Reed Tinsley, CPA

It’s That Time of Year Again (AGAIN)

I wrote in the past an article about New Year resolutions for medical practices and their management. Well another year has gone by and I’m still disappointed that most practices out there just don’t get it. The same mistakes keep occurring, strategic planning is basically nonexistent, and most are content with sitting on their hands and living the day to day. If that is the case, then why is everyone complaining about their take home pay? Again, I just don’t get it.

A book entitled “When Professionals Have to Lead: A New Model for High Performance” by the Harvard Business School Press mentions that most professional service firms (yes, a medical practice is a professional service firm) often focus on the short term and spend little time and thought on providing direction on where the practice is going and why. This is so typical of medical practices. You need goals and objectives to guide you throughout this next year – without them, you are just a rudderless ship.

So again here are the new year resolutions repeated; use them to set your own practice goals and objectives for 2012. I don’t want to have to repeat them again next year!

I RESOLVE to inspire and motivate my employees Believe it or not, this is an easy one to accomplish. Employees can be inspired and motivated just by doing a few simple things – when they do a good job, tell them they did so. Tell them thank you for a job well done and thank them for their efforts and for being a part of your team. Make the effort to take each employee individually to lunch. Get their feedback on what is good about the practice and what can be improved. Surveys have shown these little things do more for office morale than salary raises do. Remember a very important point: The better performing offices are the ones that do the best at human resources.

I RESOLVE to have a monthly management meeting Even if you are a solo medical practice, this meeting is critical to maintaining and improving the financial performance of the office. At the meeting, review and discuss such things as practice finances, billing and collection performance and comparison to benchmarks, office operations, and human resource issues. These meetings keeps management informed and on the same page. How can an office be successful unless everyone is informed and pulling in the same direction? Remember, you can’t manage what you don’t measure.

I RESOLVE to take a CPT coding class Most of your revenues are coming from fixed fee payers (Medicare, managed care, etc.). Your services are paid based on specific reimbursement rates for each service by each payer. In this environment, proper CPT coding can either lead to increased revenue or lost revenue. Take a coding class to make sure you are billing out all services that you are entitled to bill out and to make sure you are properly billing out your services.

I RESOLVE to adopt a healthier personal lifestyle I’m sure this one is already on your list but I wanted to emphasize it for you again. A healthier lifestyle can only lead to greater productivity not only in the office, but in your personal life as well. We all know what to do to get healthier, unfortunately implementation is oftentimes difficult to achieve. Make it a goal to identify all of those things that get in the way of accomplishing this goal and eliminate them from your life. Why set yourself up to take a premature “dirt nap” anyway???

I RESOLVE to take a proactive managed care stance Conduct a detailed review all of your current managed care relationships to assess what payers need to be eliminated and what contracts need to be renegotiated. I’m sure as you’re reading this you are saying to yourself that there is no way you can successfully renegotiate a contact. My response to you is: How do you know unless YOU TRY. Just talking with your managed care payers can provide valuable insight on what it takes to be successful in today’s dominate managed care marketplace.

I RESOLVE to get an independent review of my medical practice You get your car tuned up every year; doesn’t it make sense to get your medical practice tuned up also? An independent assessment will tell you what is good about your practice and what needs to be improved for increased efficiency and profitability.

I RESOLVE to start my own personal financial planning This includes retirement planning, education planning, budgeting, insurance planning, investment planning, and net worth optimization, just to name a few. As a practitioner who has been working solely with physicians for the last 20 years, let me tell you one simple truth: There are a lot of physicians out there who have to work. Don’t become one of them.

I RESOLVE to hold a strategic planning retreat this year This even applies to solo practitioners. Do you know where you want to be 3, 5, 10 years from now? Do you have a plan on how to get there? Are all physicians in agreement on how to get there? It shouldn’t take a rocket scientist to figure out that future success requires an awful lot of planning.

I RESOLVE to consider a practice merger Consider a practice merger to eliminate duplicate overhead, to increase revenue, to possibly gain some leverage over the manage care payers, and to provide a transition strategy. These are just a few of the potential benefits. If done right, a practice merger can not only increase physician incomes, but maintain some of the autonomy most physician’s desire.

Finally, I RESOLVE to hire the best people Again, I want to emphasize the simple and honest fact that the better performing practices out there are the ones doing the best job at human resources. One way they do this is by hiring the best people they can, even if it costs a little more to do so. This means strict attention must be paid to the hiring process. It is so easy to see how hiring really good people can turbo charge a practice almost overnight.

