IN THIS ISSUE
Spring 2015  
Effective Private Physician Network Strategy
By Randy Shulkin
Hospital based medical practices have increasingly become a major component of health systems’ clinical integration strategy. Over the past thirty years, many employed physicians have not viewed hospital-based practice models in a positive light. Governance, organizational structure and leadership in the typical hospital operational model remains foreign to many physicians coming from private practice. These physicians have struggled with the perceived bureaucracy of hospital systems and often become frustrated and disillusioned with the relationship. Hospitals have also struggled to justify ongoing financial support of these physician practices, which on their own frequently operate at a loss. The physician – hospital relationship has historically been one of mutual distrust and perceived competing interests. Developing an employment relationship with physicians without a foundation of trust and a clear understanding of the role and objectives of each party typically results in strained relationships and constant conflict over operations and finances.
A large academic medical center client sought a clinical integration strategy comprised of creating a new physician enterprise closely aligned with the system. They strove to learn from the past and develop a private practice network that was highly functional in terms of treating patients in a financially beneficial manner for the system.
The first step in executing this private network strategy was engagement with community physicians. Seeking input from community physicians to define the governance model, goals, and culture of the - to be formed - medical group is an important step in building trust. Over a period of eighteen months this dedicated group of physician leaders across primary and specialty groups throughout the community gathered to develop a strategic plan and by-laws for the new organization. The commitment by these independent physicians and their insight into the organizational structure was a key component of physician buy-in.
Working closely with physicians, the academic medical center committed to the guiding principle that the medical group would be a physician led, but professionally managed organization. The board would be comprised by physicians who both practiced and were employees of the group. The management of the group would be professional medical practice administrators. As the practice was developed, other important guiding principles included the insistence of the highest quality of clinical care, a commitment to the patient experience, and operational decision making would remain independent of the hospital infrastructure.
In the second decade of the 21st century, independent physicians had seen many failed attempts at developing hospital employed and/or affiliated groups. Creating an organization that mutually benefitted the academic medical center, community physicians, and patients sent a significant message to the prospective physicians that this group would not be run as a hospital cost center.
The investment in any hospital employed or affiliated group is significant. Without an accounting of the impact the group has on the downstream revenues brought into the health system, the parent organization naturally exerts pressures to reduce medical group expenses and losses. Development of the methodology to quantify the downstream impact of the practice’s physicians has been an historic challenge for every group and parent organization. To effectively and efficiently monitor downstream revenues, organizations often utilize business intelligence (BI) tools to evaluate the revenues, expenses and contribution margin of the health system’s broader ambulatory (i.e., specialists) and hospital service lines.
Attributing downstream revenues to the physician practices is a challenge. Today, many primary care physicians do not refer or admit patients directly to the hospital. More often, primary care providers refer patients to specialists, whose services may or may not be rendered in a hospital environment or Hospitalists who admit and manage these patients on behalf of the ambulatory physician. These factors make it challenging to directly correlate the downstream economic value of a private practice style network. For this reason, hospitals struggle to provide the autonomy which these practices so actively desire. Extracting unique patient identifiers (e.g., social security numbers) from the practice’s practice management or electronic health record systems can provide a link to the services that these patients received throughout the system. This approach does not require the significant manual calculation as done by Ohio State University Medical Center as documented in “Analysis of Downstream Revenue to an Academic Medical Center from a Primary Care Network”, Acad. Med. 2006; 81:702–707.
This study documented a contribution margin of 6+ times the investment in the primary care practices supported. With this type of analysis, the affiliated medical practice is able to quantify a significant contribution margin for its primary care practices. The quantifiable documentation of this information provides the parent institution the confidence to maintain its significant subsidization of its medical group.
Is an SBO Right for You?
By Johanna Epstein
Spotlight Article
The SBO; or Single Business Office is getting a lot of press lately. Executives from Integrated Health Systems all over the country are contemplating whether or not the SBO model is right for their organization. In an effort to help my fellow colleagues with this critical decision; I thought I would provide you with insight that I have gained while working with clients facing this crossroad.
