Insights from MGMA 2011: Use Data Analysis in Your Practice to Make Smarter Business Decisions

Kathy McCoy, MBA December 29th, 2011

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At the 2011 MGMA annual meeting, Cass Shaedig gave a presentation that many medical billing professionals are likely to find interesting and illuminating. Shaedig, president of Trellis Healthcare, a business-intelligence firm focusing on group physician practices, showed how you can use data analysis in your practice to drive business decisions.

This comes, of course, at a time when data is more available, more powerfully analyzed and more vital to practices’ business success than at any time previously. It should also come as no surprise that much of the data that’s critical to practices’ business intelligence falls squarely within the purview of medical billing staff, including coding, collections, reimbursement and more.  

Measure, monitor & succeed

In her presentation, Shaedig spoke about how practices can get useful data from practice-management software systems and incorporate it into business analysis along with data from external sources, particularly comparative “benchmark” data. In fact, Shaedig listed benchmark data as a key area of metrics/indicators to include in business-performance analysis. Payer reimbursement, provider productivity and the success of marketing (especially the development of referrals) are the other key measures Shaedig mentioned. 

How do you measure a practice’s performance?

When it comes to a practice’s business performance, there are several areas that should be monitored and measured. The first is productivity, which includes:

  • patient volume,
  • new-patient volume,
  • procedure volume,
  • gross charges and revenue,
  • days worked and
  • relative value units (RVUs, covered later in this article).  

Coding is also a vital metric, including evaluation and management curves and CPT/ICD-9 coding patterns. Shaedig stressed that coding metrics should be evaluated against Medicare and all-payer data sets in order to know how a practice stacks up against other practices.

Another key area to measure is marketing. What are the trends? How much money is being generated by marketing and referral-development efforts? What is the demographic profile of the practice’s patient base? Where are patients coming from? Practices should also know who their referrers are and how many patients they refer. Shaedig was careful to cite the importance of knowing referral value vs. volume.

Of course, the financials are critically important. What are the total collections? Collections as a percentage of charges? What are the guarantor collections? What percentage of charges are denied? What is the time lag between when charges are posted and paid? Shaedig was also very specific that she believes the best indicator for collections success and performance of payer contracts is “revenue per RVU.”

Understand RVUs & include them in the data analysis

In the world of practice management, RVUs have become — and are increasingly becoming — an important way to measure provider productivity, assess payer performance and determine how practice overhead is distributed. There are three types of RVUs: “Work,” “practice expense” and “malpractice” RVUs. But total RVUs are also important. (See “Understanding the RVU in Practice Management: Getting the Most Out of Using It in Your Practice” previously published on our blog.)

RVUs are a standard unit of measurement for productivity. CPT codes are assigned a specific RVU value that is “payer-blind” and disconnected from the dollars it earns. Work RVUs make it possible to measure the productive contribution of providers whose services have very different levels of reimbursement dollars. In this way, work RVUs “level the playing field” between providers, as dollars collected — while essential to measuring business success — are not a true measure of productivity.

Analyzing practice expense RVUs makes it possible to see how costs are allocated throughout the practice. This permits, as does all business-intelligence analysis, making business decisions that are informed by a thorough understanding of the practice.

Dividing total RVUs by RVUs generated, said Shaedig, allows the practice to see how well it is being reimbursed. Be sure to use only fully adjudicated services, include denied services and patient/guarantor payments, and don’t include services with no assigned RVU value.

Tips for analyzing a practice’s business data

Shaedig stressed that practices should develop standard performance measurements based on those that already exist. Practices need a standard to which they can compare their performance. She said that practices must identify the metrics, make them known to the providers, consistently report the findings and patterns to providers and keep an eye on how that reporting changes provider behavior and coding patterns.

Practices must also make sure to incorporate changes to CPT codes into the analysis of business data, Shaedig said. For example, the elimination of consult codes does not truly mean a drop in patient visits, as it might seem to indicate. These visits now have different codes. Similarly, combined codes may seem to indicate patterns that are false. Adjust for these.

Ultimately, Shaedig advised that distilling the available ample data into manageable information is central to practices’ success… and sanity. But practices must define their own goals and identify which markers/metrics they want and need to track. At the same time, she recommended keeping it simple and, if possible, including an analysis of RVUs.

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Getting Paid in 2012: 2012 CPT Code Changes and More

Kathy McCoy, MBA December 27th, 2011

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Expert Elizabeth Woodcock explains the CPT code changes and other issues that will affect your medical billing in 2012

Any savvy medical billing professional knows that maximizing the reimbursement for services rendered has always been a numbers game: specifically, using the right numerical codes whenever and wherever applicable to generate the highest possible cash flow. That hasn’t always been easy, with yearly changes and clarifications to the codes and CMS regulations on how to use them. And even if a practice is not dependent on Medicare patients, other insurers tend to follow the trends set by government payers.

In order to prepare medical billing professionals for the coding and reimbursement changes that are impending in 2012, Kareo recently asked leading practice management expert and author Elizabeth Woodcock, MBA, FACMPE, CPC to provide a detailed overview on 2012 CPT code changes and other challenges ahead. Her webinar, Getting Paid in 2012: What You Need To Know Now To Make It Happen, is packed with information that will help medical professionals from any specialty to maximize their reimbursement in 2012. To learn about important CPT changes in 2012, keeping reading this blog post. To hear her suggestions on dealing with Medicare in 2012, the Affordable Care Act, commercial payers and “voluntary” incentive programs, check back soon for subsequent blog postings.

