Current Trends in Healthcare Reform and Revenue Cycle Management

1. NM PRG Presentation Eric Burgmaier, CPA Managing Partner Burgmaier & Helton, CPAs LLC

2. Bio Managing Partner of Burgmaier & Helton LLC, recently named to New Mexico Business Weekly’s Top 25 CPA Firms Formerly the CFO of the UNM SOM Physician Group VP Finance and Revenue Cycle of ABQ Health Partners Active member of Healthcare Financial Management Association (HFMA) and Medical Group Management Association (MGMA)

3. Agenda • Current trends in health care reform • Using RVU’s to analyze practice expense • How best to use Key Performance Indicators • To improve revenue, • To decrease expenses, and • Improve revenue cycle performance

4. Rising and rising and rising…..

6. The ten largest economies in the world in 2010, measured in nominal GDP (millions of USD), according to the International Monetary Fund

7. What is in our future?

8. “the current unrestrained [fee for service]payment system has created a rate of volume growth that is unsustainable” -The Medicare Payment Advisory Commission, June 16, 2009, Letter to Congressional Budget Office

9. What replaces Fee For Service? Bundled Payments • Insurers make one payment for an episode of care that includes hospital inpatient, physician services, imaging and lab services • Intention is to promote integration and efficient care and collaboration among providers of different facilities Global Payments • Providers accept a Per Member Per Month (PMPM) payment to provide all or part of care for a given population

11. What is “RBRVS”? Resource based relative value scale • (RBRVS) is a schema used to determine how much money medical providers should be paid. It is currently used by Medicare in the United States and by nearly all Health maintenance organizations (HMOs). • RBRVS is the source for RVUs • Relative Value Units

12. What are RVUs? • Work RVU’s: • Physician component to value salary and benefits • Practice RVU’s: • Office expenses including depreciation, rent, office supplies, support staff and benefits • Malpractice RVU’s: • Both practice and physician insurance

13. Why do we care? Work RVU’s are widely accepted and most common measure of clinician production (other than visits). Whether directly or indirectly, Total RVU’s are the principal factor in reimbursement. Frequently cited in MGMA, RVU’s are used to measure practice costs and provider compensation.

14. Seven (or more) Components of a Fee • RVU’s-Relative value units 1. Work 2. Practice 3. Malpractice • GPCI’s-Geographic Practice Cost Indices 1. Work 2. Practice 3. Malpractice • Conversion factor • Modifiers

15. Current reimbursement for a 99213 Considered “the allowed amount”, all providers in New Mexico currently receive $67.51(in total) from Medicare. All RVU, GPCI, and Conversion Factor detail can be found at www.trailblazerhealth.com

16. 99213 Fee Development

17. 99213 vs. 99214

18. Do you track costs per procedure?

19. Are you ready for…………. • 95% of 2010 NM Medicare? • A PMPM of…………? • A share of a bundled payment of….? “…medical groups need to determine how well they are performing, where they can improve and how ready they are for payment change.” Marjorie A. Wytzka, “Practices must identify the cost of care to succeed in an era of accountability” MGMA Conneexion, January 2012

20. Key Point Number 1 • Begin to analyze your practice expenses • Variable vs. Fixed • Physician vs. practice vs. insurance • Line up expense data to production data

22. Accounts Receivable KPIs • If you can’t measure it, you can’t manage it • Most common Key Performance Indicators • Gross Collection Rate • Days in Accounts Receivables • Accounts Receivable Aging • Build goals, compare to best practices

23. Gross Collection Rate • GCR-on average what is collected against the billed amount, • By payer, by month, year to date, • Compared to prior year…to an expectation? • Consistently measure overtime to develop trends

24. Gross Collection Rate

25. Reasons for changes in GCR • Staff and system performance • New staff, untrained/undertrained staff, inefficient and poor communication, lack of guidance and leadership • Payer performance • Sudden increase in denials • Decrease in reimbursement • No pay or slow pay

26. Days in Accounts Receivable How long on average does is take for a claim to turn into cash? High performing practices take on average 35 to 38 days to collect Objective is to drive this number down, the longer and older the A/R is the less likely it is to be collected

28. Aged A/R by month by bucket

29. A/R Aging

30. Number 3 Key Points Number 2 Calculate Days in Accounts Receivable • Period ending A/R divided by average daily charges • Trend it Understand Accounts Receivable less than and greater than 90 days • Run your AR Aging report monthly • Trend it

32. Know how you are reimbursed Contracts with carriers are usually negotiated based on a percentage of New Mexico Medicare • Sometimes there is only a single multiple • Sometimes the multiple is separately negotiated for E&M, Surgical, radiology, pathology • Sometimes you might have a contract with a carrier that uses an internally developed RBRVS model • Could also see a fee schedule that spans multiple years, i.e., surgical on a 2001 NM Fee Schedule and all other services on the current NM Fee Schedule • RBRVS could be held constant on a given year but the conversion factor is negotiated • Carve outs

33. Examine EOBs Closely When reviewing EOB’s: • First, get your contracts together, make sure you have your current amendments • Are individual line items, if denied, followed up on? • What is the process to follow up? • Is the practice ever getting paid 100% of the billed amount? • What about NM GRT?

34. Contract Summary

35. Pay attention to rates

36. How much are you giving away? According to a recent study by CMS • Only 70% of claims are paid correctly the first time they are submitted • The remaining 30% are denied, lost, or ignored • Of those a full 60% are never resubmitted or appealed • In summary 18% of medical claims simply go unpaid, • Free Service of about $125 billion annually provided by medical practices

37. Furthermore, The Medical Group Management Association (MGMA) estimates that payersunderpaypractices in the U.S. by an average of 7%-11%.

38. Denial management • Three reasons why denials are not appealed • The denial is correct • No staff time to available to appeal • Responsible staff does not know what to do • Understand why they occur and to the extent possible correct P&Ps to mitigate • Get claims out clean, high pass rate of 95% to 98% • Staff can then work claims in the 30 to 60 day bucket

39. 2009 McKinsey Survey • 74% of insured consumers are both willing and able to pay their our of pocket medical expenses for liabilities of less than $1,000 • Yet our self pay collection efforts are insufficient and uncoordinated • And expensive, • And time consuming

40. Best practices for Self Pay Develop written financial polices, post them and educate patients Verify insurance coverage ahead of scheduled appointments When reminder calls are made, if there is an outstanding balance collect over the phone Collect co-pays and o/s balances at time of registration

41. Number 5 Key Points Number 4 Look at the allowable for your top 10 codes • For the top 3 or 4 carriers • Compare to current Medicare • Is there negotiation opportunity? Be the CEO or CFO • Spend two hours a month with the back office staff • Review system reports • Look at old A/R to understand the follow-up process • How are denials worked?

42. Upcoming speaking events: May, “Effectively Using QuickBooks” June, “Using RVUs To Measure and Manage Costs” July, “Year end Tax Planning, Session One” August, “Year end Tax Planning, Session Two” September, “Year end Tax Planning, Session Three” October, “Physician Compensation Planning” Dates and times will be posted on my web page www.myabqcpa.com

43. To reach me Eric Burgmaier, Managing Partner with Burgmaier, Helton, and Associates CPA’s, Office number (505) 299-8383 eric@esbcpas.com or eric@myABQcpa.com www.myABQcpa.com

44. Doctors are seeking employment “Hospitals are now on a buying spree of private physician practices in the rush to build something that will qualify as an accountable care organization” Some 65 percent of doctors who changed jobs in 2009 moved into a hospital-owned practice, While 49 percent of doctors out of residency were hired by hospitals. MGMA Connexion “Coach’s Corner” February 2011