Archive for Management

What Are Some Common Challenges and Solutions for Medical Practices?

What Are Some Common Challenges and Solutions for Medical Practices?

Regulatory compliance and technology are changing the landscape of the health care industry. New technologies, revenue cycles resolution and changes in leadership can all have a positive impact on your practice. Are you prepared to take on these new opportunities? In this article, Tammie Lunceford answers a few questions about how the landscape is changing and how facing these changes can help breathe new life into your practice.

Question: What are some of the common challenges you have seen in medical practices recently?

Answer: I often see revenue cycle problems. It is more difficult now than ever to get paid by the carriers and by the patient. As you know, we’ve had a shift from the carrier paying all of the health claims to now the patient has more responsibility over the costs, and it can be difficult to ask patients for money. Physicians are there to serve the patient and many feel uncomfortable asking the patient for money. I also see problems with adopting new technologies that are available, and problems where too much responsibility is on the front office…having them answer the phone and also deal face-to-face with the patient, which can be challenging. We also have seen a lot of highly qualified managers (Baby Boomers) leaving the market, which can lead to issues with changing leadership.

Question: Can you describe a couple of examples you’ve seen in medical practices where, with a few small changes, you saw a big impact.

Answer: I work with both large and small practices, and I have a couple of stories that I could share. One from this year was a Practice Assessment for a new client. The manager was overwhelmed because the practice had doubled in size over a four-year period. The physicians were overwhelmed because they were finding themselves making decisions for a large practice when they had been a small practice for so many years. Their revenue cycle manager, who had been very loyal to the practice, was not qualified to handle the new load, and were having some financial issues. MACRA was approaching as a big project and that they had no idea how to attempt that undertaking. Plus, throughout their growth, they had failed to build the appropriate infrastructure to adequately support the practice, like hiring a mid-level manager or supervisory staff to assist the manager in staying highly effective. So, after I identified these problems during the assessment, I worked closely with the group and over a short period of time we recruited and hired a revenue cycle manager who was effective and innovative. The practice’s profitability has increased, they relieved the front desk staff from answering the phones and allowed them to focus on the patients standing in front of them. Through coaching the group and the manager, they have been able to work more cohesively and make better decisions. They’ve identified some team leaders to lead other areas, and they are doing great. They are approaching projects more on their own now, but I’m still their advisor and have built a long-term relationship and I know we will continue working with that practice.

We also work with smaller practices. We received a call from a physician who was leaving a large practice and going out on her own to form a “boutique practice.” I assisted her early in her practice. She couldn’t afford a high-level manager to help her make decisions, so I became her advisor. I continued this over a five-year period and we have taken her from being too small to hire a manager to hiring a manager, to hiring to mid-level providers, and now we are about to hire a partner for her. I love forming these lasting relationships with managers and providers.

Question: What new changes are we seeing in healthcare as we move forward into the next few years?

Answer: Because we’ve seen a decline in reimbursement and collections over the last few years, it can be difficult for us to get physicians to invest in their practice because many are afraid. They want to hang on to their money rather than investing in their practice. They really don’t know where we are going in the future of healthcare, there are changes in the payment models, administrative burdens are at their highest, and manager and physician burnout is at its highest. There has never been a time where I’ve seen practices need advisory services more than now. I think with technology growing as quickly as it is, we will need to guide these physicians on what technologies they should incorporate and invest in to keep their practice vital.

Article contributed by Tammie Lunceford, Healthcare and Dental Consultant, Warren Averett Healthcare Consulting Group. Warren Averett is an official Gold Partner with the Medical Association.

Posted in: Management

Leave a Comment (0) →

How Can You Use Financial Metrics to Improve Profitability?

How Can You Use Financial Metrics to Improve Profitability?

There are many factors that can help your practice maintain financial profitability. It is especially important to review the structure of your financial statements to properly assess and optimize the health of your practice. Recently, we sat down with one of our healthcare experts, Miko Kulovitz, to discuss how important financial reporting can be to practice and what you can do to improve it.  We have outlined our conversation here:

Question: What are some of the common changes you recommend for a medical practice when you first look at its financial statements?

Answer: When we first look at the financial statements, we want to determine the health of the practice. Are they doing well? Are there areas we could improve? And those financial statements don’t always give us the information we need. A majority of practices use accounting software that is similar to QuickBooks, and that set-up isn’t always the best set-up that is going to show the medical practice how the financials need to be arranged. So when we come in, we’ll typically start with the construction of the financial statements and consider if the information is put together in a way that’s going to be useful to the physicians in making decisions and really driving the practice.

Question:  What does that generally look like?

Answer: We really want to be able to see what the operating net income is, aside from the physician expenses. We also want to be able to track by location how each division is doing. We want to see the profitability by provider. So there are a number of metrics that we need to make sure that we can track and have the financial statements divided in a way that presents that information to us.

Question: What are some of the financial metrics and practice profitability metrics that you like to monitor when you begin working with a practice?

Answer: There are a lot of key metrics that we review⁠—from the financials to the revenue cycle management. We want to look at the practice as a whole, see how it is doing and find out how it stacks up to peers on a state level and a national level. We really want to make sure that a practice’s metrics are in line with what other practices of a similar size and specialty are doing.

