thing would happen there anyway). It would be
well beyond the confines of this text to fully explain this process (i.e., game) as
it applies to the multiple carriers, regional coverage areas, and individual
insurance representatives that exist. The topic of billing and reimbursement
(and navigation of the insurance company rules and regulations) would in and
of itself warrant more detailed discussion in a book of its own. Instead, this
brief chapter highlights some of the preauthorization and denial activities
found in the game of neuropsychological billing and receiving, along with
some suggestions to help you win the game every now and then. The

161
information presented here is based on personal experience with additional
assistance and input from Edward ‘‘Ted’’ Peck III.

Preauthorization and Rejection Scenarios


Peck (2009) outlines various scenarios that may result in a valid insurance
claim being rejected (with no real chance of being reversed on appeal) by the
insurer, even after multiple hours of clinician service have been provided. He
points out that most major insurance companies (e.g., Aetna, Wellpoint,
Cigna) may have as many as 10 different carve-out plans (or contractual
subsidiaries), and that each of these carve out plans may have a different set
of requirements for the preauthorization process. Finding the pathway
through this process is both intimidating and fraught with incorrect/mis-
leading information provided by the very insurance companies from whom
you are seeking to collect fees. These different requirements may be as follows:

• No preauthorization process is needed, but you have an upper


limit for the number of billable units which will be paid.
• A telephone based peer-to-peer review process may need to be
completed between the clinician and the insurance company
psychologist.
• Specific preauthorization forms may need to be completed and
submitted by the clinician and approved by the insurance
company prior to the actual date of testing.

This leads to a multi-step process where the office/hospital employee (or


neuropsychologist) must first determine that the patient’s insurance is current
and that the policy actually covers the planned testing service. He or she must
then accurately determine which sub-plan is in effect for the individual patient
and/or service. Finally, the clinician must be provided the correct information
so that he or she can complete the right form or contact the right person at the
insurance company and so on. Peck likens this to a game of Simon Says. If you
did not get the right phrase before the command to ‘‘sit down’’ and you sit
down anyway – you are out of the game; you lose! This could also be compared
to Twister where you have to contort you body in a myriad of ways that are
physically impossible, only to clumsily fall and, you guessed it, you lose!
To complicate things further, the information relating to benefits, carve-
outs, precertification procedures, etc. (the rules of the game) are not consistent
among or even within insurance companies, and this information is not always

162 The Business of Neuropsychology


readily available. For example, a Wellpoint insurance plan may use their own
in-house mental health plan for neuropsychological evaluations, or may use a
company called Value Options or any of several other companies for the
management of benefits. This information may not be conveyed on the
patient’s insurance card, so it is necessary to do further investigation regarding
the coverage plan and possible carve-outs. Some plans provide information on
their Web sites regarding benefits, preauthorization procedures, and related
carve-out or subsidiary plans for various services, while others do not. Even
when provided it may be incomplete or may not be up-to-date. As such, a call
to their provider line may be necessary to check for benefits and this call in and
of itself may take substantial time to complete.
Earlier chapters in this book stressed the need to bill neuropsychological
services under the medical plan to reflect the actual service provided and to
achieve the best (and more accurate) reimbursement rates. However, some
insurance plans demand that the neuropsychological evaluation be covered
under mental health benefits, regardless of the medical issues at hand, while
others require that the neuropsychological evaluation be covered under medi-
cal benefits. Still others require that a peer-to-peer appraisal or specific form
completion process be completed and submitted to the mental health plan
prior to preauthorization. If the mental health plan accepts the preauthoriza-
tion request, then it is subject to their particular requirements, which may be
different from those offered under the medical health insurance plan.
However, the mental health plan may issue an ‘‘administrative denial’’ which
effectively says that the request for service does not fit under their benefit plan
and that you should apply to the medical benefit plan for the preauthorization.
At this point, of course, the game starts over, and there is no guarantee that the
medical side of the plan will issue the preauthorization either. In some cases,
this turns into a game of ping-pong where you are referred back and forth as
you try to get approval.

Playing By the Rules


Peck (2009) provided what he called ‘‘The Facts of Managed Care’’ in his recent
presentation at the annual meeting of the AACN in San Diego. They are
presented here more as the ‘‘rules’’ of managed care:

1. Always follow the rules


2. Always check for the requirement of precertification
3. Always collect the co-pay; it may be illegal not to do so

The Playground of Healthcare Reimbursement 163


4. Always communicate your plan of care to both the patient and
the insurance company
5. Always explain to the patient what you have asked for and
what you have been authorized to do
6. Always follow your own preauthorization plan; if you need to
modify the plan, then get a new precertification
7. Always remember that there are no rules

The problem in following the rules of precertification/preauthorization in


neuropsychological practice (or in any practice for that matter) is that the
rules are not consistent across payers and the rules can change quickly, often
times without notice. As a result, it is important to develop a system or process
for precertification activities within a neuropsychology practice or depart-
ment. This harkens back to Chapter 4 where the need for consistent processes
within the departmental activities was stressed. The same is true here. The
steps of insurance verification, clarification, and precertification requirements
and activities should be outlined in detail, including identified responsible
parties along the way. At first, a general template or flowchart can be devel-
oped, including the ‘‘standard’’ activities that are consistent across payer plans.
From there, more individualized flowcharts may need to be developed to
capture the specific requirements of various plans, including any additional
documentation/justification that might be required. When completed, these
should be filed in a three-ring binder or other easily accessible medium to be
used by staff every time that a patient is scheduled for an evaluation. This way
the system is continuously audited and necessary changes can be made in real
time to minimize errors/delays in the future. Peck provides flowcharts and
templates for precertification activities in his recent presentation and in his
book chapter in Lamberty, Courtney, and Heilbronner (Eds.), The Practice of
Neuropsychology. Readers are encouraged to consult these sources to guide
them as they develop precertification processes for their own practice.

Closing Thoughts
Given the variability built into the precertification process in managed care, no
system or process will be perfect and guarantee precertification and author-
ization every time. Even when authorization is provided, we have all dealt with
the reality that ‘‘prior authorization is not a guarantee of payment.’’ However,
having no system or process will certainly lead to greater difficulties, delays,
and frustrations in getting authorization and ultimately will raise the risk of

164 The Business of Neuropsychology


reductions or denials in terms of reimbursement. Whether it is finding
directions to a local restaurant or navigating a sea in the dark of night, the
driver or captain must use appropriate maps or charts to find their way.
Navigating the stormy seas of insurance precertification and rejection manage-
ment is no different; it requires a ‘‘map’’ and the knowledge and patience to
follow it. Unlike the husband who refuses to ask for directions when he is ‘‘not
lost,’’ a precertification representative or neuropsychologist must have a guide
to follow to find their way to the reimbursement harbor. Set the plan, map the
path, and learn the rules and maybe, just maybe, you can win the game some
of the time.

References, Resources, and Suggested Readings


Ehart, P, Flower, D., Frazier, R., Livgren, K., & Williams, R. (1982). Play the
game tonight. From the album Vinyl Confessions. New York: Kirshner Legacy/
Epic Records.
Peck, E. A. Business Aspects of Private Practice in Clinical Neuropsychology
for 2009. Workshop Presented At AACN Meeting, San Diego, California, June
18, 2009.
Peck, E. A. (2003). Business aspects of private practice in clinical
neuropsychology. In Lamberty, Courtney, & Heilbronner (Eds.) The Practice
of Neuropsychology. Exton, PA: Swets & Zeitlinger.

The Playground of Healthcare Reimbursement 165


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Business Development and Marketing

Thus far, this text has focused on setting up a consistent and predictable
process for the business of neuropsychology. Once the basics are established
and have proven successful from a process and fiscal standpoint, attention can
be turned to further growth and business development. This chapter provides
an outline for business development in neuropsychology with an emphasis on
smart growth based on the original strategic plan, while looking toward the
future.
Early in the development of a neuropsychological practice it is important
not to over-specialize, as volume is necessary to maintain a consistent cash
flow. This idea continues as a practice develops, but may be tempered by
real-life data related to reimbursement levels, payor mix of select patient
populations and diagnostic groups, personal and professional interest in a
specific area, referral source demand, staffing expertise and availability, and
other factors. There is the reality that the best investment strategies include
appropriate diversification of a portfolio, but care is taken to ensure that all
investments have some reasonable expectation of return. The same applies to
a neuropsychology practice. Exploration of a diverse range of possible
services extending beyond traditional neuropsychological evaluations can
identify other patient populations and clinical services to expand the pool of
potential referrals, in order to ensure consistent patient volume and reim-
bursement despite fluctuations in referral streams. Additionally, there are
unique settings, populations, specialties, or collaborations that may prove
beneficial in increasing visibility, expanding marketshare, delineating clin-
ical expertise, or simply accessing a source of high reimbursement relative to

167
traditional payors. With so many opportunities available, decisions
regarding program development require a return to strategic planning activ-
ities, but with a focus now on the growth of a practice rather than its
inception.

Re-Defining the Scope of Practice


To plan for the future it is beneficial to look at the past. Strategic planning was
outlined in Chapter 1, and at this point it is worth revisiting. To review,
Ginter, Swayne, and Duncan (2002, p. 14) define strategic planning as ‘‘the set
of organizational processes for identifying the desired future of the organiza-
tion and developing decision guidelines. The result of the strategic planning
process is a plan or strategy.’’ As such, the vision, mission, and values initially
developed for a practice continue to serve as a guide for future program
development. A review of these statements and principles provides a basis
for determining what next steps will bring the practice closer to meeting the
mission and vision.
Reviewing the strategic plan, while looking to the future, provides an
opportunity to outline the established areas of specialty as well as additional
areas of competence that may not have been included in the original business
plan. This may mean stepping away from traditional neuropsychology and
getting back to clinical psychology roots as additional service lines are
considered. This process encourages examination of the current business/
practice processes and systems to identify strengths and weaknesses that
may impact future program development. To formalize examination of
the practice/department, a Strengths, Weaknesses, Opportunities, and
Threats (SWOT) analysis is useful to determine desired/achievable future
opportunities.

SWOT Analysis
A SWOT analysis is a strategic planning method initially developed by Albert
Humphrey of Stanford University in the 1960s-1970s and revised over the
years by writers in business marketing and organizational development
(Ansoff, 1987; Koch, 2000; Panagiotou, 2003; Turner, 2002; Valentin,
2001). A SWOT analysis is a basic, straightforward model that assesses what
an organization can and cannot do, as well as identifies potential barriers. The
method of SWOT is to identify various aspects of an organization and separate
them into internal (strengths and weaknesses) and external issues (opportu-
nities and threats):

168 The Business of Neuropsychology


• Strengths: Internal aspects of the organization helpful in
achieving the objective. These reflect what the organization is
doing well.
• Weaknesses: Internal aspects of the organization harmful to
achieving the objective. These reflect the problems/limitations
within the organization.
• Opportunities: External aspects helpful in achieving the
objective or advancing the business.
• Threats: External aspects that could do limit the achievement
of the objective or be potentially damaging to future goals.

As a group, department/practice staff members develop a list in each of these


areas to identify what may assist the business in accomplishing its current and
future objectives and what obstacles must be overcome or minimized to
achieve desired results. Additionally, individual clinicians can complete a
personal SWOT analysis, applying the same principles to their own personal
and professional goals and aspirations. These can be compared to the larger
organizational SWOT to analyze the level of congruence and consistency in
goals or possibly other alternatives not considered at the larger group level.
The SWOT analysis sets the stage for identifying the best areas for future
program development based on the identified business assets and limitations.

Examining Current and Possible Future Activities


The SWOT analysis, coupled with current practice patterns and reimburse-
ment information, provides a starting point to plan for changes within a
practice/department. In looking to the future it is important to first look at
current financial information to determine what activities have proven to be
the most successful in terms of payor mix, reimbursement rate, consistency of
volumes, and overall ‘‘fit’’ with the mission and vision of the practice/depart-
ment. Some ‘‘high return’’ and consistent service lines already in place may be
enhanced by adding staff, altering schedules, or identifying new referral
streams for these services. ‘‘Low return’’ service lines may need to be minimized
or limited through scheduling restrictions, alternative clinical activities (to
decrease time and resource utilization), or external referral relationships.
Decreasing the time spent on these lower return services increases the time
available for higher return or new service lines. Before service lines are reduced
or eliminated, care should be taken to weigh the potential non-revenue
‘‘value’’ of these services to referral sources, the department/practice, the

Business Development and Marketing 169


larger institution, and the community. Some clinical services may have a
non-revenue value that does not show up on a balance sheet, but is demon-
strated in other ways. Value-added services are discussed in detail in Chapter
10, including mechanisms to make these non-revenue values visible to admin-
istrators or others stakeholders.
Once the current clinical service lines are examined and adjusted accordingly,
attention can be turned to the development of potential new service lines and
revenue streams. A good place to start is to consider services that have been
requested by referral sources in the past or obvious areas where services have
been needed in the past, but unavailable due to time or staffing limitations.
Additionally, reviewing the organizational and personal SWOT analyses may
uncover specific areas of interest for the practice or individual clinicians.
Finally, it is vital to look to the future for new opportunities that may
emerge. The following questions serve as a guide for consideration of program
development:

• What new referral sources could benefit from current clinical


activities?
• What additional services would benefit our current referral
sources?
• What new services might be needed in the geographic area in
the future?
• What new professionals or specialty clinics are moving to the
area and how can we best serve them?
• What ‘‘non-neuropsychology’’ clinical activities might enhance
our overall clinical offerings?
• What political/social changes are on the horizon that may
influence healthcare needs?

