January is a tough time for independent medical practices for several reasons:
- In private practices, the physicians typically don’t carry over any cash from year to year, so the practice starts in January from a cash position of zero.
- Most deductibles begin in January – if practices don’t collect deductibles at time of service, they find themselves hurting because their revenue goes way down.
- The Medicare debacle every year creates improper (lower) reimbursement as Congress struggles to the last possible minute over physician payments. (Here’s a simple yet helpful exercise for Congress. Congress, close your eyes and think of your favorite Medicare-age person. Is it you, your wife, your mother, your father, your neighbor or best friend? Now think of that person not being able to see a doctor when they need to because all doctors have opted out of Medicare and the only place they can get care is the local Emergency Room. It is a very ugly picture. What other profession is MADE to accept payment that is less than it costs to provide? Who do you love, Congress, who won’t be able to get care?)
- Many annual maintenance contracts come due in January
- Deals on large purchases are good (think EMRs) as vendors try to book revenue in the current year. Practices tend to make commitments to purchases now that will have to be paid for in the new year
What’s a practice to do?
I haven’t written much about the impending 29% Medicare physician payment cut. This threatened cut has happened every year for the past 10 years. Every year at the last second, Washington is convinced that if cuts take place, physicians really will stop seeing Medicare patients and they halt the cut.
It’s not a bluff. Physicians can’t afford to see Medicare patients, TriCare (ex-military) patients and disabled patients with Medicare benefits now, and they will drop out by the tens of thousands if they get paid any less. Any businessperson worth their salt will tell you that when revenue does not exceed expenses, you do not have a sustainable business model. Physician have cut expenses to the bone, taken deep cuts in their salaries and ultimately have sold their practices when they just can’t make it anymore.
But never mind the doctor, what about the patients? What happens to them when physicians stop seeing Medicare patients? Texas Medical Association has made an outstanding video that explains it in language we can all understand.
Other organizations that are working to eliminate physician reimbursement being tied to the SGR are MGMA and the AMA.
As we finish off another month here at MMP, we wanted to go back over some of our most popular posts from the month and get ready for another busy, productive, and meaningful month. Presenting, The Best of Manage My Practice, October 2011!
- Are you ready for the holidays? How about the New Year? Even though it’s still a few months off, make sure you don’t see an interruption in your practice’s cashflow by getting ready for the January 1st 5010 deadline!
- CMS has released the Premiums and Deductibles for Medicare patients for 2012, so you can start informing staff and patients now. More importantly, will 2012 be the year that you get serious about collecting deductibles at the time of service?
- Mary Pat’s “Collection Basics”series about the fundamentals of Revenue Cycle Management in Physician offices is now at part three! Check out Patient Collections Basics: Developing a Financial Assistance Program.
- One of Healthcare’s most misunderstood and underutilized documents- the Medicare Advance Beneficiary Notice- is changing for 2012. Make sure you’re ready.
- And finally, the Office of the Inspector General (OIG) of he department of Health and Human services has released its 2012 Work Plan for areas it will concentrate on investigating. Better safe than sorry! Mary Pat goes over the highlights here.
We’ve started this monthly wrap-up to make sure you don’t miss any of the great stuff we post throughout the month on Manage My Practice, but we also want to hear from you! What were your favorite posts and discussions this month? Did we skip over your favorite from October? Let us know in the comments!
CMS just announced the new numbers for premiums and deductibles for 2012. Now is the ideal time to think about Medicare deductibles and what your policy is on collecting deductibles at time of service.
If you’ve been hesitant to collect deductibles, ask yourself if you can handle the loss or delay of payment of $140 per Medicare patient. Most practices can’t. If you are thinking about collecting deductibles and other front-end collection techniques, my book “The Smart Manager’s Guide to Collecting at Checkout” is your guide to making it happen for your healthcare group. Click here to read more.
MEDICARE PART B (covers a portion of the cost of physicians services, outpatient hospital services, certain home health services, durable medical equipment, and other items)
- In 2012, the Part B deductible will be $140, a decrease of $22 from 2011.
- The standard Medicare Part B monthly premium will be $99.90 in 2012, a $15.50 decrease over the 2011 premium of $115.40.
