Introduction

Impending Medicare reimbursement cuts would create a medical Armageddon.

Many doctors are already developing their disaster scenario: What if the massive 21.2% cut takes effect? If Congress doesn’t move to prevent the reductions, the impact will be devastating for doctors.

While the clock is ticking, you could wait and assume — as many are — that the cuts won’t take place. If you’re less optimistic, you could start figuring out what you’ll do if the worst-case scenario happens.

“This issue is horrible,” says Kathryn Moghadas, RN, CHBC, practice management expert and president of Associated Healthcare Advisors, Fern Park, Florida. “If Medicare reimbursement cuts take place, commercial carriers will follow.”

“What could be even worse is that many commercial carriers base their fee schedules on a given year’s Medicare fee schedule,” says Moghadas. “So imagine the impact if the commercial carriers come back afterwards and say we will only pay 100% of the current year Medicare fee schedule! We see the bombs going off all over and over again.”

If the Medicare cuts go through, there’s no happy outcome for doctors. Like preparing for a hurricane, you can pile up the sandbags, but you also need to start planning for life after the storm.

Even if the cuts don’t go through immediately, it’s still wise to batten up your practice to survive under austere new conditions.

Think Carefully About Cutting Medicare Patients

Many doctors will make the tough decision as to whether to stop seeing Medicare patients. For most physicians, Medicare makes up a significant portion of their business.

“All practice advisors have horror stories of doctors who have dropped Medicare, and then they lost all their patients,” says Moghadas. “Most doctors derive 50%-70% of their income from Medicare. If it’s that high, you’re going to have a problem if you drop these patients.”

Some physicians are trying to see fewer Medicare patients by limiting the appointment slots available to them. “In these cases, they are cutting their Medicare population by accepting fewer and fewer Medicare patients into appointments that are convenient,” says Moghadas. “Or they are slowing down the availability, by saying that the first available appointment might be 3 or 4 weeks out. Another tactic is to not take new Medicare patients.”

This decision brings mixed feelings, however. Finances battle with the emotional ties of long-standing patient relationships. Ultimately, economic realities may rule the day.

This crisis has also forced many physicians to consider changing their practice business mode.

“I believe we would see many, many doctors abandon Medicare and commercial contracts that are tied to Medicare,” says Robert Scroggins, JD, CPA, CHBC, management consultant with Clayton L. Scroggins Associates, Cincinnati, Ohio.

“These doctors would gravitate towards a simple, no-insurance, fee-for-service practice model, and I believe many would also take the opportunity to move towards a retainer model in order to get currently high patient volumes under better control.”

Practice demographics will be a key factor in determining whether it is practical to have cash-only patients. Most doctors will not have this option.

Be Tenacious About Billing and Collecting Revenue Due

“Look at your entire revenue cycle,” says Moghadas. Most practices are leaving a significant amount of money on the table due to poor billing, coding, and collecting, she says.

“Make sure you’re checking all the sources you get money from and collecting from everyone you can,” says Moghadas. “Perform a systematic review of your billing and collections processes. Look at time in accounts receivable, percent of claims denied and resubmitted, and collections.” Press for hard data and statistics.

Now may be the time to have your processes audited or reviewed by an outside practice management firm that can identify problem areas.

Is Your Workflow Wasting Time and Money?

“Do a review of everything going on in the office, including ordering supplies, workflow, and patient scheduling; how much time and money are you spending on administrating the care you’re giving?” says Moghadas. “Look for ways to run your office more productively and effectively, but be really smart about any cuts you’re going to make.”

Involve your staff in coming up with a more streamlined work process. If you set up your workflow years ago and your practice or staff has grown since then, you may have some work-around processes that could use streamlining.

“Doctors would do well to understand their patient mix and the impact of not only a 21% drop but even a drop of a lesser percentage,” says Scroggins. “They should also go about evaluating overhead and making reasonable reductions where appropriate and in a way that will not negatively hurt production — because these steps are good to do regardless of cuts in reimbursement.”

“Doctors should also investigate ways production can be improved while at the same time delivering the best standard of care; this also is important to do regardless of any looming potential cut in reimbursement. These are good things to do because they make good business sense,” he adds.

Consider a Smaller or Less Costly Office

You might be able to accommodate your patients just as well in a smaller space or in a less expensive office building. Another option is to try to renegotiate your lease with the landlord.

Look for Less Expensive Staff Benefits

Shop around for a better benefits package, advises Moghadas. You may be able to get a less costly plan, or you may have to stop offering some of your current benefits. No one likes eliminating staff benefits, but if Medicare cuts take place, you’ll hardly be the only practice doing so.

Keep the Hard Workers but Not the Slackers

In difficult times, some people rise to the occasion, whereas others resent the loss of the previous status quo. Make sure that you have the right people on staff.

“Having the wrong personnel who do not support but who stymie is especially bad in difficult times,” says Moghadas. “Look at the positions in your office and look at the people you have filling them. You need people who are 100% committed to doing what they need to do to help make the practice thrive.”

Take Advantage of Money Available for Getting an EMR System and Using ePrescribing

Look to any money available to you for electronic medical records (EMRs) and ePrescribing. “There are affordable systems out there,” says Moghadas. The American Recovery and Reinvestment Act (ARRA) makes money available to physicians who adopt an electronic health record (EHR).

Lower Your Cost of Living

By tightening your personal or family budget, you won’t be as dependent on having your prior income. “A lot of doctors are putting their kids in public school for the first time,” says Moghadas. “One medical family cut out their children’s piano lessons. Look at the financial aspects of your personal life and see where you can tighten up and cut spending.”

Explore Other Revenue Sources

Cost-cutting is helpful, but many practices have already slashed to the bone and won’t be able to make up for the huge drop. Part of their survival plan will involve developing other income sources. Ancillary services and workers’ compensation are areas in which some doctors have found revenue opportunities.

“Workers’ compensation or maritime (Jones Act) laws and rules have their own fee schedules that often are not tied into Centers for Medicare & Medicaid Services fee schedules or formulas,” Moghadas comments. Workers’ compensation rates are governed by state statutes, and fee schedules are discounted depending on what third-party administrator is administering the individual employer or employer group claims.

“In maritime claims, again, those fee schedules are established outside of the Medicare fee schedule formulas,” says Moghadas. “We have seen a rise in revenue among our clients who have expressed interest in expanding their practices to include those payer sources. Claims administration has some different processing issues, but once we come into our clients’ offices and train their personnel, the relationship is usually a win-win.”

If Medicare reimbursement cuts take place, the practice of the future will have to be “‘leaner and meaner,”‘ and many practices will have to make significant changes in order to survive. Whether the cuts take place or not, finding ways to run a more effective practice is always a useful activity.

Read more articles at Medscape.com.