Archive for October, 2013

When You Have the Right Numbers

Tuesday, October 8th, 2013

William R. Pupkis, CMPE, Healthcare Consultant

benchmarkThe basic premise I assert is, “when you have the right numbers to analyze, most decisions are easy.” Too often practices merely identify costs rather than analyze each one thoroughly to determine its necessity and appropriateness. Here is where cost containment begins. (more…)

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Professional Courtesy Discounts

Tuesday, October 8th, 2013

William R. Pupkis, CMPE, Healthcare Consultant

congressTraditionally it has been common-place for courtesy discounts among medical professionals. However, this practice has been impacted by congressional action into a potentially illegal act with significant civil monetary and criminal penalties. Forgiving co-payments or writing off deductibles are no longer choices that a provider may make without seriously and carefully considering the repercussions.

An understanding of a provider’s options and the related liabilities is crucial to operating an efficient, legally-compliant medical practice. In regard to professional courtesy discounts, the primary issues involve The Health Insurance Portability and Accountability Act (HIPAA) of 1996, the Anti-Kickback Statute, Stark legislation, contractual considerations, and the effects of legislation on the provision of discounts.

The Health Insurance Portability and Accountability Act of 1996

With the passage of HIPAA, federal law regarding the submission of a false statement or committing fraud changed in two significant aspects: (1) some federal fraud and abuse provisions which formerly applied only to Medicare and Medicaid were extended to include all federal health plans, and (2) certain federal fraud and abuse issues are now being pursued legally on behalf of private health care plans. In other words, monitoring fraud and abuse activities in respect to Medicare and Medicaid beneficiaries is no longer enough. Private commercial carriers and all federal health plans now enjoy the same protections.

The extension of these fraud and abuse provisions to private carriers significantly increases the likelihood of detection and prosecution, even in instances in which “intent” to defraud is questionable. The private health carriers now have an incentive to identify and publicize efforts to curb fraud and abuse. Many “explanations of benefits” now carry a standard message regarding fraud and abuse detection, including an 800 number for beneficiaries to report suspect activities. Even where no fraud or abuse exists, disgruntled patients or employees have avenues through which they can voice their frustrations and concerns with the health care system.

To demonstrate the seriousness of such offenses, the U. S. Department of Health and Human Services and the Office of the Inspector General (OIG) made submitting false statements or committing fraud criminal offenses, carrying five- and ten-year prison sentences, respectively, along with significant civil monetary penalties. More specifically, HIPAA, in sections 242 to 246 created four new categories of health care offenses which apply to claims submitted to private, commercial payers:

- Health care fraud;
- False statements;money
- Obstruction of a health care offense investigation; and
- Money laundering

What is fraudulent about offering a discount to a professional associate? The reasoning is...

If you submit a claim for services totaling $200.00 to an insurance carrier, receive payment of 80% of that amount ($160), and write off the balance ($40) as a professional courtesy, the insurance has grounds to argue that the actual fee was only $160, since that is the amount for which the patient is being held liable. Under this circumstance, the insurance argues it should owe only $128 (80% of the actual patient-liable fee of $160). The insurance contends it has issued an over payment of $32.

In this example, a criminal case could be brought for health care fraud and false statements. The fraud issues revolve around the knowing and willful attempt to defraud a health care plan and/or obtain money or property by making a false or fraudulent representation.

The false statement issues are substantiated by the claim form, which demonstrates a knowing and willful falsifying of a material statement or representation. By representing the charge to be one amount but only holding the patient accountable for a lower amount, the provider is making a false statement. In addition to fines, false statements carry prison terms up to five years for each offense.

Of particular relevance to a discussion of professional / courtesy discounts are the following safe harbors:

(1) Discounts - The price of a service can be reduced in order to induce a buyer to purchase that good or service. For example, some states allow prompt pay discounts if the specific policy is available to all patients.

(2) Waiver of Beneficiary Coinsurance / Deductible – The Office of the Inspector General (OIG) has supported waiver of deductibles and copayment in individual cases of indigence. The financial circumstances justifying the waiver must be well documented, and good faith collection efforts also will justify excusing a debt.

However, some feel that sending two or three monthly statements, then writing off a balance as uncollectible justifies the action. Consequently, they may tell their fellow professionals simply to ignore the bills. If a provider routinely refers his accounts for outside collection or legal action, sending a few statements will hardly satisfy the intent of the law or the curiosity of the auditor.

Office of the Inspector General’s Fraud Alerts

A fraud alert concerning “waiver of co-insurance” was issued in 1991. At that time, it applied only to Medicare providers who routinely waived coinsurance and deductible amounts. The OIG stated that a provider who routinely waived coinsurance and deductible amounts after billing Medicare for the full charge was filing a false claim.

