Reed Tinsley, CPA

Unreasonably Low Wages by S Corporation Court Case Could Impact Physician Practices

If you are a physican practice organized as an S Corporation, pay attention to the recent tax court case below if you are paying the shareholder(s) low salary and high distributions:

The CPA taxpayer replaced his individually held partnership interest in an accounting firm with his 100% owned S corporation. For the audit years, the accounting firm paid $24,000 in compensation and made profit distributions of $203K and $175K to the taxpayer through his S corporation. An IRS expert estimated the FMV of taxpayer's accounting services to be $91K per year. The 8th Circuit upheld the District Court's findings (1) that the taxpayer was a qualified accountant with an advanced degree and 20 years experience, (2) who worked 35–45 hours per week as a primary earner in a reputable firm with substantial gross earnings, and (3) a $24,000 salary is unreasonably low compared to other similarly situated accountants. David Watson PC v. U.S ., 109 AFTR 2d 2012-XXXX (8th Cir.).

Are you making these physician recruiting mistakes?

Trying to "sell" candidates before you are sold on them

Too often, practices try to "sell" their opportunity without understanding a candidate's special interests or desires. Through their letters, emails or pre‐interview telephone conversations, allow candidates to reveal their goals and needs before you reveal much about the practice. This lets you evaluate them and more quickly eliminate those whose goals don't match yours. It also allows you to present your practice in a more appealing way to attractive candidates.

Are you checking references?

Always check references on candidates you are interested in meeting ‐‐ before you set up the interview. Assuming you can't talk to references in person, talk to them on the telephone. Never be satisfied with written letters of recommendation, since people will rarely express their reservations in writing and you have no opportunity to ask questions. When you talk with a reference, there is a wealth of information to be garnered from non‐verbal communication. Listen to what is not said, as much as to what is. Note voice inflections, hesitations in answering, or other tell‐tale signs that the reference is less than enthusiastic about the candidate. Have a list of prepared questions available to ask each reference. Then build on those questions, as appropriate, to learn all you can about the candidate and leave no issue unclear.

Don't Forget the spouse

In many cases, you will be dealing with a two income family, so find out the spouse's employment needs. Even spouses not working outside the home play a major role in making the candidate's practice choice. You should have a separate conversation with the candidate's spouse, perhaps even before entering serious discussions with the candidate.

Dicking Around

Once you have chosen your ideal candidate, make an offer right away, preferably in writing. If the candidate has other offers, you want your practice opportunity to be under serious consideration as soon as possible. Alternatively, if the candidate has no other offers on the table, the candidate may well accept yours, without waiting for other possibilities and without much negotiation.

CMS has published a revised Medicare Physician's Guide

This publication has been developed for Medicare Fee-For-Service (FFS) providers and suppliers. It provides the following information about the Medicare Program:

• Introduction to the Medicare Program;
• Becoming a Medicare provider or supplier;
• Medicare reimbursement;
• Medicare services;
• Protecting the Medicare Trust Fund;
• Medicare overpayments and FFS appeals; and
• Provider outreach and education.

http://www.cms.gov/MLNProducts/downloads/MedicarePhysicianGuide_ICN005933.pdf

Creating Team Responsibility and Incentives to Collect in a Physician Office

To garner participation from office-staff in committing to asking patients for payment at the time of visit, establish graduated expectations for improvement over a specific period of time. Provide staff with sample scripts and/or talking points on how to collect. Well trained staff may be your biggest asset toward improved collections. Monitor staff’s performance each week and share the results. Some practices offer bonuses when staff hit certain targets as an incentive to improve collections. Depending on the practice, the reward might be a set dollar amount, salary percentage or portion of above-goal collections. Indicators to watch include upfront collection percentage, gross collection percentage, total accounts receivable and days in accounts receivable. If your staff struggles to hit the targets, provide additional support to teach them the skills necessary to overcome obstacles and obtain patient payments. Incentive programs should involve and benefit every employee of the practice. Managing patient collections is the responsibility of the entire practice and all staff should be prepared to discuss payment at all appropriate points in the course of care and, ideally, be able to answer patients’ questions about what they owe.

By taking steps to collect patient payments at the time of the visit, you can significantly reduce your practice’s billing and collection efforts. When front office staff is careful to verify insurance before the visit, inform patients of collection procedures ahead of time, and collect payments at the time of service consistently, then your practice’s billing staff has a lighter work load and can focus on other areas of billing and collections.

