« August 2010 | Main | October 2010 »

14 posts from September 2010

September 30, 2010

Impact of expiring tax cuts on physician tax returns

Ninety days and counting until the 2001 Tax Act sunsets.  Expect tax rates across the board to increase on January 1st unless new tax rules are enacted.  Congress recently warned us, however, that they will not even take up extending the current tax rules into 2011 until after the November mid-term elections.  Here is what you can expect for 2011 tax rates assuming Congress isn't able to provide President Obama with a Tax Act by the end of the year:

  • The 10% tax bracket disappears reinstating the 15% rate as the lowest tax rate.
  • The 25% tax rate jumps to 28%.
  • The 28% tax rate jumps to 31%.
  • The 33% tax rate jumps to 36%.
  • And the 35% tax rate jumps to 39.6%.

As you can see, while the lowest rate increases by 5% and the top rate increases by 4.6%, the three other brackets increase by 3% each.  Since the 10% bracket is quite small, and the top bracket only affects taxpayers earning more than $400k, most people should see their federal income tax burden increase by about 3% of their taxable income assuming Congress lets the current tax rules expire.  For each $100k of taxable income, therefore, expect to pay $3k more in federal income taxes.


September 29, 2010

Other ways to keep good medical practice employees from leaving

Provide Adequate Educational Seminar Opportunities
Make sure all employees are kept up to date in their practice area. This is especially true for the office’s CPT coder(s).

Make Sure the Office is Adequately Staffed


It should be a requirement that all medical practice departments be adequately staffed. However, in the era of declining reimbursement, it seems some medical offices are cutting staff, much to their own detriment. This in almost all cases results in a decline in employee morale. If necessary to keep staff, the medical office should be creative with its human resource. This includes using flex hours, home workers, cross coverage, etc.


Be Appreciative of Staff


People are motivated by recognition. Anything the medical office can do to recognize them will make them work a little harder. Believe it or not, it also helps them stay put.  The following are some ideas for employee recognition:


§  Personal notes from management for exceptional work.

§  Employee outings.

§  A verbal “thank you.”

§  Gifting.


Conduct Employee Reviews


Reviews should be annually and periodically at designated times throughout the year. These should be productive, training sessions. Have employees set goals and monitor these goals throughout the year. Employers with good review programs, coupled with ongoing training and mentoring, seem to have the lowest turnover rate among its employee group.

September 28, 2010

Keeping Good Employees in Your Medical Practice

Step number one: Treat them well. Now that the practice has filled the position, it must make sure to keep the hired employee for long time. However, as we all know, turnover is a big issue for many medical offices. To begin this process, practices should keep the following management principles in mind:


1.    Nothing will drive employees away faster than a boss who is - or even appears to be - unapproachable or disrespectful.

2.    Employees want to make a difference. They want to be proud of where they work. They want to succeed.

3.    Without someone on the sidelines cheering employees on, enthusiasm soon fades. Productivity generally follows suit.

4.    People are motivated by recognition. Anything the practice can do to recognize them will make them work a little harder. It also helps them stay put.

5.    Bosses in medical practices should treat people like they want to be treated. If people feel they are needed, wanted and respected, they’re going to stay and the practice is going to get their loyalty.

6.    Help employees be the best he/she can be on an ongoing basis.

September 27, 2010

IRS eliminating paper tax deposits

The IRS has issued proposed regulations that would discontinue the use of paper federal deposit coupons (IRS Form 8109), beginning on December 31, 2010. The existing rules for depositing federal taxes through the Electronic Federal Tax Payment System (EFTPS) would remain valid, which would effectively increase the volume of transactions initiated by taxpayers on an electronic basis. It is important to note that for those who engage a payroll service company or a CPA to handle their federal tax deposit responsibilities, no action is likely needed on their part.

The proposed changes will apply to corporate income and estimated taxes, FICA taxes and withheld income taxes, Federal Unemployment Tax Act (FUTA) taxes, and businesses with any quarterly federal tax liability in excess of $2,500 must remit payment electronically, rather than mailing a check with the tax return.

Organizations making the types of tax payments noted above, if not currently enrolled in EFTPS, may want to act promptly in order to transfer their current paper coupon payment function to the EFTPS payment system well in advance of December 31, 2010—the end of the federal deposit paper coupon system.




