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Improving Patient Care Through Increased Practice Efficiency



Recognizing the Need for Pharmacists as Members of the Care Delivery Team By Michael Bihari, MD, contributing editor

David B. Mandell, JD, MBA

Carole C. Foos, CPA


or the past seven years I have served as a member of the board of directors of my local federally qualified community health center. During that it time has grown from a small part-time operation with one physician and fewer than 1,000 patients to an organization with three sites, 14 providers, and more than 12,000 patients. As part of the federal health reform initiatives, the health center has received a grant to triple the size of our main facility. This will allow it to build and staff an onsite pharmacy for the steadily growing population of patients with chronic illnesses. Not surprisingly, the health center providers are delighted with the prospect of having an in-house capability to dispense medications. Most important, however, was the prospect of having a full-time pharmacist as part of the health care delivery team: someone who will not only dispense medications, but will play a crucial role in patient educaContinued on page 2

IN THIS ISSUE 3 | DIABETES STRATEGY EMRs can Aid Physicians Treating Diabetes Patients, but Benefits not Always Realized

6 | FINANCIAL MANAGEMENT A Prescription for Turning Self-Pay Accounts Into Revenue

8 | CODING UPDATE Common Coding Myths May Put Profits and Practices at Risk

10 | CAPITAL IDEAS CPAs’ Advice to Physicians on Asset Protection May Be Inaccurate


AAFP Report Explains Medicare E-Prescribing Incentive Program Requirements

13 | HEALTH CARE TRENDS NIHCR Report: ACO Improvements Effective, Hard to Justify Financially

14 | PRACTICE MANAGEMENT NEWS AMA Introduces CPT Coding App for Physicians, Launches App Challenge


Continued from page 1

Neil Baum, MD Urologist New Orleans

Peter R. Kongstvedt, MD P.R. Kongstvedt, LLC McLean, Va.

Daniel Beckham President The Beckham Co. Physician and Hospital Consultants Whitefish Bay, Wis.

John W. McDaniel President and CEO Peak Performance Physicians, LLC New Orleans

Harold B. Kaiser, MD Allergy & Asthma Specialists, PA Minneapolis Nathan Kaufman President The Kaufman Group Division of Superior Consultant Co. Inc. Physician and Hospital Consultants San Diego

Lee Newcomer, MD, MHA Senior Vice President, Oncology UnitedHealthcare Minneapolis

tion and medication management. Several years ago I spent some time in London and visited a local branch of a large pharmacy chain in search of some antiinflammatory ointment for a skin rash. While standing in line, I was fascinated by people sharing their symptoms with the pharmacist, who often reached for a medication (which would have required a prescription in the States) and handed it to the patient—including an appropriate ointment for my contact dermatitis, which he correctly diagnosed.

James M. Schibanoff, MD Editor in chief Milliman Care Guidelines Milliman USA San Diego Jacque Sokolov, MD Chairman Sokolov, Sokolov, Burgess Scottsdale, Ariz.

Michael Bihari, MD

STAFF Editor Rev DiCerto 845/398-5100 Art Director Meridith Feldman

Publisher Premier Healthcare Resource, Inc. 150 Washington St. Morristown, NJ 07960 973/682-9003; Fax: 973/682-9077

My local pharmacist works behind a counter in our neighborhood supermarket. Most of our conversations are about coverage issues and why I have to pay more for my prescriptions. However, most of the medications I take come in the mail from a distribution warehouse more than 2,000 miles from my home. Along with my drugs, I get a three-page printout for each medication, with small print and lots of jargon. I wonder how many people actually read them. Fortunately, I’m a patient at the health center and have a primary care physician who is surrounded by a team of professionals who can help me manage my health. Next year when the new pharmacy opens, I can walk across the waiting room, get my prescription filled, and have time to discuss my medications with the expert, my pharmacist!■

This newsletter is published by Premier Healthcare Resource, Inc., Morristown, N.J. © Copyright strictly reserved. This newsletter may not be reproduced in whole or in part without the written permission of Premier Healthcare Resource, Inc. The advice and opinions in this publication are not necessarily those of the editor, advisory board, publishing staff, or the views of Premier Healthcare Resource, Inc., but instead are exclusively the opinions of the authors. Readers are urged to seek individual counsel and advice for their unique experiences.

2 Practice Options/May 2011

More information is available at


EMRs can Aid Physicians Treating Diabetes Patients, but Benefits not Always Realized


any physicians have adopted electronic medical records (EMRs) with the goal of improving patient care and practice efficiency. Physicians providing diabetes care are especially hopeful that EMRs can help them track the many care steps and indicators required in managing this chronic condition. But while many physicians report that they are happy with their EMRs, do the systems live up to their potential?

Benefits to Diabetes Care EMRs can be helpful in providing diabetes care in several ways. “EMRs have the potential to meaningfully improve diabetes care,” says Patrick J. O’Connor, MD, MPH, a senior clinical investigator at the HealthPartners Research Foundation in Minneapolis. “The first way is by bringing to the provider’s attention prompts and reminders regarding a diabetes patient’s health status, such as an HbA1c level that is too high, and gaps in care, such as the need for an annual eye examination.” EMRs can also be helpful by searching the patient’s record and compiling critical information across a wide range of clinical territory. “The EMR can pull together the patient’s HbA1c level,

blood pressure, lipid levels, smoking status, medication use, date of last eye and foot exams, date of last immunizations, recent renal testing, and the presence of comorbidities such as congestive heart failure, peripheral vascular disease, and renal insufficiency,” O’Connor says. “The EMR can compile all that information in a single screen in an instant. This function saves providers time, because they do not have to search through the paper records to gather all of these data. It also allows providers to have complete information at the moment they are evaluating the patient and making clinical decisions.” The EMR can process this clinical information using clinical algorithms. “EMRs have the potential to translate clinical data into specific clinical recommendations that can benefit the patient,” O’Connor says. “Ideally, the EMR would be able to prioritize those recommendations according to the potential benefit to the patient.” EMRs can facilitate population health management. “Providers can sort all of their diabetes patients into groups based on who is doing well and who needs more attention,” O’Connor says. “That can provide the basis for

active outreach to patients beyond the scope of routine office visits to improve outcomes.” These clinical benefits could elevate care providers’ relationships with payers, who, to a growing extent, are monitoring providers’ performance and ranking them based on quality; some are creating publicly available report cards or developing pay-for-performance initiatives. “The potential that EMRs provide for quality measurement and accountability measures is immense,” O’Connor says. “An EMR can easily tally what percentage of patients has achieved glucose, blood pressure, and lipid goals.” He adds that EMRs present new opportunities related to patient-reported measurement, such as the ability to include measures of depression, quality of life, and other self-report indicators; patient priorities and decision-making processes; and outcomes such as hypoglycemia, which often are not codified systematically at every visit. “EMRs can also be used to provide summaries of lifestyle recommendations to distribute to patients,” he adds.