We also want to make sure that A/R aging is the youngest that it can be. We don’t want A/R to age into older categories because that makes it a lot harder to collect, and we want to see the days in A/R. We want to make sure that money is collected as fast as possible and that the cash flow cycle is healthy. We want to look at the financial statements and see what the overhead percentage is. We want to look at those individual expense categories and see if the larger items, such as the salary, benefits and medical supplies, are in line with what we are expecting to see. And because we work with financial statements of physician practices on a daily basis, we know what those parameters are; so, those anomalies will often stand out to us and help us pose the right questions so we can do the research and see if there are things that we need to explain further.

Question: When you work with medical practices, one of the key things that the physicians are focused on is the compensation formula. Could you make some comments about the common compensation formula structures that you see and what is effective in a practice?

Answer: There is no one-size-fits-all method to compensating the physician. Every practice is different, every specialty is different. So, we really want to take a look at what makes the most sense for that particular practice. The compensation model should be set up in a manner that incentivizes the behavior that’s best for the practice and also rewards the physicians for the work that they are doing. We want to make sure that the compensation model is compliant with Stark Law, that there are no issues that would be a detriment to the practice and that the compensation model is fair. A lot of times, there are issues in which the model is not achieving the goals that the practice wants to achieve, so we really want to take a look to see if this model is performing as we need it to perform and if it is accomplishing those goals.

Question: I would assume a single-physician practice compensation model is not really a big deal. When you get larger and larger, are there some creative ways you’ve seen practices compensate their physicians?

Answer: Again, there are many different ways to do that. The main thing is to focus on the revenues, allocate those appropriately and make sure that the practice is compliant. Also, with the overhead, it’s going to be a matter of the practice’s preferences and what makes the most sense. Some practices split overhead evenly, and some might allocate a percentage of variable or percentage of fixed. Again, there are many ways to slice that. It is really important that we talk to the physicians and get to know the practice to be able to help guide them in a direction for what plan is going to work best for them.

Article contributed by Miko Kulovitz, Healthcare Senior Manager, Warren Averett Healthcare Consulting Group. Warren Averett is an official Gold Partner with the Medical Association.

Posted in: Management

Leave a Comment (0) →

The Delivery and Confidentiality Challenges in Rural Health Care Explained

The Delivery and Confidentiality Challenges in Rural Health Care Explained

Medical practices in rural settings face a host of concerns, such as how emergency protocols may differ from urban areas, difficulty in finding nurses (according to a recent Friday Letter from the Alabama Hospital Association, registered nurses are the third most in-demand jobs), and difficulty in finding appropriate training for staff.

In small towns/rural settings, where “everyone knows everyone,” confidentiality is also at the forefront, especially where patients are known by staff members.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires employees to be trained so they understand privacy procedures. According to the “Questions and Answers” section of the U.S. Department of Health & Human Services website, http://answers.hhs.gov, “the training requirement may be satisfied by a small physician practice’s providing each new member of the workforce with a copy of its privacy policies and documenting that new members have reviewed the policies; whereas a large health plan may provide training through live instruction, video presentations, or interactive software programs.” For more information, please visit the Department of Health and Human Services’ website at https://www.hhs.gov/.

Below are some tips to lessen your risk recommended by risk management experts:

Confidentiality

Written policies and procedures will help reduce the risk of a breach in patient confidentiality. To help preserve patient confidentiality, it’s important for all staff members to:

  • Never discuss cases or patients where conversations may be overheard.
  • Never leave case files, consulting reports, or any other written material regarding patients in areas where other people may inadvertently see them.
  • Only allow medical records to leave the facility when absolutely necessary.
  • Keep all patient information confidential.
  • Sign a confidentiality statement as a condition of employment and annually at the time of their performance evaluations.

In general, the HIPAA Privacy Rule (“Rule”) prevents physicians and other health care providers from using or disclosing any protected health information unless they have obtained permission from the patient or the Rule allows disclosure without the patient’s permission. HIPAA rules are voluminous, complex and can be revised yearly; it’s prudent for practices to consult their corporate attorney to help ensure HIPAA
compliance. The following is a very brief overview of HIPAA with regard to the release of patient information.

Patient authorizations grant permission to release patient health information. To be considered valid, an authorization must be in plain language and include the following elements:

  • a description of the information to be released;
  • the name of the person or organization authorized to release the information (e.g., Dr. John Smith, Smallville Cardiology Clinic);
  • the name of the person or organization to receive the information (e.g., the patient’s attorney, the patient’s employer);
  • the purpose of the disclosure* (e.g., “at the request of the patient” is sufficient when the patient initiates the authorization);
  • the expiration date or event (e.g., “end of the research study,” or “at the conclusion of the subject litigation” is sufficient);
  • a statement of the patient’s right to revoke the authorization in writing;
  • a description of how the patient may revoke the authorization and exceptions to the right to revoke;
  • a statement that the physician may not condition treatment on whether the patient signs the authorization;
  • a statement acknowledging the information may be re-disclosed by the recipient and no longer protected by the Rule;
  • a signature by the patient and the date; and
  • if the authorization is signed by a personal representative, a description of the representative’s authority to act for the patient.

