Reed Tinsley, CPA

Final ACO rule and how it might affect physician practices

Physicians are not required to be meaningful users of electronic medical records (“EMR”) as a condition of participating in an ACO, although EMR is now a quality measure and is weighted higher than others. Essentially, CMS elected not to add an extra requirement to ACO participation, preferring instead to permit participating physicians to discover and decide for themselves how best to manage patient data and other information in order to provide coordinated care for their patients.

Allows prospective assignment of patients to ACO’s on a quarterly basis, rather than using a retrospective method for selecting patients to participate in an ACO, as had been originally proposed. In the Final Rule, prospective assignment of patients is permitted in order that physicians shall know in advance which patients are in an ACO, thereby enabling physicians and patients to partner together in order to better address health problems, both in terms of objectives and how to achieve them. In this regard, it should be noted that, according to the Final Rule, only persons enrolled in the Medicare fee-for-service program may be assigned to an ACO.

Eliminates participant risk in the first of the two (2) ACO shared-savings’ models. The Proposed Rule had required that, after the first two (2) years, an ACO choosing the one-sided model (i.e., shared savings among participants without any sharing of losses) would transition into the two-sided model (i.e., shared savings and losses) during the third year. However, the Final Rule provides for shared savings among the participants in the one-sided model during the entire initial agreement period with no sharing of losses in the third year. The two-sided model, where participants share savings and losses for the entire initial agreement period (the first “year” of the initial agreement for ACO’s starting in 2012 will be to 18 to 21 months) continues to include risk- or loss-sharing for participants, but also offers them larger potential rewards than they would have received under the Proposed Rule.

Reduces from 65 to 33 the number of quality measures ACO-participating physicians must report. The Proposed Rule required providers to report on 65 quality measures in five (5) categories so as to enable CMS to assess the quality of care furnished by ACO’s. In response to the comments it received – the majority of which favored utilizing fewer quality measures in order to reduce reporting burdens and attain more focused and meaningful improvements to the Medicare program – CMS reduced to 33 in four (4) categories the required number of quality measures subject to reporting. These categories are as follows: (i) patient/caregiver experience; (ii) care coordination/patient safety; (iii) preventive health; and (iv) at-risk population that includes subcategories of reporting requirements regarding the following disease states: diabetes, hypertension, ischemic vascular disease, and coronary artery disease.

Ensures that all ACO’s shall receive a share of any first-dollar savings generated to Medicare once a minimum amount of savings is achieved, known as the Minimum Savings Rate (“MSR”). The MSR is on a sliding scale, ranging from 3.9% for ACO’s with 5,000-5,999 beneficiaries to 2% for ACO’s with 60,000 or more beneficiaries.

Physician compliance - a first step

Unfortunately, too many physicians are unconcerned about fraud and abuse. Most are confident that their practice operations are compliant with Medicare billing and documentation guidelines, and that they would never intentionally defraud anyone. True or not, this laissez faire attitude and false sense of security has the potential to hurt physicians financially and professionally by not allowing doctors to focus on the life-blood of their practice - documentation, coding and billing.

So as a first step, perform a Practice Analysis to provide ‘baseline’ statistics and develop a “snap-shot” of the practice’s current operations relative to reimbursement, compliance and operations. This involves a detailed review of all CPT/HCPCS codes and productivity reports for coding compatibility, unrepresented services and baseline statistics, and a detailed comparison of each physicians’ E/M service utilization to specialty-specific Medicare E/M data to identify under or over utilization of level of service codes. The initial results of the analysis are then linked to diagnostic coding and documentation compliance to enhance revenues while reducing post-payment demands from Medicare, Medicaid, etc.

 

 

 

Determining appropriate overhead allocations

Question. We have an OB/Gyn group. The founding partner wishes to no longer be on call nor handle OB. In computing her share of the practice expenses, she will be charged a percentage of fixed overhead and a different percentage of variable overhead. There is a disagreement between the partners' CPAs as to what constitutes fixed overhead, especially as it relates to salaries. Do you have any information on this matter?

Answer. What constitutes “fixed” versus “variable” overhead in a compensation plan is
negotiated by the physicians who are party to the plan, within parameters that are more or less well accepted. Fixed expenses include:

Depreciation and equipment repair and maintenance charges

Interest expense or similar charges, like leasing

Legal accounting, retirement plan administration

Occupancy costs: rent, utilities, insurance, maintenance, cleaning

Salaries area different story - some practices rarely considered solely fixed overhead, although in surgical practices in particular they may be partially fixed and partially variable. For example, one common approach is to treat 50% of salaries as fixed and 50% as variable. Another approach is to identify positions and allocate them to fixed or variable. The office manager or practice administrator would typically be part of fixed overhead, while nursing or reception staff could be fixed or variable.