- The standard premium is set to cover one-fourth of the average cost of Part B services incurred by beneficiaries aged 65 and over, plus a contingency margin. The contingency margin is an amount to ensure that Part B has sufficient assets and income to (i) cover Part B expenditures during the year, (ii) cover incurred-but-unpaid claims costs at the end of the year, (iii) provide for possible variation between actual and projected costs, and (iv) amortize any surplus assets. Most of the remaining Part B costs are financed by Federal general revenues. (In 2012, about $2.9billion in Part B expenditures will be financed by the fees on manufacturers and importers of brand-name prescription drugs under the Affordable Care Act.)
- The largest factor affecting the contingency margin for 2012 is the current law formula for physician fees, which will result in a payment reduction of about 29percent in 2012. For each year from 2003 through 2011, Congress has acted to prevent smaller physician fee reductions from occurring. The 2012 reduction is almost certain to be overridden by legislation enacted after Part B financing has been set for 2012. In recognition of the strong possibility of increases in Part B expenditures that would result from similar legislation to override the decrease in physician fees in 2012, it is appropriate to maintain a significantly larger PartB contingency reserve than would otherwise be necessary. The asset level projected for the end of 2012 is adequate to accommodate this contingenIn 2012, Social Security monthly payments to enrollees will increase by 3.6 percent. The dollar increase in benefit checks is expected to be large enough on average to cover the increase in the Part B premium of $3.50 that most beneficiaries will experience. For those who were paying the standard premium of $115.40, their benefits checks will only increase.
Here are some highlights from the new OIG Work Plan for FY 2012. There are more items that apply to practices, as well as items for hospitals, nursing facilities, home health, and medical equipment and supplies. The link to the complete plan is at the end of the article.
Compliance With Assignment Rules
If you accept assignment with Medicare (i.e. you accept what Medicare allows as payment for a service), the OIG wants to know if you are adhering to the allowable and not collecting more than the patient’s deductible and co-insurance.
Physicians-Owned Distributors of Spinal Implants (New)
Do physician-owned distributors (PODs) of spinal implants have a conflict of interest when they sell implants to hospitals? The OIG will investigate.
Place-of-Service Errors
Because there is a payment differential between a service provided in a hospital outpatient department or ASC and the same service provided in the physician’s office, the OIG wants to know if you provided the service where you claimed you did.
Physicians: Incident-To-Services (New)
Incident-to services are reported on the honor system – the claim does not reflect that a mid-level provider performed the service under the supervision of a physician. The OIG will dig under the claims to see if practices really understand and follow the incident-to rules.
Just in case you haven’t had a chance (what have you been doing?) to focus on the January 1, 2012 deadline for the transition to 5010, take 5 minutes to read this post and make sure your healthcare group is on track. It is critical to have NO interruption in cash flow in January – a time when cash flow is already lower due to the new deductibles in play for many plans including Medicare.
The American Medical Association (AMA), in its “5010 Implementation Steps: Getting the Work Done in Time for the Deadline” recommends the following to protect your cash in January:
- Submit as many transactions as possible before Jan. 1, 2012.
- Decrease expenses before Jan. 1, 2012, to increase cash reserves.
- Consider establishing a line of credit with a financial institution.
- Research payers’ advance payment policies.
- Consider using manual or paper processes to complete transactions until the electronic transactions are fixed.
Note that HIPAA standards, including the ASC X12 Version 5010 and Version D.0 standards are national standards and apply to your transactions with all payers, not just with FFS Medicare. Therefore, you must be prepared to implement these transactions for your non-FFS Medicare business.
Beginning January 1, 2012 all electronic claims, eligibility and claim status inquiries must use Version 5010 or D.O.
A write-off is an amount that a practice deducts from a charge and does not expect to collect, thereby “writing it off” the accounts receivable or list of monies owed them by payers or patients.
There are lots of reasons why write-offs are taken, and it is common practice to divide write-offs into two major categories.
Necessary or Approved Write-offs
These are write-offs that you have agreed to, either in the context of a contract, or in terms of your practice philosophy.
Contractual write-offs are the difference between the practice fee schedule and the allowable fee schedule you’ve agreed to accept.
Charity write-offs are the difference between the practice fee schedule and anything collected. Charity write-offs may be in accordance with a community indigent care effort, a policy adhered to in a faith-led healthcare system, or a financial assistance program.
Small balance write-offs are amounts left on the patient’s account that may not warrant the cost of sending a bill, which has been estimated to cost about $12.00 each, taking into account the statement process, as well as the cost to receive the check, post it, and deposit it. Many practices write off the small balance (usually $15 or less) and collect it when the patient returns. Others run a special small balance statement run once a quarter.