Patients can revoke authorizations at any time except when they have already been acted upon. Authorizations must be maintained for at least six years.

*This may be prohibited by state statute.

Access to Protected Health Information

With a few exceptions, HIPAA gives patients the right to inspect and make a copy of information maintained in their record. Practices must act on a patient’s request for access within 30 days of the request (60 days if the records are kept off-site).

A reasonable, cost-based fee is allowed for copy requests. This fee may only include the costs of copying (supplies and labor) and postage. Many states have rules limiting the amount a practice may charge for copying a medical record. Be sure to review Alabama’s state rules regularly as some are adjusted annually.

When an attorney makes a request for records, have the physician review the request and the patient’s records so that he or she can take the appropriate action and notify his or her ProAssurance Claims Specialist. It is prudent to establish a screening process to help ensure the physician is notified of requests for records from attorneys.

Resources

The United States Department of Health and Human Services Office for Civil Rights enforces HIPAA. Its website provides helpful HIPAA compliance information and a“frequently asked questions” page on HIPAA Privacy regulations. Access the website at hhs.gov/ocr/privacy.

State Patient Confidentiality Laws

HIPAA preempts state laws that are less stringent than HIPAA, but states may enact laws that are more stringent than HIPAA. Consult your corporate attorney to ensure compliance with HIPAA and any applicable state patient confidentiality laws.

Physicians insured by ProAssurance may contact our Risk Resource department for prompt answers to risk management questions by calling (844) 223-9648 or via e-mail at RiskAdvisor@ProAssurance.com.

Posted in: Management

Leave a Comment (0) →

Don’t Forget Your Risk Assessments!

Don’t Forget Your Risk Assessments!

Many medical practices are planning their Security Risk Assessments for the new year. Whether to better qualify for the 2019 Merit-based Incentive Payment System (MIPS) or to fulfill obligations to comply with the HIPAA Security Rule, a strong strategy now will reap benefits later. It’s a good time to remember what is required when conducting a Security Risk Assessment, as there tends to be confusion around what the Risk Assessment should include.

Here are some helpful reminders as we move through the first quarter of the year:

It’s Not Just a Checklist. A proper Security Risk Assessment is a thorough process where a covered entity under HIPAA should identify, prioritize and estimate the risks to practice operations resulting from the use of or implementation of a specific technology. Once the risks are identified, a plan of mitigation should be created that provides a roadmap for ongoing risk management.

Don’t Just Focus on EMR. While your EMR system, and the safeguards in place to protect EMR data, should absolutely be part of the Risk Assessment process, time should also be spent analyzing and assessing the risk to protected data that sits outside the EMR system. Identify the ePHI in the practice that resides outside the EMR application (e.g. files stored on users’ personal computers, data stored in ancillary systems, copiers and scanners, etc.) and assess the risk associated with this data as part of the assessment.

No Specific Methodology Required. While OCR has provided practices with guidance regarding the Security Risk Assessment Requirement, there is no mandatory process or method by which a practice must follow to comply with the requirement. However, most security professionals recommend following accepted industry frameworks, such as those provided by the National Institute of Standards and Technology (NIST).

Revisit Previous Risk Assessments to Show Progress. When conducting a new Security Risk Assessment, review past analysis and make an effort to document progress made with regards to risk mitigation. As the spirit of the Security Rule has always been to encourage covered entities to use the Risk Assessment as a starting point for ongoing Risk Management, documenting progress made will show the practice doesn’t simply consider the Assessment a rote exercise but a vital part of managing and mitigating risk on an ongoing basis.

You Don’t Have to Outsource Your Security Risk Assessment. OCR is very quick to point out there is no requirement, neither in the Security Rule nor under MIPS, for covered-entities to outsource their Security Risk Assessment. In fact, OCR has published a free, downloadable tool that practices can use to help with efforts to fulfill requirements (https://www.healthit.gov/topic/security-risk-assessment-tool). However, OCR does go out of its way to explain the time commitment and skillset required to adequately evaluate and utilize the tool, and encourages all covered-entities to seek professional assistance when considering using these resources to self-perform the Security Risk Assessment.

A thorough Security Risk Assessment must stand up to an auditor or investigator, especially in the event of a security incident. A lack of proper Risk Analysis is cited in many investigative findings that have also carried large financial penalties. Take the time to consider how your practice will approach the Security Risk Assessment in 2019, and consider it as an opportunity to genuinely look at where you might be vulnerable and how the Assessment can be used as a springboard for true Risk Management.

References:

https://www.healthit.gov/topic/privacy-security/security-risk-assessment-tool

https://www.cms.gov/Medicare/Quality-Payment-Program/Resource-Library/2018-Cost-Performance-Category-Fact-Sheet.pdf

https://www.healthit.gov/topic/privacy-security/top-10-myths-security-risk-analysis

Nic Cofield is Director of Client Services with Jackson Thornton Technologies LLC (JTT). JTT is one of the Southeast’s leading providers of managed IT services, cybersecurity services/consulting and IT Risk Assessments to health care providers. JTT is wholly owned by Jackson Thornton CPAs & Consultants, which is a partner with the Medical Association.

