Physiatry Practice Management Resources

Preferred Provider Organizations (PPOs) are frequently among the best payors. However, physician practices must be vigilant to assure that only patients entitled to a discount are receiving the negotiated fee. Otherwise, your practice will be extending a discount to individuals and payors who should be paying your billed charges in full.

Assume the following scenario: An individual insured by a small regional insurance company in Montana is visiting Pennsylvania and becomes ill. He calls your practice because he saw your ad in the Yellow Pages. Your scheduling person "squeezes him in," and he is treated by you.

Since your practice does not have an agreement with the patient’s insurance company, you should receive your total billed charge. (The insurance company would generally pay an amount it determines to be the usual, customary and reasonable fee, and the patient is liable for the balance of your charges.) Many practices will not require any payment from the patient at the time of the encounter (other than co-payments noted on the insurance card), but will wait for the payment from the insurance company, and then "balance bill" the patient for the difference between the billed charges and the amount paid by the insurance company.

Instead, your practice receives an explanation of benefits for that patient claiming a discount based on the PPO fee schedule of MegaHealth (a PPO your practice has contracted with). Since you have contractually agreed not to bill MegaHealth enrollees for amounts in excess of the negotiated fee, this discounted fee is all you get.

Here is what happened. The Montana insurance company, when it received the bill from your practice, began shopping for a discount. MegaHealth provided its list of preferred providers, and they saw they had a match with your practice. The Montana insurance company sent the claim to MegaHealth for "repricing" (insurance talk for applying the MegaHealth discount to your claim). MegaHealth sent your practice an explanation of benefits on the usual MegaHealth forms, with payment at the MegaHealth discounted rate. MegaHealth billed the insurance company for the discounted fee paid to your practice, plus an extra fee. The extra fee is often based on a percentage of the savings to the insurance company, based on the MegaHealth discount as opposed to your billed charges. Your practice was just victimized by a "silent PPO."

There are several ways a practice can protect itself from silent PPOs. One of the most obvious ways is to heed the old saying that if something appears to be too good to be true, it probably is. Insurance is a very competitive industry, and most employers base their purchasing decision predominately on price. To keep prices competitive, networks and insurers use their purchasing power to reduce fees to physicians and other providers of health care. If a network offers fees significantly above those of other payors in the area, you must be especially vigilant. How can they compete if they are paying you so much more than other networks or insurers? One possible (perhaps probable) answer is that they are not competing at all. Their business plan is simply to reduce the fees otherwise paid by insurers to your practice, and to take a profit from selling the discount they have obtained from your practice through the preferred provider agreement.

You should have competent legal counsel review each managed care agreement. In this regard, the definition of "Payor" in the PPO participating provider agreement is critical. Many plans define a "Payor" as "an individual, organization, firm or governmental entity, or self-insured account that has executed an agreement with MegaHealth." This definition would allow MegaHealth to "rent" its network in the manner set forth above. In other words, the contractual language quoted would give MegaHealth the authorization needed from your practice to run a "silent PPO." Presumably, you granted MegaHealth a discounted fee in return for inclusion in a provider directory, which "steers" patients to you. Of course, in the scenario discussed above, it was your Yellow Page ad that drove the patient into the office.

To address this issue, the definition of "Payor" should very clearly provide that the term relates solely to MegaHealth, affiliated entities in the insurance company holding group, and self-funded employee benefit plans that use MegaHealth as an administrator. It would be helpful if the definition of "Payor" specifically provided that the discounts being negotiated will not be accessible to any party other than those described above. Even better, some health plans are willing to provide a list of self-funded employers which have access to these discounts. It would be prudent to assure that such a list is given, and to check the list regularly against explanations of benefits received, to assure that the discounts negotiated with MegaHealth are not being "rented" to other parties.

In addition, the participating provider agreement should provide that the MegaHealth discount is only available to enrollees who present an insurance card with the MegaHealth logo on the card. If your practice copies the patient’s insurance card at the initial encounter (especially when the patient is a new patient) and compares the card to the explanation of benefits received, a silent PPO can be detected relatively quickly. If the MegaHealth logo was not on the insurance card, then no MegaHealth discount should be allowed. This precaution will help your practice administrator focus quickly on which preferred provider agreements to focus on first.

