With the overhead of the typical family medicine practice around 60 percent of revenues, working to control practice expenses has to be a high priority for family physicians. Of course, overhead can be reduced by increasing productivity and revenue, reducing expenses or both. To modernize the old saying a bit, a dollar saved in practice expenses is a dollar earned, while a dollar earned by seeing more patients is less than a dollar earned since some of it is eaten up by practice expenses.
While you may think your practice is so lean that you couldn’t possibly cut another dollar out of your expenses, chances are it’s not. Chances are you have several opportunities to capture money that is currently being wasted. If you can stop that waste, you’ll have more money for physician salaries or for reinvesting in the practice, and you’ll be able to practice more cost-effectively.
Working to reduce practice expenses can seem daunting, in part because it’s hard to know where to begin. That’s where this article and the one in the next issue of FPM can help. We’ll break down your expenses into sections you can tackle individually, one a month, starting with the ones most likely to repay your effort.
Weighing In
Since you’re about to put your practice expenses on a 12-month reduction plan, it makes sense to start by getting baseline measurements. Your accountant should be able to tell you your overhead percentage and what you’re spending in several expense categories, such as staff salaries, supplies, and building and occupancy costs. The result might look something like the table below, which shows that overhead expenses typically consume 59.74 percent of practice revenue, according to survey data from the Medical Group Management Association (MGMA).[1] So, if a physician brings in $50,000 in revenue each month (which is roughly $76,000 in charges minus adjustments and write-offs), his or her monthly overhead should be about $30,000, according to the benchmarks.
If your overhead percentage is below average as a whole or in certain categories, don’t let that stop you from trying to do better. You may still have opportunities for savings. If your overhead percentage is above average, you too have opportunities for savings, but don’t assume that you’ll be able to reduce it significantly; your situation or practice style may somehow make practice particularly expensive. In fact, MGMA statistics suggest that physicians with the highest incomes often have more staff and higher overhead, which allows them to be more productive. So be careful that you do not reduce your expenses in a way that actually hurts your productivity and thereby increases your overhead percentage.
Month 1: Staffing Needs
Staff costs are the largest expense in any family medicine practice, which makes this a good place to start. Any savings related to staff costs are likely to result from difficult, emotionally wrenching decisions about staff cutbacks, demotions and other measures that may hurt someone, leave you with an unsettling feeling of disloyalty to your staff, and threaten morale. Why not get the hardest part of the task over with first?
In my work with family medicine practices, I have found that payroll costs (not including benefits) generally run approximately 22 percent to 26 percent of practice revenues. If your payroll runs higher than that or if you have other reason to believe you are paying more than you should in salaries, perform a personnel needs assessment. Essentially, this involves figuring out whether the tasks that occupy your staff are worth doing, whether each responsibility is assigned to the best possible person and whether the whole operation is as efficient as possible. In other words, you need to know that the right things are being done by the right people in the right way. One approach is to list all the tasks carried out by your staff, eliminate or modify any that you consider unnecessary or inefficient, and then imagine the ideal staff for the remaining tasks: How many people, with what kinds of background and training, should you need? Now compare that personnel listing with your actual staff. Do you have two staff doing the job of one? Are certain jobs being done by staff who are overqualified for them – and probably overpaid and underchallenged? Could those individuals take on additional work?
Look at your current staff from as many perspectives as possible. Try to think outside your day-to-day acceptance of the way things are done in the office. Are all your employees essential to the practice? Do you have anyone working full time at a job that could be redesigned to be handled by a part-timer? Are there ways of combining tasks that would save time or staff members?
Are there places where adding staff might help? For instance, is patient flow so backed up that the practice’s lack of productivity is hurting the overhead percentage? Maybe you need more clinical staff. (Of course, you may just need more efficient procedures, so go carefully before you spend money to save money.) Similarly, if your billing and collections are running sluggishly, you may need to add more collections personnel – or hire better collections personnel – or you may need to consider outsourcing some billing, collections and administrative work.
Data from the MGMA show that practices employ 0.28 nonphysician providers and 5.15 support staff per full-time physician on average.[1] The numbers are even higher for high-performing practices. In deciding how many staff you should maintain, consult the published benchmarks, but remember that what is good for one practice may not be good for another. (See “Resources on practice expenses” for a listing of organizations that offer survey information on staffing, salary and other expenses.)
Action steps: Assess personnel needs. Adjust staffing. Look for functions that could be outsourced.
Month 2: Employee Salaries
The first question to answer is whether you are paying your staff more than the norm for your area. Examine your payroll carefully. For each position, find out as best you can what other local physicians pay. Ask personnel recruiters, hospital physician-relations personnel, hospital human resources staff or your local medical society. Your local newspaper’s classified advertising section may even yield this information. The average salaries shown below, or salary data obtained from the resources listed above, can be helpful, but don’t take them as gospel.
If your salaries are generally in line with your local market, you may still be paying a couple of employees excessively, such as long-term employees who have been receiving annual pay raises for many years. An office manager who started out at $30,000 annually 15 years ago might now be making more than $60,000. Consider whether the employee’s contributions to the practice justify a higher-than-market salary. Even though you value your long-term employees, you are not obligated to grant sizable salary increases each year – and you may not be able to afford to.
Instead of awarding annual raises haphazardly or automatically, try to give no more than the prevailing average, which generally ranges from 2 percent to 4 percent annually. To provide flexibility, consider giving yourself an overall, staff-wide budget for increases. If that budget is, say, three percent of your current salaries, you can assign more or less of it to individual staff to reward performance while keeping within your salary maximum. If needed, call in an objective third party – a consultant or accountant – for help in making sure that your salary decisions are fair to the practice as well as to your staff.
Have you set salary ranges for your staff positions? By all means do so. One approach is to start with the local average for a given position and establish a minimum salary 20 percent below that figure and a maximum 20 percent above it. Inform employees that their salary increases will slow down as their salaries approach the maximum.
Although you may decide that the pay increases you’ve been giving are just too big, don’t do away with them altogether – except, perhaps, as a one-time emergency measure if the practice is clearly in trouble. The negative effect on morale would outweigh whatever savings you might realize. (Of course, withholding an individual staff member’s raise because of poor job performance is another story.) You might also find it effective to use incentive bonuses as an alternative to hefty raises. Incentives can range from giving movie passes to giving $500 for outstanding performance on occasion, and they can make everyone involved feel good without committing you to years of maintaining a higher salary.
Although raises and salaries depend on employee performance, length of service and inflation, the bottom-line determinant is your generosity. Too much generosity has a price.
Action steps: Assess salaries in your area and compare them with what your practice pays. Set salary ceilings and incorporate some mechanism to control the amount of annual increases. Develop inexpensive employee incentives.
Month 3: Health Insurance
In my experience, staff health insurance and retirement plans combined typically range from 3 percent to 6 percent of practice revenues. Your real challenge will be containing health insurance costs. Some family medicine practices have experienced annual premium increases of as much as 50 percent.
As a first step in containing health insurance costs, review your current insurance coverage. Is it too generous for what you can afford? A policy with a $250 deductible generally costs more than one with a $500 deductible. A policy that has dental coverage costs more than one that does not. In an era of skyrocketing premium rates, it may not make economic sense to provide expansive health insurance coverage to employees. To offset the effect of a high deductible, your office could offer your staff some medical care for free or at substantially reduced rates. That way your employees would get a price break on outpatient services just as they would if they were covered by insurance with a smaller deductible. Naturally, there are some supervisor-employee boundary and privacy issues to consider if you choose this option.
