Here is a recent post at The Independent Urologist with a discussion between a physician and an “expert on negotiating insurance contracts.”  While this post is specific to the New York market, there are a few key characteristics that would apply to practices throughout the country that are beginning to mull over the idea of calling their local payers to begin some sort of negotiation.

Here are some of the key elements as I interpreted them based on my conversation with the negotiator.

1. Unique: If you are the only one of your specialty in a 20 or so mile radius, you may have some leverage.
2. Efficient: If you can save the insurer money by operating at a lower cost to them, such as by doing in-office procedures, or with less errors due to an EMR, you may be able to make a case for the insurer to cut you a piece of the action in return.
3. Desirable: If you are one of few doctors who does something that people want or need and will pay more to the insurance company for it in the form of premiums or plan selection–then the insurer may cut you into the action as well.

And, here is the summary for those (the majority of us) that don’t have these characteristics:

Therefore, don’t feel like you are the only schmuck on the block that takes whatever contract is offered you. If you live and practice in an over saturated market and don’t have one of the big 3 characteristics in my list, you simply must sign on the line and work like a dog.

Medicare can be frustrating.  The constantly changing rules, regulations, audit requirements, fee schedules - all of it.  To receive pennies on the dollar from a system that has turned into a large distraction and huge disincentive to providers gets old for many, but it’s what we have to deal with to provide care through the failing system.

What’s even more frustrating is to hear in the Miami Herald about a South Floridian with a drug-trafficking conviction who successfully ran eight (count ‘em) medical equipment companies using fake names, submitting over $48 million in false Medicare claims during his reign of fraud.  While many of us were working hard to keep our expenses to the system low as we provided care to our Medicare population during 2005-06, this same criminal profited to the tune of $8 million, landing a quarter of that money in his own pocket.

And if he were the only one.  In South Florida alone, medical equipment and HIV-infusion fraud amounts to a loss of $7 million per day by the Medicare system, or $2.5 billion per year.  And how’s this for a statistic - investigators reported to congress that between the years 2000 and 2007, the identification numbers of 18,240 deceased physicians were used to rack up $92 million to fraudulent medical equipment providers.

Not that eliminating fraud would by itself save the Medicare system, but a $7 million-per-day hole in the taxpayers’ bucket from only one region of the U.S. is certainly evidence that there is a long way to go to get the system on the right track.

Read the full story from the Miami Herald here.

The Centers for Medicare and Medicaid Services, which manages the 43-year-old federal insurance program for the elderly and disabled, doesn’t have a specific amount for the cost of corruption nationwide. Internal audits mainly focus on billing mistakes, excessive payments and other waste with only a fractional measure of fraud. Therefore, the agency estimates its combined loss is $11 billion annually.

Private healthcare companies, credit card companies and other industries have implemented new technology to fight fraud aggressively, but Medicare has failed to adopt even the most basic changes that the U.S. Department of Health and Human Services’ inspector general has warned are sorely needed to combat the crisis.

Medicare, one of the government’s largest agencies, seems more intent on paying claims quickly than verifying them first, according to many critics and law enforcement officials.

One of the core services offered within the healthcare industry is time.  Time to ask questions of our physicians, one-on-one time with our physical therapists, and time for our providers to actively evaluate and make recommendations for us as patients.  As a core service, time is both a driver of revenue and costs within the healthcare model, making it one of the most important and most scrutinized variables by physicians, practice administrators and insurance payers.

The notion that a correlation between the amount of time providers spend with patients and the quality of service provided is conceptually valid and serves as a platform for many of the ethical debates waged in today’s healthcare arena between providers and insurance companies.  If providers are increasingly paid less by insurance companies for the time they spend on their patients, it’s easy to see that incentives will be in place to increase the volume of patients seen, and decrease the amount of time seen with each patient.  From a qualitative standpoint this sets the stage for the ethical and political battlefield between providers, patients and payers.

Interestingly, a recent systematic review of 5 studies performed in the United Kingdom has called into question the correlation between time spent between provider and patient and the quality of care delivered, bringing another variable into the equation - the way that the time is used.  Appearing in the Cochrane Library, the review suggests that patient satisfaction was not significantly higher when more face time with physicians was made available and physicians did not practice in a manner significantly different depending upon the amount of time they spent with their patients.

Now, I don’t believe this review in any way wipes out the validity of the argument that there is a correlation between time and quality in healthcare - it simply stands to reason that providing more time allows for the opportunity to provide better care.  It does however bring to the table fodder for discussion about the “elements” of time that are important as relates to quality of care, rather than simply the time itself.

Some patients might feel like they spend more time in the waiting room than actually talking with their doctor, but a new review of studies suggests that these consultations would not be much different if patients had more face time with their physicians.