A big change to the 2012 CPT code manual that affects virtually every specialty in 2012 is the definition of “new” versus “established” patients. A big change that affects virtually every specialty in 2012 is the definition of “new” versus “established” patients. In the evaluation and management section, the 2012 CPT manual says that “A new patient is one who has not received any professional services from the physician or another physician of the exact same specialty and subspecialty who belongs to the same group practice, within the past three years.” This affects any group that has more than one subspecialty within the same practice. Why is this significant? Because the payment for a new patient (Code 99203) can be 15 to 25 percent higher than the reimbursement for an established patient visit (99213) The American Medical Association has created a decision tree that can help medical billers distinguished between the two.

Other positive changes can be found in the Prolonged Services set of codes. The 2012 CPT manual has dropped the “face-to-face” verbiage in code 99358, which allows reimbursement for prolonged services–such as records review–before or after delivering direct patient care. That means those services do not need to be conducted the day of the patient’s visit. And in 2012, prolonged services are now reimbursable if they are delivered by an “other qualified health care professional”–not strictly just physicians.

Some specialists will be heartened to know that new clarifications allow for additional or higher reimbursement than before. Cardiologists, reconstructive surgeons doing skin replacement surgery, pulmonologists, ophthalmologists and any practices administering vaccines were some of the pertinent specialties Elizabeth mentioned. Be sure to check the 2012 CPT manual for the codes you use regularly.

Finally, Modifier 33 relates to almost any specialty. CMS introduced this modifier in early 2011 and it reimburses practices for preventive services. Elizabeth points out that while the language is somewhat confusing, Modifier 33 pays for about 60 types of preventive services with no cost sharing for Medicare patients. It is important that these services are identified correctly by Modifier 33 because if they are not, patients may be billed inappropriately—and that will generate complaint calls to physician offices.

Kareo regularly sponsors webinars featuring Elizabeth and other experts discussing strategies for more efficient, accurate medical billing and maximum reimbursement. If you have a specific concern, be sure to check out our webinar archive. If you would like to hear about upcoming webinars, sign up for our notification list.

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Small Business Lessons for Physician Practices – Part 4 of 4 – Operations Management for Physician Practices

Laurie Morgan December 23rd, 2011

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The operations management variables that impact a medical practice’s productivity and patient satisfaction are similar to those that matter to manufacturers

Would it surprise you to know that the operations management variables that impact a medical practice’s productivity and patient satisfaction are similar to those that matter to manufacturers?  Manufacturing managers consider issues like plant layout and structure, equipment replacement, scheduling optimization, inventory management, and quality control.  These terms may sound like management gobbledygook that has nothing to do with a medical practice…but let’s take a closer look.

Plant Layout

In manufacturing, mistakes in plant layout can undermine – even wipe out – a company’s profitability.  For example, if partially fabricated products must move long distances across a plant, that can significantly increase production time, increase the potential for damage to components, even add costs for forklift operators and fuel.  Better workflow would eliminate all those extra costs – and immediately improve the manufacturer’s productivity.

Workflow in a medical practice is also important to efficiency – and profitability.  If your office set-up and procedures require extra footsteps, then those small inefficiencies can add up to a real bite out of your productivity when repeated over thousands of patient visits during the year.

One of our clients inherited a terrible office layout when taking over a colleague’s practice.  This busy doctor’s exam room was down a hall and around a corner from her nurse’s station – so he could never get his nurse’s attention without a trip down the hall.  The doctor quipped that this inefficiency gave him a little extra exercise, but in reality it was adding as much as a minute or two to each appointment. It would be much better to fix this problem and have an extra couple of hours a week to spend at the gym – and save on staffing costs.  (Or see a few more patients!) Reconfiguring the awkward layout wasn’t possible, but we came up with a simple solution: a discreet bell that the doctor could chime to let the nurse know to come back to the exam room.    

In our consulting business, we’ve found that most practices don’t consider the cost of little inefficiencies like these – repeated extra steps.  Some of the most common layout inefficiencies we’ve noticed:

  • Phones not easily answered from anywhere in the office
  • Supplies not readily available in all exam rooms
  • Patient entrance/exit paths not clearly marked
  • Most used areas of practice located furthest from check-in
  • Too much space allocated to lower-productivity uses.

Even when redesigning the office is impossible, small fixes can ameliorate many layout problems. 

For example, adding phone extensions in multiple areas of the office can allow staff located away from the check-in desk to pick up a call in the event of a sudden rush of calls – saving the time of listening to messages and returning calls, better serving callers, and potentially capturing prospective patients who might have hung up and called another doctor.

If repeated trips to a central supply room are adding steps to the daily routine (and causing delays in completing patient services), more storage is likely needed in each exam room. Be sure there’s room to stock a full day’s supplies, so that this is a once-a-day task.

Equipment Replacement

In manufacturing, it’s critical to replace outdated equipment at just the right time to avoid downtime.  Even a few days of downtime can jeopardize a small manufacturer’s profitability.  On the flipside, manufacturers must also be vigilant about investing in equipment upgrades that can improve productivity.  Calculating the payback period of such investments is key.

Too often, medical practices fail to do this sort of analysis of technology investments – instead assuming that delaying technology purchases to save money is always the right way to go. However, upgrading now could be much more profitable than delaying if it can increase practice productivity.

Recently, we worked with a practice that was reluctant to replace either its billing hardware or software because they thought they were saving money by not doing so.  But, the practice had grown, and its slower computers couldn’t process all the bills in a timely fashion – in fact, they had been happy if they managed to bill once a week!  Worse, the software was outdated, lacking a graphical interface, so that there was a steep learning curve for staff who needed to use it for practice management.

For our client with the outmoded, server-based billing system, almost any kind of modernization would have paid for itself quickly – and improved the profits of the practice from that point on.  But we also advised the practice to look closely at cloud-based providers like Kareo.  Working with a product like Kareo that is automatically updated can take some of the burden of deciding when it’s most profitable to upgrade off of doctors and practice managers. 

Inventory Management

Manufacturers care about inventory management because buying supplies and parts ahead of schedule or making finished products before they’re needed means that cash is tied up in those items.  In the worst cases, products are built that become obsolete before they can be sold.