Have you solicited competitive bids for your health insurance coverage lately? It may be time to do so, especially if your practice has used the same health care insurer for a number of years. For assistance with bids, enlist the help of an independent insurance agent. If you switch plans, lock in the premium rate for as long as possible. Generally, this can be done for at least one year after the new policy is purchased. Each year, though, monitor health insurance premium costs and increases, and be prepared to switch plans.
Don’t neglect the possibility of negotiating your way out of premium increases demanded by your current insurer. Were your staff members’ health care expenses lower this year than last year? If so, you might have some bargaining chips. Talk with your agent.
If your rates continue to increase over time despite all cost-cutting efforts, you may need to take more extreme measures. Your employees may need to pay part of their premiums – perhaps up to 50 percent. Check your state’s employment laws first, though, to make sure there are no limitations on employer-subsidized premiums. If your back is to the wall, you may have to impose coverage limitations or eliminate the benefit altogether. Explore all possible alternatives to outright cancellation of employee health insurance. Without offering it, you may have trouble attracting and keeping good employees.
Action steps: Review policy specifications. Bid out health insurance. Change insurers and reduce benefit levels, if necessary.
Month 4: Retirement Plan
Is your retirement plan as cost-efficient as possible? Is it the right one for your practice? For example, you may not be well-served by a money-purchase (or defined-contribution) pension plan because of the mandatory annual contribution requirements. A profit-sharing plan would provide you much more flexibility.
Pay particular attention to the length of the plan’s vesting schedule. If your practice has high turnover, structure the plan to reallocate any unvested accounts to remaining participants based on the ratio of their account balances. And remember that staff retirement plans combined with health insurance typically run from 3 percent to 6 percent of revenues, so consider this range as you determine how much you want to spend.
Action steps: Assess your current retirement plan in the context of other plans available. Switch to the most advantageous one.
Month 5: Sick Leave and Overtime Payment
Another employee issue to examine is your leave policy. Remember that anything you put into writing for your employees has the force of law behind it, so think carefully about what your written leave policies say, and check with your attorney about any state laws that might govern sick and vacation leave.
The industry standard for sick leave is five days a year for each employee. Do you pay employees for unused sick leave at the end of the year or upon termination? Do you treat sick leave as a compensated benefit? You may not have to. After all, sick leave is a contingency benefit for the employee in case of illness. If you remove the cash payment, though, your healthier employees might balk at the idea because they would feel penalized for never using sick leave. As a compromise, carry over unused sick leave to future years, or convert a portion of unused sick leave to vacation. This allows the employee to bank at least part of the unused sick leave in case of an illness, especially a serious one, but frees you from the costly position of paying your resigning employees for unused sick leave.
For vacation, two weeks a year for each employee is the industry standard. You may want to set a limit on the number of days you will allow your staff to carry forward each year. One of your long-time employees could conceivably accumulate a year’s worth of vacation days. Could you afford to have that employee take a full year’s vacation at once? Probably not. This kind of limit is particularly crucial if you have a written policy that pays employees upon termination for accrued vacation. Moreover, it’s important for everyone to take vacations regularly, and limiting the carryover of vacation days can encourage the workaholics on your staff to take time off.
And don’t forget an overtime policy. Do you hold a tight rein on overtime? Are employees made accountable for their overtime hours? How is this time documented? Is overtime approved beforehand? Is overtime being paid to exempt employees when in fact it should not be? Establish a reasonable, practice-wide policy, and stick to it.
Action steps: Stop offering cash payments for unused sick leave. Initiate a sick-leave carryover plan. Establish a vacation policy. Establish an overtime policy.
Posted in Medical Billing & Medical Practice Insights by .
Introduction
With waiting rooms already overflowing and the promise (or threat) of 30 million formerly uninsured patients lining up for appointments thanks to healthcare reform, marketing to build your practice may seem pointless. Most doctors, especially in primary care, already have too many patients and not enough time or resources.
That attitude is shortsighted, say practice management consultants. “Doctors should be on the lookout for new patients,” says Gray Tuttle, a principal with the Rehmann Healthcare Management Advisors in Lansing, Michigan. “People move. They die. People leave areas that are in economic crisis. So even in a mature busy practice, doctors should look to add a patient or 2 per week to replace those who leave.”
More important than simply attracting new patients is the chance to attract desirable patients. Marketing can help practices attract the best patients, whether defined by ability to pay or the kind of conditions you most want to treat.
“I know of many heavily booked practices but most of the patients are on Medicaid,” says Jeffrey J. Denning with Practice Performance Group in La Jolla, California. “The doctors are barely earning a living. They need to market their practices to attract better-paying patients.”
Where your practice is today may not be where you are tomorrow. “That’s why some marketing is beneficial, if only to help brand your practice so you maintain a good reputation,” says Kenneth T. Hertz, a principal for the Medical Group Management Association Health Care Consulting Group based in Pineville, Louisiana.
Some physicians confuse marketing with advertising and think it unseemly. That’s an assumption that can hurt your practice. Marketing is a broader concept that involves determining what you want your practice to be; who you want to attract, and how to target those people through many methods, of which advertising is only one.
“Advertising is just one tool of marketing,” says Jeffrey Denning. “Advertising is where you pay to control the message. Marketing can sometimes get your message out in an unpaid form.”
Marketing may also include some aspects of patient relations. “It’s how your staff answers the phone, how they are dressed. Is your office clean or cluttered? Do staffers apologize to patients when you’re running late?” says Hertz. “It’s the little things that show how you welcome patients or drive them away.”
Step 1: Find the Strategy That’s Right for You
Before embarking on a practice-building campaign, physicians need to decide what they’re trying to achieve. Do you want more patients? What types? How many more can your practice handle efficiently?
Start with what you know about your current patients. “Check out all the demographics: age, household income, geography, payer mix, services desired,” says Kenneth Hertz. “Then do a gap analysis. What do we want? So if insurance company A pays more and faster than insurer B, how do you get more As? Who are their employers?”
For example, if you know who the employers are, you can target that employer or focus your efforts geographically around the employer’s location. You can try to develop a relationship with the employer and offer to give talks at the company, adjust your hours to promote that you have good access, tell patients of that company to tell their friends and relatives about you.
Sometimes, marketing strategy means turning away patients who don’t help you achieve your goals. “We had an ophthalmologist client who was always overbooked,” says Denning. “But he wasn’t seeing enough patients with the kinds of conditions he really enjoyed working on. We had him train his appointment schedulers on how to spot the patients he wanted and discourage those he didn’t.”
“Saying yes to all patients just clogs the schedule. This can be done tactfully, such as, ‘gee, I’m awfully sorry but the doctor is fully booked up for the next 3 months. Let me give you the number of another physician who can see you earlier.’” You may feel conflicted or uncomfortable about turning down patients because of their insurance or financial status, but many practices find this is the only way they can survive.
Step 2: Practice-Building Activities That Pay Off
Giving informal talks to civic, school, and other local organizations isn’t a new idea, but it’s always been an effective practice-builder. The same applies to volunteering for health screenings and fairs where patients can see you in action.
“Making yourself available to local reporters as a health expert is even better,” says Hertz. “Appearing on the 6 o’clock news as the expert on influenza, poison ivy, whatever, has far greater impact than a paid ad in a newspaper. If you can establish yourself as an authority on a health topic, it adds great credibility.”
