Dan Rodrigues

In Part II of this blog, Rodrigues discussed 

looking at your payers and your technology as key steps to a survival plan for 2014

. Here, he continues with the final steps: addressing ICD-10 and patient engagement.

One of the biggest challenges in 2014, and one that requires careful planning and execution is the transition to ICD-10. The ICD-10 transition takes place on Oct. 1, 2014. A practice should start next year with a documented ICD-10 transition plan as well as a structured process for actually making the switch. This is essential for minimizing the potential impact of moving to ICD-10, which could actually bankrupt an ill-prepared practice.

An effective transition plan should include the following important steps:

1. Identify and contact all current vendors that will be impacted and verify their implementation timelines and identify any that won't be ready before September 2014 so that they can be replaced.

2. Audit all office forms impacted by the change and determine when and how to update each.

3. Order new CMS-1500 claim forms (02/12). It's best to do this as soon as possible.

4. Order ICD-10-CM coding books or subscribe to an online equivalent. If ordering printed coding books, be sure to do this as soon as possible due to possible supply issues or price increases as the transition deadline gets closer.

5. Determine who in the practice will need to be trained and when. Find appropriate training courses and reserve spots early. Again, as the transition period gets closer it may be difficult to find availability.

6. Set aside a time period either in late 2013 or early 2014 to audit the most commonly used codes in the practice and identify the equivalent codes in ICD-10. In doing so, review current documentation for the most used codes and validate if there is enough detail to determine equivalent ICD-10 codes, since the level of specificity may have changed up or down.

7. Recognize that the transition may slow down reimbursements. Establish a financial plan to cover reimbursement delays during the transition by asking your bank about a line of credit or special funding or by building up working capital ahead of time.

8. If you do your own billing, consider the benefits of outsourcing. Credible billing service companies will be well positioned to help their practices through this difficult transition.

Taso Michalopulos, MS, CCC-SLP/L, owner and founder of Illinois-based Right Start Pediatric Therapies, said the practice is extremely well positioned to manage the ICD-10 transition since their revenue cycle management partner Kareo will help facilitate and drive changes the practice needs to make to manage through the ICD-10 changes.

Ideally, a practice will start the year with an ICD-10 transition plan in place and have a clear path to getting through the transition during the year. Support from suppliers like practice management application vendors are critical as well and can play a key role in helping with this major change. 

Step Five - Your Patient Engagement Plan 

One of the unfortunate challenges with running a private practice is all of the activity that must be managed that isn't directly about patients and their health. Despite this, now is a good time to re-commit to building strong, proactive patient relationships and looking to build the patient into the center of all practice activities.

This can start with core administrative details such as ensuring that patients are aware of financial policies. Given the rapid growth of patient-driven programs such as Health Savings Accounts, practices must be much better at collecting identifiable charges at the point of care and setting expectations around post-care collections processes. The good news is that inexpensive but very effective technology is now available, including patient portals and electronic billing and reminders, to ensure this process is easy for the practice and the patient. These same tools can often be used to help patients schedule appointments, view health data such as lab results, and renew prescriptions.

Beyond patient administration, a practice should work to understand their patient population and evaluate the implications for expanded care services. Understanding patient population goes beyond payer mix to look at such things as patient demographic factors such as age, gender, geographic distribution, and trends in common conditions.

Evaluating additional services doesn't have to be complicated or even permanent. Practices should give themselves the flexibility to try new or expanded services that align with the characteristics of the patient population. For instance, if patients are a given age (young or old), offer special "caregiver programs" that speak to parents or adult children who are caring for their aged parents. What about offering a "free check up" for the adult child when they bring their parent into the office? 

Due to volume demands, many private practices seem to have forgotten that the patient is the customer and needs to be treated as such. Without a change in this current orientation, many private practices will face growing competitive risk from innovative new practice models such as direct pay models, minute clinics, multi-purpose urgent care facilities, and hospital driven practice model. With the proper training and orientation of practice staff, leveraging new solutions, and improving communication with patients, practices can not only improve patient satisfaction, but drive better outcomes, while easing the burden of getting paid for care delivery and heading off competition from new practice models.

There are many signs that positive fundamental changes are possible for private practices over the next few years. These changes will lead to a more favorable operating environment for small practice-based care, an environment that returns some balance between care delivery and administration. At the same time, though, 2014 will be a year of transition and a challenging one at that.

To make the transition, it is essential that a practice analyze itself to understand its strengths and weaknesses and lay out an actionable plan to get through 2014. While this does take time to complete and commitment from the physician and all staff, the benefits will far outweigh the effort involved. A practice with a plan for 2014 will get through the year with the least amount of distribution and will emerge in 2015 stronger than ever.

is the founder and CEO of Kareo, the cloud-based medical office software and services platform he launched in 2004. Today, Kareo serves nearly 20,000 healthcare providers through its integrated practice management, EHR, and revenue cycle management solutions. Prior to launching Kareo, Rodrigues designed technology for healthcare, and other industries, as a co-founder and managing partner of Skematix, and earlier in his career, he also co-founded and led Scour, a popular search engine for finding music and video content online. He holds a Bachelor of Science in Computer Science from the University of California, Los Angeles and is a resident of Orange County, Calif.

