The Top. Financial Management. Policies. Procedures. for Physician Practices. Kay Stanley, CMPE The Coker Group

Transcription

1 15 The Top Policies Financial Management and Procedures for Physician Practices Kay Stanley, CMPE The Coker Group

2 Contents About the authors v Introduction ix Chapter 1: Mastering managed care contracting Prepare a market analysis Sample evaluating managed care contracting policy Sample third party receivables policy Sample rack, refile and appeal policy Chapter 2: Strategies for better collections Collect information and payment in advance Keeping track of collections Handling disputed bills Handling tricky situations Prevention measures Sample patient collections policy Sample delinquent patient accounts policy Sample disputed bills policy Chapter 3: Overseeing auditing issues Hire the right financial manager Be alert and get involved Use physical controls Maintain your finances Use checks and balances Sample internal controls policy Sample procedural coding analysis policy Sample auditing the revenue cycle policy The Top 15 Financial Management Policies and Procedures for Physician Practices iii

3 C o n t e n t s Chapter 4: Clamping down on billing and receivables Pay attention to who handles your accounts receivable Educate your patient Take advantage of technology Use your documentation Know how to handle claims that aren t paid Stay up to date on external and internal information Insurnce responsibilities Sample accounts/receivable policy Sample reviewing and controlling expenses policy Chapter 5: How to Control Costs Establish an efficient scheduling policy Consider your template choices Determine telephone system needs and protocols Maintain and improve interdepartmental communication Train your staff Decide how to handle emergent patients and triage Sample emergent care policy Sample provider schedule policy Sample purchasing protocol policy Sample scheduling policy iv The Top 15 Financial Management Policies and Procedures for Physician Practices

4 1 M A S T E R I N G M A N A G E D C A R E C O N T R A C T I N G

5 C H A P T E R O N E M A S T E R I N G M A N A G E D C A R E C O N T R A C T I N G Keeping track of and evaluating Medicare, Medicaid, and other area payers is one of your most important jobs. Your schedules should reflect that significance by including processes and procedures that require continually evaluating and monitoring the largest portion of practice income. You can perform these appraisals daily, monthly, and annually. First, judge the worth of each third-party payer from the starting point of contract negotiations all the way through the claims appeals. Keeping abreast of new plans in your area can offer an opportunity to seek out other appropriate payers that may not be available once the payer is solidly established. Use governmental agencies as resources regarding the history and litigations of specific contracts you may be considering or with which you are already on assignment. Being aware of local and national payer issues can help you retrieve reimbursements due to your practice. When solicited, daily, monthly, and annual reporting can offer your practice management system a wealth of information. Know your population and look at larger local employers to gain insight about future demographic trends. Prepare a market analysis Before evaluating existing managed care agreements or entering into new ones, be armed and ready with information about your practice. Determine the cost of your procedures so you know the threshold of reimbursement needed from any present or future contract. This process of studying your market and practice is also known as a market analysis. It is extremely important in helping you determine where you stand in the dark room of managed care contracting. The The Top 15 Financial Management Policies and Procedures for Physician Practices 3

6 Chapter One policy on evaluating managed care contracting in this chapter leads you through the following steps: Step I: Assess the local market Your local chamber of commerce and hospital marketing department can be good resources to use when gathering community data. Collect statistics by demographic group (e.g. sex, age, race, income, education, employer, etc.) and by the following: Population density and distribution by locale Anticipated trends in population growth or decline by locale Major employers Major health insurers Annual healthcare expenditures Major hospital participations Step II: Assess the practice market Gather a minimum of 12 months of practice utilization data. Obtain the following information for demographic groups (e.g., age, sex, ZIP code, and, if available, race, employer, income, and educational levels): Number of active patients seen in the past two years, by payer mix. Offices visits/procedures per year. Average visits/procedures per active patient/year. Average inpatient days per active patient/year. Diagnosis frequency by demographic group. CPT frequency by demographic group. Calculate average cost per visit/procedure by dividing practice expenses by hours worked to arrive at an average cost per hour. Then divide again by the number of visits/procedures per hour to arrive at the average cost of each visit/procedure. Step III: Create a business plan Now for the most important step: Pull all of the data together into a business plan. The term business plan often scares physicians and managers, but unless you are using it to search for capital, your plan 4 The Top 15 Financial Management Policies and Procedures for Physician Practices