Sending out press releases can get your practice known. Major broadcast networks are rarely interested, but local media such as weekly community newspapers and radio stations are receptive to short stories about you adding an associate with particular expertise or hiring nurse practitioners or physician assistants. These news organizations are eager for simple human interest stories, such as an employee who is retiring after 30 years in your practice or how your staffers participate in a charity race, says Hertz. One physician who rode his bike across the country was featured on the front page of his town newspaper.
If your practice offers nutritional counseling or an illness support group, a press release can drive patients to you. “Educational stories and heart-warming anecdotes about patients do well,” says Susan Raef, of WordPower Communications in Chicago. Be careful about patient privacy; always get signed permission to use any patient’s name publicly. “You can send them out on PRWeb, or PRNewswire and even have them go to a bilingual market. With some outlets, you can get feedback statistics in real time of how many people are getting your message. We did one for a plastic surgeon a few years ago about smart liposuction tips. We’re still getting inquiries from that release.”
Writing a column on a health issue for a local newspaper also is an effective way to reach new patients.
Make sure you let everyone know about your practice strengths. For example, in primary care, one area to promote is availability. How easy or difficult it is for patients to get a quick appointment can mean the difference between a successful practice and one that is leaking patients.
“Urgent care centers do an incredible amount of advertising, and that’s direct competition to primary care,” says Gray Tuttle. “Letting it be known that patients can get in to see you without much delay is important.”
The way you describe your availability is crucial. “If I put up a sign, or take out an ad that says ‘no appointment necessary,’ it sounds a bit like a barber shop and the patient may think I’m not a very good doctor,” says Hertz. “But if the message says ‘same-day appointments available,’ it has a more professional tone.”
Step 3: Word of Mouth Is Powerful
“The best thing any practice can do is to exceed a patient’s expectations,” says Hertz. “There is nothing more powerful than a patient who is impressed by the care she received and tells her friends about it.”
A personal touch impresses patients. Having the physician call the patient after surgery or a severe illness to inquire about how he or she is feeling builds tremendous rapport.
Encouraging referrals from satisfied patients should be part of the practice routine. Simply asking them to tell friends and family that you’re expanding your practice and would welcome new patients is effective. One Michigan family practice has a sign that says, “The highest compliment our patients can give us is the referral of their friends and family. Thank you for your trust.”
If a patient refers a friend or relative to you, it’s important to promptly thank that patient with a handwritten note, says Jeffrey Denning. “Thanks so much for referring Ken as a patient and for having confidence in our practice. If there is any way we can be of assistance to you, please don’t hesitate to call.”
Ask every new patient how he or she learned of the practice. Registration forms can ask, “How did you hear about us?” or “Who can we thank for this referral?” If the answers are nonspecific such “a friend” or “I saw your name in the newspaper,” a staff member should follow up to get more details.
Step 4: Pay Key Attention to Referral Sources
Practices that depend on referrals need to keep track of which physicians are sending them patients — and which ones have stopped.
“With computerized billing systems, it’s easy to identify the sources of your referrals,” says Gray Tuttle. “Look for trends, especially any reduction in the volume of referrals. Are big primary practices absent from the list? Ask yourself why. Ask them why. Often, the issue is how long the patient has to wait before he or she can be seen.”
Specialists used to bump into their referral sources at the hospital, but with the advent of so many hospitalists, that’s less likely. Physicians may see each other at social functions or medical society events. “That can trigger a follow-up phone call,” says Tuttle. “You might say, ‘I enjoyed seeing you again at the benefit last night. Can I talk to you about referrals? I’ve noticed they’ve declined lately. Is there anything we can do to change that?’”
Sending out a survey of referral sources is a great reminder about your practice and a subtle message that you’re looking for more work. You can also learn of deficiencies in your practice that stop primary care doctors from referring to you, he says. Even if your practice is busy, you can let referring doctors know that you can always squeeze in a patient if they let you know about the person.
Kenneth Hertz recalls a cardiology practice that was concerned because referrals had dropped off. “I asked when was the last time they’d spoken to the other doctors. They said they hadn’t in years because they were busy enough and didn’t see the need to. So I encouraged the cardiologists to take their referral sources to lunch every few months,” he said. “They learned things, such as their nurse almost always said they were unavailable to talk on the phone, or that reports didn’t get back to the other doctors in a timely fashion. Then they were able to fix those problems.”
When sending out a report to the referring doctor, ask how he or she wants to receive the information, says Gray Tuttle. “Sending voluminous reports [the physician] doesn’t want isn’t helpful. Asking if [the physician would] like to receive the information via fax, email, snail mail, or phone shows respect for the doctor’s time.”
In addition to the report, send a quick handwritten thank you note as well, says Denning. “Little things make an impression.”
Step 5: What Doesn’t Work
Some marketing methods have outlived their usefulness and may be counterproductive, say the consultants we interviewed.
If you send emails to patients, always ask for permission before adding them to an email list, says Hertz. Otherwise, they could find it intrusive or consider it spam.
Marketing tricks like raffles, giveaways, and free first visits aren’t seen as professional. “Novelties like refrigerator magnets, mugs, and pens are too common to be effective and I don’t think they’re dignified enough for medical practices,” says Jeffrey Denning. “Image is important. Dentists may have a happy tooth at their reception area, but physicians don’t want to cheapen their product that way.”
Lavish open houses sponsored by specialists to attract referral sources “have served their day in the past but aren’t effective anymore,” says Gray Tuttle. “They just don’t drive a lot of business.”
Every consultant we spoke with said a professional Website is practically standard for any medical practice these days. Medscape will discuss Websites, along with whether it pays to advertise, in our next installment.
Posted in Medical Billing & Medical Practice Insights by .
Even with the recession winding down, times — and budgets — are tight. If your practice is strapped and you are considering letting staff go to stay in the black, look first at your nonstaff-related overhead. Staff reductions are hard on office morale and make physicians less efficient. Check out our relatively painless and much less disruptive suggestions for lowering your practice overhead.
1. Shop smarter for supplies: Are you keeping close tabs on your supply costs? Buying bulk office and medical supplies can certainly save you money, so take an organized and forward-looking approach to your stock. Shop around for a better deal, and only buy what you need rather than automatically restocking overflowing supply closets. You may also be able to enter a group purchasing agreement with other practices for volume discounts.
2. Scrutinize service contracts: When was the last time you compared cleaning service rates? What about the other laundry companies in town? Check out the competition for services such as phone and Internet, copier maintenance, and even accounting and bookkeeping. There’s a good chance the rival companies will be willing to negotiate lower rates.
3. Outlaw overtime: The staffer who comes in a few minutes early each day and sticks around late could be costing you big. Overtime costs can add up over the year, especially if you have several employees padding their hours. Set a policy that all overtime must be approved by a supervisor. If the job isn’t getting done in the 40-hour week, you may need to take a look at your practice’s work flow to eliminate the need for overtime.
4. Reduce staff work hours: Rarely a staff favorite, it still beats the heck out of losing one’s job. Even moving from a 40-hour to 35-hour work week can save the practice a bundle, while keeping your work force intact. Consider softening the blow of smaller paychecks by offering employees more flexible scheduling. This also allows you to keep the practice open the same business hours despite the reduction in staff hours.
5. Review facility costs and/or rent out extra space: Are you maximizing your office space? Spend a week or two carefully observing whether there are exam rooms going unused or private physician offices standing empty most of the day. If you find you have space to spare, it may be time to downsize to another location or sublet your unused space to another practice or provider.
Posted in Medical Billing & Medical Practice Insights by .
When Medicare payments are cut, everybody loses, not just self-employed physicians.
