Taking home more practice revenue is about to become a life-saving skill. The Centers for Medicare and Medicaid Services (CMS) is set to cut physician Medicare reimbursement by 10% on January 1, 2008. The second shoe will drop in March and April as insurers that base their own reimbursement on Medicare rates make similar changes.
Taking home more practice revenue is about to become a life-saving skill. The Centers forMedicare and Medicaid Services (CMS) is set to cut physician Medicare reimbursement by 10% on January1, 2008. The second shoe will drop in March and April as insurers that base their own reimbursementon Medicare rates make similar changes.
"You could be looking at a drop in income from around $160,000 to $120,000 next year," warnedpractice management consultant Keith Borglum, a member of the American Academy of Family Physicians'(AAFP) FPAssist program. "That will cause lifestyle changes."
Physicians are on their own to deal with the coming cuts, Borglum predicted. Congress maytake protective action, but the White House will likely veto any legislation that delays Medicarereductions.
"All you have to do is look at what Bush did with SCHIP," he explained during a lectureyesterday. "He has no interest in saving you from this cut. You have to adjust your practice assumingthis will go through."
There are no easy ways to make up for a sudden drop in collections, Borglum continued, butthere are some effective steps that family physicians can - and should - take.
There are only two ways to increase the amount of revenue a practice owner or partner takeshome: increase overall revenues or decrease expenses.
Boosting revenue is limited only by legal restrictions and your own imagination, Borglumsaid. A popular step is to cut back on insurance plan acceptance or eliminate insurance plansaltogether and move to a cash practice.
Four or five plans account for 80% of patient care revenues in most practices, so it may makesense to retain them. That allows billing and coding staff to become expert in the practice's mostimportant revenue generators, submitting cleaner claims and boosting cash flow.
At the same time, the practice becomes an out-of-network provider for other plans. Patientspay cash and receive a form CMS 1500 at the time of payment to submit to their insurance carrier.Cash payments boost cash flow and eliminate thousands of dollars related to billing and collectingexpenses.
What happens to practices that take the next step and drop out of the insurance marketcompletely? They become more profitable, Borglum said.
Here's how it works: Patients pay full price, which eliminates the fee reductions mandated bymost third-party contracts. That's an immediate boost in revenue. At the same time, billing andcollection expenses fall because there are no insurance claims to code or to submit. The practiceboosts cash flow, increases revenue and cuts expenses.
Ancillary services are another solid source of new revenues. Ambulatory blood pressuremonitoring can add $5,000 in net annual revenues, Borglum noted.
Dispensing the most common prescription drugs to patients instead of sending them to a pharmacy cannet another $12,000 yearly. Adding echo/ultrasound imaging adds $15,000 to the bottom line. Othercommon services include CLIA-waived office tests; sleep studies and snoring reduction; pulseOX,spirometry, and PFT; and bone densitometry or DEXA scans.
Another avenue is specialty practice in areas such as dermatology, pain, psychiatry,bariatrics, menopause, or gynecology. Non-board certified practitioners in all of these areas arepaid at specialist rates, Borglum said. Non-boarded FPs can easily obtain the additional training toperform common specialty procedures. In areas such as gynecology, he noted, FPs already do nearlyeverything board-certified OB/Gyns do except surgery.
Non-standard practice models are another potential income source. In addition to cash-onlypractice, Borglum said physicians have moved to a retainer practice, where patients pay a monthly feeto be part of a limited patient panel, by-the-hour consultative services, home or hotel practice,executive physicals, travel medicine, even homeopathy.
"Income is being pinched between falling reimbursement and rising overhead," Borglum said."Doing nothing is not a viable option."