In five studies conducted in the United Kingdom, doctors did not discuss more problems, prescribe more drugs, run more tests, make more referrals or do more examinations when they had a few additional minutes with patients.

In healthcare finance, numbers are - unfortunately - a game.  As much as we’d all like to focus on the practice of quality care and little else, the amount we charge for services and the amount we are paid are distinctly different concepts, and therefore must be understood (better yet, managed) as such.

Fee schedules upon which payments for services are (loosely) based, must be higher than the amounts allowed by each payer if a practice is to maximize their revenue.  You can rest assured that an insurance company is never going to whisper into your ear, “achem…you know you can charge a bit more for that,” or better yet, “you’re charging less than we’ll pay, so we’ll give you the higher of the two.”  This isn’t the way it works, or will ever work.  Practices must look out for themselves, and must keep on top of payer contracts on a regular basis to make sure that they are getting paid to the extent allowed.

Now, the difference between the fee schedule and the allowable amount creates a game of sorts (I prefer backgammon myself) when managing practice financials.  Because the fee schedule can generally be what you’d like it to be, as long as it’s above the allowable amounts, this can inflate (or deflate) gross revenue (total charges based on the fee schedule) depending on where it sits in relationship to the allowed amounts.  Net income will be the same, but there can be wide swings in the amount of revenue “discounted” which can be confusing to the practice owner if not entirely understood.

In this post, Peter Lucash over at the Medical Practice Business Blog makes the point that fee schedules must remain consistent with what services are worth, AND be higher than the allowable amounts per payer contract.  By doing so, an accurate representation of the value of services provided as well as the “value” (or lack thereof) of certain contracts can be properly evaluated.

Some disagree with billing at full (private) fee as an exercise in self-deception. But it’s not – it reflects what your services are worth, and what some patients are undoubtedly paying. Financial statements always have to be in context, which is why any footnotes are very important.

Interesting theory here: pay more money to the initial point-of-contact physicians, allow them to spend more time with the patient, let them perform a more thorough screening, and just maybe it will save money in the long run.  It makes very good sense and early experiments in several states by multiple payers presented in this article show that it might just be true.  It might also entice more medical students back toward primary care.

The idea is that by paying family physicians, internists and pediatricians to devote more time and attention to their patients, insurers and patients can save thousands of dollars downstream on unnecessary tests, visits to expensive specialists and avoidable trips to the hospital.

Nationally, Medicare and commercial insurers pay an average of only about $60 a visit to the office of a primary-care doctor and rarely if ever pay for telephone or e-mail consultations. Many health policy experts say the payments are not enough to let the doctors spend more than a few minutes with each patient.

Healthcare providers work hard to care for their patients. Providers always want to spend more time with patients. The requirements to meet patient expectations, complete the documentation required and submit billings sometimes leaves little time to make sure that the payments from payers are timely and accurate. A recent study by the AMA grades insurance companies, focusing on their ability to process and pay claims appropriately. It is worth spending the time to insure accurate and timely payment.

 “The goal of the AMA campaign is to hold health insurance companies accountable for making claims processing more cost effective and transparent and to educate and empower physicians so they are no longer at the mercy of a chaotic payment system that takes countless hours away from patient care,” William A. Dolan, an AMA board member, told the Chicago Tribune.

 

When working with clients, we often find 2 things: (1) practice owners want to be more profitable, and (2) cutting expenses is not always an option.  At its most fundamental level, a healthcare practice’s profit is based on the equation: revenue - expenses = profit.  So, if expenses can’t be reduced significantly, the next place to look is at the revenue side of the equation.

Revenues are controlled by 2 elements, volume and price.  Increase either and you increase revenue.  We love to see increased volumes, but sometimes the easier (and quicker) fix is to make sure a practice is collecting the maximum amount allowed by its payers (i.e., “allowable” price is maximized).

Enter fee schedules.  In the complex healthcare environment we live in, selling a healthcare service is not as easy as charging a price, getting paid, and going home.  A healthcare practice that gets reimbursed from insurance companies must set a fee schedule which dictates how much the practice will charge for each procedure performed within the practice.  It is off of this fee schedule that the insurer will allow payment for the procedures performed.

If there are multiple payers for the practice it can be a bulky task to have a fee schedule set for each individual payer, so practice owners sometimes opt to use one fee schedule for all payers.  Getting back to the revenue issue, this is where problems sometimes lurk.  Insurance companies have different rules and allowable expenses for medical care, and they don’t all reimburse the same.  So, if a practice has a fee schedule set for one insurer that doesn’t exceed what they “allow” as payment, money is left on the table by the practice.  This can easily happen when using one fee schedue for all payers and is of obvious concern to practice owners.  The good news is that, relatively speaking, it’s an easy fix.

