The Great Practice Makeover: No Doormats, Please

September 1, 2007

A Texas psychiatry practice gets help finding its backbone in dealing with negligent payers.


How is it possible to have a full patient panel, bill healthy amounts every month, yet receive no paycheck? Now imagine, too, that you feel you have absolutely no leverage with hospitals or payers to change the situation. No wonder physicians such as Ted Krell, founding psychiatrist in this month’s Makeover practice, say their glasses are half empty. After 34 years of private practice, “We pull our hair out trying to figure out how to get what’s duly ours.”

These unhappy providers - three psychiatrists and two therapists - constitute the psychiatric division of Jacinto Medical Group, in the Houston area. The monthly per-provider payments the practice is obliged to give Jacinto make this group relationship an expensive one for the practice to maintain, but the physicians aren’t sure they can - or should - break away.

Georgina Young her husband, Paul Young, both psychiatrists, joined the practice almost four years ago. She knows the fees they pay the group for using their payroll and billing systems are steep: “I asked in the beginning what the heck I was paying for.” Young feels she never got a straight answer, but didn’t pursue the question further at the time.

“If we leave the group, we’d have to get a billing system, for example,” she explains. “How on earth do we do that?”

All of the providers also worry about obtaining health insurance for both themselves and the practice’s employees. The Youngs, former Army physicians, are accustomed to a much smoother administrative path. Georgina Young says that many colleagues who leave the military for private practice return after they “realize the nightmare that’s out there.”

Bad dreams indeed: The practice’s roster of accounts receivable has reached alarming proportions, with several staffers devoting themselves entirely to addressing collections. Georgina Young has spent the past few months at home, seeing no patients and trying to get a handle on collections. “My house is normally spic and span. But now you should see the area in front of my fireplace,” she says, noting that work-related papers have drifted into a mountain there. “That’s actually probably a Freudian slip. I want to throw it all in the fire.”

Catalogue of woe

Cheri Smith, the office manager, attributes much of the problem to the specialty itself as well as to a changing climate. “I’ve never seen the excuses that we get” from payers, she says, “in 25 years in general practice. I worked a denied claim yesterday. We electronically filed; they didn’t get the claim. We mailed it; they didn’t get the claim. We faxed it; they didn’t get it.” In the end, the payer told her she’d just have to refile.

Krell mentions another outstanding denial, now more than a year old: “We call them and they say, ‘Gee, we never received a request to pay that bill.’ How can you deny something you’ve never received?” she asks incredulously. “We’re forever getting denials for lack of precert, or lack of recert, and we’re sitting here looking at the paperwork showing [that the certification] was done. So we’ll have to resend the claim, and sometimes they pay you and sometimes they hassle you further, hoping you’ll go away.”

The practice isn’t alone in its struggles to collect what it’s owed. In a recent survey commissioned by the PNC Financial Group, hospital executives report that one in five claims is delayed or denied.

Some solutions? Attack the problem strategically, and figure out what’s causing the biggest percentages of denials. Go after past-due accounts intelligently, too, writing off those that are beyond late filing deadlines. Also, focus on the high-value accounts first, and work these denials promptly. Focusing too much on very dated accounts may distract the team from collecting on ones they can close today.

Jacinto’s e-filing system doesn’t always work for these mental health providers, so this practice should take a hard look at that as well. Is the practice able to immediately review the statements, flagging claims that didn’t make it through? Is a new clearinghouse in order? Or perhaps claims-scrubbing software?

For Krell’s practice, many denials stem from hospital visits. A high percentage of those patients are uninsured, and despite repeated mailings, says Georgina Young, “we don’t get any money from the self-pay patients because people don’t pay their bills.” In fact, she discontinued her hospital contract out of frustration two years ago.

As Georgina Young says, many of the practice’s hospital patients unfortunately don’t care about smudges on their credit reports. So give those self-pay collection policies some long-overdue attention - letters should be just one element. Does the practice obtain the names of family members, if possible, at the time of service? Does it offer payment plans? What about directing patients to organizations that help such folks get jobs? If these patients aren’t already on Medicaid, can the office do anything to help them get on it? Time-consuming tasks, yes, but great patient services - services that constitute part of the cost of providing psychiatric care (and being reimbursed for it).

