Key CMS Changes for 2011 Affecting Third Party Medical Billers and Physicians

Kathy McCoy, MBA October 29th, 2010

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First in a Series on the 2010 Compliance Update from the AMBA National Medical Billing Conference

During the AMBA National Conference a few weeks ago, I attended a very interesting presentation by Robert Liles, Esq., of Liles & Parker on compliance risks for medical billing services and physician providers in 2011.

If Mr. Liles intended to impart the fear of God, he certainly succeeded with me. God in this case being CMS, of course.

The presentation was intended primarily for third-party medical billers, but also included some important information for providers.

Mr. Liles pointed out that under Section 6401 of the Health Care Reform Act, Secretary H.H. Snow has the authority to require healthcare providers to put compliance plans in place. This will now be a condition of participation. “While the days of ‘voluntary’ compliance plans are over, the unresolved question is how this will affect third party billing companies,” he said.

Mr. Liles reported that changes to the False Claims Act were also subsequently covered in the Health Care Reform bill passed last March. Importantly, the Health Care Reform Act defined “overpayments” as “any funds that a person receives or retains” under Medicare or Medicaid, to which they are not entitled.

The Health Care Reform Act further provides that all overpayments must be reported and refunded within 60 days of being identified. The question is, what does “identified” mean?

“The bottom line is clear – should you identify an overpayment, it must be repaid within 60 days or the provider may be liable under the False Claims Act,” said Mr. Liles. “As the provider’s third party biller, you may also be jointly and severally liable. Third party billers are not keypunch operators – you will be held responsible.”

Regarding credit balances, Mr. Liles stated: “From a practical standpoint, health care providers need to ensure that “overpayments” and “credit balances” are returned to the proper payor in an expeditious fashion.” These would include:
Medicare, Medicaid and other Federal Health Benefit Program payors
• Patients / Non-governmental Insurance Companies
• State – under State escheat laws, these balances may belong to the State if you cannot return them to the payor

While most States impose civil penalties, plus interest, some states also have the ability to impose criminal penalties.

Mr. Liles concluded that again, “The bottom line is fairly straightforward; ‘overpayments’” and ‘credit balances,’ don’t belong to the provider. They should be returned to their rightful owner or to the State.”

Another concern is the recent changes to the Federal Anti-Kickback Statute, according to Mr. Liles. These changes make it easier for the government to show knowledge and intent requirements under the statute.

“In the past, due in part to conflicting case holdings, violations of the Anti-Kickback Statute were sometimes difficult for the government to show because some Federal Courts interpreted the “knowing” (knowledge) and “willful” (intent) requirements as mandating that the government must show that a provider had specific knowledge that their actions violated the anti-kickback statute and that there was a specific intent to violate the law,” Mr. Liles said. Under PPACA, a person may now violate the Anti-Kickback Statute without specific knowledge OR a specific intent to violate the Anti-Kickback Statute. Notably, similar changes were made to the Criminal Health Care Fraud Statute.

Another key change is that Permissive Exclusion Authority is expanded: HHS-OIG can exclude any individual or entity that knowingly makes or causes to be made a false statement or omission in an application, agreement, bid or contract to participate or enroll as a provider or supplier under a Federal healthcare program.

Most third party billers assist providers with Medicare applications, notices, updates, etc. Under this provision, the third party billing company is now squarely in the government’s sights. Mr. Liles pointed out that third party billers should take special care when assisting physicians with Medicare applications.

Another major concern is that under the Health Care Reform Act, HHS-OIG (in consultation with CMS), is authorized to suspend Medicare/Medicaid payments to a provider or a supplier “pending an investigation of a credible allegation of fraud.”

This is the first in a series of blog posts on this very interesting presentation; future posts will cover the compliance risks posed by ZPICs, RACs and other CMS changes. Visit our blog weekly to read the additional posts.

Robert W. Liles, Esq. owns a private law firm, Liles & Parker, which focuses on fraud defense, internal audits, compliance, and regulatory matters. Robert serves as AMBA’s General Compliance Counsel.

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Join Us for a Free Webinar–Best Practices in Medical Billing: What the Most Successful Practices Know that You Don’t

admin October 13th, 2010

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Wednesday, Nov. 10, 2010
1:00 PM EST

Best Practices in Medical Billing

Unlock the secrets of the best-run medical practices with Elizabeth Woodcock, co-author of The Physician Billing Process: Avoiding Potholes in the Road to Getting Paid and expert speaker and trainer in practice management.

Register Now to Gain Insights on How to:
• Reduce payer denials
• Streamline workflow — and help staff work smarter
• Establish staff accountability
• Measure key performance indicators
• And much more

Register Now!

