Monthly Archives: January 2012

Why Payers should update their reimbursement model for Pediatricians

January 27, 2012 in Blog by support Team  |  Comments Off on Why Payers should update their reimbursement model for Pediatricians

For the last 20 years, Healthcare costs increase at a rate higher than inflation. Why? I would argue that the alignment of incentives in the current Healthcare system rewards use of the high cost treatments. If we look at the 2010 Medicare Spending (provided by Avalere Health and the centers for Medicare and Medicaid Services), 59% is spent on Hospitals and Long Term Care, 20% on specialists and other clinical services, 12% on prescription drugs and only 2.8% on Primary Care Doctors. This information was published the Wall Street Journal today in an article titled “An Rx? Pay more to Family Doctors”. After reading this article, I began thinking about how patients use our healthcare system as well as the non-alignment of incentives in the system.

Let’s look at some of the current incentives:

• Incentive to add more specialists: Many specialists make 2x per year than a Primary care Physician. It is interesting how the US has twice as many Medical Specialists per population as other developed countries (Seems that when specialists are paid so much more, so many more individuals practice as a specialist).

• Incentive to treat Symptoms & not Align Care: Pharmacies that add treatment clinics with NP and PA which ‘patch up’ a patient by prescribing an antibiotic when it is not needed. Although a Rx at the Pharmacy as well as a patient purchasing OTC drugs and other products at the chain pharmacy brings additional revenue to the pharmacy, this type of treatment can cost the system more overall. This pharmacy care is ‘non coordinated patient care’ in the system that benefits pharmacies. This lack of coordination causes some patients to over use the ER as well as specialists that drive more procedures because an issue was not identified appropriately by a Pediatrician.

• Incentive to Pay for Size vs. Quality: Payer incentives that allow health systems with larger power and size to be paid more for the same procedure without any proof in decrease in cost or improvement in quality to the healthcare system. The large systems add layers of management, personnel, expensive buildings and pay for these upgrades by increasing their size so they can negotiate a higher rate from the payers.

• Incentive to Payers for making reimbursement ‘Difficult’: Complicated payer systems and processes for which the ‘average’ provider is only being collecting 95% of the contract amount (managed care keeps 5% of the missed opportunities – this leads to an incentive system for Managed Care to make more $ by denying payment).

Hospitals have been on a buying spree to own large physician networks that increase their revenue in two ways: referrals to the hospital and organization size to force managed care to pay higher reimbursements. What has been happening is that many of the payers are paying for more and more services in specialists and the hospital. It is difficult for the independent Pediatric Office (non-owned by a hospital or multi-specialty large integrated health system) to stay independent. Many payers have been short sighted and provide minimal rate for services for Primary Care providers as well as minimal increases to these rates (unless the Pediatrician is in a large health system). One representative from a health plan explained a year ago to me that their standard increase was 0% due to increase cost in the system. During the discussion, I pointed out to this representative that their rates were in the lower 25% of all payers, their company increased their profits by over 25% and their CEO made approximately $20M in the previous year. The payers seem to be able to benefit from the current model

Many payers have been under paying the total costs of vaccines to the independent practices while paying larger systems more money. The payment difference is not due to better quality outcomes but due to many of the smaller offices not being able to identify the issue with their ‘dated’ systems, people, processes as well as the payers taking advantage of the Pediatric practice that is 1-5 physicians.

What can Pediatricians do in this environment?

1. Utilize up to date systems that update coding and payment rules continuously versus just one update a year – this points to why using cloud computing is an advantage.

2. Identify all the costs in your practice and establish a minimum rate of reimbursement that will be rejected from payers.

3. Analyze the payers in your practice at least 2x per year.

4. Evaluate if there is a payer that is below the minimum and speak with this payer. If they do not meet the minimal payer mix, discharge the insurance from the practice. The patients can either see your providers as out of network or cash.

5. Evaluate the total compensation for well and sick visits in your practice. Identify the payers that reject paying for nights and weekends. Call the representative and explain the extra costs for after hours and that the insurance company has established 9-5 as routine hours (the hours that they are available).

These are just a few recommendations on how to operate in today’s healthcare system.

