Rx for practice management

Fall 2014

Need help around the office?Reaping the benefits of nonphysician providers

Improving your revenues with proven business practices

It’s a new generationThe topsy-turvy ride of PPMCs

How to maximize your practice’s financial health

onphysician providers (NPPs) play a central role in the future of health care delivery in the United States. Medical

practices are finding that NPPs can extend the therapeutic reach of their physicians, with the added benefits of increased patient satisfaction and improved net profits.

Find the right fit

There are two primary categories of NPPs: physician assistants and nurse practitioners. Which category is best for your practice depends on which is licensed in your state and the range of activities that the NPP in question is licensed to perform.

An NPP may be able to function independently or work under a doctor’s supervision — again, depending on relevant state law. Typical services that an NPP of either type may provide include:

x Coordinating health education, patient counseling and patient care,

x Ordering and/or performing diagnostic and therapeutic procedures,

x Arranging patient referrals,

x Delivering on-call care,

x Performing physical exams,

x Taking patient histories, and

x Contributing to clinical decision making.

Discuss with your physicians which services they’d be willing to accept from an NPP. Desired degrees of collaboration may vary. Also, calculate the appropriate number of NPPs to meet the practice’s needs, and establish benchmarks to evaluate NPP performance.

Find the right candidates

The most direct way to find good NPP candidates is through job listings on the websites of local and national associations for physician assistants and nurse practitioners. (Check out aapa.org for the American Academy of Physician Assistants, and aanp.org for the American Association of Nurse Practitioners.)

Bear in mind that the two professions are always represented by separate associations. Another source of candidates may be local schools that train NPPs.

Introduce them to everyone

Once you’ve found and hired your NPPs, you’ll need to introduce them to two critical constitu-encies: physicians and patients. When introducing them to doctors, clarify how the NPPs will fill your practice’s gaps in care. Then define the roles for physicians and NPPs and document applicable

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Need help around the office?Reaping the benefits of nonphysician providers

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Private commercial payers have their own rules about reimbursing NPP services. They usually apply separate criteria for credentialing NPPs, sometimes not allowing them to bill directly.

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standing orders, protocols, collaborative agreements and supervision agreements. Last, send letters to patients explaining the hire of NPPs and the role they’ll play. Physicians should introduce the NPPs to their patients during their next visits.

Get ready for reimbursements

An NPP can bill Medicare for services in two ways:

1. “Incident to” a physician’s care, using the doctor’s National Provider Identifier (NPI), or

2. Directly after being credentialed by Medicare, using the NPP’s own NPI.

Under the first option, after an initial visit by a doctor, the NPP can provide services under the physician’s direct supervision or while the doctor is available in the office to give immediate assis-tance. To continue billing subsequent visits with the NPP as “incident to,” the physician must actively participate in and manage the patient’s treatment, with commensurate documentation in the patient’s medical record.

Unless all of an NPP’s services fall within the “incident to” definition, the NPP must use the second option — that is, to enroll in Medicare, obtain an NPI and bill directly. NPPs who bill directly receive lower reimbursements than when they bill “incident to.” It’s 85% of the full physi-cian fee schedule rate vs. 100%.

Prepare for commercial payers

Private commercial payers have their own rules about reimbursing NPP services. They usually apply separate criteria for credentialing NPPs, sometimes not allowing them to bill directly.

Plus, they typically reimburse NPPs at lower rates than for supervising physicians. Your practice must bill under the doctor’s NPI and follow the billing guidelines in the payer’s provider manual. And you may need to append certain modifiers to the bill to correctly identify the NPP and supervising physician providing the care together.

Failure to satisfy the billing requirements of either Medicare or a private payer can create serious

compliance problems for a practice. Regularly consult the websites of the Centers for Medicare and Medicaid Services and relevant private insurers to stay up to date on NPP billing rules.

Think about it

NPPs can bring substantial value to a practice, lightening doctors’ workloads and bringing in some fresh perspective. But integrating them into your operations and reimbursing them can be tricky. If you’re intrigued by the concept, discuss it with your practice’s leadership and business advisors. x

How to compensate NPPs

According to the MGMA Research & Analysis Report, NPP utilization in the future of US healthcare, in 2012 the median annual compensation for a primary care nurse practitioner was $94,062, and, for a surgical physician assistant, $112,689. Their physician counterparts earned $207,117 (family medicine physician) and $367,885 (general surgeon), respectively. As the demand for nonphysician providers (NPPs) has increased, their compensation has risen 10% to 17% between 2008 and 2012.