In a medical practice, there are some parallels — for example, medical supplies that you need to have on hand, but that expire.  Rather than ordering these in excess, establish a process for ordering them just in time – and for taking perfect care of highly perishable supplies like vaccines.  Most practices find that it’s very hard to get full reimbursement for vaccines – if supplies are allowed to expire and thereby go to waste, vaccines become a net cost to the practice!

Buying in bulk is often a cost-saving option for non-perishable supplies.  But, those extra supplies need to be stored somewhere.  If stocking up takes up space that could be used for more profitable activities – even handling additional patients – it may be time to reconsider the value of bulk-buying.

Scheduling and Control

For manufacturers, scheduling plant operations optimally is essential for profitability.  Just starting up the plant often means significant costs for payroll, electricity, etc.  If the plant is open but idle, costs can run up dramatically – with no revenue to support them.

A medical practice may not seem much like an assembly line, but opening the doors each day requires outlays for utilities and payroll (typically the largest cost for practices).  Scheduling inefficiencies are one of the most common productivity problems we see in practices; downtime during the day is a direct hit to profitability.  Too often, staff will ask patients, “When would you like to come in?” instead of offering the next available spot to keep the calendar full.  Don’t leave scheduling up to patients – offer them times that make your practice more profitable first.

Quality Control

In the early 90s, an idea took hold in manufacturing that still applies today: Quality is free.  The theory was that quality problems cost businesses customers, and that errors in production were costly to fix – so, avoiding them in the first place was more profitable.

The idea that quality is free is perhaps the most relevant operations management concept for medical practices. In so many ways, practices can’t afford errors – not only can they decrease practice profitability, in the worst case, they can be dangerous to patients.

The chief idea behind manufacturing quality control is that when quality is consistently inadequate, it’s often a problem of the system, not the team.  It’s easier to point fingers and try to eliminate poor performers.  But, over the long run, well-run practices will examine how jobs are structured and the day-to-day processes of the practice to identify ways to reduce opportunities for errors to occur.

Putting It Altogether

Effective operations management ultimately means conducting your business so that all of your investments of time and money – whether physician time, staff time, supplies, even your rent and utilities – are allocated to patient care.  Minimizing your steps through the office, managing your schedule to reduce downtime, keeping equipment up-to-date and timing and optimizing your inventory purchases all allow you to serve each patient with as little associated expense as possible.  And that contributes to making your practice as possible as possible!

Thinking like a businessperson has been the theme of this Small Business Lessons series of articles.  A medical practice is a business with a higher purpose of patient care, but it is nonetheless a business.  Thinking of it as a business and aiming for efficiency and profitability means better compensation and financial stability for physicians and staff.  And, this in turn allows the practice to continue to pursue its higher goals.

Small Business Lessonsis the fourth in a four-part series.  The other articles in the series are Small Business Lessons: Human Resources, Small Business Lessons: Getting Started With Marketing, Small Business Lessons: Financial Basics.

Laurie Morgan is a management consultant with Capko & Company. She specializes in marketing, management and technology for medical practices and blogs about practice management issues at . Laurie has a BA in Economics from Brown University and an MBA from Stanford.

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Complimentary Webinar – Let’s Collect Deductibles in 2012: Tips for Improving Self Pay Collections

Kathy McCoy, MBA December 21st, 2011

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Thursday, January 19, 2012
10:00 AM – 11:00 AM PST / 1:00 PM – 2:00 PM EST
Sara Larch, MSHA, FACMPE

Sara Larch will discuss strategies that will help manage deductibles and increase revenue collected at time of service

At the beginning of each calendar year, medical groups feel the impact of deductibles on their bottom line unless they implement “best practices” for self pay collections.  Medical practices will have even more self pay patients in 2012 and the deductible category is the fastest growing portion of self pay.  This is a result of the number of patients selecting high deductible health plans without the ability to pay their deductible – thus resulting in patients who are underinsured.  In this webinar, we will focus on strategies that will help collect deductibles and increase revenue collected at time of service.

We will discuss how to improve self pay collections and attendees will learn:

  • The importance of good patient communication
  • What the medical group’s staff needs to know
  • “Best Practices” in self pay collections at time of service
  • And much more

Sara Larch, MSHA, FACMPE, principal, Business of Medicine and co-author of “The Physician Billing Process: 12 Potholes to Avoid in the Road to Getting Paid,” will describe key methods for managing deductibles to increase your practice’s revenue.

Register now to learn strategies that will help manage deductibles and increase revenue collected at time of service

You can download the Let’s Collect Deductibles Webinar Handout now.

Question-and-Answer Session — Ask your tough questions and get answers to your challenges with collecting deductibles and managing practice cash flow after the deductible reset.

Who Should Attend
Private practice owners, office managers, billing managers, billing service owners and others concerned about managing practice cash flow and profitability.

About Your Speaker
Sara Larch, MSHA, FACMPE

Sara  Larch will discuss how to manage cash flow and collect from self-pay patients after the deductible resetSara Larch, MSHA, FACMPE, is a speaker, author and consultant in the healthcare industry.  She has more than 30 years of experience in medical group operations in private physician and large medical group practices, non-profit health systems, academic medical centers, and physician faculty practice plans.

Sara currently assists medical group practices with practice analysis & operational improvement, physician practice integration and alignment, facilitating and leading change, and physician and hospital relationships.

Sara is Past Board Chair of the Medical Group Management Association and Past President of the Academic Practice Assembly and the Association of Managers of Obstetrics and Gynecology.  She is a co-author of “The Physician Billing Process: 12 Potholes to Avoid in the Road to Getting Paid and is a popular speaker at national and local conferences.

