Solutions for the Medical Aesthetics Industry

1. Solutions for the Medical Aesthetics Industry

2. ADAM 2010“How To Read Financial Statementsand a couple additional pearls” Thom Schildmeyer Aesyntix Health, Inc. Aesyntix Billing Solutions & Aesyntix Physician Network

3. Disclaimer and Background • Co-Founder and President Aesyntix Health. Healthcare services for Dermatology and Cosmetic Surgery. • Aesyntix Billing Solutions – Revenue Cycle Management, Dermatology Medical Billing • Aesyntix Physician Network – Group Purchasing Organization (GPO) specializing in Dermatology and Cosmetic Surgery. Also, exclusive GPO for ADAM.

4. Agenda • Basic review of financial statements • The next step: Analyze and Present • Benchmarking- “Sneak Preview” - First ever Denial Management Database in Dermatology • Questions

5. Financial Statements • Income Statement (I/S), also know as Profit and Loss Statement (P/L) • Balance Sheet (B/S) • Statement of Cash Flow (C/F)

6. Income Statement Income Statement (IS) can also be called the Profit and Loss Statement (P/L) • Practice Revenue: Net increase in assets due to sale of goods or services. • Operating Expenses: Costs expired during the reporting period related to production of income. • Non-Operating Revenues and Expenses: Investment income such as dividends and interest as well as interest expense and depreciation.

7. Sample Income Statement

8. Bottom line Profit or Loss Revenues – Expenses = Profit or Loss

9. Profit and Loss Statement • Revenues: • Collections • Fees • Revenues • Receipts • Other

10. Revenues • Clinical Collections • Consulting Fees • Clinical Studies • Cosmetic Receipts • Other or Miscellaneous

11. Revenues • Clinical Collections • Commercial • Medicare • Fee for Service • Surgery/MOHs • Cosmetic Revenues • Injectables • Botox • Fillers • Lasers • Aesthetic • Surgery • Products

12. Revenues expanded

13. COGS • COGS (Cost of Goods Sold) • Medical Supplies (not a bucket) • Resell (Toxins, fillers, products) Revenues – COGS = Gross Profit

15. I/S or P/L • Revenues • Minus COGS • Gross Profit • Minus Expenses • Profit or Loss

16. Expenses • How do you categorize? • Payroll (Large number) • Wages (Break it down) • Administration • Providers • Front Staff • Back office • Payroll Taxes • Benefits

17. Balance Sheet The Balance Sheet (BS) is a statement listing the total assets, liabilities and owners’ equity indicating the net worth of the company at a certain point in time.

18. Balance Sheet • ASSETS = LIABLITIES + OWNER’S EQUITY • Most will break A and L into short term and long term • Balance Sheet must balance. • Assets = (cash, inventory and accounts receivable) • Liabilities and Owner’s Equity (OE) = are claims to those assets The value of everything owned minus the money owed to others leaves the value of the owner’s rights to the business.

19. Sample Balance Sheet

20. Cash Flow Statement • Cash flow statement is produced to show how the enterprise generates and uses cash and cash equivalents. • Cash flow statement should report cash flows, during the period classified by operating, investing and financing activities.

21. Cash Flow • Operating Activities • Cash generated or paid out through the normal cash generating activities of the enterprise. • Investing Activities • Cash flow on capital expenditure incurred which will generate future operating cash flows • Financing Activities • Cash flow received from or repaid to outside providers of finance.

22. Simplest terms • Cash came in • Collections • Interest income • Other incoming cash • Cash went out • Accounts Payable • Any outgoing cash

23. Analyze and presenting

24. Financial Benchmarking • Standard Reports • Profit and Loss Statement • Balance Sheet • Statement of Cash Flow • Production Report • Aging Analysis • Create a benchmarking report • Charges, Collections and Adjustments • Accounts Receivables and Aging Analysis • Patient encounters • Expenses

26. Benchmarking Ratios • Net Collections • Net Collection Ratio • Overhead • Aging Analysis – A/R • Number of FTE support staff • Net Collections per FTE provider • Net Collections per FTE support staff • Net Collections per patient • Non provider payroll ratio

27. Time to Look Deeper - Dashboard • Dashboard (Benchmarking) • Key metrics/Ratios that show trends, performance and allows you to identify what needs to be reviewed or how you are improving or getting worse. • Needed: • Collections, • Charges, • Adjustments, • A/R, • Patient Encounters.