In many areas of Pennsylvania, physician practices are being pushed to the limit with escalating costs and declining reimbursements. Make sure that your practice only provides a discount to payors that are entitled to the discount.

Dennis Hursh, Esq
Dennis Hursh, Esq., is a principal in Hursh & Hursh, P.C., a Middletown, Pennsylvania law firm concentrating on representation of physicians and physician group practice
Source: Physician's News Digest

In my work as a health care attorney, I have reviewed and drafted hundreds of physician employment contracts. Here are some of the key "lessons learned" over the years.

Termination. Every contract runs for its full length (term), such as one or two or three years, including renewals, unless it is terminated according to the contract’s terms. Therefore, it is critical to include termination provisions. Without a proper ability to terminate the contract during the term, the physician practice will be "on the hook" for all salary payments that are to be made during the term, if the physician must be terminated during the term.

Generally, there are two ways to terminate a contract: with cause, and without cause. "Cause" is often a defined term. "Cause" generally means loss or suspension of license, loss or suspension of hospital privileges, loss of malpractice insurance, abuse of drugs or alcohol, conviction of a felony, or theft or other dishonesty. Generally, these events allow for immediate termination, thereby removing the "bad" physician from the practice, and terminating the practice’s responsibility to provide continuing salary. However, these cause provisions are not complete without a catch-all "material breach" clause. This will enable the practice to terminate for other unspecified material breach of the contract, such as the associate’s failure to perform duties, turn over fees to the corporation, and abide by its policies. Oftentimes there is a period for "cure" by the associate. This essentially means that the physician must be given notice of the material breach, and an opportunity to fix the problem to the reasonable satisfaction of the employer.

The attorney representing the medical practice should be careful not to permit a cure proviso to apply to some of the more serious "bad acts" such as loss of license or privileges, since these acts are really not capable of cure (they cannot really be fixed). Thus, while it is possible for a physician to cure his work habits (arriving to work tardy), it is not really possible for him to cure an act of embezzlement, or loss of license, as in such cases the physician’s ability to provide services, and/or the practice’s trust in the physician, has been irreparably damaged.

In addition to cause termination, we recommend a provision permitting termination without cause. This is any termination that is not a cause termination. Because it is without cause, it does not require justification. Typically such a proviso would say the physician can be terminated "for any reason or no reason, upon 30 [or 60 or 90] days’ advance notice to the physician."

Some newly hired physicians resist a provision allowing termination without cause, although in fact it has become standard in associate physician agreements. The associate worries that the practice will act arbitrarily in terminating his or her employment. In fact, our experience with hundreds of physician practices is that no decision to terminate, even without cause, is made on the spur of the moment or a whim. Generally, it is made only after considerable soul searching and delay, after the parties have long since devolved into a dysfunctional working relationship.

In terms of the amount of advance notice required, this is simply a question of money. Typically, a without cause proviso includes an additional sentence or two that enables the practice to suspend the physician’s active provision of services to the practice, so long as the practice continues to pay salary and benefits for the given notice period. This enables the practice to get the associate out of the practice, where he or she cannot say bad things to the staff about what has happened, or contribute to a bad atmosphere with his negative attitude, and so forth.

Thus, the bottom line on the amount of notice provided is simply the amount of money that the practice will pay to make the associate go away

Bonuses. Volumes can be written about bonus provisions. A typical bonus provision gives the associate physician a percentage of his collections if those collections exceed a certain threshold, oftentimes, two or three or 3.5 times base salary (or times base salary and benefits).

Once the associate’s production exceeds this level, then the associate is normally entitled, as a bonus, to 20 percent, 30 percent or even 40 percent of collections in excess of that threshold.

Be clear about what is included in the revenues that are counted, and what period is used. For instance, will ancillary services ordered by the physician count as "production?" In some practices, this can be substantial.

A conservative bonus provision will provide that only collections for personal services rendered (i.e., excluding all ancillaries) will be included. That arguably makes better sense than including all ancillaries in the bonus calculations because (1) Stark restricts the Practice’s ability to pay for various "designated health services," rendered to Medicare or Medicaid patients and (2) the availability of ancillary services is really not a function of the associate’s work efforts (which is what the bonus is designed to reward), but rather reflects investment by the owners of the practice in the technicians, equipment and supplies necessary to furnish the ancillary service.

