physicians: how to manage in uncertain times

(C) Lutz Healthcare Consultants, LLC(C) Lutz Healthcare Consultants, LLC 22

NEW ADMINISTRATIONNEW ADMINISTRATION

ECONOMY IN RECESSIONECONOMY IN RECESSION

UNCERTAIN FUTUREUNCERTAIN FUTURE

UNREALISTIC EXPECTATIONSUNREALISTIC EXPECTATIONS

PHYSICIAN SHORTAGEPHYSICIAN SHORTAGE

DEMANDING PATIENTSDEMANDING PATIENTS

NYMGMA – December 9, 2008

What Can We Expect in 2009?

New Yorker MagazineNew Yorker Magazine 33


1.1. THIRD PARTY PAYERSTHIRD PARTY PAYERS

2.2. HOSPITALSHOSPITALS

3.3. REGULATIONSREGULATIONS

4.4. PHYSICIAN SUPPLYPHYSICIAN SUPPLY

5.5. PATIENTSPATIENTS

6.6. OPPORTUNITIES TO THRIVEOPPORTUNITIES TO THRIVE


What Can We Expect in 2009?

The New Yorker MagazineThe New Yorker Magazine 55


MEDICARE:MEDICARE:– Medicare Improvement for Patients & Providers Act (MIPPA)– Medicare Improvement for Patients & Providers Act (MIPPA) 2008. 2008.

- 0.5% Conversion Factor (CF) increase through 2008. - 0.5% Conversion Factor (CF) increase through 2008. - 1.1% CF increase for 2009. - 1.1% CF increase for 2009.

- 2-year voluntary program to test appropriateness criteria 2010. - 2-year voluntary program to test appropriateness criteria 2010. - established accreditation for advanced imaging 2012. - established accreditation for advanced imaging 2012. - Budget Neutrality Factor (BNF) movement in payment formula. - Budget Neutrality Factor (BNF) movement in payment formula.- Without Congressional action CF would have been 5.4% lower.- Without Congressional action CF would have been 5.4% lower.- CMS will continue to propose payment cuts until new leadership- CMS will continue to propose payment cuts until new leadership is in place. is in place.


THIRD PARTY PAYERS


BNF – First implemented in 2007 to prevent the changes in WorkBNF – First implemented in 2007 to prevent the changes in Work RVU’s from increasing Medicare expenditures more that the RVU’s from increasing Medicare expenditures more that the statutory permissible amount. The 2008 increase in this factor statutory permissible amount. The 2008 increase in this factor eliminated any increase in the 0.5% CF change. eliminated any increase in the 0.5% CF change.

Pre-MIPPA – Physician Payment Formula (RBRVS):Pre-MIPPA – Physician Payment Formula (RBRVS):

[RVU (Work) x [RVU (Work) x BNFBNF x GPCI (Work)] + x GPCI (Work)] +[RVU (Practice Expense) x GPCI (Practice Expense)] + [RVU (Practice Expense) x GPCI (Practice Expense)] + [RVU (Malpractice) x GPCI (Malpractice)] [RVU (Malpractice) x GPCI (Malpractice)] x Conversion Factor = MEDICARE ALLOWED PAYMENT x Conversion Factor = MEDICARE ALLOWED PAYMENT


MEDICARE (CONTINUED)


MIPPA – Revised Physician Payment Formula:MIPPA – Revised Physician Payment Formula:

[RVU (Work) x GPCI (Work)] +[RVU (Work) x GPCI (Work)] +[RVU (Practice Expense) x GPCI (Practice Expense)] + [RVU (Practice Expense) x GPCI (Practice Expense)] + [RVU (Malpractice) x GPCI (Malpractice)] [RVU (Malpractice) x GPCI (Malpractice)] [[BNFBNF x Conversion Factor = MEDICARE ALLOWED PAYMENT x Conversion Factor = MEDICARE ALLOWED PAYMENT

In 2009, the BNF is applied to the CF which will be $36.0666. In 2009, the BNF is applied to the CF which will be $36.0666.

The more technical revenue, the greater the negative impact! The more technical revenue, the greater the negative impact!




How did moving the BNF impact professional fees?How did moving the BNF impact professional fees?



CPT-4 2008 2009 % Change99211 $18.52 $17.58 -5.1%99212 35.11 34.96 -0.4%99213 57.02 58.55 2.7%99214 85.75 86.19 0.5%99215 115.94 119.2 2.8%99241 45.12 45.77 1.4%99242 84.12 85.74 1.9%99243 115.62 117.96 2.0%99244 170.43 175.48 3.0%99245 210.25 215.59 2.5%99232 61.3 64.7 5.5%99233 87.88 92.65 5.4%93000 21.04 19.21 -8.7%93015 95.94 91.98 -4.1%


Conversion Factor History:Conversion Factor History:



2001 $38.25812002 36.19922003 36.78562004 37.33742005 37.89752006 37.89752007 35.9848

2008 Q1& 2 38.08702008 Q3 & 4 38.0870 "Reprieve"

2009 36.0660


New CPT-4 & ICD-9 Codes: Many changes – learn them now.New CPT-4 & ICD-9 Codes: Many changes – learn them now.

New CCI edits have New CCI edits have notnot been released – look out for them. been released – look out for them.

Physician Quality Reporting Initiative (PQRI):Physician Quality Reporting Initiative (PQRI):

- 2009 & 2010 incentive is 2% of allowable.- 2009 & 2010 incentive is 2% of allowable.- 153 PQRI measures for 2009 (i.e. Measures 135-186 are new).153 PQRI measures for 2009 (i.e. Measures 135-186 are new).