Program Agenda
During this informative complimentary one-hour webinar, you will learn proven methods to:

• Increase internal edits to reduce payer denials
• Deploy automation to streamline workflow — and help staff work smarter
• Develop — and consistently apply — methodology for insurance follow up
• Encourage front-end registration accuracy and timely, complete time-of-service collections
• Establish staff accountability through performance audits and workload expectations
• Measure — and share — key performance indicators
• And much more

Question-and-Answer Session — Ask your tough questions and get answers to your current medical billing and practice management issues.

Who Should Attend
Private practice owners, office managers, billing managers, billers, billing service owners and others concerned about improving the profitability of medical practices and managing revenue cycles for healthcare practices will benefit from this informative session.

About Your Speaker:
Elizabeth Woodcock, MBA, FACMPE, CPC

Elizabeth Woodcock Talks About Best Practices in Medical Billing

Elizabeth Woodcock is a speaker, trainer and author who is passionately dedicated to helping physician practices achieve and sustain patient satisfaction, practice efficiency, and profitability. An expert at practice operations and revenue cycle management, she is nationally recognized for her outstanding presentations and writings aimed at improving the business of medicine. Her education and expertise, combined with her humor and an engaging delivery, make her popular with physicians and administrators alike.

With rich experience in consulting, training, and industry research, Elizabeth has led educational session for the nation’s most prominent health care professional associations, specialty societies, and medical societies. She consults for many clients including Kareo medical billing software.

Register Now!

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Key Performance Indicators for Medical Billing

Elizabeth W. Woodcock, MBA, FACMPE, CPC October 11th, 2010

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In today’s challenging reimbursement era, there seems to be no end in sight to the complexities of medical billing. Despite the obstacles, you have to be on top of your game to ensure that collections are optimized. There’s always plenty of work to do, but how do you know if your operation – and the staff you employ to carry out your game plan – is performing at full speed? Developing a dashboard of key performance indicators can maintain your focus on success.

Consider these key performance indicators to establish the framework for your dashboard.

Days in receivables outstanding (DRO). Without a doubt, the best overall indicator of billing performance, DRO must be measured consistently in order to be meaningful. Calculate DRO by adding your current total receivables outstanding and the sum of your credit balances. (Adjusting for credits is important, as credits offset receivables, thus masking performance.) Divide that figure by your average daily charge. You can calculate your average daily charge by taking the previous three months’ worth of charges, and dividing by 90. Although you can determine the average daily charge based on 365 days, using 90 days accounts for seasonality, growth and other fluctuations in business.

Your DRO should be in the range of 40 to 45 days, although there are several factors that may cause it to fall outside of this target. You can improve DRO results through robust time-of-service collections, including collection of copayments, coinsurance, unmet deductibles and pre-service deposits. Insurance verification and timely, clean charges contribute to success as well. Factors outside of your control, such as dealing with challenging payers like Workers’ Compensation and having a bevy of patients on payment plans, may lead to above-range DRO results, even if your operations are in order.

Receivables outstanding over 120 days. Monitor the aged receivables sitting in your aged trial balance to determine if your efforts are paying off. Obviously, you’d prefer to see that 100 percent of your receivables are under 120 days, but that’s unrealistic. Shoot for less than 12 percent being over 120 days. (As noted above, be sure to exclude the credits when analyzing the amount of accounts receivables over 120 days.) The same factors cited above for DRO may positively – or negatively – impact your ability to beat or fall short of the 12 percent range.

Although focusing on the ‘over 120 day’ category is recommended, you can certainly measure your success by evaluating the percent over (or under) any of the aging categories. The key is to choose a category – and stick to it.

Net collection rate. Although it’s nice to measure your collections as a percent of gross charges (commonly referred to as the gross collection rate), you can’t use the result to judge the performance of your operation. Since each medical practice’s fee schedules, payer mix, and contracts vary, your gross collection rate also will be different. Instead, focus on the net – also known as ‘adjusted’ – collection rate. Of each dollar you’re allowed to collect, what percentage of it do you actually collect? For example, if the allowable for USA Insurance is $56.40 for a 99212, did you collect all of that money? You’ll have to chase down that money from USA Insurance and, particularly in today’s consumer-directed health care era, from the guarantor, too. As a result, the net collection rate reflects your ability to collect the contracted allowable rate, which is a combination of payments made from both the payer and the guarantor.