As I write this, the 2010 Medicare physician fee schedule is in stable condition, but the long-term prognosis is uncertain. This is of keen concern to many family physicians. However, the prevailing sentiment among physicians who are employed by hospitals, health systems and large medical groups seems to be one of frustration with Congress but general lack of interest. There is an apparent disconnect between the potential 21-percent reduction in Medicare fees and their compensation, which is usually based on a guaranteed contract tied to relative value units (RVUs). The reality is that what happens to the Medicare fee schedule and the RVUs on which it is based does have an impact on employed family physicians.
Impact of Medicare Fees
A change in Medicare fees may not directly impact employed family physicians’ income, at least for the term of their guaranteed contracts. But what happens to Medicare fees will have a direct impact on these physicians’ employers, who bill Medicare for their services, and ultimately on the physicians themselves. For instance, if Medicare fees decreased 21 percent, a family physician’s employer would face a potentially significant decrease in revenue, depending on the percent of their business that comes from Medicare and the extent to which private payers follow suit, as they often do. These employers, whether for-profit or not-for-profit, must also decrease costs to maintain financial viability.
This is where employed family physicians start to feel the cuts. For example, there may be fewer ancillary staff to support the physicians or fewer physician colleagues with whom to share the workload. And when these employed physicians’ contracts come up for renewal, there may be a more direct impact, as the employer must determine whether to renew their contracts and at what compensation level.
Impact of RVUs
Many employed family physicians have contracts that measure productivity in terms of RVUs. The advantage of using RVUs is that they are not affected by the limitations associated with measuring charges or collections. Two physicians providing the same service will generate the same RVUs, regardless of the patients’ insurance or the physicians’ respective charge schedules. RVUs also reflect the fact that not all encounters or hours spent in patient care are the same. An office visit for treating tinea pedis with topical therapy would generate different RVUs than an office visit for evaluating and managing a patient’s complaint of chest pain, assuming the visits reflected different CPT codes.
That said, RVUs are not a perfect measure of physician productivity. Although the medical profession has input into the RVUs, the Centers for Medicare & Medicaid Services (CMS), the federal agency that administers the Medicare program, ultimately decides what the RVUs for a given CPT code will be. Thus, universal consensus does not exist for all of the work RVUs for all of the CPT codes that make up the resource-based relative value scale (RBRVS, the basis for the Medicare fee schedule). Another limitation is that RVUs depend on appropriate CPT coding, so employed physicians who don’t code correctly (perhaps because they think it doesn’t matter in their situation) may be paid based on a false sense of their productivity.
How employed physicians’ contracts define RVUs and how they are used can have a direct impact on their income. For instance, the total RVUs for a service include RVUs for physician work, practice expenses and malpractice expense. Some employers measure physician productivity based on total RVUs, and some measure it based only on physician work RVUs. If the employer is measuring only physician work RVUs and comparing those to benchmarks based on total RVUs, an employed family physician’s productivity can look very poor.
Also, the number of RVUs assigned to CPT codes changes from year to year. If the contract does not specify what year’s RVU schedule is to be used, employed family physicians cannot know whether they are being appropriately compensated. Physicians who want to know the RVUs for a given service in a given year can use the Medicare Physician Fee Schedule Look-Up tool online at http://www.cms.hhs.gov/PFSlookup.
Worse yet, depending on what year their contracts specify, employed physicians may find themselves under-compensated relative to the current year’s RVUs. For instance, between 2006 and 2010, the total RVUs for 99213, one of the most common services provided by family physicians, increased 31 percent. If the employed family physician’s contract specifies 2006 RVUs, he or she is at a disadvantage compared to someone whose contract specifies 2010 RVUs.
Of course, RVUs are only part of the equation. The compensation per RVU (sometimes referred to as the conversion factor) also deserves attention. If the employer moves from 2006 RVUs to 2010 RVUs but reduces the level of dollars it pays per RVU, its employed physicians won’t benefit.
So what?
What are employed family physicians to do with this information? First, they should shed any apathy they may have about what is happening in Washington relative to the Medicare physician fee schedule. What happens to Medicare fees will likely have an impact on employed physicians, just as it does on their self-employed colleagues. The impact may be indirect initially, but eventually it will catch up with them.
Second, employed physicians should pay attention to the terms of their employment contracts to ensure that they understand the mechanism for measuring their productivity and compensating them for their work. What year’s RVUs are specified in the contract? How many RVUs must the physician generate to achieve a given level of compensation (i.e., what’s the benchmark)? What types of RVUs (e.g., “work” or “total”) are being used? How does the compensation per RVU change as the RVUs change?
Finally, employed family physicians should pay attention to their coding. RVUs generated depends on CPT codes reported. Thus, if RVUs are an important part of the contract, so is appropriate coding.
It would seem easy, as an employed family physician with a guaranteed contract, to remain unconcerned with what happens to the Medicare physician fee schedule and the RVUs on which it is based. However, as my grandmother used to say, what is easy isn’t always what is best.
Posted in Medical Billing & Medical Practice Insights by .
Introduction
As revenue continues its sink-hole slide, more and more office-based doctors are considering doing clinical trials within their practices.
While the income potential could reach into the hundreds of thousands (or more), there are enough obstacles to turn off many doctors. But given the possible patient benefits and the income benefits, a number of physicians are taking another look.
“From a remuneration perspective, conducting clinical trials is very positive relative to what we get from insurers; it’s a positive amount for the time spent,” says Jeffrey Danzig, MD, internist and gastroenterologist in solo practice in Ridgewood, New Jersey. “It’s money you don’t have to haggle over with insurance companies or go through numerous claim resubmissions; you know you’re going to get paid.”
A single study can pay $70,000; doing 3 or more at once — which is typical — can bring in significant income.
Besides the financial benefits, conducting clinical trials can bring other rewards.
“It allows you to nurture your academic side and to stay involved in the academic side of medicine,” says Danzig, who has done about 20 clinical trials. “It also keeps you updated on the condition you’re studying.” Some of the trials Danzig has done involved looking at how a proton-pump inhibitor affects reflux and esophageal healing; another involved comparing a new inflammatory bowel disease drug to current drugs.
Additionally, patients may benefit from new or experimental treatments.
Administration Is a Big Factor
Still, clinical trials require a ton of paperwork, careful adherence to compliance and protocol requirements, and stiff reporting requirements. Many doctors conduct one clinical study and vow to never to do another.
“There is some tedium in getting a study going and getting all the logistical factors in line,” says Danzig. “You have to sign all the papers, review the protocol. There’s not only a time investment, but there’s the tediousness.”
Doctors also need to be aware of how conducting in-office trials can affect their office workflow and general practice operations, potential ethical issues, and other factors.
What Are Your Opportunities?
It’s not hard to find an intriguing clinical trial: Pharmaceutical and medical device companies spend an estimated $25 billion annually on clinical trials in the United States.
Currently, there are more than 88,327 trials in 172 countries listed on the US government registry www.clinicaltrials.gov. A large percentage of the US trials are carried out by doctors in office-based practices.
While many clinical trials take place at dedicated clinical research centers, pharmaceutical and device companies want more office-based doctors to take part. In 2007, sponsors recruited an average of 11 investigators (medical professionals conducting trials) per active investigational new drug. Today, clinical trials seek more targeted, smaller patient subgroups because of the diseases being studied, newer study designs, and cost issues.
However, most doctors aren’t racing to become clinical trial investigators. Only about 1 in 8 (13%) physicians currently conduct clinical trials. Half of all physicians have never done so.
Why not? Some reasons cited include: no opportunity, too much time required, not enough personnel support, not enough resources, and burdensome paperwork. Overcoming these issues requires careful planning and some training.