Posted in: Management

Leave a Comment (0) →

The Tax Cuts and Jobs Act: How It Still Affects You

The Tax Cuts and Jobs Act: How It Still Affects You

Editor’s Note: This article is a follow-up to The Tax Cuts and Jobs Act – How Will It Affect YOU? published in the Winter 2018 issue.

On Aug. 8, the IRS issued proposed regulations for the newly created Section 199A 20 Percent Qualified Business Income (QBI) deduction. 199A has been one of the most talked about aspects of the Tax Cuts and Jobs Act since its passage last December. This provision of the act was included in the tax reform bill in an attempt to give pass-through entities (such as partnerships, LLCs and S corporations) and sole proprietorships similar tax savings that were provided to C Corporations (C Corp tax rates were reduced from a high of 35 percent to a flat 21 percent). The new 20 percent QBI deduction is effective for the 2018 tax year through 2025.

Although the new tax deduction is generous, the structure of the deduction is complicated with many limits, phase-ins, and phase-outs. Whether or not you will be able to take the deduction depends upon many factors, the key being your personal taxable income. Other factors include wages paid by the practice, the value of business property, nature of income, etc.

Physicians are especially impacted by limits on the deduction since the income is earned from what the law labels as a “Specified Service Trade or Business” (SSTB).

What is a Specified Service Trade or Business (SSTB)?

Most unincorporated business owners, partners and S Corporation shareholders benefit from the 199A deduction. However, Congress precludes some higher-income business owners from taking the deduction if the income is earned from an SSTB.

An SSTB is a trade or business involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, investing and investment management, trading, dealing in certain assets or any trade or business where the principal asset is the reputation or skill of one or more of its employees. Per IRS regulations:

The term “performance of services in the field of health” means the provision of medical services by physicians, pharmacists, nurses, dentists, veterinarians, physical therapists, psychologists and other similar health care professionals who provide medical services directly to a patient. The performance of services in the field of health does not include the provision of services not directly related to a medical field, even though the services may purportedly relate to the health of the service recipient. For example, the performance of services in the field of health does not include the operation of health clubs or health spas that provide physical exercise or conditioning to their customers, payment processing, or research, testing and manufacture and/or sales of pharmaceuticals or medical devices.

Based on this definition, physician practices are considered SSTBs, and therefore, limits apply on the available deduction.

How does the deduction work?

The QBI deduction is based off “pass-through income,” income reported on a Schedule K-1 earned from partnerships, LLCs and S Corporations or if a sole proprietor, what is reported on Schedule C of Form 1040 individual income tax return. Wages reported on a W2 or guaranteed payments paid to partners do not qualify as QBI. It excludes any investment-related items, such as interest, dividends or capital gains or losses from the sale of property. The maximum deduction available is 20 percent of QBI.

Although the deduction is calculated based on income earned from a trade or business (i.e. – the physician practice), the actual amount of the deduction is dependent on the taxable income of the individual. Most physicians with taxable income over $415,000 filing a joint return will be hard-pressed to qualify for the deduction. As such, it is possible for a large group practice to have some physicians qualify for a QBI deduction and some not qualify when there is a large variation in income among the owners.

The deduction itself is claimed on Form 1040 individual income tax return. Form 1040 will include a new line for the deduction in arriving at taxable income.

How do I know if I qualify to take the deduction?

The deduction is fairly simple and straightforward for individuals with married filing joint taxable income of $315,000 or less ($157,500 or less if filing single). Those taxpayers receive the full 20 percent QBI deduction. Above those taxable income amounts, the 20 percent QBI deduction becomes subject to a tangled web of limitations, phase-ins, and phase-outs. Individuals with income from SSTBs (i.e. physician practices) are subject to even more limitations that, depending on the individual’s taxable income, quickly eliminate the 20 percent deduction altogether.

Let’s first examine the limits applicable to both service and non-service businesses alike once taxable income exceeds the limits noted above. The 20 percent qualified business income deduction is limited by the greater of:

  • 50 percent of W2 wages paid by the qualifying business or
  • 25 percent of W2 wages paid plus 2.5 percent of unadjusted basis of all qualified property.

These limits are phased in for joint filers with taxable income greater than $315,000 but less than $415,000 ($157,500 / $207,500 for non-joint filers) and result in a reduced 1991A QBI deduction.

In addition to the above limits, the ability to take the 199A QBI deduction for individuals with pass-through income from a SSTB is completely lost once individual taxable income exceeds $207,500 if filing single or $415,000 if filing joint. Phase out begins at $157,500 filing single and $315,000 filing joint.

The chart at the bottom of this section summarizes the various limitations, phase-ins and phase-outs for both SSTBs and non-SSTBs.

To illustrate, assume Dr. A is a sole practitioner who files a joint return. Her practice is organized as a single-member LLC. The qualified business income as reported on Schedule C of Dr. A’s 1040 is $240,000 after wages paid to staff of $195,000. Dr. A and her husband’s taxable income for the year is $295,000.

