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Physician Practices Pressured to Review Revenue Cycle Management

By Greg Freeman  
   June 07, 2013

Healthcare reform changes and ICD-10 implementation require new strategies to optimize revenue cycle operations in physician practices.

This article originally appeared in Managed Care Contracting & Reimbursement Advisor, June 2013.

The changes associated with the Patient Protection and Affordable Care Act, electronic medical record implementation, and new Medicare rules mean that physician practices are under increasing pressure, says Nancy Ruff, director of health advisory services for CTG Health Solutions, a consulting company in Dallas. Optimizing your revenue requires clearing some new hurdles and aggressive strategies, she says.

"This is a very challenging time, especially with ICD-10 implementation around the corner," Ruff says. "If they are not efficient right now with their revenue cycle operations, if they are not up to date with their technology, if they don't have good coders in place, they should be very concerned about what to do next and how to stay ahead."

Practices can get so focused on or distracted by one valid goal that they neglect other concerns, Ruff says.

For instance, EMR implementation is important and certainly worth a good deal of your resources, but "we see lots of groups that are in the middle of EMR implementation, trying to achieve Stage 2 meaningful use for those incentives, but they also have to be preparing for ICD-10 implementation," she says. "If they don't get ahead of ICD-10 and plan, test, and train for that on time, they could experience total cash stop page. They could have a total blackout of cash because they're not prepared."

Ruff recently worked with a client in preparing for the changes associated with the PPACA, and also in planning for EMR implementation to attest for meaningful use. The physician practice has a high Medicare patient population, so the owners were concerned that the declining reimbursement from Medicare would impact them significantly, she says. They were already experiencing a decline in revenue and an increase in expenses but didn't know what was causing this or how to fix it.

"We recommend starting with a financial health assessment which includes a review of the accounts receivable metrics, expenses, interviews with key staff members, and observation of workflows," she says. "We then put together recommendations to help improve operations, gain efficiencies in technology, revamp a staffing plan, renegotiate managed care contracts, and then develop a strategic and tactical work plan to drive these improvements."

In this particular case, Ruff and her colleagues assisted the practice with the implementation of the EMR, helped them plan and attest for meaningful use, and implemented operational and financial efficiencies. The changes helped put this client well down the path of preparing and stabilizing its operations to sustain revenue and remain profitable in spite all of the changes associated with the PPACA, she says. (See the story on p. 4 for more on that case study.)

Physician practices of all types are preparing for the current and anticipated changes in healthcare, Ruff says. Some are educated on the changes and have already taken the necessary steps to achieve meaningful use and receive the associated incentive dollars, and they have taken the appropriate measures to optimize cash flow and remain profitable. Others are concerned and trying to understand what specifically they should do to prepare and are thinking through strategies such as acquisition and new technologies to become better prepared, she says.

And still others, some of the smaller physician-owned practices, are operating as usual and are of the opinion that this will not impact them at all. They're mistaken, she says.

"The larger physician groups and the ones aligned with larger health systems are a bit more attuned to these concerns than the smaller practices, giving some thoughts to what they're facing and how to get to a better place," Ruff says. "Others are preparing but don't know exactly where to go and what to do. And then there are the smaller physician groups, the privately owned practices that are not too concerned about it and planning to just wait it out, and see if they can stay afloat. We do not recommend just waiting it out, no matter how small your practice."

Actually getting your EMR up and running isn't enough. Practices must conduct a security risk analysis, notes Evan S. Schwartz, JD, founding partner of the law firm Quadrino Schwartz in Garden City, N.Y.

The analysis should show that the system does meet the strict standards required by the law.

Insurers also are auditing practices at an increasing rate, he says.

"Especially the commercial plans, they are going back further and more extensively to review claims," he says. "If you refuse, they are offsetting it against future claims to the provider. That's led to a lot of complaints from doctors lately, even though Medicare and Medicaid audits are nothing new.

Those claims audits are looking for fraud, but with these commercial payers they are just looking back and saying, 'We think we overpaid you, so give us back a couple hundred grand or a couple million dollars.' "

Schwartz notes that the some practices are revising their denial management processes to take advantage of new regulations that provide more ability to stop such audits and ongoing denials.

He cautions that much of the impact of the PPACA is still to come, while the meaningful use requirements are in effect now. The strict nature of those requirements often are underestimated, he says.

"A lot of people don't understand that just buying software doesn't cover you," he says. "The detail required in the security risk analysis is going to start affecting reimbursement going forward, so that's something where you need to get your house in order."

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