Changes in the law under the 1996 False Claims Act create a violation anytime this waiver of deductible or coinsurance occurs in connection with ANY payor. So, a physician who bills an insurance carrier for one amount then extends a courtesy discount, forgiving part or all of the remaining balance, would be guilty of filing a false claim and subject to a civil monetary penalty of up to $50,000 per claim. Providers who believe this provision of the law will never be pursued should carefully review a wide range of articles appearing in healthcare journals detailing such cases and penalties. While not submitting a claim to a payer would avoid the pitfalls of the False Claims Act, it might not escape scrutiny under the unlawful financial benefit in exchange for referrals provisions of the Anti-Kickback Laws.

Penalties

While the Health Care Financing Administration develops the regulations under Stark, it is the OIG which has the authority to impose the civil monetary penalties for violations. Stark violations include civil money penalties of up to $15,000 per claim and up to $100,000 for each referral-inducing financial arrangement.

Resistance to change

After having been forced into many less-than-equitable managed care contracts and having been bureaucratized by endless restrictions and directives, providers might dismiss the relevance, applicability, and urgency of changing the way in which they extend professional courtesy discounts.

Attitudes such as these are unfortunate, not only for the physician but also for the staff member who may unsuspectingly be promulgating illegal activity inside the practice. It also may be these same staff members who pursue “qui tam” actions against their employers when they become educated in the applicability of the various laws.

With the accelerated rate of mergers and down-sizing in medical practices across the nation, the level of discomfort and discontentment of employees has increased. Being concerned about external auditors randomly targeting one’s practice is much less of a concern than being reported by a disgruntled employee or dissatisfied patient. Add to this situation the fact that under current whistle blower rules, the reporting person retains a percentage of the recouped funds, shifting the incentive for reporting fraudulent practices.

Even when the provider decides to stop or revise the discount policy to become compliant, the reaction of the local medical community might be negative. Once a benefit has been extended, removing it is difficult. Consequently, it is important that providers in communities across the nation begin an active discussion of the issue and take action to correctly apply discounts in accordance with the laws, regulations, and contracts.

Developing a Reasonable Solutionsolution image

The government is serious about its fraud and abuse programs. By almost doubling its funding of such initiatives and by logging repeated successes in the litigation arena, the message is clear: zero tolerance of fraud and abuse in the medical practice must become the norm, not the exception.

Developing a compliance plan will not insulate a group from prosecution, but it serves as a powerful defense against willful and intentional disregard for the law. The existence and effective operation of a compliance plan is essential. It should be a written professional courtesy discount policy which integrates elements of the compliance plan with specific guidelines, forms, and letters relating to professional courtesy issues.

The policy should address:

Written Standards. These should incorporate billing methods for Medicare, managed care carriers, and national standardized claim form filing instructions. In addition, there should be a written directive regarding the action to be taken if violations are discovered.

Internally-Designed Monitoring Tools. Proof that the tools which an employee needs to discern fraudulent activity demonstrate a genuine effort to monitor, correct, and improve billing accuracy.

Training Mechanism. Employees at all levels should be trained not only in the appropriate methods of billing, but also in the applicable regulations. Once the initial professional courtesy discount policy has been written, develop an in-service in which each item in the policy is reviewed and discussed.

Performance Appraisals. Evaluations of employees should incorporate elements of the organization’s compliance plan to demonstrate that the plan plays an active role in the work place.

Audit Mechanism. Regular, systematic audits should be conducted to ensure compliance.

Consistent Action Plan. When violations occur, there must be immediate corrective action taken not only to correct the error, but also to correct the system which allowed the error to occur.

Compliance Officer. While the person who assumes this role may be the administrator, it is imperative that someone with authority to initiate corrective action ultimately bear the responsibility for ensuring compliance.

Board’s Role. The Board of Directors must share in the responsibility of the compliance plan’s implementation and monitoring.

Communicate with Providers in Bottom-Line Terms. Present the civil monetary penalties and prison terms in “visual” images.

Calculate the number of $50,000 false claim settlements it would take to bankrupt the organization. Present the total number of claims filed each year to demonstrate the on-going need for vigilance and billing integrity.

Counsel the providers on how to respond to requests from patients for discounts.

Adopt a standard written response or notification letter to be used with patients who request (or may expect) a professional courtesy discount.

Using the procedure code used to write-off professional courtesy discounts now, pull a report of the last 25 discounts, by provider, listing the reason for the discount. Ask the provider whether the discount truly was necessary and what the actual reaction would have been from the patient had the legal ramifications of the patient’s request been explained.

