Chart your financial future
The old ways of practicing medicine are gone-at least if physicians want to get paid in a value-based world.
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Changes to Medicare reimbursement continue to bewilder and intimidate smaller practices while the effect on private payers remains unknown. Physicians already deal with patients angry at having to pay high deductibles for the same level of care, while fighting to maintain leverage with payers and getting paid for all the work they do to improve the well-being of patients. The “unknowns” about 2017-from how payments will progress to what will transpire under a new administration in Washington, D.C.-has many concerned.
“I think 2017 will be a little more challenging because the focus on quality is putting reimbursement at risk,” says Jeffrey Kagan, MD, a Newington, Connecticut-based internist and member of the Medical Economics Editorial Advisory Board. “The other unknown is what is going to happen to Obamacare,” Kagan adds. “I have a business with a budget based on income not falling. If income falls and affects our budget for the year, we’ll have to figure out where to cut back.”
Only by understanding the biggest risks to their revenue this year can physicians maximize their reimbursements.
The requirements for the Medicare Access and CHIP Reauthorization Act (MACRA) reflect a larger shift in the industry, and physicians need to be proactive in how they approach the new law this year to maximize revenue potential in 2019 and beyond.
“This is the beginning of the transformation of the healthcare system,” says Randy Buchnowski, MHA, FACHE, network executive for Halley Consulting Group, a healthcare consulting firm. “I see this as a movement toward value-based care that is going to go well beyond Medicare.
Practices that fail to adopt value-based models jeopardize their future revenue, says Katie Fellin, MHSA, a senior manager at ECG Management Consultants and a specialist in working with small physician groups and independent practices. “Although the ACA introduced ‘accountable care’ into the healthcare lexicon, commercial payers have run with the concept and show no signs of backing away,” Fellin says in an email.
Fellin points to two surveys as evidence: a 2016 survey from the Health Care Transformation Task Force in which 38% of payers who responded had value-based payment models with providers at the end of 2015, and a 2016 Commonwealth Fund study showing that more than 800 accountable care organizations (ACOs), both commercial and Medicare, cover an estimated 28 million patients.
Aetna, as of early last year, had nearly 6.2 million members receiving care from physicians in value-based arrangements, accounting for 40% of Aetna’s payments for medical care, she adds.
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Taking a long-term approach is the key to maximizing reimbursement and creating a thriving practice, says Laura Wooster, MPH, interim senior vice president of public policy for the American Osteopathic Association.
No matter where a practice is in preparing for MACRA and value-based care, physicians should look to take the next step, whether it’s finally getting an electronic health record (EHR) system or moving from Medicare shared savings track one to track two, because those investments can pay off over time.
“I think there are business opportunities here in terms of practices being able to do well,” says Wooster. “It will require a good amount of planning and an upfront investment of time and resources, but in the end, this can be looked at as a positive business opportunity.”
To get started, Fellin suggests providers do the following:
Success under MACRA and value-based care doesn’t have to be complicated, says Joseph Schlecht, DO, a Jenks, Oklahoma-based primary care physician. Schlecht started practicing value-based care more than a decade ago after realizing he wasn’t taking as good care of his diabetic patients as he could. Today, he’s set to reap the financial rewards for quality care through MACRA and from private payers.
“Doctors want to practice the way they’ve done for 40 years, but that’s not the way it’s going to go,” Schlecht says. “We have to shift to quality reports.”
His solution is to create patient registries for diabetes and other chronic conditions. Once set up, the registries are combined with a severity index so he can identify his most at-risk patients. His staff has access to the information and is trained on how to handle these patients.
Higher-risk patients get scheduling priority, and the combination of registries and severity index allows him to regularly schedule eye and foot exams, for example, which also drive additional revenue. Patients receive better care management while the practice benefits from higher patient satisfaction scores and increased profitability.
Schlecht created his first registries with the help of a receptionist, two medical assistants and an office manager, who put it together in about 30 hours of overtime work.
This same data and outcome tracking has positioned him to perform well under MACRA. “Everyone says they are better than the next guy,” says Schlecht. “The payers are now saying, ‘Show me.’ Without registries and data, you can’t show or prove anything.”
If the cost of adopting a value-based care model is a concern, physicians can look to programs such as the Transforming Clinical Practice Initiative, which offer expert advice on how to most effectively implement quality measures. CMS also has promised additional training and support funding.
Wooster advises keeping a close eye on the virtual group provisions for MACRA. These are currently undefined, but are intended to help small practices pool resources to save money. Practices in different geographic locations could join together for reporting purposes, allowing them to combine data to comply with the law’s reporting requirements, for example.
With such a transformational shift, it’s not surprising that some physicians are worried, but Schlecht says they shouldn’t be. “I don’t think physicians need to fear MACRA, but they need to be educated on what it’s all about,” he says. “This can be a win for them, and more importantly, for their patients.”
As healthcare costs continue to rise, one of the effects has been to shift costs from insurers to patients, so that a patient might be liable for thousands of dollars of bills via a deductible before insurance takes effect. Copays have also increased, surprising some patients and causing them to vent their frustration on the physician and practice staff.
Doctors are finding themselves trying not only to get reimbursements from insurance companies, but from patients who may not have the ability to pay. As the number of these high-deductible plans increase, so too does the financial risk to doctors who might not get paid for services rendered.
“The high-deductible plans have been a headache for a few years now,” says Kagan. “It’s a great plan in theory, but what happens when patients don’t have any money to pay for their medical expenses? We don’t charge interest, and we go month to month without getting paid, and sometimes we don’t get paid at all.”
Most practices already have collection policies, but the problems start because practices don’t follow them, he says. With small practices this can be especially true, because the people they are collecting from might be friends or neighbors, creating awkward situations.