Fringe Benefits. The typical package of benefits for a new associate physician includes health insurance (family coverage), malpractice insurance, dues, licenses, journals and CME costs. In addition, the practice will normally provide a vacation allowance of two to three weeks for an associate, plus a week in each year for continuing medical education. Typically, there is also a separate proviso for sick pay at five to 15 days per year, as needed.

One consideration is with respect to vacation/CME time. Oftentimes, in lieu of vacation/CME and sick pay, the practice will provide a "paid time off." With PTO, it does not matter why the physician is absent (vacation, sick, CME, etc.) only that he or she is absent. The PTO concept is helpful to the practice as it limits the total amount of time off that the physician may take.

Questions also arise regarding "maternity leave." Generally all that is required by federal anti-discrimination law is that the practice does not discriminate against pregnancy-related disability. Thus, if the practice normally provides ten days of sick pay for a broken leg, or illness, it cannot deny ten days of sick pay if a female employee goes on bed rest, or for recovery from childbirth. In other words, there is no legal requirement to provide for extra paid time off for a pregnant employee. Some practices provide paid "maternity leave," which is paid leave over and above that provided for other illnesses or injuries. However, that is purely discretionary, not required by law.

Malpractice Tail. This is typically a hotly negotiated item. In the past, most medical practices paid 100 percent of the tail cost for a departing doctor. However, many practices are now shifting this cost, in full, to the associate. In response, associate doctors frequently propose the following: the tail will be paid by the associate if he resigns voluntarily, or is terminated with cause, but it will be paid by the practice if the physician is terminated involuntarily and without cause.

The intent of such a proviso is to allocate the tail cost to the party who is "at fault" for the termination of the relationship. Thus, if the associate leaves voluntarily, he must pay for the tail, since he acted under his own volition, whereas if the practice terminated the associate, without cause, then the practice must pay. The problem with this formulation is that it is difficult oftentimes to determine whether or not a termination is voluntary or involuntary. If the relationship is not working out, the associate may be tempted to provoke his own termination, so that he is terminated without cause, and therefore is not responsible for the tail. Accordingly, to avoid such ambiguities, the parties should clearly specify the allocation of tail in the event of any termination, whether that is 100 percent to the doctor coming on board, or a 50/50 split, or 100 percent to the practice.

Non-Compete Provision. Again, volumes can be written on this subject. A non-compete in the Commonwealth of Pennsylvania needs to be "reasonable" in terms of duration and geographic scope. A typical debate with respect to the non-compete is when it should apply. As with tail, the associate may argue that it should not apply if he is terminated without cause. However, like tail, this is far too important an issue to be turn on such niceties as whether the physician left voluntarily or in fact was terminated without cause, involuntarily.

Thus, we generally advise that the non-compete should apply in all circumstances. If the associate maintains that the employer has breached other terms of the document, so that he should in turn be released from his non-compete obligations to the practice, this can be dealt with by a clause that says that "breach is not a defense" to enforcement of the non-compete provision. In other words, any alleged breach by the employer has to be litigated separately, and does not vitiate the non-compete obligation of the associate.

The practice should also specify that it can recover its attorneys fees if it prevails in the non-compete litigation. Thus, if the practice seeks to enforce a reasonable non-compete, it can be assured that it will be made whole, in terms of its attorneys fees, if it does prevail.

These are the key provisions to watch for in a physician employment contract. The employment agreement is a key document that needs to be drafted with care, as any of these provisions can cost the practice considerable money.

By: Daniel M. Bernick, Esq. M.B.A.
Daniel M. Bernick, Esq. M.B.A., is a Principal with Health Care Law Associates, P.C. and The Health Care Group, Inc. in Plymouth Meeting, Pa.
Source: Physician's News Digest

Collecting Accounts Receivable Efficiently


One of the most challenging issues facing the back office of any medical practice is the efficient use of personnel in the collection of accounts receivable. On a normal day, an office may see anywhere between 25 and 75 patients per physician. At the same time, there are hundreds, if not thousands, of outstanding accounts receivable that must be continually monitored for optimum collection. Most practices would consider collecting accounts receivable more efficiently to be one of their priorities. So how does a practice go about doing this?