Register now to learn strategies that will help manage deductibles and increase revenue collected at time of service


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ICD-10 Training Camp: Beware of Coding Changes Easily Missed in ICD-10-CM, Part II

Nancy Maguire, ACS, PCS, FCS, HCS-D, CRT December 19th, 2011

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Note: This is the second part of an article published in our Getting Paid newsletter last week.  You can read Part 1 now.

Stop and review these coding changes easily missed in ICD-10-CM

ICD-9-CM classification has “V” codes describing “aftercare” encounters and “V” codes describing “follow-up” encounters.  In ICD-10, the rules change when the encounter is for aftercare of an acute injury.  Follow-up (surveillance codes), also has a noted rule change in ICD-10.  In the ICD-10 classification, the “V” codes as we know them in ICD-9-CM are listed as “Z” codes in Chapter 21 of the new classification.  

In ICD-9 we would have used the “aftercare healing” codes for these encounters, but not in ICD-10.   ICD-10 gives instructions to not use the aftercare codes, but to use the acute injury code and in the 7th place, the D is placed to indicate ‘subsequent encounter.’  The guidelines state “The aftercare Z codes should not be used for aftercare for injuries. For aftercare of an injury, assign the acute injury code with the 7th character “D” (subsequent encounter).” “Extension D” subsequent encounter is used for encounters after the patient has received active treatment of the injury and is receiving routine care for the injury during the healing or recovery phase. Examples of subsequent care are: cast change or removal, removal of external or internal fixation device, medication adjustment, other aftercare and follow up visits following injury treatment. Examples:

S83.511D – “Sprain of anterior cruciate ligament of right knee, subsequent encounter” or,

S72.21XD, “Displaced subtrochanteric fracture of right femur, subsequent encounter for closed fracture with routine healing.”

If the patient presents for aftercare of a surgical procedure, the appropriate “Z” code is assigned in ICD-10-CM.  For example, an encounter for aftercare following heart transplant would be code Z48.21.    Another example for aftercare is code Z48.01 Encounter for change or removal of surgical wound dressing.

Aftercare codes may also be listed in other chapters of ICD-10

Aftercare codes may also be listed in other chapters of ICD-10.  An example is treatment for a sequela of cerebral infarction, Chapter Nine: I69.351, “Sequela of cerebral infarction, Hemiplegia and hemiparesis following cerebral infarction affecting right dominant side.”

Follow-up codes are used for conditions that have completed treatment or for cancer patients to monitor the recurrence of cancer after treatment has been completed.  These are surveillance encounters, no complaints, no symptoms, no treatment currently rendered.  Previous resolved conditions require monitoring to detect recurrences.  ICD-9-CM coding guidelines (V67 series) state that follow-up codes are listed first unless a condition has recurred on the follow-up visit, then the diagnosis code should be listed first in place of the follow-up code.

ICD-10-CM coding guidelines differ in that if a condition is found to have recurred on a follow-up visit, the follow-up code is still used as first-listed and the diagnosis code is listed second.  Personal history codes should be assigned as an additional code with follow-up examinations.  An example of a follow-up code in ICD-10 is as follows: Z08 “Encounter for follow-up examination after completed treatment for malignant neoplasm.”  Category code Z08 includes: medical surveillance following completed treatment.  ICD-10 also instructs the coder to: Use additional code to identify any acquired absence of organs (Z90.-); Use additional code to identify the personal history of malignant neoplasm (Z85.-).  Additional characters will be needed on category Z90 and Z85 to complete the code assignment.  Medical record documentation must be specific for accurate code assignment.

Code Z08 is a full code; it does not require additional characters.  There is an Excludes1 note under category Z08.  This note states that if the reason for the encounter is aftercare following medical care (Z43-Z49, Z51), you are not to assign code Z08.

Category code Z09 describes an Encounter for follow-up examination after completed treatment for conditions other than malignant neoplasm.

The distinction between “aftercare” and “follow-up” care must be determined prior to code assignment.  Aftercare for acute injuries will be assigned a code from Chapter 19, ICD-10, with the appropriate “subsequent care” 7th character extender.  Encounters for “follow-up” care or surgical aftercare will be assigned a code from Chapter 21 of the ICD-10 Tabular list.  Documentation in the medical record must be clear on the circumstance and intent of the visit.

Nancy Maguire reviews coding changes easily missed in ICD-10-CMNancy Maguire, ACS, PCS, FCS, HCS-D, CRT, author of The Nancy Maguire GPS to ICD-10-CM Planning and Implementation Guide, is a nationally-renowned procedural and diagnostic coding instructor, bootcamp trainer, and workshop leader. She has spent more than 30 years as a hands-on coder and has authored countless coding articles and presentations. She served the first two terms as president of AAPC in the early 1990s.

Hear Nancy speak in two complimentary archived webinars on ICD-10 presented by Kareo medical billing software: How to Prepare for ICD-10/5010 to Reduce F41.1 (Anxiety Reaction) or Preparing for ICD-10-CM: The Nitty-Gritty of Diagnosis Coding. You can also read her entire series of articles on ICD-10.


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Insights from AMBA 2011: Policies and Claims Tracking Can Improve Collections

Kathy McCoy, MBA December 14th, 2011

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Policies and Claims Tracking Can Improve Medical Practice Collections

Maximizing collections is the point, the goal, the mission of medical billing as a profession. At this year’s AMBA meeting, it was also the topic of a presentation given by Cyndee Weston, AMBA’s founder and president. In that presentation, Weston essentially made a single, powerful assertion: There are things medical billing professionals can do to improve collections

So, what are they?

It comes down to information. Providing it and collecting it

Weston’s discussion focused primarily on two things billers can do to be more successful at collecting:

  • Set, communicate and follow policies to reduce labor and improve patient compliance/remittance.
  • Track denials, payments and adjustments in order to identify, analyze and fix claims issues.