Verification of Proper Insurance Retractions in Pediatric Practices

January 20, 2012 in Billing and Collections by support Team  |  Comments Off on Verification of Proper Insurance Retractions in Pediatric Practices

Insurance retractions occur routinely in a busy Pediatric Practice. A retraction of money occurs when a practice owes insurance plan money due, usually, to the insurance company overpaying or incorrectly paying the practice. Some reasons why an insurance company might incorrectly pay a practice for a patient visit include:

• The patient’s insurance expired or is invalid.

• The claim system of the insurance company incorrectly paid higher than the contract amount.

• The patient has a high deductible plan and the insurance company incorrectly paid the practice prior to the patient deductible being met.

A practice management system should be able to adjust to these changes at a claim level and appropriately record the retraction. A retraction for one patient can be split over multiple payments. Note that each retraction needs to be verified by the Biller after they receive the payment summary or other documentation of the retraction from the managed care plan. These adjustments happen for various reasons and require the biller to continuously update the claim in the system.

Let’s look at an example:

Patient John Smith Visits ABC Pediatrics on January 4, 2012. ABC Pediatrics bills the Insurance provided by John Smith, receives a payment of $431 on February 2, 2012 then on April 10, 2012, ABC Pediatrics receives a statement that John Smith was not a valid member of the insurance so the practice needs to pay back the $431. The next payment is for $200 on a different patient – so the plan documents that the practice now owes the plan $231 ($431-$200) and that the EFT check for that patient is $0 (since the plan reduced the liability to the practice by $200 for John Smith’s correction).

The practice management system should have a method to update the claim for the changes so that these changes are properly documented as a credit and debit in the system. If you are unsure, call your practice management vendor for help and assistance.

Protection of Your Pediatric Practice from Theft

January 13, 2012 in Billing and Collections by support Team  |  Comments Off on Protection of Your Pediatric Practice from Theft

Unfortunately, theft is more common in Pediatric Practices than most practice owners anticipate. Businesses in general, according to some estimates, lose approximately 7% of revenue due to Theft and Embezzlement. According to a September 2010 article in MGMA Connexion, the magazine produced by the Medical Group Management Association, the Association of Certified Fraud Examiners (ACFE) estimates that the typical organization loses 5% of its revenue each year to fraud. Think that because you run background checks on all hires that you are protected? Think again – in a 2010 ACFE report, 86% of individuals that were charged or convicted of fraud were first time offenders.

Some examples of fraud in a Pediatric Practice include: employees stealing through theft of receipts, cash on hand, disbursements such as forging or altering a check, submitting fictitious invoices, paying personal expenses with company funds, payroll and expense reimbursement. More than 50% of the time the employee stole alone and had 3 or more years of experience.
Using Risk Management principle of trust and verify with proper oversight and systems can mitigate much of the risk. This includes:

1. Assess your processes and monitoring for high risk areas including co-pay management, payroll, reimbursement, patient refunds.

2. Make sure the front desk team and other members understand that there is an on-going audit of these activities (if a partner is monitoring 1 hour/1x per week, there should be enough clarification each month for the employees to understand there is an audit system).

3. Minimize the individuals involved with high risk areas (such as access to banking, payments and payroll) and insure there is a partner in the business that audits this function (recommend switching this role in a larger group so all partners have an equal share in the audit function).

A well-designed Pediatric Practice management system should have the ability to print the co-pay report per day so that the practice can insure that the books balance. This is similar to a bank teller verifying that the cash balances in their drawer. If you are unsure how to use their audit system, obtain some training then implement this with the front desk team each day. If your Practice Management system vendor does not have this function, request that they build this into the software since this is an important function. Insure that your Pediatric practice is not one of the practices that loses a percent of their revenues each month due to not implementing auditing systems and controls. By consistently implementing an appropriate audit system, you can minimize your risk of fraud/theft, protect your practice, and maybe even sleep a little better at night.

http://www.mgmaconnexion.com/connexion/201009?pg=40&pm=2&u1=friend#pg40

10 Ways to Improve the Bottom Line of Your Pediatric Practice

January 3, 2012 in Blog by support Team  |  Comments Off on 10 Ways to Improve the Bottom Line of Your Pediatric Practice

