Judy Griffith

Rocky Mountain AAHAM & CO HFMA JOINT CONFERENCE March 25, 2011

Proprietary & Confidential Copyright Intermedix Corporation 2010

Economic Challenges

HITECH Privacy & Security

5010

HealthCare

RAC Audits

EHR Limited time offer

ICD-10

Local Delivery Local Accountability

Physician Leadership

Coordinated, accountable care across the continuum of care

Performance Measures (transparency)

Financial rewards tied to quality more than volume or cost

Improve health outcomes, slow cost growth

Why do physicians want to become employees?

1. Improved work-life balance 2. Competitive benefits & retirement package

3. Job satisfaction
4. Increased annual income 5. Consistent income
Source: PricewaterhouseCoopers 2010 Report

 Does

physician integration make sense to your facility?

Your business model will change

RBRVS Resource Based Relative Value Scale

Physician fee schedules are often structured using
the RBRVS, assigning relative values (RVU) to each CPT code for services on the basis of the resources

related to the procedure rather than simply on the

basis of historical trends.
Physician work component (55%)

Practice expense component (42%)

Professional liability insurance component (3%)

ROI for salaried physicians

Average Salary is $160.00/hr for an ED provider $1,401,600.00 in physician salaries annually for a single coverage ED ($116,800 a month)

Add Malpractice expenses

Add Benefits Add Medical Director stipend
($5,000-$20,000/month)

ROI for salaried physicians

18,000 annual visit emergency department
Single coverage ED
730 hours a month

730/120 (full time ED provider hours) = 6 FTEs required

2 patients per hour

$60 - $130 per patient collections:

$1,080,00000 - $2,340,000.00

Cumulative costs for provider:

$1,401,600.00 (Salary) $ 120,000.00 (Malpractice) (Plus tail coverage) $ 400,000.00 (Benefits) $ 10,000.00 (Medical Director Stipend)

Total physician cost $1,971,600

Possible revenue:
$1,890,000.00 ($105.00 per patient)

Length of visit increases More legal exposure Employee liability is direct to the hospital, group keeps liability if separate entities Difficulty implementing production based models

Eventually employee physicians always want detailed financial information and profit sharing

Problems with scheduling and recruitment are now hospital issues Disciplining the doctor(s) becomes a hospital issue

Total risk of bad collections falls on the hospital

Liability for coding problems falls on the hospital

Hospital may feel they have more control Implement a benchmarking tool to increase productivity and tie directly to incentive program.

High volume, low dollars

ED Physician coding is complex

Understanding E/M levels Ongoing physician documentation training

Identify, track, report and improve documentation

deficiencies Monitoring contracts for underpayment/working denials

PQRS (Physician Quality Reporting System)

System changes required for optimal reporting

Handling physician credentialing Experienced with the nuances of ED coding

Attending ACEP coding courses?

Monitoring contracts and allowances

Negotiating payer contracts Generating ED specific reports

Monitoring/reporting PQRS statistics

Discussing with ED physicians regarding

documentation deficiencies and providing ongoing training Calculating RVUs Consistently following up on ED accounts Working denials and appeals

Benefits

Control of Staff
Control of Costs Bundled payments One patient statement for global charges

He who has the gold, makes the rules.

Risks
Strain on current staff HR issues, vacations, medical leave, etc. Limited hiring pool

Space limitations
Lack of clinical knowledge

Physician documentation training

Risks
Keeping up with current coding regulations,
state rules and regulations, changes with the payer rules, etc. ICD-10 challenges RACs, etc. HIS limitations

Risks
EMRs!!
Compliance Concerns: Cloning (reference handout) Templates Over documentation Automated coding

Risks
Financial Impact Certified Coders arent cheap 2009 AAPC estimates $53,700 (loaded) Revenue decrease with no lobbying efforts by provider organizations
(HBMA,EDPMA)

Revenue decrease with inadequate

provider managed care negotiations

Benefits
Reduced liability No HR issues, ongoing training, certifications, space management, etc. No management of other services: Physician credentialing Billing statements

Postage, return mail

RACs, etc.

Benefits
Fees based on revenue collected
No claims clearinghouse cost Coding and billing expertise in the specialty Peer to peer physician documentation training

Risks
Lack of control
Cost of collection

IN-HOUSE vs. OUTSOURCE 18,000 Annual ED Visits

DONT SHOOT THE MESSENGER!

Salary includes all benefits**

Taxes Vacation pay Sick pay Paid holidays

Medical Insurance
Work Comp Unemployment Personnel Turnover/Training Costs Non-labor costs (furniture, equipment, space, utilities, etc.)
** average nationwide expense of employing someone, depending on the benefits package35-40% over the annual salary amount

Resources Needed
Management of Staff Salary for Certified Coder (CPC) Salary for Biller Claims Clearinghouse Cost Mailing Costs ($1.25 per statement)
1.5 statements per account

Annual Salary $60,278 $53,352 $47,736

Resources Utilized $ 15,069 $ 53,352 $ 37,000 $ 4,500 $ 33,750

Salary for Payment Poster Salary Patient Call Center

(in-bound calls, self pay)

$42,120 $47,028 $47,028

$ 13,500 $ 13,500 $ 27,000

Salary for Patient Acct. Rep

(outbound calls, insurance, denials)

Physician Credentialing Cost

More turnover in the ED

4,500

Total:

$202,171

In-House
$105 avg. patient collection Deduct 25% lost reimbursement due to inaccurate documentation & inexperienced coders Deduct 20% lost revenue for A/R holding costs and inconsistent f/u

Outsource
$105 avg. patient collection 8% contingency fee (Range 7-9%) All inclusive fee

$1,134,000 revenue $ 202,171 cost

NET REVENUE

$1,890,000 revenue $ 151,200 billing fee NET REVENUE

$931,829

$1,738,800

Cumulative costs for provider:

$1,401,600.00 $ 120,000.00 $ 400,000.00 $ 10,000.00 (Salary) (Malpractice) (Plus tail coverage) (Benefits) (Medical Director Stipend)

Total physician cost $1,971,600

Possible revenue:
$1,890,000.00 ($105.00 per patient)

RVU/Pt increase

@ 18,000 visits

@ $30/RVU collection rate

@ $35/RVU collection rate

@ $40/RVU collection rate

0.10 RVU/pt

1800 RVU increase/year

$54,400 increase/year

$63,300 increase/year

$72,200 increase/year

0.33 RVU/pt

5940 RVU increase/year

$178200 increase/year

$207900 increase/year

$237600 increase/year

0.50 RVU/pt

9000 RVU increase/year

$270000 increase/year

$315000 increase/year

$360000 increase/year

Do they handle specialized coding and billing?

Can they provide onsite physician documentation training

specific to the specialty? Can they manage contracts and payer negotiations?

Do they off-shore or outsource patient accounts?

What are the fees and any additional costs? Do they understand compliance and acuity levels!

ED has always been considered the

red-headed stepchild

There is not a one size fits all answer

Depends on your facility, your

resources and your overall strategies to fulfill your hospitals mission.

Judy Griffith Director of Business Development Intermedix 303-656-8790 judy.griffith@intermedix.com