Today the Centers for Medicare and Medicaid Services (CMS) released the new pricing for flu shots for Medicare patients for the 2011-2012 flu season. The Medicare Part B payment allowance limits for seasonal influenza and pneumococcal vaccines are 95% of the Average Wholesale Price (AWP) as reflected in the published compendia except where the vaccine is furnished in a hospital outpatient department. When the vaccine is furnished in the hospital outpatient department, payment for the vaccine is based on reasonable cost.
What do Medicare patients have to pay for the flu shot?
Annual Part B deductible and coinsurance amounts do not apply for the influenza virus and the pneumococcal vaccinations. All physicians, non-physician practitioners, and suppliers who administer these vaccinations must take assignment on the claim for the vaccine. Do not collect from Medicare patients for the vaccine or the administration of a flu shot.
What will Medicare pay for the flu shot?
The payment allowances below reflect the annually updated payment allowance for the listed CPT codes and Q-codes when the vaccines are furnished outside the hospital outpatient department.
UPDATE: The submission period for applying for a 2012 hardship exemption for failing to e-prescribe in 2011 is over.
CMS has just announced the process for applying for a hardship exemption from the 2012 1% Medicare payment adjustment (i.e. reduction.)
If you are participating as an individual Eligible Professional…
…use the new CMS provider webpage, called the Quality Reporting Communication Support Page, to enter the request and supporting rationale. Your request must be submitted by November 1, 2011. A Quality Communications Support Page User Manualis available to answer questions eligible professionals may have.
If you are participating using the Group Practice Reporting Option (GPRO)…
…Group practices selected for and participating in the 2011 GPRO I or II reporting option wishing to submit a 2012 exemption request should submit a letter to: Significant Hardship Exemptions, Centers for Medicare & Medicaid Services, Office of Clinical Standards and Quality, Quality Measurement and Health Assessment Group, 7500 Security Boulevard, Mail Stop S3-02-01, Baltimore, MD 21244-1850. This letter must be postmarked no later than November 1, 2011.
To help eligible professionals and group practices understand the key provisions and impact of the 2011 Medicare Electronic Prescribing (eRx) Incentive Program Final Rule, A Quick Reference Guide has been posted to the eRx Incentive Program website on the Educational Resources page. Frequently asked questions (FAQs) addressing the 2011 eRx Final Rule, as well as other information and resources about the eRx Incentive Program can be found at the eRx Incentive Program website here.
Last week the U.S. Department of Health and Human Services (HHS) announced a new initiative to help improve care for patients while they are in the hospital and after they are discharged. Doctors, hospitals, and other health care providers can now apply to participate in a new program known as the Bundled Payments for Care Improvement initiative (Bundled Payments initiative). Made possible by the Affordable Care Act, it will align payments for services delivered across an episode of care, such as heart bypass or hip replacement, rather than paying for services separately. Bundled payments will give doctors and hospitals new incentives to coordinate care, improve the quality of care and save money for Medicare.
“Patients don’t get care from just one person – it takes a team, and this initiative will help ensure the team is working together,” said HHS Secretary Kathleen Sebelius. “The Bundled Payments initiative will encourage doctors, nurses and specialists to coordinate care. It is a key part of our efforts to give patients better health, better care, and lower costs.
Payment bundling is the future
In Medicare currently, hospitals, physicians and other clinicians who provide care for beneficiaries bill and are paid separately for their services. This Centers for Medicare & Medicaid Services (CMS) initiative will bundle care for a package of services patients receive to treat a specific medical condition during a single hospital stay and/or recovery from that stay this is known as an episode of care. By bundling payment across providers for multiple services, providers will have a greater incentive to coordinate and ensure continuity of care across settings, resulting in better care for patients. Better coordinated care can reduce unnecessary duplication of services, reduce preventable medical errors, help patients heal without harm, and lower costs.
The Bundled Payments initiative is being launched by the new Center for Medicare and Medicaid Innovation (Innovation Center), which was created by the Affordable Care Act to carry out the critical task of finding new and better ways to provide and pay for health care to a growing population of Medicare and Medicaid beneficiaries.
Four bundled payment models
Released today, the Innovation Centers Request for Applications (RFA) outlines four broad approaches to bundled payments. Providers will have flexibility to determine which episodes of care and which services will be bundled together. By giving providers the flexibility to determine which model of bundled payments works best for them, it will be easier for providers of different sizes and readiness to participate in this initiative.