Managing a Pediatric Medical Practice is full of opportunities and challenges today. In the ‘old’ days managed care plans had minimal influence on the bottom line of your practice, Malpractice rates we’re relatively inexpensive and patients were flexible to meet 9-5 office hours. Today, much has changed in society as well as in managing a Pediatric Medical Practice. Other ‘conservative’ services such as banking have changed drastically in the last 15 years. Look how easy it is to gain access to your bank/bank account today versus 15 years ago. You can be successful in Pediatric Medicine today by understanding how to meet the needs of Patients and Managed Care Plans. Patients want good access to a good Pediatrician while Managed Care Plans know that seeing a Pediatrician is more economical then using the ER or Urgent Care Centers. Also, many Pediatricians act like a Medical Home that provides continuity of Care. Managing a pediatric practice needs to be done in an objective manner by providing goals while measuring and monitoring success toward these goals. Here are 10 suggestions to improve the bottom line of a Pediatric Practice:

1. Optimize New Patient Additions: how many patients are in your Pediatric Practice? What are the ages of these patients? What is the average # of New Patients joining your practice per month? How do your hours, location(s), facilities, and staff compared to other choices for Parents? The more practices in the same location, the stronger the value proposition needed for your practice to be successful. Patients choose a Pediatrician to obtain good advice and treatment. They need to feel heard, have their questions managed and feel that your practice provides the best options. If a provider is not meeting these needs, the practice manager/physician Partner needs to discuss the importance of service. Suggested reading, although in the Hospital Segment, includes “If Disney Ran You Hospital, 9 ½ things you would do differently”. http://www.amazon.com/Disney-Ran-Your-Hospital-Differently/dp/0974386014

2. Provide and Measure Quality Care/Patient Satisfaction: Quality Care is important in any Pediatric Practice. How do you measure “Quality” in your practice? You should be able to set up reports in your E.H.R. system to measure HEDIS measures such as the % of patients that were vaccinated per a pre-determined vaccine schedule. The patient and parent have an opinion of the care in your Pediatric Practice. If you provide them an option on each visit to provide feedback either via a ‘Feedback Box’ or an online link, you have a great opportunity to see trends in the perception of the care provided by your practice. If the patient survey is created and implemented correctly, you will also be able to use the tool to view feedback per provider. This can be used as a tool to constantly improve care and/or the perception of care. To receive continuous improvement in your practice, you need the feedback and the providers need to choose to change based on the feedback.

3. Leverage the “Right” Technology: Patients and parents are use to convenience via their smart phones and home computers (look at the dramatic increase in on-line sales in 2011 versus 2010 as an indicator). Does your Electronic Health Record System have the ability for parents to schedule appointments, view select information through a patient portal (determined by the Pediatrician), and pay bills on-line? If you are not sure, ask your E.H.R. vendor what options they have the cost for the options. Also inquire if you and the providers on call can view all your patient records via a smart phone. The system used on a smart phone should be configured for a smart phone.

4. Managed the Fee Schedule: I am surprised at the number of practices that have established their fee schedule significantly below appropriate levels established by consultants in the field of Medical Practice Management as well as recommended levels provided in practice management courses through the Medical Group Management Association (MGMA). Generally, the billed rate per CPT code should be 2-3x the Medicare reimbursed amount for that code. The practice needs a consistent and well thought out fee schedule that is reviewed at least 1x per year. If you are unsure how to establish appropriate fees, contract with an organization that manages Pediatric Offices or does consulting for Pediatric Offices. This is not a task for companies that primarily sell software and have services as an afterthought. If you want to learn on your own, recommend attend courses provided by MGMA.

5. Review Contract Rates with Plans: The fee schedule is one component, what the actual contract rate with each insurance company is an important component to improve the bottom line of your pediatric practice. The fee schedule should be re-visited each year. Look at the difference between your fee schedule and the contract rate for each of the top 8-10 plans. There will be a few plans that will try to not give an increase in their rates. There were two plans I worked with for a Pediatric Practice that try to sell in ‘no increase’ from the previous year while the plans increased their profitability by 15-20% year versus year and the CEO’s of the plans made millions in salary and bonus. Remember, that Pediatricians are usually the lowest paid specialty in Primary Care and Pediatricians help the managed care plans reduce ER visits, Urgent Care centers as well as inappropriate use of the health care system. No increase in a fee schedule is a decrease in your salary since the costs associated with Rent, Employees, taxes, insurances, supplies and vaccines increase each year. You might need to cap or discharge a particular ‘poor’ performing insurance from the practice. Many of the patients from a particular plan will stay with your practice. Obtain good advice and use appropriate consultants that understand contracting.

