“Tightening your belt and your procedures” Coping with the new economy and regulations

“Tightening your belt and your procedures” Coping with the new economy and regulations

Tightening your belt and your procedures, Coping with the new economy and regulations By Mary Foarde, JD, & Konrad “Kit” Friedemann, JD

The current health care environment brings a couple of old aphorisms to mind. “If you don’t like the way things are, wait 10 minutes” and “Just when you think things couldn’t get any worse, they do.” While cynical, these statements seem appropriate in light of the present state of affairs, where the economy has made finances tighter than ever, the government is announcing new enforcement initiatives at a dizzying rate, and we are all trying to figure out what health care reform will mean for us. While physician practices are waiting for reform to sort things out in completely new ways, there are things they can do to cope with the current state of affairs and better position themselves for the reform measures to come.

The new economy

Reimbursement for physician practices has been dropping at the same time that costs are increasing. Patients face job losses, furloughs, salary freezes, tight credit, and other economic problems that translate into diminished ability to pay their doctors. The result is that to survive in the new economy, physician practices need to run a tight ship, on both the revenue and the expense sides of their operations.

Revenue strategies. On the revenue side, this means being proactive in addressing potential payment problems. Every practice can take these steps to reduce the economy’s negative impact on revenue:

  • Collect patient payments up front. This is relatively straightforward with copayments, but will require more work in the case of deductibles and other outstanding balances. Give your patients advance notice that balances must be addressed before future appointments can be scheduled. This is a delicate balance—medical practices don’t want patients to think that their doctor prioritizes getting paid ahead of their treatment. On the other hand, it doesn’t hurt to be a squeaky wheel if you do it respectfully and privately. Patients who are feeling financially squeezed will naturally put off bills to the creditors who wait the most patiently—including their friendly neighborhood doctor.
  • Review your billing and coding procedures to make sure they reflect current insurer requirements. You can’t afford to risk denials and the attendant lost revenue by being out of step with billing requirements.
  • Consider increasing the frequency of insurance verification. Patients may have lost or changed insurance due to layoffs and job changes. Most practices make insurance verification a routine inquiry at each patient encounter.

In addition, make sure to familiarize yourself with payment changes contained in the Patient Protection and Affordable Care Act (ACA) passed in March. Another potential incremental payment source is the medical home payment under the reform legislation passed in Minnesota in 2008.

Expenses strategies.

On the expense side, your best bet is to manage your largest expense: your employees. Examine your processes for non-value-add work. Some other ideas for managing payroll expense include:

  • Monitor your employees’ productivity. Actively managing problem employees has several benefits. First, sometimes bringing attention to a performance problem actually does result in improvement! Second, it boosts the morale of your other employees when they see that underperforming colleagues are not given a free pass. Happy employees are more productive. Finally, if you have to let an employee go for performance-related issues, you will be in a better position if you have been working on the issue for a while.
  • If you have to discipline or terminate an employee, get good advice in order to avoid EEOC charges and discrimination or wrongful termination lawsuits. An ounce of prevention is important here, since one employment lawsuit can destroy your budget. Honor the terms of any employment agreement, and adhere to applicable provisions of your employee handbook; but unfortunately, you cannot rely on those precautions to protect you completely from a discrimination suit. Consult your employment lawyer if you need to take disciplinary action, and in the case of a potential claim, notify your employment practices liability insurance (EPLI) carrier.
  • Ask an outside expert to review your employee benefits to make sure they are within market. Nobody wants to be Ebenezer Scrooge, but many companies are scaling back on fringe benefits in these tough economic times. While unfortunate, it can be preferable to actually cutting positions.

Practices that don’t already have an electronic medical records (EMR) system should consider implementing one. While the industry continues to debate whether EMRs actually save money or improve care, electronic records are becoming a necessity and will likely be required to produce the data necessary for new payment methodologies. Look into sources of support for this investment: Federal funds will be available under the Health Information Technology for Economic and Clinical Health (HITECH) Act passed last year.

