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Medical Practice Operations - Business Fundamental ...
255193 - Video 5
255193 - Video 5
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Thank you for joining me for Medical Practice Operations, Business Fundamentals 101. This is Module 3A in an eight-module segment on the macro view of practice management. There are actually 10 modules. There is a 2A and a 3A. And so we'll be getting into 3A today, which is a follow-up to revenue cycle. And if you had the opportunity to go through and review Module 3 with RevCycle, I think it gives you a pretty good picture as to why it's necessary to offer Module 3A. Not only that, it's important to the business for you to understand these functional components, even if you don't deal with it on a day-to-day basis. It hopefully will give you enough background to help you to ask questions, whether it's in the practice, while the operations of the practice, or if it's in a hiring process where you're meeting with a medical clinic and you want to understand their days and AR and things of that nature, because that does speak to the financial wherewithal and viability of the medical clinic. As with the other modules, I have nothing to disclose. And it's always worth saying this presentation is not legal advice. It should not be construed as such. Any decisions involving legal aspects of healthcare delivery, like compensation plans or contracts, should be discussed with qualified legal counsel in that space. This is simply a primer on the business of healthcare. I work for Wifley. Wifley is an accounting firm with 105-year history. We have been around doing business. We actually were the accounting firm and founding group with the Green Bay Packers, interestingly enough. And so, in the general business footprint, we work in a lot of different verticals, as you can see from this slide. One of those is healthcare. I am the National Director for the Physician Enterprise, which basically means I deal with medical practice operations all over the country, regardless of specialty or subspecialty, and regardless of care delivery platform. As you've heard me say before, if you have listened to other modules, I do work in academic medical centers. I do work with tribes. I do work with FQHCs, with rural clinics, with critical access hospitals, community hospitals, large health systems, and private practices. So I am care delivery platform agnostic, and I am specialty agnostic. And I hope that you have found, if you've listened to the other modules and are joining today, I hope you find this to be useful in your medical practice operations background. This slide is a little bit about me. I've been in the business for 30-plus years and have seen pretty much everything that I can see. And when I say that, you end up seeing other stuff. So the nice part about healthcare is things change all the time, whether it's technology or delivery of care or new modalities or things of that nature. It's just a fun space to be in. I really enjoy what I do. So here are the modules in the educational series. We are doing Revenue Cycle Part 2 today as a follow-up to Module 3, which is going to give us a little deeper dive into the revenue cycle. So we'll have a little brief overview, a review of Module 3. If you haven't listened to Module 3 yet, one doesn't necessarily precede the other, although this one does get into more detail of the rev cycle. But they do essentially work in tandem. But they're, I think, worth listening to for sure. So we'll get an understanding of the billing process, how the revenue is generated outside of the CPT codes. And we'll dig into the metrics in a little greater detail and the value of benchmarking. So we contemplated in the last module being inundated with data and having data noise. And now we'll talk about, okay, we've decided here are the data elements we're going to measure. Here are the benchmarks that we've either created internally or externally. And here's what we're going to develop for a reporting piece that we deliver to the shareholders or the staff and or, you know, the folks in the trenches so they understand what is our guiding light to rev cycle nirvana and to ensure that we're tacking the right way. So brief review, here's my tried and true. This is both the clinic office visit patient flow and the revenue cycle flow. And as we discussed in module three, I would make the argument that the revenue cycle is anything that does with money. Anything you have to do with collecting of money in the practice, broadly speaking, is what I call the revenue cycle. We contemplated in module three that rev cycle is not simply billing and coding and collecting. That's not the whole thing. And as I mentioned in module three, credentialing of a new clinician before they see patients is really part of the revenue cycle. Because if I hire Dr. X today and have her start tomorrow, she's going to see patients and get denials for claims for being out of network. So the rev cycle is your revenue lifeblood for the clinic. And candidly, that's regardless of your care delivery model. So when we get into or talk about in module one, your different options with regard to employment, this happens in all of those, just in various different formats. Hospital's a little more complicated, a little more cumbersome. They deal in a different payment methodology to deal with disease resource groups, DRGs. So a little different than just billing CPT codes. But the logic, I would suggest, holds true. And here, as I've stated before and will state forever and ever, the clinic ecosystem, i.e., the patient visit and the RC rev cycle ecosystem coexist and intertwine and play off of each other. These are multivariate inputs into the system. And we talked about this. Again, this is a rehash. So physicians properly and orally credentialed before they work. Eligibility, we discussed this as a repeat slide from module three. There is software out there. And where it's possible to use bolt-on techie pieces that make sense, and where there's an ROI, by the way. I wouldn't get them just for the sake of having technology. But if you can prove that it reduces staff time, reduces errors, you can make a return on investment argument as to why I need software assist. And then, again, past due balances, outstanding balances on the patient's day of service. And, you know, if you're doing an elective surgery, collecting that money. Also, I would suggest, we didn't talk about this, and I'm not sure I cover it, but on the back end or on the front end, but the back end is the collection piece. On the front end, if you're performing an elective procedure, it could make sense to have a payment plan with the patient. So, you know, if it's a $10,000 out-of-pocket, maybe put them on a payment plan where they're paying $1,000 a month for 10 months or something akin to that, whatever that looks like. There are also funding mechanisms out there where companies will buy your AR and manage it. You need to just look