It’s the unfortunate reality that while increased specialization of labor in health care can result in better care, it most certainly results in more expensive care.  This is going to be an issue until we find a way to pay more for “brain time” or “cognitive medicine.”

From, the NY Times: Let Doctors Bid for Medicare Business

Researchers have observed that having one additional specialist (per 100,000 people) in a region leads to about $13 more in health care spending per Medicare patient. New York City, for instance, has 186 specialists for every 100,000 residents, which is twice as many as Albany’s 93. Accordingly, Medicare spends $12,114 a year treating each patient in New York City, but only $5,950 in Albany.

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Tannus Quatre PT, MBA is a private practice consultant and principal with Vantage Clinical Solutions, Inc., a nationwide healthcare consulting and management firm located in Bend, OR and Denver, CO.  Tannus specializes in the areas of healthcare marketing, strategy, and finance, and can be reached through the Vantage Clinical Solutions website.

We love creativity and innovation around here…and here we simply tip our hats to Fast Company’s Top 10 Most Creative People in Health Care.  Keep a-changing the health care world as we know it fellas. 

Congratulations, and thank you.

Vantage Clinical Solutions

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Tannus Quatre PT, MBA is a private practice consultant and principal with Vantage Clinical Solutions, Inc., a nationwide healthcare consulting and management firm located in Bend, OR and Denver, CO.  Tannus specializes in the areas of healthcare marketing, strategy, and finance, and can be reached through the Vantage Clinical Solutions website.

I recall as a student when - somewhere near the last day of school - an instructor would share the funniest things that they’d seen come across their desk throughout the year.  It was usually some 5-word blooper from a student or a simple, yet funny misstatement of history that found it’s way into a writing assignment; something that managed to set itself apart from the rest, truly catching the attention of the instructor through a countless sea of papers, essays, tests, and homework assignments.  Only the real gems would make it to that last day of school.

We’ll, I wish I could say that I’ve got a “gem” for you, or perhaps even a blooper.  If not that, then at least something that is a bit rare and unusual.  Unfortunately, the only qualification that my statement has is that is has caught our attention, and it should catch yours as well.  It’s not funny, rare, or even a blooper.

One of our functions is as a provider of medical billing services, and we consider this to be a “sign of the times” in health care and in our economy, and the statement is simply this (taken from an actual letter from patient to doctor):

Dear Doctor:

I am your patient and I have a bill for $400.  I will send you half within the month if you will agree to write off the balance.  Please sign below acknowledging this agreement.

Sincerely,

Your Patient
 
Approved:

_________________________
Medical Practice Authorized Representative

Our recommendation is simply this: If you believe in your services, your prices, and your policies, then don’t fall hostage to anyone, not even a patient.  If you feel that arrangements such as this are in the best interest of your practice, and your financial policy supports this behavior, then it certainly might be right for you.  But understand the risks of too quickly going after the quick buck in lieu of collecting the sum of what is rightfully yours as a provider of health care services.

There are no easy answers, but it is in your interest to know that these letters are coming and you should at least know how you will respond.

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Tannus Quatre PT, MBA is a private practice consultant and principal with Vantage Clinical Solutions, Inc., a nationwide healthcare consulting and management firm located in Bend, OR and Denver, CO.  Tannus specializes in the areas of healthcare marketing, strategy, and finance, and can be reached through the Vantage Clinical Solutions website.

If you don’t know about the “Red Flag” rules yet, you may want to do some homework.  The Federal Trade Commission (FTC) will begin enforcing law stating that practices need to have an identity theft prevention program in place.  This program includes written policies and procedures as well as demonstration of true implementation of the program (i.e. it can’t just be written down and stuffed away in a binder somewhere in your clinic).  The deadline was seven days ago, however, they have given more time for businesses to comply by pushing the deadline out to August 1, 2009.  Read more by Peter Lucash here.

A constant challenge in today’s highly regulated health care environment is managing medical records requests from a variety of sources.

Soon you may begin receiving requests from the Recovery Audit Contractors (RACs). As part of Section 302 of the Tax Relief and Health Care Act of 2006, the RAC Program is permanent and will be expanded to all 50 states by no later than 2010. The RAC program is administered by CMS to identify claims processing errors - both underpayments and overpayments. A 3-year demonstration project of this program was recently concluded and found the program to be highly effective in identifying payment errors, recovering $1 to CMS for every $.22 spent on the program.

The 3-year RAC demonstration program in California, Florida, New York, Massachusetts, South Carolina, and Arizona collected over $900 million in overpayments and returned nearly $38 million in underpayments to providers (CMS press release 10/6/08. For more information visit: http://www.cms.hhs.gov/RAC).