Answers to these and other questions contribute to brainstorming activities


focused on general future clinical service lines. From there, a few specific
possibilities can be identified that fit the mission and vision of the depart-
ment/practice, match the interests of the clinicians involved, reflect diversi-
fication without over-extending the boundaries of the practice, and are
realistic relative to available personnel. For lack of a better phrase, it is
important to think ‘‘outside of the box’’ in terms of potential new clinical
activities and services. This means extending beyond traditional neuropsy-
chology practice to include more general clinical, clinical health, or

170 The Business of Neuropsychology


rehabilitation psychology services. The following list provides some clinical
areas of consideration that have been incorporated into some ‘‘neuropsy-
chology’’ practice groups or departments:

• Pre-spinal cord stimulator placement evaluations


• Pre/post surgical evaluations for transplants, bariatric surgery, etc.
• Headache clinic evaluations
• Vocational rehabilitation contracts
• Worker’s compensation & occupational medicine
• Forensic consultation
• School/university contracts
• Fee-for-service performance enhancement evaluations for
business executives (executive coaching with a neuropsychology
focus)

This highlights some services that have been provided in some practices as a
means to expand their services. It is important to brainstorm and identify ideas
that fit the practice/department and identified parameters via the SWOT
analysis.

Evaluating Potential New Service Lines


After an initial list is generated, each idea is examined and evaluated on the
basis of the business basics described in previous chapters, including financial
forecasting. To begin, four basic questions must be asked of each potential
new service line to evaluate the potential for success:

• Who? – What is the patient population and where do they


come from?
• How many? – How many patients are likely to be seen?
• How much? – What is the expected reimbursement?
• How often? – At what frequency will these services be
provided?

There is certainly more information necessary, but these questions pro-


vide a starting point for future discussions and are the basis of fore-
casting and an abbreviated business plan for each of the new areas. It is
also necessary to outline the expected resources and costs associated with
the service.

Business Development and Marketing 171


While exploring program development opportunities some basic eco-
nomic principles are considered – cost, value, and opportunity cost. Cost
is the amount of dollars or resources needed to provide the service. Value is
the perceived ‘‘worth’’ of a resource. From a department or practice perspec-
tive, worth refers to how the new service, as an asset, is expected to produce
over its useful life (i.e., what is the potential revenue), as well as its potential
to maximize its value while reducing or maintaining systemic cost. This
valuation examines how much resource utilization is required, the reimbur-
sement in return, and the frequency and consistency of the return. In other
words, is the squeeze worth the juice? To a consumer, worth refers to the
resources he or she would be willing to expend to acquire the service. This
‘‘expense’’ is not always measured in dollars. Consumer resources also
include the time spent; physical, mental, and emotional energy required;
ease of obtaining the service; and other factors. Opportunity cost examines
what else could have been done with those same resources. In other words,
what is the value of alternative uses of the time, money, and effort relative to
the new service? The goal is to achieve a return that justifies the risk/effort of
providing the service or expending the resources. All of these concepts are
bi-directional in that both the producer (i.e., clinician) and the consumer (i.
e., patient) weigh the costs and benefits of the activity to determine whether
or not the service is to be provided. An abbreviated business plan for the
potential new services can be helpful to explore these concepts and the
feasibility of the ideas.
As an example, consider a neuropsychologist being asked to join an
epilepsy clinic. While this is certainly a good opportunity to develop a
new referral stream and increase the visibility and notoriety of the
neuropsychologist and the practice/department, the time demands asso-
ciated with this clinic can be high, with a great deal of non-billable time
spent in committee meetings, case conferences regarding localization of
lesion and potential need for further testing, team conferences to determine
appropriateness and mechanism of surgery, and post-surgical follow up
meetings regarding disposition. There may also be time demands related to
research activities. However, reimbursement is based on neuropsychological
testing and Wada procedures with patients who may have limited reimbur-
sement options (e.g., Medicaid, Medicare, and charity) due to their limited
ability to maintain employment as a consequence of the intractable nature of
their seizure disorder. More recently, there are increasing numbers of move-
ment disorder clinics that enjoy collaboration with neuropsychology

172 The Business of Neuropsychology


in similar fashion. Again, the development and maintenance of these colla-
borations can be quite time-consuming with a limited reimbursement rate
due to payor source make-up (i.e., primarily Medicare). As a result, the
answers to the new service evaluation questions previously asked do not
paint a very good picture for fiscal success for neuropsychologists in these
ventures, especially when the resource/time costs are factored in. So, why are
there so many of these clinics being set up? Simply put, they are true money-
makers for neurosurgeons and hospitals through the associated professional
and hospital facility payments for the surgeries and related medical
procedures.
For neuropsychologists working in these areas, it is beneficial to be
affiliated with the institution so that the ‘‘value-added’’ nature of their
services are captured through some form of an institutional cost offset or
other mechanism of value to account for the non-billable or reduced reim-
bursement activities provided. Alternatively, some programs secure external
funding through research grants, foundation donations, or other mechan-
isms to provide the financial support for clinical activities allowing for
neuropsychologists’ work to be adequately reimbursed or offset. For those
in private practice, participation in these programs may need to include
some established parameters regarding attendance in meetings/conferences
to minimize non-billable time. Alternatively, contractual agreements with
the institution might be possible to provide some additional financial sup-
port for the reduced reimbursement or to account for the non-billable time
that is valued by the surgical team.
In contrast, other new service lines have cleaner answers to the previous
questions. As an example, many insurance companies now require a
psychological evaluation prior to approval for spinal cord stimulator pla-
cement, bariatric surgery, organ transplant, or other surgical procedures.
The very basis for these referrals (i.e., insurance requirement for procedure
approval) sets the stage for a strong payor mix, relative ease in precertifica-
tion, few arguments regarding medical versus mental health approval,
reasonable reimbursement rates, and good patient compliance with sched-
uled appointments. These evaluations may not provide the notoriety or
professional involvement that comes with epilepsy and movement disorder
clinics, but the fiscal benefits and ease of the overall service line offset the
decreased prestige value. Additionally, these more streamlined and finan-
cially stable service lines serve to underwrite the costs of some of the more
prestigious clinical services that have lower reimbursement.

Business Development and Marketing 173


Balancing the Service Lines
The development of new service lines takes additional time and resources,
negatively impacting existing service lines. Therefore, once the new ideas have
been evaluated and selected, department practice patterns need to be adjusted
to provide a reasonable balance of the old and new service lines in terms of
workloads, volumes, revenues, and scheduling. The idea behind program
development is to grow the practice or department, but initially this increases
the stress and strain for all involved. This highlights the need for controlled
growth and continued process development and control to implement the
changes necessary to accommodate the new service lines.
Adding service lines means increased demand on time and resources,
including administrative, clinical, and management staff. Additional per-
sonnel may be needed, and this should be considered in program develop-
ment discussions. Workloads, time utilization, and process/system variables
need to be examined to determine actual needs versus desired staffing levels.
Clinician productivity and utilization numbers are certainly a source of ten-
sion and discomfort in small or large departments. Establishing equitable
workloads can be very difficult when clinicians provide a broad range of
clinical services with varying time/resource demands and reimbursement
rates. Still, some established utilization/productivity expectations are neces-
sary and typically serve as at least a portion of performance appraisal.
Identified productivity targets should include efforts to balance work volumes,
revenues, and quality. Problems develop when these three variables are out of
balance. While maximizing volumes and revenues intuitively seems the best
approach, this typically results in a decline in quality of service as clinicians tend
to hurry through services to get to the next case. Additionally, when volumes get
too high, attention to the system process decreases and errors are more likely to
occur. Conversely, focusing on just revenues and quality (spending more billable
time per patient and providing excellent quality) results in decreased patient
volumes and diversity of services due to the increased amount of time required
for each case and limited opportunity for program development. This also causes
increased waiting lists resulting in decreased referral source and patient satisfac-
tion in terms of service availability. Finally, maximizing quality care and volume
results in the provision of non-billable services and excessive time utilization,
reducing overall revenues. In setting workload and productivity targets, a balance
of the three variables is best so that volumes, reimbursement, and quality remain at
high levels without sacrificing one for another.

174 The Business of Neuropsychology


To manage the appropriate balance of new and old service lines, as well as
high and low reimbursement services, controlled scheduling is a useful tool.
Scheduling is ‘‘controlled’’ when clinician schedules are developed with avail-
able services assigned to specific days/times to account for resource demands
and balance in terms of the types of services provided across the work week.
For example, a clinician may have full evaluations scheduled on Mondays and
Fridays, headache clinic evaluations on Tuesday mornings, shorter evalua-
tions scheduled on Tuesday afternoons and two on Wednesday (for dementia,
Parkinson’s, etc), and presurgical evaluations scheduled for Thursday
(morning and afternoon slots). Feedback, initial interview, and/or interven-
tion appointments can be scheduled during the technician testing times on
Monday and Friday. This is a rather full schedule (and not necessarily rea-
listic), but by assigning times in this manner, productivity/utilization numbers
for the clinician as well as technician and office staff can be estimated. In large
practices where technician and administrative support staff are shared, this
ensures that a technician and other supports are available at the specified
times. This is a sample schedule for an outpatient setting and is meant for
demonstration only. Other schedules may include conference times, meet-
ings, inpatient consultation, report writing time, etc. What is on the schedule
is based upon the services provided and the level of flexibility will vary
according to practice settings. Development and management of a controlled
schedule requires an understanding of the department/practice referral pat-
terns and volumes. This makes it difficult to establish for a new and devel-
oping practice, but as it matures this can be accomplished on a more limited
basis. Whatever scheduling format is used, developing a standard and con-
trolled schedule follows the process control and consistency ideas described in
the earlier chapters and helps eliminate variance and surprises. Also, it ensures
that there is ‘‘room’’ for the new service lines within clinicians’ schedules
without sacrificing established services.

Marketing as Program Development Tool


As noted in Chapter 2, a marketing strategy is simply a plan of how a business
lets the target customers know that it exists and how the business is able to
provide the goods and services in the best way for the consumer. The idea is to
reach the largest number of targeted consumers with the least amount of cost.
The focus is on the identified patient groups served rather than a generalized
marketing strategy that may waste time and resources. There is no perfect

Business Development and Marketing 175


marketing strategy, but whatever methods are used, they should be carried out
as part of well thought-out plan.
Porter (1985) describes two basic types of competitive advantage: cost
leadership and differentiation. In neuropsychology, cost is not much of a
factor due to the fact that most reimbursement is paid by third party payors
at relatively fixed rates. Therefore, marketing efforts need to focus more on
distinguishing the department/practice from the competition through differ-
entiation and customer service. Marketing strategies in neuropsychological
practice are subject to the APA Ethical Guidelines and Principles (American
Psychological Association, 2002) and any marketing strategy should be devel-
oped in accordance with these principles. Neuropsychology is defined as a
specialty practice and marketing efforts should be targeting related patient
populations. Since patients typically come from physician referrals, marketing
efforts will likely focus on this group, at least in the early stages of setting up a
practice. It is important to note that while the physician writes the order for
neuropsychological testing, it is typically a nurse, office manager, or other
office staff member that actually sends the referral to a provider. As such, these
individuals should be included in any marketing strategy. This may include
preprinted referral forms with contact information that could easily be called
in or faxed directly to the practitioner, making a referral to the practice/
department as easy as possible. While most efforts will focus on obtaining
referrals from physicians that work specifically with patients in the identified
targeted patient population (e.g., neurologists, neurosurgeons, psychiatrists,
pediatricians, geriatric specialists) efforts should also extend to physicians in
other areas, as well as social workers, counselors, vocational rehabilitation
professionals, case managers, attorneys, and others that may prove to be
valuable sources of patient referrals. Additionally, it is not uncommon for a
referral to ‘‘pass through’’ a physician on referral from an allied health provider
such as a rehabilitation therapist or social worker.
Marketing efforts can be quite varied. Some choose newspaper, television,
or radio advertisements; informational mailings; personal letters to potential
customers; press releases; door-to-door visits; testimonials; etc. Whatever
strategy is used, a good analysis of who, what, where, when, and why
regarding the medium and targeted audience will help in determining the
course that will have the most beneficial and cost effective outcome. Similar to
pharmaceutical representatives, neuropsychologists may choose to schedule
personal meetings with targeted physician groups, rehabilitation profes-
sionals, worker’s compensation professionals, or other groups that may have