7 Mastering managed care contracting can be a simple outline to keep you focused on important practice issues and goals. This outline, called a market assessment, is based on the community and practice assessment and describes market forces that will affect the practice. It includes the following: Current patient mix Anticipated demographic growth/decline Expected increase/decrease in current health plan reimbursements Financial impact of the first three items above on practice Strengths and weaknesses of the practice (e.g., geographic coverage, range of services currently offered, special services, additional unused expertise available, competition) Credentialing (e.g., affiliations, such as IPAs; hospital privileges; board certifications; deficiencies, such as malpractice claims, impairments, and sanctions) The Top 15 Financial Management Policies and Procedures for Physician Practices 5

8 Chapter One 1. SAMPLE 1. SAMPLE EVALUATING ADDRESSING MANAGED PATIENT CARE COMPLAINTS CONTRACTING POLICY POLICY Your practice name Subject: How to evaluate the managed care contract Approved by: Policy number: Effective date: Review date: Revision date: Page 1 of 3 Procedure: Step 1 Gather information Make a list of all plans you are considering Obtain a contract to evaluate Obtain a list of all physicians in your area who are participating in the plan, especially those in your specialty Determine the market-share and program-growth history of the plan, and consider the following: Has the plan added any new employers in the past six months? (Obtain a list of employees participating in the plan in your area.) How many, if any, employers have dropped the plan in the past year? (Ask the state regulatory agencies whether there are any compliance issues or complaints against the plan.) Is this a capitated or a fee-for-services plan? What is the basis for reimbursement? (Obtain the plan s payment rates for the top 25 procedures the practice performs.) Obtain references and look into the following: Ask other physicians about timeliness of payments Ask whether the information received with payment was adequate enough to reconcile it Find out how many claim denials they average each month Find out how easy it is to resolve administrative problems in the plan Determine whether participation in the plan has hindered or helped the practice Step 2 Reviewing the contract Are there any restrictions imposed on the practice? Does the contact has a hold harmless clause (i.e., contracting entity is not held responsible)? Are the terms of renewal automatic (note that this is not always good; review fee schedule changes as well) or proactive? Can the contract be terminated? How? Who notifies patients? How? 6 The Top 15 Financial Management Policies and Procedures for Physician Practices

9 Mastering managed care contracting 1. SAMPLE EVALUATING MEDICAL CENTER MANAGED POLICY CAREAND CONTRACTING PROCEDURE POLICY (CONT.) (CONT.) Does the contract require the use of certain vendors for ancillary services? Does the contract delineate noncovered services? Can the patient be billed? Does contract require certain services to be precertified? What is the credentialing process? Does malpractice coverage limitation fit within the range of what the practice carries? Does the insurance carrier impose a penalty if payment is delayed? Can the schedule be changed without the knowledge and consent of the practice? How often can the reimbursement schedule be received/changed? Are there any time limits on claim submissions? What is the appeals process? Step 3 Investigate utilization review and quality assurance Is there a peer review system? Is peer review conducted or by physicians or nonphysicians? Does the peer review process inhibit the physician s ability to practice sound medicine? Are plan participants required to participate in peer review? Does the plan have its own utilization and review department, or does it subcontract for these services? Are physicians part of the grievance process? Step 4 Analyze reimbursement The following table will help to analyze the plan s reimbursement: Evaluating managed care contracting policy box Top 25 CPT codes Plan 1 Plan 2 Plan 3 Plan 4 Plan 5 Plan under consideration List top 25 codes Enter current reimbursement rates for the top three to five plans in which the practice currently participates List reimbursement rates quoted by the plan under consideration The Top 15 Financial Management Policies and Procedures for Physician Practices 7

10 1. SAMPLE EVALUATING MEDICAL CENTER MANAGED POLICY CAREAND CONTRACTING PROCEDURE POLICY (CONT.) (CONT.) From this chart, you should be able to determine where the reimbursement rates for the plan under consideration fall, as compared to the existing top three to five payers. From there, ask yourself the following: Is it high, low or within range? Is there an acceptable deviation? What if this was the practice s only payer? What would the net revenues of the practice look like? Top 25 CPT codes List top 25 codes Plan 1 Plan 2 Plan 3 Plan 4 Plan 5 Enter current reimbursement rates for the top three to five plans in which the practice currently participates Plan under consideration List reimbursement rates quoted by the plan under consideration 8 The Top 15 Financial Management Policies and Procedures for Physician Practices