In this example, Dr. A’s tentative 20 percent deduction is $48,000 ($240,000 QBI* 20 percent). Since Dr. A’s overall taxable income is less than $315,000, she is able to take the full deduction of $48,000 since neither the W2 phase-in limit nor the SSTB phase-out limit applies.

But what if Dr. A’s taxable income is over the $415,000 limit noted above? Since the medical practice is considered a SSTB and income is over the allowed threshold, Dr. A is not allowed to take any amount as a QBI deduction.

It is important to note 199A generally requires taxpayers to identify QBI on a business-by-business basis. Physicians who own interests in other non-SSTB pass-through entities may still qualify for a 199A deduction for that trade or business.

IRS Anti-Abuse Regulations

Various planning strategies have been considered by physicians and their advisors on how to avoid the SSTB limitation. Some of these strategies became known as “crack and pack,” which involved splitting a practice into separate legal entities to isolate non-medical activities to qualify for some amount of deduction. One of the entities would provide the medical services and the other entity would lease office space, provide billing services, or various other administrative functions.

However, the regulations issued by the IRS contain various anti-abuse provisions – one of which significantly limits the ability to segregate activities among various entities when there is common ownership among the entities solely to qualify for the 199A QBI deduction. The proposed regulations state if any trade or business provides 80 percent or more of its property or services to an SSTB, and if that other trade or business and the SSTB share 50 percent or more common ownership, then that other business is considered an SSTB too. For purposes of this anti-abuse rule, ownership is both direct and indirect ownership by related parties.

It is a common practice for various components of a physician practice to be held in separate entities, often for legal protection and tax planning. One such example is real-estate held in a separate entity and rented to the practice. This is still acceptable; the anti-abuse regulations just prohibit taking a 199A QBI deduction in such circumstances.

The regs contain various other anti-abuse provisions, such as treating non-SSTB’s as an SSTB if they share expenses/overhead with a 50 percent commonly owned SSTB. In addition, there will be increased scrutiny over changes in classification between employee versus independent contractor or partner/shareholder status due to the impact on qualifying for the 199A QBI deductions. Physicians should consult with their attorney/tax advisor prior to making any such changes in an attempt to take a 199A QBI deduction.

Planning Opportunities

Although not every physician will be able to take advantage of the new 20 percent QBI deduction, the Tax Reform and Jobs Act still provides numerous other tax breaks, such as an overall reduction in individual income tax rates, elimination of some itemized deduction limitations, increased depreciation deductions, etc. For those physicians under the SSTB thresholds noted above, now is the time to time to consult with your tax advisor to ensure optimization of the 199A QBI deduction.

  • Physicians under the SSTB threshold should review and evaluate the following items and discuss with their tax advisor and attorney:
  • Whether he or she is operating the practice in the most appropriate entity form to qualify/maximize the 20 percent QBI deduction.
  • Partners in a partnership currently receiving guaranteed payments should consider revising their partnership agreements and taking draws instead to increase QBI and the corresponding 20 percent deduction.
  • For S Corporations, review compensation agreements and ensure a reasonable compensation is paid for services provided (not QBI), and pay the remainder of income as a distribution (does qualify for QBI).

In Summary

This summary merely scratches the surface of the 199A 20 percent QBI deduction and was written in the context of physician practices. Although the regulations are still in proposed form and not expected to be finalized until later this year, the Department of the Treasury has provided sufficient insight and interpretation of the law to plan for its implementation.

Executive Summary

  • The new 20 percent QBI deduction is based on pass-through income earned from partnerships, S-Corps, LLC’s or sole proprietorships.
  • W2 wages/guaranteed payments do not qualify as QBI.
  • Deduction will be claimed on Form 1040 individual tax return.
  • Claiming the deduction will be difficult, if not impossible to claim for physicians with taxable income over $207,500 if filing single or $415,000 if married filing joint unless there are sources of income from other non-SSTB pass-through entities.
  • Newly issued IRS anti-abuse regulations limit the ability to split apart practice into various entities to isolate non-medical activities in order to take the deduction.
  • Physicians earning under the above thresholds should meet with their tax advisor and attorney now to maximize potential deductions for 2018.

Mark Baker is a Principal with Jackson Thornton CPA’s and Consultants in Montgomery, Ala. He may be reached by calling (334) 834-7660 or email Mark.Baker@JacksonThornton.com. Jackson Thornton is an official partner with the Medical Association.

Posted in: Management

Leave a Comment (0) →

Protecting One of Your Most Valuable Assets – Your Employees

Protecting One of Your Most Valuable Assets – Your Employees

Several studies show that the total cost of losing an employee can range from tens of thousands of dollars to 150 percent of the employee’s annual salary. There are also the “soft costs” of losing an employee, including lost productivity and lower employee morale if the practice incurs high turnover rates. According to a survey by the Medical Group Management Association, 50 percent of respondents reported that clinical support staff positions, such as nurses and clinical assistants, had the most turnover. When these employees leave a medical practice, they may also take with them valuable, confidential information, including patient lists, fee schedules and vendor contracts.