6. Evaluate Payer Mix: What is the payer mix of your practice? Some practices have minimal patients that utilize Medicaid and/or Managed Medicaid Insurance while other Pediatric Practices are >75% Medicaid. Understanding the geography and plan mix will help you make informed decisions. You should become with some of the reimbursement and desires of the plans that comprise greater than 80% of the revenue for your practice. Analyze the capitation rate per patient per month for each of the insurance companies as well as the facility usage rate for the average capitated patient. Does your practice management system track the monthly capitation payments? What % of your monthly revenue is from the capitation checks? If you added a new provider or have a new practice, you should be more flexible on the insurances that you accept as well as the ‘cut off’ for contract rate. If you are unsure how to evaluate the payer mix, seek advice from your billing team (if you use a vendor that specializes in Pediatric Billing) or a Pediatric Practice Consultant. Recommend evaluating the payer mix at least 1x per year to determine what changes are needed.

7. Monitor Collection Rate: Net collection rate is the % collected versus the contract amount. For example, if your fee schedule for 99214 is $145 and the contract amount for the fee schedule is $100, a 99% Net collection rate means that $99 was collected of the $100 contract amount. The contract amount could be broken into three areas: co-pay collected at front desk, amount paid by insurance and amount due by patient. Let’s do an example with the $100 for a 99214 (assuming this was the only code for the visit). Let’s say the patient had a $20 co-pay and $50 paid by the Insurance per the Explanation of Benefits and another $30 due by the patient. The back-end billing team needs to bill the patient for the remaining $30. MGMA benchmarks show that the average collection rate for charges >120 days aged is approximately 95%. MGMA establishes a goal of 97% of Net collections. What is the Net Collection rate for your practice? Do you monitor this monthly? Do not settle until the collection rate is above 99%….when contracting a vendor; ask for their range in collection rates for the Pediatric Practices that they manage. When you use your own internal billing team, make sure and monitor multiple patients per week to insure that billing and write offs are appropriate per the protocols of the practice. Any person can upload charges to a clearing house, but not all practices have systems that manage the entire Pediatric Revenue cycle. An average collection rate can cost a practice thousands of dollars in lost revenue.

8. Monitor AR Days: Accounts Receivable days or AR days is a simple formula of taking the total $ in Accounts Receivable and dividing this by the averaged $ generated per day. Again, benchmarks are important to monitor on a monthly basis. The MGMA averages are between 42 and 50 with

9. Evaluate Front Desk & Providers: Both the Front Desk team as well as the providers in a Pediatric Office have a significant impact on the Revenue Cycle. The front desk team needs to verify the insurance, scan the insurance card, and collect the co-pay as well as any outstanding balance on a patient account. The Pediatric E.H.R./Practice Management system should have a system for the Practice Administrators/Physician Partners to monitor/audit the collection of co-pays. Note that some resources report that approximately 70% of practices have theft at the front desk. If you have a strong audit system that verifies the amount each day (like a bank teller) you can avoid revenue being taken from your practice. The providers have a responsibility in the revenue cycle to make sure they capture the work/advice they provided to the practice. Strong Pediatric Practice management systems should be able to simplify the choices so the providers just select from one of the most common Diagnosis codes and CPT codes.

10. Review E&M Coding: The “bell” shaped curve is the ‘ideal’ for Pediatric Practices. Some high quality based might have a curve that has slightly to the right. Some practices either under or over code. This either reduces the appropriate level of revenue for the practice or places the practice at an audit risk for which they could owe revenue back to the insurance company. The E&M coding should be reviewed by provider and practice at least 1x/quarter. If there is a provider that is ‘under’ or ‘over’ coding, consider enrolling in an on-line course provided by either MGMA or the American Academy of Pediatrics.By implementing these 10 suggestions early in 2012, your Pediatric Practice can benefit from appropriate changes for the entire year. A well-managed Pediatric practice leads to happy providers, staff members, and patients.