September 23, 2010

Improving front desk collections

Have an employee print the encounter forms in advance and contact the patient concerning their past due balances and the expectation of payment at check-in. When the patient checks in for the appointment, the Front Office employee could place the superbill on the counter for the patient to see the amount and then asks how they wish to pay.

Although you can practice objection comebacks with the staff, I have found it is argumentative and leaves the door open for continued excuses.  Instead consider using the Broken Record Technique.  If the patient says they cannot pay (regardless of the reason), the employee is to advise the patient that if he/she is unable to pay the past due balance, that day's visit will have to be rescheduled.  If the patient comes back with another excuse for not paying, the employee is to make the same statement in the same pleasant and caring tone of voice.  By making the same statement to the patient each time, it lets the patient know that excuses will not change the inevitable.  The employee does not have combat every excuse and the patient does not feel that the employee is arguing with him/her.  It is rare that we have to reschedule the patient's visit.

And yes, always make sure that the patient has not come in for an urgent visit before they are rescheduled.

All physician offices need to change a culture of “service now, pay later.”  It is tough in the beginning, but you can lead your patients into the change eventually.

September 22, 2010

Bad-debt Control Checklist to Improve Medical Practice Cash Flow

With what seems like a continuous decline in physician reimbursement, it is imperative that all practices collect every dollar they are entitled to.  However we all know this is not always the case. As such, mechanisms and systems need to be in place to avoid bad debt situations as much as possible. The following is a bad debt control checklist you can use to assess whether or not a medical practice is prepared to minimize its bad debts. Any “no” answers should be investigated immediately, with recommended solutions following soon thereafter.


Do written guidelines exist on the collection of self-pay accounts? ___ yes    ___ no


Are collection guidelines reviewed and revised periodically? ___ yes   ___ no



Are collection guidelines clear, concise and sufficiently detailed to serve as a working reference to personnel? ___ yes   ___ no



Do business office personnel receive formal training on collection guidelines before beginning work?

___ yes   ___ no


Do employees receive formal training on collection guidelines after any revision, or otherwise at least annually?    ___ yes   ___ no


Does management solicit employee suggestions for changes in policies and procedures?

___ yes   ___ no


Do exceptions to approved guidelines require the approval of management on a case-by-case basis?

___ yes   ___ no


Do self-pay guidelines allow monthly payments on certain accounts?___ yes      ___ no


Do self-pay guidelines specify the maximum number of payments that will be accepted?

___ yes   ___ no

If so, how many? _______________________


Do self-pay guidelines specify the minimum monthly payment amount that will be accepted?

___ yes   ___ no

If so, how much? ________________________ 


Do collection guidelines specify what action should be taken if a patient misses a payment?

___ yes   ___ no


 Does management support the collection guidelines, even when a patient complains?

___ yes   ___ no



September 20, 2010

Administrator Performance Review Criteria

In my consulting practice, I am sometimes asked to assist in developing performance criteria for use in evaluating the position of clinic/office Administrator/Manager. In most cases we can all agree on the practice financial benchmarks that must be achieved. However, there needs to be other more subjective standards and criteria to consider when evaluating performance.  Practices are learning the hard way that focusing only on financial benchmarks can lead not only to significant governance issues but also poor financial performance due to the resulting impact on staff morale and employee turnover.


Used alone, financial benchmarks have a proven tendency to promote short term decision making that rarely serves to create sustained or meaningful value-creation. First, recognize that there are a number of other areas of administration that are just as important as the financial benchmarks for the long term success of the group. Listed below are examples of behaviors that my clients have used for the Administrator/Manager position. In order for the person to be considered fully effective, each one of these should be evident to at least some degree. I use many of these to assist clinics and other healthcare entities in developing performance review measures – and complete programs, for their management team.


r  Sound decisions based on cost/benefit

r  Efficient use of resources

r  Implementation of staff performance reviews

r  Staff development and training - extremely important

r  Strong communication skills

r  Strong presentation skills

r  Conducts regular staff meetings

r  Facilitates regular physician meetings (even if you are a solo practice)

r  Helps establish short term and long term goals and plans

r  Recognizes developing problems

r  Initiates positive change

r  Generates creative ideas

r  Demonstrates passion for the job

r  Makes timely decisions

r  Communicates and gets input from all affected parties prior to implementing changes

r  Exhibits high ethical standards

r  Open and honest in all dealings

r  Maintains confidentiality

r  Earns trust of physicians and staff

r  Honors commitments

r  Demonstrates specific job knowledge and expertise

r  Delegates appropriately

r  Maintains composure in stressful times

r  Works efficiently

r  Organized

r  Recruits competent employees

r  Flexible with various personalities

r  Provides positive and constructive feedback to team members on a regular basis