The other psychiatrists could consider dropping their hospital contracts as well, but the first step should be a meeting of the minds with the hospital, which surely wants their referrals. This practice ought to be able to come up with a plan that makes everyone happy, or at least happier than they are now. For example, the hospital can’t force drug-abusing patients with no insurance to pay their physicians, but it can certainly change the call schedule, which both Paul Young and Krell find onerous, and it can share the patient information it has, relevant to billing, with the practice. Once the practice’s providers define what’s most important to them, they should present their own creative solutions to hospital administration.

Make your case

Speaking of revamped agreements, “One of the things Dr. Georgina Young wants is for us to renegotiate our [managed care] contracts,” says a skeptical Krell. “Well, that’s easier said than done.” True, but it’s a must. “In most negotiation situations there’s some equality, but this is a David and Goliath situation,” he laments. “You don’t have any negotiating power.” Not so true.

Only four psychiatrists practice full time in this relatively large area, and three of them are part of this practice. All three are board-certified in general psychiatry, and Krell has subspecialty certification in addiction psychiatry. This practice should not sell itself short.

Consultant Nancy Smit, president of SHR Associates Inc., suggests that a true problem at the payer level might well be to blame for the low number of providers in the area. Payers must nevertheless take responsibility for the contracts they enter into, so what gives? At the risk of slipping into, er, psychobabble, the practice is going to have to be a partner rather than a victim when it comes to relationships with both the hospital and payers.

Smit says she’s written letters to payers hoping simply to move the practice’s fee schedule above Medicare allowables, but surprisingly, this hasn’t been a concerted enough effort to produce results. So-called knowledge-based contract management systems - attractive in that they shift some of the power (i.e., knowledge) back toward the physician - are one option for tracking whether a given payer arrangement makes sense.

Assuming you’re not bound by confidentiality clauses, strategically sharing information on other contracts the practice has may also be beneficial. You might not be able to divulge the rates and names of other payers, but what you can say is, “Look, I’m getting 4 percent more from another payer in the area and I could take more business from them. Give me a reason to stick with you.” Including clean-claims provisions in which payers commit to a time frame for decisions is another smart contracting move.

The practice should re-examine its contract with Jacinto, too. They need to make sure the group’s billing system really works for mental healthcare. Given the volume of denials and other glitches, it may not. Krell says he joined Jacinto in the first place because, “the costs of doing business kept escalating. My primary reason was to cut expenses.” But did costs go down? And has anyone figured out, based on what they're billing and on a standard (or historical) adjustment rate (or their current payer contracts), what the practice’s providers should be netting each month? If the main benefits of being part of the Jacinto group are limited to access to a health insurance plan and billing system, the practice can surely purchase those commodities elsewhere.

That all said, this practice should resist the urge to turn molehills into mountains.

Georgina Young is worried about the expertise needed, should they decide to separate from the group, to transfer their third-party payer ID numbers. “This will require staff with knowledge and is time-consuming,” she says, noting that the practice has neither resource to spare at the moment. But transferring these numbers is a simple matter of calling each payer and working through their administrative requirements. Changes might take some time to take effect and will vary from payer to payer, but problems should be minimal because they are already established providers with these companies.

Purchasing health insurance shouldn’t be an insurmountable obstacle for the practice either. The American Small Business Association offers guidance and many large carriers now offer plans for employers with two to 50 staff members. Small businesses can often provide managed-care plans (HMO, PPO), cafeteria-style coverage (you don’t specify the benefits), or health savings accounts (tax-advantaged account plus high-deductible health plan).

Rigorous prioritization would go a long way toward helping this practice dig itself out of its accounts receivable hole. Getting organized should make that a little easier. Once it has collected on its claims, the practice will need to be able to determine at a glance whether payers are living up to their newly made promises, and have data at the ready to present if they aren’t.

Hopefully, Physicians Practice has gotten these providers started down the road to recovery, but they might consider enlisting a healthcare business consultant, who would be able to work in depth with the practice to clarify covered benefits and negotiate new payer fee schedules. A consultant can also look into how other mental health providers in the state are being reimbursed, something Krell rightly points out physicians are precluded from doing. Included in the consultant’s scope-of-work agreement should be a close look at the practice’s accounts receivable. Issues here often stem from front-end errors or omissions, so this problem should be evaluated as part of the comprehensive exam.

Laurie Hyland Robertson is a senior editor with Physicians Practice. She has been in the medical publishing field for 10 years, covering both clinical and management issues. She can be reached at LCHRobertson@physicianspractice.com.

This article originally appeared in the September 2007 issue of Physicians Practice.