11 Mastering managed care contracting 2. SAMPLE THIRD-PARTY RECEIVABLE POLICY Your practice name Subject: How to perform a third-party receivables review Approved by: Policy number: Effective date: Review date: Revision date: Page 1 of 2 Procedure: 1. Practice information Before evaluating an existing third-party payer relationship or entering into a new agreement, perform a comprehensive review of administrative systems to determine the costs and reimbursement rates: Gather data on the area s largest medical practice groups Look at patient demographic population trends 2. Analyze the numbers Prepare a spreadsheet that shows your top 50 CPT codes, standard fee, and Medicare and top payers reimbursements on each code. Compare the determined cost of each of these codes to reimbursements for each contract. 3. C reate a contract-negotiations checklist The ability to check off the necessary components of contract negotiations will help you stay organized during this process. For example, your checklist should contain the following items: Reimbursement for the top 50 CPT codes Spreadsheet comparisons Bundling procedures Credentialing protocols Referrals procedures Payer reporting requirements Appeals processing and timing Clean claims payment laws 4. Use third-party administrators (TPA) and discount cards Get in writing as much of a guarantee of payment as possible. Ask the TPA to insert or clarify your right to deny participation with discount programs or other cards that are presented. Contract administrative procedures: When reviewing receivables, also consider other factors, such as re f e rral, authorization, and cre d e n t i a l i n g p ro c e d u res. The Top 15 Financial Management Policies and Procedures for Physician Practices 9

12 Chapter One 2. SAMPLE THIRD-PARTY RECEIVABLE POLICY (CONT.) For established contracts, the managers/physicians must meet with the representatives at least annually. Maintain and verify credentialing procedures and protocols as dictated by each payer. Verify and review bundling procedures with payer and physician. State-mandated laws and regulations: Compare contract review to state-mandated laws and requirements regarding claims filing timing. Include the agreed-upon list of reimbursements in the contract package. Build this list into your practice management system for contract reporting. Governmental, statewide and patient resources: First consider the governmental and society resources for existing and new contracts. Obtain, review, and compare area-specific data on average reimbursements, collections, and percentage of write-offs. Practice management system: Each payer is designated its own class or category and continually monitored at least monthly. Daily charge and payment journals should reflect the day s activities by payer. Month-end reports include an aged trial balance by payer, with aging from zero to 30 days and up to 120 days plus. The only amounts reflected in sixty days and up should be claims that are in appeals, claims for worker s compensation patients, or claims in other extenuating circumstances. Run a contractual receipt analysis report that reflects actual payments per code received for each payer. Run the following reports in tandem with month-end procedures, and review them with the physician: Monthly reporting: Aged trial balance for each payer Insurance-receivable totals reflecting billing and collections ratios Contractual receipt analysis Insurance representatives: Meet with insurance representatives at least annually to discuss any issues that affect your relationship, both good and bad. 10 The Top 15 Financial Management Policies and Procedures for Physician Practices

13 Mastering managed care contracting SAMPLE ADDRESSING TRACK, REFILE, PATIENT ANDCOMPLAINTS APPEAL POLICY POLICY Your practice name Subject: How to track the reasons for claim denials, make corrections, and appeal denied claims Approved by: Policy number: Effective date: Review date: Revision date: Page 1 of 4 Purpose: Submitting claims correctly the first time is the goal of every practice. Nevertheless, coders and billers make mistakes, and payers do provide challenges and obstacles, so some claims will be denied. Given that fact, make sure that claims denied are followed up and re-filed appropriately. Your practice loses money every day that a claim is unpaid. Whether your internal procedures say staff must be assigned to work on non-payments and denials or say staff must make a telephone call to inquire about how to re-file the claim, action should be taken without delay. The objective is to track the reasons for claim denials and to use the data to make corrections so you can file the charges correctly or redesign your revenue cycle. Note that in the case of denied reimbursement, the practice has the right to appeal the denial for payment. Procedure: 1. Internal practice issues Establish internal controls to ensure timely charge capture, posting, and fee levels. Such controls include the following: File quickly. Avoid delays between the time of patient care and the time when charges are entered into the billing system. File claims within 48 hours of the visit or procedure. Know which payers pay claims on time. Know your payer contracts, who the payers are, and what reimbursements are listed in each contract. Take proper adjustments, as outlined by the contract. Create a binder that includes contract specifics for each payer. Each person who posts payments can refer to it when questions arise about contract reimbursement policies. Also compile a list of each payer s appeal deadlines. Make sure that your fees are appropriate. Track the reasons for claim denials, and make corrections. The Top 15 Financial Management Policies and Procedures for Physician Practices 11

