Physician Practices - What to do in the Face of Fee Reductions & the Additional Pressures Anticipated by Universal Health Care Implementation?

by Jim Thomas MBA, CPA

It is uncommon to see a business model where one customer not only makes up a significant portion of your revenue, but is also the "floor" for the price that all your other customers will pay. Even rarer yet, is that same model where said customer fees have been decreasing steadily the past 10 years. Such is the dilemma many of the Physician Practices find themselves in today. If the new Health Care legislation is implemented in 2014, it is reasonably expected that between 30 to 40 million Medicaid patients will be added (fees that are 1/3 to � of the aforementioned shrinking Medicare rates), to the population of patients that Physician Practices will be expected to see while many of their costs (I.e. Salaries, equipment, rent, etc.) continue to rise. Despite the bleakness of this picture, there are many steps that Physician Practices can take to not only survive, but thrive under the worse possible scenarios. Here are but a few of the steps every practice should be undertaking to be optimally positioned during this extremely volatile and uncertain period:  

1. Request a review of your billing & collection area. What CPT codes are being used for patient encounters? Are they proper & do they include the proper modifiers (when warranted) to insure prompt payment? Do the Physician patient notes support the coding? Does the new patient evaluation CPT code reflect the amount of "face" time spent by the Physician? What does your rejected claims rate look like?
2. How does the Accounts Receivable aging look? How does it compare to industry standards and similar practice specialties. Are the older accounts being worked first? Do patient letters go out each month? Do the notes on the patient account file in the system reflect collection activity?
3. Does your IT solution optimize the efficiency of your staff? (i.e. Does it include a flexible scheduler; include a strong report writer for custom report needs; ease of use and training for new staff; etc.)
4. Have you implemented Electronic Medical Records (EMR)? Medicare is requiring implementation by 2012 to avoid being penalized. Medicare is offering a 1% fee incentive (down from 2% for 2010 implementation) for 2011 implementation.
5. Have we thought of additional revenue streams that can be added to increase overall revenues and pre-tax income? As an example, practices that send out a significant amount of monthly referrals for MR (>100) should consider adding onsite MR and plain films capability.
6. The addition of Physician Assistants (PA) & Nurse Practitioners (NP) to increase the efficiency of the Physicians while at the same time strengthening the clinical aspects of the practice and increasing revenues. A well trained PA or NP can see between 25-30 patients in follow up daily. This translates into an additional $200,000 - $250,000 annually in collected fees based on reimbursements at 85% of the Physician fee schedule.
7. A systematic review of all practice costs centers should be initiated with the goal of eliminating all unnecessary expense. Every line item of costs should be challenged starting with staff payroll. Is excessive overtime being paid? If this is a significant recurring costs, at 1 � normal rates it may be cost effective to add additional part time staff. How effective are your marketing and advertising costs, and are they being tracked? As a routine, does the practice obtain 3 quotes on all major purchases?
8. Do your payments on managed care contracts agree to the negotiated fee schedule? Are these contracts being managed not only as to the negotiated fee schedule, but are they monitored as to when the contract will be expiring so new rates can be negotiated?

The above are some of the areas that practices should be looking at to optimize the productivity of the Physicians & staff while at the same time maximizing practice revenues and pre-tax income. We realize that practice management is well aware of these areas of opportunity, but may be inundated with the daily demands of the Practice.  

Nperspective's team has a proven track record of helping Physician Practices with evaluation and implementation of effective profit improvement programs. Contact us for a free consultation to discuss if there are ways we can help your company succeed.

Please contact Janet Watson at (813) 317-3460 or

jwatson@npcfo.com

.

Question:

What can you do to improve your cash collections?

If you would like more information or have questions about our other services we would love to hear from you.  Please contact Janet Watson at 813.317.3460 or jwatson@npcfo.com.