Articles

Having plans in place for ICD-10 and patient engagement are the final steps in creating a medical practice survival plan for 2014.

Five-Step Private Medical Practice Survival Plan: Part III

addressed the first step in creating a survival plan for your medical practice

 as we approach 2014 - your financial plan. Here, he continues with two more steps: looking at your payers and your technology.

The next critical area, and one that substantially impacts both revenue and billing success, is payer performance. Physicians should evaluate payer performance in two ways: contracted rates and actual performance.

Actual performance is often overlooked and can have a significant impact on practice success. For example, if a contracted reimbursement is $100 but only 90 percent of claims are paid, the effective contracted rate is $90. Practices should periodically review the contracted rates of all their major payers and then take a deeper look into the net numbers, accounting for things such as denial rates, underpaid claims, and bundled charges. This review will show how the payers are actually performing.  

Another important component of payer performance is the cost of collecting claims.  Payers may add steps, such as prior authorizations, medical records, or special billing instructions, to the billing process that have a direct cost component for the practice.  Some payers require prior authorizations, which may require the practice to hire an additional person. These claims also have a higher rate of denial because it gives the payer another chance for scrutiny. Understanding actual contract performance by payer will lead to data-driven decisions about payer mix in the future while also providing valuable information for payer negotiations. It is important for practices to frequently evaluate payer performance and to establish specific actions to either improve payer performance or reduce the mix the payer represents in the practice's revenue. With all of the changes coming to the insurance industry due to the Affordable Care Act, it is more important than ever to understand and take action on payer mix and performance.  

Finally, it is important for practice leaders to have a good understanding of merging practice and payer models, such as the new quality-based models like a Patient-Centered Medical Home, and the potential implications of these models on the practice over time. By understanding which models might have merit for the practice over time, the practice can plan time for further exploration and discovery at industry events, through direct research, and by seeking out providers on the path toward adopting a new model. Very few practices will be in a position to move to an entirely new model during the year, but all should be aware of the options and associated considerations of a model change at some point over the next few years.

Technology is a real bright spot for the private practice today, although many practices may not recognize this. In the last few years, technology has progressed to the point where it finally fits the needs of private practices. Until recently, practices basically had their choice among solutions built more for the enterprise-sized environment - requiring expensive onsite implementation, IT investment, ongoing maintenance, and extensive training.

In the last few years, the two transforming trends have been mobility and the cloud. Today, a practice can access most of the core technology needed to run a practice and deliver care with a laptop and an Internet connection. These solutions have been built with the smaller practice in mind. They are intuitive, fast to deploy, available when and where needed, and require little or no investment in hardware, maintenance, or upgrades. What's more, key functionality is moving to mobile solutions providing access at the point of care in a non-intrusive way.

According to Estee Pummel, billing and insurance manager at Lifestyle Eye Center in Walla Walla, Wash., their practice would not be what it is today without the right technology. "I don't think [our physician] could have built up the practice this much without a practice management system that is easy to learn and use," said Pummel. The practice opened in 2010 and deployed cloud-based software from Kareo.

With this in mind, a practice should evaluate its current technology, how well it works for the practice today, and the direct and indirect costs. Then, the practice can assess alternatives that may not only cost less time and money, but result in far more effective administration and care delivery. The next step is to establish a specific plan for evaluating alternatives that will work better and cost less than legacy solutions. With some advanced planning, a practice can make the transition to new technology and quickly reap the benefits for the practice and its patients.

In Part III of this blog, Dan Rodrigues will discuss the final elements to a survival plan for medical practices as we approach 2014: having a plan for ICD-10 and patient engagement.

Evaluating your payers and the technology for your medical practice are two key components of a 2014 survival plan you should address today.

Five-Step Private Medical Practice Survival Plan: Part II

In 2014, private practices will face a period of unprecedented change and challenges, driven by a wide variety of factors, ranging from the implementation of the Affordable Care Act to increasing private and public payer requirements such as ICD-10 and the shift to consumer-driven payment models. These factors are just adding to a growing list of concerns that are contributing to the fact that independent physicians, as group, are a disgruntled bunch right now. According to the recent 

 and sponsored by Kareo, physicians ranked their number one frustration as too much third-party interference. The conventional wisdom, often covered by the mainstream media, is that the rate of change and the significance of the challenges are creating insurmountable barriers for independent practices leading to practice sales or early retirement.