The Pros and Cons of Conducting Clinical Trials
It’s wise to consider several areas of clinical trials to determine whether they are right for your practice.
Additional Revenue
Some doctors find clinical trials to be very profitable. In general, companies pay in the $70,000 to $80,000 range for each clinical study.
“A medical practice can conduct more than one study at a time,” says Carmen Arismendy, MD, CCRC, president of Arysmed LLC, a company that prepares private practices, hospitals, and clinics for doing clinical research. “If your office performed three at once, that’s significant revenue for the physician, even after costs.
“If you hired a clinical research coordinator — whose salary is in the $50,000-$60,000 range — to coordinate the studies, that would enable you to conduct multiple studies and you would still be bringing in significant profits.”
According to Danzig, a study that does not involve performing procedures might pay $200-$350 for the initial patient encounter and $100-$150 for subsequent encounters.
“For most studies, the formula for payment is based on the projected number of data submissions that you’ll need to do,” says Danzig. “A short study could require us to see somebody 12 times in a year, or a longer study might require us to see someone 14 times over 5 years.
“The pay factor is not how long the study lasts, but how much interaction you need to have as an investigator,” says Danzig. “For example, as a gastroenterologist, we had to do endoscopies, or have a procedural event. That reimbursement would be greater than if the patient just has to come in for a visit and you do data collection in the office.”
Of course, the revenue is prior to subtracting for overhead expenses involved with running the trials. “You’ll need some support staff; if you don’t have the right person, you need to hire him or her,” says Danzig.
“You may not have all the right equipment you’ll need for a particular study. You might need, for example, a centrifuge to spin down the blood sample, or a certain temperature freezer dedicated to the study drug, or a locked cabinet that you have to rent or buy. The average office that doesn’t do studies typically doesn’t have that equipment,” says Danzig.
Helping Patients and Advancing Medicine
Most physicians are delighted if they’re able to sometimes give patients the latest or newest treatments for their condition.
Particularly in the case of life-threatening diseases, if a patient has exhausted all the available treatment regimens, a clinical trial with experimental drugs may be his only hope for a recovery. Participating in clinical trials can help get experimental treatment to at least some patients who may be helped or whose life may be prolonged thanks to that treatment.
“Office-based physicians also point to the benefit of being able to provide more comprehensive care solutions to their patients through offering access to clinical trials and the opportunity to spend more time with patients compared with the highly limited interactions common under a managed-care environment,” says Kenneth A. Getz, MBA, a senior research fellow at the Tufts Center for the Study of Drug Development and founder of CenterWatch.com, a resource center focusing on clinical trials.
Some doctors also appreciate playing an important role in helping advance science by testing new drugs.
“Participation in clinical trials provides a number of benefits to office-based physicians,” says Getz. “According to interviews with several hundred community-based doctors, the opportunity to focus some energy on the frontiers of medicine is exciting. Many physicians like the more collegial atmosphere of a clinical research team that includes other physicians involved with the project as principal investigators and the sponsor company’s research team.
How Will Clinical Trials Affect Your Regular Practice?
Clinical trials take time and possibly some rejiggering of your office workflow. (In our next installment we’ll talk about how to get your office ready to do clinical trials.)
Unlike your regular patients who come to you when they’re ill, clinical trials patients may have to come in frequently just to get monitored. For them it’s partly a burden, and clinical trial sites need to be as accommodating as possible. That may mean adding flexible hours so that patients can stop in before work or at the end of the day.
Because most clinical trial participants are voluntary, offices that conduct trials take extra pains — beyond those for their regular patients — to avoid having the clinical trial patients wait. Some dedicated clinical trial centers say that 10 minutes is the absolute maximum a clinical trial volunteer might be required to wait to be seen (not just to be moved into the exam room). If patients drop out of the trial because they are annoyed at a long wait, it will upset your trial protocol.
A multiphysician office may be able to strategically reallocate the physician and staff schedule to see patients, get data, and do the required reporting.
For a smaller practice and especially for a solo practice, says Danzig, your best bet is to hire a clinical trials coordinator or use a clinical trials consulting service that sets up your office and gets it ready for trials, hires and preps the coordinator, and helps you recruit the required number of appropriate patients.
“A lot of those logistical issues are manageable if you have a third party help you do it,” says Danzig. “That’s what allows me as a solo practitioner to do this; particularly since I have no one else here to cover me.”
Admittedly, using a third party adds cost, but Danzig says it’s worth it. “Obviously, I would rather not have any cost and would like to be able to absorb more profit. But I probably would not be able to do most of these studies without a third party, and I would be getting nothing rather than something. The something I now get minus the cost factor is still positive compared to what I get from the average insurer seeing patients for the same time.”
What Doctors Dislike About Clinical Trials
Paperwork and Regulation
Clinical trials require a considerable amount of paperwork, protocol, regulations, and record-keeping and often some training (Table). Some doctors who have taken part in a clinical trial were exasperated by all the record-keeping, document storage, report filing, efforts to keep volunteers interested, and other aspects of the trials. They did one clinical trial and vowed to never do another.
Table. Pros and Cons of Conducting Clinical Trials
| PROS | CONS |
| Can bring significant revenue without insurance hassles | Entails significant paperwork, record-keeping, and protocols |
| Appeals to your academic side because of interesting and diverse topics available for study | May require marketing expenses to find new patient |
| Provides new or experimental treatments to patients | Could require a dedicated trial coordinator |
| Patients often enjoy participating | For small or solo practices, may require third party to prepare office and coordinate |
| Could lead to increase in malpractice premiums and liability exposure | |
| Training is recommended | |
| Could affect office workflow and scheduling |
Recruiting Patients
It’s tempting to think, “I’ve got plenty of patients in my practice who will be in this trial.” But in most cases, you’ll have to recruit additional patients. Studies usually have strict criteria for patients and conditions, and you may not have sufficient patients who suit the rules of the trial (such as age and overall health).
Even if you do, it’s unethical to pressure patients to take part. So you may need to recruit trial patients.
Some doctors are reluctant to ask even their own patients to participate. “For some physicians, presenting the possibility of being in a study makes them uncomfortable. Some would rather post a sign in the office than broach the subject themselves,” says Danzig.
“The key is being forthright and candid in trying to drum up business,” says Danzig. “You can say, ‘we have a study going on; here are the pros and cons for you.’ You present it in an even handed nonsales way to let the patient decide. Then you can be very comfortable doing it.”
If you need to conduct marketing and recruiting, you can do it if you have existing personnel with the appropriate knowledge. Or, you could use a consultant or marketing company to do it for you.
Ethical Issues
Some physician balk at the prospect of giving a long-time patient a placebo rather than a treatment that works to some degree. According to Getz, a majority of clinical trials do not involve placebos; they typically involve testing one dosage or regimen against another.When you read about the trial protocol, pay attention to whether a placebo is involved — if you are uncomfortable with it, that is probably not the right trial for you.
Involve Others in the Decision
To make your trials and your office run smoothly, it’s wise to plan in advance for all you need to do. It’s also optimal to take classes or get training to help prepare yourself and your office to make your clinical trials venture successful.
For many doctors, participating in clinical trials is rewarding and provides a welcome revenue stream. When deciding whether you’d like to become involved with clinical trials, speak with other doctors who are doing them.
To find clinical trials to participate in, go to www.centerwatch.com (click on Industry Provider Profiles) or www.clinicaltrials.gov.
Posted in Medical Billing & Medical Practice Insights by .
