Opting to Opt In or Out? Reimbursement and Cash Flow Options

Medicine is a business and as with any business, money matters.

By Douglas J. Jorgensen, DO, CPC

As reimbursement diminishes and more onerous documentation requirements evolve, one wonders when or if a more fair and expeditious system will come to fruition.

Obviously, some forms of reimbursement pay better than others do. Yet, how can we as physicians be impartial as to what payors we accept? Furthermore, how do we avoid feeling like we are making decisions based on one’s insurance rather than medical necessity?
From a federal stance, making medical decisions based on available benefits is tantamount to fraud. Medically, it is not only a poor practice, but questionably unethical.

However, we are faced with these decisions daily. In peer review cases and in our own practices, social admissions or adjusting a diagnosis code to “help” a patient get the services covered is akin to running a yellow light or rolling through a stop sign.

However, I would argue that one must be careful in this respect as it is a slippery slope and the ramifications could be penal resulting in financial or criminal prosecution. And perhaps more devastating, one’s license to practice medicine could be permanently revoked. Ironically, this could occur with the most noble of intentions when you are trying to help the neediest patients.

A Financial Review
In light of these issues making reimbursement difficult, a critical look at these and other areas germane to your practice’s financial stability need to be reviewed.

To review financial matters, one issue that must be discussed is money. It has long been a faux pas to discuss money when discussing medical care of our patients. It is rarely, if ever, reviewed in medical school and residencies are only starting to address practice management issues. This lack of preparation leaves new doctors unprepared to enter practice.

What we must all realize is that medicine is a business—a business of caring for people, but a business nonetheless. If we wish to keep our doors open, then we must be good at this business of medicine or we will no longer be there for our patients.

In the last decade, we saw many private practices being bought up by larger multispecialty groups. It seemed the days of the solo or partner type practices were over.

However, in recent years, the pendulum is shifting and more doctors are realizing that they can make it on their own, with more autonomy and discretion as to their practice’s direction, focus and financial concerns. Many doctors are still within employed venues and are paid on an incentive basis.

Knowing what your services pay and how your services are billed will give you more control and knowledge of your practice and your income in this setting as well. While antitrust issues disallow you to find out what a colleague on the other side of town charges, you fortunately have a standard by which to measure what you can charge.

The RVU or relative value unit system exists to create more uniformity based on regional, demographic data that allows you to standardize your office fees. Most practices have an RVU schedule for standard E&M (evaluation and management) services and another for procedural services.

For example, a 99213 is worth approximately one RVU. If you charged $70/RVU, the 99213 would be billed out as $70. If your procedure codes were set at $100/RVU and you did a procedure that was worth 2.5 RVUs, then the bill would be $175 (2.5 x $70 = $175). The amount designated to multiply against the RVU is up to your practice. It should never be less than what Medicare will reimburse you and really should be at least as much your best payor reimburses.

The only downside to having it set rather high is the write off at the end of the year. However, as you will see below, depending on your payor mix, it could benefit you to have higher rates in the long run.

This article will focus on issues surrounding reimbursement and help to more clearly elucidate, and correct some routine practices that could border on illegal or potentially fraudulent practice. Remember that these are general guidelines. Each state varies in its individual regulations. Thus, check with a healthcare attorney, your specific payors and/or your state and specialty medical societies for more specific information as it pertains to your particular practice issues.

Time of Service Discount
Cash paying patients are increasingly uncommon, but in more urban and suburban settings, patients with the means to do so, would prefer to avoid the hassles of dealing with their insurer. Providers often code down the visit or do not list on the encounter form all the issues that will be in the note to avoid having escalating the bill. An option available is to offer a time of service or cash discount for payment provided the same day as services rendered.

Some practices offer a 30-40 percent reduction in the total fee. Thus, a 40 percent discount for a $150 office fee would result in a cash payment to your practice of $90. No collection, no waiting for the insurer to pay you and your patient who has no insurance gets a very reasonable deal. Cash or checks are still commonly used, but most patients now use their ATM cards or credit cards for payments.

If you do not already do so, it would behoove you to take credit cards as well, as these have become very user-friendly and most practices now accept them. The fees per transaction are nominal compared to the convenience of increasing your cash flow without a delay on the turn around time from the payor. Many clearinghouses that do electronic billing can also assist you in establishing this form of payment for your practice if you simply inquire about it.

The issue that I am most commonly asked about cash discounts is “Is this legal?” The short answer is “yes”. The fear by many is that if your third-party payors find out about this, they will demand a discount for their beneficiaries as well. They would be entitled to the discount if they paid you on the same day services were rendered. Most do not pay you for weeks to months, so the point is mute.

However, if at some point the payors reimbursement system evolves to be able to pay us on the same date we see their patients we can revisit this office policy and modify it as necessary. However, the likelihood of this happening anytime soon is small for most prefer to scrutinize claims before reimbursing them.

