Practice Management

August 23, 1999

Practice Management

Practice Management

Jump to:Choose article section...Improving the way you share income from capitationThings to consider when you volunteer medical servicesHow to choose a billing serviceCoding for patients with Alzheimer'sWhen a retiring doctor can't let goShould you spin off a side business from your medical practice?Whether to delegate hiring to a head hunterWhen a staffer commits insurance fraud

Improving the way you share income from capitation

Q Our internal medicine group uses a productivity formula to compensatesenior doctors for their fee-for-service patients; we pay for capitatedpatients based on the number assigned to each doctor. Our senior physicianshave significantly more prepaid patients assigned to them than our associatephysicians do. But the associates--who are paid a straight salary, plusincentives--often end up treating the overflow of capitated patients frombusy, older colleagues. How should our young doctors be reimbursed for this?

A Since the associates are salaried, you don't necessarily need to changethe way you distribute capitation revenues. It's okay for the older doctorsto keep the income, because their name recognition is likely what attractedmost of these patients to the practice.

But if capitation comprises 30 percent or more of the group's revenue,develop a bonus system for allocating some of that money to the salariedphysicians. You could do that by assigning a dollar value to each visit,based on monthly capitation revenues divided by the number of monthly visits.A portion of that amount would be awarded to the associate who saw the patient.

Things to consider when you volunteer medical services

Q As a favor to a friend, I've been volunteering as the temporarymedical director at his clinic. My duties include reviewing charts, consultingon tough cases, and setting up protocols. I declined compensation becausethe clinic is struggling financially. I also want to avoid the appearanceof a conflict of interest, since there are referrals between the clinicand my private practice.

Am I right to be concerned about a conflict of interest? And am Iincreasing my malpractice risk by working at the clinic?

A Yes to both questions. Even if you fully inform patients about yourlimited role at the clinic, you could still appear to be violating rulesagainst self referral. Moreover, you heighten your malpractice risk anytimethe doctor/patient relationship isn't clearly understood--as is the casehere.

You'd be wise to tell your friend you can't act as his medical directoranymore. But if you're reluctant to do so, at least ask your malpracticecarrier whether you'll be covered under these circumstances. And considerhaving an attorney draw up a more formal, written agreement that limitsyour liability.

How to choose a billing service

Q Our three-doctor internal medicine practice is thinking about hiringa billing service. The services in our community charge 4 to 6.5 percentof collections. Is this reasonable? What other factors should we considerwhen we choose a service?

A The fee range you cite is reasonable. In researching which firm tocontract with, get answers to the following questions:

  • What specific services are included? For instance, will the firm handle collection follow-up and send out secondary claims?
  • Has the Better Business Bureau received complaints about the company?
  • Has the company ever been sued?
  • Will it train your staff?
  • Does it have insurance to cover errors or omissions it makes when processing claims?
  • Is the company Y2K compliant?
  • Does the commission include such things as start-up costs and postage?
  • Has the company implemented the "Compliance Program Guidance for Third-Party Medical Billing Companies" recently issued by the Inspector General of the Department of Health and Human Services?

Perhaps most important: Get references of same-size practices in yourspecialty--and make sure you call them.

Coding for patients with Alzheimer's

Q How should I code for treating a patient whose multiple medicalproblems include Alzheimer's? If I code only for the non-dementia diagnoses--diabetesor hypertension--all I can use is a 99212 or 99213. But the Alzheimer'scomplicates the visit, justifying a code of 99214 or higher.

The problem is, the moment I include the Alzheimer's diagnosis, Medicareregards the visit as psychiatric and reimburses me at a lower rate.

A Your local Medicare carrier is wrong. The psychiatric limitation appliesto outpatient psychotherapy, not to medical management of an Alzheimer'spatient. Double-check your claims: Have you listed the diagnoses properly,with the main non-dementia condition as the primary one, and the Alzheimer'sand other conditions as additional diagnoses? If so, contact the carrierto clear up the problem.

When a retiring doctor can't let go

Q Our founding member is retiring but wants his name to remain onthe group's letterhead. Is this a good idea?

A No. It would mislead patients. If you must indulge him, place "retired"after his name.

Should you spin off a side business from your medical practice?

Q In recent years, more and more patients have been coming to my soloFP practice for weight management--so many that I'm wondering whether Ishould split off the weight-management business from the rest of my medicalpractice. By creating a subsidiary with a descriptive name and separateidentity, I could market it more effectively. Yet patients who come to mefor other reasons wouldn't think I'm phasing out my regular practice.

Is this a good idea? Or would it create too many administrative headaches?

A It's a great idea if you're willing to put in the time, energy, andmoney required to make the business fly. Some doctors who've built successfulspin-offs have later sold them for large sums.

It would be best to incorporate the weight-management practice, separatingits assets and liabilities from your family practice. You should also consulta health care attorney about how to steer clear of self-referral violations.

Whether to delegate hiring to a head hunter

Q Is there any advantage to using an employment agency to find qualifiedclinical or administrative staff?

A The advantage is small. Although an agency will narrow the field ofapplicants, you still have to interview candidates and check their references.Are you and your office manager so busy that you can't do the preliminaryscreening yourselves?

When a staffer commits insurance fraud

My partner and I provide free medical care to employees and theirimmediate family members. We recently discovered that one staffer was billingour insurer anyway and pocketing the money. How should we handle this situation?

Fire the employee. Then speak to your attorney for advice on what tosay to the insurer, whether you'll need to repay the funds, and whetherit's worthwhile to take legal action against the employee to recoup thestolen money. Do you have a practice management question that may be stumpingother doctors, too? Write PMQA Editor, Medical Economics magazine,5 Paragon Drive, Montvale, NJ 07645-1742, or send an e-mail to mepractice@medec.com (please include yourregular postal address). Sorry, but we're not able to answer readers individually.

Edited by Kristie Perry, Senior Associate Editor



Kristie Perry. Practice Management.

Medical Economics

1999;16:158.