From a legal (and practical) standpoint, it is very difficult to prevent an employee from leaving a medical practice, but you can implement several strategies to limit the adverse impact.

First, for certain “high-level” employees, the practice can require each employee to sign a non-compete agreement. A typical non-compete agreement would prevent the departing employee from working in a competing business for a certain period of time within a designated area. For a non-compete to be enforceable in Alabama it must be reasonable as to geographic scope (e.g., the service area of the medical practice) and as to duration (e.g., up to two years is presumed reasonable). Further, the non-compete must serve to protect the practice’s “protectable interests,” which includes the practice’s confidential information (e.g., pricing and patient lists and vendor information) and specialized training provided by the practice to its employees. A non-compete should only be used for employees that hold a position “uniquely essential” to the management, organization or service of the practice. Accordingly, a properly drafted non-compete for an administrator or other high-level employees should be enforceable, but a non-compete should not be used, for example, with a receptionist. Further, in Alabama non-compete agreements cannot be used with professionals, which have been defined by the courts to include physicians and physical therapists. Other clinicians that exercise independent, clinical judgment may also fall within this “professional exemption.”

Second, each employee (or at least the physicians and other “high-level” employees) of the practice can be asked to sign a non-solicitation agreement restricting the employee from “hiring away” other practice employees upon their departure. Non-solicitation agreements are common in physician employment agreements, but can also be used for other employees. A typical non-solicitation provision would read: “Employee agrees that, during the term of his/her employment with the Medical Practice and for a period of one year following termination of employment, regardless of the cause of such termination, Employee shall not, directly or indirectly, through any individual, person or entity, without the prior written consent of the Medical Practice: (a) solicit, induce or attempt to solicit or induce away, or aid, assist or abet any other party or person in soliciting, inducing or attempting to solicit or induce away any employee of the Medical Practice, or (b) employ, hire or contract for services with any employee of the Medical Practice, or any person who was an employee of the Medical Practice during the six (6) month period immediately prior to termination of the Employee’s employment with the Medical Practice.”

The final option to consider is a confidentiality agreement with employees. This type of agreement prevents a departing employee from retaining or using any of the practice’s confidential information after leaving the practice. Confidential information can be defined broadly to mean any sensitive or proprietary information of the practice, including all business or management studies, patient lists and records, financial information, trade secrets, fee schedules, and employee and operating manuals. A strong confidentiality agreement will become especially important if an employee leaves a medical practice to work for a competitor.

Howard Bogard is an attorney with Burr & Forman LLP and is the Chair of the firm’s Health Care Industry Group. Burr & Forman LLP is an official partner with the Medical Association. 

Posted in: Management

Leave a Comment (0) →

When Is It Wise to Offer Patients a Reduced Fee Schedule?

When Is It Wise to Offer Patients a Reduced Fee Schedule?

Some of our practice management roundtable participants are offering certain patients an opportunity to pay fees of less than the standard fee schedule for their care. Below we will discuss how they are reaching that decision and if it could be appropriate for your practice.

Some patients have no insurance coverage but want to pay for their care. For this group, there is logic to support a price which is less than the standard fee schedule, if that fee schedule is already set above the amounts paid by all insurance companies and Medicare. The fee reduction is based on an acknowledgment that billed fees for health care are generally set at higher amounts than the providers expect anyway, so some discounting is within reason. A problem occurs when your group’s fees are set at precisely the amounts paid by your largest payers and any discount reduces your fee to levels below what insurance companies or government payers pay you. This can get you into big trouble because those payers are willing to pay only your UCR or Usual and Customary Rate, and if you are regularly making a lower rate available to others, the large payers could ask for repayments. However, if your fee schedule is sufficiently high, a discount to an individual might still leave you with enough fee to protect against violating any “most favored nation” clause in your contract with an insurance company.

After this logic is used to support fee reductions to uninsured patients, can it also be applied to patients who are underinsured? Most employers have received significant annual increases in medical insurance premiums for coverage of their employees. As a result, the employers are modifying the coverage to increase the deductibles dramatically. In one client practice, the annual deductibles per person were raised from $750 to $5,000 after premiums increased 18 percent, 18 percent and 15 percent over the most recent three years. As a result, patients are presenting at medical offices with personal liability so great that they are not able to pay for care. Some administrators even indicate that patients are postponing needed care because of their inability to pay for it.

If a practice has made a decision to reduce fees for patients without coverage, and since many patients are facing large deductibles, those physician offices are extending discounts to insured patients who wish to personally pay a lower fee in full at the time of service. Under HIPAA, patients do have the right to pay for care and request that you not file a claim with their insurance company, but there are forms the patient must sign to correctly document this handling.

The danger associated with any discounting is the possibility that all the discounted dollars serve to reduce physician bonuses at year end. The practice overhead will not be reduced by reason of discounting. If these discounts are thought of as the last dollars collected, then they would have been available for MD payment at bonus time. However, if by discounting you are collecting patient payment monies that would otherwise have become a bad debt not collected, then the amounts you receive are incremental money for distribution to doctors at year end. Which of these situations applies to you will depend on whether your group is writing off uncollected patient balances that could have been obtained, in part, at the time of service.