176 The Business of Neuropsychology


a need for the services. Brief in-services and informational cards describing the
provider’s training, experience, and credentials are helpful during initial
contacts, along with the more traditional business cards. Also, as mentioned
above, preprinted referral forms that can be called in or faxed directly to the
practitioner allow for easy referrals as well as regular awareness of the practice
even when you are not directly in their office.
Image is everything, so it is important that any marketing/branding efforts
maintain a high degree of professionalism in terms of content and appearance.
While this includes mailings, business cards, and other informational mate-
rials, branding and marketing efforts can be included in all aspects of clinical
practice. Designing a unique business logo and letterhead is quite useful and
can then be incorporated into all documents associated with the practice,
including registration materials, internal documentation, preprinted referral
forms, and the final report that is sent to the referral source. As described in
Chapter 4, creating forms for all aspects of the practice with the identified
letterhead or branding serves to further market the practice while developing
consistency in the way that a patient is processed through the department.
There is no substitute for word-of-mouth recognition. This typically cannot
be achieved prior to the beginning of a practice, but early contacts with
potential referral sources, especially if there is a prior working relationship,
is very beneficial in spreading the word about a new practice and the quality of
services provided. Having the opportunity to introduce the clinicians and the
practice to physician or other professional groups may heighten awareness
and ‘‘chatter,’’ especially if the services provided are unique or meet some
specific needs. While APA ethical principles limit using patients for testimo-
nials, this does not apply to physicians who may be willing to provide
endorsements regarding clinical practice skills, knowledge base, and quality
of service. Also, these established referral sources may assist in setting up
meetings with other physicians and other referral networks in the area through
group meetings or individual contacts. It is important to capitalize on these
resources and have a plan in place regarding how the practice will be pre-
sented so that this can occur in a professional, well-organized, and timely
manner. As a final note in marketing, it is important to remember that it is
better to under-promise and over-perform than to over-promise but under-
perform.
While marketing efforts certainly will include clinician background
training and experience, board certification, and research/publications to
differentiate the department/practice from other practices on the basis of

Business Development and Marketing 177


qualifications and expertise, patients and referral sources do not necessarily
place the same value on these factors as other neuropsychologists. Instead,
they are looking for a provider that is recommended to them by physicians,
friends, or family. As a result, customer service and service recovery activities
can be some of the most important marketing tools available to a practice/
department. Physicians will listen to their patients when they return for
follow-up appointments with either very good or very bad things to say
about the neuropsychologist who provided the evaluation as well as the
related office staff. Subsequently, their referral patterns will reflect the feed-
back they receive from their patients. As mentioned in Chapter 2, two of the
best questions regarding patient satisfaction are ‘‘Would you recommend this
product or service to a friend or family member?’’ and ‘‘How would you rate the
overall quality of care?’’ How a patient or referral source answers these ques-
tions quickly determines your competitive advantage in the marketplace
regardless of your status in the field of neuropsychology.

Final Thoughts
While growth in a business sense is typically a good thing, it is important to
manage the growth in such a manner that it is planned, predictable, and
profitable. Expansion for the sake of expansion can be problematic and may
result in commitments that can be detrimental to the financial bottom line or
a situation where the practice is unable to live up to the promises that were
made. Smart growth that reflects the initial mission and vision of the prac-
tice, accounts for available resources, and includes reasonable profitability
forecasting allows for greater potential for success, stability, and longevity.
This takes additional time and effort, but in the long run it is worth the
investment.

References, Resources, and Suggested Readings


American Psychological Association. (2002). Ethical principles of
psychologists and code of conduct. American Psychologist, 57, 1060 –1073.
Ansoff, H.I. (1987). Corporate Strategy, revised edition, Penguin Books.
Ginter, P. M., Swayne, L. E., and Duncan, W. J. (2002). Strategic management
of health care organizations, 4th Ed. Malden, MA: Blackwell Business.
Koch, A.J. (2000). SWOT does not need to be recalled: It needs to be enhanced.
Available online at http://www.westga.edu/bquest/2001/swot2.htm.

178 The Business of Neuropsychology


Panagiotou, G. (2003) Bringing SWOT into Focus. Business Strategy Review,
Vol 14, Issue 2, 8–10.
Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior
performance. New York: The Free Press.
Turner, S. (2002). Tools for success: A manager’s guide. London: McGraw-Hill.
Valentin, E.K. (2001). SWOT analysis from a resource-based view. Journal of
Marketing Theory and Practice, 9(2): 54–68.

Business Development and Marketing 179


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PROFESSIONAL DEVELOPMENT
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Where Did the Time Go?

Time is a unique and precious resource that is necessary to do your work,


accomplish your goals, spend time with family and friends, participate in
favorite activities, and enjoy everything that life has to offer. It is a precious
commodity that is available in limited amounts and cannot be restocked,
refilled, or re-ordered when the supply is low. It is the one resource that if
given away or wasted, it cannot be made up on another day. Think of all of the
security systems people purchase to protect their money and belongings that
typically are insured or, for the most part, can be replaced. It is just as
important to secure and protect the one asset that cannot be replaced –
time. This chapter explores aspects of neuropsychological practice that can
drain available time with no identified or tangible benefit. The idea is not to
eliminate all of these activities, as many of these truly have value. Instead, the
goal is to be selective, rational, and prudent in how and where time is spent
and to find ways to demonstrate the value of this time when it does not reach a
financial balance sheet.

Non-Billable Time
In Chapter 9, an example of a controlled schedule was presented that allotted
specific times for full evaluations, abbreviated evaluations, headache clinic,
and pre-surgical evaluations, with feedback appointments, initial interviews,
and intervention appointments to be scheduled during technician testing
times. This is an unrealistic schedule, but was described to demonstrate a
schedule that would maximize billable time. What was missing from this
schedule? Think for a moment about your week in clinical practice and

183
develop a list of all of the scheduled or unscheduled activities that are non-
billable. The list includes at least some of the following and possibly more:

• Team meetings
• Case/care conferences
• Patient rounds with the team or physician
• Scheduled in-service training
• Informal consultations with physicians or treatment teams
• Grand rounds or other didactic opportunities
• Family conferences without the patient present
• Marketing/meet-and-greet activities
• Department business meetings
• Institutional committee/administrative meetings and obligations
• Institutional joint commission computer-based or group training
sessions
• Fixing scheduling/process errors
• Service recovery activities for the department/practice or the
institution

This is not an all-inclusive list by any means, but it is lengthy. When you factor in
a time component to each of these activities, time slips away very quickly. This
highlights the importance of managing a controlled schedule. When these
activities occur, they should be included in a schedule to document utilization
of time and resources. When all activities are put into a schedule, it is easier to see
what can and cannot be done within a work week, and when it is time to say ‘ no.’’
This strain on the schedule and reduced billable time is not necessarily a bad
thing. The activities listed above have meaning and value and can be beneficial to
patient care and even to the hospital in terms of overall reimbursement levels. The
key is to identify and document how the non-billed time brings value-added
service as well as indirect income to the institution. These are presented as distinct
concepts with value-added services consisting of activities that do not necessarily
generate revenue directly or indirectly, and indirect benefit services consisting of
activities that promote revenue generation with little or no direct billing.

Value-Added Services
For the purpose of this text, value-added service (VAS) is a term used to
describe non-billable services that promote the main business of healthcare. In
psychology, a VAS is an activity that adds ‘‘worth’’ to the overall clinical service

184 The Business of Neuropsychology


or institution by optimizing cost-effective care, streamlining necessary ser-
vices, enhancing overall treatment outcomes, shortening a length of stay,
bringing notoriety and prestige to the institution, and improving overall
customer (i.e., patient, family, physician, treatment teams) satisfaction.
Review the previous list of activities again and think of how this construct
applies. How often in your clinical work (billable and non-billable) do you
take part in activities that could be considered a VAS?
VAS can be demonstrated in a variety of ways including membership in
leadership committees, providing input through team meetings or informal
consultation, providing educational in-services to staff, and serving as a face
or contact for a department or practice to enhance marketing and publicity.
These typically are scheduled activities and it is relatively easy to document this
utilization of time. Clinically, neuropsychologists are often called upon to
handle crisis situations, angry or upset families, and other situations, with a
general goal of service recovery and improved patient satisfaction. These activ-
ities also result in fewer disruptions of rehabilitation interventions; improved
management of challenging behavioral difficulties; and ultimately, improved
treatment outcomes on a more general level. These activities also decrease the
burden, time, and expense of other staff and may also be a source of support and
education for other disciplines. These activities, while useful on a variety of
levels, are not always billable, thus limiting their value from a financial perspec-
tive. Additionally, they are rarely planned, and therefore, are not always docu-
mented from a scheduling and utilization of service standpoint.
Psychologists provide other VAS through their scientist-practitioner mindset
to assist a larger institution in a variety of ways. This scientific basis of training
allows for easier understanding of the methodology and statistical concepts
often utilized in institutional care monitoring, evaluation of quality standards,
and outcome-based research. When this skill is utilized, psychologists can
prove to be very knowledgeable partners with the administration to analyze,
document, and present the volumes of ‘ data’’ collected through the healthcare
system at multiple levels. Additionally, when supported, psychologists can
bring notoriety and prestige to an institution through national presentations
and publications related to institutional or practice-based research.

Indirect Benefit Activities


Indirect benefit (IB) activities in neuropsychology are those services that may
or may not be billable, but where the activities contribute to increased
reimbursement in other areas, institutional cost savings, and/or better

Where Did the Time Go? 185


outcomes on the basis of the service being provided. In Chapter 9, the
difficulties, from a reimbursement perspective, were presented relative to
the epilepsy and movement disorder clinic examples. Performing low reim-
bursement clinical services due to the payor mix typically associated with
these populations, coupled with the potential for additional non-billable time
related to care conferences and neurosurgery team meetings, on the surface
can seem counter-intuitive to a larger institution. However, when the total
‘‘package’’ of services is considered, including professional and hospital facility
charges associated with the neurosurgical, neuroradiological, and other med-
ical procedures, the financial benefits for the larger institution are easily seen.
As such, neuropsychological services in these clinics provide IB to the hospital
by helping to pave the way for the other high revenue procedures (e.g.,
neurosurgery) to occur more readily.
Other IB services provide benefit by reducing the overall costs to provide
services. A good example of this is seen in rehabilitation environments that
manage patients with traumatic brain injuries that require one-to-one super-
vision, safety beds, cancelled therapy interventions, and/or increased staff
utilization due to neurobehavioral and neuropsychiatric syndromes including
agitation, combativeness, refusals, wandering, elopement concerns, or other
behavioral difficulties. Neuropsychologists are often called upon to set up a
behavior plan, work with the physician to initiate and monitor medication
management, and educate staff members on how best to manage the patient.
These services are not always billable, but if successful, significant cost savings
can occur by minimizing staff and resource utilization, improving participa-
tion in therapies, decreasing the overall length of stay, and improving
outcomes.

Identify and Document Value Added Contributions


A perusal of the literature regarding VAS and healthcare yields multiple
articles regarding information technology; billing, marketing, and human
resources services; temporary employment consultants; and other adminis-
trative applications of the concept. However, there were no articles/refer-
ences/Web sites found applying this concept to clinical professionals and
professional activities in the healthcare system. At some level this is new
ground, but there is a definite need for further research and exploration in
the area of quantifying the financial value of non-billable VAS and IB services
to further support these activities in an ever-shrinking healthcare financial
system.

186 The Business of Neuropsychology


For practitioners in institutional settings, demonstrating value through
both revenue and non-revenue-based activities solidifies their role in the
system and increases administrative appreciation and support. Therefore,
developing methods of communicating non-revenue producing services that
include some quantitative, fact-based data is of utmost importance when
identified roles and responsibilities include many of these activities. This
means identifying non-billed time that brings value-added service, as well as
income, to the institution. The keys are to identify activities that produce
substantial cost-savings or bring prestige or positive attention to the organiza-
tion; show the value added for these activities in a quantifiable, meaningful,
and persuasive manner; and make you and your department indispensable.

Training Programs and Research Activities


Thus far, exploration of time factors has focused on activities that add value or
indirect benefit to a department or institution in the context of clinical service.
Other activities commonly associated with neuropsychological practice, while
valuable, can also require substantial investment of time, energy, and
resources. Two of these areas include training programs and research. There
is no argument that these programs are valuable, but there is also little
argument that they can be quite time intensive to manage.

