According to recent data from the Centers for Medicare & Medicaid Services (CMS) the breakdown of who receives the $2.3 trillion of the healthcare spending in the US. looks something like this:
Hospitals $718 billion
Physician & Clinical services $496 billion
Prescription drugs $234 billion
Administrative costs $159 billion
Nursing homes $138 billion
Structure & equipment $113 billion
Dental $101 billion
Government public health $69 billion
Other personal health $68 billion
Other professional $65 billion
Home health $64 billion
Research $43 billion
OTC's and related products $39 billion
Durable medical equipment $26 billion
Saturday, August 28, 2010
Saturday, August 21, 2010
Physicians starting a new practice; what needs to be done?
I get a lot of calls from physicians about to enter their own private practice and unsure of all the items that need to be attended to. Here's an article I wrote with a shortlist of the major items, while not comprehensive it at least gives a good starting point.
Establishing a new practice is a lot of work and many details must be dealt with in order for things to go as smoothly as possible – even then, you must allow for “hiccups” in the process. As you begin this endeavor, identify those resources and individuals who can help steer you through all the pitfalls involved in a practice start-up. Key professionals to include are your attorney, accountant, banker and a practice management consultant. You may also need to hire an administrative assistant as early as possible to help you with the blizzard of paperwork involved in setting up a practice - unless you are working with a top notch practice management company, in which case they will typically take care of much of the paperwork on your behalf.
The main things to focus on are:
• Finding a location
• Determining what kind of a legal entity you want your practice to be
• Developing a banking relationship
• Determining which managed care panels are a priority
• Collecting your paperwork in order to begin the credentialing process
• Developing and implementing your billing/collection mechanism
I've found you can just as easily use on-line resources such as nolo.com or legalzoom.com to set up your corporation, however, many physicians prefer using professionals to assist. If you prefer, your attorney and accountant can help complete all the required legal and tax-related paperwork necessary to set up your business, including obtaining an employer identification number (EIN) as its a bad idea to have everything tied to your SSN.
Establishing a line of credit with your banker is a good idea, even if you believe you have enough start-up capital; remember it can be 60 – 90 days, and often longer, after the initial patient visit before insurance checks or electronic payments start coming in, assuming you begin submitting claims right from the start.
As early as possible you must determine which managed care panels you want to apply for and begin the application process, begin with Medicare and continue with the rest. On average, it takes three to four months to go through the credentialing process. It doesn’t matter if you are already credentialed with these plans as you still have to go through the entire process again using your new employer identification number. It’s also a good idea to confirm your admitting privileges at any area hospitals to ensure that they will continue once you start your own practice, especially as you may need this information for credentialing with provider plans.
Once these steps have been dealt with, you have to decide what equipment and furniture you need, you’ll also have to obtain a telephone long distance carrier, pager, cell phone service and or answering service. If you intend accepting credit card payments, you will have to find the appropriate vendors.
The next order of business is to determine how you will bill insurance companies and patients. Your options are to either use your own staff or to use an outside billing service. In-house billing would require purchasing, or leasing, a computer system and practice management software as well as hiring experienced, competent billing and collection staff who also understand CPT coding. Using an outside billing company can cut down some of the in-house headaches of the billing/collection process, especially if it all new to you.
Your decision here is critical to the financial well being of your practice and should be based on several considerations, including the availability of cash to purchase or lease the necessary hardware and software, staff expertise and office space etc. Regardless of your decision, your primary goal is to have a system in place when you see your first patient.
Next, establish accounting and payroll systems, your accountant can help here. You will also need to purchase appropriate professional and office insurance, set up a medical records system, obtain office and medical supplies, develop an office manual and establish OSHA standards.
Staffing is next on the list, first identify the functions that must be accomplished in your practice and develop written job descriptions. Next, determine the qualifications and experience of the people who would be performing the jobs. There is a wealth of information regarding staffing ratios and salary ranges etc available on the internet and via local and national organizations.
Now that you have completed all these steps you have to publicize the opening of your new practice. At a minimum, letters and announcements should be sent to your colleagues, referral sources, patients, family and friends. Other activities should include advertising the practice’s opening in local and internet media as well as developing a web site. These are just some initial ways to get word out about your practice, marketing is an on-going activity and will be dependant on your budget.