Jun 10
16
Payer Performance Examined
Wouldn’t it be great if payers would own up to their part in the number of days your practice’s claims languish in account receivables? Or if you could see at a glance which payers denied more claims than the rest, and then compounded the hassles by sending back muddy explanations of their denials?
Now you can. In fact, if you’ve been reading Physicians Practice in recent years, you’d know that detailed information on payer performance has been a reality since 2006.
Like its predecessors, this fifth edition of PayerView details how well or poorly national and regional payers do in getting you paid correctly and on time for the services you perform. Using only hard claims data, PayerView is a top-to-bottom ranking of commercial payers, Medicare, and Medicaid that measures the level of “hassle factor” each payer represents.
Payers judge your “performance.” Now it’s your turn to judge them on theirs.
When the project started in 2006 in collaboration with athenahealth, the nation’s largest revenue cycle management company, the goal was twofold. First, by offering you vital intelligence (otherwise unavailable) on payer performance, you can make informed judgments about which payers you want to work with. Second, we hoped that over time the publicity from PayerView would prompt competition among payers to improve.
We knew that the second objective was a bit ambitious. But it’s worked. Many payers have improved performance in most of the categories PayerView measured this year. (To review past performance, read the 2007, 2008, and 2009 reports.) They paid claims faster and resolved more claims on the first submission. Even the sorest spots in provider-payer relationships, such as denial rates, showed improvements almost across the board.
Let’s look at the numbers.
Payers compared
What is PayerView, exactly? It’s a public ranking of 137 payers doing business in 45 states and the District of Columbia during 2009. The rankings are prepared by athenahealth and based on data from millions of claims submitted by thousands of providers, which are run through an algorithm athenahealth created that includes weighted performance metrics in key categories.
Not only does the trend from 2008 to 2009 show improvement, but payers are displaying competitive levels of performance between each other. This year, PayerView introduces the all-payers comparison, which allows comparisons across all categories of payers. When all 137 payers were examined, the top performer was Blue Cross & Blue Shield of Rhode Island, where claims averaged just 12.2 days in accounts receivable, and 98.5 percent of claims were resolved on the first pass. Close behind in the all-payer rankings was the national payer Humana.
How can tiny Blue Cross of Rhode Island outperform giant national payers? By making shrewd use of electronic transactions and by streamlining the claims process.
Even notoriously inefficient state Medicaid payers, perennial basement dwellers in PayerView’s rankings, took steps forward in performance, though they continue to lag behind.
“It’s really become a game of who’s improving faster,” says Melissa Lukowski, director of payer outreach for athenahealth. Lukowski credits the widespread use of electronic transaction standards in helping companies like athenahealth guide users more precisely and improve payer performance.
“The payers getting to the next level in rankings are the ones who fully leverage electronic transaction,” she says. “They don’t just process a claim; they keep you informed about its progress through the entire chain of eligibility, claims status inquiry, and electronic remittance.”
Key measures
How, exactly, does PayerView work?
Each payer is judged on how well it performs in certain areas that are important to physician practices — average days that a claim spends in accounts receivable (A/R), for example, or the rate at which it denies claims outright. The payer’s performance in all categories is tallied by the data crunchers at athenahealth to get a final score, which is then used to rank the payers against each other.
Some notes:
First, because some categories are more important to practices than others, the categories are weighted when athenahealth tallies up the final scores.
Second, athenahealth does not report the final score itself. It reports only the rankings and the payers’ performance on each individual metric.
Third, because PayerView data comes only from physicians using athenahealth for billing, it’s not a complete picture of each payer’s network. In fact, payers generally perform better inside athenahealth’s system than outside of it, due to the various steps athenahealth takes to facilitate payment — that is its business, after all — so we can’t say for sure that PayerView performance is precisely reflective of a payer’s performance generally.
Still, PayerView contains so much data that we consider it a representative sample. Working in nearly every state, athenahealth’s data represent more than 39 million charges worth $7 billion from more than 22,000 providers in 2009.
Fourth, to keep the calculations fair, athenahealth imposes some limitations on what it will include. Only payers on which athenahealth has a minimum of 3,500 claims per quarter for at least six physician practices were included in PayerView. Also, if any single athenahealth client contributed a disproportionate percentage of a payer’s claims, those claims were removed from the calculations. That exclusion may in turn have eliminated some payers from PayerView if there weren’t enough claims remaining to meet the 3,500 minimum.
The metrics included in PayerView were adjusted this year, too. Added was a measure gauging accuracy in determining insurance eligibility. Removed were measures on payers’ compliance with Medicare’s Correct Coding Initiative, and rates of claims kicked back with requests for documentation.
A metric showing the percentage of patient liability by payer was revised to measure “provider collection burden,” and was given more weight in the scoring. This metric now shows the percentage of charges transferred from the primary insurer to the next responsible party, such as the patient.
| Payment processes: What’s next?
We asked executives at major payers what the future will bring to the physicians claims process. Their answer: more of the same, but faster.
|
Major payers
When the eight national payers were compared, Humana scored a repeat appearance in the top spot. It led in fewest days in A/R (22.4) and was highest in claim denial transparency (96 percent), which measures how many denied claims required only one resubmission to get paid, indicating how well a payer explains its denials.
Sparking Humana’s performance, in part, was its ability to resolve claims in real time. Humana, as well as UnitedHealth Group, has integrated real-time claims adjudication with athenahealth’s system. Physicians who use this process get a determination of a patient’s liability within seconds of submitting a claim, and can collect what the patient owes immediately instead of waiting weeks for a final determination.
Mark Smithson, a service vice president with Humana, explains that real-time adjudication produces real savings for physician practices: it reduces days in A/R and saves staff time, postage and other collection costs. It also leads to fewer bad debt write-offs as many practices eventually give up trying to collect from patients who are reluctant to pay.
“We try to get providers to change their work flows a bit to make sure they are coding and submitting that claim while the patient is in the office,” Smithson says.
Medicare And Medicaid
Medicare’s development of the National Provider Identifier standard in 2007 and 2008 probably hurt its PayerView performance in those years, according to athenahealth’s analysis. But with that process mostly behind it, Medicare made solid performance gains in 2009.
The program averaged declines of 24 percent in A/R days and 25 percent in denial rates while leading all payers with an eligibility accuracy rate of about 99 percent.
Even Medicaid programs, traditionally the lowest performing, marked an 18 percent decrease in A/R days. Lukowski credits the improvements to increased efficiency and transparency stemming from the spread of standardized transactions.
Many Medicaid plans also reduced rates of denied claims.
“They are dealing with complex rules and specific eligibility information,” Lukowski says. “It’s not just, ‘Is this patient eligible?’ but ‘Is the patient eligible for this particular service at this time, with this provider?’”
| Ready for 5010 in 2012?
The HIPAA-mandated standards for electronic transmission of healthcare transactions implemented in 2003 are poised to take another big step soon. Next year, everything from claims and remittances to eligibility and status requests between providers and most payers will move to the Version 5010 standard, which aims to resolve gaps in the current standard. As an example of where the current standard falls short, take a look at the current state of electronic remittance advice. It directly affects your ability to manage denials — that is, to understand why a claim was denied or adjusted. Melissa Lukowski, director of payer outreach for athenahealth, says many payers had difficulty converting from their proprietary remittance explanation codes to the standard HIPAA adjustment and remark code sets. “Everyone’s struggled with it, especially the Medicaids, which had a very high level of specificity in their former, proprietary code sets,” Lukowski says. Cloudy remittance advice means your staff must spend more time calling the insurance plan’s provider line or signing on to a Web portal. These extra efforts to resolve pesky denials can also introduce paper or nonstandardized information into the claims process. Physician offices may have to, or feel they should, send in portions of the patient’s record or other forms on paper to get the claim paid. Indeed, this year’s PayerView report indicates that a fully electronic claims process — from initial claims submission to the transfer of payments to the physician’s account — shaves up to eight days from the claims cycle, with a similar reduction of average days in A/R. |
Physicians and payers
Can the improvements seen in many of the PayerView categories continue? Yes, but more work needs to be done by physician offices, says Rosemarie Nelson, who consults with medical practices on technology-related issues for the Medical Group Management Association.