Typically the consideration for becoming an SBO comes with the decision to migrate to a new revenue cycle technology platform. This migration affects an organizations' Hospital and Physician billing workflows. As a result; during the strategic planning process, the inevitable question is posed. "Given our new technology and its integrated capabilities; should we merge the Hospital and Professional Business Offices?"
This sounds like a very reasonable and appropriate question at a time when the organization has made a considerable investment in a new practice management and hospital billing system. To that end, I offer one fundamental suggestion. Clearly define what the SBO will mean in your organization. The SBO in one organization is likely to be different from the SBO in another. For example, will your Single Billing Office be defined as the complete integration of hospital and professional patient access and revenue cycle operations? Will all patient scheduling and registration be performed by a single group of cross trained staff in a Centralized Call Center? Will a physician coder need to learn inpatient hospital coding? Will the seasoned hospital accounts receivable follow up representative be required to learn professional billing and collections, and, if so, what are the operational and financial implications of such a major cultural change to your operation?
I have seen a variety of flavors of the Single Billing Office ranging from the full integration described above, to more of a cafeteria menu model where integration takes place only in the most patient-facing areas, such as in appointment scheduling, patient billing and customer service. The concept here being, that integration is a key ingredient to increasing patient engagement and satisfaction. As more patients are purchasing healthcare that allows a greater level of choice in how their care is delivered, large health systems need to find ways to make access to care less complicated and efficient.
I urge you to take time to think about what level of integration makes the most sense for your patients, and your ability to implement this integration. If the transition to the SBO is being implemented in conjunction with a major practice management and revenue cycle technology conversion, it might be best to dip your toe into the waters of the SBO. Think about the SBO in terms of making the process better for your patients. Would centralizing appointment scheduling across the enterprise increase access for patients? Would a dedicated group of staff who are trained as experts in patient registration reduce the number of times patients have to repeat themselves when presenting at multiple locations for care? Would it reduce billing related denials across the enterprise by getting the demographic and financial information correct up front? Would having a single billing statement decrease confusion around what a patient owes for care rendered? Will patients have fewer questions, and therefore call your Customer Service Department less? Will this encourage patients to make one large payment, and if so, how is that large payment allocated in an environment where physician and hospital transactions appear on the same bill? These are just a few of the considerations that will need to be made as you plan the future of your revenue cycle.
The concept of the Single Billing Office, regardless of the level of integration, should be taken very seriously. Allow for sufficient enough time to think through the details of this vitally important decision. Play devil’s advocate. Challenge your thought process and keep an open mind. I have seen organizations who have traditionally maintained very distinct Hospital and Professional billing operations become one highly functional unit. I have seen organizations that have decided to send a single Hospital and Professional billing statement to their patients, only to wish they hadn’t. These choices have far reaching implications and your Strategic Plan should allow time for these game changing discussions.
Epic Upgrade Planning
By Rachel Miller
Software upgrades (of all kinds) are complete with a dichotomy of excitement and trepidation as organizational stakeholders prepare for meaningful and necessary enhancements. And while the healthcare landscape continues to push Meaningful Use, ICD-10, as well as value-based care models, the preparation for system upgrades can be considerable.
Epic Software Upgrades are of course no different. Whether improved patient safety, increased productivity or enhanced revenue capture, there are key features in all Epic version upgrades that get organizations excited. After the excitement comes the planning, preparation and implementation of the key features to move organizations beyond their current state. While Epic does try to facilitate prioritization of enhancements within each application, it is important for each organization to appropriately align version enhancements with their own initiatives, not only now but over the following 1-2 years.
The most successful upgrades rely on excellent project planning and organization as well as integration of operational stakeholders with the IT teams similar to the initial implementation. As you plan for your next Epic Upgrade, confirm the following is part of your project to ensure the largest return on your upgrade investment.