Starting a new practice is an exciting albeit cumbersome task. You should allow yourself at least six to nine months to make sure everything gets attended to. The professionals you select to work with you have the resources available to help remove many of the headaches from the process. Good luck!
Establishing a new practice is a lot of work and many details must be dealt with in order for things to go as smoothly as possible – even then, you must allow for “hiccups” in the process. As you begin this endeavor, identify those resources and individuals who can help steer you through all the pitfalls involved in a practice start-up. Key professionals to include are your attorney, accountant, banker and a practice management consultant. You may also need to hire an administrative assistant as early as possible to help you with the blizzard of paperwork involved in setting up a practice - unless you are working with a top notch practice management company, in which case they will typically take care of much of the paperwork on your behalf.
The main things to focus on are:
• Finding a location
• Determining what kind of a legal entity you want your practice to be
• Developing a banking relationship
• Determining which managed care panels are a priority
• Collecting your paperwork in order to begin the credentialing process
• Developing and implementing your billing/collection mechanism
I've found you can just as easily use on-line resources such as nolo.com or legalzoom.com to set up your corporation, however, many physicians prefer using professionals to assist. If you prefer, your attorney and accountant can help complete all the required legal and tax-related paperwork necessary to set up your business, including obtaining an employer identification number (EIN) as its a bad idea to have everything tied to your SSN.
Establishing a line of credit with your banker is a good idea, even if you believe you have enough start-up capital; remember it can be 60 – 90 days, and often longer, after the initial patient visit before insurance checks or electronic payments start coming in, assuming you begin submitting claims right from the start.
As early as possible you must determine which managed care panels you want to apply for and begin the application process, begin with Medicare and continue with the rest. On average, it takes three to four months to go through the credentialing process. It doesn’t matter if you are already credentialed with these plans as you still have to go through the entire process again using your new employer identification number. It’s also a good idea to confirm your admitting privileges at any area hospitals to ensure that they will continue once you start your own practice, especially as you may need this information for credentialing with provider plans.
Once these steps have been dealt with, you have to decide what equipment and furniture you need, you’ll also have to obtain a telephone long distance carrier, pager, cell phone service and or answering service. If you intend accepting credit card payments, you will have to find the appropriate vendors.
The next order of business is to determine how you will bill insurance companies and patients. Your options are to either use your own staff or to use an outside billing service. In-house billing would require purchasing, or leasing, a computer system and practice management software as well as hiring experienced, competent billing and collection staff who also understand CPT coding. Using an outside billing company can cut down some of the in-house headaches of the billing/collection process, especially if it all new to you.
Your decision here is critical to the financial well being of your practice and should be based on several considerations, including the availability of cash to purchase or lease the necessary hardware and software, staff expertise and office space etc. Regardless of your decision, your primary goal is to have a system in place when you see your first patient.
Next, establish accounting and payroll systems, your accountant can help here. You will also need to purchase appropriate professional and office insurance, set up a medical records system, obtain office and medical supplies, develop an office manual and establish OSHA standards.
Staffing is next on the list, first identify the functions that must be accomplished in your practice and develop written job descriptions. Next, determine the qualifications and experience of the people who would be performing the jobs. There is a wealth of information regarding staffing ratios and salary ranges etc available on the internet and via local and national organizations.
Now that you have completed all these steps you have to publicize the opening of your new practice. At a minimum, letters and announcements should be sent to your colleagues, referral sources, patients, family and friends. Other activities should include advertising the practice’s opening in local and internet media as well as developing a web site. These are just some initial ways to get word out about your practice, marketing is an on-going activity and will be dependant on your budget.
Starting a new practice is an exciting albeit cumbersome task. You should allow yourself at least six to nine months to make sure everything gets attended to. The professionals you select to work with you have the resources available to help remove many of the headaches from the process. Good luck!
Wednesday, August 18, 2010
Providors continue getting squeezed...
I read an excellent article on ORTHOPRENEUR : Guest Editorial Knowsumerism, Healthcare Reform and Chicken Farming: Five Lessons to Help You Thrive. There is a link to the full article at the end of this intro, well worth reading...
Author: Marshall Steele, M.D
When I sailed my boat from Boston to Annapolis, I had some time to think. Healthcare has changed rapidly during my orthopaedic career. After I completed my military service in 1977, I started a solo orthopaedic practice in Annapolis, Maryland. Arthroscopy was in its infancy and total knees had not been perfected. Sports medicine as an entity did not exist. Neither did MRIs. Total hips stayed in the hospital 14 days and I received $5,000 for the surgery. I looked forward to ER call, as 40 to 50 percent of my income came from the emergency room. Healthcare spending as part of GNP was under ten percent.