Clinical Training Programs


In review of Lamberty, Courtney, and Heilbronner’s The Practice of Clinical
Neuropsychology (2003), it was noted that the incorporation of clinical training
programs was specifically discussed in 7 of the 11 chapters in the section
entitled ‘‘A Survey of Settings and Practices in Clinical Neuropsychology.’’ As
expected, these included chapters describing neuropsychology practice in
university-affiliated and Veterans Administration (VA) medical centers, but
chapters describing practices based in non-academic general medical centers
and medical rehabilitation facilities also specifically described clinical training
activities. Interestingly, chapters describing independent practice, private
practice with a physician partner, and forensic neuropsychology, did not
specifically address clinical training activities. This does not mean that such
activities do not occur in such settings, but does demonstrate that it may not be
a primary area of ‘‘inclusion’’ in discussing practice activities. This is consistent
with survey data provided by Sweet, Moberg, & Suchy (2000) showing that
86% of clinical neuropsychologists working in institution-based settings were
involved in some form of research and teaching compared to 66% of clinical

Where Did the Time Go? 187


neuropsychologists in private practice settings. Additionally, those in institu-
tional settings reported spending an average of four hours per week providing
supervision compared to two hours per week for those in private practice.
One way to identify the basic time involved in training activities is to look at
the APA Committee on Accreditation Guidelines and Principles for Accreditation of
Programs in Professional Psychology (2008). At both the predoctoral internship
and postdoctoral residency level, supervision is to be regularly scheduled,
assuring a minimum of four hours of supervision per week, at least two hours
of which will include individual, face-to-face supervision. This is further rein-
forced by the Houston Conference Guidelines (Hannay, et al 1998) recom-
mending APA accreditation for internship and appropriate supervisory activities
by a board-certified clinical neuropsychologist. Additionally, these guidelines
state that it is expected that residents will spend significant percentages of time
in research and educational activities as well as clinical service. There is at least a
small percentage of lost billable time based on the supervision requirements
alone. This does not include the time required to complete the paperwork to
apply for and maintain accreditation; prepare and present formal didactic
programs; complete evaluation and other training-related documentation; par-
ticipate in the recruitment, interview, and selection of interns and residents; etc.
Needless to say, establishing and maintaining a clinical training program is quite
time-consuming and in the business sense, time lost is money lost.
Without going into significant detail, maintaining a training program does
not come without monetary expenses above and beyond lost revenues due to
lost clinician billing. The administrative financial support for stipends, mate-
rials, clerical support, space needs, and educational activities must be secured
along with the basic fees for maintaining accreditation, recruitment activities,
and selection/matching service fees. While there is a hope that the clinical
activities performed by the trainees will provide some offset for these
expenses, it is again important to note that services provided by trainees are
not reimbursable by Medicare and potentially some other providers. As such,
the institution payor mix will have a significant impact on how well these costs
can be at least partially recouped.
The information presented here is not meant to discourage the development
and maintenance of clinical training programs. Those who know me well can
attest to my commitment to the training process. The goal is to make sure that
clinical training programs are developed for the good of the profession and to
bring respect and notoriety to the institution, rather than as a cost-effective
way to add clinical staff. Also, this discussion is meant to encourage

188 The Business of Neuropsychology


neuropsychologists to become more active in professional organizations working
to improve options for Graduate Medical Education (GME) and other funding
mechanisms to promote psychology and neuropsychology training programs.

Research Activities
Using the Lamberty, et al. (2003) text again as a resource, research activities
occur in a wide variety of practice settings. As expected, those in academic
medical centers described the general ease and expectation of ongoing research
projects. Torres and Pliskin (2003) describe the open opportunities to partici-
pate in clinical research as part of their work in such an environment. The direct
access to clinical populations, opportunities for collaboration with multiple
disciplines, and the ability to capitalize on resources available within the
medical academic institution are cited as how research is facilitated in this
environment. Additional descriptions highlight the institutional support as
well as the enhanced opportunities to participate in individual and medical
center grants due to the academic affiliation and collaborations. McCrea (2003)
also highlights the benefits of multiple opportunities for collaborative research
in a general hospital setting, but differs in terms of his description by citing the
‘ balance’’ the department was able to create to manage the difficulty in securing
time dedicated to research in the context of clinical demands. While some of the
same benefits of hospital affiliation were described in available patient popula-
tions and collaborative relationships, his chapter focused more on securing
external funding and using research and publication activities to benefit the
department by increasing clinical referral streams. Greiffenstein (2003) provides
practical guidelines for designing and completing research studies in a private
practice setting. The nuances of developing a research program utilizing avail-
able resources, including time, are laid out nicely in this article.
The common thread across these three very different settings, explicit or
implicit in the content of the information provided, is that additional time is
expended to participate in research activities. More importantly, all three of
these authors provide methods to manage this dilemma and manage the time
parameters as much as possible. McCrea cites several factors that are ‘ key’’ in
finding time to mix research and clinical responsibilities in a medical center
environment, including contacts with other staff with research interests, colla-
boration with biostatistics staff, utilization of research assistants, securing out-
side grant funding, and gaining support from department and hospital
administration. These ‘ keys’’ were already cited in the Torres and Pliskin chapter
highlighting the ease of availability in the academic affiliated institution.

Where Did the Time Go? 189


Throughout the Greiffenstein chapter, he implicitly describes process variables
that allow a database to be developed automatically when patients are seen using
newer powerful databases that allow for easy data entry. Additionally, he
maximizes the use of other technological advances including electronic versions
of journals, scientific literature search programs, and software packages to
minimize time required for statistical analysis and manuscript preparation.
Perhaps most importantly, research activities are broken down into concrete
steps that are rooted in a strong scientist/practitioner knowledge base allowing
for research activities to occur in an efficient fashion with minimal wasted time.
Regardless of setting, neuropsychologists can learn from all of the pre-
viously cited authors a variety of ways to streamline their approach, secure
institutional/departmental support, and minimize the time needed to perform
quality research. Efforts can then be directed toward securing external funding
that would allow for time to be carved out of a clinical work week without
losing financial resources necessary to maintain the department or practice.

Improved Time Management


Time management is defined as managing the use of daily schedules for the
purpose of achieving maximum productivity; maximum time utilization; and
not wasting time (Friedman, 2000). As discussed, time is a precious commodity
and the better time is managed, the more there is to use for the things we enjoy
most. While a comprehensive overview of time management is well beyond the
scope of this chapter and this text, a brief overview of one time management tool is
offered to stimulate thinking and future exploration in this area. Covey (1989,
1994) presents a time organizing process that helps categorize tasks in such a way
to emphasize what is important, not merely what is urgent. In the busy world of
neuropsychology and healthcare such a skill is useful as practitioners work to
balance the demands for their time. Covey divides tasks into four quadrants:

i. Important and Urgent (crises, deadline-driven projects)


ii. Important, Not Urgent (preparation, prevention, planning,
relationships)
iii. Urgent, Not Important (interruptions, many pressing
matters)
iv. Not Urgent, Not Important (trivial, time wasters)

Most people spend the majority of their time in quadrants I and III, while
quadrant II is where the best work happens. The key is to recognize where the

190 The Business of Neuropsychology


various tasks that make up your day belong and manage your time accord-
ingly, focusing on the important more than the urgent.
This is a brief overview of a single strategy, but the reader is encouraged to
explore this and other time management tools listed in the reference section
of this chapter to find the right fit. Many valuable rewards await those willing
to develop good time-management practices, including the research and
training activities described previously, program development, and even
non-professional activities like flying kites with your children. The premise
of this text has been to apply process/system control and consistency to
neuropsychological practice and it is this process control that can set the
stage for better time management at the individual level as well.

References, Resources, and Suggested Readings


American Psychological Association Committee on Accreditation (2008).
Guidelines and principles for accreditation of programs in professional psychology.
Washington, DC: American Psychological Association.
Covey S.R. (1989). The 7 habits of highly effective people. New York: Fireside.
Covey, S. R., Merril, A. R. & R. R. (1994). First things first. New York: Simon &
Schuster.
Friedman, J. (Editor). (2000). Time management. Dictionary of Business Terms,
Hauppauge, NY: Barron’s Educational Series, Inc.
Greiffenstein, M. F. (2003). Neuropsychology research in a private practice
setting. In Lamberty, Courtney, & Heilbronner (Eds.) The Practice of
Neuropsychology. Exton, PA: Swets & Zeitlinger.
Hannay, H. J., Bieliauskas, L. A., Crosson, B. A., Hammeke, T. A., Hamsher, K.
deS., & Koffler, S. P. (1998). Proceedings: The Houston Conference on
Specialty Education and Training in Clinical Neuropsychology. Archives of
Clinical Neuropsychology, 13, 157–250.
Lamberty, G. J., Courtney, J. C., & Heilbronner, R. L. (2003). The practice of
neuropsychology. Exton, PA: Swets & Zeitlinger.
Mayer, Jeffrey J. (1995). Time Management for Dummies. Foster City, CA: IDG
Books.
McCrea, M. (2003). The practice of clinical neuropsychology in a general
hospital setting. In Lamberty, Courtney, & Heilbronner (Eds.) The Practice of
Neuropsychology. Exton, PA: Swets & Zeitlinger.

Where Did the Time Go? 191


Reynolds, Helen, and Tramel, Mary E. (1979). Executive Time Management.
Englewood Cliffs, NJ: Prentice-Hall.
Sweet, J., Moberg, P. & Suchy, Y. (2000). Ten-year follow-up survey of clinical
neuropsychologists: Part II. Private practice and economics. The Clinical
Neuropsychologist, 14, 479–495.
Torres, I. J. & Pliskin, N. H. (2003). Adult practice in a university-affiliated
medical center. In Lamberty, Courtney, & Heilbronner (Eds.) The Practice of
Neuropsychology. Exton, PA: Swets & Zeitlinger.

192 The Business of Neuropsychology


11
&&&

Survival Guide for the New Professional

Early career psychologists entering the field of neuropsychology are faced with
many new responsibilities, challenges, and opportunities. They also face what
seems to be a never ending stream of additional hoops to go through to finally
acquire and settle into their first job. For some the process seems to be an easy
transition, but it is safe to say that most new professionals bump into their
share of obstacles on their way to some sense of stability. This chapter is
designed to increase awareness of some of these difficulties and to provide
strategies to navigate the obstacle course as smoothly as possible. This topic
could fill a small text of its own in discussions of internship and postdoctoral
residency selection, licensure and certification issues, job searching activities,
vita preparation, interviewing skills, negotiation strategies, networking and
professional development, financial planning, and other issues. Perhaps an
early career neuropsychologist reading this chapter will take the challenge to
complete such a text. However, the brevity of this chapter allows for only a
brief overview of select professional issues salient to early career psychologists
and specifically neuropsychologists as they complete their training and
embark on their journey into professional neuropsychology.

Securing the First Job


Belar (1998) and Johnson (2001) report that the time required to complete
education and training requirements has significantly increased since the
Boulder model was established, with students now taking an average of
nearly seven years to complete their graduate education in clinical psychology
as opposed to the four year average noted previously. This, coupled with the

193
increased practicum experiences, specialized nature of predoctoral intern-
ships, the typical two year postdoctoral residency for those in neuropsy-
chology, and the emphasis on research during training activities means that
new entries to the job market are coming into the field with significantly
heftier vitae than those of us who came into the field just a decade earlier. This
does not mean that there are employers just waiting to snatch up every new
professional that is graduating from postdoctoral residency. Quite the con-
trary, employers have the opportunity to be selective, as there are many quality
applicants for a select few positions. As a result, as with any marketing activity,
there is a need to project a competitive advantage over the competition (your
peers) in trying to secure that first position.

Job Searches
There are a variety of ways to learn about open positions in neuropsychology.
One of the most useful Internet job search engines for psychology is the
PsycCareers link on the APA Web site: http://psyccareers.apa.org/. This Web
site provides opportunities to search positions that are listed in the APA
Monitor on Psychology as well as other positions posted specifically to this
page. This site allows for searches by location, keywords, and/or job category.
Additionally, this is a good resource for a variety of other job search activities
and job search tools. Additional online neuropsychology job postings
are found on the Web sites of professional organizations, including
the International Neuropsychological Society, Divisions 22 (Rehabilitation
Psychology) and 40 (Clinical Neuropsychology) of the APA, and others.
The USAJOBS Web site is a useful search engine allowing for searches based
on keyword, location, and/or category for posted positions in federal govern-
ment agencies (e.g., VA Medical Centers, military hospitals). These positions
are oftentimes not posted in other locations so it is important to check this site
frequently if there is an interest in working in government facilities.
Mainstream job search engines such as Monster, HotJobs, etc. are not as
useful in neuropsychology, but can occasionally locate open positions on
institution/hospital Web sites that may or may not be posted on the neurop-
sychology-related search engines.
In addition to these search engines and others, job announcements are
frequently posted on the various neuropsychology and rehabilitation
psychology e-mail listserves. Participation in these listserves can be a great
resource to discover early position announcements prior to their posting on
the more formal search engines. Networking with current and former

194 The Business of Neuropsychology


supervisors is another great way to learn about current or future position
openings. The keys to any good job search are to use a variety of resources for
broad coverage and overlap, make frequent checks for updates/changes, have
flexibility in geography and facility type, and starting the process as early as
possible.

Curriculum Vita and Cover Letters


Despite what can seem like a lean job market, job searches will identify
opportunities that warrant further inquiry and exploration. Most position
announcements include a minimum request for a curriculum vita (CV) and
cover letter. These two documents serve as the first impression of the applicant
to those hiring for the position. In fact, for some positions decisions about the
applicant will be made regarding possible fit after reviewing these materials for
only a few minutes. It is possible that a quality applicant will be rejected
simply because the CV and cover letter were poorly prepared or did not make
a good impression. Therefore, it is important that these documents result in a
solid first impression that at the very least keeps the applicant under
consideration.
There is no defined algorithm or format for producing a successful CV and
cover letter. There are many guides that can be used, but pre-packaged resume
builders are typically not designed for medical or academic based settings and
may steer you in the wrong direction. Consulting with supervisors or trusted
mentors is usually a good starting point in the development of a quality CV.
Most are willing to share their own CVs (some have old CVs from their early
career period) that can be used as a formatting guide. Because of their limited
background thus far, early career professionals need to describe the activities
of their internships, residencies, and first positions in sufficient detail to allow
the reader to get a good grasp of training, experience, work settings, and
competencies. Over time, these descriptions become less important (and less
lengthy) as the professional’s activities become more apparent through work
history, research and presentations, and other activities. While community
activities are nice, professional activities will attract more attention. It is nice
that an applicant coaches youth sports or is involved in the community
theater, but these activities may not belong on a professional CV. The focus
should be on what identifies the background, training, and professional
abilities that highlight the qualifications for the position being sought.
While CVs present a general picture of a candidate’s background educa-
tion, training, work history, and professional activities, the cover letter

Survival Guide for the New Professional 195


provides an opportunity to introduce the applicant to the reviewer and
describe specifically what makes him or her the right person for the position.
It does not need to be lengthy, but it should consist of more than a simple
paragraph stating that he or she is applying for the position and has attached a
CV. It should convey why the applicant is applying for that specific position
and why he or she is the right person for the job. That means that the applicant
should know something about the position above and beyond the position
description provided in the announcement. This may require a phone call to
the contact person to learn more before applying. The cover letter should also
convey an openness to discuss qualifications and overall fit for the position.
While peers are helpful in reviewing materials for misspellings, grammar, etc.,
it is more important to have the materials reviewed by a supervisor or mentor,
specifically one who has been in the position of hiring. It may be important to
ask that the reviewer provide feedback consistent with how he or she would
rate the materials of an unknown candidate. More critical reviews result in a
better outcome for the overall product.