So what is the take away relative to this trend? First, have a practice which is so well known for excellence in care that you may pick the patients you want and avoid discounting fees to anyone. Next, make sure your standard fee schedule is set higher than the reimbursement you receive from your practice’s highest payer. Finally, reach an agreement among all of your physicians on the discounting process you want to consistently apply and implement that process by training all staff. Times are changing in health care and one major change is the shifting of cost risks to the patients from their insurance carriers. Be sure your practice is adapting to this area of change.

Article contributed by Sae Evans, Maddox Casey and Jim Stroud, Members, Warren Averett Healthcare Consulting Group. Warren Averett is an official Gold Partner with the Medical Association.

Posted in: Management

Leave a Comment (0) →

Paying More Money Is Not the Best Way to Retain Great Staff

Paying More Money Is Not the Best Way to Retain Great Staff

Medical practices are painfully in need of keeping their top employees. The time, costs and dangers of recruiting replacement personnel are just part of the issue. Loss of key team members negatively impacts patient care, practice profitability, and staff morale. All administrators agree the retention of a trained, well-performing and mutually cooperative staff is a key to success in medicine. How do you increase your prospects of keeping your “keepers” so that you lose only the ones who needed to go anyway? There are three secrets to success in this area and none require pay raises or bonuses.

Most important is to show them that you respect them. Make them feel valued by your praise of their efforts and character. Try to “catch” them doing something good. Take an employee to the office of another physician in the group and praise some special thing they did recently. Prompt the physicians about special employee efforts and send them off to find and praise the staff member. Write key staff notes of thanks for their sacrificial efforts. Set aside time each week to praise one to three members of your team. Conduct “stay interviews” with select team members. Also, the physicians and practice leadership should be aware of the circumstances in their life. Do they have a child excelling at academics or athletics, are they planning a special vacation, are they approaching empty nest status, are they caregivers to parents or other family members, do they have a special hobby they enjoy discussing, are they saving for a major purchase like a vehicle, boat, or home?

Caring about the lives of your team affirms their value to you. Giving them a $500 bonus deposited into their joint checking account is a currency over which they may have limited control and when it is spent, it is forgotten. Giving them a handwritten note or sincere verbal praise is a “currency” they can keep for their very own and use again and again as they replay the message in their minds. The praise costs your practice a little of your time and a modicum of empathy.

After a culture of merited praise is established, it is easier to correct or discipline them when necessary. Ignoring mistakes or poor conduct is a sign of not caring about the person. Think of the influential family members, teachers and coaches in your life. Weren’t they candid with you about times when your efforts were not your best? If the staff rest in the certainty of your gratefulness for them, they can handle the truth about poor performance from you better. Always praise their character and criticize their actions. In other words, speak to the actions, but don’t attack their character. Avoid a “compliment sandwich” where you say something nice, slip in the problem, and then end with another positive. Be brief, be clear, be firm, but be nice.

New employees need some corrective discussion as early in their employment as possible. Not only is there usually an area for enhancement, but it establishes that you will exercise the right to address them when you deem necessary. For the millennials in your office, this discipline may come as a great shock. They were raised in an era when every child received a participation trophy just for showing up, and as children, they were assured they could be anything they wanted to be. If there were problems at school, their parents went to the school and took care of it for them. Now you are telling them they are special but not in a good way, and their only trophy may be dismissal if the behavior continues. This might be a difficult message to absorb, but you owe it to the great staff to communicate it in a timely manner.

At a recent practice management roundtable, we discussed the fact that some medical staff members underperform until the leadership assigns part of their duties to the better performing staff, so that things get done. Permitting this transfer of work, is unfair to all staff and must be remedied.

With a balance of praise and discipline in place, have some fun at work! Every holiday is a good time to have fun. At Christmas, let them have a contest to decorate a door. For Thanksgiving let them write something about each member of their work area for which they are thankful. Compile the results and share with the staff in a lunch meeting. Halloween, the start of football season, Groundhog Day and anything else is a reason to celebrate. Have each bring a baby photo of themselves, and let the team guess which baby is the staff member, let them send in photos of what they did this summer and have a collage review in the fall of the pictures with narrative by each staff to share the joy, take them bowling, have a new baby “pool” where all can guess the delivery details of an expectant mother on the team, and select secret pals among the staff with a low limit on any expenditures. The point is to permit them to have fun at work. You do not have to entertain them, just give them permission to entertain themselves.

It is essential medical practices provide a fair salary and benefit structure to their staff. Underpaying your people is not compensated by the provision of a good work environment. However, remember people accept a job for the initial pay and benefits, but they remain in a position because they feel appreciated, know their best efforts are expected, and they are encouraged to have fun at their work. Make your practice a place where these three things are true, and you will have a stable, patient-caring and happy staff. It will make everything else you have to do so much more enjoyable.

Article contributed by Sae Evans, Maddox Casey and Jim Stroud, Members, Warren Averett Healthcare Consulting Group. Warren Averett is an official Gold Partner with the Medical Association.