When I retired a few years ago to establish a company that develops orthopaedic Destination Centers throughout the U.S., the practice had grown to over 20 providers and 14 orthopaedic surgeons. We were highly specialized and, like Noah’s Ark, had at least two of everything. We owned MRI scanners, PT and orthotics. Outpatient surgical centers were everywhere. Total hips stayed three days or fewer, and I received $1,280 for the surgery. No one wanted to take ER call, including me. Healthcare as a percentage of GNP had climbed to 16 percent.
That’s quite a bit of change, but as songwriter Randy Bachman wrote, “You ain’t seen nothing yet.”
Why?
Read the rest of the article at this link: https://www.orthoworld.com/site/docs/op/online/2010/julaug/editorial_steele.pdf
Author: Marshall Steele, M.D
When I sailed my boat from Boston to Annapolis, I had some time to think. Healthcare has changed rapidly during my orthopaedic career. After I completed my military service in 1977, I started a solo orthopaedic practice in Annapolis, Maryland. Arthroscopy was in its infancy and total knees had not been perfected. Sports medicine as an entity did not exist. Neither did MRIs. Total hips stayed in the hospital 14 days and I received $5,000 for the surgery. I looked forward to ER call, as 40 to 50 percent of my income came from the emergency room. Healthcare spending as part of GNP was under ten percent.
When I retired a few years ago to establish a company that develops orthopaedic Destination Centers throughout the U.S., the practice had grown to over 20 providers and 14 orthopaedic surgeons. We were highly specialized and, like Noah’s Ark, had at least two of everything. We owned MRI scanners, PT and orthotics. Outpatient surgical centers were everywhere. Total hips stayed three days or fewer, and I received $1,280 for the surgery. No one wanted to take ER call, including me. Healthcare as a percentage of GNP had climbed to 16 percent.
That’s quite a bit of change, but as songwriter Randy Bachman wrote, “You ain’t seen nothing yet.”
Why?
Read the rest of the article at this link: https://www.orthoworld.com/site/docs/op/online/2010/julaug/editorial_steele.pdf
Wednesday, August 11, 2010
Recovery audits becoming big business for auditors and bad for physicians
Have you heard the news? CMS has started to expand its recovery program to include Medicaid as well as seeking out overpayments in Medicare private plans and the program's drug benefit. CMS wants this to happen by the end of the year.
Why the aggressive push? Simple, RAC auditors have identified around $1 billion (yes, that’s billion with a b” in Medicare overpayments over a three year period from the original pilot program launched in California, New York & Florida.
Sounds great that the government is working hard to recoup hard earned dollars that were wrongfully spent, and putting them to better use within our healthcare system. However, if we dig a little deeper what do we find? For starters, auditors are paid based on the dollar amount of improper payments they find which makes these contractors suspect given the self-serving nature of this set up.
More importantly, it is incredibly burdensome for physicians to comply with the audits even when the reviews turn up little or no evidence of Medicare overpayments. There are a number of credible reports from physicians who were audited during the pilot project where it appeared that the auditors were simply on fishing expeditions to find overpayments, and demanding numerous medical records from years gone by.
While no-one doubts there is fraud and abuse in Medicare does adding such burdensome regulations to physicians who are already the most regulated of all businesses really accomplish anything?
Given that these contractors are being paid handsomely and that they are highly incentivized to dig as deep as they can to see what they can find, who is really benefiting here? CMS or these outside independent auditing companies?
Why the aggressive push? Simple, RAC auditors have identified around $1 billion (yes, that’s billion with a b” in Medicare overpayments over a three year period from the original pilot program launched in California, New York & Florida.
Sounds great that the government is working hard to recoup hard earned dollars that were wrongfully spent, and putting them to better use within our healthcare system. However, if we dig a little deeper what do we find? For starters, auditors are paid based on the dollar amount of improper payments they find which makes these contractors suspect given the self-serving nature of this set up.
More importantly, it is incredibly burdensome for physicians to comply with the audits even when the reviews turn up little or no evidence of Medicare overpayments. There are a number of credible reports from physicians who were audited during the pilot project where it appeared that the auditors were simply on fishing expeditions to find overpayments, and demanding numerous medical records from years gone by.