at that very carefully, how that works with you. And one of the things is, too, when you start farming out component pieces, whatever it is, whether it's revenue cycle, billing, collecting, et cetera, you are farming out your name and reputation, right? So if my orthopedic practice has a great reputation with referring providers and in the community, and I do good works, and I help my daughter's lacrosse team and all that stuff, if I farm out the rev cycle to a company in India or wherever else, and they don't have good or they don't have patient management the way I manage my patients, and they're selling my reputation, that goes a long way. And like we say in healthcare marketing, if you provide a really good service and keep a patient happy, they'll usually tell four people. If you do them wrong, or even they perceive that you didn't help them out, they will tell 10 patients, right? And they'll tell family members. And I had such a bad experience. And that grows and grows and grows, and you can see the damage that can be done. So the short version to that is, be careful who you partner with, because they are a party to your reputation. So broad overview, simplified to show you the revenue drivers of the practice, how you're generating money. Again, this is really system, delivery system, or specialty agnostic. You have to do all of these things, regardless of what kind of practice you have. With your internal medicine, cardiology, ortho, whatever, these things have to happen. And again, I make the argument to you, which I have in the other modules, that that service offering, the rev cycle piece is really 90 to 95% generic. It's operations management of the revenue. So when I talk to providers, regardless of where they are, again, rural, in Iowa, or New York City, urban areas, what have you, you'll get these kind of broad, hey, our revenues are down, or I'm not getting paid what I deserve, or I'm working really hard, and we're not generating money. And we talked about this last one, I charge so much, and I'm not getting paid for it. There's a lot of answers to all those. There's usually not just one answer. That's why I don't look at, and you shouldn't look at the revenue cycle as a monolith, as this homogeneous just billing and coding. It is multifaceted. Revenues could be down because doctors are taking time off, or your fee schedule's bad. I'm not getting paid what I deserve. Well, again, that could be either a compensation thing, where we look at your comp plan, or you're truly not generating any revenue by seeing three patients a day, right? So it's being open to these hard conversations. If you're going to ask for a solution or a reason, you need to be ready for a hard conversation and looking at all these different component pieces. So on the rev cycle, right person, right job, I know right now it is difficult finding folks. I've dealt with a lot of clients where clinic, finding clinical help, RNs, even trainable medical assistance is very challenging. I'm sure the rev cycle is the same way, but that just goes a long way to keeping staff happy. And by that, I don't mean paying everyone $100,000 a year, but making your office, your clinic, your system the best place to work, right? I love it here. And a little, like a thank you goes a long way. There are studies out there, which I can't quote off, I can't cite off the top of my head that indicate a diminishing return on an annual raise. So if I give Jimmy a 3% raise, he'll be happy for a little bit, but essentially that money is already spent. It's going out the door. You know, people want to be valued and they want you to care about them. And don't do it haphazardly, like you're checking a box. Be interested in your folks. They're your team and they're the ones who are making your job easier, my hope is, theoretically, and they're the ones collecting your money. So aside from bonuses, it's the little things that matter to folks and you have to make it so they don't want to go anywhere else. Or if they do, it's not the grass is greener situation where they want to come back. Policies and procedures tell folks what's expected of them. We talked about that in module three. And it's really essential to helping folks understand what's expected of them. Too often we throw people in jobs and say, oh, you're an MA. You need to do these things, okay, off to the races or front desk. You've got someone who does a really bad job at the front desk training someone and they're going to train them on how to do a bad job. So having feedback loops, taking the pulse of your staff as they do the work so they feel comfortable and having meetings with folks, giving them feedback, but also getting feedback. Ask them how you're doing. Tell them to be straight up. What do I, how do I make your job better? In any event, those are essential to not only the clinic operations on the clinical side, but also on the operational business side. And so the feedback loop, and we'll get into the metrics later, but proper payment and collection front end, back end, coding documentation, scrubbing and submission, proper follow-up on denials and things of that nature. I will tell you in my 30 years, and I haven't seen a policy in writing that says this because I haven't worked on the insurance company side of things, but I know there are maybe unsaid things that go on where claims are denied that should have been paid. And I will tell you my cynical sense is those denials sometimes happen because the payers don't think you're going to come back at them to get the claims paid. It requires fight and effort. And that's why, and I'm not saying any insurance, I don't want to impugn insurance companies, but I will tell you, I have seen that happen. Claims that are totally clean that get denials. So in any event, that's why you must do everything you can on the front end to ensure that your claims are spic and span. Also, on the rev cycle side, I would make connections where possible with the insurance companies, because having that personal connection with them, you get faster and better service and you develop a bond that they don't want to sully, really. It's a friendship or could be a friendship. So wrap up on module three, and I won't beat this into the ground. This is out there. You will have access to these slide decks and you can see and will continue to see my little diagram over the course of the next few modules. So understanding the billing process. This is that ecosystem diagram broken down in a little more detail. So here's your ecosystem and purely on the rev cycle side, we talked in module three about fee schedules and negotiating and leverage and how that looks to health systems versus practices, private practices, single specialty versus multi-specialty versus pure subspecialty. What does that look like? So it's your fee schedules, what you're going to get paid, which involves a data analytics exercise. It's your payer contracts. It's your credentialing of all your providers with all of your insurance companies that