MMA Preparedness Survey

Roberta Buell, MBAPatricia Falconer, MBAANCO Consultants

Today’s Agenda

Project Objectives MMA Revenue Loss Projections “Underwater” Drugs Compared to First

Quarter ASP + 6% E&M Audits and Profiling Superbill Issues Charge Issues Accounts Receivable Action Items

Objectives

Estimate MMA revenue reduction Identify potential drugs that may

be “underwater”. Determine quality of E&M coding

and documentation. Assess charge profiles and accounts

receivable management. Create action items to assist

practices cope with 2005 changes.

Profile of Practices

All Located in Northern California Practice Size Ranges from 1 to 11

Physicians Average Practice Revenue of $11.2

Million

MMA Model

Compared reimbursement data for 21 ASP drugs published by CMS for Q1 2004 with current 2004 SDP

Reduction of drug administration reimbursement from the 32% transitional rate to 3% in 2005

Reimbursement increase of 1.5 % for E&M services.

Scenario 1: 100% of payers convert to the MMA reimbursement methodology

Scenario 2: Only Medicare segment converts to MMA reimbursement methodology.

MMA Results Scenario 1All Payers

Average Practice Revenue Reduction for Drug Reimbursement = $519,000

Average Practice Revenue Loss on Drug Administration =$237,000

Average Total Revenue Loss per Physician = $206,000

MMA Results Scenario 2 Medicare Only

Average Practice Revenue Reduction for Practice = $337,000

Average Total Revenue Loss per Physician = $101,000

MMA Results

Average Percentage of Practice Revenue Lost Scenario 1 = 8%

Range of % of Practice Revenue Lost Scenario 1 = 4-12%

Average Percentage of Practice Revenue Lost Scenario 2 = 4%

Range of % of Practice Revenue Lost Scenario 2 = 2-6%

Cash profit impacts were far more profound, but profit calculations were quite variable.

MMA Results

What makes the difference? Payer Mix Drug and Administration revenue relative to

other revenue from E&M, research, legal, and/or medical directorships.

Specific drug mix in terms of brand vs. generics such as paclitaxel and pamidronate.

Volume of growth factors. Volume of Lupron and Zoladex Collected revenues

Potential “Underwater” Drugs

Practice drug acquisition costs do NOT include accrued rebates!

Drug reimbursement based on Q1 ASP. Drugs where acquisition cost exceeded ASP

Taxotere Gemzar Procrit Lupron Zoladex Navelbine Pamidronate Camptosar Herceptin

Drug Purchasing

Prices were truly variable. Best prices were not always contingent on practice size.

Everyone thinks they have the best deal, but the best deals take effort by your staff.

Best prices achieved by purchasing from multiple sources.

Evaluation & Management

Documentation Audit Number of charts audited = 169 Average Office Visit Error Rate (99212-

99215) = 36% Average Office Consult Error Rate

(99241-99245) = 52% Average Overall Error Rate = 49%

Evaluation & Management

Common Problems: Consults

Definition—what is a consult? ROS in the history PFSH in the history 8+ organ systems in the physical High level decision-making in Level 5s

Evaluation & Management

Common Problems Office Visits (99212-99215)

Modifier -25 ‘separately identifiable’ service

Legibility Chief complaint Missing notes or dictation Mis-matched dates of service

Evaluation & Management

Avoiding Common Problems Read E&M guidelines once per year at minimum Make sure each of your consults notes document the

referring MD, their request for your consult, and that you are conveying your advice and treatment plan.

Dictate or type your notes. Dictate your note right after the visit and charge for the service based on your dictation.

Use a consistent template matching AMA/CMS guidelines. Note ‘non-contributory’ (history) or within normal limits (physical) in areas that you have checked.

Make sure all tests, path reports, and differential treatments considered are documented—particularly in high-level services.

Do not use complicated charting systems like pasting in notes for each date. This causes backlogs and filing delays.