Licensure and Board Certification


In my years of hiring for open positions, it always amazes me when applicants
quickly point out that they are ‘‘board eligible.’’ While completing neuropsy-
chology training consistent with the guidelines set out by the Houston
Conference (Hannay, et al., 1998) is impressive, it holds little value if the
applicant is not ‘‘license eligible.’’ There is a saying that ABD (i.e., All But
Dissertation) also means All But Desirable in the job market. The same is
true for an applicant who has completed their degree plus a two-year resi-
dency, but has not yet started the licensure process (ABL – All But Licensed).
Many facilities cannot even bring an applicant in for an interview unless they
have, at a minimum, taken and passed the Examination for Professional
Practice in Psychology (EPPP). Having completed, or at least started, the
licensure process prior to applying for positions provides a competitive
advantage in the early career job market.
As described earlier, the average time required to complete a graduate
program in psychology has increased. Additionally, graduates must also
complete an additional year of supervised postdoctoral experience in
most states to be license eligible. This is typically a non-issue for new
neuropsychology professionals who are completing a postdoctoral resi-
dency. Efforts are in place to advocate for licensure at the receipt of the
doctoral degree, eliminating the need for the additional year of

196 The Business of Neuropsychology


postdoctoral supervision. At their February 2006 meeting, the APA
Council of Representatives voted to adopt a statement as APA policy
that affirms the doctorate as the minimum educational requirement for
entry into professional practice as a psychologist. This paves the way for
advocating a removal of the requirement of an additional year of post-
doctoral training for licensure. This does not change the expectation for
postdoctoral training in neuropsychology, but does allow for licensure to
be completed prior to the end of residency. Licensure requirements in
most states consist of the following:

• Completion of a doctoral degree in clinical, counseling, or


school psychology – typically from an institution that is
accredited by APA or the Canadian Psychological Association
(CPA).

 If your program is not accredited, there typically are additional


questions to be answered or supporting documentation
required to show that the degree requirements meet the
Association of State and Provincial Psychology Boards
(ASPPB) or National Register definition of a doctoral degree.

• Completion of a specified number of hours of supervised


predoctoral professional experience – typically from an APA or
CPA accredited pre-doctoral internship. Again, if the internship
is not accredited, additional questions and documentation may
be required.
• Demonstration of an additional year of supervised professional
experience – not necessarily a formal postdoctoral experience.
• Obtaining a passing score on the EPPP.
• Obtaining a passing score on the state’s jurisprudence exam
(where applicable).
• Passing an oral examination from licensed peers (where
applicable).

These requirements are relatively standard across states, but some significant
differences remain. Still, it is beneficial to have this process completed, or at
least underway, prior to applying for open positions.
Obtaining licensure is not automatic, and by no means is it expedient. De
Vaney, Olvey, Hogg, & Counts (2002) highlight the difficulties in meeting

Survival Guide for the New Professional 197


licensure requirements and the variability across states. The process was felt to
be sufficiently taxing that they asked the question, ‘ Have we raised the bar too
far?’’ While individual states differ in their requirements, some difficulties seem
to remain relatively common across states, highlighting the need to start early:

• It takes longer than licensing boards indicate and longer than


you expect.
• Some items mailed to the board office will not be received.
• Some items received by the board will be lost.
• Your program requirements may not match the board’s
interpretation of appropriate requirements.
• The EPPP is harder than you think (Why else would there be so
many study guides, seminars, preparation courses, etc.).
• Some jurisprudence and/or oral examinations are only given a
limited number of times per year, possibly delaying the
completion of licensure.
• A state board will sometimes cancel its monthly meeting,
delaying final review of materials.
• Even with reciprocity and having an ABPP diploma, completing
the licensure process takes a significant amount of time, effort,
diligence, planning, and patience.

There have been increasing efforts to encourage new professionals to start the
board certification process early in their careers. In fact, the American Board of
Professional Psychology (ABPP) currently has an early entry program offering a
discounted application rate for unlicensed postdoctoral residents to start the
general application prior to the completion of their residency. This should not
be mistaken for an effort to delay the licensure process, but instead as encour-
agement to apply for licensure and board certification simultaneously. The
board certification process is more demanding and more time consuming, so
starting the process early, as with licensure, keeps the momentum going in an
early career psychologist’s professional development.
There are several certifying boards in neuropsychology available for con-
sideration and opinions about which board is best are not hard to find. Making
a determination of which board is the right board is not the purpose of this
text. However, early career professionals should take care when considering
which board certification to pursue and make the decision based on stability,
credibility, and legitimacy. There are many ‘‘vanity’’ boards available that are

198 The Business of Neuropsychology


happy to provide a credential with little more than payment required as a
qualification. Before putting the time and energy into any specific board it is
best to get the facts and consult with trusted colleagues.
As a point of reference, the American Board of Professional Psychology
(ABPP), incorporated in 1947 with the support of the American Psychological
Association, provides oversight certifying psychologists competent to deliver
high quality services in various specialty areas of psychology. The mission of
the ABPP is ‘‘to increase consumer protection through the examination and
certification of psychologists who demonstrate competence in approved
specialty areas in professional psychology.’’ Currently, the ABPP serves as a
unitary governing body of 13 separately incorporated specialty examining
boards that assure the establishment, implementation, and maintenance of
specialty standards and examinations by its member boards. Further informa-
tion regarding the ABPP is available on their Web site at www.abpp.org.
The American Board of Clinical Neuropsychology (ABCN) is the specialty
board within ABPP that oversees an examination process for board-certification
in clinical neuropsychology. It is, in fact, the fastest growing and most successful
ABPP specialty board, with a greater proportion of the potential pool of specialists
becoming board certified than any of the other twelve ABPP specialty examination
boards. ABCN board preparation workshops are offered annually at several
national conferences, including the annual meetings of the American Academy
of Clinical Neuropsychology (AACN), International Neuropsychological Society,
and the National Academy of Neuropsychology. These workshops provide an
excellent opportunity to learn more about the boards as well as the credentialing
process. For those considering the application process, a well-rounded paper-
back text has been developed (Armstrong, Beebe, Hilsabeck, & Kirkwood, 2008),
and a well-organized group of volunteers has devised numerous resources under
the auspices of AACN, known as Be Ready for ABPP in Neuropsychology
(BRAIN). Information regarding the supportive and mentoring resources,
including listserv and study materials, of BRAIN is available online at http://
www.cincinnatichildrens.org/svc/alpha/n/neurobehavioral/brain/. For additional
information regarding board certification through ABCN, visit their Web site at
www.theabcn.org.

Managing the Job Offer


Hopefully, all of the time and effort put into the job search will result in one or
more job offers. Identifying the right position for the applicant can be as
difficult as identifying the right applicant for the position. There is rarely a

Survival Guide for the New Professional 199


‘‘perfect position’’ that has all of an applicant’s wants and desires in terms of
salary, roles and responsibilities, setting, hours, support services, geographic
location, etc. In choosing the right position to accept there will need to be
some give and take and weighing of pros and cons. It is vital to get as much
information as possible about the opportunity, including short and long term
expectations. It is also important to look at the promises made and the
feasibility that they can be fulfilled.
The first factor thought of in job negotiations is the salary range. It can be
fun to look at salary surveys for neuropsychology and dream of large homes
and fast cars. The reality is that the initial return on the education investment
dollars in neuropsychology is not as good as one would hope. Salary ranges
are large and vary by geographic region, setting, position type, and other
considerations. Surveys, such as the AACN/TCN salary survey by Sweet et al.
(2006) and the APA Center for Workforce Studies (Li, Wicherski, & Kohout,
2008) demonstrate the wide range of variability in salaries dependent upon
multiple factors. The Federal Pay Scale (use by VA Medical Centers and other
federal institutions) has less extreme variability, although geographic adjust-
ments are made. The current Federal Pay Scale tables with geographic
regions are available online. This is a good reference source in salary nego-
tiations due to its ease of use and geographic corrections. As a point of
reference, a newly licensed clinical psychologist is eligible for a General
Scale (GS) level of GS 13-1 (grade 13; step 1).
Despite the wide variance seen in the various salary surveys and pay
schedules, individual facilities will have a much more stable (and restrictive)
salary structure. Salaries are typically determined by Human Resources sur-
veys of similar facilities in their area and a salary range or ‘‘band’’ for the
position title is created and divided into quartiles. Salary offers will be based
on this range, typically allowing for annual raises within the band over the
coming years. As a result, negotiations in salaries are not as open-ended as
many applicants may hope. There are set restrictions on how high a salary can
go and still allow for merit pay increases in upcoming years. It is important to
recognize the full compensation package taking into account paid time off,
sick leave, various health insurances, disability, retirement contributions, etc.
This can be referred to as the ‘‘hidden paycheck.’’ Typically, an additional 30%
of the salary can be added for the cost of benefits and these added to the actual
salary make up the total compensation package.
Despite the ‘‘ceiling’’ effect of hospital-based salaries, this doesn’t paint the
entire picture. There still are a few areas of negotiation that are beneficial to

200 The Business of Neuropsychology


both the psychologist and the facility. Hospitals and private practices tend to
request or require non-compete contracts. Sometimes these are as negotiable
as salary, but sometimes they are not. If the expectation is that an individual
will never sign a non-compete contract, at some point he or she may have a job
offer rescinded as a result. It is best to negotiate around the non-compete by
way of distance from the institution/practice, time parameters, clearly identi-
fying what activities are included, etc. Some other areas of negotiation include
added incentive for high productivity, allowance or sharing of medico-legal
practice reimbursement and deposition fees, grant sharing, continuing
education dollars, professional dues allowance, and others. It is best to ask
about these options rather than demand them. If you don’t ask they may not
tell. As a final note, if an employer actually pays employees what they are
‘‘worth,’’ they will not be in business for very long. As with any commodity, it is
necessary to generate more revenue for any good or service than what it costs
to produce – no margin, no mission.

First Job Issues


When a new neuropsychologist takes a first non-training job there is a risk
of developing an imposter syndrome – that feeling that maybe I am really
not ready for this and someone will figure that out and blow the whistle.
Those feelings are not reserved for the new professional. As neuropsychol-
ogists advance in their careers those feelings may come and go as new
challenges present themselves. The key is to identify the roles and respon-
sibilities associated with a position as well as the identified performance
expectations. If there are no clear expectations documented, it is appro-
priate to request them to know the standards by which performance will
be measured. Additionally, reasonable personal expectations and targets
should be established to guide not only work performance, but professional
development as well.
It is worth noting that as an early career professional gets settled into a
position, the negatives of the job, setting, and possibly geographic location can
come to the forefront as other position announcements are seen that would be
‘‘perfect.’’ As stated previously, there is no perfect position and the grass is not
always greener in someone else’s yard. Before jumping, consider how well the
current yard has been fertilized, watered, and groomed. Has it had time to
grow, fill in, and mature? What about the current position can be improved to
better suit wants, desires, and expectations? It is also important to notice the
can of green spray paint hidden behind the shed in the other yard.

Survival Guide for the New Professional 201


Other Early Career Issues
Networking/Mentoring
The American Psychological Association Committee on Early Career
Psychologists (APA-ECP) developed a brochure entitled Building Bridges:
Opportunities for Learning, Networking, and Leadership (2006). This publication
outlines not only the benefits of networking and mentoring, but also specific
ways to become a part of the professional community. Networking activities
allow new professionals to develop and foster relationships with other profes-
sionals that share interests, goals, and passions for specific areas within the
profession of psychology and neuropsychology. It is these relationships that lead
to action through participation in organizations, committees, conference activ-
ities, and eventually leadership activities within the organization. Additionally,
networking allows you to meet individuals that may provide mentorship
through advice, consultation, and feedback based on their own professional
experience, as well as other professionals for research, clinical, or other forms of
collaboration.

Professional Development
Once quality networks are established, professional development and involve-
ment happens in a very natural fashion. These relationships spawn increased
activities within organizations and ultimately some early leadership opportu-
nities. As described in the APA-ECP brochure, most professional associations
have a hierarchical governance structure run by an executive committee that
oversees the administrative activities of the organization as well as a variety of
boards, committees, and other leadership groups. For new neuropsychologists,
it is best to identify opportunities that build on your strengths and expertise
while serving the organization.
There are many committees in every organization that are always looking
for individuals to step up and take an active role. Find a committee that fits
your interests and volunteer to serve. Taking an active role in the committee
strengthens networking and professional relationships and creates an iden-
tity with a new set of professional peers. For some, increased interest in the
activities develops and informal leadership qualities emerge. Ultimately, it
is very possible that they end up as a chair of the committee. From there,
the professional growth continues, possibly including elected positions
within the organization. It all started with joining a committee and getting
involved.