Written financial policies help improve compliance and remittance

While many practices don’t have a clear, written financial policy, Weston said they should. Who is responsible to pay? What fees are charged for various filings, appointment no-show fees, charges for NSF checks? How is delinquency defined? Collections process and charges?

These and many other issues should be crafted into a clear, detailed policy that is presented to patients in writing at the beginning of the relationship. This establishes the norm up front. It makes clear to patients what is expected of them and what they can expect. Be sure to obtain the patient’s signature for their receipt of — and agreement to — your policies. Do this not just at the initial visit but again each time policies are updated. Weston advised, also, to make new or changed policies available to patients on the web, via fax or through mail.

Establish the norm for staff… and empower them

Having written policies is as helpful for aligning staff to the practice’s A/R goals as for patient compliance. Written policies tell staffers what is expected of them and of the patients. The policy removes guesswork and judgment. It also gives medical billing personnel and office staffers the ability to be firm, which is a must. A signed, agreed-to policy enables staff to remind patients that they have always been aware of the processes and responsibilities, agreed to them and have had a copy to reference.

Communicate all policies and help everyone understand

Pointing out that communication is critically important to collecting, Weston explained the need to provide to patients not just financial policies but also office policies. They need to know your hours, policy on prescription refills, reporting of test results, privacy rules and other things that may come up as issues that impede payment. This includes letting them know, as a deterrent, the practice’s policy on “firing” or “divorcing” them for delinquency, not adhering to physician advice and/or other reasons.

Weston also advised doing all you can to help patients understand their responsibilities, your policies, their coverage, their EOBs and anything else that will make them more willing and/or able to pay. Similarly, be open and direct with staff so they know their responsibilities and are best able to work toward their goals.

Lastly, Weston said that billing managers and personnel should be willing to explain the importance of and need for written policies to the physicians and other decision-makers in the practice.

Tracking helps you identify and fix problems with claims

Of the many key policies and practices that Weston recommended, one of the most important is to track claims denials, payments and adjustments. Simply put, you cannot manage what you don’t measure. And you can’t fix what you can’t find. Specifically, Weston says that billers must use their billing software to identify and analyze problems in claims that may be adversely affecting reimbursements.

Billing departments need to make sure to set up specific codes for each specific reason for denial: Insurance terminated. Out-of-network. Set up specific codes, also, for every possible type of payment, including which carrier, type of payment, etc. Then do the same for adjustments, including both voluntary and involuntary write-offs. In essence, billing departments need to design what they want to track. Having codes for every situation reveals patterns, from too many physician-waived fees to poor pay frequency from a certain carrier.

In her presentation, Weston also outlined some ways to quickly assess accounts receivable and some reasons behind what you may find. Plus, she provided ways to boost overall office and billing efficiency. Visit AMBA’s site for more information on these and the other topics covered in Weston’s presentation.

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CPT Changes for 2012: An Overview

Betsy Nicoletti, M.S., CPC December 12th, 2011

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Coding expert Betsy Nicoletti reviews the changes in the 2012 CPT codes

Isn’t getting a new CPT book a little like a birthday present?  The excitement of unwrapping it, the suspense about what’s inside.  A new CPT book may not be as much fun as a new video game or as intriguing as a jewelry box, but coders eagerly anticipate it.

A listing of code changes for the year can be found in Appendix B of the CPT book, “Summary of Additions, Deletions and Revisions.”  This is the first place coders look for an overview of changes. The Professional Edition of the CPT book shows editorial changes in green within the body of the book, which can be very helpful.  It focuses a practice on the changes that matter for their specialty.

The 2012 CPT Book has the return of the new and established patient visit Decision Tree.  The tree defines a new patient in a practice as a patient who has not been seen by a physician in that group in the past three years of the “exact same subspecialty.”  This will lead some subspecialists within a group to bill for new patient visits in place of established, but heed this caution:  CPT sets coding rules and payers set reimbursement rules.  Currently, Medicare and most payers only consider specialties that are designated by the two-digit specialties developed by Medicare.  If the subspecialist in question doesn’t have this two digit specialty designation, the payer will continue to process the claim as an established patient.

Increase to work RVUs

The initial observation codes 99218-99220 were assigned typical times for 2012, which is a change from previous years.  (99218: 30 minutes; 99219: 50 minutes; 99220: 70 minutes.)  CMS has increased the work RVUs for the initial observation services to match the work RVUs for initial inpatient services, a major improvement for physicians who maintain that the work of the admission is the same, whether the status is observation or inpatient.  Adding typical time for the observation services means that a physician may use prolonged services codes with them. CPT also changed the wording for prolonged services codes, taking out the words, “face-to-face.”  Keep in mind that CMS requires that prolonged services are face-to-face services, not unit services, and requires start and stop time, not total time.

CPT continues its practice of listing codes out of numerical sequence, in the position in the CPT book where they fit within the logical structure of CPT.  These out of sequence codes are identified with a pound (#) sign in front of them. 

Here are some other changes that will be of interest to some specialties:

  • There are significant changes in the skin replacement codes, (15271-15278).  Eight new codes were created, six revised and twenty four deleted.
  • There are changes to the lungs and pleura section, starting with code 32035.  Codes are deleted, revised and added.  The editorial comments at the start of the section are all new.
  • The term “Video-Assisted Thoracic Surgery” is introduced in CPT.  Thoracic surgeons will want to review codes starting with code 32601.
  • Cardiologists have seen enough coding and reimbursement policy changes in the past few years.  They could be forgiven for wanting to be skipped this year!  The codes have not changed, but the editorial comments at the start of the pacemaker section (before code 33202) are new.  There are some revisions to the descriptions of the codes that follow.  There is a terrific chart which will help to code pacemakers and implantable cardioverter-defibrillators services in this section.  The chart lists the codes for insertions and removals.
  • Read the revised editorial comments at the start of the section on Diagnostic Studies of Arteriovenous Shunts for Dialysis if this is a service provided in the practice.  These are before code 36147.
  • Definitions for codes in the spine section changed, with editorial comments, in the book before code 62263.
  • CPT added many molecular pathology procedures, starting with code 81200.  Unfortunately, CMS has not valued these codes as of now.