A 100 percent net collection rate would be ideal, but the range to look for is 96 to 98 percent. There are a couple of important factors to recognize: the two to four percent left on the table is bad debt, including monies you’ve written off to a collection agency and other uncollectables. Furthermore, if your rate is too good to be true, it probably is. Indeed, if you’re reporting 100 percent (or more), month after month, it may be a result of wide variability in productivity or revenue (and thus signal a potential need to redesign billing processes) – or it may be a function of how your staff is treating adjustments. Let’s say you contract with USA Insurance for $56.40 for a 99212.  Assume that the claim is denied due to untimely filing, which is a non-contractual adjustment. Missing a timely filing deadline – and having to adjust off the expected money — is one of those uncollectables that causes the net collection rate to dip below 100 percent, as it should.  If your staff incorrectly categorizes the adjustment as a contractual adjustment, then neither the payment nor the allowable are included in the rate. If uncollectables are all written off as contractual adjustments, you’ll appear to be collecting 100 percent of the dollar – even when you’re really not.  To keep it real (and thus, find opportunities to improve collections), you need to differentiate between contractual and non-contractual adjustments – and work on reducing the latter.

Cash. The last, but certainly not least, key performance indicator is measuring collections on a weekly, if not daily, basis. Although cash can’t be benchmarked, you can ensure that its flow is the same as – or better than – the previous time period. You’ll also want to keep in mind that cash may vary from week to week (or day to day). It may increase when new physicians and/or services are added or decrease if patients cancel procedures, physicians take time off or resign, or other events that may choke off cash.

Fixing the problems

While some percentage of the complaints that patients bring to your office will inevitably get better with the passage of time, the same cannot be said for medical billing financial performance. Once the car’s wheels go off the paved highway, it’s not too long before you are in a ditch, financially speaking. Here’s what to do with the knowledge you gain by monitoring key performance indicators:

Use your KPI data. Falling within the industry norms on key measures should certainly be your goal, but it’s easy to be distracted by the multitude of external challenges that influence your performance. For this reason, recognize the upper limits – that is, the OMG (‘oh, my gosh,’ for my non-texting friends) factors:

  • For DRO, get nervous when it rises past 65 days;
  • For receivables over 120 days, set the panic alarm to go off at 20 percent; and
  • For net collection, investigate staff performance and office policies when it hits 90 percent or lower.

While underperforming at times on some or several of these indicators may be a fact of life in your situation, it pays to have a line in the sand that will signal you to dig deeper for opportunities to improve performance.

Don’t allow too many excuses. Verify insurance before patients present, and don’t forget to check coverage on hospital and other non-office services. For the latter, even if the services have already been performed, you are better off identifying insurance problems before the claim is transmitted instead of 30 or 60 days later when the claim finally bounces back to you. Encourage collections at the time of service, focus efforts on identifying and reducing denials, and work accounts fully every 60 days.

Don’t be misled. Carrying credits masks your true performance, making it look much better than it really is. Keep a tight rein on credits; use the 60-day mark for getting those processed back to the correct party. Although payment plans may be a necessity of your patient collections process, categorize them with a different payer class. Don’t bury payment plans in the middle of your patient receivables. Classify these accounts separately, and report your DRO and receivables over 120 percent with – and without – payment plans.

Use automation. The influence of automation can’t be overstated. Improve your cash flow by automating insurance coverage and benefits eligibility verification, charge scrubbing, electronic remittance, funds transfer, remote deposit and the many other technological tools available to the medical billing industry.

Writing off a bunch of uncollected money will certainly bring your DRO and percentage of receivables over 120 days into alignment with industry standards, but it won’t tell the whole story of your financial performance. Worse, it will give you an inaccurate snapshot of the health of your operations. Monitoring all of the key performance indicators together – and doing so weekly, or even daily – means there is nowhere for poor financial performance to hide. You simply can’t get better until you know where improvement is needed. Ultimately, that’s the goal of the key performance indicators – not to judge, but to improve.

KPI                            Industry norm                                   OMG (‘Oh, my gosh!’)

DRO:                         40 to 45                                                      65

A/R over 120:             <12 percent                                                 20%

NCR:                          96 to 98%                                                    90%

Cash:                         $?

Elizabeth Woodcock, MBA, FACMPE, CPC, is an expert, author, speaker and trainer in practice management operations and revenue cycle management whose clients include Kareo medical billing software.

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Two Critical Components to Building a Dynamic Team

Thom Schildmeyer October 11th, 2010

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Perhaps the two most important steps to building a dynamic team are retaining top performers and creating a winning environment. Unfortunately, many practices realize from experience that a lack of teamwork leads to office inefficiencies, low morale, staff turnover, and many lost hours sorting out staff controversies. How then does a practice create a winning team?