Organizing Data According to Michael West, MD, PhD, a Washington, D.C.-based solo practitioner who sees 350 patients a month, at least one-third of whom have diabetes, one of the key benefits of the EMR is better organization. He notes a commonly cited benefit of EMR use: all documents relevant to a patient’s care are available immediately at any time. “Practices using paper charts tend to lose documents, or they have difficulty promptly filing documents into the charts such that follow-up visits are based on incomplete information,” he says. “EMRs update the chart as soon as documents are scanned in. I never have a problem with missing documentation during follow-up visits. Furthermore, because there is no need to pull and re-file each patient’s chart, the efficiency of my staff is enhanced.” In this way, the EMR also helps West improve his care quality. “Using an Continued on page 4 Practice Options/May 2011 3

DIABETES STRATEGY Continued from page 3

patients who fit this profile, which based clinical decision support system EMR helps me to do a more complete helps my practice participate in clinical intervention improved their HbA1c job of keeping on top of every issue the levels and better maintained systolic trials.” patient has,” he says. “I am able to make blood pressure control than patients clinical decisions based on complete Unfulfilled Potential who did not receive the intervention. information about the patient’s history, Unfortunately, while individual prac“Other studies have shown that an test results, and trends. And with paper tices have reported improvements in EMR can lead to improvements in testcharts, there is a tendency to remember diabetes care with EMR use, research ing and examination rates,” O’Connor only the notes from the patient’s most has not confirmed widespread adds. recent visit. The EMR makes new The main reason EMRs have not issues easy to document and ensures improvements in actual outcomes. “There is a huge gap between what is reached their potential is that busy that ongoing issues are easy to track.” possible and what has actually been physicians have not explored the deciAn EMR’s ability to help clinicians achieved, ” O’Connor notes. “Most pubsion support functions, even when they track notes and clinical data across lished studies have not shown that are available, according to O’Connor. multiple visits can be especially imporEMRs definitively improve important “A medical group will install it, but the tant for the care of diabetes patients, aspects of diabetes care, such as the levdoctors won’t use it,” he says. since there is great value in being able “Unfortunately, many systo track data over time and tems are not sufficiently manage the need for ongointuitive. Furthermore, ing testing and evaluation. “We are just learning now how to there is no real incentive “When providing patient reorganize the workflows to get the for the doctor to use it. care, I search the record to Finally, office workflows most clinical bang for the buck.” determine whether the have not been reorganized patient has received a foot —Patrick J. O’Connor, MD, MPH, to encourage EMR use. or eye examination, HealthPartners Research Foundation, Minneapolis Involving nurses in EMR enabling me to proactively use at the front end of the address gaps in care,” states visit can help. ” West. “I can also search for specific ICD-9 codes, which is very els of glucose, blood pressure, and Start Simple helpful for research purposes. If I want lipids.” However, in a study published in the January 2011 issue of the Annals Often, physicians who invest in comto identify all of my diabetes patients of Family Medicine, O’Connor and colplex EMR systems complain that the with kidney problems, I can search by leagues reported that diabetes patients EMR is too complicated to use, and code and instantly obtain a list of randomly assigned to receive an EMR- therefore do not leverage the potential




ccording to a 2009 report from the Centers for Disease Control and Prevention, only 6.3% of physicians reported using a fully functional electronic medical record (EMR), while 20% report having some basic system. But more physicians may be adopting these systems. Under the American Recovery and Reinvestment Act of 2009, physicians who can demonstrate meaningful use of an electronic health record system by 2011 will qualify for $44,000 or more in Medicare incentives. With an estimated 404,000 eligible medical professionals in 2011, the Center for Medicare Services predicts that adoption rates will range from 10% to 36% in 2011, 15% to 44% in 2013, and 21% to 53% in 2015. The challenges in adopting EMRs can be daunting. According to a 2009 Medical Group Management Association survey, nearly 62% of surveyed physician group practice administrators rated


4 Practice Options/May 2011

selecting and implementing a new EMR as a “considerable” or “extreme” challenge. EHR implementation was cited as the third most pressing challenge after dealing with operating costs that are increasing more quickly than revenue and maintaining physician compensation levels in an era of declining reimbursements. Still, those physicians who embark on EMR adoption are typically happy they did so, provided they choose the right system for their practices. According to an article by Robert El-Kareh, MD, and colleagues published in the April 2009 issue of the Journal of General Internal Medicine, primary care physicians report that use of an EMR improves the quality of care delivered to patients, including reduced medication errors, improved test result followup and better communication with other clinicians. —DJN