To make sure fee schedules are maximizing reimbursement from payers, make sure that they are set above the allowable amounts for each payer, for each charge.  If one fee schedule is to be used for all payers, then make sure the fee schedule exceeds the amount allowed by the highest reimbursing payer (for each charge).  If multiple fee schedules are being used, make sure that each schedule establishes a fee that exceeds the allowable amount for the payer (again, for each charge).

As you can see, the concept is fairly simple, but the time necessary to establish and maintain proper fee schedules for a medical practice can appear daunting.  It is recommended that the time and energy is spent however, as a significant sum of money can be easily left on the table by not establishing appropriate fee schedules. 

This article excerpt from the Medical Group Management Association (MGMA) provides more information on this important topic.

Medical practices may leave large sums of money on the table because they don’t devote enough attention to developing and maintaining fee schedules. Your practice’s fees should match or exceed reimbursement levels from your best payer to maximize the negotiated amount it can receive.

We frequently review practices’ insurance contracts and reimbursement rates when consulting on their overall revenue cycles.  Unfortunately, time and time again providers have signed contracts with payers in which they are making less money per visit than it costs them for that visit.  Net for the business is in the red for each of these visits.  Begin seeing more patients with these insurances and the business has less and less of a chance of survival.  Ultimately, the business may have to close.  We consistently coach practice owners to know what their cost per visit is so that they can make smart decisions when it comes to signing up for or remaining in contract with an insurance company.

Obviously, we consult in this fashion to look out for the best interests of the particular practice that we are working with.  However, what if this trend spread throughout the country and more practices started paying attention to their costs per visit relative to their reimbursement rates?  The end result may be health care reform on a much bigger scale.  I recently ran across this post that speaks to this idea.

As dealing with insurers becomes less rewarding monetarily and the hassle-factor continues to increase, the time will come when it will no longer be worth my while to contract with them. At that point, I will stop doing so. As it happens, I believe that many other physicians in situations similar to mine will come to the same conclusions as I, and will also choose to terminate those contracts. The eventual result will probably be that no outpatient primary care physicians will participate with insurance.

At that point, the insurance companies will almost certainly adjust their business model to take the new reality of non-participating physicians into account. With any luck, they will move towards something that looks like actual insurance (think home and auto; coverage only for catastrophic care) and will therefore be considerably less expensive. Who knows; they may even have to make do with less revenue. That’s what capitalism is all about, isn’t it?

On April 23rd I wrote about the benefits of using email in physician-patient communication, and how trends in this area are inevitably going to change the standards of communication in years to come.  I’ve also written about Dr. Jay Parkinson and the company, Myca, who are pushing the use of technology to improve the efficiency and cost effectiveness of the physician-patient relationship through the use of instant messaging, video-conferencing and email.

Email and other efficient modes of communication are undoubtedly in our near future as healthcare providers.  Now if we could just get the payers to notice…

Well, it looks like they are starting to notice.  As part of the medical home model, Capital District Physicians’ Health Plan is entering a 2 year pilot program which will, among other things, pay physicians for using communications such as email to improve the efficiency of interaction with patients.  This article from Times Union explains.

Currently, doctors are paid only for face-to-face visits. There’s little incentive for busy doctors to explore other types of interactions, said Bruce Nash, chief medical officer and senior vice president of medical affairs at CDPHP.

“The rest of the world’s used e-mail for a decade,” he said. “It’s been limited to a physician, because it hasn’t been paid for.”

If you read this blog regularly, this won’t be the first time you’ve read a post about the growing trend in medicine that favors reimbursement for procedures over time spent with patients, regardless of how important or necessary that time is to the overall plan of care.  As the leader of many trends in medicine, Medicare is the driving force behind this direction our reimbursement system is taking, and there isn’t an immediate end in sight.  This article from the Wall Street Journal explains how this trend is reducing the availability of needed specialty care in the United States by providing a disincentive for medical students to pursue specialty areas that rely on cognition rather than procedural expertise.

A discipline built on spending time with patients to gather clues for a diagnosis, neuro-ophthalmology could become another casualty of a medical payment system that favors high-tech procedures over low-tech exams. The median income of a neuro-ophthalmologist at a teaching hospital is $200,000, according to the North American Neuro-Ophthalmology Society. That’s a third less than most general ophthalmologists, who undergo less training but can see more patients, and do more pricey procedures, in a given day.

Many in health-policy circles have focused on how the current health-care payment system is helping create shortages among primary-care doctors, internists and others on the front lines of medicine. But often lost is how the system is endangering some of the country’s most highly trained specialties as well.

Endocrinologists, rheumatologists and pulmonologists — specialties that also don’t involve performing many procedures — face acute shortages. Many of the severest deficits affect children. Though nearly 300,000 children in the U.S. are diagnosed annually with juvenile arthritis, lupus or other complex rheumatic diseases, there are fewer than 200 pediatric rheumatologists to take care of them, according to the U.S. government’s Health Resources and Services Administration.