The first step to creating a winning team is hiring and retaining top performers. Management should assess its current and future personnel needs and ask itself the tough questions. Do we encourage high performers to excel in our practice? Do we consistently ask our staff what is going well and where can we improve? Have we created an environment that attracts quality people? When management asks these types of questions, they also need to understand why staff members leave the practice. The most commonly reported reasons why individuals leave a company are:

  1. Lack of recognition and appreciation.
  2. Feeling stressed and overworked.
  3. Not feeling a part of a team and not getting along with fellow employees.
  4. Lack of leadership/management.
  5. Work is not meaningful.
  6. They feel as though they are not contributing.
  7. They lack clear job descriptions.
  8. There is no career path or training.
  9. Higher salaries and/or benefits.
  10. Lack of vision or understanding of their role.

These reasons focus on the employee and how they felt they were treated by management and coworkers. How does your practice rank in these 10 areas? A practice must commit to these fundamentals if it wants to attract and retain the right personnel to build a high-performance team.

An important second step in team development is creating a winning environment. To motivate employees to work as a team, management needs to create the right environment by setting goals, communicating everyone’s roles, recognizing team members, and sharing practice success.

Retaining good people and creating high performance teams can only happen with strong leadership. It is imperative that management (physicians, managers, and administrators) create goals for the practice. A goal may simply be providing high quality patient care. Whatever the goals, team members must clearly understand them and how they individually fit into attaining them.

Detailed job descriptions are a good way to communicate team member roles. Each team member must know his or her job specifics and expectations. They must clearly understand how their position fits into the vision of the practice. They also must be held accountable for performing those duties appropriately through annual reviews. An annual review serves as a report card that measures what team members are doing well and where they need to improve.

Building a team starts with goals, roles, and reviews; however, a team will only succeed if management recognizes team members, shows appreciation for their efforts, and shares successes with them. Recognition and showing appreciation does not have to be complicated. Simply saying hello or good morning to team members, thanking them after a difficult session, or complimenting them on handling a difficult patient can have a tremendous impact on morale. Make it a habit to “catch” team members doing things right and acknowledge them for it. Praise works wonders on staff morale.

A firm commitment to attracting and retaining top personnel, developing goals, defining roles, and recognizing team member’s accomplishments will eliminate many battle lines and lay a firm foundation on which to build an enduring, winning team.

Thom Schildmeyer, MBA, is President of Aesyntix Health, Inc., a medical billing service based in Roseville, CA.

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Medical Billing Tip of the Month – October

Linda J. Sacco, CEO, RMC, Advantage Medical Billing Solutions LLC October 11th, 2010

1 Comment Latest by COMMENTOR NAME

Utilizing Prolonged Services Coding to Maximize Practice Revenue

It is our job to look closely at each area of revenue and expense in great detail with the goal and expectation of finding overlooked areas of profit and expense opportunities that will fine tune and maximize practice profitability.

One area that we find deserves great focus and consideration is coding technique.

Let’s use a one-doctor practice as an example for this coding and documentation technique. This medical practice sees approximately 13-15 patients per day. Some of these patients are booked for 10 minutes and some booked for 45 minutes, depending on the type of exam and nature of presenting problem. Regardless of the type of exam or problem, many times the provider will address multiple issues and counsel on some of these issues as well as treat on other issues thus causing the original 10-45 minute appointment go into 40 to even 75 minutes. How can the provider get compensated for all this additional time and work?

Medicare allows office visit coding and billing based on time when a visit is extended in time due to counseling and coordination of care; if this is more than 50 percent of the time of service then time shall govern the coding of the visit. Let’s say a scheduled, typical 99214 visit takes 60 minutes of face-to-face time with the patient when typically 25 minutes face-to-face time is spent on this visit. This visit would be eligible for additional prolonged services coding due to the additional 35 minutes. Prolonged service codes 99354-99355 are used in addition to the E/M code based on the additional time spent on counseling and coordination of medically necessary issues face to face with the patient. These codes do require documentation of the additional time spent as well as the medically necessary reasoning for spending this time. Prolonged service codes are not reportable with preventive medicine exam codes. Review the threshold times to bill for prolonged visit codes on page five of the following link:

What to do next: Add these codes to your EHR’s and your encounter forms and let’s take a look at the financial impact of using these codes in your medical practice.

Continuing with the practice example above, say that this practice sees patients 4 days a week and that once a day the practice is presented with a prolonged service situation for a patient visit. This is an average of 4 times weekly and 208 times annually. Continue to use the same CPT code you would normally use based on the visit regardless of what CPT/Carrier you’re billing;  that part of your reimbursement will remain the same or constant. However, adding a 99354 which has a Medicare allowed amount of $104.64 times the 208 times per year is an additional $1,813.76 per month or $21,765.12 per year in revenue to your practice. This is a considerable impact and most providers are unaware of these codes or are unclear as to how and when to use them.

Remember to document all times and medically necessary reasons for the warranted additional time.

Linda J. Sacco, CEO, RMC
Advantage Medical Billing Solutions LLC
Voice 877.666.5279

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