While no-one doubts there is fraud and abuse in Medicare does adding such burdensome regulations to physicians who are already the most regulated of all businesses really accomplish anything?
Given that these contractors are being paid handsomely and that they are highly incentivized to dig as deep as they can to see what they can find, who is really benefiting here? CMS or these outside independent auditing companies?
Tuesday, August 10, 2010
Is web based medical software a good idea?
Knowing that I co-founded Kareo, a web based medical software company, and that I’m an avid user of QuickBooks On-line as well as Salesforce (also web based programs) a friend recently asked my opinion about using such a service for his medical practice, I gave him all the usual reasons why he should but then asked why he should not sign up for such services. Wow, what a great question! Read on for what I told him to think through.
What exactly is web based software or Software as a service (Saas) also known as software-on-demand. As the name suggests, it is software deployed over the internet to run behind a firewall on a local area network or personal computer. With this type of service the software is typically licensed through a monthly subscription or a "pay-as-you-go" model.
In Kareo’s case, the technology provides an Internet-based medical billing and practice management software service for medical doctors. As a hosted software service, Kareo stores all customer data on central servers accessed over the Internet by end users who have installed a desktop application to their home or office computer.
In many respects it is an ideal way to deliver software and services to consumers. So, what did I tell him to think through before signing up?
1) Keep in mind that the program is hosted somewhere other than where you are, you could be in Alaska the data residing in Florida, with you accessing everything through the web. You are used to buying software and owning it so you need to be comfortable with the difference.
2) You will need decent “always on” internet access from wherever you connect from so you can access all your data and the program functions via the web.
3) You have to be able to rely on your web connection 100% of the time. What are you going to do when you have a waiting room full of patients but your internet connection just went down? That’s not as far fetched as you might think. Have you had trouble checking your email in the last year? Enough said
4) Are you sure your data is really yours? Sure, the hosting company says you own it in the contract, but if you ever have to leave the service, how much will they charge to give you your data? In almost all instances they may be able to give you the demographics but it will be virtually impossible to get the financial data in a usable format that could be imported into another software system.
5) Most importantly, what happens if you have a dispute with your vendor/hosting company and they shut off service one day or they simply go out of business? How do you see patients? How do you get your data? How do you rebuild all your files, including years of financial transactions?
I will post an update when I find out what he ends up doing…
What exactly is web based software or Software as a service (Saas) also known as software-on-demand. As the name suggests, it is software deployed over the internet to run behind a firewall on a local area network or personal computer. With this type of service the software is typically licensed through a monthly subscription or a "pay-as-you-go" model.
In Kareo’s case, the technology provides an Internet-based medical billing and practice management software service for medical doctors. As a hosted software service, Kareo stores all customer data on central servers accessed over the Internet by end users who have installed a desktop application to their home or office computer.
In many respects it is an ideal way to deliver software and services to consumers. So, what did I tell him to think through before signing up?
1) Keep in mind that the program is hosted somewhere other than where you are, you could be in Alaska the data residing in Florida, with you accessing everything through the web. You are used to buying software and owning it so you need to be comfortable with the difference.
2) You will need decent “always on” internet access from wherever you connect from so you can access all your data and the program functions via the web.
3) You have to be able to rely on your web connection 100% of the time. What are you going to do when you have a waiting room full of patients but your internet connection just went down? That’s not as far fetched as you might think. Have you had trouble checking your email in the last year? Enough said
4) Are you sure your data is really yours? Sure, the hosting company says you own it in the contract, but if you ever have to leave the service, how much will they charge to give you your data? In almost all instances they may be able to give you the demographics but it will be virtually impossible to get the financial data in a usable format that could be imported into another software system.
5) Most importantly, what happens if you have a dispute with your vendor/hosting company and they shut off service one day or they simply go out of business? How do you see patients? How do you get your data? How do you rebuild all your files, including years of financial transactions?
I will post an update when I find out what he ends up doing…
Monday, August 9, 2010
Why practices lose money
Having worked with over 1,000 hospitals, clinics and physicians in private practice across all specialties and all states, what I've found is that most lost revenue can be traced to a handful of controllable factors.
Quantifying this information, demonstrates that each of these factors can add 2% to 8% in revenue. In other words, if all of these were issues in a practice, and were corrected, it would result in an eye popping 38% increase in revenue.