Again, check with your local healthcare attorney as contractual agreements with various third-party payors could present unique circumstances for your practice regarding this option. Remember, there are a good number of doctors who only accept cash and many are doing quite well. If you still want to charge a fair fee to your cash paying patients, you could opt not to give the discount and keep your fees low. However, this would work against you when you bill the worker’s compensation or personal injury cases.

Copays
Copays account for approximately 20 percent of the revenue that comes through your office. In a four-doctor practice with each family doctor grossing $250,000 (a conservative estimate), that means there is about $200,000 going across your checkout desk each year.

Some practices I have seen have a collection rate of 50 percent, some 80 percent. The goal should be 90-100 percent. The reason being, if you are losing $100,000 or even $40,000 for lack of, or incorrect copay collections, you are losing revenue that could perhaps cover several staff salaries, not to mention possibly provide production bonuses for your organization.

Key areas where copays are missed are: old insurance cards, forgot my wallet, didn’t know I had a copay, staff not asking or forgetting to collect, or you are having it waived as a courtesy to a friend or colleague.

Regarding the old insurance card, each visit should commence with a verification of insurance and demographic information. Asking is “everything still the same?” is inadequate. Instead ask “do you still live at 435 Elm Street?” and is your telephone number still 323-6434 and then check to see that their insurance card has not expired. This issue should be addressed as part of your compliance plan for your practice.

Forgetting a wallet or purse happens. Simply direct your staff to request they retrieve it from the car now or make them aware that they will be billed. Some practices will not see the patient for the next visit until the copay from the previous visit(s) is resolved. You and your colleagues need to determine the policy you would like to enforce, and stick to it.

Waiving copays have resulted in federal sanctions and private payors removing doctors from their participating provider list. Your federal and private payor contracts, in most instances, stipulate that you are to collect copays with E&M services. Not only is this part of the money owed to you, it is contractually your responsibility to collect it.

The same goes for the 20 percent due from your Medicare beneficiaries if they do not have a secondary insurer to balance bill. You must collect these monies, for it is vital to your practice’s fiscal health and part of a binding contract. Therefore, educate your staff on the importance of the copay and balance billing, as they are crucial to the vitality of your practice.

Professional Courtesy
The Office of the Inspector General in its compliance plan recommendations specifically discussed this issue. Contrary to what many consultants claim, it is not illegal. However, the point at hand is the relationship of the person you are seeing under this courtesy and how it might impact your practice. If the person you are seeing (or his/her partner, spouse, child, parent, etc.) is a referral source or someone with whom you may have a potential business relationship, regardless of how remote, you must bill him/her in the usual manner.

The perceived impropriety by the federal government is all that is necessary for this courtesy visit to be seen as an inducement and subsequent referrals or other patient encounters (use of your lab or x-ray equipment) could be seen as kickbacks for your free treatment. It is not worth the risk to you and your practice.

Another commonly used tactic to avoid a paper trail of this visit is to not document the visit. The most innocent and friendly interactions in a medical setting have the possibility of becoming potentially litigious. Thus, it is against common medical-legal thought to perform or provide medical services without documenting them. Again, check with your local attorney for his/her advice, but it will likely be conservative and advise against this practice.

Worker’s Compensation
Worker’s compensation is a state and federally funded program designed to pay for expenses due to an injury that was deemed work related or if the injury itself did not occur at work, but work ‘significantly’ worsened the existing medical problem.

Regulations vary from state to state, but usually the reimbursement is much better than third party payors or other state or federal programs. The biggest issue with these programs is the amount of paperwork and, at times, letter writing required to keep the employer and the agencies up to date on the patient’s condition. Some organizations do not take worker’s comp due to the perceived hassles and occasional delayed payments. However, since the reimbursement is better than average, one might put systems in place to make the visits move more smoothly.

Usually, the organization for whom the patient works has a particular form they need filled out specifying the date of injury, type of injury, do you think it was work related, anticipated length of treatment, type of diagnostic testing being done, treatment and/or medications being used, ICD and CPT codes to define the exact medical issues at hand and then a descriptor of the patients ability to work, and if so, with what restrictions if any.

The paperwork, while cumbersome, is often redundant, so keeping a copy of the previous records is helpful at the next visit and necessary for good record keeping. Templated work letters to employers and lawyers also expedite things for, other than the diagnosis, treatment and timetable, much of the letter can be recycled.

MVA/Personal Injury
Many providers cringe at the patient list for the day when they see an MVA appointment. Motor vehicle accidents usually involve attorneys, automobile insurers and possible defense attorneys from the other driver(s) involved. Much like the worker’s comp situation, there is a great deal of redundant paperwork. Therefore, templated letters and other systems can expedite claims and paperwork.

Furthermore, as osteopathic physicians, we are often sought out to evaluate and treat these patients. This eliminates the need for yet another practitioner to become involved.