But when you do have to begin the cycle of billing patients for outstanding balances, work to achieve a patient-friendly look and feel to your billing statement. Patient invoices should clearly explain the dates of service, services performed, insurance payments, payment collected at time of service (co-pays, deductibles), and the total amount due. Patient invoices should be sent as soon as the EOB is posted, because the sooner an invoice is received by the patient, the more likely and faster it will be paid.

With more transparent, patient-friendly billing processes in place, significant savings in the administrative costs associated with inefficient processing and collections can be achieved, thus cutting out a tremendous amount of bad debt that would otherwise be written off.

Remember, a patient-friendly experience begins the moment the patient walks into your practice. Do not miss the opportunity to create a favorable, patient-centered experience. By making adjustments to the manner in which your practice interacts with patients, your practice can build a more positive patient experience, ultimately establishing a more cost-effective workflow within your office.

Proposed Medicare Rule on 60-day Repayment of Overpayments

The much-anticipated proposed rule regarding the 60-day repayment of overpayment obligation was issued in proposed form by the Center for Medicare and Medicaid Services on February 16, 2012 (77 Fed. Reg. 9,179). If left unchanged, the proposed rule would substantially increase the burdens on providers and suppliers. Most notably,the proposed rule would create a new 10-year look-back period for overpayments. In addition, the proposed rule would create little certainty by establishing a deliberate ignorance or reckless disregard standard for conducting a reasonable investigation into allegations of potential overpayments and includes preamble language suggesting a new standard of "all deliberate speed" on internal investigations into potential overpayments. The proposed rule signifies a move toward more formality and standardization of the existing overpayment reporting process.

The proposed rule aims to define the parameters and process for reporting overpayments to CMS and its contractors utilizing an existing process for self-reporting overpayments through Medicare contractors. The proposed rule establishes new standards for repayments of overpayments but only for Medicare Part A and Part B providers and suppliers. CMS states that standards for Medicare Advantage, Prescription Drug Plans, and Medicaid MCOs will be addressed at a later date. Nevertheless, CMS cautions that the 60-day repayment obligation is effective even without implementing regulations.

http://www.gpo.gov/fdsys/pkg/FR-2012-02-16/pdf/2012-3642.pdf

OIG Alerts Physicians to Exercise Caution When Reassigning Their Medicare Payments

Physicians who reassign their right to bill the Medicare program and receive Medicare payments by executing the CMS-855R application may be liable for false claims submitted by entities to which they reassigned their Medicare benefits.

The Office of Inspector General (OIG) encourages physicians to use heightened scrutiny of entities prior to reassigning their Medicare payments. Physicians should carefully consider entities to which they choose to reassign their Medicare payments and ensure that the entities are legitimate providers or suppliers of health care items and services.

The OIG recently reached settlements with eight physicians who violated the Civil Monetary Penalties Law by causing the submission of false claims to Medicare from physical medicine companies. Specifically, these physicians reassigned their Medicare payments to various physical medicine companies in exchange for Medical Directorship positions. While serving as Medical Directors, the physicians did not personally render or directly supervise any services. There was evidence that the services the physical medicine companies claimed the physicians performed were not actually performed or were not performed as billed.

The failure of the physicians to monitor the services billed using their reassigned provider numbers resulted in individuals with little to no medical background serving as physical therapy "technicians." These unlicensed "technicians," including retail cashiers and massage therapists, rendered unsupervised in-home physical therapy services to Medicare and Medicaid beneficiaries. The physical medicine companies falsely billed Medicare using the physicians' reassigned provider numbers as if the physicians personally rendered the services or directly supervised a "technician" rendering the services. Many of the owners and operators of the physical medicine companies were criminally prosecuted. OIG determined that the physicians were an integral part of the scheme and pursued their liability under the Civil Monetary Penalties Law.

Note: A physician who reassigns to any entity his or her right to bill the Medicare program and receive Medicare payments has the right to access the entity's billing information concerning the services the physician is alleged to have performed and for which the entity billed Medicare. Physicians have unrestricted access to claims submitted by an entity for services that the entity billed using the physicians' reassigned provider numbers to provide added assurances that the services for which the entity billed Medicare were, in fact, performed and were performed as billed.