Be certain to learn how to meet eligibility requirements and demonstrate “meaningful use” of the electronic medical record. The support under the Medicare program is substantial: a maximum of $44,000 over five years. The government has also relaxed relevant rules to permit hospitals to assist with the cost of electronic medical records, so it pays to ask your hospital if assistance is available. For more information, visit the official website for the Centers for Medicare and Medicaid Services Medicare/Medicaid EHR Incentive Programs at www.cms.gov/ehrincentiveprograms/.

The new regulations

In response to the economy and the spiraling cost of health care, the government is stepping up its efforts to reduce fraud, abuse and waste in medicine. In a perfect world, these efforts would focus on the small percentage of unethical providers who consciously bilk the government, but unfortunately there are many traps for the well-intended but unwary medical practice. Some of the areas of increased scrutiny include:

Mandatory compliance plans.

We hope all medical practices have already adopted a formal compliance plan, but if your practice does not have one, the ACA will ultimately require one. Requirements will be developed in regulations, but significant guidance has been available for some years. If you haven’t implemented a compliance plan, now is the time to address it.

Government overpayments.

In the ACA, Congress enacted new requirements that Medicare providers repay any amounts overpaid by the government within 60 days of discovering the overpayment. Penalties for non-compliance will be painful. Practices should review their billing compliance processes and make sure they are up to standard. If you discover that you have unintentionally collected overpayments from any government program, you should contact legal counsel immediately.

Fraud and abuse.

These are some simple steps any practice can take to reduce the chances of being accused of a violation of the fraud and abuse laws (principally the anti-kickback and Stark laws):

  • Examine the areas where your practice receives funds from hospitals or others to whom you refer business.
  • Make sure all payments you receive from these sources are covered by a written agreement that is currently in force; have the agreements reviewed by counsel if they are not current or have not been reviewed previously.
  • Review your performance under these agreements (e.g., a physician recruitment support agreement with a hospital) to make sure you are implementing them the way they were written. Performance under a contract that differs substantially from the way it was originally designed can be problematic.
  • Familiarize yourself with the current PhRMA and AdvaMed requirements for relationships between pharmaceutical or device companies and physicians, and make sure you are not accepting inappropriate meals, gifts, or other perquisites from vendors.

Privacy and security.

HITECH also made changes to HIPAA, increasing penalties for non-compliance and adding reporting requirements in the case of breach. To minimize liability for a privacy or security breach:

  • Make sure your procedures for protecting patient information are up to date.
  • Develop a protocol for what to do if there is an unintended breach of privacy, such as theft of a laptop or flash drive containing protected patient information.
  • Make sure these types of portable storage places are encrypted and password-protected.

New disclosure requirements.

The ACA added new requirements for physicians who refer patients for high-end imaging to facilities they own. For CT, PET and MRI imaging, you now will need to give patients a list of other potential imaging facilities when you refer them for a test.

No rest for the weary

Another old saw could be added to the aphorisms cited at the start of this article: “The more things change, the more they stay the same.” Even amid the noise, fury, hopes, and disappointments of this new era of health reform, strategies for meeting the day-to-day challenges for physician practices will remain much as they have in recent years:

  • Live within your means.
  • Bill smart; collect smart; buy smart.
  • Run a tight ship.
  • Take advantage of financial support that may be available.
  • Keep your eyes open to potential new alliances.
  • Be mindful of compliance: whatever it costs you now is nothing compared to what mistakes or oversights will cost.
  • Keep up with regulatory developments, as they will surely have an impact on your practice.

Many of these nuggets may sound familiar, but they carry new resonance at a time when the effects—real and imagined—of seismic legislative enactments ripple their way through the health care delivery system.

Mary Foarde, JD, and Konrad “Kit” Friedemann, JD, are partners at FriedemannFoarde PLLC, a law firm focused exclusively on health care and serving regional clinics, hospitals, and integrated health care systems throughout the Midwest.