Despite these pessimistic views of the future of private practice physicians, there are actually signs of a coming renaissance for the independent physician. Both the Physicians Foundation and the AMA have released their own studies, and the data shows that while hospital employment has increased, work in private practice remains much more significant. Most interesting, a recent AMA study showed that 

doctors in physician-owned practices are more satisfied than those working for hospitals or larger delivery systems

. Ironically, the coming renaissance is being driven in part by the same set of challenges, most notably increased patient demand. But it's being made possible by the emergence of new and better technology, services, and operating practices that are enabling small-practice physicians to rebalance their focus away from the business side of running a practice to the patient side, where it belongs.

There's no question, though, that 2014 is going to be a challenging year, and physicians can't simply sit back and wait for changes to happen. Those who are interested in a better future must take steps now and plan for their practice so that they can successfully manage the transition over the next few years to emerge as strong, successful, independent, patient-centered practices. The first step is to develop a 2014 action plan.

The place to start is the most critical area for a practice - its financial condition and operations. The best way to do this is with good benchmarking data. These data can be secured through many sources, including healthcare associations such as the Medical Group Management Association, suppliers, and networking. By comparing a practice's performance relative to benchmarking data, key areas of weakness can be identified for action. Benchmarking data should reflect the size, geography, specialty, and operating model of a practice, although some metrics can be viewed more universally.

In benchmarking financial performance, it's good to start with practice revenue. How does the practice compare in gross billings per provider to a relevant comparison group? What are the drivers of either positive or negative variances? Are there consistent schedule openings that could be filled with new patients? Are there opportunities to expand services to existing patients, like scheduling annual wellness checks? Is the payer mix optimized for the best possible financial performance? Are billing results meeting standard performance metrics? 

Very few practices collect all of their billed revenue and even fewer do so through an efficient billing process. Billing metrics are among the most important to understand and manage in a practice. Despite this, private practices achieve vastly different billing results hindering the success of otherwise well managed practices.

In diving deeper into billing results, here are a few key benchmarks to analyze:

1. The net collection rate overall should be greater than 95 percent. If it's less than this, a practice has one or more billing issues that must be resolved to ensure financial success.

2. Average days in accounts receivable (A/R) should be less than 40 days to 45 days. Longer time periods mean a practice has to carry too much working capital to cover ongoing costs and points to an ineffective billing process.

3. Accounts received over 120 days from date of service should be less than 12 percent to 15 percent.

4. Days from service to bill should average less than three days, with most claims billing in one day to two days. Again, longer periods point to an inefficient process.

5. The claim denial rate should be less than 3 percent to 5 percent monthly. This is essential in both achieving a collection rate greater than 95 percent, but also to avoid unnecessary administrative costs managing denials.

Gross and net revenue are the starting points for a financially successful practice, but the broader costs of a practice must be benchmarked as well. The best way to do this is as a percentage of gross revenue and collected revenue. A practice should break up its costs into a manageable number of categories and analyze these versus other similar practices to understand cost mix. These categories should include: provider compensation and related expenses, staff compensation and related expenses, facilities and associated costs, costs tied directly to the delivery of care, and non-facilities infrastructure costs like software, equipment leasing, maintenance, etc., and legal and financial management costs such as accountants, attorneys, and insurance expenses.

Where a practice identifies what appears to be a more costly category, the practice should explore opportunities for cost reductions. These might take the form of new negotiated agreements, outsourcing of sub-scale functions like billing, or replacing older and more expensive technology with newer, cloud-based options.

By understanding relative financial performance, a practice can identify key areas of risk or weakness and then establish clear actions to address these areas in 2014. Almost all practices, even the best managed, have multiple opportunities for improving financial results with proper planning and focus.

One example of a practice that achieved positive operational improvements after a practice assessment and action plan is Perry, Ga.-based pediatric speech therapy practice Speech Path. The practice moved to a cloud-based billing system supplied by Kareo and an integrated EHR from WebPT and added three clinical providers and eliminated four non-provider positions. This well-managed practice now has 21 providers at two locations seeing 400 patients a week supported by five non-provider positions. Their average time in A/R generally runs less than 30 days and claims from their largest payer are received in 10 days or less. They have a steady flow of revenue and are well positioned for ongoing growth.  

In Part II of this blog, Dan Rodrigues will discuss the second and third steps for a private medical practice survival plan for 2014: addressing your payer plan and your technology plan.

is the founder and CEO of Kareo, the cloud-based medical office software and services platform he launched in 2004. Today, Kareo serves nearly 20,000 healthcare providers through its integrated practice management, EHR, and revenue cycle management solutions. Prior to launching Kareo, Rodrigues designed technology for healthcare, and other industries, as a co-founder and managing partner of Skematix, and earlier in his career, he also co-founded and led Scour, a popular search engine for finding music and video content online. He holds a Bachelor of Science in Computer Science from the University of California, Los Angeles and is a resident of Orange County, Calif. E-mail him 

2014 brings a series of changes and challenges to medical practices. Here are five steps to survive, beginning with addressing your financial plan.