  • Foster Engagement - operational involvement in identification and prioritization of enhancements creates both a sense of ownership and accountability. What are the organizational initiatives this year, next year and possibly the year after? Communication of these initiatives to the project team responsible for enhancement review will provide appropriate alignment of Epic system support (as appropriate) for areas important to the organization
  • Increase Scope - while not all version enhancements will apply to every organization, planning aggressively allows organizations to avoid falling behind with basic functionality, which quickly compounds over time. The most successful organizations take full advantage of the upgrade timeframe to continue facilitating success for their end users, divisions and entire organization
  • Spread the Word – whether in the early stages of planning, deep into build or approaching go live for the upgrade, transparent communication across the organization is incredibly important. Effective communication involves application team integration, effective status updates to Executive Sponsors and frequent updates to Operations
  • Before and After – not only is it important to test the new features and functionality but also all the workflows that aren’t changing. A very detailed plan to account for all workflows current and future state should be included. Ensuring test plans are up-to-date and rare workflows are tested helps ensure issues are kept to a minimum
  • Stick to a Plan – very similar to your initial go live, a specific detailed plan for training end users on new functionality including workflows needs to be outlined. Unlike your initial go live this may not involve classroom sessions, however, that doesn’t mean training isn’t required in other formats. The more they know, the smoother the transition
Optimizing Revenue - Avoiding the Copayment Blizzard
By Bill O’Brien
Copayments, because of their small size, have a tendency to be overlooked in the larger scheme of running the revenue cycle. However, these small leaks can lead to large revenue losses if not managed actively. With January upon us, those of us who live in the Northeast can expect to see snow in the forecast for at least the next couple of months. Interestingly, while the individual flakes are harmless, anyone who has lived through a blizzard or two knows that when they are grouped together, these same snowflakes are capable of inflicting tremendous damage. By the same token, the “harmless snowflakes” of a revenue cycle are the portion of patient copays that go unpaid. Here as well, the individual “flakes” may not seem like much. Taken together, however, these numbers add up quickly, and are capable of creating a “blizzard effect” that can also inflict tremendous damage – in this case, on both the profitability and efficiency of your entire operation.
A different world
In the not so distant past, insurance paid for everything; patient copays and deductibles were rare. When they did occur, they were simple to track and relatively easy to administer.
Today, of course, that has all changed. Not only do the vast majority of both in-patient and out-patient services require copay, the variety and permutations possible among patients has made the collection process significantly more complicated.
Copays today also represent a great deal more revenue than ever before. There is one healthcare organization that, for example, amassed over $500k in one year alone in unpaid copays.
The solution lives at your front door
Described below are four recommendations for improving your revenue cycle copay collection. As you’ll see, the consistent thread that runs through all of these tactics is this: Collect the money at the point of service.
Industry research suggests that it is as much as 60% less likely to collect payment after a patient leaves the premises. Once that person walks out the door, over half of the owed revenue is lost – forever.
Second, because by not collecting copays at the front door, we push the collection process – and all its associated expense – further back into our own operation. Paper statements need to be mailed; office staff needs to get involved; collection agencies need to be hired.
When you collect the money up front, by contrast, all of these negative aspects and expenses are avoided.
In our experience, improvement requires attention in four areas:
1. Attention to culture.
Most people are uncomfortable asking for money, particularly those who were hired with the expectation that their job is simply “registration and scheduling.” Step one, therefore, is to help front desk staff gain a better understanding of where they fit – and the tremendous impact they can have – within the revenue cycle.
Information sharing goes a long way in this regard and it’s well worth the time and effort it takes on the part of management and the executive team to connect the dots for staff.
It’s critical that they see how the money captured up front by their efforts impacts the profitability and success of the organization and the people who work there.
2. Attention to training.
Asking for money is a learned skill – it requires training. Teaching simple, unambiguous statements, such as, “Your co-pay is ten dollars, we take cash, credit card or check. How do you want to pay for that?”, will make a big difference.
Training should also cover the effective handling of patient responses. If, for example, a patient says, “I can’t pay today,” we want staff to respond with, “Is there some portion you can pay today?” as opposed to just accepting the initial rejection at face value.
The idea is to teach staff – whether they are involved at check-in or check-out – that a patient should not walk out the door without a deliberate effort on our part to first receive payment.