of the system to improve care quality. vendor had programmed into the sys- Get Involved West decided to go with a simple, tem. It was a disaster,” says West. “EMRs are here to stay,” O’Connor says. Solo practitioners, small group prac- “They are valuable for a variety of reastraightforward EMR after an initially tices, and physicians new to private bad experience with EMR adoption. sons. We are just learning now how to When he opened his practice in practice likely have a limited budget; reorganize the workflows to get the many practices have delayed EMR most clinical bang for the buck and December 2009, West knew he wanted adoption due to the cost of large server- how to design clinical decision support a paperless practice. Unfortunately, like based systems. “These physicians may many physicians, he chose the wrong functions so that physicians like them EMR. “Despite the fact that I feel more comfortable with a Web- and want to use them. Eventually, we researched EMRs and thought I was based system,” says West. Web-based will see the technology’s many potenmaking a good decision, I tial benefits begin to be chose poorly,” remembers fulfilled. Still, at the medWest. West purchased a ical group level, physicians “The first way [an EMR can improve moderately priced, serverand nurses will need to diabetes care] is by bringing to the based software system that figure out how to organize was networked through his work processes incorpoprovider’s attention prompts and office. “This system was the EMR.” reminders regarding a diabetes patient’s rating sold to us under false preO’Connor counsels tenses—namely, that the health status, such as an HbA1c level physicians to get involved system was ready to go. But in EMR use. “Physicians that is too high, and gaps in care,” says after we bought it, the sysand medical groups O’Connor. tem experienced many bugs should actively determine and glitches, which indicathow they can use this ed that the software was resource to improve the systems are often referred to as “soft- care of their patients,” he says. really not programmed appropriately. I felt like I was beta testing for this com- ware as a service” (SaaS) systems. “Physicians can determine how to pany.” Furthermore, although the ven- “Rather than owning the software and build features and templates into their purchasing an annual software update dor was represented by a U.S. office and EMR systems, as well as how to design sales team, nearly all its programmers from the vendor, with a SaaS system the work processes around these systems, and technical support staff were locat- physician pays a monthly fee and uses in order to improve their efficiency as ed in India. “There was constantly a the Internet to log onto a remote server well as their clinical outcomes.”■ disconnect between what an American hosted by the vendor, which is respon- —Reported and written by Deborah J. sible for updates and maintenance.” physician office needed and what the Neveleff, in North Potomac, Md.




fter three months of frustration with his original serverbased electronic medical record (EMR) system, Michael West, MD, PhD, a Washington, D.C.-based solo practitioner who sees 350 patients a month, many of whom have diabetes, decided to cut his losses. He signed up for Practice Fusion (, an online Web-based EMR. Practice Fusion operates under a business model that is growing in popularity: it does not charge physicians a monthly fee, but instead obtains its revenue from advertisers. Although the offer of a free EMR seems unusual, the idea that businesses can benefit by offering valuable products and services for free is gaining widespread attention, especially for products offered on the Internet. In his book Free: The Future of a Radical Price, Chris Anderson, editor-in-chief of Wired magazine, included Practice Fusion as a case study. Other free EMRs include OpenEMR


(, FreeDOM (, Mitochon (, and ( emr.htm). Currently, Practice Fusion has more than 60,000 users representing more than 6 million patients. “Advertisements pop up along the edges of the computer screen,” explains West, adding that despite his initial concerns, these ads are not at all distracting. “The ads are peripheral, and I do not have to exit out of them to see the screen; they never interfere with my use of the software.” West adds that physicians who want an advertisement-free version of the system can pay a small monthly fee. “Because I am a solo practitioner and just starting out in practice, I was willing to take a gamble on this system,” says West, who is highly satisfied with his second EMR. —DJN

Practice Options/May 2011 5


A Prescription for Turning Self-Pay Accounts Into Revenue By David G. Morrisey, director of development, KeyBridge Medical Revenue Management

almost one-third of respondent hospitals, receivables are growing faster than patient revenue.

Decreasing Revenue

David Morrissey, KeyBridge Medical Revenue Management’s ( director of development, has over 30 years of experience in health care and management training. He teaches seminars and courses around the country on effective communication skills and the keys to motivation. He is a member of the Medical Group Management Association, the Healthcare Financial Management Association, and the Michigan Association of Healthcare Access Professionals.


s a result of persistently high unemployment and increasing costs of health insurance, medical practices and hospitals are seeing an increasing number of patients paying for large amounts of their medical expenses out of their own pockets. According to the Health care Financial Management Association (HFMA) 2009 study, “The Changing Face of Self-Payment in Hospitals,” 97% of hospitals surveyed experienced an increase in self-pay accounts receivable compared with the prior fiscal year. At

6 Practice Options/May 2011

Seven out of 10 hospitals have experienced a dramatic decline in overall financial health, according to the American Hospital Association’s Rapid Response Survey published in November 2009. Providers continue to struggle with cost-effective answers to collecting those balances. Collecting payments from patients can be an expensive and unprofitable experience for medical providers for four key reasons: • CFOs are not equipped with the metrics to analyze the situation effectively. • “Industry accepted methods” are used globally instead of implementing what works for each particular organization. • Staff are not adequately trained to collect money and are concerned with compromising patient satisfaction. • Office resources are inadequate for dealing with self-pay accounts. Hospitals and group practices need to focus on creating a streamlined process for recovering payments from self-pay patients. Not doing so could affect providers’ bottom lines by creating more bad debt.

Recovering Bad Debt Implementing a strategic debt recovery process begins with analyzing the cost and return on investment (ROI) of your current payment collection system. The next step is to maximize that ROI while improving the way your staff communicates with your patients. CFOs have a myriad of metrics available to describe the health of their revenue cycle. However, it is not as common to have information available that quantifies their success in liquidating

patient-liability balances only. One valuable metric is the cost to collect. CFOs may have cost to collect data for their entire operation, but lack the ability to analyze their collection operations specifically for the self-pay financial class, including balance after insurance. As a result, many providers either are spending too much on inefficient internal operations for the results they are reaping, or are spending too little and leaving money on the table that eventually becomes bad debt. Using cost to collect data along with recovery metrics and comparing them across different financial classes can be instrumental in making informed decisions on whether to bolster internal processes or outsource in certain areas, or both. Too often, providers select collection methods and processes based on market trends instead of what works best for them. No two providers are alike. Two hospitals may have different patient demographics, staff competencies, account dispositions, and information system capabilities that affect what collection processes will work best for each institution. Managers may change current processes or implement new ones with the assumption that what’s working for others will work for them. However, what works best is what makes the most sense based on your practice’s metrics and capabilities. Making assumptions, dictating what your staff and vendors will do, and then living with the results rarely works. Instead, compiling the data that tell your story and sharing those data with competent vendors will often produce processes and results that will be the most beneficial for your organization, and will also foster longterm profitable relationships.