One of the first issues that should be addressed is the evaluation of the amount of time spent by the staff on accounts receivable collections. It is important to ensure that the A/R staff is spending their time as effectively and efficiently as possible. In order to do this, it is necessary to empower the staff with the appropriate tools. This starts with an appropriate accounts receivable/billing system. Any good system will have the ability to differentiate between those outstanding accounts that need attention by the staff from those that are simply in the normal timeframe of collection from the appropriate insurance company. If your system has the ability to identify "expected payments" for each service rendered (this is normally based on the insurance coverage by the patient) combined with the information from the contract your group has with the insurance carrier and the payment history for the same procedure codes, then your system can routinely advise management of the total amount of collectible accounts receivable by insurance carrier. Monitoring this amount, and having an aged accounts receivable by carrier, will allow for better use of billing staff time.

The use of electronic records for incoming Explanation of Medical Benefits paid (EOB) documentation will additionally allow the computer system to provide optimum tools for the staff to use. Whether your computer system provides the ideal circumstances or not, the staff needs to spend time first on the older and larger accounts receivable. The ability to sort accounts receivable based on age, as well as on dollar amount, will lead to the best use of the staff time available.

One of the other issues that will frequently raise its head in the billing function is a particular insurance carrier delaying payment or changing their pattern of rejections. For this reason, it is very important to continually monitor the outstanding accounts receivable aging by carrier. Whether it is done electronically or manually, certain parameters should be applied to each insurance company based on a contract and their history of payment. As an example, if XYZ insurance routinely pays clean claims in 40 days, there should be a trigger for any claim that is outstanding to that carrier for 60 days. If the carrier begins to fail to meet their required timeframe, two things should happen:

· The carrier should be notified in writing, as well as with a phone call to the Group’s representative, to determine if there is any problem.

· The insurance company should be notified of the imposition of any interest or other penalty as appropriate in the contract.

The use of this technique will help "nip in the bud" the occasional changes that may occur in an insurance company’s payment policies.

An additional area that requires attention is: Secondary Insurance Companies. When a patient has more than one insurance company, the "primary" insurance company will always be billed first. Once the primary insurance company has made its payment, billing to the secondary or tertiary insurance company should then be completed. In certain circumstances (primarily Medicare patients who have MediGap coverage with a carrier related to a Medicare intermediary) the secondary insurance payment will be made automatically. In many circumstances, however, the billing office must generate a new claim which, in some circumstances, may require the initial EOB to be attached to the secondary insurance claim. The ability to quickly identify those claims requiring secondary insurance billing and to generate the bills on a timely basis will greatly enhance the speed of collection and reduce the overall time needed in the billing department.

An area that is often overlooked is collection at the time services are rendered. It is far more effective and efficient to collect funds at the counter when the patient is there than it is to send a bill and try to follow-up after the service is completed. This is especially true when patients have co-payments and deductibles at the beginning of the calendar year. Simply asking the patient whether they have a co-payment and/or deductible will sometimes provide the correct information, leading to the ability to then request payment. An efficient way to obtain the co-payment and/or deductible information would be to get that information directly from the carrier in advance of the patient visit. One to two days before the patient is scheduled to visit, a call to the carrier for this information will provide a practice with the ability to notify the patient when they are in the office of their responsibility. The ability to then accept credit card payments and/or checks will again speed up cash receipts and reduce the collection efforts significantly.

It may also be important, depending on the practice, to establish a policy with regard to uninsured or uncovered services. Most practices will attempt to maintain their fee schedule at an optimum level for total reimbursement by all carriers. Nonetheless, it is understood that many carriers, through contractual relationships, will pay substantially less that the fee charged. In most instances, it is allowed (and may be appropriate) for a practice to offer a discount to an uninsured patient, or one undergoing a non-covered service for prompt payment. Again, the ability to make the collection effort at a time that services are rendered will reduce or eliminate the need for follow-up effort by the billing and collection staff.

It is a good idea to review your A/R reports with your administrator and billing manager on a monthly basis with a good solid review each quarter to make sure your staff is collecting all the money due you. Often, it is discovered that practices are not optimizing their collections, not because the staff does not want to do a good job but because they are either overwhelmed with the current insurance company climate or the department is understaffed.