3. Attention to tracking.
The industry standard for effective, upfront payment collection is 80% (we’ve seen it as low as 20%. If you’re not tracking and sharing this information – at least monthly and on a department by department basis – you’re not in a position to make improvements.
In terms of how to report the collected information, you’ll have the most success when you break out and share the comparative data across your various departments. If Radiology, for example, is the standout with an 85% collection rate, your entire organization will benefit from knowing this and from incorporating some of Radiology’s best practices.
It should go without saying, of course, that both the efficient collection of copays at the front end as well as the accurate reporting of results after the fact, are dependent on having appropriate IT systems in place to begin with.
4. Attention to expectations.
Just as staffers need to be educated regarding copayments, patients need to be brought up to speed too. Not everyone remembers or even realizes they have a copay and your clear, consistent and early communications will go a long way.
Modify your pre-call scripts and pre-visit paperwork to tell patients in advance how much they need to pay when they arrive; display clear signage asking for payment at the time of service; talk to patients prior to delivering a procedure regarding their ability to pay (and route them immediately to finance when needed).
Here as well, clear information and proactive discussions can vastly improve your collection results.
Now that winter has arrived, we can be certain of one thing: The snow is going to fall. Managing “the flakes” as they happen, whether we’re talking about the ones that fall from the sky or the ones that arrive as unpaid copayments, requires ongoing attention and a commitment to never letting the drifts pile up too high!
Revenue Cycle: Payment Variance Analysis
Today, organizations and providers are faced with many financial challenges including incorrect payer reimbursement. Performing an analysis of the variance between the actual reimbursements received and the expected reimbursement (as based on the contracted payment terms) is a key step to determine whether these payments are compliant with negotiated contract reimbursement rates. There are several situations that might contribute to payment variances. A common occurrence is when an organization has a new or re-negotiated contract and the payer may not have updated their fee schedule system, or there could be a payer system configuration issue with the newly loaded contracted fee schedule. Both occurrences are often found to be the case at the start of a new contract or contract year.
Speaking Volumes
Underpayments by payers are also a common occurrence. An underpayment of even $1.00 or $2.00 dollars per transaction might seem insignificant. However, the aggregate of these multiple underpayments for high volume services definitely add up to significant dollars over time. Take for example, a primary care practice. The majority of underpayments for services rendered would be for Evaluation and Management codes submitted. Again, while the underpayment for each procedure might be only a few dollars, extrapolation of these shortfalls would represent a significant loss of potential revenue. Fortunately, these types of errors are easily identified by performing a simple payment analysis. Moreover, they can often be resolved by just communicating your findings with your payer representative.
According to Code
Modifier setup will also impact your calculations and reimbursement outcomes. Surgical or specialty practices will have a slightly different course and potentially greater impact on reimbursement. Once again, analysis is key. For specialty visits, that include procedures, the review should ensure that each procedure provided is reimbursed according to standard payer guidelines and in accordance with your contract. This applies particularly to complex surgeries and procedures.
Complex surgeries and other intervention procedures, (e.g. endoscopy), are often a set of add-on procedures. Multiple Procedure Payment Reduction (MPPR) reduces reimbursement in a graduated or scaled calculation. Graduated or scaled reimbursement reduction is based on a reimbursement calculation, and that individual calculation is applied to the number of procedures or families of procedures performed in the same session. For example, the first procedure is reimbursed at 100%, the second procedure at 75% and procedures three through five at 50%. Some payers will set a limit on the number of procedures submitted. For example, Medicare sets the limit for reimbursement at five procedures, while other payers might reimburse for more than five add-on codes.
The Centers for Medicare and Medicaid Services (CMS) and other specific payers’ websites provide useful information, including guidelines and files available to assist in the review process. It is strongly suggested to download a current list of surgical procedures that are considered as add-on procedures and subject to MPPR rules. Should a payer inadvertently take a reduction on an add-on procedure, a reduction could be of significant variance. The CMS list should be reviewed annually, as “add-on” codes might change each year as new codes are included, eliminated or changing reimbursement guidelines. It is also important to note that each payer might have different reimbursement guidelines for multiple surgical procedures. Therefore, you will want to review the guidelines of each payer and not assume they follow CMS guidelines.