Admonition: When a physician cuts back on hours, if other physicians do not pick up those
hours, there may be less patient volume and therefore a need to cut back on staff salaries.

Want to know how to maximize physician revenue?

It's actually pretty simple:

Monitor physician volume, work RVUs, collections, gross and net collection percentages, payor mix and benchmark these against your peers, both nationally and internally.

Then, evaluate provider efficiency - ensure they have the tools they need (often staff) to be as effective as possible; concentrate on highest and best use of resources.

Where to find medical practice billers (or any employee for that matter)

Smart organizations know that hiring the wrong employee is costly – so costly, in fact, that it is well worth the extra effort to hire the right employee the first time around – every time. Productivity, morale and, even, the organization’s revenue are at stake in the hiring process. Here are important steps – both in hiring and keeping – the best medical biller. So where can you find a good biller (or any employee for that matter)?

Remember that staff can help recruit, so ask them for suggestions. A current staff member may have a friend who would fit in well with your operation. More employers are offering small incentives – for example, a $200 gas card – to employees who suggest a job candidate who turns into a hire. Managers and employees alike can network with colleagues at local medical billers’ associations. Many of these groups can also circulate the job posting. Turn to local training programs and community colleges when posting a position, as well as using advertisements in the local newspaper. Local community colleges and technical schools that train billing and office staff may be able to place interns. Internships can give you a view of how a potential candidate would fit with your team well before you ever need a replacement.

Online job listings like monster.com and careerbuilder.com can be expensive, but they will get the word out to a lot of people. Post the opening on your organization’s website and don’t forget about social networking. If your organization uses Facebook or Twitter, use them to spread the word about an opening. Staff might mention the opening to their online “friends” and “followers”, too.

Dear physician, where are the contracts?

Even after many years of working with physicians, I am still surprised by the poor record-keeping habits of private practices. I'm not talking about medical record documentation -- that's a whole other issue. What I'm talking about is business records -- and more particularly legal agreements. When a physician client contacts me with a problem, very often it involves some contractual relationship such as a managed contract, employment agreement, service agreement or lease. Of course, my first request is that they send me a copy of the signed agreement underlying the relationship. Amazingly, more often than not I am told that they don't know where the signed agreement is or they send me an unsigned draft or an expired agreement.

So are your contracts organized? When was the last time they were reviewed? Are they outdated? If I came in to your office tomorrow, can you put your hands on any contract I ask for? Please give this issue some priority before the end of the year.

OUCH-Possible big cut in physician Medicare reimbursements?

Centers for Medicare & Medicaid Services (CMS) has released its Calendar Year (CY) 2012 Final Rule with Comment Period for practitioners who are paid under the Physician Fee Schedule (PFS). The final rule impacts a variety of methodologies used to calculate physician payment, including the adjustment for geographic differences in practice expenses and the payment rates for the professional component of multiple advanced diagnostic imaging procedures.

CMS anticipates that, without changes to current law, the Sustainable Growth Rate (SGR) adjustment to physician reimbursement will result in a 27.4% cut in payment rates for 2012. This adjustment has historically been reversed through congressional intervention. However, in light of the ongoing impasse over budget cuts required by this summer's debt ceiling debate, the possibility looms that no legislative fix will be forthcoming. As a result, there is a very real possibility that a substantial reduction in physician reimbursement will occur with the CY 2012 PFS.

Don’t forget the small things when scrutinizing practice overhead

Numerous and often small costs can add up. They must be evaluated regularly. They include

• Small fees ­– i.e., bank charges and penalties. No practice should incur these. Review statements to ensure this.
• Advertising – compare the benefits of advertising with its costs, particularly
  telephone directory advertising. Practices that have half- or full-page ads might consider reducing or eliminating them.
• Outside – determine a potential collection rate, minus expenses, for billing and compare it with the same figures for the external billing agency.
• Postage costs – are they practice’s postage costs or employees’ personal postage costs? Develop a system to determine and track postage costs.

Also review your office lease agreement. if it contains an operating stop provision, have you audited the related calculations to make sure you are only getting dinged with actual costs to operate the building?

Are you regulary evaluating payer performance?

Evaluate payer performance based on the insurance plans that account for the highest volume of revenue to the practice. Examine and compare their reimbursement rates for the top CPT codes utilized in the practice. This will identify under-performing contracts that compromise practice profits.

Other factors in evaluating payer performance include:

The level of cooperation and support the plan’s provider relations department gives;

How promptly claims are adjudicated;

The number of errors in paying claims; and

The number of denials that require the practice to fight for its money.