The ability to determine which carriers are rejecting claims, and necessitating the billing department to start over – both delaying the ultimate receipt of the funds and costing dear time for the limited staff - will also enhance the efficiency of the office. Many practices will perform an analysis of rejections by carrier and by staff member. Each type of rejection can then be tracked to limit or eliminate repeat occurrences of the same issue, often avoiding the issue being confronted later in the case of a second carrier following the same protocol at a later date.

The ability to perform the analysis of what has gone wrong before, and to correct the internal policies and procedures to avoid these same issues being repeated, will usually be well rewarded. By way of example, the knowledge that Carrier A is rejecting otherwise clean claims due to a lack of a referring physician in the case of an office consultation can lead to either an additional claims "scrubbing" routine or a manual review of this area before the claims are submitted to this carrier. Also, the knowledge that biller C is responsible for 35 percent of the rejections due to lack of date of birth on the billing submission, while she is only responsible for 10 percent of the practice’s billing will lead to the knowledge that additional training and/or supervision may be required. This type of enhanced information on the rate and type of rejections can lead to a better incentive system for the billing department, and the front desk staff, based on a reduction of the rate and type of rejections from the base lien level.

Let’s not forget there is another option. Your practice may benefit from outsourcing their billing. This is a common issue that often arises when a medical practice is deciding whether to buy a new updated practice management system because they have recently found out that theirs will not be supported in the future or because they are having trouble finding quality billing staff and their accounts receivable balance is climbing. It may be a good idea for the medical practice to at least explore the billing company option to see what it can offer and how much it will cost compared to what they are paying now.

The ability to maximize the use of staff time and optimize the efficiency and effectiveness of the billing department relies upon a complete and coordinated cycle in the collection process. This cycle begins at the billing desk when the patient is there, collecting those funds that are available, and making sure that all insurance and mailing information is correct and updated, and then, utilizing the time appropriately, making certain that those items that begin to fall behind are caught early. Most practices find that these steps greatly increase the total efficiency of the accounts receivable collection function.

David H. Glusman, CPA, is a principal at Margolis & Company P.C. and is co-chair of the firm’s Healthcare Services Group.

If you are admitting patients to the hospital and intend to follow them while they are there, you are likely to share responsibility for their care as hospitals expand the ranks of employed physicians. While there are many professionals that you will interact with, particularly nurses; these individuals will have some degree of clinical decision-making authority regarding the care of your patients. It is also important to note that there may be an impact upon your income as the hospital bills and collects for the services of both hospitalists and intensivists, and this prevents the attending from billing.

There are a few common themes regarding the needs of these three categories of physicians, even though they play very different roles in the hospital setting. Residents are there for postgraduate medical education in a specialty and are technically hospital employees. Hospitalists and Intensivists are hospital employees fulfilling a particular function. Hospitalists are generally focused exclusively on managing inpatient care and are supposed to be expert in that. Intensivists are often in place in the various intensive care units and are knowledgeable in the critical care provided in that unit. In all cases, these individuals are expected to know more about how care is provided in their areas of responsibility, both in terms of the staff working there and the equipment and supplies available to them. They may also be expert in managing care through specific clinical pathways designed to provide optimal care and to move the patient through the system quickly and efficiently.

I think this is a particularly important discussion as these people are physician colleagues, but play very specific roles in the hospital setting, often exercising authority over your patients, while controlling assets and resources you may want access to. Physicians wanting privileges to work in the intensive care units are not pleased to learn that this is not allowed in some hospitals that utilize intensivists. Residents and hospitalists will often exercise some level of authority and control over your patients also. It is essential to understand the roles of these people and develop useful and collegial relationships with them.

First, and most important, is that you be available to them and provide them the information you have gathered regarding your patient. The absolute worst thing you can do is not return a call. Nothing upsets everyone more then the physician who is unreachable for some period of time. No one, of course, is always available immediately, but you must make a good faith effort to be in communication when needed.

Second, you must acknowledge the mutuality of responsibility regarding your patient. By definition, you have admitted your patient to this hospital because you believe it is in their best interest. Therefore, it is incumbent upon you to work cooperatively with the physicians the hospital has employed to oversee your patient. It is essential that the attending physician work willingly with these clinicians in the delivery of the best possible care for their patients. It may also be a requirement in order for you to have privileges at the hospital.