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Consultant Buchnowski says a clear policy combined with staff education on how to handle touchy situations will result in better collection rates.
“Verifying insurance and eligibility is especially important at the beginning of the year, because plans may have changed,” he says. “Train staff on how to politely collect copays. Teach them to not catch patients off guard, using appointment reminder calls to let them know of any possible copays or outstanding balances. For patients on high-deductible plans, try to collect the entire amount at the time of the visit.”
Practices may need to do a little wheeling and dealing to increase the chances of collecting from patients paying cash or covered by high-deductible plans, Buchnowski says. Offer discounts if the patient pays in full, or keep credit card numbers on file to draw a monthly payment if the patient can’t afford to pay all at once.
Having that credit card on file can provide a safety net for the practice, says Tim Hoff, Ph.D., professor of management, healthcare systems and health policy at Northeastern University in Boston. Most offices spend little time learning where patients with high-deductible plans are in meeting their deductible for the year. Collecting a copay and then billing insurance after the visit creates a financial risk if the deductible hasn’t been met, or worse, the patient hasn’t even paid their policy premium.
“Small practices especially may need to work harder on developing the capability to verify, for a given patient’s insurance plan, how much of the annual deductible has been met, how the services rendered for a given visit fit into that deductible and what the specific copays are for each and every distinct service being rendered,” Hoff says in an email. This requires learning more about the various insurance plans patients have and dedicating resources to make sure staff can check on deductible status in real time.
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Buchnowski says to start by contacting payers, who may offer training on how to get the information you need. Also, physicians should make sure the practice’s collection policy is understood and being followed by staff, no matter how uncomfortable it may be at times.
With industry consolidation in the healthcare insurance market and the growing complexity of contracts, the days of small practices negotiating their own rates are waning fast, experts say. Negotiating power has mostly shifted to larger groups, but all is not lost for small practices when it comes to dealing with payers.
“If you, as the physician, can make yourself valuable to the networks you are participating in and bring value, that’s how you will do well,” says David Manko, JD, a partner in Rivkin Radler’s Health Services Practice Group in Long Island, New York. “When you have practices that are high performers when it comes to value-based contracting, they become more valuable to the networks they participate in.”
The idea of proving value was a constant theme from all the experts that spoke with Medical Economics regarding negotiating power. As the industry shifts from volume to value, physicians are in the best position to control costs while providing quality care, and those who do it well-and can prove it with data-will have the most to gain.
“When you sit down with payers and can show trends of improved patient satisfaction surveys, or lowered hospital admissions or how providing after-hours care resulted in fewer patients in the emergency room-if you can collect that data and show how much money was saved, you’ll have a better negotiating position,” says Manko.
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Trying to make a practice stand out with a unique offering isn’t necessarily going to provide negotiating leverage, says Manko. Payers want uniform payment rules, so the idea of creating exceptions isn’t appealing to them. One exception would be something so innovative that it could be considered for a pilot program that could be extended to all providers in the network.
While negotiating rates may not always be fruitful for the small practice, focusing on contractual payment terms can yield dividends, says Buchnowski.
“Small practices aren’t always tracking well what they billed, what they expected to be paid and what they actually got paid,” he says. “If you are shorted 3% to 5% on an error from the payer, that can add up over time.”
Kagan says the best option may be to join an independent physician association to handle negotiations, and that in some cases payers will not negotiate with small practices individually so as to avoid having hundreds of different contracts.
Nonfinancial items should also be considered part of any negotiation This includes the right to accept or reject any contract amendments proposed by payers, especially those that add new products to the provider’s existing agreement, says Fellin. It could also include fee schedule updates that may affect specific CPT codes. Providers should also maintain their rights to denial management and appeals processes.
Prior authorizations are a common complaint among physicians, and can be negotiated, but Buchnowski says to focus on working with the plans to better understand their process and what tools they may offer to help.
He recommends requesting payer-sponsored training where a plan representative can explain how the process works and what they are looking for-and at the same time, someone from the practice can start to build a relationship with the representative. By centralizing prior auths to one person, relationships can develop that can lead to a direct-dial number or quicker approvals.
No matter what is being negotiated, Manko says physicians should not look at payers as the enemy. “Physicians should view payers as partners and figure out how to work with those partners so everyone wins,” he adds.
Billing for all services and supplies is crucial to running a successful practice, yet many physicians either don’t code properly, leave things out or don’t take advantage of the codes available to them, says Nancy Enos, FACMPE, owner of Enos Medical Coding in Warwick, Rhode Island.
For example, transitional care management codes (CPT 99495 and 99496) are underutilized, says Enos. These codes apply to patients following a discharge from the hospital. The challenge is knowing when the patient is discharged, because the codes require contact within two days of discharge and a follow-up appointment within either seven or 14 days, depending on patient risk factors.
Another area Enos says is underutilized are advanced care planning codes (99497 and 99498). These cover time spent in face-to-face care discussions with family members or caregivers of the patient. “The reimbursement nationally is about $85 for code 99497,” says Enos. “It is a time-based code, so it’s really important to document at the time of the conversation.”
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Too much physician revenue is not being billed because of simple oversights, she adds. “Remember to write down all the drugs and supplies consumed that are billable,” she says. “During audits, I’ll see that a doctor gave the patient a splint, but there was no charge for materials. I think a lot of supplies and materials are missed.”
She says proper coding education is the key to avoiding missed revenue, adding that there is no reason to be conservative in coding if the treatments are medically necessary.
“I think physicians are not comfortable with all the codes and leave some things on the table out of fear of getting into trouble,” says Enos, “Over the course of a career, this can cause a huge loss in revenue.”