“Before you point your finger at the payer, ask if you are posting 95 percent of your claims electronically, because that’s what the better-performing medical practices do — and it works,” she says.
Nelson’s prescription for the electronically empowered medical practice goes beyond equipment. She suggests asking these questions about your practice:
- Staff training: Is your front-office staff trained to be part of the revenue cycle team along with your business office?
- Staff deployment: Has your practice’s check-out function moved from the cashier-at-a-counter model to a desk staffed by a “financial advocate” who completes real-time adjudication and collections?
- Billing: Does your staff take time to set up every payer electronically — even your smaller payers?
- Clearinghouses: Do you make good use of the information and services your clearinghouse provides, even if it costs a little extra?
- Claims: Do you submit claims every day? “Sending claims in once or twice a week is old school,” Nelson says.
Robert Redling is a freelance writer based in Tacoma, Wash. He has been practice management editor for Physicians Practice, Web content editor and senior writer for the Medical Group Management Association, and a speechwriter for the American Academy of Family Physicians. He can be reached via editor@physicianspractice.com.
This article originally appeared in the June 2010 issue of Physicians Practice.
Posted in Medical Billing & Medical Practice Insights by .
Introduction
Physicians talk with their patients about symptoms and health problems but they typically don’t discuss the costs of different treatments or drugs. Yet some experts say that you need to have those discussions, because not having them could be harmful to your patients’ health.
Richard M. Frankel, PhD, Professor of Medicine and Geriatrics and a senior research scientist at Indiana University School of Medicine, recalled when his father-in-law, a retiree on a limited income, remained hypertensive despite taking his blood pressure medication.
“He was taking the drug, but because the pills were expensive, he was cutting them in half, so the dose was under the therapeutic range,” says Frankel.
Financial concerns are among several reasons why patients don’t comply with treatment recommendations.
“As patients’ out-of-pocket costs increase, physicians’ decisions affect not only patients’ medical well-being, but also their economic well-being,” says internist G. Caleb Alexander, MD, a bioethicist who teaches at the University of Chicago’s MacLean Center for Clinical Medical Ethics.
“In the case of prescription drugs, we know that 20%-30% of patients report cost-related nonadherence,” Alexander adds. “As former Surgeon General C. Everett Koop famously pointed out, ‘Drugs don’t work in patients who don’t take them.’”
Focus on Cost Is Growing
Drugs aren’t the only area where price can have an impact on the patient’s health. Concern regarding high out-of-pocket costs also affect patients’ utilization of tests, treatments, and follow-up care. Indeed, in February the Wisconsin State Assembly passed the Health Care Transparency Bill, which requires healthcare providers to disclose, upon request, their median charges for a service, test, or procedure.
In signing the bill on March 10, the state’s Governor, Jim Doyle, said, “Nowhere else are people asked to buy a product before they know what the price is. This bill is a practical step forward that will help people better understand what their healthcare costs are before making important healthcare decisions.”
By bringing the subject of costs into the open, physicians can increase compliance and ease patients’ economic burdens. “In many instances, doctors and patients can choose among different regimens,” Alexander notes. “Some may be less costly, and patients would be more likely to adhere to them.” For example, a patient might opt for a generic instead of a brand-name drug, or “watchful waiting” rather than radiation therapy for prostate cancer.
“Patients, on the other hand, may be reluctant to report cost burdens owing to embarrassment or concern that they’ll get second-rate care if they mention economic troubles,” he says. “And they may erroneously believe that physicians don’t have any leeway in addressing these issues. Physicians, however, in addition to being pressed for time, aren’t well trained for these discussions and often don’t know what patients pay out of pocket for various treatments.”
Doctors can turn this problem into an opportunity by using some effective techniques for broaching the topic and helping patients overcome financial worries that hinder optimal treatment.
Overcome the “Don’t Ask, Don’t Tell” Barrier
Because finance is such a sensitive topic, physicians and patients often avoid discussing it.
How can you bring the subject out of the closet? “An important step the physician can take is to normalize the issue,” says Alexander.
“For example, when inquiring about nonadherence, I always begin by saying, ‘Some patients aren’t compliant with their therapies. About how often do you take your medicine?’ Or, more specifically, ‘Some patients are burdened by prescription costs, or by the costs of different tests or treatments. Are you not taking the medicine I prescribed last month because you’re having trouble paying for it?’”
Frankel suggests asking about cost up front, when you make a therapeutic recommendation. For example, “Is this something that you can afford?” or “Is this something that is going to cause an economic problem for you?”
Of course, you need not bring up financial matters with every patient during every visit, but you can talk about costs in the following circumstances:
- When you suspect or identify nonadherence;
- When patients give clues that suggest financial hardship (eg, asking you for a letter so that their electricity will not be turned off);
- When patients are uninsured or lack prescription drug coverage; and
- When you recommend an extremely costly therapy.
In determining which patients might not be able to follow your recommendations due to financial concerns, there’s no substitute for conversing about these matters, especially when the stakes for the patient are high, says Alexander. “Many practices have signs that encourage patients to raise the money issue,” he adds. “For example, ‘If you’re having trouble with your healthcare costs, please bring it to our attention.’”
“Physicians and patients discuss sensitive topics all the time,” Alexander points out. “I don’t view this as very different from a discussion of sexual practices or psychiatric symptoms. I think that most physicians are quite skilled and have substantial experience in helping patients to feel safe and comfortable and establishing a climate of trust where these discussions can take place.”
Many physicians cite time constraints as a reason to avoid costs talks. But Frankel says that these conversations rarely take more than a few minutes and in the long run can save time.
“I’d rather know up front if somebody is going to have difficulty affording a treatment than to have to deal with the protracted consequence of a patient’s noncompliance,” he says.
“We operate in the real world,” says internist Robert Wachter, MD, Associate Chairman of the Department of Medicine at the University of California, San Francisco. His blog, Wachter’s World, focuses on healthcare quality and safety.
“It may be that I want the patient to run 3 miles a day but I know he won’t or can’t, so I come up with a treatment plan that I believe is realistic considering the facts on the ground.” The same rule applies regarding costs, Wachter says. “My job as a physician is to understand patients’ situations — including their financial situations — and then recommend what I think is the best care for them.
“If a patient says, ‘Look, doctor, I can’t afford the cost of the CT scan,’ my job is to advocate for the patient. That means I might need to call the insurance company. If I’m unsuccessful, my next job is to come up with a more affordable alternative.”
Eric. E. Shore, DO, JD, MBA, an internist and a health law attorney with Kane & Shore in Philadelphia, agrees. “Ordering the best treatment is worthless if the patient cannot afford it,” he says.
“Assuming that a physician knows that treatment A is not covered, it becomes his or her responsibility to discuss treatment A, the reasons why it is best, and any covered alternatives with the patient. Sometimes, if treatment B, a covered service, is tried and proves ineffective, the insurance company may agree to cover treatment A.”