you deal with. And in that, you should have a process in place internally. So when you bolt on a new provider, you're able to start checking those boxes and getting that process handled. Pre-service, what does a schedule look like? Am I seeing five patients a day? If I am, how's that built? Is it built for one new patient an hour or do I tuck in two new patients an hour? Understanding that I might do level three office visits and I can get two in. And then do I do rechecks all day? So the schedule matters to the revenue generation and the revenue cycle. We talked about the pre-reg process of checking eligibility, checking past due balances that we will collect on the day of service. So I might call Mrs. Smith or have an auto reminder and say, Hey, Mrs. Smith, your appointment is next Wednesday. And by the way, we still have you down for a balance on your last visit of $25 and your copay for this visit is going to be X. Again, those money conversations, especially in healthcare, need to be managed carefully. But it is the patient's obligation to pay you for services rendered. And you just need to figure out narratively, how do you handle those conversations and how do you gently have the difficult talks? And then your practice management system and your electronic medical record system, they play a role that the PM system obviously deals with all the data analytics of your contracts. All the money that gets paid goes into your practice management system. So you can do analysis of the revenue cycle using those data pieces. And when I first started in healthcare management a hundred years ago, it was a lot of mashing of teeth and pulling different data sources to understand what was going on. Nowadays, that stuff is pretty easy to get to. And most of the practice management systems have malleable reporting structures so that you can craft your own report out. So if you're struggling with, I don't know, let's say, let's call it Blue Cross Blue Shield for argument's sake. Let's say you're struggling with them. You're getting denials. Maybe you haven't been managing those. I'll run all of that CPT code for the last year by denial and just find out, am I getting a bolus of denials? And if I am, why is that? So right, you can grab that data and really start to analyze why are those getting denied? If you can't find a reason, you need to call them up and say, hey, I need to bulk rebuild these because you guys are denying them for no reason. And the time may come where you need a letter, an appeal letter drafted by one of the clinicians, an MD, or excuse me, a physician, a MD, or PA, or NP that substantiates the need for the claim to get paid, a medical necessity need. And that letter can be 60% generic of, I'm Dr. X, and I do this, that, the other thing, and whatever. But then you have to get into the nuts and bolts as to why this was medically necessary. And that may also, as part of the revenue cycle, you may need a physician lead to meet with the physician lead at the insurance carrier to talk about the medical necessity of X. Point of service, financial counseling, if you're doing, if you're performing surgeries or doing invasive procedures or anything involving, you know, diagnostic imaging, you probably need to have a financial counselor who handles those discussions because those are high dollar discussions. And that financial counselor may talk about the finances options that are available. They may talk about what they think your rate is going to be as out of pocket or meeting deductible. They may also have to work with the health system if you're a clinic on doing scheduling of the procedure. And then point of service, we talked about the charge capture after you've documented the claim Captured the charge coded out. We need to make sure we have compliance With that process and it needs to be a process. I have dealt with clinics I had a 350 doc clinic that they had some of their providers that who hadn't closed a chart in 75 days So that's 75 days worth of revenue. That's sitting there and there are some payers after a certain time Your claim times out where and the phrase is timely filing You can't file the claim after a certain time period and the next thing is if I'm paying you Why are you not getting this done this is part of your job, but then that gets into a physician to physician discussion of Performance that is not a practice manager discussion. That is a clinician to clinician discussion The three C's Correct. Oh goodness gracious. I'm gonna have to punt on the three C's because I forgot what they were but it even it really speaks to the three C's speak to the accuracy of The claim submission and it's like we talked about before. This is a process that needs to be managed It can't just it has to it's gonna ebb and flow and that is what it is But you need to understand why and be able to move in the low points to fix them Standard reports and reporting constants and benchmarking Like I said, we will get into a little bit of a benchmarking report later to show you what and why And third-party insurance follow-up. We've talked about ad nauseum And then remittance and processing so when you get the revenue in the door Making sure it's properly allocated to the patient account Making sure you collected what your allowable is looking the fee schedule and understanding That we build 100 and our allowable is 80. We should have collected 80 denial management I'm working with a large orthopedic group right now, and they have a load of denials for For time period So it's basically when you look at that They did not check the patient's insurance coverage vis-a-vis The time of coverage right? So if I've got a patient that's in the hospital Right, so if i've got coverage with somebody from January 1 to december 31st of 2023 And they do the procedure on let's say they did it on 12 31 of 2022 They will get denial because the patient is not covered and that is totally avoidable and we are talking by the way millions of dollars in charges in their That are pending in their ar because they get denied for a very avoidable reason Um, and let's call that let's call that two million dollars And if they're if their net collection rate is 95 You're looking at a million 900,000 give or take that is not coming in the door And if you're a private practice with shareholders That's a million nine that didn't go to pay bills and didn't drop through to pay physicians a la our pnl in the employment model And then patient responsibility again like I said in module three this is Partly their responsibility when I get insurance via whatever the insurance carrier is whether it's blue cross blue shield or whomever That's a contract with me and them and you And so my obligation Is to pay my share under that contract and as I said in module three You cannot just build the insurance company and write off the patient pay Now there are instances that is doable if there's a financial need on the patient's Part where they're in financial Despair, you can work on a process of