Part of the RAC program’s success is attributed to the contingency fees paid out to the RACs for the overpayments that they identify. Each RAC’s contingency fee is established with CMS and varies from 9%-12.45% of collected payments. Provider types targeted included inpatient rehabilitation facilities, hospitals,physicians, skilled nursing facilities, durable medical equipment suppliers, laboratories, ambulance, home health agencies, and hospices.

RACs may use Automated Reviews and Complex Medical Reviews of CMS claims data to request improper payments. Automated review must have clear policy that serves as the basis for the overpayment (”clear policy” means a statute, regulation, National Coverage Determination, coverage provision in an interpretive manual, or Local Coverage Determination that specifies the circumstances under which a service will ALWAYS be considered an overpayment); be based on a medically unbelievable service; or occur when no timely response is received in response to a medical record request letter. Complex Medical Record Review includes coding reviews and medical necessity reviews. Requests for records can go as far back as October 1, 2007.

In the demonstration project, the majority of requests were made of inpatient hospital stays. Analysis revealed the following breakdown: Inpatient hospital 85%; rehabilitation 6%; outpatient 4%; physician/DME/ambulatory/other 4%; and SNF 2%. Recover of payments were due to the following reasons: Medical necessity 40%, incorrect coding 35%, incomplete documentation 8%, and other unspecified reasons 17%.

Consider the following questions when beginning to prepare for RAC records requests…

1. Does your organization have a RAC Readiness Committee? If so, how frequently do you meet and what functional areas are represented on the committee?
2. Does your organization have a RAC Coordinator responsible for overseeing RAC readiness as well as responses to requests received from the RAC? If so, what are this person’s qualifications and previous position, if applicable? What responsibilities will this person have and who will they be reporting to?
3. Has your organization either developed or purchased a tool to track RAC requests and the status of claims from the point of the RAC request through resolution of the request, including any appeals?
4. Has your organization been participating with your state hospital association or other industry organizations to assist with preparations for the RACs, including identifying contact people at the RACs and sharing of common issues faced by other healthcare organizations?
5. How is your organization planning on handling appeals of RAC determinations? Are you planning on partnering with a law firm and/or any outside consultants with expertise in medical necessity, coding and documentation requirements?

There can be tremendous added costs of responding to the RAC requests. It is important to know that providers can be reimbursed for medical records photocopying costs reimbursed as follows…

• PPS provider records $.12 per page plus first class postage
• Non-PPS institutions and practitioner records,$.15 per page
• Dialysis /capitated facilities receive $.12 per page plus first class postage
• Specifically, hospitals and other providers (such as critical access hospitals) under a Medicare cost reimbursement system, receive no photocopying reimbursement.

Resources:

CMS RAC Status Reports, Statement of Work, FAQs, Expansion Schedule, Fact Sheets, Press Releases, etc. www.cms.hhs.gov/RAC/

CMS Appeals Process
www.cms.hhs.gov/MLNProducts/downloads/MedicareAppealsProcess.pdf

American Hospital Association RAC Resources
www.aha.org/aha/issues/RAC/aharesources.html

Transmittal 1457 - Redeterminations of Overpayments
www.cms.hhs.gov/Transmittals/Downloads/R1457CP.pdf

Limitation on Recoupment (935) for Provider, Physicians and Suppliers Overpayments
www.cms.hhs.gov/MLNMattersArticles/downloads/MM6183.pdf

Transmittal 1671 - New & Material Evidence (Good Cause)
http://www.cms.hhs.gov/transmittals/downloads/R1671CP.pdf

OIG Audit of Medicare ALJ Hearings 7/08
www.oig.hhs.gov/oei/reports/oei-02-06-00110.pdf

OIG Audit of QIC Medicare Appeals Processing 7/08
http://www.oig.hhs.gov/oei/reports/oei-06-06-00500.pdf

As health care providers receiving reimbursement from the government for the care delivered to our patients, we are subject to potential review of our records and claims. This is to “assure integrity” for the services we provide to our patients.
 
However, recently I came across a list of agencies and organizations who can review our records and claims to “assure integrity” in the care we provide…and the list was long. Too long. Especially when viewed through the lens of providers who simply want to provide a good service and get paid an amount which reflects the skill they have acquired, expertise they have gained, and sacrifice they have made to become a health care provider.
 
Given the levels of review and potential audits that are in place to “assure integrity,” an undesirable level of complexity has been added to our health care system. This complexity deters the most skilled providers from providing care to patients who are reimbursed by the government. In addition, many providers who are clinical experts feel their livelihood is threatened when they are unable to understand and maintain a current knowledge of all the rules and processes imposed by these agencies and organizations who are “assuring integrity.”
 
As taxpayers, we may be glad that the government has put into place organizations working to assure integrity in health care for our taxpayer dollar by reviewing medical records and claims. However, is the review of medical records and claims a valid measurement for integrity of care?
 