While it would be highly unusual to see all of these problems in a practice simultaneously, in my experience it is common for a practice to have at least 3 or 4 at any given time so it is quite realistic for a practice to expect to see revenue increased by 12% - 25% if the following items were closely controlled:
1) Inability to recruit and retain qualified medical billing and collections staff.
Hiring unqualified people, relying on questionable staff, inadequate reporting and access to information, insufficient training and oversight leading to staff turn-over.
2) Picking the wrong software or using a subscription service rather than purchasing the program outright
I've seen a number of physicians make the mistake of choosing software that isn't up to the job or using the wrong type of program or service. Even though I co-founded a medical billing software that is based on monthly subscription service (Kareo Inc) these types of services are not right for everyone. When it comes to software, there is no "one size fits all" so do your diligence and choose wisely
3) Improper Contract Set-up and Management.
Setting physician fee schedule and charge master incorrectly without current codes and optimal pricing. Making the mistake of not regularly reviewing contracts or past negotiations
4) Unverified Eligibility.
This is the area where I've probably seen the most issues; scheduling, registration, verification and eligibility issues often lead to lost physician time, inaccurate information and denied or missed claims.
5) Not Conducting Coding Reviews.
Over coding leaves a practice susceptible to fraud risks, while under coding could lead to compliance issues, missing modifiers and incorrect or sub optimal CPT/ICD usage resulting in significant lost revenue
6) Misdirected/Lost Claims.
No pro-active or consistent follow-up process for re-filing charges for the 2 to 3% of claims which are submitted but never received or subsequently lost by insurers.
7) Denial Management/Reporting
No aggressive follow-up system with denial reporting or trending for re-filing and training internal staff to reduce denials by developing/implementing clean claims programs.
8) Secondary Insurance.
Not billing and/or following aggressively on secondaries. Staff under trained or overwhelmed and unable to manage this properly leaving revenue uncollected
9) Unsent Patient Statements.
Not having front office payment collection policies and non-paying patient procedures
with unsent/not followed patient statements becoming an increasingly large percentage of uncollected debt.
Quantifying this information, demonstrates that each of these factors can add 2% to 8% in revenue. In other words, if all of these were issues in a practice, and were corrected, it would result in an eye popping 38% increase in revenue.
While it would be highly unusual to see all of these problems in a practice simultaneously, in my experience it is common for a practice to have at least 3 or 4 at any given time so it is quite realistic for a practice to expect to see revenue increased by 12% - 25% if the following items were closely controlled:
1) Inability to recruit and retain qualified medical billing and collections staff.
Hiring unqualified people, relying on questionable staff, inadequate reporting and access to information, insufficient training and oversight leading to staff turn-over.
2) Picking the wrong software or using a subscription service rather than purchasing the program outright
I've seen a number of physicians make the mistake of choosing software that isn't up to the job or using the wrong type of program or service. Even though I co-founded a medical billing software that is based on monthly subscription service (Kareo Inc) these types of services are not right for everyone. When it comes to software, there is no "one size fits all" so do your diligence and choose wisely
3) Improper Contract Set-up and Management.
Setting physician fee schedule and charge master incorrectly without current codes and optimal pricing. Making the mistake of not regularly reviewing contracts or past negotiations
4) Unverified Eligibility.
This is the area where I've probably seen the most issues; scheduling, registration, verification and eligibility issues often lead to lost physician time, inaccurate information and denied or missed claims.
5) Not Conducting Coding Reviews.
Over coding leaves a practice susceptible to fraud risks, while under coding could lead to compliance issues, missing modifiers and incorrect or sub optimal CPT/ICD usage resulting in significant lost revenue
6) Misdirected/Lost Claims.
No pro-active or consistent follow-up process for re-filing charges for the 2 to 3% of claims which are submitted but never received or subsequently lost by insurers.
7) Denial Management/Reporting
No aggressive follow-up system with denial reporting or trending for re-filing and training internal staff to reduce denials by developing/implementing clean claims programs.
8) Secondary Insurance.
Not billing and/or following aggressively on secondaries. Staff under trained or overwhelmed and unable to manage this properly leaving revenue uncollected
9) Unsent Patient Statements.
Not having front office payment collection policies and non-paying patient procedures
with unsent/not followed patient statements becoming an increasingly large percentage of uncollected debt.
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