attempting to collect over a period of time and writing that off, but that can't be That can't be the rule that definitely has to be the exception and if you're writing off all of patient responsibility You can get your contract canceled and if blue cross blue shield is let's say 60 of your business you don't want that right so Um making sure that that process is tightened up also one other thing vis-a-vis that got me to thinking if a medical practice has patient credit balances You need to resolve those I dealt with a large specialty clinic And went in to look at the revenue cycle and they had millions of dollars in patient um credits That is not um, I I can't remember if that's illegal or my senses Let's just call that a no-no because that's money. Basically. That's that you owe the patient back and I do believe there are laws with regard to um Refunding patients what's due now some clinics will make the argument. Well, jimmy will be in Next month and i'll just apply it. Well if jimmy's coming in next month Okay, maybe you can skirt around that I don't know but If jimmy's not coming in For another year or if jimmy's one and done he comes in as a new patient. He's good to go Um, you need to clear those books off and and this is decidedly bad form, uh, and and you should you should never have uh overabundant dollar value in in um in uh Patient balances credit balances Okay So here's the process broken down a little in a little more detail We talked about the rev cycle beginning before the visit Susie has blue cross blue shield We check her eligibility comes back as yes um at the visit Janie is going to collect um the co-pay for the day so We may depending on her plan we may collect um, she has a balance outstanding, excuse me, she has a balance outstanding We're going to collect today's co-pay. We're going to collect 175 dollars if she can't pay, you know, she'll oh I don't have my Whatever my checkbook or what have you? Okay, we take credit cards, right? Everyone takes credit cards or Debit cards or what have you there should be no unless she has a financial issue There should be no reason she doesn't pay her outstanding balance because again You are then chasing her around for the remainder of that revenue And if you let her get away with it unless she has a financial reason You know that just will go on and on and on I will tell you this physicians medical practices Hospital bills are the last bills to be paid at the end of the month. They just are So susie needs to see dr schmoe Um, dr schmoe sees susie in the clinic setting documents all of her issues The issues are narrative and captured via diagnosis. She does the hnp um, she takes her icd code, um 10 um, so we're going to say that susie's got A 101.00 acute rheumatoid room, excuse me acute rheumatic pericarditis She's got a 160.00 non-traumatic subarachnoid hemorrhage, which obviously i'm not a clinician i'm just throwing that out there she documents um all of the visits and substantiates her cpt value With the icd 10 the diagnosis codes. So dr schmoe is going to bill susie in 99214, right? She's a recheck We know we've seen her before because she has an outstanding balance as evidence on the last slide So it's going to be a level four recheck which indicates to the insurance company that's pretty heavy-duty recheck So you've done a fair amount of leg work in the care delivery process So it's based on time or complexity Excuse me And then you documented your medical decision making So, dr. Schmoe sees susie for the visit dr. Schmoe documents the visit dx and cpt code um, which we'll get into even more detail on those and the bill or on the Um, yeah on the billing and coding side of this And then dr. Schmoe bid susie adieu and if it's a recheck for ongoing um chronic care, which candidly, I don't know if rheumatoid pericardium rheumatic pericarditis Or a subarachnoid Arachnoid hemorrhage is ongoing or if that requires her to go to the hospital asap But in any event, this is a recheck and on the way out the door Dr. Schmoe may say susie I need you back in six months So you will schedule the visit with susie. She will walk out with her recheck visit for another six months So, so that's kind of the broad view of of that piece of the rev cycle So benchmarking this slide is is a redo from um module three It's giving us a sense of What's going on and it helps us point out where things are broken And so you can develop internal benchmarks you can use external you can use the two of them together As I cautioned before we want to be careful not to get crushed by the noise because there is a load of data um and when you're in the physician executive committee meeting space Those meetings in my opinion Should contemplate the fiscal health Maybe a snapshot of the revenue cycle And then a snapshot of the pnl and then a snapshot of productivity really depends on how big you are And what the structure looks like but those things should be measured on an ongoing basis Um, and we talked about in module three and we will get into physician compensation later Work our views days and ar staffing per work. You know, what does our staff look like? Um, I interestingly dealt with a large health system out west And they feel understaffed and they're trying to recruit folks and they can't get them in the door And I looked at their physician staffing load and schedules relative to staff volumes And they have about 60 clinician bodies That are functioning as 30 full-time physicians, right? So they've got a variety of different subspecialties That come in and go out and work elsewhere and um And then they've got about 10 full-time employed clinicians So when I looked at this and matched the staffing With the work, they're actually overstaffed So what the problem is is with the ebbing and flowing of the clinicians and their schedules They have staff there that some days they run around like chickens with their heads cut off in other days They're just doing follow-up work and killing time. So it's understanding how these things again this this makes the argument for My care delivery ecosystem. It's understanding how all of these pieces work together And so when someone calls me and says hey, I need you to look at my rev cycle I'll say hey I can do that But all of these other pieces impacted be best to understand what's driving what goes on with your um with your revenue cycle And so when we do the benchmarking as I alluded to in the last slide You know, we ask the question who who are we doing this for and why? At the shareholder level do they get a packet of financial information that really just gives them the highlights Um, and or is there an exec committee where you take that financial information and you dig into it more aggressively Where you're in the nuts and bolts where your rev cycle manager presents the data and says hey, here's a broken thing And here's what we're going to do to fix it And then the next month you report back on what was broken and how that fixed one you know, do we just have the management team