Practices have several payment meth-odologies. For instance, you might offer an annual salary based on the NPP’s specialty and prorated for part-time. Or you can choose an annual salary for full-time NPPs and hourly pay for part-time. But, perhaps the best option is one that incentivizes the NPP to work hard, such as a fixed-base salary plus bonuses for meeting or exceeding production goals.

here are many things that can affect a medical practice’s revenues. External factors, such as the economy

or changing demographics, can be beyond one’s control. But there are still ways that a practice can boost its revenues. It starts with proven business practices.

Money matters

Create a basic budget by simply checking the previous 12-month financial statement and setting goals for revenue and expenses. Make sure you include each line item and physician compensation in your budget.

Next, examine billing and collections. Ensure that outstanding receivables are less than 60 days old, based on date of service, not date of billing, and verify all insurance denials for legitimacy. Also audit all practice procedures to determine which CPT codes are used most often. Make sure you’re billing appropriately, using proper coding and charting, for your most commonly used CPT codes. Mistakes here can result in substantial revenue loss.

On the expense side, review loans and credit lines. Work with your financial advisor to

help you determine how you can best lower your interest rate or change your payout term.

Review all expenses, such as maintenance and service con-

tracts. Take a good look at your repair and maintenance costs for any

older computers, printers, copiers and phones. Buying new equipment might be a lot less costly in the long run. And, in some cases, you may be able to do without service contracts altogether.

Job duties

Is every person on your staff vital in achieving practice goals? Look at each position objectively and then ask yourself how the position is helping patients or controlling costs.

Also review the health insurance coverage you’re providing your employees. There are many ways to reduce insurance costs. Options include increasing deductibles, instituting a waiting period for new employees, covering only full-time employees and allocating an annual fixed-dollar contribution to employees for medical plans. However, be aware of your obligations under the Affordable Care Act for the provision and amount of coverage as you investigate these opportunities.

If you haven’t done so already, consider adding a Flexible Spending Account (FSA) or a Health Savings Account (HSA) to the benefits you’re currently offering. And if you provide life and disability insurance, review that as well. As you know, insurance costs will vary by carrier. That means you need to review your policies annually

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Improving your revenues with proven business practices

Marketing your practice starts with outlining the distinctive features of the medical treatment experience that a patient can expect if he or she chooses to visit your office.

hysician practice management companies (PPMCs) rose and fell during the 1990s. After acquiring dozens of medium-to-

large multispecialty and single-specialty physician practices, most of these organizations failed and declared bankruptcy.

The consensus is that the PPMC concept didn’t work because it was both premature and poorly executed. But now, a new generation of PPMCs has emerged with a stronger value proposition.

Striking a deal

The typical PPMC acquires all the tangible assets, other than real estate, owned by a physician prac-tice. It then employs all the personnel associated with the practice (other than the physicians and certain clinicians) who are needed to operate it, in exchange for a management fee that includes reimbursement of its costs. The amount of the fee

depends on the structure of the relationship, as well as the particular services provided.

The PPMC manages the day-to-day business operations of the practice, and physicians are solely responsible for the clinical aspects. Each doctor typically has an employment agreement with the practice that includes noncompetition and nonso-licitation provisions.

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It’s a new generationThe topsy-turvy ride of PPMCs

for necessity and cost. Make sure you put your entire insurance package out for bids every year.

Marketing efforts

Develop a marketing plan for new and existing patients. Earmark somewhere between 2% to 4% of your practice’s total revenue to marketing. How this is allocated will depend on your specific needs.

Marketing your practice starts with outlining the distinctive features of the medical treatment experience that a patient can expect if he or she chooses to visit your office. Next, you need to develop a message that succinctly summarizes that outline for current patients and prospects. Your marketing plan should ultimately help your prac-tice achieve its long-term goals, whether they’re

to increase revenues, expand its geographic service area, explore new market segments or undertake any other strategic objective.

Sometimes marketing can be as simple as a phone call. For example, in slow periods, ask your staff to call patients who haven’t been seen in the last 12 to 18 months to come in for wellness visits. Doing so may help you fill open slots in the schedule.

Diligence toward the process

Once you implement the steps noted above, be diligent at improving the steps of every process. And be sure to contact your CPA or health care business advisor. He or she can help you develop a sound plan to ensure your practice not only stays afloat, but sails ahead. x

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Filling the gap

PPMCs fill several gaps in the abilities of physician practices to thrive in a highly dynamic health care environment. They offer help with capital invest-ments, managing risk, payer contracting, acquiring new patients, improving administrative efficiency and other economies of scale. Here are just a few of the support services a practice can expect from a PPMC:

x Organizational growth, such as new office/clinic expansion and acquisition,

x Clinical functions, such as protocols and best-practice sharing,

x Systems, such as evaluation and selection of required IT and EMR systems,

x Reimbursement, such as negotiation of payer contracts and coding analysis,

x Private payers, such as customized marketing and referral network development,

x Operational processes, such as performance measurement and improvement,

x Employee benefits, such as incentive plans and payroll processing, and

x Accounting and legal, such as legal compliance support, as well as certifications, accreditations and licensures.