14 Chapter One 3. SAMPLE TRACK, REFILE, AND APPEAL POLICY (CONT.) 2. External payer issues Tracking reasons for denials can help you improve cash flow and save time by eliminating time spent on appealing claim rejections. Demonstrating issues with payers through numerical reports can also benefit contract negotiations. Either manually or using your existing billing software, run a report on your top four payers at least quarterly. Track the following information: What was the lag time between the date-of-service entry and date-of-charge entry? What was the lag time between the date-of-charge entry and the payment posting in the system? What are the top 10 reasons for claims denials? Which area (provider, department, etc.) of the practice most frequently generates the denial? (Look for a pattern.) Is there one particular visit or procedure that a payer continually denies? Did reimbursement occur according to contracts? 3. Remedies Applying remedies to information gleaned from tracking denials will enable your practice to submit claims correctly in the first place, help you in negotiations with problem payers, and help you decide whether a denial is inevitable. Obtain and know the payer s reimbursement policies (referring to your payer contract binder) to recognize the following: Whether and when the payer contract permits financial responsibility to be shifted to the patient. Is it at the time of service? After receipt of the Explanation of Benefits (EOB)? What appeal efforts probably will generate the greatest return on investment. When services are bundled into payment for the primary procedure. When it is no longer feasible to provide a service that is not reimbursable. Whether a denial is likely. When a denial is likely, determine what kind of information you can provide to get it paid. In your practice management system, insert automatic write offs of denials that you cannot appeal. 4. Reworking claims promptly Know what processes to use and what paperwork you need to rework claims. Identify denials that are worth appealing Appeals should be made in writing, outlining the essential course of action Attach the original EOB Include the additional information that was previously omitted 12 The Top 15 Financial Management Policies and Procedures for Physician Practices

15 Mastering managed care contracting 3. SAMPLE TRACK, REFILE, AND APPEAL POLICY (CONT.) 5. The use of software Some software packages provide templates for several different appeal letters that cover the most common claim denial reasons. For exceptions, set up form letters and attach supporting information to them. Keep sample letters for quick reference. Appeals should provide the following information: Patient information Insurance account identification number Attending physician(s) and provider number CPT and ICD 9 codes Date of service Original claim submission dates Appropriate regulations or legal precedence (cited from software databases), which could include verification of insurance coverage, including automated on screen legal forms for benefits verification and assignment local and federal law regarding coverage exclusion, including preexisting, maternity, newborn, violent crime, and substance abuse denials State law, medical necessity, and utilization review procedures, including special rulings on cancer and transplant related procedures COBRA and ERISA coverage termination legislation Time reprocessing and late payment interest regulations for each state 6. Follow up action items Develop a system for follow up that includes the following steps: Sort denied claims by reason and route to the appropriate person Prioritize by payer with the shortest appeal deadline and then with the highest dollar value. Track your appeals through the practice management system, institute an automated calendar function, or print a copy and file in the tickler file by date order, and review for action and resolution in 30 days Designate certain staff members to handle all appeals 7. Levels of appeal Although each third party payer has a specific protocol for how the appeal is to proceed, the process is generally as follows: Urgent review: Request immediate phone consultation with the payer organization s professional utilization/quality or nurse reviewer. Level 1 appeal: Typically, a Level 1 appeal is made to the reviewer or clerk who initially rejected or disallowed the claim. This process involves a review of the records and claims submitted. The reviewer will probably request the clinical case record and conduct an additional assessment. Your practice should The Top 15 Financial Management Policies and Procedures for Physician Practices 13

16 Chapter One request a quick determination (within 24 hours). Adverse determination entitles the appellant to Level 2 review. 3. SAMPLE TRACK, REFILE, AND APPEAL POLICY (CONT.) Level 2 appeal: This is usually an appeal to a physician/medical director at the managed care organization and involves a review of medical records, claims, and additional information from the provider. This appeal may entail telephone discussion with the provider. An adverse determination entitles the appellant to a Level 3 appeal. Level 3 appeal: This appeal is commonly conducted by a board or committee consisting of providers that specialize in the treatment in question. The process involves a board review of all events that have transpired up to that point, relevant documentation, and other information from the parties. The board may meet with a provider, in some cases, to hear the facts and to ask questions (this is highly recommended from provider s standpoint). The review boards usually meet weekly. An adverse determination at this level is frequently considered the final determination unless the third party payer and the medical practice have contractually agreed to arbitration or the plan is subject to a self insured employer that provides an additional level of appeal. Other recourse: If arbitration occurs, the arbitrator s decision is typically final and binding. However, self insured employers with third party plan administrators may require an additional level of appeal, which can work to the benefit of the provider by helping obtain payment for services provided. 8. Filing grievances with the state insurance commission File a grievance for less than appropriate reimbursement, delays in payment, and other perceived inappropriate actions on the part of the insurance company. When a medical practice believes that it is a victim of unfair treatment by an insurance company, it has the right to submit a grievance to the state insurance commission. The insurance commission is obligated to investigate the matter and to require the insurance company to respond and defend itself. Consider filing a grievance only in the case of consistent/significant problems in which the ramifications of lower reimbursement are great. 14 The Top 15 Financial Management Policies and Procedures for Physician Practices

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