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Five payment problems can hurt your bottom line
P
hysician practices today face a changing healthcare
landscape that continues to erode their bottom lines.
In particular, payment issues can weigh heavily on
profitability, requiring the implementation of strategies
that can help to address them.
1. Declining reimbursement
Declining reimbursement is the No. 1 issue having a negative
impact on practice profitability, according to a March 2014 survey
by health technology provider CareCloud and QuantiaMD,
America’s leading/largest social learning network for physicians.
The more-than-a-decade-long
trend toward declining reimbursements has been exacerbated by the
Affordable Care Act (ACA). As
Medicare continues to adjust payments and Medicaid rolls swell,
many insurers’ fees for physicians
participating in health insurance
exchanges have been set below
those paid in networks for employer-sponsored plans.
Congress did pass a provision to
equalize Medicaid fees with the
higher Medicare rates for certain
services as part of an effort to
entice physicians to take on newly
covered Medicaid patients – but for
only two years. Medicaid parity ends Dec. 31, 2014. Legislation has
been drafted to extend parity two more years.
Practices with declining revenues should review their payer
mix. One simple way is to determine what percentage of total
encounters each major plan represents for a 12-month period.
Compare that with the percentage of income each represents
for that time frame. This comparison will give you a basic sense of
your more profitable payers.
Many practice management consulting firms can provide
in-depth payer-mix analyses. From the knowledge gained, a
practice may decide to decline new patients from less profitable
payers (check your payer contract to ensure there are no
restrictions on refusing new patients) or choose not to contract
with those payers in the future.
2. Claim denials
Inside
“Denied claims equal denied
revenue,” Elizabeth Woodcock,
a practice operations and revenue
cycle
management
expert,
ouse calls 21st Century
told attendees at a recently held ➜ H
style: Has telemedicine
webinar. “Business intelligence is
needed to determine the reason for
come of age?
denials.”
For a specific time period, list the ➜ Ready for impact of
new fee schedule ?
most common denial codes, and
separate them by category. If you
have many denials for incorrect or
missing information, these are issues
you must address with front office
staff. To prevent eligibility denials,
for example, ensure staff verifies eligibility at check-in or when
appointments are made.
If coding is an issue, clinical and coding staff training may be
required. Coding denials may become an even bigger issue next year
when ICD-10 is implemented.
A practice with a high percentage of denials due to
front-end and coding issues may benefit from a revenue-cycle
management system that scrubs claims, catching common errors
Nov./Dec. 2014
Inside
See Payment problems on page 4
A financial and management bulletin to physicians and medical practices from:
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House calls 21st Century style:
F
A
Has telemedicine come of age?
rom large facilities to small practices, telemedicine services
are growing.
Telemedicine and telehealth services refer to the delivery of
remote clinical services through technology.
In fact, 2014 may have marked a turning point for telemedicine driven by the number of newly insured through the
Affordable Care Act, a physician shortage and the government’s
desire to cut healthcare costs. About 900,000 households used
video consultations with physicians in 2013. That number is
expected to balloon to 22.6 million in 2018, according to Parks
Associates, a market research firm.
The National Conference of State Legislatures reports that
43 states and the District of Columbia now provide some form
of Medicaid reimbursement for telehealth services.
Additionally, 20 states and the District of Columbia have
enacted laws requiring that private insurance plans cover
telehealth services.
The trend toward
value-based purchasing models that pay
one fee for an episode
of care may also spur
telehealth.
Due to telemedicine’s low cost, small
practices that adopt
telemedicine “may be better prepared to participate and succeed
in new payment and delivery models, such as bundled payment,”
said Megan McHugh, Ph.D., Northwestern University Feinberg
School of Medicine, in her July 31, 2014, testimony before the
House Committee on Small Business Subcommittee on Health
and Technology.
bout 900,000 households
used video consultations
with physicians in 2013. That
number is expected to balloon to
22.6 million in 2018.
Barriers
To be sure, barriers exist to widespread adoption of
telemedicine services, including low reimbursement and
geographic restrictions. Additionally, state laws vary widely as
to what is defined by telemedicine, which services are covered
and who can provide those services.
California is among the states in the forefront in modernizing legislation to take advantage of new technologies. All
health professionals licensed in California can deliver
telehealth services.
Additionally, California has parity among clinical services
regardless of whether they are delivered in person or through
telehealth. Twenty states and the District of Columbia have
passed parity laws.
The Centers for Medicare & Medicaid Services (CMS) has
proposed to expand telehealth coverage. The 2015 Medicare
Physician Fee Schedule adds annual wellness
visits, psychoanalysis, psychotherapy, and prolonged
evaluation and management services to the list of covered
services for Medicare beneficiaries. However, coverage
2
remains restricted to beneficiaries in rural areas or
counties outside of Metropolitan Statistical Areas.
Another barrier
is licensing. All
states require physicians to have a
license to practice
in the state in
which the patient is
located.
Physicians seeking a license in
multiple
states
must deal with
varying medical
board and credentialing regulations
and costs. An
exception is the
Department
of
Defense, which allows physicians licensed in one state to provide services anywhere in the United States.
The Federation of State Medical Boards has proposed a
Medical Licensure Compact. It would significantly reduce barriers to multiple-state licensure by making qualified physicians
eligible for expedited licensure in all states participating in the
compact.
On the national level, several telehealth bills are wending
their way through Congress. One bill expands eligible
providers and services and removes geographic restrictions.
Another bill eliminates the need for multiple state licenses for
certain Medicare providers who offer telemedicine
services to Medicare beneficiaries across state lines.
Getting online
A number of companies provide the resources to get a
practice’s secure, HIPAA-compliant telehealth services up and
running.
Alternatively, physicians can join a network, such as
Teladoc, the largest provider of telehealth medical consultations in the nation.