reporting, you know, do they meet with your Executive leader whether that's a managing physician or whether that's a executive slash ceo Do they manage or do they meet monthly to talk about their different? areas of expertise revenue cycle, um Whatever the case may be, you know staffing who's managing the rns. How's that going? Etc, etc and then at a functional level, what are our Um advanced practice professionals are our pas and mps. What are they doing? What's the nursing staff doing? Um, you know, I have been in medical practices where nurses do patient work up on the front end And unless you're in a super subspecialty clinic Where that nurse needs to touch the patient right out of the gate. Why aren't you using an ma? to do that job that just makes all the sense in the world and then You know, I when I ran my cardiology group a thousand years ago I had a nurse practitioner run my congestive heart failure clinic and she dealt with all our chf With oversight from a congestive heart failure We called it the heart function clinic and they dealt with all of you know They had their parameters and they met with the the physician leader of the congestive heart failure um Operation and that also took chf off the table. We didn't have to manage I didn't have 10 different physicians trying to manage chf we funneled them in Um had a level of specialty. So so it's what's the scope of care? What's the functional level? What are we doing and that's outside of rev cycle sort of but that also does involve billing Physician oversight how you bill for the pa's nps, etc Okay, so who Who are we delivering? The message to you may just this is Rev cycle output, right? I've taken all my data elements monthly And theoretically I could do a month to date in what this looks like A month to date last year to compare the months but there's there's also More value and more data right over time. And so what we've done is on the far right hand side of this So let's do this This is my manager. I'm in a 30 doctor practice My ceo um gets this report monthly from my revenue cycle manager Because at that level if you're 30 40 50 docs you're talking about a 30 to 60 million dollar business, right? So you're going to have the ceo Managing this 30 to 60 million dollar business and you're you're probably going to have a revenue cycle manager Who does all of this and then they have folks who manage? from there, so anyway I meet with my Rev cycle director monthly we have discussed and I have discussed with the physician leadership We want to have our days in ar under 28 days and we covered those earlier and you can go back to those slides to kind of get a sense of How those data elements get us to where we are now on the report out? We want our outstanding ar to be under two hundred thousand dollars And we want our charges to be more than six hundred thousand dollars a month We want our ar buckets broken down as you can see here And we have our benchmarks on the right And then we want our net collection rates gross collection our cost to collect and our balance at check-in collected to be As you see here 95 greater than 65 60 percent We want our cost to collect to be under five and a quarter percent and we want um our Balance at check-in collected be 95 So these are goals and these can then be broken down to my director of rev cycle Where she or he knows this is what i'm measuring and we've agreed that this is what we'll measure And I want him or her to dynamically measure these things And if something gets out of whack i'm good with that But let me know why what's going on that got us out of whack and what's the plan to fix it, right? A la our last slide where we deliver this message To the physician leadership and we tell them we've got a plan to fix it We'll get remedied within x or we're getting denials. We need dr. Y to write a letter to Insurance company number one to appeal all of these on medical necessity. Um, um guidelines So as we look at these data points, we'll go through line by line Um our year today day's outstanding is 27 last year. We're at 44. So we're doing really good Somehow we reduced by 17 and we're happy about that. We're marginally under where we want to be So i'm good with that our ar outstanding you could see We were good last year. We're better this year. Awesome. Things are going we're managing our accounts receivable our charges we're down a hundred thousand from last year and We're off our monthly So why is that that red sticks out to me? Did we have five doctors off who perform very? Um delicate surgeries and and they're out of the office on vacation at the same time First of all as a scheduling matter, we should never do that But secondly that could be an explanation as to why our charges are down And we look at our buckets Um last year we had 62 percent of our ar between 0 and 30 days This year we're at 50 So we're worse off than we were last year, but we're right about what our goal is So then the question is are we okay with that or do we really want to be in 62 percent? You know, so then you get into splitting hairs of saying hey our metrics greater than 50. We're right about there So we're good to go. So anyway, you work your way down asking those questions And dynamically managing providing feedback as to how are we going to Amend the things we need to amend we get to the net collection rate. They're at 99 year to date. That's awesome. We love that um prior year to date we made some significant improvements and again, you can get into The mathematics and the logic of prior slides in a module three To look at how we calculate the net collection rate and understand Yeah, they must have moved mountains to get there and yay. We love that gross collections We're down um 10 from last year, but we might have changed our fee schedule And we might have upped some rates that made sense and so we're collecting only 65 But maybe that's okay, right and you can see on our benchmark anything over 60. We're good with that And then our cost to collect we didn't really talk about that in the rev cycle, but that is also a measure to look at because um a lot of revenue cycle companies if you outsource They will charge four to seven eight nine percent Of collected revenue to manage that whole process, right? So you outsource it we talked about the potential landmines to your reputation Because how they collect and and their approach to collecting on your patients if it's hyper aggressive You're going to have some angry patients, but nonetheless understanding our cost to collect internally Um really as a as a function of how well we're doing managing, you know Our employee cost and the revenue that we're bringing in the door, right those things bounce off one and up Excuse me And so our cost to collect is down So maybe we had a high cost employee leave or maybe we're collecting more revenue And that offset what it's costing us to collect, but we want to look at as our target Anything under five and a quarter percent we're happy about balance collected So this is copay