202 The Business of Neuropsychology


Loan Repayment, Early Career Research Awards, and Financial Planning
With so many new graduates facing mounting debt due to student loans that
can rise into six figures, alternative ways of paying down this debt are often
sought. Hawley (2005) outlines the National Health Service Corps (NHSC)
loan repayment programs and the application process. NHSC is a federal loan
repayment program that assists health professionals in reducing their debt by
working in underserved health professional shortage areas. For new profes-
sionals looking for such an opportunity, the Hawley article is a great resource.
Additional information can be obtained directly from the NHSC Web site.
Another way to acquire loan repayment assistance or increase their finan-
cial bottom line is through early career research awards. The National Institute
of Health (NIH) gives Career Development Awards for early career profes-
sional through the NIH Pathway to Independence (PI) Award (K99/R00) and
through the Loan Repayment Program (L30). Additional information can be
obtained from the Web sites provided in the reference section of this chapter.
As unbelievable as it may seem as early career neuropsychologists embark
on a new career, most are already behind their peers in retirement planning.
Think for a moment about your high school graduating class and your peers
that did not obtain the higher degree requirements that your path did.
Neuropsychologists typically enter the work force in their late 20’s or early
30’s. This leaves them five or more years behind similar aged peers in terms of
retirement savings, not to mention the possibility of accumulating a significant
amount of debt in the process. Suffice it to say, as early career neuropsychol-
ogists there is some catching up to do, and as presented above, the salaries are
not necessarily helpful in closing the gap.
Early financial planning activities are very useful in establishing good habits
on the front end that will pay large dividends over time. The APA-ECP devel-
oped a booklet entitled Financial Planning for Early Career Psychologists: From
Repaying Student Loans to Successful Retirement that provides some initial insights
into how to plan for the future. Additionally, professional financial planners are
useful to map out a plan for investment and retirement security while paying
down the education-related debt in the most expeditious fashion.

References, Resources, and Suggested Readings


American Psychological Association Committee on Early Career Psychologists.
(2008). Financial planning for early career psychologists: From repaying student loans
to successful retirement. Washington, DC: American Psychological Association.

Survival Guide for the New Professional 203


American Psychological Association Committee on Early Career
Psychologists. (2006). Building bridges: Opportunities for learning, networking,
and leadership. Washington, DC: American Psychological Association.
Armstrong, K. E., Beebe, D. W., Hilsabeck, R. C. & Kirkwood, M. W. (2008).
Board certification in clinical neuropsychology: A guide to becoming ABPP/ABCN
certified without sacrificing your sanity. New York: Oxford University Press.
Belar, C. (1998). Graduate education in clinical psychology: ‘‘We’re not in
Kansas anymore.’’ American Psychologist, 53, 456–464.
De Vaney, C., Hogg, A., & Counts, W. (2002). Licensure requirements: Have we
raised the bar too far? Professional Psychology: Research and Practice, 33, 323–329.
Hall, J. E., Wexelbaum, S. F. & Boucher, A. P. (2007). Doctoral student
awareness of licensure, credentialing, and professional organizations in
psychology: The 2005 National Register International Survey. Training and
Education in Professional Psychology, 1, 38–48.
Hawley, G. (2005). Got loans? Understanding the National Health Service
Corps Loan Repayment Program. The Kansas Psychologist, 31(3).
Johnson, N. (2001). Is our education system ready for the next generation?
APA Monitor, 32(2), 5.
Li, X., Wicherski, M., & Kohout, J. L. – American Psychological Association Center
for Workforce Studies (October, 2008). Salaries in psychology 2007: Report of the
2007 APA salary survey. Washington, DC: American Psychological Association.
Hannay, H. J., Bieliauskas, L. A., Crosson, B. A., Hammeke, T. A., Hamsher,
K. deS., & Koffler, S. P. (1998). Proceedings: The Houston Conference on
Specialty Education and Training in Clinical Neuropsychology. Archives of
Clinical Neuropsychology, 13, 157–250.
Sweet, J. J., Nelson, N. W., & Moberg, P. J. (2006). The TCN/AACN 2005
‘‘salary survey’’: Professional practices, beliefs, and incomes of U. S.
neuropsychologists. The Clinical Neuropsychologist, 20, 325–364.
Vaughn, T. J. (Ed.). (2006). Psychology licensure and certification: What
students need to know. Washington, DC: American Psychological Association.

Resources for Early Career Neuropsychologists

• APA Committee on Early Career Psychologists CECP - The CECP


Web site (www.apa.org/earlycareer/) has very useful information
on resources, careers, activities, Listservs, and other topics.

204 The Business of Neuropsychology


• Be Ready for ABPP in Neuropsychology (BRAIN) http://www.
cincinnatichildrens.org/svc/alpha/n/neurobehavioral/brain/
• National Health Service Corps (Information on the NHSC
Loan Prepayment Program) – http://nhsc.bhpr.hrsa.gov/
• The National Institutes of Health Career Development Awards
 NIH Pathway to Independence (PI) Award (K99/R00) http://
grants.nih.gov/grants/guide/pa-files/PA-06-133.html%00
 Loan Repayment Program (L30) http://www.lrp.nih.gov/
about/lrp-clinical.htm

• National Register – www.nationalregister.org


• PsycCareers: APA’s Online Career Center – http://psyccareers.
apa.org/
• U. S. Government Federal Pay Scale – http://www.opm.gov/oca/
08tables/indexGS.asp

Survival Guide for the New Professional 205


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Professional Development for the ‘‘Seasoned’’ Professional

‘‘It’s not old, just older.’’


Bon Jovi (Billy Falcon & Jon Bon Jovi, 2000)

Neuropsychologists reaching the middle to late stages of their careers do so


with their own histories, hopes, and aspirations. While early career neurop-
sychologists focus on securing their first jobs, creating professional identities,
and looking for ways to advance professionally, more mature neuropsychol-
ogists have the opportunity to take stock in their current situations and decide
where they want to focus their energies in the future. There are those who
hope to continue to progress in terms of professional development, notoriety,
prestige, and purpose, while others prefer less time in the limelight and more
time with non-professional activities. Neither path is right or wrong. They just
lead different places with different rewards. Also, neither path is permanent.
Life brings changes with many twists and turns with variations in profes-
sional roles and responsibilities; ever-changing family dynamic, activities and
responsibilities; new opportunities for community involvement; and even
opportunities for professional advancement through promotion or job
changes. Eventually, future planning focuses more on end of career issues
such as decreasing professional involvement, transferring responsibilities to
others, closing or selling a practice, and/or retirement. As with any develop-
mental process, career/professional development has a beginning, middle, and
end. While previous chapters presented material in a ‘‘practical’’ manner with
descriptions or ideas communicated in more of a ‘‘how to’’ fashion, the current
chapter is designed more to stimulate thinking for the more middle and late

207
career neuropsychologist and to explore some opportunities for consideration
rather than offering direct information. Practical resources are offered where
applicable, but this chapter is intended to be more open-ended in its format.

Where Am I Now and Where Am I Going?


As described in Chapter 9, the SWOT analysis is a good way to gain perspec-
tive about the status of an organization and to plan for future program
development. This can also be used for individuals that are looking at their
own professional status and looking at future professional development. For
neuropsychologists who have been working in the field for a number of years,
a personal SWOT analysis is useful in determining their current status and
outlining goals and plans for the future. To review, the SWOT analysis is used
to outline Strengths, Weaknesses, Opportunities, and Threats. For the indi-
vidual neuropsychologist, this allows exploration of the ‘‘internal’’ strengths
and weaknesses or what he or she is bringing to the table, along with the
‘‘external’’ opportunities and threats related to their current professional envir-
onment as well as other areas. A personal SWOT should not completely focus
on professional activities, but should also include personal aspects such as
family, community, and personal activities and interests outside of the work
place. Ultimately, the goal is to use the SWOT analysis to asses the ‘‘total’’
current situation and to identify opportunities for development and improve-
ment in a balanced fashion. Future development can then proceed in a rational
fashion whether it is to focus on increasing financial status and security,
enhance current vocational/professional opportunities, embark on new pro-
fessional journeys, increase professional stature, or satisfy internal develop-
ment and goals.

Increasing the Financial Bottom Line


As noted in the early career neuropsychologist chapter, salary surveys by
Sweet et al. (2006) and the APA Center for Workforce Studies
(Li, Wicherski, & Kohout, 2008) demonstrate the wide range of variability
in salaries for psychologists and neuropsychologists. Two of the factors that
influenced salaries most prominently in these surveys were work setting and
years since completing training. It is sometimes difficult to significantly
change an individual’s salary beyond yearly cost of living or merit pay
increases without a change in position title (promotion) or position location
(change of institution or department). Salary negotiations typically occur at
the time of hire rather than during a professional’s tenure within a job. There is

208 The Business of Neuropsychology


the option of looking for greener (i.e., more lucrative) options elsewhere. This
may result in increased salary as other institutions provide encouragement to
leave one location for another. Additionally, this may lead to a renegotiated
salary opportunity from a current employer as part of a retention package to
keep a neuropsychologist from leaving. Still, this increased salary may come at
a cost of decreased perceived commitment to the current facility or a general
sense of instability.
It can be difficult to raise this issue when there is no desire to change
locations. For those secure and happy in their current positions who are
simply looking to increase their financial security and happiness within the
present setting, the focus is on changing the identified expectations, roles, and
responsibilities (i.e., position title). This could be accomplished through an
advancement of job title to increase the salary band (e.g., ‘‘Senior’’
Neuropsychologist) or possibly promotion to a position with greater leader-
ship responsibilities (e.g., Coordinator, Director, Manager, etc.). With this
title change and increased performance expectations comes a change in salary.
Another avenue to increase financial standing within an organization is to
diversify activities to increase revenue generation or status within the organi-
zation. Program development activities in new service areas can be beneficial
in both aspects, especially if more lucrative referral streams are identified. For
the middle to late career neuropsychologist whose reputation in the commu-
nity has developed in prominence, this may mean increasing medico-legal
referrals that are known to be more financially lucrative. Negotiations
regarding salary increase, revenue sharing, and deposition dollars are
common with an increase in this referral stream. Securing grant funding for
research or program development can be another way to increase a neurop-
sychologist’s financial value within an institution. The key is to explore the
opportunities within the present organization and identify avenues to improve
both the institution’s and your own bottom line (SWOT analysis). The chal-
lenge is to present these ideas in a rational and collaborative, yet persuasive,
manner based on facts and figures rather than emotions.
For those in private practice, increases to the financial bottom line are
based on increasing revenues and/or reducing costs. Increasing revenues
requires improving the payor mix by re-evaluating current referral streams
and adding more lucrative sources if possible. Again, as a neuropsychologist
becomes more experienced, this typically comes with increased notoriety and
prestige. This may mean increased referral opportunities and as a result an
opportunity to be selective in which streams will be the focus of the practice.

Professional Development for the ‘‘Seasoned’’ Professional 209


For stability and security purposes there remains a need for diversification in
referral sources, but consideration of payor mix can now also be considered.
This may mean expanding the practice to include entry-level providers to
manage the volumes in the lower payment services (e.g., Medicare), allowing
the more experienced professional to grow more lucrative services (e.g.,
Medico-Legal). In short, if the practice has been in existence for a number of
years it is likely time to revisit and revise the business plan for future growth
and possible change in the business/corporate structure if needed.

Enhancing Professional Status and Intellectual Stimulation


Satisfaction in work is dependent upon more than just financial security. As
neuropsychologists approach the middle to late career stages of their career
they also look to improve their satisfaction in their professional endeavors as a
whole. All work and no play makes Johnny a dull boy and all clinical work and
no other interesting professional activities makes a neuropsychologist stag-
nant. To avoid the mid-career doldrums, diversification of professional activ-
ities stimulates continued interest and engagement in the profession of
neuropsychology. There are many opportunities for more experienced neu-
ropsychologists to share their knowledge and experience for the good of the
profession.
While adding research activities is certainly an appropriate way to diversify
professional activities, it is not uncommon for middle to late career neurop-
sychologists to already have years of experience in various research projects or
possibly a single line of research. A new avenue might be to expand the
presentation of this material through a written collaborative article, chapter,
or book or possibly a workshop at a national meeting or other venue. This
allows them to continue in their areas of interest, while developing new skills
and expertise in disseminating the information. This also provides additional
opportunities to extend their notoriety and prestige in the neuropsychology
community.
In a similar vein, having the additional years of experience and expertise
provides the opportunity to gain increased knowledge and perspective within
the field of neuropsychology. Presenting this knowledge through more theo-
retical/practice based writings can be very useful in stimulating thinking
within the field of neuropsychology. Some great examples of this include
writings such as Paul Meehl’s (1973) ‘‘Why I Do Not Attend Case
Conferences,’’ Carl Dodrill’s (1997) ‘‘Myths of Neuropsychology,’’ or
Prigatano’s (1989) ‘‘Work, Love, and Play After Brain Injury.’’ These articles

210 The Business of Neuropsychology


have become classics in the field and have served to stimulate thinking for
many years.
To cite the work of Meehl (1973), he mentions that as a chairman of the
Psychology Department he ‘‘had a policy of not hiring faculty to teach courses
in the clinical and personality area unless they were practitioners and either
had the ABPP diploma or intended to get it’’ (p. 226). This demonstrates his
belief that to teach in these areas the psychologists needed appropriate back-
ground and experience. As such, experienced neuropsychologists are well
suited to pass their knowledge and experience in classroom environments.
This does not necessarily mean a change in jobs. Adjunct teaching opportu-
nities are commonly available and universities would welcome the chance to
have an experienced practitioner in their classrooms. Additionally, passing
this knowledge through practicum, internship, and residency activities can be
just as stimulating as possible work in educational settings. Teaching and
training activities come with both pain and joy, but overall this way of giving
back to the profession and ensuring its health for the future can be rewarding
in many ways.
Finally, there are vast numbers of professional organizations at local,
regional, national, and international levels that promote the advancement of
psychology and neuropsychology. As discussed in the early career chapter,
these organizations are always looking for professionals to become more
involved. This is especially the case for more advanced practitioners who
have more to offer in terms of experience, perspective, leadership, and men-
toring. Increasing involvement in these organizations, especially in leadership
and mentoring roles, provides an opportunity to ‘‘give back’’ while investing in
the future of neuropsychology.