In addition, a PPMC can provide staffing support — such as workforce planning, recruitment, hiring, education and training.

Considering the features

If you’re thinking that it might make sense to sell your practice to a PPMC, there are certain features you should consider. Look beyond the savings from the services men-tioned above; they’ll likely be offset by charges assessed by the com-pany. Focus on the prospects for increased income from the time freed up from the practice manage-ment functions, the value realized through the sale of the tangible assets, and fewer aggravations.

PPMCs boost profitability through superior rev-enue generation schemes, local marketing, payer contracts, per-patient revenue optimization and specialized front-office systems. Ask whether all these activities will be updated regularly to account for changes in the health care ecosystem.

Aiming for commonality

The relationship between the acquired physicians and the PPMC should be one of partners with a common vision, rather than employer and employee. This can happen only through a business model that encourages physician engagement and aligns incen-tives between them and the company. The challenge here is to ensure that the physicians stay connected to the local practice while simultaneously supporting the overall interests of the larger entity.

Moreover, physician engagement will be enhanced through transparent governance and operating pro-tocols. Such protocols should include early warning signals of potential conflicts, such as methods for quickly resolving grievances.

Optimizing specificity

Keep in mind that the package of services that a PPMC offers must be optimized for your specific physician group and the market in which it com-petes. Applying standard policies and practices to all physician groups within a PPMC network, regardless of their location, will lead to dysfunc-tion and dissatisfaction. x

ew medical practices operate at their fullest potential, so their financial health suffers. Most practices fail to do so simply

because physicians and staff are overwhelmed by day-to-day tasks. But a more calculating approach to this challenge can make a difference.

Imagine your very best

Imagine your practice functioning at peak perfor-mance. Its work processes are systematic, streamlined and thorough. As a result, you see more patients while providing high-quality care. No-shows have been reduced to a bare minimum. Claims spend less time in accounts receivable, and a higher percent-age of total charges are paid. Thus, your practice generates more revenue with fewer hours of work. Plus, patient copays and deductibles are collected at the time of service, and you’re receiving additional income from Pay-for-performance (P4P), Physician Quality Reporting Initiative (PQRI), and Health Information Technology for Economic and Clinical Health (HITECH) incentives. Altogether, you understand the practice better and have more con-trol over its long-term success.

Step toward utopia

To reach this idealized state, reassess what you can do alone, what you could do better and what can be accomplished only with the help of a partner. That partner might be your CPA, a vendor or a physician practice management company. The point is to have necessary tasks performed by the person or organi-zation that’s best qualified for the work. Either alone or in collaboration with a partner, your practice can implement key finance-related initiatives, such as adopting measures to minimize billable time lost to patient no-shows. This includes matching appoint-ment capacity to patient demand to reduce backlog

and schedule “churn.” You can also grow your patient panel through referrals and direct market-ing. And scheduling appointment requests within a week can reduce the likelihood of no-shows. Your practice must establish patient eligibility in advance to maximize time spent during an appointment. For instance, contact ineligible patients ahead of time so they can check with their insurers about eligibility. Facilitate a smooth flow of information between the front desk and the billing office to help minimize denials, maximize point of service collections and avoid registration errors. And cross-train staff to per-form critical tasks during busy periods.

Master patient appointments

Inform patients before appointments of the payment amounts they owe and their payment options. Collect copays/deductibles (current and overdue) to avoid the cost, unreliability and delays associated with billing via mail. And, allow patients to make automatic monthly bill payments using their credit cards. Bill appointments immediately and follow up to ensure claims are received by the payer and subsequently paid. And be sure to review and appeal denials and underpays quickly. Follow up on uncollected self-pay balances to determine whether patients understand their obligations. Then review overall billing and collection performance monthly.

Be nimble

In today’s high-intensity health care environment, your practice must operate at its fullest perfor-mance to meet its revenue potential. Be sure to continuously track, benchmark and improve over-all performance while always looking for ways to re-engineer work processes to free up time for revenue-generating activities. Doing so can help your practice be more nimble and profitable. x

Practice notes

How to maximize your practice’s financial health

7This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use. ©2014 RXfa14

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