- - www.cms.hhs.gov/pqri/www.cms.hhs.gov/pqri/ & & www.QualityNet.orgwww.QualityNet.org




E-Prescribing: MIPPAE-Prescribing: MIPPA

- 2% increase in allowable in 2009 & 2010;- 2% increase in allowable in 2009 & 2010;- 1% increase in allowable in 2011& 2012;1% increase in allowable in 2011& 2012;- -1% reduction in allowable in 2012 for not using;-1% reduction in allowable in 2012 for not using;- -1.5% reduction in allowable in 2013 for not using; -1.5% reduction in allowable in 2013 for not using; - -2% reduction in allowable in 2014 for not using. -2% reduction in allowable in 2014 for not using.

Prerequisite: a functional eRx system. Prerequisite: a functional eRx system.

Electronic Medical Records: Time to seriously consider one.Electronic Medical Records: Time to seriously consider one.




All market third party payers are reporting losses in 2008.All market third party payers are reporting losses in 2008.

Reduced Medicare RVU’s will result in lower physician payments Reduced Medicare RVU’s will result in lower physician payments from other third party payers.from other third party payers.

These payers will struggle to maintain premium income while These payers will struggle to maintain premium income while employers reduce benefits and employees to save money. At the employers reduce benefits and employees to save money. At the same time, other competing plans aggressively attempt to lure same time, other competing plans aggressively attempt to lure groups away with gimmicks.groups away with gimmicks.

Increased scrutiny regarding appropriated compensation levels for Increased scrutiny regarding appropriated compensation levels for Medicare & Medicaid managed care plans.Medicare & Medicaid managed care plans.


OTHER THIRD PARTY PAYERS


In 2009, New York State’s hospitals will be under more financial pressure In 2009, New York State’s hospitals will be under more financial pressure than ever before as Governor Paterson & the Legislature struggle to reduce than ever before as Governor Paterson & the Legislature struggle to reduce the cost of the Medicaid system at a time when the demand for the cost of the Medicaid system at a time when the demand for uncompensated services will be at an all time high.uncompensated services will be at an all time high.

Many hospitals are attempting to secure their referral relationships by Many hospitals are attempting to secure their referral relationships by acquiring physicians once again.acquiring physicians once again.

Fortunately, this region’s hospitals have already consolidated services, Fortunately, this region’s hospitals have already consolidated services, however, opportunities exist for physician practices to establish more however, opportunities exist for physician practices to establish more beneficial relationships.beneficial relationships.

Interoperability of information sharing between hospitals, physiciansInteroperability of information sharing between hospitals, physicians

& health plans. & health plans.


HOSPITALS



REGULATIONS

Self-Auditing: Preventive Medicine for your Practice

If you have been in practice management, you know that “the best offense is a good defense”.

From Personnel Regulations to Tax Regulations. You do your best to know what you are doing, so document your efforts.

Recovery Audit Contractor (RAC) Program – Code Correctly!

First there was HIPAA; soon there will be “RED FLAG” Regulations.

The Federal Trade Commission (FTC) has delayed the compliance date of the regulations that may require medical practices to establish an Identity Theft Prevention Program to May 1, 2009.



REGULATIONS

Anti-Markup Rules: See MGMA & CMS Websites for details.

Independent Diagnostic Testing Facilities (IDTF): CMS proposed requiring physician practices that perform diagnostic testing to enroll as IDTF’s; the proposal has been deferred indefinitely; however, MIPPA requires accreditation by January 2012.

Advocacy – Get Involved! Call your elected officials! Support MSSNY & other advocacy organizations with real data.



PHYSICIAN SUPPLY

Primary Care:- Residency slots are not filling.- Most residents are choosing to continue subspecialty training.Specialists:- Many more positions than physicians available to fill them.- Geography & family effect.

Succession Planning:- When do your physicians plan to retire?- Are agreements in place to prevent retirements at the same time?- How long will it take to replace a retiring physician?- Will the new physician’s priorities be consistent with the needs of your Practice?- What happens if a physician is disabled in your Practice?



PATIENTS

Patients expectations will run extremely high:

- New President who promised to provide coverage for all.- Record unemployment (highest in 34 years).- Economy in recession (or worse).- Uncertainty about the future.- Aging population.- New drugs.- New technology.- Immediate gratification is a pill away!- No incentives to prevent disease (e.g. obesity is now an epidemic).



OPPORTUNITY TO THRIVE

Practice operating costs are increasing at a higher rate than practicerevenues in all areas of medicine.

You run a business – focus on the fundamentals!

Optimizing revenue must be your first priority:1) Add ancillaries.2) Invest in your facilities.3) Implement EMR technology.4) Incorporate your non-physician providers.5) Target market.




Your staff is your greatest non-physician expense – do you havethe right people in the right roles? Practices with more FTE support staff were more profitable thanthose with fewer FTE support staff.




Objectively Assess/Audit Your Practice:

What are our goals?

Do we have a plan & timetable to accomplish them?

Are we moving in the right direction to achieve them?

Can we create alternative revenue sources?

Are our expenses appropriate?

Can we do provide quality care in alternative ways?

Are we coding & documenting compliantly?

Establish specific metrics to objectively measure your performance.



Have a safe, happy & health

Holiday Season!

Thank you!

physicians: how to manage in uncertain times

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