Selected Participants in the Pioneer ACO Model

The Pioneer Accountable Care Organization (ACO) Model is a CMS Innovation Center initiative designed to support organizations with a new payment model, allowing them to provide more coordinated care to beneficiaries at a lower cost to Medicare. The Pioneer ACO Model will test the impact of several innovative payment arrangements to support these organizations in achieving the goals of better care and outcomes at a lower cost.

The Pioneer ACO Model was designed specifically for organizations with experience offering coordinated, patient-centered care, and operating in ACO-like arrangements. The selected organizations were chosen for their significant experience offering this type of quality care to their patients, along with other criteria listed in the Request for Applications (RFA) document available at www.innovations.cms.gov. These organizations were selected through an open and competitive process from a large applicant pool that included many qualified organizations.

The descriptions of selected ACOs provided in this document are based on information provided by the ACOs for publication and do not necessarily reflect the views of CMS. Organizations participating in the Pioneer ACO Model:

Organization and Service Area

1. Allina Hospitals & Clinics Minnesota and Western Wisconsin
2. Atrius Health Services Eastern and Central Massachusetts
3. Banner Health Network Phoenix, Arizona Metropolitan Area (Maricopa and Pinal Counties)
4. Bellin-Thedacare Healthcare Partners Northeast Wisconsin
5. Beth Israel Deaconess Physician Organization Eastern Massachusetts
6. Bronx Accountable Healthcare Network (BAHN) New York City (the Bronx) and lower Westchester County, NY
7. Brown & Toland Physicians San Francisco Bay Area, CA
8. Dartmouth-Hitchcock ACO New Hampshire and Eastern Vermont
9. Eastern Maine Healthcare System Central, Eastern, and Northern Maine
10. Fairview Health Systems Minneapolis, MN Metropolitan Area
11. Franciscan Health System Indianapolis and Central Indiana
12. Genesys PHO Southeastern Michigan
13. Healthcare Partners Medical Group Los Angeles and Orange Counties, CA
14. Healthcare Partners of Nevada Clark and Nye Counties, NV
15. Heritage California ACO Southern, Central, and Costal California
16. JSA Medical Group, a division of HealthCare Partners Orlando, Tampa Bay, and surrounding South Florida
17. Michigan Pioneer ACO Southeastern Michigan
18. Monarch Healthcare Orange County, CA
19. Mount Auburn Cambridge Independent Practice Association (MACIPA) Eastern Massachusetts
20. North Texas Specialty Physicians Tarrant, Johnson and Parker counties in North Texas
21. OSF Healthcare System Central Illinois
22. Park Nicollet Health Services Minneapolis, MN Metropolitan Area
23. Partners Healthcare Eastern Massachusetts
24. Physician Health Partners Denver, CO Metropolitan Area
25. Presbyterian Healthcare Services – Central New Mexico Pioneer Accountable Care Organization Central New Mexico
26. Primecare Medical Network Southern California (San Bernadino and Riverside Counties)
27. Renaissance Medical Management Company Southeastern Pennsylvania
28. Seton Health Alliance Central Texas (11 county area including Austin)
29. Sharp Healthcare System San Diego County
30. Steward Health Care System Eastern Massachusetts
31. TriHealth, Inc. Northwest Central Iowa
32. University of Michigan Southeastern Michigan

Six Year-End Tips to Reduce 2011 Taxes

The IRS wants to remind all taxpayers that with the New Year fast approaching, there is still time for you to take steps that can lower your 2011 taxes. However, you usually need to take action no later than Dec. 31 in order to claim certain tax benefits. Here are six tax-saving tips for you to consider before the calendar turns to 2012:

1. Make Charitable Contributions – If you itemize deductions, your donations must be made to qualified charities no later than Dec. 31 to be deductible for 2011. You must have a canceled check, a bank statement, credit card statement or a written statement from the charity, showing the name of the charity and the date and amount of the contribution for all cash donations. Donations charged to a credit card by Dec. 31 are deductible for 2011, even if the bill isn't paid until 2012. If you donate clothing or household items, they must be in good used condition or better to be deductible.