deductible, etc. Collected at copay. We're at 92 percent this year um, we're Oh, sorry, that should be that should be a green and I apologize We're at 92 percent this year. We are 82 percent. So we're actually happy about that. So my apologies for the red Um, but we are slightly below where we need to be. We need to be collecting 95 You should collect 100 But there are going to be anomalies right that we've discussed earlier in module three and in module three in in this module Um to this time and and those anomalies will happen. So is 95% an attainable goal? Maybe it is, maybe it isn't. And if it's not, then maybe we move it to 90% when we redo these goals for the next calendar or fiscal year. So this goes to show you how all those data elements roll up into a report. Who that gets shared with is really dependent upon how big the group is, what the reporting structure looks like. I did a presentation a few years back to a group and it was purely about revenue cycle. And I said to the group, you know, don't go to a physician meeting and bring a ream of data because that's not valuable and you're going to overload. Physicians, in my opinion, should be doing what they do best. That's not to say don't understand this and if you want to get in the weeds, get in the weeds. But our jobs as non-clinicians should be to make your jobs as clinicians much easier, right? I want you to be able to come in, see patients, enjoy the work you do, and get paid a fair wage. I don't want you to try to figure out why, you know, why we're not collecting for a 99203 with an insurance company. We do $100 a year in business, right? If that's an issue, I want to bring that to your attention, but I don't want you going down a rabbit hole. And so I made the argument that, hey, deliver this to your clinicians and let them understand if it's broken, I know it's broken, here's what I'm going to do to fix it. And I had a physician come up to me afterwards who said, you know, we're not idiots. We can handle the data, etc, etc. And I said, Dr. X, I know that. I've been doing this for a long time. I know you're all very bright and I totally get that. If I offended you, I am sorry. But my point is, you should have a relationship with your staff where they, you understand very clearly what's going to get measured and what it means, sort of like what we're doing with module 3, module 3a, and the rest of these modules. You understand these things, but you don't need to get lost in the weeds. And that was my argument. Your staff should be good enough where they bring something like this on slide 23 to you and you get it very clearly what's going on. Because honestly, I don't want you spending 10 hours getting lost and mired in the muck. I want you spending 10 hours providing high-quality patient care. I'm sure you'd rather do that. Now there are clinicians who want to be business people and do this kind of stuff, and that's good. Then do that. And I have buddies who are physicians who do this purely on the tech side, purely on the practice consulting side. That's all good. But if you're a clinician in the trenches, what I want to do is provide you data. I want to provide you information, and I want you to understand it very clearly. So when I give you this, you can look at it and go, why are we down 100,000? I can say to you, Dr. X, here's why. That was the point of that exercise. Sorry, that was a little long-winded. My point being, I know you're all very bright. I totally get it. I do. But I don't want you to get lost in the weeds. Remember, we talked about data noise. And in healthcare, there's a load of data noise, whether it's over documentation or a bunch of data points that we collect that we have no use for. And here, this is supplied by the Medical Group Management Association. I want to give them proper attribution. This is a urology comparison, but just to give you a sense of some of the data pieces that are out there. So this is from 2017, so it's aged out. But this is provider comp relative to collections, collections of work-or-view, or compensation versus collections ratio. So you, again, you get lost in the weeds. A lot of this stuff doesn't matter. But you can see here, your median in a private practice, and this actually can be broken down in size of group. They get down to that level of detail. But you should be providing 8,600 work-or-views a year at the median. That's where MGMA and they're serving nationally. That's where they came out for physician-owned. You can see in a hospital or independent facility-owned, the median there in urology in 2017 was 7,800 R-views. So again, this gives you a sense of the data elements. And believe me, this goes on and on and on. So understanding what we want to look at. And again, we need to work-or-views because those do, even some private practices use work-or-views as a compensation methodology. So it behooves you to understand not only what those are, but how they're derived. And again, I'm giving you, I don't expect you to work with those daily, but I do want to give you the background and that's the whole idea behind our practice management 101 sessions. So define the data elements to manage. Review with the managers. Again, who you review these with and what you manage is predicated on your size and scope, sophistication of your staff. Updates on the reds. You know, the outliers should stand out some way, whether it's red or green or gold or fuchsia. We need to provide to you a detailed report that shows you very clearly what's broken. And we need to come to you with the solution. Don't, you know, as a manager, I don't want folks dropping stuff on my desk going, oof, look at this. I want them to come to me and say, oof, this is broken, but here's what we think it is. And then us have a dynamic discussion about how to remedy the broken stuff. So again, this is an ecosystem, right? You provide inputs, you tweak, you measure, monitor, and you continuously feed that ecosystem. So measure, report, address, repeat. Small practice. So an administrator acts on all of this stuff. So if you go back to module one and you look at your employment opportunities, if you're in a three doctor practice, you're probably gonna have an administrator that does all of this. And some of them do it really, really well. I worked with one mid last year who was awesome. Like hit all of these things, pulled all the levers. And you'll work with some who don't have a sense of this. And they could be really good, but they could be overwhelmed. And that's another piece. So, you know, when you're interviewing for your job, as we discussed in module one, understand it's on you to understand the functioning of the practice because that does matter. And then share pieces with the billing manager. That RevCycle thing that I showed you, that report out, that's maybe me as the CEO of our very big practice with the director of RevCycle who has a manager of the billing components or something. So take meeting with them, an ongoing base, and saying, hey, here's what I