Insist that providers never write-off balances on patients for whom a professional liability issue is likely to be raised. Malpractice suits occur regularly, and a provider’s defense is weakened when a courtesy or insurance-only discount has been applied.

Terms and Conditions

Statements and opinions expressed in the Newsletter, Preferred Talk, are those of the author(s) and do not necessarily reflect those of DT Preferred Group, LLC. DT Preferred Group, LLC makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. In publishing this Newsletter, neither the authors nor DT Preferred Group, LLC are engaged in rendering medical or other professional service. If medical advice or other expert assistance is required, the services of a competent professional should be sought. DT Preferred Group, LLC will not be liable for any losses, injuries, or damages from the display or use of this information. This policy is subject to change at anytime.

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“Better Performing” Practice Concept

Monday, October 7th, 2013

William R. Pupkis, CMPE, Healthcare Consultant

The basic premise of “better performing” practice is an exercise to learn from others. It is the use of metrics that can be measured that will lead to improving the bottom-line in most practices. However, when discussing best practices, there is no “silver bullet.” The practice involves attention to detail and analysis.

There are several shared characteristics of “better performing” orthopaedic surgery practices. One is the use of business and strategic planning. Just as a global positioning system (GPS) is helpful in getting from point A to B, business and strategic planning can be a great roadmap to success. As part of this looking forward process, look out one to two years and conduct a “SWOT” (strengths, weaknesses, opportunities, and threats) analysis. Trying to forecast beyond that point is difficult, given the rapid changes in the business environment of healthcare.

Another characteristic is solid billing and business processes and protocols. Physicians usually do not go to medical school to make money, but they must collect money to stay in business. Look at your reports to watch for trends, both good and bad. Studies have shown that better performing practices spend a great deal of time assessing and evaluating these processes to ensure financial success.

The primary source of income is via services provided by physicians, but there are only so many hours in a day. Plus, with reimbursement declining, there is a need to find other ways to enhance the bottom-line and to improve patient care. The additional revenue from ancillaries is another shared characteristic. Having an ambulatory surgery center, physical therapy, durable medical equipment, and/or investmentMRI can help to enhance the bottom-line and improve patient care. A related subject is the use of physician extenders. In the right circumstance, using these additional resources could free the physician to see more complex cases, which could generate a higher relative value unit-per-encounter ratio than would have occurred without them.

Continuing the discussion of improving revenue, financial success might be simpler than one might think. I highly recommend that you think of your practice’s payer mix and contracts as an investment portfolio. They are not that dissimilar. Both provide economic returns. The more diverse they are, the better, and both demand careful management. Calculate the percentage of each payer to total charges and collections to determine its impact on total revenue. Then determine the collection ratio of each payer to find the worst payer. If the medical group decides to jettison its worst payer, it shifts the mix and automatically makes a difference in total revenue by filling the empty appointment slots with better paying patients.

A discussion about improving the bottom-line usually turns to cutting expenses. Understand the details behind the numbers, which allows you to analyze expenses more precisely and compare your expenses to national benchmarks. A line item like supplies does not tell you enough. There should be detailed sub-categories, such medical supplies, injectibles, office supplies, etc. Guard against cutting back in some areas because it may cost you in lost revenue. Consider that if you add a medical assistant or cast tech, you might be able to see one or twobenchmarktext additional patients per day, adding to the bottom-line. However, if you are convinced that payroll seems to be high right now, if someone leaves, consider redistributing their responsibilities over the short term.

Look for other savings in areas like deleting yellow page, local newspapers, radio, or billboard advertising. Join a buying group to gain better pricing. Put all of your cell phones under one contract after comparative shopping. If you have a lease on a satellite office that is due to renew, do not keep it open just because it is convenient for one of the partners; run the numbers and make your decision based on objective data. “If you have the right numbers to analyze, most decisions are easy.”

Why do all of this? The best practice concept is smart business. You get to compare your practice to others, and by doing so, you might make some operational changes that can increase your bottom-line, which can affect your physicians’ incomes. Another goal is that it could ultimately impact YOUR income.

Terms and Conditions

Statements and opinions expressed in the Newsletter, Preferred Talk, are those of the author(s) and do not necessarily reflect those of DT Preferred Group, LLC. DT Preferred Group, LLC makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. In publishing this Newsletter, neither the authors nor DT Preferred Group, LLC are engaged in rendering medical or other professional service. If medical advice or other expert assistance is required, the services of a competent professional should be sought. DT Preferred Group, LLC will not be liable for any losses, injuries, or damages from the display or use of this information. This policy is subject to change at anytime.

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