It’s vital to create a climate in which patients are comfortable being candid with you, because patient dishonesty affects physician decision-making, Shore adds. “If, for instance, a patient who is not responding to a medication as expected is reluctant to admit to splitting pills, the physician may decide that the dose is too low and order a higher dose, resulting in an overdose.”
Sometimes an Honest Conversation Is Not Enough
“A hospital has social workers and a case manager on hand to address complicated topics, including what a patient’s insurance will or won’t allow, and many clinics employ someone whose job involves haggling with the insurance company,” says Wachter.
In a large group practice, physicians can ask administrative staff to assist patients who are struggling with their out-of-pocket treatment costs. “Staff can play an important role in helping to identify resources that might enable patients to get financial assistance, more effectively engage with their insurers, or access safety net programs such as Medicaid or charity care,” says Alexander.
However, in a solo or small group practice, physicians might have to call insurers directly to determine what options are available and advocate for patients when the insurer won’t pay for a treatment. “It might be that the insurer doesn’t understand the value of a certain treatment, so you need to explain it,” says Wachter. “You may get the insurance company to approve your recommendations if you can make a case that not doing X today greatly increases the likelihood that the patient is going to develop a complication or will have to be admitted to the hospital.”
In the case of drug treatments, if you’re sufficiently persuasive you might be able to get the drug company to sell the medication at a lower cost, or even provide it free to the patient, says Shore.
Document a Patient’s Noncompliance Due to Cost
If a patient can’t afford treatment, that doesn’t mean you’re off the medical-legal hook.
When a patient avoids taking a medication or having a test because of the cost, be sure to record the entire episode in detail, says Shore. The note should describe your efforts to try to get the treatment covered, attempts to persuade a pharmaceutical company to supply a drug for free or at a reduced cost, your suggestions for less expensive alternatives (if there are any), and — most important — discussions with the patient about the potential consequences of not following your advice.
Be sure that the progress note includes your recommendations, why the patient declined to follow those recommendations, and that you gave her the opportunity to ask questions and answered all of her questions. Ask the patient to sign the note, Shore advises.
“Generally, such a note, even without the patient’s signature, is sufficient to deflect any potential litigation,” he says. “If litigation ensues anyway, it will be hard for a plaintiff’s attorney to convince a jury that you were at fault when you did everything you could to ensure that the patient got the needed drug or treatment.”
Shore has one additional piece of advice. “If your discussion with the patient is time-consuming, it’s a good idea to specify start and end times in the note. Documentation indicating that you spent considerable time trying to persuade a recalcitrant patient goes a long way toward presenting a caring physician to a jury.”
The new healthcare law is an important step in helping to reduce individuals’ burden from medical costs, but it’s not going to be a magic bullet. Encouraging patients to talk about cost burdens is also important.
Posted: 05/04/2010
Posted in Medical Billing & Medical Practice Insights by .
Is your medical practice bogged down by the administrative tasks of medical billing? Are you searching to increase profits and productivity, reduce collection times and successfully process claims? If yes, then you are at right place. Today, most medical billing companies provide a wide range of services. Yet, many fail to have the proper skill and high level of service that is needed to be successful and satisfy clients.
The process of medical billing is follow below steps:
• Claims Transmission: The medical practice forwards the medical claim to billing company
• Retrieval and Checking of Medical Claims: the medical billing company checks all documents
• Medical Coding: auditing/adjusting the code(s) for each patient
• Charge Creation: the medical billing company creates claims based on billing guidelines
• Medical Claims Audit: check to verify the complete procedure and information
• Medical Claims Transmission: creating claims before sent electronically to the claims transmission department
• Claims Submission to Insurance Agencies: ready to dispatch to the concern insurance agencies or government department
• Follow up and Settlement: the medical billing company follows-up the with the insurers and payment agencies until funds are disbursed
Thus, medical billing is a process of insurance verification, patient demographic entry, CPT & ICD-10 coding, charge entry, claim submission, payment posting, A/R follow-up, denial management and reporting.
If you are facing the problem of increased operating costs and spending more time on your practice administration than patient care, then outsource your medical billing needs to Millennium Medical Billing.
Posted in Medical Billing & Medical Practice Insights by .
May 10
7
Preparing for RAC Audits
Recovery Audit Contractor (RAC) is a term that every Medicare healthcare professional and staff member needs to know. RACs were created as part of CMS’ Medicare Integrity Program. Under this program, CMS must do everything possible to protect and safeguard its funds against fraud, waste, and abuse. For physicians that means CMS is taking all possible steps to ensure that practices are submitting proper claims.
The purpose of a RAC is to audit Medicare claims and determine where there are opportunities to recover incorrect payments from previously paid but noncovered services (including services that were not medically necessary), erroneous coding, and duplicative services. The initial phase of CMS’ Medicare Integrity Program has been completed and, effective January 1, 2010, RACs are now operational in all 50 states.
If you have not yet prepared yourself for a possible audit, now is the time to get your practice ready and have a plan in place for such an occurrence, even if you feel “it couldn’t happen to my practice.” All practices that submit claims to government programs are likely to be reviewed at some point by a RAC.
So where do you start?
First, assess your billing procedures to determine if you are making the kind of billing mistakes that would trigger CMS’ threshold for investigation. RACs use proprietary software to analyze claims based on your practice’s claims history and monthly supplementation. Audits can date back to claims paid after October 1, 2007, so your last 30 months of billing are open for review.
Here are some of the items a RAC is likely to look for:
- Obvious “black and white” coding errors (such as a well-woman exam billed for a male patient);
- Medically unnecessary treatment or wrong setting of care where information in the medical record does not support the claim;
- Claims with a secondary diagnosis assigned as a complication or comorbidity; and
- Multiple or excessive number of units billed.
Second, your practice should create a consistent process for responding to all RAC inquiries, to include the names of the staff members who will fulfill audit requests. Appoint a RAC leader who can guide your practice through the auditing process. Having a single individual spearhead the audit process is very important, because once a practice is informed that it is being audited, documents must be submitted within 45 days, or an error is declared and penalties may result.
RAC protocol should be established for every office and an “audit log” developed to track requests for documents, demand letters from CMS, appeal deadlines, and final determinations. Keep accurate records for RAC-based denials (given the unique denial code “M432”), so that an appeal can be properly supported. Practices should appeal as many denials as possible, as Administrative Law Judges will make all final determinations and may be more sympathetic than the RAC.
Finally, be prepared. Conduct a mock audit, and see how a subset of your Medicare claims would hold up to closer scrutiny. Are your records in an easy-to-retrieve format (such as in electronic form), or would the 45-day deadline present problems for your practice? It is recommended that all requested records be submitted on a CD and kept in a scanned format inside the practice, as opposed to off-site record storage, where transfer time must be factored into each request.
Take heart, the RACs were not created to “get” those providers who make occasional billing errors. However, if your Medicare billing process has a systematic “hiccup,” don’t be surprised when a RAC knocks on your door. By preparing your practice ahead of time, you’ll be better equipped to properly answer it.
*(Click here for a list of RACs by region, to find out the name of your Recovery Audit Contractor.)
Susanne Madden, MBA, is founder and CEO of The Verden Group, a consulting and business intelligence firm that specializes in practice management, physician education, and healthcare policy. She can be reached at madden@theverdengroup.com or by visiting www.theverdengroup.com.
Jason E. Lopata, Esq., is Senior Consultant, Legal Services, for The Verden Group. He may be reached via physicianspractice@cmpmedica.com.
This article originally appeared in the May 2010 issue of Physicians Practice.
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