Continued Professional Development and Advancement


Despite the years of experience and the continuous learning that occurs over
the years working in neuropsychology, there is always room for continued
learning and professional development. As can be seen in just the past two
decades, the field of neuropsychology is rapidly changing with advance-
ments in neuroradiological methods, the neuropsychological measures used,
the time allotted for evaluation, education and training methods, billing and
coding activities, reimbursement patterns, etc. It is imperative that experi-
enced neuropsychologists maintain awareness of these trends and contribute
to the continued growth of the specialty. It is also important to keep up with
the professional changes regarding credentialing. Board certification is moving

Professional Development for the ‘‘Seasoned’’ Professional 211


toward the expectation, rather than the exception. Most job announcements
now include ‘‘board certification or eligibility’’ as a requirement for considera-
tion. Armstrong et al. (2008) in their guide to becoming board certified in
clinical neuropsychology highlight the advantages of board certification
including the following ‘‘top ten’’ reasons:

1. Higher Income
2. Job Satisfaction
3. Job Security
4. Credibility
5. License and Practice Mobility
6. Streamlined Credentialing
7. Increased Knowledge Base
8. Reduced Public Confusion
9. Personal Validation and Satisfaction
10. Quality Assurance

Some of these reasons may not apply to every individual neuropsychologist,


but this list does provide basis for pursuing board certification, even later in a
neuropsychologist’s career.
In addition to board certification, there may be opportunities for advance-
ment through further training and education to prepare for administrative roles
or positions. Callahan (2005), in his article entitled ‘ Rehabilitation Psychologist
as Health Care Executive: A Platform for Professional Diversification,’’ outlines
the rationale as to why psychologists are suited for administrative positions. He
describes the rapid turnover and changes facing U.S. hospitals and the growing
need for leadership in healthcare administration. While recruitment efforts have
typically focused on non-healthcare professionals (e.g., MBAs or finance profes-
sionals) who lack the traditional patient-centered values, Callahan suggests that
this need for new leadership reflects an opportunity for psychologists to utilize
their unique skills to move into healthcare leadership positions. He presents a
rationale for psychologists to move into healthcare leadership based on five core
competencies:

• Clinical – Psychologists have an understanding of healthcare


delivery from a provider perspective.
• Relational – Psychologists have core interpersonal skills that
could translate to improved personnel management.

212 The Business of Neuropsychology


• Analytical – Psychologists training in psychometric/statistical
knowledge and their ability to understand and integrate data is
valued in this setting.
• Methodological – Psychologists bring a hypothesis testing
mindset that can be applied to strategic planning and follow
through with objective evaluation.
• Ethical – Psychologists have established ethical standards of
practice that are rarely addressed in MBA programs.

The sixth area he describes is ‘‘financial’’ and this is presented as a ‘‘give and
take proposition.’’ Psychologists typically come to administrative roles with
little experience in the business world, little or no education in business as a
part of their doctoral curriculum, limited understanding of the language of
business, and little or no training in financial analysis. For psychologists that
make up for these limitations through additional educational activities (e.g.,
earning an MBA, MHA, or MPH), there is significant reward waiting on the
other side. Specifically, psychologists who can move into administrative posi-
tions typically have improved long-term earning potential and increased
power, prestige, and influence in their institutions. For the discipline as a
whole, psychologists in these positions are provided a seat at the adminis-
trative table, affording them the opportunity to keep psychology as a discipline
from becoming irrelevant and to promote positive changes from within
(potentially from the top).
Administrative roles are not meant for everyone, but for those who have an
interest in this area, the payoffs can be rewarding personally, professionally,
and financially. It is a not an automatic transition and is most effective when it
occurs in a natural developmental progression. Psychologists are rarely hired
directly into administrative positions. Typically, the leadership and knowl-
edge base they demonstrate in clinical settings target them for advancement
into supervisory or management activities. Administration looks for future
leaders that have an ability to motivate and influence others without de-
manding or setting a negative tone. This behavior may be seen in psycholo-
gists/neuropsychologists working in team environments or within a
departmental or training program structure. As psychologists move into
leadership/administrative roles it is important to learn the language of busi-
ness and learn as much as possible along the way. Additional education and
training may be useful for those with administrative aspirations to avoid the
Peter Principle – getting promoted to a level of incompetence

Professional Development for the ‘‘Seasoned’’ Professional 213


Slowing Down or Fading into the Sunset
Despite all of the discussion in this chapter about professional development,
diversification, and advancement, for some the choice is to gradually decrease
professional activities and focus time and energy in non-professional
directions. This may or may not mean ending their professional
career completely, but does mean altering their professional activities in a
significant way.

Retiring to Full Time


I have had several colleagues later in their careers describe themselves as
being ‘‘retired’’ into a full time position after spending many frenetic years
dedicated to their clinical activities, research, teaching and training, and
professional organizations. This partial retirement allowed them to spend
more time with family or on other areas of interest that did not involve
neuropsychology. Reaching the point where it is okay to say ‘‘no thanks’’
when an opportunity presents itself is a sign of not only maturity, but also
humility. Still, it takes planning and preparation to make this transition
successfully.
Priorities and values change over time and making a decision to walk
away from some responsibilities is not easy. For some this means a change in
job due to the high profile/high productivity expectations of current posi-
tions. Without changing the setting, the hours and expectations would not
change. This means seeking new employment and being clear about expec-
tations for a new position. A new employer may have the same high
expectations as the prior employer if clear intentions are not laid out
beforehand. The positive of this is that searching for a new position with
the plan of slowing down allows the professional to look more at location
and entry-level expectations rather than salary and career advancement
opportunities.
Some late career professionals choose to slow down or reduce responsibil-
ities by mentoring a junior colleague to take the reins and carry the department/
practice forward. This is a process that typically is a natural progression over
several years, but still involves planning and open communication. This passing
the mantle does not come without stress and tension, as experienced neurop-
sychologists must now withhold judgment and opinion when the newly identi-
fied leader takes things in a different direction or does things in a different way.
This requires redefining roles and living up to the change in status. On the more
positive side, the late career neuropsychologist has the opportunity to observe

214 The Business of Neuropsychology


and appreciate the growth and development of a junior colleague and continue
to provide support and mentoring as needed.

Retirement Issues and Closing a Practice


Ending a career in any profession requires advance planning and preparation
on multiple levels. In neuropsychology it is impossible to simply close the
doors or walk away. There are many clinical, ethical, legal, and business
obligations that must be managed. Due to the extent of these obligations, it is
recommended that neuropsychologists consult with accounting and legal
professionals as they embark on this endeavor. The American Psychological
Association has a Checklist for Closing a Practice developed by their
Corporate Relations and Business Strategy Staff (2005) that is applicable
not only to those in private practice, but also those transitioning out of
clinical practice in other settings. This checklist includes activities related
to planning for the retirement/closure (Getting Started); informing current
and past clients and appropriately managing their records (Clients and Their
Records); closing out financial records and exploring options to sell the
practice (Finances); transitioning the business aspects to partners or
buyers, ending business relationships, and dispensing of business related
assets and equipment (Business Issues); and personal and professional
liability concerns (Take Care of Yourself). Due to the wide variation among
business structures, settings, and organizational activities, it is not possible
to address all of these issues in a single chapter. It is important to realize that
this can be a lengthy and tedious process and legal and accounting profes-
sionals will likely be needed to assist in this transition.
For those not in private practice settings, there is still a need to make
appropriate plans for retirement and ending a clinical practice. Many of
the items in the checklist described above are still applicable. There is a
need to make appropriate referrals to current, and possibly some previous,
clients to avoid abandonment and to maintain a continuum of care.
Additionally, there is a need to identify a custodian of records so that
patient information is stored in a manner that is compliant with HIPAA
and other regulations. It is important to contact professional referral
sources to inform them of your plans and potentially to provide alternative
referral options. Depending on the nature and setting of the practice, other
issues may warrant attention as well, including any planned ongoing
consultative relationships, notification of professional organizations, notifi-
cation of licensing boards, etc.

Professional Development for the ‘‘Seasoned’’ Professional 215


References, Resources, and Suggested Readings
American Psychological Association Corporate Relations and Business
Strategy Staff (2005). Checklist for Closing Your Practice. Washnington,
DC: American Psychological Association. Available online at http://www.
apapractice.org/apo/insider/practice/pracmanage/business_strategies/
closing.html#.
Armstrong, K. E., Beebe, D. W., Hilsabeck, R. C. & Kirkwood, M. W. (2008).
Board certification in clinical neuropsychology: A guide to becoming ABPP/ABCN
certified without sacrificing your sanity. New York: Oxford University Press.
Falcon, B. & Bon Jovi, J. (2000). Just older. From the album Crush. New York:
The Island Def Jam Music Group.
Callahan, C. (2005). Rehabilitation psychologist as health care executive: A
platform for professional diversification. Rehabilitation Psychology, 50, 177–182.
Dodrill, C. B. (1997). Myths of neuropsychology. The Clinical
Neuropsychologist, 11, 1–17.
Li, X., Wicherski, M., & Kohout, J. L. – American Psychological Association
Center for Workforce Studies (October, 2008). Salaries in psychology 2007:
Report of the 2007 APA salary survey. Washington, DC: American Psychological
Association.
Meehl, P. E. (1973). Why I do not attend case conferences. In P. E. Meehl,
Psychodiagnosis: Selected Papers, (pp. 225–302, Chapter 13). Minneapolis:
University of Minnesota Press.
Prigatano, G. P. (1989). Work, love, and play after brain injury. Bulletin of the
Menninger Clinic, 53, 414–31.
Sweet, J. J., Nelson, N. W., & Moberg, P. J. (2006). The TCN/AACN 2005
‘‘salary survey’’: Professional practices, beliefs, and incomes of U. S.
neuropsychologists. The Clinical Neuropsychologist, 20, 325–364.

216 The Business of Neuropsychology


Index

Note: Page numbers followed by f and t indicate figures and tables,


respectively.

Accounting basics, 50–51 Maintenance of Records, 93


Administration factors, and bottom Multiple Client Records, 96
line, 151–53 Preserving the Context of Records,
Ambulatory Payment Classifications 95
(APC), 140–41 Record Keeping in Organizational
American Academy of Clinical Settings, 95–96
Neuropsychology (AACN), Responsibility for Records, 92
199 Retention of Records, 94–95
American Board of Professional Security, 93–94
Psychology (ABPP), 198 Assessment code
APA Center for Workforce Studies, 96101: Psychological Testing by
200 Professional, 113
APA Ethical Principles and Code of 96102: Psychological Testing
Conduct, 90, 91 Administered by Technician,
Documentation of Professional 113–14
and Scientific Work and 96103: Psychological Testing
Maintenance of Records, 90 Administered by Computer,
Maintaining Confidentiality, 90 114
Maintenance, Dissemination, and 96116: Neurobehavioral Status
Disposal of Confidential Examination, 116
Records of Professional and 96118: Neuropsychological
Scientific Work, 90–91 Testing by Professional,
APA Recordkeeping Guidelines, 113–14
91–92 96119: Neuropsychological
Confidentiality of Records, 92–93 Testing Administered by
Content of Records, 92 Technician, 113
Disclosure of Record Keeping 96120: Neuropsychological
Procedures, 93 Testing Administered by
Disposition of Records, 97 Computer, 113
Electronic Records, 95 96150: Initial Health and Behavior
Financial Records, 96 Assessment, 124

