Paying Attention to the Basics Will Help Your Bottom Line
It’s not easy making your medical practice profitable in the U.S. today.
In addition to the cash flow challenges confronting any business—office space, staff salaries, IT infrastructure, marketing, and more—physicians face several complex obstacles unique to the medical field.
Consider just a few features of the American healthcare landscape intersecting, and often threatening, medical practices’ profitability in recent years:
- EHR Adoption Can Mean Major Expenses
The HITECH Act incentivized adoption and “meaningful use” of electronic health records (EHR) through payments reaching more than $38 million as of March 2018. But those payments are finished, while the penalty for eligible providers who haven’t adopted an EHR will be 5% of Medicare payments. Thousands of providers nationally still use paper records—about 20%, reports Governing magazine. EHRs are major capital expenses. The average five-physician practice spends $162,000 to implement a system and $85,500 in first-year maintenance, Health Affairs finds. While EHR systems should pay for themselves over time, they can deliver a big immediate blow to profitability.
- MIPS Raises the Stakes on Value-Based Care
CMS’ new Merit-Based Incentive Payment System (MIPS) promises to reward physicians who deliver quality, cost-effective care with increased reimbursements and bonuses for exceptional performance. But one recent survey of doctors found a widespread “lack of familiarity” (60%) with the program.So some practices may be setting themselves up for dramatic and disastrous hits to their revenue when the performance threshold rises in 2019. In addition, MIPS’ EHR requirement may prove a significant and costly barrier to participation for small and rural medical practices.
- Some U.S. Healthcare Policies Lower Physician Revenue
Whatever your political opinion of the Affordable Care Act (ACA), it’s clear the law doesn’t benefit practices’ bottom lines. “Obamacare” brought more patients but not more revenue into doctors’ offices, due to low reimbursement rates. One survey found 41% of physicians taking second jobs to offset falling income. Though the Trump administration aims to undo the ACA, new policies may not help physicians’ profits either. For instance, David Blumenthal argues in the Harvard Business Review that the new tax law means “less revenue for doctors, hospitals, and myriad health care businesses.”
If you go looking for advice about achieving a bigger profit margin in medicine, you’ll find plenty of it. But some of it strikes us at MDCodePro as downright depressing.
Is working 75-80 hours a week really the best option (especially when at least 5% of U.S. doctors already do)?
Or turning away patients covered by Medicare and Medicaid—and in some cases, with any health insurance at all—and starting a more exclusive concierge practice?
We’re convinced dedicated, hard-working physicians like you can discover better ways to increase your medical practice’s revenue, ways grounded in the core of your calling to care for people who are sick and injured.
Money wasn’t your main motivation for getting into medicine. But with renewed attention to the basics of what you do and how you document it, you can raise your medical practice’s profitability while doing good.
Stop Undercoding the Services You Provide
If you don’t document enough information during patient visits to support the highest CPT® codes their complexity and risk warrant, you’re throwing profit away.
Undercoding is “the number one reason I find that physician practices lose money,” medical practice management consultant Keith Borglum writes for Healthcare Finance. In FPM, coding and compliance consultant Emily Hill shows how undercoding just five patients a day by one level (99213 vs. 99214) could cost $40,000 annually.
To correct undercoding, conduct regular internal audits. For example, review 20 charts from each provider twice a year to identify gaps between documentation and codes, as the AAPC’s G. John Verhovshek suggests in Physicians Practice.
Remind providers how important careful, complete documentation is for capturing all billable services at the proper level. Then give them training and tools to help. Borglum told Medical Economics a $1,000, 8-10 hour investment in coding classes “can easily yield $10,000 to $50,000 or more in higher income, each and every year.”
Raise Your “Clean Claims Rate”
Denied medical claims are a burden on your bottom line because the payer’s not paying—at least, not until you’ve spent more time and money correcting and resubmitting those claims. When each denied claim costs $25 on average to rework, it’s not surprising some 50-65% of them never are.
A higher first-pass resolve rate (FPRR), or percentage of claims paid on initial submission, is key to your medical practice’s profitability.
Do you know your FPRR? Most providers’ fall between 70-85%, according to Health IT Outcomes. The industry best practice 90% rate is hard to reach but worth striving for. Every percentage point means more profit for your practice.
To clean up your “clean claims rate,” various software solutions can help you “scrub” claims of mistakes like missing or incomplete information; but training your providers and staff in accurate and compliant coding will also substantially improve claims’ chances of being paid the first time.
Invest in Increasing Your Medical Practice’s Revenue with MDCodePro
Yes, mastering the essential principles of documentation and medical coding takes time and money. But when you use MDCodePro, it doesn’t have to take as much time as you worry it will, and you’re likely to recoup your cost many times over.
Dr. Alexander Stemer, MDCodePro’s founder, has taught the documentation and coding method at the heart of the MDCodePro app to hundreds of physicians. Once they started following it, they saw their average medical practice revenue grow by $30,000.
When you put the streamlined, easy-to-remember techniques taught in the MDCodePro video lectures to work, and use the app’s powerful, step-by-step code generator, you’re far less likely to undercode, make coding mistakes, or choose anything less than the optimal code for each patient visit. That means you capture and keep more revenue, increasing the profit margin for your medical practice.
No matter what trends intersect and potentially threaten your medical practice’s profitability, you can minimize their impact by maximizing your documentation and coding for accuracy, compliance, and revenue.