When the new book arrives, look first at the summary of additions, deletions and revisions in Appendix B.  Then, look at the editorial comments at the start of each section that describes services done in the practice.  Pay attention to the symbols at the bottom of each page indicate a code is new, revised or contains new or revised text.  Avoid coding denials by keeping up to date with CPT.

Coding expert Betsy_Nicoletti reviews the changes in the 2012 CPT codesBetsy Nicoletti, M.S., CPC, is the founder of, a wiki for physician reimbursement. She is a nationally known speaker and consultant, and can be reached at You can watch an informational video by Betsy Nicoletti on Better Collections Through Improved Medical Coding now. Or, view her archived webinar on What You Can Do to Prepare for Medicare Payment Reductions. She has also written recently on What You Need to Know About Annual Wellness Visits for Medicare Patients and Why Can’t We Get Paid? A Look at Denials.

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ICD-10 Training Camp: ICD-10-CM Changes You Can’t Afford To Miss!

Nancy Maguire, ACS, PCS, FCS, HCS-D, CRT December 12th, 2011

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ICD-10-CM is quickly becoming a reality as the Oct. 1, 2013 deadline looms just beneath the horizon.  There are a number of skills that are critical to this transition.  All coding professionals, hospitals, health care facilities, and, physician offices will be impacted.  The impact will be felt both financially and in time and staff allocation.  We are stepping into territory that is completely new to the delivery of patient care.  This does not have to be a feared experience; it can actually be a fun, rewarding, and even relatively easy transition.  Motivation is within each of us but we must recognize and act on this opportunity in a positive manner.

First, let’s discuss the skills required for this transition; they include Cognitive, Perceptual, Associative, and Autonomous learning skills.

Cognitive skills are intellectual skills that involve thought processes.  During the cognitive phase we identify and develop the component parts of this learning process.  It involves forming a mental picture of the skill.

Perceptual skills are how we interpret the presented material.  This can be a landmine because we are used to the rules and conventions of ICD-9-CM, which are entirely different from  its replacement classification (ICD-10-CM).  You will be learning new concepts and code structure as well as new conventions and guidelines.  You must have an open mind and a positive attitude to weather this storm.  You must be motivated.  Prior knowledge can be at odds with the new material and you must be careful not to distort new material as related to ICD-10-CM implementation.  ICD-10 will refine prior knowledge in a long-term learning process involving interaction with peers and physicians.  Each step is a short-term experience (incremental part) in a long-term learning process.

Associative phase allows us to link the component parts into a smooth action.  This phase involves practicing the skill and using feedback to perfect the skill.  Perfect practice makes perfect (Vince Lombardi).  Conversation and peer interaction is essential.

The final phase is the autonomous phase.  The autonomous phase of  learning develops the learned skill so that it becomes automatic, not all coders will reach this stage of learning.

You must have strategies (plans) prepared in advance of a new learning experience, which you hope will place the practice in a winning position.  Tactics are then used to put the strategies into action.  To develop strategies and tactics, you need to know the strengths and weaknesses of all involved in the process.  There must be buy-in from the top down.

This new concept in learning is necessary to enhance, strengthen, and introduce what is new and vital in the coding profession. In this age of rapid technological change and knowledge creation, a coder must continue to learn throughout her career and to be able to readily adopt and navigate new paradigms.

Changes in the ICD-10 code structure

The purpose of this article is to highlight several changes in the ICD-10 code structure and the rules that could be missed when learning this new system.  One of the most essential life skills a person can have is the ability to adapt to change.  An adaptive individual is one who is able to refocus the mind in new directions and make choices based on his or her desired outcomes.

However, adapting to change is difficult for most people due to the fact that humans are creatures of habit and change can be annoying and usually is.  Why is there fear today about ICD-10 implementation?  One reason may be because it is an unknown and many think this will cause a loss of control.  Others may fear the commitment or even potential for failure.  You control how you think about and perceive change.  Think positive and your reaction to this change will be positive.

Be aware of the following changes (Part 1):

ICD-10 introduces the seventh extender of “S” on many code options listed in specific chapters of the tabular list.  A 7th digit or character requirement must be in the 7th place of the code selected (when a 7th character is required).  The 7th character of “S” means it is a sequela encounter with the patient due to a late effect.  This extender is used for complications or conditions that arise as a direct result of an injury or a healed condition with complication or residual condition.  When using extension “S”, it is necessary to use both the injury code that precipitated the sequela and the code for the sequela itself. The “S” is added only to the injury code, not the sequela code. The “S” extension identifies the injury responsible for the sequela. The specific type of sequela (e.g. traumatic arthritis) is sequenced first, followed by the injury code (example, fracture).

Sequela is the new terminology in ICD-10-CM for late effects in ICD-9-CM and using the sequela extension replaces the late effects categories (905–909) in ICD-9-CM.  There is no time limit on when a late effect code can be used.  The residual may be apparent early, such as in cerebral infarction, or it may occur months or years later, such as that due to a previous acute injury. An example of a residual and a sequela encounter is as follows: M12.572 (Arthropathy, traumatic, ankle), S92.002S (Fracture, traumatic, tarsal bone, calcaneous), sequele encounter, the arthropathy is the first-listed code.