Evaluation & Management

Following this slide are: Northern California practices versus

2002 Medicare medical oncology profiles for:

Office visits Consults

Office Visit Profile

0%

10%

20%

30%

40%

50%

60%

70%

% OF eNCOUNTERS

99212 99213 99214 99215

LEVELS

OFFICE VISITS VS. MEDICARE 2002

MC % of

ANCO %

Consult Profile

0%

10%

20%

30%

40%

50%

60%

70%

% OF SERVICES

99241 99242 99243 99244 99245

LEVELS

OFFICE CONSULTS VS MEDICARE 2002

MC % of

ANCO %

Evaluation & Management

Northern California Profile: Aggressive coding—this is fine as long

as your patients are complex, have a cancer (not anemia) diagnosis, and your charts are organized and legible.

Clustering—consistent billing of Established Patient Office Visits at Level 4 and Level 5. This acceptable as long as the documentation matches the level of service. This coding pattern may attract attention.

Superbills

Common Problems If your profile shows clustering, you must have

all levels of service on Superbills. Include 99271-99274 for confirmatory consults.

Use them for second opinions. Include 36550 for de-clotting of ports.

Medicare pays for this! Include 36540 for blood draws through a port.

Privates pay for this. Investigate whether your private payers will

pay for a facility fee for 96549.

New CPT and HCPCS Codes

Make sure any new CPT and HCPCS codes for 2005 are set up in your billing system and reflected on your Superbill before January 1, 2005.

Accounts Receivable

Average Total Account Receivable =3 Million

Average % Accounts Receivable over 90 days old = 25%

Average months outstanding =2.2

Accounts Receivable

Common Issues No Pre-Certification process No financial plan established with patients

prior to treatment No procedure for routine collection of patient

co-payments at the time of service Poor management of A/R Employee turn-over Poor organization, training, and delegation of

responsibilities to business office staff No physician notification of diagnosis and/or

therapy change prior to treatment

Action Items

Establish Pre-Certification Process All patients treatment reviewed for treatment

compared with diagnosis. Is diagnosis FDA approved or Compendia supported? Use the MOASC Drug Grid as a tool.

All patients insurance must be verified prior to treatment. Benefits, co-payments, authorization requirements should be determined.

Patient should be advised of out of pocket costs. Payment arrangements need to be made. Get a

credit card on file. Advanced Beneficiary Notice signed in cases where

denial is probable and/or you think that drug will be paid for my someone other than Medicare.

Action Items

Evaluate Drug Purchasing and Terms Average time to collect was 68 days. Weigh drug cost reduction benefit for

shorter payment terms with financial consequence of drug inventory financing.

Decrease your A/R days

Action Items

Effective Accounts Receivable Management Make sure your outstanding Medicare A/R is

collectable. Medicare pays within 14 days for clean claims. If there is Medicare A/R over 45 days old, you have a problem or these accounts may not be transferred to the supplemental insurance or patient.

Have physicians evaluate the denials that occur on a frequent basis. This way, they can see why money is not coming in the door. Is it a billing or clinical problem?

Make A/R a centerpiece of your management meetings. Ensure you know what the status is and that cash never waivers. Some of you will not survive without better cash flow management.

Action Items

Data Management Review Management Reports Monthly

Accounts Receivable Aging Productivity Reports Financial Statements

Invest In Practice Management Software Use data to evaluate important practice bench

marks, i.e. profit per physician, injections and infusion hours billed per MD, infusion hours billed per Nurse per month, hours of infusion per chair, and $ collected per month per employee

Action Items

Proper Documentation and Coding Quarterly Evaluation & Management

Auditing Review Productivity Reports for Coding

Trends Group Practices are Liable for All

Members

Action Items

Ensure that Nurses Manage: Inventory Charge capture Proper documentation of “Incident to”

services per Medicare requirements. Cost effective strategies to deliver care Purchasing

What We Learned

Most practices will survive but physician income will decrease.

Managing cash will be critical to ensure successful operations next year.

Practices need to assess and use data more effectively.

Nurses need to “own” the documentation and reimbursement process for drug administration.

Physicians will need to play a more active and interventional role in the financial management of their practices.