Patient Education Points According to the American Medical

Association, providers have as many as the time of service, they become chal- How would you like to take care of this today?” nine opportunities to educate patients lenging to collect later. The cost of One key to keeping your cost to colresources required to contact patients about their financial policies and patient responsibilities. These patient and motivate them to pay on a small lect in line with recovery results lies in balance often exceeds the amount col- understanding the capabilities of your education points should be used to business office and augmenting them lected. These costs are compounded as condition patients to think they are where needed. Common areas that expected to pay their out-of-pocket the accounts age, requiring even more may need additional attention include resources. expenses at the time of service rather statement generation processes, paythan be billed later. Most of these edument plan monitoring, charity care cation opportunities involve adding Customizing Your Process qualification, incoming customer sersimple written communication at nor- Few people are comfortable requesting vice, and outgoing patient follow-up. mal points of contact with the provider. payment from patients. Modifying everyday communication techniques Even many of the latest information The nine opportunities to educate your systems lack efficient features required patient about their financial responsi- can make a difference. Many untrained for effective follow-up on bility are: patient liability balances. 1. Appointment scheduling The antidote for curtailing 2. Provider Web site Hospitals and group practices need bad debt and uncompensated 3. Welcome letter to focus on creating a streamlined care is a streamlined payment 4. Insurance verification recovery process from self-pay 5. Appointment reminder process for recovering payments patients. It’s important to 6. Patient check-in from self-pay patients. design a process that works for 7. Patient check-out the specific needs of your hos8. Claim processing/patient pital or practice. Utilizing metinvoice rics, reconditioning patients to pay at representatives often resort to passive 9. Appeal letter the point of service, training associates At each step, the payment policy, pay- inquiries such as, “Would you like to to appropriately request payment, and ment method options, and outstanding pay your balance today?” Inquiries like understanding the limitations of your this enable the patient to simply answer balances should be clearly stated. business office are key elements to your The collection of small balance co- “no,” or provide an excuse. A better pays at the time of service has enor- approach would involve the represen- financial recovery. Identifying an tative stating the balance and then accounts receivable management partmous potential to increase cash flow, ner could reduce the strain on your saying, “For your convenience we cut cost to collect, and reduce bad debt. staff and time. ■ Once these small balances go unpaid at offer [list your payment options].

ASK THESE QUESTIONS WHEN CONSIDERING WORKING WITH AN ACCOUNTS RECEIVABLE PARTNER or many health care providers, collecting payment from patients can be time-consuming, expensive and unprofitable. It is not uncommon for a provider’s information system to be inefficient or deficient in processing patient-liability balances. Many administrative support personnel also lack the proper skill set or process in place to handle self-pay collection issues. This brief questionnaire can help a practice manager determine if working with an accounts receivable management partner is right for his or her practice. • Do we have inadequate staff resources to manage collection of outstanding patient balances? • Are we seeking ways to reduce self-pay accounts receivable? • Do we have an increasing amount of outstanding receivables? • Does our staff need additional training to properly handle


collection? • Do we have the resources to make outgoing contact on patient accounts? • Do we have a backlog of low-priority accounts? • Do we need assistance managing patient payment plans? • Is our staff spending unwanted time concentrating on collecting outstanding patient balances versus focusing on patient care? If the answer was yes to at least three of the questions, then exploring a relationship with an accounts receivable management partner may be appropriate. When researching partners, be certain to evaluate their direct experience in health care collections, attention to preserving the patient relationship, availability of real-time performance metrics, and their client service reputation. —DM

Practice Options/May 2011 7


Common Coding Myths May Put Profits and Practices at Risk


orrect coding has significant sive data mining and obvious inconsisconsequences for physician tencies will catch its attention, Hume billing and practice. There are a says. For example, Doctor A bills everynumber of coding myths, however, that thing at the lowest level of evaluation can jeopardize practices and reduce the and management (E&M) service but all amount of revenue for which they can of his or her peers are at mid- or highbill. Given the zeal shown by federal level E&M. While it is possible that A’s agencies and health insurance compa- peers have more specialized types of nies to recover improperly paid bills, it patients, continuous undercoding will is essential that medical professionals catch CMS’s attention. Doctor A will Jennifer Hume are careful and correct in their coding stand out, encouraging CMS to investiCPC, CPCO, CPMA, CEMC practices. According to Jennifer Hume, gate whether his or her practice is vioprovider types (physicians and hospiCPC, CPCO, CPMA, CEMC, a mem- lating anti-kickback statutes. Are patients receiving a benefit (e.g., tals who billed Part B services) in its ber of the American Academy of a comprehensive exam) for a reduced certification audit. This is an error rate Professional Coders (AAPC), Salt Lake price? The government may interpret of 7.8%. For carriers and Medicare City, Utah, the four most prevalent codthe lower level of coding as an induceadministrative contractors, there was a ing myths are the following: ment to patients to see that particular 9.9% error rate, resulting in improper 1. Undercoding is a way to avoid audits. physician. Similarly, the government payments of $7.8 billion. 2. The fact that payment has been Money that the government invests received automatically means that may consider a waiver of co-pay deductibles as an inducement for the in recouping overpayments is well coding has been performed correctly spent, says Hume. A for the encounter. range of dollar amounts 3. Not accepting Medicare Given the zeal shown by federal agencies has been reported, but for patients will protect a every dollar spent, four and health insurance companies to practice against audits. dollars are recovered. 4. A small practice is autorecover improperly paid bills, it is essen- Blue Cross/ Blue Shield matically immune from tial that medical professionals are carerecovers seven dollars for being the subject of an every dollar spent. audit. ful and correct in their coding practices. Physicians should keep Hume debunks these in mind also that a new common coding myths and beneficiary. Although there is no case small business administration law is explains how they can lead to profeslaw on this topic, undercoding has putting into use new anti-fraud measional and financial difficulties for more potential pitfalls than advantages sures. For example, credit card compaphysicians and physician practices. for physicians and their practices. nies monitor credit card activity and will contact a customer if they observe Undercoding Payment Considerations unusual spending patterns. Medicare is Undercoding is a poor choice for severThe fact that a bill has been paid does now required to put similar processes al reasons. When they undercode, not mean that it was coded correctly. in place, according to Hume. As a “physicians leave dollars on the table Insufficient documentation on bills result, Medicare may hold up claims for medically appropriate services for submitted for payment is often the payments while it screens payments as patients,” says Hume. Further, physicause for an audit, and CMS has part of an anti-fraud review. This cians who undercode may be placing become more aggressive in investigatreview process is targeted to be in place themselves at increased risk for an ing claims that it considers suspicious. by July 2011. One repercussion of this audit because their coding is inconsisHume offers these figures for considernew law is that providers who are tent with that of their peers. ation: CMS reported that, for fiscal year accustomed to receiving payment in 14 The Centers for Medicare & 2009, $24.1 billion were overpaid for all days for electronic claims may have to Medicaid Services (CMS) does exten-