The company provides the software, helps set up the website, works with insurance companies for reimbursement
and provides medical malpractice insurance for network
physicians.
Visit the American Telemedicine Association at www.americantelemed.org for more information on telemedicine resources.
And before incorporating telemedicine into your practice,
consult with a healthcare attorney to ensure you are in
compliance with all state regulations. ■
Our thanks to Irene E. Lombardo for her editorial
contributions to this publication.
Nov./Dec. 2014 Your Healthy Practice
Ready for impact of new fee schedule?
P
hysicians need to review how their practice might be
affected by the 2015 Medicare Physician Fee Schedule
to offset any negative consequence.
November 2014 is the deadline for the Centers for Medicare
& Medicaid Services (CMS) to finalize its fee schedule.
N
ovember 2014 is the deadline
for the Centers for Medicare &
Medicaid Services to finalize its
fee schedule.
The impact of the proposed changes on healthcare
professionals is a mixed bag. The good news for family
physicians and internal medicine practitioners is an
estimated increase in total allowed charges of 2 percent
next year.
But because of a planned reclassification of practice
expense, specialties expected to be hit hard
next year include radiologists (-2 percent), radiation
oncologists (-4 percent) and radiation therapy centers
(-8 percent).
Chronic care management
Much of the increase for family physicians and internal
medicine practitioners is expected to come from the CMS
proposal to pay separately for non-face-to-face chronic care
management services for Medicare beneficiaries with two
or more significant chronic conditions.
These services include regular development and revision of a plan of care, communication with other treating
health professionals and medication management.
T
he good news for family physicians
and internal medicine practitioners
is an estimated increase in total
allowed charges of 2 percent next year.
CMS has set reimbursement at $41.92. Physicians can
bill the new code if they have provided at least 20 minutes
of chronic care management services for a qualified patient.
Billing is limited to once every 30 days per patient.
Work the clinical staff members do under general
supervision of a physician counts toward the 20 minutes.
Direct on-site supervision by a provider is not required.
As proposed, physicians must have a certified electronic
health record (EHR) system that meets meaningful-use
requirements to qualify for reimbursement.
Value-based modifier effect
All physicians who receive payments under the 2015
Medicare Physician Fee Schedule will be critically affected.
They include solo practitioners, groups of two or more and
other eligible professionals, such as physician assistants
and nurse practitioners.<stTheir performance for the year
will be judged against the Medicare Physician Quality
Reporting System (PQRS) cost and quality measures. The
results will determine whether they will be rewarded for
their performance or penalized in 2017.
Under the value-based modifier program, solo practitioners and groups under 10 reporting data on PQRS
quality measures will be eligible for a bonus but will not
be subject to a penalty.
However, those who don't participate in PQRS or are
low-performing in 2015 could risk losing 4 percent of their
payments in 2017. Therefore, CMS is urging small groups
and solo practitioners to participate in PQRS now.
A
ll physicians who receive
payments under the 2015
Medicare Physician Fee
Schedule will be critically affected.
Large groups will feel the effect of the value modifier
program in 2015.
Payments to physicians in group practices of 100 or
more that submit claims under one tax identification
number will be adjusted next year based on their
2013 performance.
The
value
modifier
will
apply
to
both participating and non-participating Medicare
physicians.
And in 2016, the value modifier will be applied to physicians in groups of 10 or more based on 2014 performance.
All groups and solo practitioners should review the
recently disseminated CMS Quality and Resource Use
Report.
Based on 2013 data, the report contains
performance information on the quality and cost
measures used to calculate the value modifier, and it
provides physicians with some insight as to how they will
fare under the program.
For a complete review of the final 2015 Medicare
Physician Fee Schedule, visit the CMS website at
www.cms.gov. ■
Nov./Dec. 2014 Your Healthy Practice
3
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Payment problems continued from page 1
prior to claim submission.
It is important to develop protocols in writing for managing denials. The guide should identify who is accountable
for working the denials and include an action plan.
Woodcock notes that often staff will resubmit a claim
without fixing it, which simply delays payment further, and
the resubmitted claim may be returned as a duplicate.
3. Underpayments
Underpayments represent about 8-10 percent of remittances, Woodcock said. Check payments against contract
terms regularly. Contract management systems are available
that can, among other things, analyze claim and remittance
data against contract terms and flag underpayments for
speedy resolution and increased revenue.
4. Slow payment
Monitoring accounts receivable is critical to ensuring
financial stability. Best practice is to stay below 50 days in
accounts receivable, with 30 to 40 days preferable, says the
American Academy of Family Physicians. Accounts receivable
older than 120 days ideally should comprise only 12 percent
of total accounts receivable but no more than 25 percent.
A process should be in place to follow up on unpaid
claims in a timely manner. A large percentage of aged
accounts receivable may indicate a problem with payer mix
and/or staff efficiency in handling denials and aged claims.
Check your state’s laws regarding prompt payment
requirements for insurers. A practice may be entitled to
interest on outstanding balances.
5. Patient collections
As insurers pass greater financial responsibility on to insureds, collecting copays,
coinsurance and deductible amounts has
become more difficult. Requiring payment at
time of service should be standard practice.
Obtaining credit or debit card signatureson-file is a good way to ensure automatic
payment of any balance after the claim is
adjudicated. Another option is to offer patients the choice of
making payments online.
For patients with large balances, consider offering a
healthcare credit card. The credit card company pays the
balance and collects from the patient. There is a monthly fee
to the practice based on a percentage of the total amount
owed, but the debt is no longer on the practice’s books. ■
Your Healthy Practice
The technical information in this newsletter is necessarily brief. No final conclusion on these topics should be drawn without further
review and consultation. © 2014 CPAmerica International