Lastly, remember that discharge planning begins at admission and have a plan for the care of your patient after their hospital stay is over. The most frustrating situation in the hospital, and, unfortunately very common, is for the patient to be unprepared to go home or to another institution. We all know this is something faced every day in every hospital, but to the extent possible, it is the responsibility of the attending physician to assist in the eventual placement of their patients. It is understood that many patients’ post-hospital placement is often difficult, but at least try to help. Ignoring the situation does not make it go away and your reputation can only benefit from the perception that you will try to be helpful.

Residents

The rules of the game for residency programs have changed with the number of work hours constrained and shorter length of stays for patients. Program directors must make certain that the educational component of the residency outweigh the service component and that the resident workload be managed according to the relevant guidelines of that specialty. Anything that adds to the service requirement of the program must be carefully scrutinized. So while we have all figured out that one of the things that brings your patients to our hospital is the 24 hour coverage we provide, we must make certain that the resident’s educational needs are foremost in our minds. Nurses provide much of that coverage, but the housestaff play a critical role in allowing you to sleep through the night knowing that your patient is well cared for. All they want in return is for you to provide them some teaching in return for their service, particularly if there is something of interest in the patient’s illness. They will also take care of your routine patients without complaint if you make yourself available to them for their education whenever you are there. Be sensitive to the idea of teachable moments and provide them to the residents whenever possible. Simple and straightforward, but you cannot imagine how often this does not happen.

Hospitalists

As a good friend of mine says, if you have seen one hospitalist program, you have seen one program. They are all different and each hospital that has this program in place defines their roles and responsibilities differently. It is also the fastest growing physician specialty and has attracted for-profit companies to provide these services.

Your first challenge is to find out how your particular hospital defines the position. Is the hospitalist fully in charge of your patient or is the hospitalist a co-manager along with the attending physician? Are you asked to consider the recommendations of the hospitalist or are you expected to follow them? In some institutions hospitalists are involved with the care of just general medicine patients and in others they are overseeing all inpatients. Take the time to sit with the hospitalist chief and work through how they will take care of your patient and what they need from you. This advice applies to everyone discussed in this article. Most commonly, they will be your advisers and not have the final say on a patient’s plan of care, but some hospitals do give them the authority to make decisions and implement them. If that is how it is done there, and you object to it, admit your patients elsewhere. For some physicians, this is also a financial matter as they are interested in the income that derives from consulting on their patients in the hospital. For that reason, as well as the quality of care perspective, it is imperative that the hospital clearly define the responsibilities of the hospitalists and involve the medical staff organization in that process.

There is an increasing body of evidence that skilled, mature hospitalists can have some incremental benefit towards reducing length of stay and improving patient movement through the care process. Due to this, it is increasingly likely that you will see more of these programs starting up, particularly as hospitals see the benefits from their work. You will be ahead of things to determine how to work with these people.

Intensivists

The Leapfrog Group for Patient Safety has taken a leadership role in advancing the suggestion that quality of care in critical care units improves when the unit is closed to "outside physicians" and managed by unit intensivists. These physicians are highly trained experts who are in place at the most sophisticated hospitals, readily available to the critically ill patients they are responsible for. These hospitals have determined that the complex and expensive resources available in the critical care unit can best be managed by individuals who specialize in that activity. This not surprising as we know that most health care services are best performed by people who do lots of them and this applies to both hospitalists and intensivists. This is particularly true for the complex level of care provided by all critical care units. In addition, this is also the most expensive care delivered in the hospital and it is in everyone’s interest to utilize these resources as efficiently as possible. To work successfully with the intensivists, be available, communicate what you know about the patient, and be aware of what authority the intensivist has in caring for your patient.

To summarize, each of the parties to the transaction of patient care has differing needs, responsibilities and skills. It is the blending together of each of these skill sets that makes our health care system the envy of the entire world. When the blending is done correctly and with support from all the professionals involved, the patient and the system all benefit. The referring physician gets the best care for their patients as well as the 24 hour supervision that is needed. Each of the professionals receives the benefits from their chosen role in the system and, lastly, the hospital and the health care system strive to manage resources optimally.

By Samuel H. Steinberg, Ph.D.
Samuel H. Steinberg, Ph.D., FACHE, is Deputy Chair, Department of Medicine, Temple University School of Medicine. This article is adapted from his book, The Physicians Survival Guide for the Hospital.
Source: Physician's News Digest