28. Dashboard • Look deeper • Monthly comparison • Quarterly comparison • Compare to monthly averages • Departments (Revenues/Expenses) • *Closer look at expenses

29. Sample Dashboard

30. Dashboard Template Example

31. Quarterly Comparison

32. Production

33. Billing Performance

34. Expense Tips • Manage payroll (overtime, dead weight, efficiency) • Renegotiate space • Reduce costs (5-10% makes a difference) • Medical - Surgical Supplies • Office Supplies • Credit Card Processing • All services/products purchased • Join a GPO (Group Purchasing Organization) let them do the work – Specialty specific is always a plus

35. Revenue and Expense Tips • Collect what you have earned! • Bill it out • Work the A/R • Track the denials • Paid faster (ERA’s, Clean claims) • Collect at time of visit (copay, deductible…) • Providers engaged (maximize efficiency) • Staff engaged • Recruit medical patients (internal marketing) • Customer Service 101

36. Revenue Cycle Management(Technology) • Denial Management (PaidRight™, TotalView™, EOBresolve™) • Collect on Unpaid Claims • Identify patterns with insurance carriers (denial management is incredibly helpful) • Identify patterns with your billing team

37. Information that is groundbreaking“Sneak Preview” Denial Management Dermatology Benchmarking,

38. Questions What is your average (across all payers) denial rate for post-adjudicated claims? Which payer denies you most? Why? What is your average age of your paid claims from date-of-service to payment date? What are your three top reasons for denials? How does your practice rank among your peers on these reimbursement metrics?

39. Scenario today Practices operate in fiercely independent manner Payers are HAPPY to divide and conquer No one knows “How does Blue Cross reimburse my 17110 versus my peers?” No Good Specialty-Specific Payer Benchmarks You can’t MANAGE what you can’t MEASURE!

40. Sneak Preview of First Ever Dermatology Benchmarked Denial Data

41. PaidRight Benchmarking database for Dermatology • Aesyntix’s PaidRight powered by RemitData is the first ever to introduce Denial Benchmarking data. • Sneak Preview – data being scrubbed further for data April release • Over 100 Dermatologists • National

42. First look at unscrubbed Benchmark data • 4th quarter 2009 - Denial Rates • Dermatology aggregate: 9% • Medicare: 11% • BCBS: 8% • United: 12% • Top Reason Codes for denial: • 18 - Duplicate Denial • 24 - Charges covered under a capitation agreement/managed care plan • 97 - "The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated..."

43. Age of Claims • Age of Claims (from DOS) • Medicare: 41 days, 72% paid in 30 days • BCBS: 27 days, 81% paid in 30 days • United: 32 days, 62% paid in 30 days

44. Top procedures denied • Top Procedures and denial reasons: • 99213 - Office/Consult • 18 - duplicate • 27 - Expenses incurred after coverage terminated • 24 - charges are covered under a capitation agreement • 17311 - Mohs • 97 - benefit is included in the payment/allowance for another service/procedure that has already been adjudicated • 18 - duplicate • 16 - claim lacks info • 88305 Tissue Exam by Pathologist • 18 - duplicate • 24 - charges are covered under a capitation agreement • 140 - Patient health identification number and name do not match

45. Key Takeaways • Practices need better coding education:  • Are you being denied for lack of coding expertise?  Capitation denials ( 97 & 24 codes) & claims lacking information can be eliminated with better coding & education.  • Watch your duplications!  Denial code 18 – duplicate denials are #1 trigger for OIG & RAC audits.  Are you at risk of being above average for this type of denial reason?  Duplicate denials often are the result of "working harder" but not smarter, resubmitting hoping for a different result.   • Eligible but you still have old info.  Denial code 27 – if you are getting high rates of eligibility denials, re-evaluate your check-in processes and information flow within practice.

46. Key Takeaways • Payers need a progress report, from you! • Payers are glad to slow pay & no pay.  Address denial and cash aging concerns with your payer representative.  Bring reports to the meeting that prove your point.  Unfair denials?  Which procedures, how often, what period?  Address their end of the speed equation, how long is it taking them to pay you once they receive a claim?  • Hold payers accountable for poor reimbursement.  Address your average allowable for each payer contract, by procedure.  Show reports that unsatisfactory averages.