need, here's what's broken, etc, etc. So reporting monthly, at the granular level, at the micro level, day to day, there should be discussions all the time about what's going on. But at the report out monthly level, you know, that's a roll up of our agreed upon metrics that need to go out to the clinician, whether it's the PAs and PAs, or whether it's the physicians or the exec team. That again, is dictated or predicated on size and scope. These things don't work in a vacuum, right? So again, multivariate inputs, there are external things that are coming in, this is never a closed system. Be concise and ensure accuracy. We want zero to 30 buckets to be under 50 days. All right? If that's our goal, is that real? And how do we get there? Choose your topics, be very concise. What's important to the business? You know, I worked with a group, and they had a lot of recheck work, right? So very low on new patients, high rechecks. And so I said, look, to grow that business, because they had a lot of chronic care management, we need new patients coming in the door. So how do we address that? How do we market better? How do we make ourselves available to referers? How do we show them our quality is awesome? How do we get those patients in the door? And then again, this is not, this is multivariate. I have Dr. X, he wants to retire in a year, he doesn't want new patients. So okay, is his compensation going to be reduced? Or does he have some stipulation in his ownership agreement where, you know, he just comes in and checks the box. These are things that impact the revenue cycle and the practice operations. And this is why, when a physician comes to me and says, hey, our revenue cycle is broken, that this stuff matters, right? The provider productivity matters in the revenue cycle. So identifying what's important to the business and our make a plan. It doesn't have to be, you know, dead 100% accurate. As the saying goes, you know, perfection kills, wow, convince the same thing. But in any event, like perfection kills a really good plan that's 80% dead on. If you're striving to get it 100%, you will spin your wheels for the rest of your days. So there you go. So identifying key components to benchmark again, staffing per worker view, the right person, right job, provider productivity, aggregate data for the practice management system, knowing what to measure when to run the reports, etc. On that, keep the reports short and sweet, and have them tell the story. You can either do it electronically on a database, everyone can access it, or, you know, limit accessibility or do it on paper or both. There are database products out there, business visualization tools that help you to aggregate data, especially if you're in an enormous medical practice. We do work with a thousand physician ophthalmology optometric group throughout the United States. And we just did a data analytics dashboard for them because obviously you're not doing that on paper in your practice in Atlanta. So why? We're using these data and these benchmarking components to manage a business. We're using them to measure production, review modalities, right? If I have a new modality I want to introduce, am I going to get paid for that? Does Medicare pay it? Okay, Medicare pays it, check. If Medicare pays it, what is my Medicare population? Because I know in the worst case scenario, at least Medicare will pay it, okay? And now I want to scale that back to what if I only get 50% of my Medicare patients in this modality for clinical indications or they opt out or what have you? Well then that changes that the revenue side of that, right? So you can use the data to start to make your argument about introduction of a new modality because you'll know what the expense side is. You have variables on staffing, but you'll have fixed expense on your physical plant and on the equipment. If it's a CT machine at a million two or an MRI at a million two, million five, million eight, those become real dollars. Am I going to get a return on that piece of equipment? And then using data in this day and age to measure quality outcomes. Again, I did that in 2002. It's doable, but you have to define what are we doing, why are we doing it? Is it good care and or is it good care and delivers adjunctive revenue? So win-win on that. Benchmark changes in finances, production and modalities relative to peer groups. Peer groups nationally, peer groups in your demographic area if you can do that. This assists with financial modeling. It avoids surprises, offers transparency into the business so everyone understands very clearly what's going on, offers a succinct snapshot to the shareholders, helps in strategic and financial planning and budgeting. And by the way, I want to add a new physician or a new PA. Why? Do I want to pay a new physician $250,000 a year and then they're going to be a shareholder making five, six hundred thousand dollars a year? These discussions really come into play. Can I add two PAs, generate another million in revenue and only pay them $125 each? You get more bandwidth out of two PAs and maybe that could work there. The benchmarking helps you understand those component pieces. A good source of aggregated data from which to educate, evaluate and elevate team members. If you've got great folks, as we said, that's really going to go a long way into the eval process. When are you going to use them? Monthly? Quarterly? We discussed this at length. Management meetings? Who else to share with? Do I go all the way down into the front desk level and say, guys, we're not collecting what we need to at the point of care time of service? What are we going to do about that? Like we said, don't overuse, over measure. There's a load of data and you can get lost in the weeds. Choose your key data elements. And we discussed this in module three. Not enough data to benchmark, inaccurate data or there's no measurement, i.e. we talked about dermatology. There's a dermatology specialty group that does practice management related work and they also aggregate data. So a lot of derm clinics don't report their data to larger financial management operations data sites. So again, there's data out there. This is from the Medical Group Management Association. We give them full attribution. This is an aged out sample report of days in AR and you can see it's all practices, so all specialties, collections, paramex data for urology, hospital employed. So again, you can see how you can go down a rabbit hole in this type of stuff. What does it tell us? Where the practice is relative to like situated practices? How are we doing apropos of other group stays in AR? Collections by group, collections per physician. This, we are running short on time, my apologies. You could see why we split this out into two modules, but this does get into work RVs. So I have fictional work RVs and as you can see, let's tie those into the CPT codes. If this was a 99201, 202, 203, 204, 205, more work is expended to do these procedures. And so the allowable could