r  Holds all employees accountable

r  Provides consistent leadership and adherence to clinic policies

r  Executes directions

r  Accepts constructive feedback from physicians and staff

r  Expresses opinions when appropriate

r  Demonstrates assertive take charge can do attitude

r  Maintains Focus on initiatives


Ideally, all of these behaviors will be evident in the performance of a “complete” leader for your organization, and many of them should receive just as much attention as the financial benchmarks that are adopted. Each organization, and its circumstance, is different, however. The development of the review program should be conducted in concert with the organization’s goal-setting and strategic planning process. The job performance elements that are seen as most closely tied to the organization achieving its short and long term goals should be specified and weighted to reflect their importance. Having a balance of financial and non-financial criteria reflects not only good governance but also the recognition that real value creation cannot be reliably reflected by one or two financial numbers alone.

September 16, 2010

Sample overtime policy for a physician office

Work requirements and scheduling may occasionally require the need for overtime.  Employees are expected to work overtime when it is requested.  Every effort will be made to notify employees far enough in advance to minimize inconvenience.


Nonexempt employees will be paid overtime for all authorized hours worked in accordance with applicable law. Exempt employees are not eligible for overtime pay.


Overtime will be computed on actual minutes worked, and will not be rounded to the nearest quarter hour.  Under the Fair Labor Standards Act (FLSA), only hours worked are added together to determine an employee's overtime pay.  Vacation sick and holiday hours are not used in the calculation of overtime.


All overtime must be pre-approved by the Practice Administrator, except in the following circumstances:


1.    A patient remains in the building (and it is the employee's responsibility to see that all patients have left the building).


2.    A physician requests the employee's assistance.


In cases where overtime has not been pre-approved (see above), it is the employee's responsibility to note the circumstances of the overtime on their timecard.


September 14, 2010

A refresher on the new health care reform mandates


Starting in 2014, individuals must maintain "minimum essential coverage" or pay a penalty. The penalty will equal the greater of (1) 1 percent of modified adjusted gross income (AGI) or $95 per person in 2014, (2) 2 percent of AGI or $325 per person in 2015, and (3) 2.5 percent of AGI or $695 per person in 2016, indexed for inflation in later years. "Minimum essential coverage" includes coverage under a qualifying or grandfathered insurance company or employer-sponsored plan, government-sponsored program such as Medicare or Medicaid or a state-based exchange. The penalty for dependents under the age of 18 will be capped at 50 percent of the adult individual's penalty. The penalty for each family will be capped at 300 percent of the adult individual's penalty. The maximum penalty will also be capped at an amount equal to the average national premium for exchange coverage.

There are a number of exceptions to the individual mandate, including exceptions for individuals who have income below the tax filing threshold, incur hardships, have religious objections, are not lawfully present in the United States, are incarcerated or are overseas.


Like the individual mandate, employers will be required to offer health care coverage for their employees or pay a penalty. This is often referred to as the employer "play or pay" mandate.

Large employers will be required to offer qualifying health coverage or pay a penalty of $2,000 per full-time employee, except the first 30 employees. For this purpose, "large employers" are employers who employ an average of at least 50 full-time employees on business days during the preceding calendar year. "Full-time employees" are limited to employees who average at least 30 hours of service per week. Smaller employers will be exempt from the "play or pay" mandate.

Employers must also pay a penalty of $3,000 for each full-time employee with income below 400 percent of the federal poverty level (FPL) (in March 2010, $88,200 for a family of four) who opts for exchange coverage in lieu of employer-based coverage. Employers must also offer "free choice" vouchers to certain lower income employees if the employee's cost of employer-provided health coverage ranges from 8 percent to 9.8 percent.

September 13, 2010

Health Care Credit Draft Form

The IRS released a draft of new Form 8941 (Credit for Small Employer Health Insurance Premiums) for eligible small businesses and tax-exempt organizations to calculate a 2010 credit for health insurance purchased for employees. The credit was provided by the Affordable Care Act and is designed to help small businesses that employ moderate and lower income workers. Small businesses will include the computed credit amount as part of the general business credit on their tax return, and tax-exempt organizations will claim the credit on a revised Form 990-T. The form is available at www.irs.gov/pub/irs-dft/f8941--dft.pdf .