Another circumstance that will be a reversal from ICD-9 coding rules is coding for “adverse effects”.  ICD-10-CM lists the adverse effect codes in Chapter 19: Injury, poisoning and certain other consequences of external causes (S00-T98).  Chapter 19 is the largest chapter in the Tabular list and most codes require a 7th character extender.  For example: T43.015- Adverse effect of tricyclic antidepressants.  This code requires a 7th character extender of A, D, or S.  If the encounter is the initial treatment by the physician, the 7th character will be “A”.  If the encounter is a subsequent visit, the 7th character will be “D”.  If the patient presents for a sequela condition, the 7th character is “S”.  In the ICD-9-CM classification, you code the manifestation condition as first listed followed by the E code for adverse effect. In ICD-10-CM, the adverse effect code must be first-listed (T43.015-(A, D or S) followed by the manifestation (for example, drowsiness, anxiety, emotional blunting).  If this was the initial encounter, the full code for this encounter would be T43.015A.

Conditions classified by severity

ICD-10-CM classifies some conditions by severity.  An example is Asthma (J45.-).  Instead of asthma being described as extrinsic or intrinsic, it is described as mild intermittent, mild persistent, moderate persistent, and severe persistent.  Subcategory J45.2 is listed as follows:

J45.2-   Mild intermittent asthma

J45.20…… uncomplicated

J45.21…… with (acute) exacerbation

J45.22…… with status asthmaticus

You must have 5 digits to complete a code assignment in subcategory J45.2.

Remember, we can always know more, understand better, or improve how we do something.  ICD-10-CM learning is a new challenge but with perfect practice comes perfect coding.   Stay focused and do not lose the momentum.  Preparation and planning leads to success, it doesn’t just happen.

Nancy Maguire reviews ICD-10-CM changes you can’t afford to missNancy Maguire, ACS, PCS, FCS, HCS-D, CRT, author of The Nancy Maguire GPS to ICD-10-CM Planning and Implementation Guide, is a nationally-renowned procedural and diagnostic coding instructor, bootcamp trainer, and workshop leader. She has spent more than 30 years as a hands-on coder and has authored countless coding articles and presentations. She served the first two terms as president of AAPC in the early 1990s.

Hear Nancy speak in two complimentary archived webinars on ICD-10 presented by Kareo medical billing software: How to Prepare for ICD-10/5010 to Reduce F41.1 (Anxiety Reaction) or Preparing for ICD-10-CM: The Nitty-Gritty of Diagnosis Coding. You can also read her entire series of articles on ICD-10. In her next installment, Nancy will review coding changes easily missed in ICD-10-CM.

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Best Practices: Strategic Planning for Medical Practices – A Means to an End

Judy Capko December 12th, 2011

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It is easy to understand why many physicians aren’t particularly interested in strategic planning.  Some of them have never done it and some just don’t see the need. It seems they have enough on their minds just trying to keep the practice on firm ground today, let alone thinking about what should be done next year. Some see it as a low priority or a waste of time and resources. In my opinion, they are missing out on a powerful opportunity to protect and guide their future.   If you are part of the management team of a medical practice, clinic or ambulatory surgery center  or run a medical billing service, I hope this information will inspire you to begin 2012 by creating and implementing a formal strategic plan that positions your business for a brighter future.

Why strategic plan?

It’s similar to a professional basketball game.  Coaches have a clear vision of the team’s strengths and weaknesses.  They also find out as much as they can about the opposition. Effective coaches draw on the team’s capabilities and plan a series of strategies to outsmart the competition. The coach intends to win the game and makes sure the quarterback leads the team, never straying from that objective. This same approach applies to the business of medicine.

The medical practice environment is so complex and changing so rapidly that a practice must have a strategic plan in order to survive. The larger, busier and more complex the practice, the more critical this becomes.  It’s reasonable to expect that every medical enterprise is faced with different issues within its walls and in the community where it resides. How we will respond to these critical issues, the decisions we make and the results we achieve, are directly related to how well we understand our business and how well we prepare for the future.

What is involved?

The technical elements of the strategic plan start with gathering demographic data about the community, the competition and the practice.  This includes analyzing both objective and subjective information to better understand the practice’s strengths and weaknesses, exploring opportunities and identifying potential threats to our business future. It also requires an examination of key performance indicators (KPIs) that measure and report the state of your business in terms of growth, market share and financial stability.  The basic KPIs include:

  • Productivity: charges, receipts and adjustments;
  • Accounts receivable performance, days in A/R (DAR) and aging by payer class;
  • Income and expenses;
  • New patient and attrition statistics;
  • Full time equivalent employees per provider;
  • Overtime costs;
  • Staff turnover;
  • Missed appointment trends;
  • Referral patterns; and
  • Patient satisfaction scores.

This is certainly a lot of information, but it is key to understanding your position.  It can be advantageous to recruit a consultant to review and analyze this important information.  Once these data are collected and analyzed, a clear picture emerges that reveals the organization’s strengths and opportunities, as well as weaknesses and threats that must be overcome. This is critical information hat will guide leadership in developing realistic goals and planning strategies to accomplish those goals.

If the leadership team is on the same page, the staff will get on board.  If the staff gets mixed messages, the plan will be compromised. Think of the practice as belonging to everyone who works there – they have a vested interest in its success and will feel the impact of decisions that are made. Without everyone’s support, the practice is likely to experience unexpected problems or poor results.  Frustration mounts and there is a tendency to give up.

Of course, new challenges are always emerging on the scene. Preparing for this relies on a careful investigation of demographic and competitive factors the present either an opportunity or a threat.

Even a well crafted strategic plan can’t predict the future. But it helps the practice do a better job of preparing for the future and developing a road map to lead them where they want to go.

What if there is no plan?

Without a plan, clinics and ambulatory surgery centers may not be prepared for growth or unexpected circumstances that affect how they perform (survive or thrive) in the future.  They will not recognize the opportunities or take steps to overcome obstacles to protect their future, improve their market share or help them become more profitable.  There’s a chance they will be blind-sided, because they didn’t see a potential threat and take proactive measures to overcome it and protect the practice. This could result in eroding your market share, causing a decline in revenue and deterioration in staff morale.   If the practice experiences these types of changes, there is tendency to hit the panic button and a solid foundation can quickly feel like quicksand.