2. Install Energy-Efficient Home Improvements – You still have time this year to make energy-saving and green-energy home improvements and qualify for either of two home energy credits. Installing energy efficient improvements such as insulation, new windows and water heaters to your main home can provide up to $500 in tax savings. Homeowners going green should also check out the Residential Energy Efficient Property Credit, designed to spur investment in alternative energy equipment. The credit equals 30 percent of the cost of qualifying solar, wind, geothermal, or heat pump property. For details see Special Edition Tax Tip 2011-08, Home Energy Credits Still Available for 2011 on the IRS.gov website.

3. Consider a Portfolio Adjustment – Check your investments for gains and losses and consider sales by Dec. 31. You may normally deduct capital losses up to the amount of capital gains, plus $3,000 from other income. If your net capital losses are more than $3,000, the excess can be carried forward and deducted in future years.

4. Contribute the Maximum to Retirement Accounts – Elective deferrals you make to employer-sponsored 401(k) plans or similar workplace retirement programs for 2011 must be made by Dec. 31. However, you have until April 17, 2012, to set up a new IRA or add money to an existing IRA and still have it count for 2011. You normally can contribute up to $5,000 to a traditional or Roth IRA, and up to $6,000 if age 50 or over. The Saver’s Credit, also known as the Retirement Savings Contribution Credit, is also available to low- and moderate-income workers who voluntarily contribute to an IRA or workplace retirement plan. The maximum Saver’s Credit is $1,000, and $2,000 for married couples, but the amount allowed could be reduced or eliminated for some taxpayers in part because of the impact of other deductions and credits.

5. Make a Qualified Charitable Distribution – If you are age 70½ or over, the qualified charitable distribution (QCD) allows you to make a distribution paid directly from your individual retirement account to a qualified charity, and exclude the amount from gross income. The maximum annual exclusion for QCDs is $100,000. The excluded amount can be used to satisfy any required minimum distributions that the individual must otherwise receive from their IRAs in 2011. This benefit is available even if you do not itemize deductions.

6. Don't Overlook the Small Business Health Care Tax Credit – If you are a small employer who pays at least half of your employee health insurance premiums, you may qualify for a tax credit of up to 35 percent of the premiums paid. An employer with fewer than 25 full-time employees who pays an average wage of less than $50,000 a year may qualify. For more information see the Small Business Health Care Tax Credit page on IRS.gov.

And here is one final tip to remember: you should always save receipts and records related to your taxes. Good recordkeeping is a must because you need records to prepare your tax return, and it will help you to file quickly and accurately next year.
For more year-end tax information and to access all IRS forms and publications, visit the IRS website at http://www.irs.gov.

Six Year-End Tips to Reduce 2011 Taxes

The IRS wants to remind all taxpayers that with the New Year fast approaching, there is still time for you to take steps that can lower your 2011 taxes. However, you usually need to take action no later than Dec. 31 in order to claim certain tax benefits. Here are six tax-saving tips for you to consider before the calendar turns to 2012:

1. Make Charitable Contributions – If you itemize deductions, your donations must be made to qualified charities no later than Dec. 31 to be deductible for 2011. You must have a canceled check, a bank statement, credit card statement or a written statement from the charity, showing the name of the charity and the date and amount of the contribution for all cash donations. Donations charged to a credit card by Dec. 31 are deductible for 2011, even if the bill isn't paid until 2012. If you donate clothing or household items, they must be in good used condition or better to be deductible.

2. Install Energy-Efficient Home Improvements – You still have time this year to make energy-saving and green-energy home improvements and qualify for either of two home energy credits. Installing energy efficient improvements such as insulation, new windows and water heaters to your main home can provide up to $500 in tax savings. Homeowners going green should also check out the Residential Energy Efficient Property Credit, designed to spur investment in alternative energy equipment. The credit equals 30 percent of the cost of qualifying solar, wind, geothermal, or heat pump property. For details see Special Edition Tax Tip 2011-08, Home Energy Credits Still Available for 2011 on the IRS.gov website.

3. Consider a Portfolio Adjustment – Check your investments for gains and losses and consider sales by Dec. 31. You may normally deduct capital losses up to the amount of capital gains, plus $3,000 from other income. If your net capital losses are more than $3,000, the excess can be carried forward and deducted in future years.