And, as they are watching over us, who is watching over them?
 
Nine Organizations Assuring Integrity for Health Care Reimbursed by the Government…

• Recovery Audit Contractors (RACs): Can review all providers
• Office of the Inspector General (OIG): Publishes a work plan each fall stating the providers they will review
• Comprehensive Error Rate Testing Contractors: Potential reviews for all providers who submit claims to Medicare
• Medicare Payment Error Rate Measurement Contractors (PERM)
• Hospital Payment Monitoring Program: Reviews hospital claims submitted to Medicare
• Zone Program Integrity Contractors (ZPIC): For hospitals submitting claims to Medicare
• Qualified Independent Contractors (QIC): For hospitals submitting claims to Medicare
• Program Safeguard Contractors (PSC): For providers submitting claims to Medicare
• MAC/FI/Carriers: Review providers specific to geographic region and provider type

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Bridget Morehouse PT, MBA is a consultant with Steffes and Associates, a rehabilitation consulting firm based in Wisconsin.

Here is a healthy reminder from Peter Lucash regarding internal controls around revenue and expense tracking.

Internal controls have several purposes, the most important of which is to insure that all revenue and expenses are recorded, and assets are recorded and placed where they belong. The essential concept is this: a separation of duties. The person who opens the mail and receives the checks is not the same person who enters payments into the bookkeeping system, and is not the same person who prepares the deposit.

Take the necessary time to review your clinic’s policies and procedures around these cash-handling processes.  As Peter mentions, it’s not about trusting your staff, it’s about making sure that your businesses financial records are correct (and audit-proof).

Paradoxical, yes, but according to new recommendations presented by the American College of Physicians (ACP), this is exactly what is required in order to reduce healthcare costs: Increase reimbursement for primary care physicians as part of the effort to lower the cost of medical care.

The argument goes something like this.  By increasing reimbursement to primary care physicians, we will reduce the primary care shortage (currently a shortage of 16,000 physicians nationwide), which in effect will improve the quality of healthcare resulting in fewer “big ticket” costs such as hospital admissions, surgeries, and ER visits.

Makes sense, and I support efforts to address the primary care shortage, though I’d be interested to see the actual math as well as the ACP’s thoughts on why specialists wouldn’t respond with equal demands for increased reimbursement.

The annual report recommends reforms to the primary care payment policies that would enable primary care physicians to achieve market competitiveness with other specialties. The disparity between the salary range of primary care physicians and non–primary care physicians is a large factor in the declining number of medical students deciding on careers as general internists or family physicians.

…

There is increasing evidence that augmenting the number of primary care physicians improves quality and lowers the cost of medical care. For example, recent studies indicate that communities with a greater proportion of primary care physicians have fewer hospital admissions, fewer emergency department visits, and fewer surgeries. Furthermore, a 5% decrease in the rate of hospital admissions could result in a healthcare savings of up to $1.3 billion.

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Tannus Quatre PT, MBA is a practice consultant and principal with Vantage Clinical Solutions, Inc., a national healthcare consulting and management firm based in Oregon and Colorado.  Tannus can be reached through the Vantage Clinical Solutions website by clicking here.

It goes without saying that it’s the portion of payment for healthcare services that the patient is responsible for that is the hardest to collect.  And it doesn’t matter if it’s a co-pay or a patient responsible portion invoiced to the patient after services, it’s not easy to move the money from the patient’s pocket to the clinic’s bank account.

This is not to say that collecting from insurance companies is a walk in the park either, but at least insurance companies aren’t sitting across the room from you, benefiting from your services, then realizing that they don’t have the resources to pay.  It’s a bit tricky when you’re collecting money from those with whom you’ve helped, and likely have established a good interpersonal relationship.

Patients, as a whole, should absolutely not be held in contempt, as healthcare for the most part is not a discretionary, scheduled service.  You get it when you need it, and money doesn’t necessarily happen that way.  I know that my responsible portion has drifted beyond the “current” column in an A/R aging report or two, and I think I’m pretty responsible.  Sometimes patients just can’t pay their part when they need to.

So how does this drive the practice of medicine, dentistry, physical therapy, and the like?  Do doctors, physical therapists, dentists, and other healthcare professionals treat patients differently based on their ability or willingness to pay?  Should they?  We would all hope not, right?

Well, a few comments found in this post from Kevin, MD show that some providers do admit to treating the uninsured differently, and it might just surprise you.

With some states considering cutting already low Medicaid payment rates, those with this insurance are rapidly joining the uninsured by being treated with preferentially poor care.

Over the past few weeks, healthcare has not been the top story in the news.  America’s money has been the focus recently, and rightfully so.

The two are very much related though, as money buys healthcare, and good health allows our economy to generate money. 