8 Practice Options/May 2011

wait longer. “It’s an extra layer of ‘Let’s sents a recovery rate of seven dollars for OIG Web site and the number of look and see if this claim is correct every dollar spent. And it is not only providers, you’ll see that individual solo before we pay’ instead of a post-pay- “The Blues” that are pursuing incorrect providers are listed as under ‘Appropriate Integrity Agreements’ payments; Cigna and United ment review,” says Hume. Physicians will have to watch for six Healthcare also have special investiga- because they’ve been noticed,” she says. “If you’re a solo practitioner, the RAC months to a year to see how this poten- tive units. Private payers have learned tial delay in payment will affect their from the success of the federal govern- auditors can look at 10 claims every 45 days. If you’re a two-to-five bottom lines, Hume doctor practice, they can look at says. If payments have Money that the government invests in 20 claims every 45 days.” This previously been made recouping overpayments is well spent, high degree of scrutiny can be in 14 days and that fairly intrusive for a practice: period begins to says AAPC member Jennifer Hume, every 45 days, in addition to lengthen, it would be CPC, CPCO. A range of dollar amounts what a solo practitioner is necessary to determine assigned to maintain, he or she quickly the cause of the has been reported, but for every dollar also must gather the claims to delay. “I would be spent, four dollars are recovered. send to the RAC and be ready looking at my historito defend them if necessary. cal claims payment records and make sure that a process is ment and have followed its example in This is money well spent for auditors in place” to flag payments that are tak- examining claims and recovering funds. and the agencies or companies that employ them: for every 20 cents spent ing longer than usual, observes Hume. on RAC audits, the auditors recover $1. No Practice Is Too Small Knowing that closer examination of RAC auditors usually have work lists claims is on the horizon should “My practice is too small to be noticed,” and are assigned specific geographic encourage physicians and their staffs to “I’m a solo practitioner,” and “I’m one look at their coding patterns now to of only two or three doctors” are state- target areas. They have the ability to ments Hume hears cited as reasons point out to CMS what they consider to ensure that all services are coded physicians expect not to be audited. But be a potential problem and ask to audit specifically and fully, Hume advises. it. In October 2010, CMS published the while the concept of a practice being Medical practices that do not see comprehensive error rate testing proMedicare patients are not safe from protected because of small size may gram. The Office of the Inspector being audited, Hume adds. It is not only have been true in the past, it is no General (OIG) audited the findings and Medicare recovery audit contractors longer, according to Hume. As the government has continued to found that CMS was not reporting (RACs) who assess claims. Even withaudit findings to the RACs. CMS agreed out Medicare patients, practices are not expand its audit capability through the to start doing so to enable RACs to conprotected from review by first commer- use of RAC auditors, zone program integrity contractors, and program safe- duct their reviews in an appropriate and cial payers. Blue Cross/Blue Shield fraud investigators recovered more than guard contractors, more emphasis has complete manner. ■ $510 million in 2009, she notes. This been placed on all provider types and —Reported by Joseph Burns. Written by amount of recovered revenue repre- sizes, Hume says. “If you look at the Mary Service, in Bloomfield, N.J.

MEDICAL PRACTICES SHOULD PREPARE FOR INCREASED SCRUTINY, AAPC VICE PRESIDENT SAYS he Patient Protection and Affordable Care Act of 2010 calls for the creation of compliance programs that will increase the risk for audits of medical practices by Medicare and Medicaid, and health care providers will be required to have compliance programs in place within their practices. “Previously, compliance was a voluntary program unless you were under a corporate integrity agreement,” says Jennifer Hume, CPC, CPCO, CPMA, CEMC, a member of the American Academy of


Professional Coders (AAPC), Salt Lake City, Utah. “Hospitals and larger practices have established them, according to the OIG’s [Office of the Inspector General] published guide. However, under the health reform laws, the Secretary of Health and Human Services has authorized the implementation of compliance programs.” The message behind these new requirements is that physicians should be ready for additional examination. —MS

Practice Options/May 2011 9


CPAs’ Advice to Physicians on Asset Protection May Be Inaccurate By David B. Mandell, JD, MBA, and Carole C. Foos, CPA


inancial and legal advisers are always surprised by how few physicians have gotten any advice or even direction on asset protection from their certified public accountants (CPAs). When you think back on whether or not your CPA has helped you shield your assets from unnecessary exposure, it is likely you will realize that he or she has not. Unfortunately, even when doctors do receive asset protection advice from their accountants, that advice is often wrong. Common bad advice from CPAs ranges from “You don’t need to worry about asset protection; you have insurance,” to “Why create a professional corporation [PC] for protection? It’s not worth the expense,” to “Just put the assets in your spouse’s name; that will protect you.” It might be helpful to examine each of these common bits of bad CPA advice separately.

David B. Mandell, JD, MBA is an attorney and principal of the financial consulting firm O’Dell Jarvis Mandell LLC, where Carole C. Foos, CPA, works as a tax consultant. They can be reached at 877-656-4362. company. In any of these cases, you could be left with the sole responsibility for the loss. Lastly, even if all of your losses are covered within your policy’s coverage limits, you may see your future premiums skyrocket. For these reasons, it is unwise to rely solely on insurance for your protection, especially when many asset protection

extra expense ($1,000 or so to create, a few hundred dollars per year) and the additional paperwork required (tax return, minutes, etc). But advisers find it troubling that physicians often follow the advice not to form a PC when Insurance Limitations almost no other sophisticated busiWhile any financial or legal adviser nessperson would. No other owner of a would strongly advocate property and significant business, with $100,000 or casualty (P&C) insurance as part of more in annual revenues your asset protection and a number of employees, plan, it is important to Many physicians have placed their assets would allow that business to remember that an insurance policy is 50 pages in the name of the non-physician spouse operate in his or her own name. long for a reason. There and assumed those assets were protected When you fail to use a PC are a variety of exclusions or other similar entity (PA, from lawsuits against the physician. that most doctors never PLLC) to run your practice, take the time to read, let you expose all of your peralone understand. This is sonal wealth to any claim against the true for personal policies like home- techniques actually will save you taxes practice. While CPAs are quick to point owner’s, car, and even umbrella insur- and help you build wealth for your out that the PC will not protect your ance, as well as business policies, the retirement. assets from malpractice anyway, which most important of which for physicians is correct, they ignore any potential liaForm a Professional is their medical malpractice insurance. bility risks that might be created by Even if your insurance policy does Corporation Many physicians report having fol- your employees and that you might cover the risk in question, there are still risks of the claim exceeding your cover- lowed their accountants’ advice and not have nothing to do with. Some examformed a PC. The main justifications ples of such risks include car accidents age limits, strict liability, and the possifor not forming a PC are typically the employees might experience when dribility of bankruptcy of the insurance