The sequential ordering of procedures on a claim might also have an impact on reimbursement. Payers base full payment on the procedure with the highest Relative Value Unit (RVU). If the RVU’s have not been recently evaluated and updated in your fee schedule, your calculation will most likely not be accurate. If your charge entry system does not automatically prioritize or order your transactions based on the RVU and the payer orders, then this will result in a payment calculation variance.
With respect to Obstetrical (OB) services you will need to know the specifics of your payer contracts as most of these services tend to be based on the type of delivery, and are often capped. Therefore, again knowing the specifics of your payer contracts will provide a clearer understanding as to whether you are being paid appropriately.
Modifiers can also significantly affect reimbursement. This is especially true with surgical and anesthesia procedures. A common area of inaccurate modifier coding in anesthesia is when it comes to identifying the type of provider providing services. A common error is when services are provided by certified registered nurse anesthetists (CRNAs) versus residents. This not only will impact the accurate calculation of reimbursement but it could also trigger a payment audit. In addition, depending on a patient’s assigned physical status modifier, extra units may be included in the anesthesia base and time units. Anesthesia modifiers can also increase the amount of reimbursement for surgical payments associated with multiple procedures and can impact appropriate payments for mid-level providers as well.
Impact of being Current
Your fee schedules will also impact your reimbursement. There are some commercial payers that still base their reimbursements on a percent of charge. Therefore, you should review your fee schedules annually, not only to ensure that your fees are current for your practice and region, but also because this could impact your payer reimbursement. You should also review you’re pricing from an insurance reimbursement perspective annually and prior to any major payer contract negotiations. Payers will reimburse the lower end of their approved submitted charge for the service. Other payers base their reimbursement on a percent of charge of current year CMS schedules or a prior year, depending on the CMS base year identified in the payer contract. It will therefore be necessary to download the specific CMS schedule with respect to the applicable base year for reimbursement comparison or your analysis will not be accurate. You should also be aware of how third party payers reimburse and calculate for specific procedures or “carve-out” procedures. They like to do that for high cost, high volume or what they determine to be “special” procedures. These “carve-out” procedures are typically small in number but can have a significant impact on reimbursement. In addition, you need to take particular care to note whether your practice spans more than one county or state, as payers often have different reimbursement rates by geographic location. A new trend is payers may even have differing reimbursement rates by local employers, especially the larger employers who have partnered with their insurance provider and become more aggressive with their healthcare reimbursement rates.
Trending
Reimbursement associated with the use of modifier 22 is complex and is unique to each respective payer. The use of modifier 22 is for unusual procedural services and is often applied to procedures that do not have a standard reimbursement methodology or may have involved significantly increased operative complexity. If this is the case, payer specific guidelines are then uses to determine the reimbursement. Typically the guidelines utilize the timed length of the procedure as well as the operative notes. Reimbursement for these procedures set contractually but rather the process by which the payer determine reimbursement. These procedures are reimbursed on a case by case basis with no guarantee they will be reimbursed at a higher level or at all. Therefore, the more detailed the operative note documenting the complexity of the procedure is critical to the level of reimbursement received.
Reporting
There are unfortunately many factors that determine final reimbursement, and these factors vary by payer and by contract. There are also many software and decision support systems available to track and report in real time on variances from the fee schedule. Many of these systems can be very helpful in assisting practices in the analysis of their reimbursement data. Whether an organization utilizes a software system or does it the old fashion way; routine, consistent and accurate reimbursement analysis is essential to ensuring you are being paid appropriately and timely. Remember, time is of the essence should you discover any reimbursement errors.
That is because most payers have pre-determined deadlines and other constraints as it relates to how and even what settlements and/or errors can be resolved or negotiated. As always, should a contractual reimbursement error occur, the first step is to document the error and then notify the respective payer in writing. This will serve as official notice to the payer and will enable you to work with them to stop the error from continuing and become a bigger issue. Once the error is corrected and/or acknowledged, you can then proceed to work with them to negotiate a timely settlement.
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