The good news here is these visits pay cash and usually pay your asking price. The downfall is that it could take months to years to get paid. Some practices with which I am familiar have accounts receivable over seven figures. However, in the proper setting, this can be a mutually beneficial relationship for the patient and your practice.

Patients who work with attorneys should sign a lien letter stipulating that your fees will be paid in full out of the settlement. A copy should be made and then the original, with the patient’s signature, should be sent to their attorney for signature. If the patient will not sign the lien letter, you can collect cash and have them bill the attorney or the insurer themselves. In some instances, billing the insurer directly results in prompt payment and eliminates the attorney’s involvement and the fee to your patient for submitting the same bill.

Again, letters can be templated to make this entire process more expeditious. Fees can also be billed for record requests as going through the chart and copying germane entries takes valuable time away from your staff’s other duties.

Lastly, you could be subpoenaed to testify. Your practice should come up with a uniform fee schedule for depositions that takes into account what your hourly dollar value is. Many, if not most doctors, underestimate this fee. Consult your local healthcare attorney for more details on these letters, regulations and your options in your particular state.

Third-Party Payors
Truth be told, some payors pay better than others and some are easier to work with than others. Guess what? It’s your practice and you should decide whom you want to work with or not.

If in a group setting, sit down and have a frank discussion with your colleagues and practice manager. If a particular payor is reimbursing poorly and routinely denies claims or is a hassle with which to deal, consider whether they represent a significant portion of your patient population.

If you can afford to do so, remove your practice’s providers as participating members. If you cannot afford to do so, use the state bureau of insurance to file complaints and your state medical society to intervene on your behalf as well as utilizing your national organization to help support your efforts. Do not sit by and be bullied into submission.

Is it idealistic or even utopian to think you will get a positive outcome? Perhaps. But we need to begin to formally take a position as physicians that we will utilize all means necessary to alleviate the burdens placed on us and, in the end, hope to improve our reimbursement outcomes.

If you cannot resolve issues and you need the current patient load from this payor, your other option is to close your practice to new patients for that particular payor. We are so used to the insurers dictating the rules, we often forget that we have options and we can put ourselves back in the driver’s seat.

Medicare/Medicaid
These payors are usually the most consistent, but often the most feared due to the lay press and folklore stories of audits, fines and possible criminal prosecution. However, some states mandate the percentage of your patient population that must be from Medicaid in order to maintain your license in that state. Additionally, many providers feel an ethical responsibility to take care of patients on state and/or federal programs.

While the reimbursement from these payors is usually consistent, it is also typically comparatively low. Therefore, providers are, in some instances, starting to limit their practices to only established Medicare and Medicaid patients.

If you work in an FQHC or RHC (federally qualified health center or rural health center) you receive a fixed fee for these patient’s visits regardless of the level billed (99214 is reimbursed the same as a 99212). Diagnostic testing is not billed in these facilities as it is coupled in with the higher reimbursement at and FQHC or RHC.

Some offices are using nurse educators to provide high quality education and monitoring for diabetes, hypertension, coronary artery disease, smoking cessation, obesity, etc. The educator sets up visits at the discretion of the doctor to assist in the care of the patient’s chronic condition. The sessions are overseen by a provider who can bill an established patient visit utilizing the history obtained by the nurse educator. The provider need not be present for the entire visit.

However, the provider must perform and document the exam, but to bill 99212, it could simply be confirmation of vitals or a general constitutional exam. Additionally the provider should do the note in SOAP format. If the medications need to be adjusted, it is certainly reasonable to bill the appropriate level visit, which could be a higher level.

To bill a higher level, the history, exam and the medical decision-making would need to justify this.¹ Please be certain that it is not the intent of this author to recommend upcoding. However, these beneficiaries can at times be some of the more medically needy and could very much benefit from such a program.

Furthermore, several successful programs exist with good clinical outcomes at institutions across the country. These programs are not limited to state and/or federal beneficiaries and therefore could be applied to private payors as well. Design of these programs should be well thought out, as should the documentation needed to make these legitimate for billing purposes. Seeking professional advice regarding this is strongly advised.

Summary
As one can see, there are myriad of ways reimbursement may not be as optimal as it could be. Some of the ideas outlined above may already be part of your daily routine and may simply need some fine-tuning.

It is imperative to utilize the resources available to you and your office to maximize your efficiency. The templates and well-designed educational programs may be able to meet these objectives while offering a new venue for reimbursement in your practice. It is imperative that you have competent healthcare counsel to review matters prior to implementation.

However, these ideas coupled with adherence to the federal documentation guidelines and your contractual agreements with your payors will keep you comfortably within the boundaries of allowable practice standards.

References:
1. Jorgensen, D.J.; History: A Vital Clinical and Coding Element (and) Examining the Physical Examination and Deciding on Medical Decision Making; Osteopathic Family Physician; January and February 2001.