4. Contribute the Maximum to Retirement Accounts – Elective deferrals you make to employer-sponsored 401(k) plans or similar workplace retirement programs for 2011 must be made by Dec. 31. However, you have until April 17, 2012, to set up a new IRA or add money to an existing IRA and still have it count for 2011. You normally can contribute up to $5,000 to a traditional or Roth IRA, and up to $6,000 if age 50 or over. The Saver’s Credit, also known as the Retirement Savings Contribution Credit, is also available to low- and moderate-income workers who voluntarily contribute to an IRA or workplace retirement plan. The maximum Saver’s Credit is $1,000, and $2,000 for married couples, but the amount allowed could be reduced or eliminated for some taxpayers in part because of the impact of other deductions and credits.

5. Make a Qualified Charitable Distribution – If you are age 70½ or over, the qualified charitable distribution (QCD) allows you to make a distribution paid directly from your individual retirement account to a qualified charity, and exclude the amount from gross income. The maximum annual exclusion for QCDs is $100,000. The excluded amount can be used to satisfy any required minimum distributions that the individual must otherwise receive from their IRAs in 2011. This benefit is available even if you do not itemize deductions.

6. Don't Overlook the Small Business Health Care Tax Credit – If you are a small employer who pays at least half of your employee health insurance premiums, you may qualify for a tax credit of up to 35 percent of the premiums paid. An employer with fewer than 25 full-time employees who pays an average wage of less than $50,000 a year may qualify. For more information see the Small Business Health Care Tax Credit page on IRS.gov.

And here is one final tip to remember: you should always save receipts and records related to your taxes. Good recordkeeping is a must because you need records to prepare your tax return, and it will help you to file quickly and accurately next year.
For more year-end tax information and to access all IRS forms and publications, visit the IRS website at http://www.irs.gov.

Items and Services That Are Not Covered Under the Medicare Program

This publication published by the Medicare Learning Network provides the following information:

• The four categories of items and services that are not covered under the Medicare Program andapplicable exceptions to exclusions;

• The Advance Beneficiary Notice of Noncoverage (ABN); and

• Resources.

This is an excellent learning tool for your billing staff, so I suggest you make a copy for each person.

https://www.cms.gov/MLNProducts/downloads/Items_and_Services_Not_Covered_Under_Medicare_BookletICN906765.pdf

2012 IRS mileage rates are out

The rates are:

• 55.5 cents per mile for business miles driven;
• 23 cents per mile driven for medical or moving purposes; and
• 14 cents per mile driven in service to charitable organizations.

The business rate is the same as the mid-2011 adjustment that took effect on July 1. The rate for medical and moving miles actually fell by 0.5 cents per mile.

Bad-debt Control Checklist to Improve Physician Practice Cash Flow - Part II

Do exceptions to approved guidelines require the approval of management on a case-by-case basis? ___ yes ___ no

If a guideline is implemented, it should be followed “to the letter.” However, there may be situations where the policy cannot or should not be followed. However, this is not a decision of the employee to make. Exceptions should be reviewed and approved by management before such action is undertaken. Make sure the exception is properly documented.

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

A sound bad debt policy will allow a patient to make installment payments on their account. Just make sure there is a review mechanism in place to make sure the patients that are allowed to make payments are actually making them each and every month.

Do self-pay guidelines specify the maximum number of payments that will be accepted? ___ yes ___ no If so, how many? _______________________

The installment policy should be fair to both the patient and the practice. It is crazy to allow a patient to pay $5 a month for ever until their balance is paid off. This really creates collection hassles for the practice. Set a reasonable length of time for time for the patient to pay off their account.

Do self-pay guidelines specify the minimum monthly payment amount that will be accepted? ___ yes ___ no If so, how much? ________________________

This ties in with the commentary above. The minimum amount to pay should tie in with the maximum allowed length of time a patient is allowed to pay off their account. Of the two, the maximum number of payments allowed is the most important. Fit and set the payment amount within this guideline.

Do collection guidelines specify what action should be taken if a patient misses a payment? ___ yes ___ no If so, describe the policy.

The point to be made here is to set a policy and stick to it. If the policy is to turn the patient over to collection if two consecutive payments are missed, then make sure this policy is adhered to and if exceptions are made, they are made with management’s approval.

Does management support the collection guidelines, even when a patient complains? ___ yes ___ no

It is useless to implement a policy and then have the doctors not follow it. There must be a “buy in” to the guidelines by every doctor within the practice. In other words, they must support them. If not, policies and guidelines never get abided by and end up becoming a “joke.” Employees also get very confused on how to implement policies and guidelines when the doctors tell them different things and so does administration.