10 Practice Options/May 2011

ving for the business, such as when a spouse and assumed those assets were Another good litmus test is to ask the receptionist is going to pick up lunch protected from lawsuits against the CPA what he or she thinks will happen physician. To see how this legal inter- in a divorce if you follow his or her for the office, or a slip and fall in the pretation is wrong, ask yourself: office, or a car accident in the parking advice and put all the assets in your • Whose income was used to purchase lot. If it is implemented correctly, a PC spouse’s name. It is likely that he or she the asset? arrangement would protect your perwill say that the court would treat these sonal wealth against all of these poten- • Has the doctor used the asset at any assets as joint because you are still tial liabilities and more. But treating them as joint without one, all of your perassets; you are living in the Advisers find it troubling that sonal wealth would be vulhouse, spending money nerable. from the accounts, and physicians often follow the advice For this kind of protecpaying the taxes. The court not to form a PC when almost no other knows tion, the small cost of formthat you haven’t sophisticated businessperson would. ing a PC and the necessary really given the assets away paperwork seem to be well to your spouse. Most likely, No other owner of a significant worth the investment. In this is exactly the way the business… would allow that business fact, most CPAs have such court would treat the assets an entity in place, and nearly for creditor purposes as to operate in his or her own name. 100% of solo attorneys also well. use one. If such an entity is a In today’s environment, suitable protection for a CPA practice time? asset protection should be part of every or a legal practice, why is it not good • Does the doctor have any control over physician’s financial plan. It is unfortuenough for small medical practices? the asset? nate that so many doctors are tripped • Has the doctor benefited from the up by poor advice from accountants. Transferring Assets asset in any way? Some experienced legal and financial to a Spouse If the answer is “yes” to any of these advisers try to educate CPAs in CPE The third common type of bad advice questions, most courts will find that at lectures around the country. As a pracphysicians receive from CPAs about least half of the value will be exposed to ticing physician, you should watch out asset protection is that assets in your the claims against the doctor. In com- for such poor advice and seek out an spouse’s name cannot be touched. munity property states, 100% of the adviser versed in such matters to be Many physicians have placed their value may be exposed, since such assets part of your team and work with your assets in the name of the non-physician are viewed as community assets. CPA.■




elated to the mistaken advice often given to physicians by certified public accountants (CPAs) that a physician should avoid using a professional corporation (PC) to protect assets in the event of a lawsuit is the more common misguidance for solo physicians to have a professional entity, but to choose to have the entity taxed as a “disregarded entity” by the IRS. A soleowned corporation or LLC can elect not to be treated as a separate entity with its own employer identification number (EIN) but, instead, to be treated as a “disregarded entity” using the social security number of the sole owner. While CPAs recommend this as a cost-saving measure—saving the whopping cost of a simple tax return, perhaps $1,000 per year—by using this form, the physician now endures the same risk as having no professional entity at all. A lawsuit against the practice could “pierce the corporate veil” and attack all of the doctor’s personal assets, even if




he or she was uninvolved in the activity that created liability. While subjecting all of the physician’s personal assets to these types of risks to save $1,000 per year is bad enough, this advice is also detrimental from a tax perspective. By choosing a “disregarded” status for a sole-owned LLC, the doctor may also pay more taxes on his or her income every year than if he or she chose a different tax status. Typically the “S” tax status would be more beneficial in such a situation. Thus, this bad advice is wrong on both the asset protection and tax liability levels. Nevertheless, successful solo physicians frequently follow their CPAs’ advice to use disregarded entities. Many of these physicians have over $1 million of annual income and significant net worth. If such successful physicians can get such poor advice from their advisers, anyone can. —DBM, CCF

