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So you think you're underpaid, huh? Well, you are, of course, but are you underpaid compared to the doc across the street? Here's how you compare with colleagues in your region and specialty.

Physicians Practice has been surveying practices about fee schedules since 2002, but we haven't seen anything like this year's results.

Reimbursements dropped dramatically in 2005 - by as much as 22 percent for an E&M visit since 2004.

In nearly all markets, allowables were actually lower in 2005 than in 2003. So much for keeping pace with inflation or the rising cost of providing care.

Why the plummet?

Given Medicare's modest increase in 2005, we might have expected to see commercial allowables stay steady against 2004 or drop just slightly. But there were giant slashes.

Medical specialists reported a 15 percent cut in payments for office visits from 2004 to 2005, and primary care practices told a similar story with a 14 percent decrease. Even payments to surgical specialists went down 15 percent. A consistently grim picture. Looking at the results by region, the numbers were more varied, but still ugly. The South Central states told us about cuts near 22 percent. The Mid-Atlantic states, already the poorest paid region in 2004, got 17 percent less in 2005. The Pacific states: 19 percent less. For lucky New England, 2005 only brought 3 percent reductions.

What happened?

There's no doubt that commercial payers are doing what they can to reduce their costs, including cutting reimbursement.

But it's also likely that these terrible numbers reflect a change in how physicians are being paid - not necessarily how much they are being paid. The survey asked what payers reimburse, on average, for various CPT codes - as opposed to the total amount the practice gets from the payer and the patient. Payers and employers appear to be shifting costs to patients by way of rising copays and deductibles.

The average patient is now responsible for nearly 35 percent of his own medical bills, more than three times the amount he paid out-of-pocket in 1980, according to the Centers for Medicare and Medicaid Services. A September 2005 study from Health Affairs indicates that almost 4 percent of employers that offer health benefits offered a health savings account (HSA) or health reimbursement account in 2005, covering about 2.4 million workers. Deductibles for HSAs averaged $1,901 for single coverage and $4,070 for family coverage ("What High-Deductible Plans Look Like: Findings From A National Survey Of Employers, 2005," Health Affairs, Web exclusive, posting date September 14, 2005.).

Reflecting the rising commitment to budget-driven, consumer-driven coverage, Aetna, for one, has even started to post its physician allowables online, allowing beneficiaries to pick the physicians that will cost them - and Aetna - the least.

In short, "consumer directed" health plans - with their high deductibles and copays - are on the rise. If Physicians Practice included the patient portion of payments in our totals, the amount practices are supposed to receive for services may not look so dismal.

Still, the cost-shifting trend is hardly good news for doctors. The fact is patients can actually be harder to collect from than payers. Patients, speaking very broadly, tend to put their financial obligations to physicians after their obligations to mortgage companies and the grocery store. And who can blame them? Generally, physicians are a lot easier to put off than other collectors.

What you can do

If 2005 was bad for you, take a look at what portion of your projected income was to come from patients versus payers, and tighten up your patient collections policies and procedures.

For example, get your staff online to check on deductibles and copays before the patient arrives. Train front desk staff to insist on payment of copays or past-due accounts. Tighten your collection process, sending patients only three statements before passing their name to collections.

Also, put things in writing. Most practice management experts suggest creating a financial policy brochure for patients that explains exactly what you expect of them.

At a new patient's first visit, have a staff member take patients through the brochure and, ideally, sign a paper indicating that they understand it.

You should also have a more detailed financial policy, in writing, for your staff. There are several good reasons for putting your financial policy on paper. You don't want your billing staff to learn key policies by word-of-mouth - unwritten policies are often unclear and sometimes employees never hear about them at all.

In the absence of clear direction, some staff members may repeat mistakes they've been making for years, or apply policies they learned at another practice. Some of their actions may even be illegal, since payment collection is a minefield of legal requirements. Bottom line: patients collections is no longer an area that you can afford to let slide. If it ever was.

Even practices that collect well may have to tighten their belts. That's because patient who are paying more out of pocket are less likely to schedule visits for minor issues or even routine preventive visits. There's not very much you can do about that, but good marketing and patient service will help ensure that your practice is the one patients come to, when they come.

If you're like many physicians, you may turn pale when they think of marketing: slick, high-priced advertising campaigns just don't seem right for you. But while advertising can be included, such efforts are not really what marketing is all about. It really means consistently doing simple things like thanking physicians who refer patients to you, providing excellent care to your patients (along with little touches like remembering their birthdays), and letting the community know who you are and what services you offer. Offer to write columns for the local newspaper about common health topics, such as obesity or skin cancer. Hold patient-education sessions in the office. Offer your services for school physicals. Develop a practice newsletter and save money by sending it via e-mail.

And, of course, make an effort to send reminder cards to patients overdue for check-ups.

This phenomenon is likely to mean a readjustment in your concept of what amounts to a too-large patient panel. You may find it easier to support a larger patient population if fewer of them actually come in.

Charges down, too

Similarly, take care when reviewing your charges. Respondents to our survey dropped their charges at least 14 percent and as much as 34 percent from 2004 to 2005, depending on the region studied. This trend, too, probably reflects an effort to be "nice" to patients paying more out of pocket. That's lovely, and appropriate if rates had truly gotten out of control, but remember that commercial payers will be all too happy to pay you a lower rate as well, if what you charge is less than what they are willing to pay. Make sure your fee schedule stays higher than your allowables. And don't forget that it is possible to establish a written discount policy on your rates for patients who truly need it; you need not drop your charges across the board.

Your single best defense against reduced reimbursements is to understand your own practice. Analyze the trends in your financial picture - as well as the national and regional trends reported on these pages - and take the time to adjust as needed.

This article originally appeared in the January 2006 issue of Physicians Practice.

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