The strategic advantage

Strategic planning provides a blueprint for the medical business to follow and get it where it intends to go. It will result in better decision-making when it comes to expanding services, adding providers, investing in equipment or preparing for inevitable retirement.

Strategic planning is a proactive process rather than taking a reactive approach to making decisions that can affect the future of your medical enterprise and provides a concrete plan to protect, and even flourish, in times of uncertainty.

Many medical businesses recognize the need to hire a skilled consulting team that can dedicate the time necessary to examine your position, provide an objective analysis and conduct a strategic planning retreat to guide the process and develop an effective  plan.

A solid strategic plan will examine the marketplace, the community and the competition, and take a critical look at your past and current business performance.  It will clearly address challenges and provide an opportunity to develop an action plan that focuses on business strengths and potential opportunities, while overcoming potential threats. It will be the powerful source that helps you accomplish impressive achievements in a competitive and economically challenging environment.  So what are you waiting for?

Judy Capko discusses why strategic planning is important for medical practicesJudy Capko is a healthcare management and marketing consultant, speaker and author or the best-selling book: Secrets of the Best-Run Practices. She is based in Thousand Oaks, CA, and can be contacted at In November, Judy wrote on Collections – 3 Steps to Do It Better. You can hear Judy and Joe Capko speak now on Guarding Your Revenue: How to Prevent and Uncover Embezzlement in an archived webinar.

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4 Steps to Get the Most from Your EHR Effort

Ron Sterling December 12th, 2011

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Many EHR implementations have failed to meet practice expectations and, in the worst cases, have damaged the practice. EHR implementations by necessity will impact every process and activity in the practice. For example, immediate access to the patient record could be used to speed answers to patient questions at less cost, or have no impact in a paper-based workflow that remains in use. In order to set the stage for EHR success, practices need to:

1. Redesign Workflow

Workflow redesign is a challenging process since EHR workflow will dramatically differ from the paper-based environment. For example, every process involving a patient question is delayed by the location and disposition of the paper chart today. The patient chart must be located before we have the information we need to address the patient issue.

In many cases, multiple people in the practice need the chart at the same time. With an EHR, practice staff and doctors do not have to deal with patient issues sequentially, and could be working on the same patient at the same time. For example, surgery scheduling may be delayed until transcription is completed. With an EHR, the patient note may be completed at the completion of the visit and surgery scheduling efforts started immediately.

In order to redesign your workflow, you should start with your operational and clinical needs and figure out how the EHR tools can be effectively used. Be wary of cookie cutter strategies that may inhibit success. For example, standard workflow may be inappropriate for a practice that has an affiliated ASC.

2.    Rethink Patient Service

Patient service today is mostly driven by patients. The patient is notified by the doctor of necessary tests and services, but the patient is responsible for negotiating the maze of issues associated with the treatment plan.  In many cases, patients lose track of the requirement when the practice cannot schedule or facilitate the clinical service. Such delays may be caused by limited scheduling calendars of 3 months, or a busy front desk.

The practice should take a new look at their patient service goals and standards. EHRs enable the practice to more proactively manage patients and, as important, manage patient services across the practice. For example, EHRs allow you to track specific outstanding clinical treatment plan items such as MRI, lab test, procedure and return office visit. These outstanding items are presented on the patient summary screen, and you can produce a list of outstanding treatment items for all patients. Triage calls, surgical scheduling and other items can be dramatically improved, if you get the right EHR and design your EHR effort to use these tools.

3.    Rearrange Responsibilities

Changes to responsibilities can face a number of organizational challenges. For example, many practices have designated specific staff to work with each doctor.

Changes to responsibilities are enabled through the change to the workload as well as the flexibility enabled by immediate access to the patient record. For example, nurses will be able to more effectively communicate with patients when they have immediate access to the key information on a patient.

Nurses will be able to review patient prescriptions and the last visit information when the patient calls rather than deferring communication with the patient until the paper chart is available. Similarly, clinical staff could easily help any patient when they are accessing a patient record that is structured like any other patient record.

However, changes to responsibilities and more flexible patient services requires a practice decision to use staff more effectively across the practice and not focused on the specific workload of a single doctor or office.

4.    Refine Collaboration

Physician practices are very collaborative environments. Physicians rely on clinical and administrative staff to keep the patients moving through the office visit. Physicians also rely on their partners and colleagues to collaborate on complex and diverse patient problems. Unfortunately, much of this effort is subject to thrashing paper chart contents and allowing all involved to see the patient chart information. For example, some practices are constantly faxing patient chart information to other locations where the doctor is located.

Instant chart access through an EHR simplifies the collaboration process and can lead to more effective use of resources. For example, EHRs simplify calling on staff to assist doctors with patients in the office as well as communicating with patients outside the office. Similarly, passing a patient issue to a colleague in another office is cheaper and faster with an EHR.

You need to select a good EHR product to have the right tools to service patients and improve operations. However, even the best EHRs are subject to the limitations on changes that you are willing to make to take advantage of your investment. Rethinking how your practice works and the use of staff and doctors will help you get the most from your EHR effort and investment.

Ronald Sterling, CPA, MBA, advises 4 key steps to get the most from your EHR effortRon Sterling (800-967-3028, publishes the popular EHR Blog, and authored the HIMSS Book of the Year Award winning guide “Keys to EMR/EHR Success.”  He is an independent EHR consultant. Hear Ron speak in an archived webinar sponsored by Kareo: What You Need to Know About Selecting the Right EHR. Ron most recently wrote for Getting Paid on Surveying Paper Patient Records to Prepare for EHR.

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