Practice Options/May 2011 11


AAFP Report Explains Medicare E-Prescribing Incentive Program Requirements


There are four ways physicians can Medicare received my claims with s part of the health care reform avoid incurring the penalty, according G8553? legislation, physician practices to the report. The most common • Does this penalty apply to all physiare required to adopt electronmethod of avoiding the penalty is to cians? Does it apply to non-physician ic prescribing (e-Rx) systems for subsubmit at least 10 Medicare Part B practitioners? mitting prescriptions to pharmacies. claims that incorporate the code G8553. • Is there an exception for physicians Under a Medicare-sponsored incentive Other means of avoiding the penalty, in rural areas where Internet access program, practices that cannot demonwhich are described in more detail in and pharmacies that accept electronic strate that they have performed a certhe report, include reporting that the transactions are limited or not tain amount of e-Rx during 2011 will be provider does not have prescribing available? ineligible to receive a 1% Medicare privileges, reporting a lack of availabili- • Does participation in the Medicare incentive payment in the year 2012. ty of high-speed Internet access, and EHR Incentive Program exempt me Practices that cannot demonstrate a reporting a lack of e-Rx-capable pharfrom the penalty? and lesser amount of e-Rx during the first macies in the provider’s area. • Will we have to meet two reporting six months of 2011 (January 1 through The incentive will be most likely requirements in 2012? June 30) will incur a 1% penalty on earned through a provider reporting at According to the report, a qualified eMedicare payments during 2012. least 25 Medicare Part B claims before Rx system may be a stand-alone system The American Academy of Family December 31, 2011, that incorporate or part of a certified EHR system that is Physicians (AAFP; on the code G8553. The incentive can also equipped with e-Rx capabilities. In addiApril 4 announced the tion, an e-Rx system must be launch of a new online able to generate an active medresource intended to ication list that includes data The most common method of avoiding explain the e-Rx incentive from pharmacy benefit manprogram to physicians the penalty is to submit at least agers and pharmacies; be able who may be confused to electronically transmit pre10 Medicare Part B claims that about the requirements. scriptions, print prescriptions, The bulk of the resource incorporate the code G8553. conduct alerts, and select medtakes the form of a report ications; must have the ability that is available as a free to provide patients and download through the Leawood, earned when a provider submits providers with information about therabased organization’s Web site. data for 2011 from a CMS-approved peutically appropriate alternative medelectronic health record (EHR) or reg- ications that may be available at a lower Requirements Explained istry during the first quarter of 2012. cost; and must be able to provide inforThe AAFP report opens with a summamation on patient eligibility, authorizary of the rules to the Centers for Questions Answered tion requirements from a patient’s drug Medicare & Medicaid Services (CMS) In addition to the explanation of the plan, and formulary or tiered formulary have created for physicians participating incentive program’s requirements, the medications. In addition, medical proin the e-RX incentive program. It report also addresses a number of fessionals who participate in the explains the minimum requirements questions that physicians may have Medicare EHR Incentive are not exempt that must be met by June 30 in order for regarding details of the program. The from incurring the e-Rx penalty if they physicians to avoid incurring the 1% answers are concise and simple but have not fulfilled the necessary requireMedicare penalty in 2012, and the mincomplete. The questions addressed in ments by June 30, 2011. imum requirements that must be met by the report are: The report also includes a list of links the end of 2011 for physicians to be eli• What is code G8553 and when do I to additional CMS and Center for gible for the 1% incentive payments. The report it? Health IT resources. The entire report requirements for avoiding the penalty • What are the denominator codes? is available as a free download at and earning the incentive money are • What is a qualified e-Rx system?■ laid out side by side in a table. • Will I receive anything showing that —Editor Rev DiCerto

12 Practice Options/May 2011


NIHCR Report: ACO Improvements Effective, Hard to Justify Financially


ed these activities through existing reserves,” the report says, “while others, particularly those engaged in quality measurement or HIT [health information technology]-investment-related activities, applied for and received grant funding.” “None of the organizations indicated attaining a positive return on investments related to improvement activities,” the report says. “Although some noted ACO incentives or enhanced payments for patient-centered medical homes in the future might improve the business case for these activities, many acknowledged that the economic market rewards may not materialize for a long time, if ever.” The report cites changes in workflow that affected productivity as a potential drawback to implementing of the organizations indicated attain- the ACO model. ing a positive return on investments related However, it goes on Gathering Data to suggest ways by A report released by the to improvement activities,” the report says. which the difficulties National Institute for with the model can Health Care Reform be addressed. These (NIHCR) in January details the experiactivities likely to be pursued by approaches include the encouragement ences of seven prominent health care ACOs, ” the report says. “The activities of physician buy-in and ownership of organizations that have implemented generally fell into two categories: 1) needed changes, physician leadership, aspects of the ACO model. No two of interventions to improve care delivery; and the partnering of nonclinical the organizations introduced identical leadership within organizations with measures or followed identical path- and 2) investments in infrastructure or other organizational changes to the physician leadership to encourage ways, the report, “Lessons From the encourage or facilitate care delivery staff buy-in and reduce resistance from Field: Making Accountable Care improvements. ” The report lists the clinical and nonclinical staff to change. Organizations Real,” states. Authored various ACO-type changes implementThe report also stresses “the imporby Timothy K. Lake, Kate A. Stewart, ed by each of the health organizations. tance of other clinical staff, including and Paul B. Ginsburg, the document nurses and medical assistants, in develnotes that though the organizations’ Addressing Shortcomings oping new programs or interventions,” efforts at improving and coordinating While none of the organizations and the need for “transparency, open care and facilitating communication reported unsatisfactory results with lines of communication and focus on among providers were largely successregard to their ACO improvements, the teamwork. ” The full report can be read ful, “developing these ACO-like findings of the report indicate that at required substantial groups seeking ACO status in the Organizations.pdf.■ investment, both in time and money.” future may have difficulty funding the —Editor Rev DiCerto The NIHCR researchers interviewed necessary improvements. “Many fundpeople who worked with seven health n the wake of the March 2010 adoption of the Patient Protection and Affordable Care Act (PPACA), considerable attention has been paid to emerging new models of care delivery. Prominent among these models is the accountable care organization (ACO). PPACA provides incentives for the formation of ACOs in coming years. Despite the attention the model has received, there remains little agreement as to how ACOs are to be formed. It has therefore fallen to individual large medical organizations to attempt to implement broad changes to bring themselves in line with ACO requirements in the absence of solid guidelines for implementation. As these organizations have implemented various aspects of the ACO, reports have become available detailing their experiences. “None

care organizations. The organizations included the Billings Clinic of Billings, Mont., the Carilion Clinic of Roanoke, Va., Physician Health Partners of Denver, Co., ProHealth Physicians of Conn., Sharp Health Care of San Diego, Calif., UniNet of Omaha, Neb., and Westshore Family Medicine/Mercy Health Partners of Muskegon, Mich. Three of the organizations were integrated delivery systems, one was a physician-hospital organization, two were medical groups, and one was a management services organization affiliated with four independent practice associations. “All of the organizations studied were engaged in multiple efforts to improve care coordination and quality of care—

Practice Options/May 2011 13


AMA Introduces CPT Coding App for Physicians, Launches App Challenge


he American Medical Association (AMA) on March 29 introduced its first app designed for physicians. The app allows physicians to quickly find Current Procedural Terminology (CPT) billing codes. It is available free through the iTunes store. “The AMA’s new CPT quick-reference app helps physicians determine the appropriate E&M code for billing quickly, easily and accurately,” said AMA Board Secretary Steven J. Stack, MD. AMA also launched the 2011 AMA

App Challenge to find the next great medical app idea. The competition calls on those on the front lines of medicine to submit their unique app idea for a chance to have the AMA bring it to life. Participants can submit app ideas through an online form through June 30th, 2011. Two winners will be selected, one from the resident/fellow or medical student category and one from the physician category. The winners will each receive $2,500 in cash and prizes, plus a trip for two to New Orleans for

the unveiling of their app at the AMA’s meeting in November. The CPT evaluation and management quick reference app is compatible with Apple’s iPhone, iPod Touch, and iPad. It features decision-tree logic and quick search options, allowing physicians to digitally track CPT codes and e-mail them anywhere. Physicians can save their most frequently used codes by location or type of service for increased ease of use. Visit the AMA Web site,, for more information.