be $1, could be $2, $3, $4, and $7 for a level 5. So let's just say that I've done one of each of these. That's 10.3 RVUs generating $17 of allowable and I would be collecting $1.65 per RVU. We won't get the weeds on that now, but that sort of level sets some things as we move forward towards comp. So you see in the comp plan here, if I'm paying $10 per work RVU, I would pay $103 for these 10 work RVUs. If I'm actually collecting 21, I'm overpaying this doctor $82. So you can see how comp comes into play, a production, and how the actual collections come into play. So basically you're upside down on this physician. He's doing the work, but you are not collecting for him. So why is that? So lag days we talked about a little bit earlier. That means money that's not coming in. Physicians over coding, that's either fraud or abuse. If it's willful and wanton, if you're up coding because you want to make more money, that's against the law. Medicare will put you in jail if they find you or they will fine you and not let you see Medicare patients for years and years and years. Abuse, I worked Medicare fraud and abuse way way way long long time ago. If you're doing it accidentally, Medicare can, they have the latitude to feel pity on your soul and make sure you get educated and you pay back. They do this thing where you self-attest and you pay back what you overbill, but they will keep an eye on you and you will need to in many instances provide proof of education and how you're now coding within proper parameters. So technically if you're under coding, Medicare can charge you for fraud. So you know there are physicians who bill level threes when they should be billing level fours and fives because they don't want to run afoul of Medicare. Technically if you're doing a level five you're fraudulently billing a level three. Now having said that, I've never seen Medicare go after anybody for under billing. They may, but I've never seen it. But I have seen them go back for over billing many many times. So let's look at this for one second. Here's a normal volume of these CPT codes. Here's the payment rate. Here's what was generated, right? 2 times 73, 10 times 113, etc. So I generated or I should have generated $2,569. Now in an analysis I actually billed, so this is what I probably should have billed normal distribution. I actually billed no level twos, one three, and you can see I blew it out with level fours and fives. So 19 visits, right? The same number of visits, 19 visits, but I got paid $3,588. That's 39% more. I was overpaid 39%. So again, absurd example, but if you extrapolate that out you can see where that becomes a problem. So we're getting problems with this too is if allowables aren't loaded in the system, which we contemplated in module three and further here, because then you don't know what you're collecting. You don't know if it's accurate or not. Janie simply takes the allowable rates off the difference. How much money are you losing a year on that? Again, if you're in a 20, 30, 40, 50, 80, 100 practice, that becomes a lot of money. And as I said earlier, there are a lot of groups that don't know where their contracts are. I've seen that in two doctor practices. I've seen it in 40 doctor practices. That needs to be managed carefully. That is driving your revenue. So I appreciate you spending, excuse me, I appreciate you spending the time. We're coming up on an hour and my apologies, but I do think that all of these things matter. And as you might imagine, I could take module three and module 3A and this could be a three, four hour conversation with Q&A. So in any event, I will remind you that this is module 3A of eight modules, but actually ten modules because 2A and 3A. The fine folks at AOA are collecting questions as a result of these modules. We want to do module 8 Q&A. So if you have questions, regardless of what they are, they could be on anything from module 1 through module 7 or anything else for that matter, and I will address it as I can. Please submit those to Physician Services at osteopathic.org. Please do so if you can before May 10th. We're going to try a slide deck to walk through similar to all of the other modules. And then we will answer those questions live on May 10th, 7 p.m. Eastern Time Live. For those of you on the West Coast, if you're unable to free yourself up at 4 p.m. Pacific, the presentation will be recorded as with all of the other modules and will be on demand as needed. And if you need to, you can reach out to me. My contact information is on all of the discussion documents. So again, I thank you for your time and attention on all these modules, and I really appreciate you dedicating an hour today to this. But I do feel like this is very important stuff, and I hope that you gained great value out of this presentation and all the other ones for that matter. So thank you very much for your time, and I hope to hear from you and discuss things with you on May 10th of 2023. Thank you.
Video Summary
In Module 3A of Medical Practice Operations, Business Fundamentals 101, the focus is on detailing the revenue cycle and its significance in medical practice management. This module builds on Module 3 by providing a deeper dive into how the revenue cycle, which encompasses all money-related activities in a medical practice, plays a crucial role in the financial health and operational efficiency of medical institutions.<br /><br />The session emphasized the importance of understanding various revenue cycle components, even for those who do not handle them daily. These components include credentialing, billing, coding, and financial counseling. Effective management of the revenue cycle ensures that medical practices can efficiently collect payments, maintain cash flow, and uphold their reputations.<br /><br />Moreover, proper benchmarking, including understanding metrics like days in accounts receivable and collection rates, is necessary to assess and improve financial performance. The module also addressed the need for clear processes and staff roles to avoid common pitfalls such as high denial rates on claims, which can lead to financial losses.<br /><br />The presentation highlighted the significance of managing patient interactions regarding financial responsibilities, ensuring compliance with billing, and using technology to improve efficiency. Practical examples and scenarios demonstrated how data analysis and proper management practices can lead to operational improvements. <br /><br />In essence, this module serves as a guide to enhance understanding and management of the business aspects, specifically revenue cycles, within healthcare settings. It underscores the need for continuous assessment, reporting, and adjustment to optimize both patient care and financial outcomes.
Keywords
revenue cycle
medical practice management
financial health
credentialing
billing and coding
financial counseling
accounts receivable
collection rates
denial rates
patient interactions
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