For those that have been following the presidential race, it should be clear that one of the biggest fundamental differences between the candidates has to do with the level of regulation applied to the healthcare industry.  Obama believes that healthcare is a right, and should be available to every American.  McCain believes that healthcare is a responsibility, and that government’s role should be to create an environment where Americans can have the choice to access affordable healthcare through specific incentives and tax credits.

As a healthcare entrepreneur myself, I certainly believe in the power of the free market to drive innovation, creativity, and progress.  In fact, helping physicians, physical therapists, dentists, and the like to leverage the entrepreneurial spirit for the benefit of their patients and themselves is the sole focus of our company.

This said, this question over whether or not healthcare is a right or a responsibility shouldn’t be taken flippantly, and deserves some thought and reflection from those of us that focus our professional careers around the issue.  While free market principles undoubtedly play a positive role in catapulting forward our technologies and business models within the healthcare industry, there is a role for the protections afforded Americans through systematic oversight.

I appreciate the comments made by Paul Hsieh, MD in his blog, We Stand Firm, in regard to the view that healthcare is a commodity, but would add that a balance can be achieved whereby one person’s right to access healthcare doesn’t necessarily have to infringe upon another’s right to (or to not) provide it.

The fact that modern health care is essential for human life makes it all the more crucial to allow the free market to work and to restrain the government from violating the rights of patients and health care providers. Any attempts by the government to guarantee health care as a “right” necessarily violates someone’s actual rights — either the providers or those forced to pay for others’ health care against their will or both. Hence, Americans must reject the flawed notion of health care as some sort of “right” and embrace the fact that it is a commodity.

And for those that are interested, here is an excerpt from the presidential debate last Thursday night on the topic of the right to healthcare, provided by CNN:

Brokaw: Quick discussion. Is health care in America a privilege, a right, or a responsibility?

Sen. McCain?

McCain: I think it’s a responsibility, in this respect, in that we should have available and affordable health care to every American citizen, to every family member. And with the plan that — that I have, that will do that.

But government mandates I — I’m always a little nervous about. But it is certainly my responsibility. It is certainly small-business people and others, and they understand that responsibility. American citizens understand that. Employers understand that.

But they certainly are a little nervous when Sen. Obama says, if you don’t get the health care policy that I think you should have, then you’re going to get fined. And, by the way, Sen. Obama has never mentioned how much that fine might be. Perhaps we might find that out tonight.

Obama: Well, why don’t — why don’t — let’s talk about this, Tom, because there was just a lot of stuff out there.

Brokaw: Privilege, right or responsibility. Let’s start with that.

Obama: Well, I think it should be a right for every American. In a country as wealthy as ours, for us to have people who are going bankrupt because they can’t pay their medical bills — for my mother to die of cancer at the age of 53 and have to spend the last months of her life in the hospital room arguing with insurance companies because they’re saying that this may be a pre-existing condition and they don’t have to pay her treatment, there’s something fundamentally wrong about that.

So let me — let me just talk about this fundamental difference. And, Tom, I know that we’re under time constraints, but Sen. McCain through a lot of stuff out there.

Number one, let me just repeat, if you’ve got a health care plan that you like, you can keep it. All I’m going to do is help you to lower the premiums on it. You’ll still have choice of doctor. There’s no mandate involved.

Small businesses are not going to have a mandate. What we’re going to give you is a 50 percent tax credit to help provide health care for those that you need.

Now, it’s true that I say that you are going to have to make sure that your child has health care, because children are relatively cheap to insure and we don’t want them going to the emergency room for treatable illnesses like asthma.

And when Sen. McCain says that he wants to provide children health care, what he doesn’t mention is he voted against the expansion of the Children’s Health Insurance Program that is responsible for making sure that so many children who didn’t have previously health insurance have it now.

Now, the final point I’ll make on this whole issue of government intrusion and mandates — it is absolutely true that I think it is important for government to crack down on insurance companies that are cheating their customers, that don’t give you the fine print, so you end up thinking that you’re paying for something and, when you finally get sick and you need it, you’re not getting it.

And the reason that it’s a problem to go shopping state by state, you know what insurance companies will do? They will find a state — maybe Arizona, maybe another state — where there are no requirements for you to get cancer screenings, where there are no requirements for you to have to get pre-existing conditions, and they will all set up shop there.

That’s how in banking it works. Everybody goes to Delaware, because they’ve got very — pretty loose laws when it comes to things like credit cards.

And in that situation, what happens is, is that the protections you have, the consumer protections that you need, you’re not going to have available to you.

That is a fundamental difference that I have with Sen. McCain. He believes in deregulation in every circumstance. That’s what we’ve been going through for the last eight years. It hasn’t worked, and we need fundamental change.