CMS WEB SITE OFFERS DATA ABOUT HOSPITAL-ACQUIRED CONDITIONS AT U.S. HOSPITALS he Centers for Medicare & Medicaid Services (CMS) in April added data about the safety of care in America’s hospitals to the CMS Hospital Compare Web site. Medicare patients can now see how often hospitals report conditions that develop during an inpatient hospital stay and possibly harm patients. Hospital-acquired conditions (HACs) often result from improper procedures followed during inpatient care. CMS’s data show the number of times a HAC occurred for Medicare fee-for-service patients between October 2008 and June 2010. The numbers are reported as number of HACs per 1,000 discharges, and are not adjusted for hospitals’ patient populations or case-mix.


CMS reports HAC rates for eight measures, selected because they incur high costs to Medicare or occur frequently during inpatient stays for Medicare patients. HACs usually result in higher reimbursement rates for hospitals because more resources are needed to care for the patient with the complication. Since 2008, Medicare has not provided additional reimbursement for cases in which a HAC was reported as having developed through the course of a patient’s hospital stay. The HAC data can be accessed through the “Hospital Spotlight” section of Hospital Compare online at

MEETING HIPAA VERSION 5010 COMPLIANCE DEADLINE A CHALLENGE FOR MEDICAL GROUPS edical groups face significant challenges as they transition to the HIPAA Version 5010 electronic standards, according to research from the Medical Group Management Association (MGMA). A majority of respondents to an MGMA questionnaire stated that critical software upgrades have not been made and testing with health plans has not been scheduled. Groups face potential interruption of claims processing and other essential administrative transactions should they not implement Version 5010 by the Jan. 1, 2012 deadline. Only 22.3% of respondents believed their current software


14 Practice Options/May 2011

would permit them to use Version 5010, with 48.6% stating that their software would require an upgrade and 5.8% indicating it would need replacement, while 22.6% stated that they did not know what needed to be done with their software. Fewer than half of respondents indicated that they had received any communication from their practice management software vendor regarding the change to Version 5010. The full MGMA survey data can be downloaded at

MGMA EHR Study: Optimization, Meaningful Use Eligibility Challenges


he Englewood, Colo.-based Medical Group Management Association (MGMA; in April released findings from its Electronic Health Records: Status, Needs and Lessons 2011 Report Based on 2010 Data, which provides a snapshot of medical practices’ experiences adopting electronic health record (EHR) systems and the barriers to those that have not. Nearly 72% of EHR owners said they are satisfied with their systems. Of all EHR owners, 26.5% reported practice productivity had increased, 30.6% indicated that it had decreased, and 42.9% reported no change in productivity after implementation. Of the 20.7% of users who reported having optimized their EHR since implementation, 41.1% reported that increased productivity, 16.5% reported decreased productivity, and 42.4% reported no change in productivity. In that same group, 26.8% reported total practice operating costs had increased,

while 39.7% said costs had decreased and 33.5% reported no change in costs. Of practices still using paper records, more than 78% feared there would be a “significant” to “very significant” loss of productivity during implementation, and 67.4% had similar concerns about the loss of productivity after the transition period. The practices currently using paper medical records described the other significant to very significant barriers to EHR adoption as “insufficient capital resources to invest in an EHR” (71.7%) and “insufficient expected return on investment” (56.9%). Independent medical practices were more likely to have a fully implemented and optimized EHR than their peers owned by hospital systems. The report examines 4,588 valid online responses from a variety of health care organizations, including medical group practices representing about 120,000 physicians. The full report can be downloaded at

NCQA CERTIFIES 14 SOFTWARE VENDORS he National Committee for Quality Assurance (NCQA) announced in March the certification of 14 software vendors for their Healthcare Effectiveness Data and Information Set (HEDIS)-related software. NCQA software certification demonstrates to prospective health plan customers a product’s ability to produce accurate and reliable results. Health plans using NCQA-certified software can forgo the manual source code review portion of the HEDIS Compliance Audit and P4P Audit Review. NCQA validates vendors’ software by generating test data sets. Vendors process the test sets and compare their output to the expected results to determine whether their software computes results in accordance with NCQA specifications. Software certification included testing on the HEDIS performance measure Plan All-Cause Readmissions, which is new for 2011. The vendor’s certification report indicates which measures are certified and are exempt from manual source code review by NCQA compliance auditors during an NCQA HEDIS compliance audit. For information on software certification and a list of vendors’ status, visit aspx.


IOM RECOMMENDS STANDARDS FOR RELIABLE CLINICAL PRACTICE GUIDELINES, REVIEWS OF EVIDENCE wo reports released in March by the Institute of Medicine (IOM) recommend standards to enhance the quality and reliability of clinical practice guidelines and systematic reviews of the evidence base for health care services for informing health care decisions. These important tools are supposed to offer health care providers, patients, and organizations authoritative guidance on the comparable pros and cons of various care options, but too often are of uncertain or poor quality. There are no universally accepted standards for developing systematic reviews and clinical practice guidelines, leading to variability in the handling of conflicts of interest, appraisals of evidence, and the rigor of the evaluations. Clinical Practice Guidelines We Can Trust (accessible at /3rjbxy5) recommends eight standards to ensure the objective, transparent development of trustworthy guidelines. Several problems hinder providers’ and others’ ability to determine which among thousands of sometimes competing guidelines offer reliable clinical recommendations. Finding What Works in Health Care: Standards for Systematic Reviews (accessible at 3qkp5nm) recommends 21 standards to ensure objective, transparent, and scientifically valid reviews. Poor quality reviews can lead clinicians to the wrong conclusions and ultimately to inappropriate treatment decisions. The studies were requested by Congress and sponsored by the U.S. Department of Health and Human Services. For more information, visit or


Practice Options/May 2011 15



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