 

Improve office collections by making it easy and convenient to pay

Give your patients the ability to pay by cash, check, and credit/debit card in the office or online. Teach staff to be compassionate without letting patients walk all over them. Ask for the payment politely after handing the patient a statement with the estimated amount owed. Don’t ask if the patient would like to pay today; ask how the patient would like to pay. If a patient indicates they forgot their checkbook, remind the patient that you accept credit and debit cards. If the patient cannot pay at the time of service, use a system for processing credit cards that allow you to keep a patient’s credit card on file to charge later, after insurance has paid it portion in order to guarantee payment. In addition, the option to pay bills online is becoming more prevalent in medical practices as consumers become more accustom to making payments on line. If using an online payment system, make it easy for the patient to understand what actions you want them to take when they receive their statement. The more options patients have, the more likely they are to pay in full.

Stopping Workplace Drama in the Healthcare Practice

Whether it’s the backstabbing, power struggles, dealing with the queen bee, or the “untouchable” employee, or even just navigating through change, drama manifests itself in many ways in a medical practice. You KNOW it goes on in your practice - gossip, poor coordination of the team, disruptive physician or disruptive employee behavior - and you KNOW it is a huge distraction away from good patient care, efficiencies and profits in a practice. Drama is a drain on a medical practice - a drain on physician and physician executive time, a drain on time that could be spent on patient care and driving referrals, a drain on administrator and office manager energies.

Finally there is an audio-conference that actually discusses and addresses these issues. Presented by Greenbranch Publishing on Wednesday, February 29th, author Marlene Chism, award-winning author of “Stop Workplace Drama,” gives practical ways to identify and eliminate drama before the drama translates into turnover, absenteeism, poor morale, and a financial impact to the practice. In addition, learn how to cut through your own personal drama - whether it is a difficult family issue, a business problem, a health challenge or a financial struggle…you don’t need to create further issues at work! The material presented in this webinar translates from business to personal. Take control today and start learning how to halt the drama in the healthcare workplace, right here, right now.

For more information, go to:

http://greenbranch.com/article_940_Stop-Workplace-Drama-in-the-Healthcare-Practice.cfm

As I've said many times - my experience and external data has proven that the physician practices that do the best at human resources are the ones that are the most profitable!!

Develop written financial policies to improve practice collections

The policies should strive to optimize revenue recovery and clearly outline what the practice considers acceptable in terms of patient payment timing and extended payment plans for large balances. Educate patients on your payment policies while they are making their appointments. Your payment policy should explicitly state that payments are due at the time of service. It should be posted in your office, listed on all billing forms, and communicated to patients before their appointment. As you are developing your policies, you should review your payer contracts. When it comes to collections, you may find that you have stipulations in your payer contracts about how, when and what you can collect from your patients. Make sure to look at these stipulations before implementing your collections policy. If your practice fails to establish written policies, you are jeopardizing the ability to improve cash flow and maximize your revenue.

New HIPAA audit program announced

Last month, the Office for Civil Rights (OCR) of the Department of Health and Human Services (HHS) published details about its new HIPAA Privacy and Security Audit Program at its website. This new HIPAA Audit Program is being established pursuant to the American Recovery and Reinvestment Act of 2009 (in Section 13411 of the HITECH Act) which requires HHS to perform periodic audits of covered entities and business associates to ensure that they are complying with the HIPAA Privacy and Security Rules and Breach Notification standards.

Initially, only covered entities (e.g., health plans, health care providers, etc.), will be selected for audit, but business associates will be included in future audits. OCR plans to audit 150 covered entities during this initial pilot phase, which will last from November 2011 until April 2012.

Entities who have been selected for an audit will receive a letter introducing the contractor that has been selected to perform the audit (currently KPMG), explaining the process and expectations in more detail, and describing the initial document and information requests. Entities are expected to provide the requested information within 10 business days of receiving the request.

OCR plans to notify a selected entity 30-90 days prior to the anticipated onsite visit, which is expected to last 3-10 business days, depending on the organization. Within 20-30 days of completion of the onsite visit, the auditor is expected to provide a draft final report to the entity; the entity will have 10 business days to review the draft and provide written comments to the auditor. Within 30 days of receiving the entity’s response, the auditor will complete a final audit report, which will be submitted to OCR.

Although OCR has stated that these audits will be conducted primarily to improve compliance with HIPAA and to help OCR determine what types of technical assistance should be developed and what types of corrective action are most effective, if an audit report indicates a serious compliance issue, OCR may initiate a separate compliance review to address any identified problems. OCR has indicated that it will not post a list of the entities that have been audited or the findings of any individual audit that clearly identifies the audited entity.

Given this new focus on audits, both covered entities and business associates would be well advised to review their HIPAA privacy and security compliance programs and ensure that they are up to speed.

http://www.hhs.gov/ocr/privacy/hipaa/enforcement/audit/sample-ocr_notification_ltr.pdf