Bad-debt Control Checklist to Improve Physician Practice Cash Flow - Part I

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. I have provided commentary to aid you in this analysis.

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

Every practice should have written guidelines to guide its employees on how to collection self-pay and patient-pay accounts. These are accounts where the patient might not have insurance at all or accounts where the amount shown is the amount the patient personally owes after his or her insurance has paid.

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

Medical practice in today’s environment does not remain constant and so neither should the internal policies of a practice. This is especially true of collection policies and one main reason why these policies should be reviewed and revised at selected points in time. For example, many practices used to refuse to press patients for payment of their overdue accounts for a variety of reasons; but with insurance reimbursement declining, this type of policy may have to be reconsidered.

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

You want a document you can give to an employee and after reading it, they can understand what their job duties are. This not only minimizes training time but it provides the employee a guide he or she can refer to on an ongoing basis.

Do business office personnel receive formal training on collection guidelines before beginning work? ___ yes ___ no

Up front training can prevent and sometimes even eliminate many of the day-to-day problems that occur within the practice. Just don’t throw an employee into the water and assume they can swim. The good practices take the time to train their employees as soon as they start work and then on an ongoing basis thereafter.

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

Here is the main point about a “guideline”: Do the employees follow it? Employees are almost always going to tell you that they are but what are the results? Are the guidelines really working? There must be a continuous assessment to ensure they are working and effective.

Does management solicit employee suggestions for changes in policies and procedures? ___ yes ___ no

The good practices constantly solicit employee feedback. Listen to them – they often have good ideas on how to improve various aspects of how the practice operates.

A Good Time To Evaluate Your Medical Practice - Part II

As I mentioned in yesterday's post, now is a good time to evaluate and assess your medical practice. Here are a few more areas to take a look at:

Coding Analyze the coding patterns for evaluation and management services and well as the coding for all other services. Practices can lose significant amounts of revenue if services are not coded correctly. Also, are your billing and coding all services you are entitled to bill?

Managed Care Review all managed-care plans to evaluate their reimbursement rates and profitability. If the plan’s rates or profitability are not acceptable, assess the potential for renegotiation.

Front Desk Collections Make a critique of front-desk collections. Calculate the percentage of patients who actually made some form of payment at the time of service.

Billing and Collection Take a hard look at your billing and collection policies and processes. Flowchart these processes to identify and eliminate the inefficiencies.

Employees Create a formal organizational chart – are there too many employees? Too few employees? The goal is to make sure workforce is at the optium level to allow your practice to be successful. Also look at payroll costs, including overtime costs and employee benefit costs. Also, did you have excessive turnover and what was the cause of it?

Marketing Review your marketing activities and their successes or failures. Create a new marketing plan for the upcoming year.

Patients If I called a sample of your patients and asked them what they thought about your practice, what would they say? Positive things? A lot of negative comments? Physicians sometimes ignore the importance of patient satisfaction.

A Good Time To Evaluate Your Medical Practice - Part I

December is a great time of year – not only because it’s the holiday season for most but because it’s a good time to evaluate and assess your medical practice. So what went right this year and how can you capitalize on those strengths moving in to next year? What went wrong and what needs to be done to fix your practice problems? Remember there is only one financial benchmarking statistic that matters – did the physician owner(s) make more money this year than last year? Ask yourself if not, why not? Why didn’t practice net income grow? If you do decide to evaluate edical practice, here are a few areas I suggest you take a look at. Part II of suggested areas to look at is tomorrow's post.

Finances Take a look at charges, collections and work RVUs for both the practice and by individual physician. Is the practice growing or are the doctors working harder to maintain the same income level?

Financial Percentages and Ratios Review the practice’s gross collection percentage, net collection percentage, and days in A/R. Assess whether all these statistics are reasonable for the practice’s particular medical specialty and compare to prior year performance.

Accounts Receivable Conduct an in-depth analysis of a current aging of the accounts receivable. Pay particular attention to A/R over 90 days old. Also take a look at denied charges that were written off – could any of these write offs been appealed and ultimately paid?

Financial Statements Taking your financial statements, look at actual revenue and expenses compared to the prior year. Why is a particular overhead category higher this year than last year? Are collected revenues lower or stagnant this year versus last year? Why?