217
Assessment code (Continued ) result analysis, 41–43
96151: Health and Behavior revenue prediction, 35–37
Re-Assessment, 124 timeframe, defining, 34
Assessment documentation, 129 worksheet, 37t
Association of State and Provincial Building Bridges: Opportunities for
Psychology Boards (ASPPB), Learning, Networking, and
197 Leadership, 202
Average gross profit, 32 Business
Average gross profit percentage, 32 definition of, 3
calculation, 38–40 structure, 4–8
Average moving range (XmR), 59 cooperative, 4, 7–8
corporation, 4, 6–7
Baylor Health Care System, 19 partnership, 4, 5–6
Be Ready for ABPP in sole proprietorship, 4–5
Neuropsychology (BRAIN), of hospitals. See Hospital-based
199. See also American business structures
Academy of Clinical Business and strategic planning,
Neuropsychology (AACN) purpose of, 13–14
Billing, 12–13, 111 Business description
Billing/Coding Representative, 73–74 business knowledge and
Board certification, 196–99 accomplishments, 30
advantages of, 212 business process, 26–27
Board eligible, licensure, 196 competitors analysis, 28–29
Bottom line content areas, 25
administration factors, 151–53 marketing strategies, 29–30
charity care and write-offs, 151 marketplace, defining, 27–28
clinician factors, 153 purpose, 26
co-pays collection, 149–50 Business partnership, 4, 5–6
increment of, 208–10 Business plan, 23
managing threats, 154 break-even analysis, 31–33
no pays/zero-pays, 151 average gross profit percentage
payor mix, 147–48 calculation, 38–40
pre-certification process, 148–49 break-even point, 33, 41–42
use of trainees and students, fixed cost estimation,
153–54 40–41, 41t
Break-even analysis, 31–43 income and expenditure
average gross profit percentage estimation, 34–35
calculation, 38–40 result analysis, 41–43
break-even point, 33, 41–42 revenue prediction, 35–37
fixed cost estimation, 40–41, 41t timeframe, defining, 34
income and expenditure worksheet, 37t
estimation, 34–35 cash flow analysis, 46–49

218 Index
completion of, 49–50 Continued professional
accounting basics, 50–51 development, 211–13
development of, 25 Continuous quality improvement
business description, 25–30 (CQI), 56
financial aspects of, 30–49 Control chart, 58–59
financial aspects of, 30–31 Cooperative business, 4, 7–8
goals, 23–24 Co-pays collection, 149–50
profit and loss (P&L) forecast, Corporation, 4, 6–7
43–45 Cover letters, for job search,
start-up costs estimation, 45–46, 195–96
47t Cross-functionality, business
Business process, 54 process, 55
Current and possible future analysis,
Canadian Psychological Association 169–71
(CPA), 197 Current Procedural Terminology
Cash flow analysis, 46–49 (CPT), 111, 112–13
Centers for Medicare and Medicaid and ICD diagnoses, 125–26
Services (CMS), 13, 36, 62, documentation, 126–31
63, 82, 111 for neurological practice, 113–14
Charge system, developing, 144–46 assessment codes, 114–19
Charity care and write-offs, 151 intervention codes, 119–25
Childhood developmental diagnoses Curriculum vita (CV), 195–96
codes Customer, business process
96110: Developmental Testing; element, 55
limited, 117 Customer service representative, 75
96111: Developmental Testing;
extended, 117 Development/practice manager,
Children’s Health Insurance 75–77
Reauthorization Act of 2009, Diagnosis-Related Group (DRG)
136 payment, 139
Clinical staff, 75 Diagnostic interview codes
Clinical training programs, 187–89 90801: Psychiatric Diagnostic
Clinician factors, and bottom line, Interview Examination, 120
153 90802: Interactive Psychiatric
Closing a practice, checklist for, 215 Diagnostic Interview
Code sets, 101–2 Examination, 120
Coding. See Current Procedural Differentiation, competitive
Terminology (CPT) advantage, 176
Competitive advantage, 176 Doctoral clinical psychologist,
Computerized medical records, definition, 53
81–82 Documentation, 126–28
Constant compliance, 56 assessment documentation, 129

Index 219
Documentation (Continued ) First job
intervention documentation, identifying right position,
129–30 199–201
professional documentation, 128 issues in, 201. See also Early career,
issues in
Early career, issues in. See also First job searches, 194–95
job securing, 193–94
financial planning, 203 Fixed cost, 32
loan repayment, 203 calculation, 40–41
networking and mentoring, 202 Full-time retirement, 214–15
professional management, Functional brain mapping code
202 96020: Functional Brain
research awards, 203 Mapping, 118
Early career research awards, 203
Electronic health and medical Goals
records (EHR), 81 of business
Embeddness, business process, 55 financial requirement, 23–24
Employer Identifier Standard, 102 fundamentals of business,
Entrepreneur’s Toolkit (Harvard 23, 24
Business Essential), 4 characteristics, 16
Evaluation, business process Graduate Medical Education (GME),
element, 55–57 153
Examination for Professional Practice Gross profit, 32–33
in Psychology (EPPP), 196
Expected unit sales, 32 Health and Behavior Assessment
and Intervention Codes,
Facility fees. See Fees 122–25
The Facts of Managed Care, 163 Health and behavior codes
Federal Pay Scale, 200 96150: Initial Health and Behavior
Fee structures Assessment, 124
facility fees 96151: Health and Behavior
eligibility for, 11, 12, 13 Re-Assessment, 124
provider-based, 140–142 96152: Individual Health and
professional fees Behavior Intervention, 124
provider-based, 142–144 96153: Group Health and
Financial status, and business Behavior Intervention,
structure, 8 124
Financial bottom line. See Bottom 96154: Family Health and
line Behavior Intervention with
Financial dashboard example, 156t Patient Present, 124
Financial planning, career issues, 96155: Family Health and
203 Behavior Intervention

220 Index
without Patient Present, Improved time management,
124 190–91
and psychotherapy codes, Indirect benefit (IB), 185–86
differentiation, 123t Intellectual stimulation, 210–11
Healthcare leadership, 212 International Neuropsychological
Healthcare process, 60–63 Society, 199
healthcare control model, 61–62, International Organization for
62f Standardization
healthcare process model, ISO 9000 family of standards, 56
60–61, 61f International Statistical
outcome measurements, in Classification of Diseases
psychology and and Related Health
neuropsychology practice, Problems (ICD), 111
63–65 Intervention documentation, 129–30
Healthcare reimbursement, 161–65
Health Insurance Portability and Job searches. See First job
Accountability Act (HIPAA),
97 License eligible, licensure, 196
access and disclosure, 104–5 Licensure, 196–99
applicability and action, 102–4 Licensure requirements, 197
consent and authorization, 105 Limited liability company (LLC),
Employer Identifier Standard, 5–6
102 Limited liability partnership (LLP),
final caveats, 106 5–6
in research settings, 105–6 Loan repayment, career issues, 203
overview, 98
Privacy Rule, 99–100 Managed care, rules of, 163–64
Security Rule, 100–101 Managing threats, 154
Transaction Rule and Code Sets, Marketing efforts, 176–78
101–2 Marketplace, defining, 27–28
Hospital-based business structures, Market sector, 3
8–10 Medical records officer, 74–75
for-profit hospitals, 8, 9–10 Medicare, 145, 149, 150, 151, 153
not-for-profit hospitals, 8, 9 approach to payment, 139–40
Hospital settings, psychology translation to payment, 140–42
practice in, 10 benefit structure, 137–38
consultants, 12–13 Part A, 137
departments, 11 Part B, 137
hospital-based psychologists, Part C, 137–138
10–12 Part D, 138
independent practitioners, 13 fraud and audits, 154–55

Index 221
Medicare (Continued ) paperwork, 79–81
model for reimbursement, people, 70–71
136–37 billing/coding representative,
provider-based status, 138–39 73–74
choosing, 142–44 clinical staff, 75
Medicare Advantage (MA), 137–38 customer service representative,
Medicare Fraud and Audits, 154–55 75
Medicare Physician Fee Schedule development/practice manager,
(MPFS), 140 75–77
Medicare Trust Fund, 137 medical records officer, 74–75
Mission, of organization, 15–16. See patient liaison/administrative
also Goals assistant, 71–72
MPFS allowable payments pre-certification representative,
for select CPT codes, 143t 72–73
practice, 82–83
National Academy of setting, and issues, 83–84
Neuropsychology, 199 Opportunities, SWOT, 168–169
National Employer Identifier (NEI), Ordered activities, business process
102 element, 55
National Health Plan Identifier, 102 Outcome measurement, in psychology
National Provider Identifier (NPI), and neuropsychology practice,
102 63–65
Networking and mentoring, career Outpatient Prospective Payment
issues, 202 System (OPPS), 138–39
Neuropsychological testing,
reimbursement procedures, Paperwork, 79–81
172 Partnerships, 4, 5–6
Neuropsychology, definition of, 176 Patient liaison/administrative
Non-billable time, 183–84 assistant, 71–72
IB activities, 185–86 ‘‘Pay for performance’’ model, 63
value-added contributions, 186–87 Payor mix, 147–48
value-added services, 184–85 Personal liability of owners, 8
No pays/zero-pays, 151 The Practice of Clinical
Neuropsychology, 24
Office of the Inspector General Preauthorization and rejection
(OIG), 155 scenarios, 162–63
Office process, 69, 77 managed care rules, 163–64
auditing, 78–79 Pre-certification process, 148–49
computerized medical records, Pre-certification representative,
81–82 72–73
flowsheet, 86–87 Primary processes, 54
identifying, 77–78 Privacy Rule, HIPAA, 99–100

222 Index
Process Record Keeping in
definition, 54 Organizational Settings,
of office. See Office process 95–96
Process control, business process, Responsibility for Records, 92
55–57 Retention of Records, 94–95
Process management, 58–60 Security, 93–94
Products, 36 Health Insurance Portability and
Professional development and Accountability Act (HIPAA), 97
advancement, 211–13 access and disclosure, 104–5
Professional documentation, 128 applicability and action, 102–4
Professional management, career consent and authorization, 105
issues, 202 Employer Identifier Standard,
Professional status, enhancing of, 102
210–11 final caveats, 106
Program developing tool, marketing, overview, 98
175–78 Privacy Rule, 99–100
Project Apollo, vision of, 17 in research settings, 105–6
Provider-based status, 138–39 Security Rule, 100–101
choosing, 142–44 Transaction Rule and Code Sets,
Professional fees. See Fees 101–2
Red Flags Rule, 106–8
Quality Relative Value Unit (RVU), 139–40
business process, 55–57 for select CPT codes, 141t
definition of, 55–56 Reimbursement, 11, 161–65
Medicare model, 136–37
Receivables and financials, 146–47 procedure for neuropsychological
Recordkeeping, 89 testing, 172
APA Recordkeeping Guidelines, Research activities, 189–90
91–92 Research awards, career issues, 203
Confidentiality of Records, Retirement issues, and closing a
92–93 practice, 215
Content of Records, 92
Disclosure of Record Keeping St. Vincent Health in Indianapolis
Procedures, 93 core values, 18–19
Disposition of Records, 97 health mission statement, 18
Electronic Records, 95 of Neuropsychology
Financial Records, 96 Department, 20
Maintenance of Records, vision statement, 18
93 Scope of practice, re-defining, 168
Multiple Client Records, 96 SWOT analysis, 168–69
Preserving the Context of S corporation, 5–6
Records, 95 Security Rule, HIPAA, 100–101

Index 223
Select CPT codes 96103: Psychological Testing
MPFS allowable payments for, Administered by Computer,
143t 114
RVUs for, 141t 96118: Neuropsychological
Service lines, 171–173 Testing by Professional,
balancing of, 174–75 113–14
business-based evaluation and 96119: Neuropsychological
examination, 171–173 Testing Administered by
Services, identification of, 36 Technician, 113
Six Sigma Quality, 56 96120: Neuropsychological
Small Business For Dummies, 4 Testing Administered by
The Small Business Start-Up Kit: Computer, 113
A Step-by-Step Legal Guide Threats, SWOT, 169
(Nolo), 4, 24 Time, 183
Sole proprietorship, 4–5 management of, 190–191
Start Your Own Business, 4 non-billable time, 183–84
State Children’s Health Insurance indirect benefit activities,
Program (SCHIP), 136 185–86
Statistics process control (SPC), value-added contributions,
58–60, 60f identifying and documenting,
Strategic planning 186–87
definition of, 14–15 value-added services, 184–85
goals and objectives, 16–17 training programs and research
in healthcare, 17–19 activities, 187
mission, 15–16 clinical training programs,
values, 15, 16 187–89
vision, 15 research activities, 189–90
Strengths, SWOT, 169 Time wasters, 190
Strengths, Weaknesses, Opportunities, Total cost, 32
and Threats analysis. See Total quality management
SWOT analysis (TQM), 56
Suppliers, of goods and services, 3 Total revenue, 32
Support processes, 54 Total variable cost, 32
SWOT analysis, 168–69, 208 Traditional Mental Health
Psychotherapy Codes,
Templates, computerized, 24 120–22
Testing codes Trainees and students, 153–54
96101: Psychological Testing by Transaction Rule, HIPAA, 101–2
Professional, 113 Type I error, in process evaluation,
96102: Psychological Testing 57–58
Administered by Technician, Type II error, in process evaluation,
113–14 57–58

224 Index
Unit price, 32 Variable cost, 32
Urgent and not important Veterans Administration (VA), 187
tasks, 190 Vision, of organization, 15, 16
User-benefited principle, 7
User-controlled principle, 7 Wada procedures, 172
User-owned principle, 7 Weaknesses, SWOT, 169
Western Electric Rules, 59
Value(s), 15, 16, 54 Word-to-mouth recognition, 177
Value-added services, 12, 55, 170,
184–85 Zero-pays, 151

Index 225

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