Posted in: Management

Leave a Comment (0) →

Don’t Get Caught in a Copay Conundrum

Don’t Get Caught in a Copay Conundrum

In the current environment of increasing patient deductibles and copays, the billing and collection of the patient portion of the services you provide is top of mind. In the Department of Health and Human Service’s report dated May 23, 2017, Alabama’s average monthly health insurance premium amounts increased 223 percent from 2013 to 2017, versus the national average increase of 105 percent. In real dollars, average monthly premiums jumped from $178 to $575.

With deductibles and copay amounts increasing as well, it’s becoming more difficult to collect the patient’s portion of the bill. As a provider, you are more than aware of these financial hardships your patients are facing, especially your sicker patients who absolutely need care. You might routinely waive the patient portion of your services because you sense a financial issue. Maybe you treat other physicians or colleagues and write off their portion of the bill as a professional courtesy. You might even provide care to your team of employees at a reduced rate as a perk of their job. But did you know all three of these scenarios can land you in hot water?

These practices, while intended to be a gesture of goodwill, professional courtesy, or “it’s just the way we’ve always done things,” could put you and your practice at risk of violating federal anti-kickback statutes and violating contracts with insurance carriers – not to mention impacting your practice’s financial bottom line.

According to the Office of Inspector General, the federal Anti-Kickback Statute (AKS) is “a criminal law that prohibits the knowing and willful payment of ‘remuneration’ to induce or reward patient referrals or the generation of business involving any item or service payable by the federal health care programs.” Violating the federal Anti-Kickback Statute can lead to criminal penalties and administrative sanctions. The penalties for physicians who pay or accept kickbacks can be up to $50,000 per kickback plus three times the amount of the remuneration in question as well as imprisonment and exclusion from future participation in federal health care programs. The HHS’s A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud & Abuse states the following:

“…Where the Medicare and Medicaid programs require patients to pay copays for services, you are generally required to collect that money from your patients. Routinely waiving these copays could implicate the AKS, and you may not advertise that you will forgive copayments.” In this case, the HHS would determine a practice is violating the AKS if their standard practice is to waive copays. Patients would become the referral source and would be receiving the benefit of a waived copay.

From a commercial insurance carrier’s point of view, if you routinely write off patient’s copays and deductibles, you are in essence decreasing the total charge for the service you are providing. A $100 visit with a $20 copay that is routinely waived has now become an $80 visit.

Commercial insurance carriers can view this as a breach of contract, and they have recently been cracking down on enforcement of collections. Commercial carriers can stipulate that copay portion is required to be paid in order to reimburse the practice its portion. If they find out you have been waiving the patient portion for services, they can come back and seek repayment of funds they’ve already paid for those patients.

Profit margins for services are getting smaller and smaller, and as a medical practice in today’s post-ACA world, your bottom line can’t afford the consistent waiver, or poor collection of these copays and deductibles.

To navigate this issue, we recommend you review/update or implement policies and procedures guided by these best practices:

  1. Immediately stop any current practices of routinely waiving or reducing copays and deductibles.
  2. Where financial need is an issue, develop a policy with outlined procedures to document a patient’s financial hardship. Having a patient merely sign a document stating they have a financial hardship is not enough to substantiate the patient’s inability to pay. Have a designated staff person/financial counselor document the patient’s financial need. You need to perform due diligence with the patient to prove they are unable to pay. The HHS’s Roadmap for New Physicians states, “… you are free to waive a copayment if you make an individual determination that the patient cannot afford to pay or if your reasonable collection efforts fail.” Train front desk and billing staff on these policies and procedures to ensure consistent enforcement.
  3. Bill copays and deductibles and make adequate attempts to collect from the patient. We recommend at least three statements and a phone call as a best practice. Document all communication and collection efforts in the patient’s file to provide an adequate audit trail, should you need such information in the case of an audit.
  4. If these three practices bear no fruit, you can write off the patient’s copay or deductible.

As you can see, justifiable circumstances of financial hardship or need are situations where you can discount or waive patient copays. Use these best practices to implement consistent and reasonable policies and procedures. Steer clear of routine waivers and discounts of copays, and you shouldn’t find yourself in a copay conundrum.

The Do’s and Don’ts of Deductibles and Copays

What you should do…

  • Always bill the full amount.
  • Make a reasonable effort to collect from the patient.
  • When a patient states an inability to pay, establish policies and procedures to determine financial need and keep adequate documentation.
  • Work out a payment plan with a patient, or agreement for paying a certain amount each visit.
  • Collect up front rather than later. Each statement sent costs you time and money.

What you should not do…

  • Routinely or systematically write off copays or deductibles.
  • Advertise that you will forgive copays.
  • Accept the “in-network” copays if you are an “out-of-network” provider.
  • Devalue your services by waiving or reducing the copay and deductibles due.

The information in this article is not intended as tax or legal advice. Please contact your lawyer or CPA for specific information regarding your individual situation.

Article contributed by Jenna Roton, CPA, with Jackson Thornton CPAs and Consultants, an official partner with the Medical Association.

Posted in: Management

Leave a Comment (0) →
Page 1 of 4 1234