Tips for Department Improvements and Maximizing Revenue

HBP Services11 Research Drive , Suite 2

Woodbridge, CT 06525203 397-8000

rtessier@hbpworld.comwww.hbpworld.com

October 21-24, 2014

Robert H. TessierSenior Reimbursement Consultant

West, Midwest & Canada Regional APC/PDAS Meeting

Third Party Strategy

1. Review all contracts with reimbursements based on historically high technical/global payments for 88305 and other major codes such as 88342.

This assumes that the best payers allow 2x Medicare, for example:

88305-26 88305-TC 88305 (Global) $60 + $80 = $140

2. Re-negotiate the rates at the earliest opportunity. Don’t wait for current term to end.

3. Lock in these rates and offer a modest adjustment over a multi-year time frame. While a one year/ 3%+ increase might have been acceptable in the past, our mantra is “Go Long”.

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Third Party Strategy

4. Many payors are willing to write multi-year contracts if the adjustments are favorable to them.

5. Depending on the level of activity billed globally (vs PC only), your Practice proposal might include:

Year 1 +3% Year 2 +2.5%Year 3 +2%Year 4/5 +1.5%

This approach protects the critical baseline reimbursement for technical services.

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Third Party Strategy

6. Present favorable rates paid by other payors as blinded data.

7. Also suggest selective codes for “carve-out” . Request ten codes, settle for five. Accept area-wide usual and customary for other codes when calculations indicate this as the best strategy.

8. Consider current “Run Rate”, if different from CY 2013. Use to Practice advantage4

88305-26 88305-TC 88305 (Global)

Current 45.00 60.00 105.00

Payor A 60.00 80.00 140.00 Payor B 55.00 72.00 127.00 Payor C 48.00 68.00 116.00 Workers Comp 84.48 80.99 165.47

Average 61.87 75.25 137.12

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Set up a Department Fund to seed innovative programs

Fund incomePathologists make charitable contributions to this Fund at their discretion

Performance Based Part A – % of “dividend reinvestment” into the Department

Hospital should match the Performance Based Part A, up to an agreed level

Other sources - Seek outside donors such as charitable

organizations, corporate donors and individuals

prepare a list and rationale for specific improvements inthe Department.

Department Fund –Dividend Re-investment

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Department Fund – Income

Contribution

s

Hospital Contributions

Performance Based Part A

Other Contributions

Pathologist Contributions

– Seed new Department initiatives

– Strategic planning for Programmatic Expansion - Molecular

– Department promotion, including public relations

• sophisticated Annual Report

– Website development and improvement of contents

– Enhanced learning and education tools (Department Library)

– Outreach promotion

– Marketing collateral

Department Fund - Expenses

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– Non-funded clinical research

– Training opportunities for Lab Staff

– Travel to explore best practices at other sites

– Consulting services to provide objective guidance

– Electronic Medical Records (EMR) Connectivity and Training

– Distinguished Lecture Series

– Supporting the Hospital Cancer Center

Department Fund - Expenses

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Department Fund - Other Considerations

‾ “Other purposes”, as the Department Chairman may designate

‾ All expenses will be submitted by the Chairman

‾ Each expense requires Administrative approval, which will not be unreasonably withheld, as long as they are within the stated purposes of the Fund.

‾ A report showing all activity will be prepared by Hospital/Medical School Finance on a monthly basis. An Annual Report should be prepared by the Chair and submitted to Administration.

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Dividend Re-Investment

– “Dividend” re-investment by the Pathologists is critical

Administration and Finance complain that Hospital-based physicians (not only Pathologists) have exclusive arrangements that earn income for inpatient/outpatient work but they don’t give anything back to their Departments/Hospitals

• Even modest contributions are respected

• These can be in the form of Expertise (if carefully documented) as well as Financial Support

• A contribution, should be considered

– This can be a tax exempt charitable contribution to a Department Fund from each of the Pathologists

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Dividend Re-Investment- Pathologist Talent

• Another “dividend” is the Pathologists’ expertise that extends beyond Department requirements AND IS NOT PAID AS PART A

Serve on a Hospital wide group for IT initiatives

Work on committees, such as credentialing, IRB and fund raising

Become an Officer of the Medical Staff

Join the Board of the local PHO

State Path Society LeadershipThis time needs to be quantified and presented.

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Dividend Re-investment

– There are many other ways this can be presented but it must be measured:

• Free Services Clinic or Indigent patients

• Deep Discounts Mandated by Hospital contract requirements

– One approach to this investment would be to base it on the Pathology FTEs

PCCP Billing

Professional Component of Clinical Pathology (PCCP) billing has a wide range of acceptance throughout the US. (none-30%+)Whenever possible, we recommend the following elements to maximize income:

1. Set up a separate entity to bill for these services.

2. An LLC is usually the best structure.

3. With a separate tax ID it is possible to bill for these services as “non-par” Participation status is typical when billing for anatomic pathology .

4. As a non participating provider there is less of a requirement to submit bills to patients for deductibles and co-pays.

5. Avoid billing patients and the negative PR consequence.

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PCCP Billing

6. Don’t be shy about the level of professional fees.

7. Recent analysis of many groups billing payers as both “par” and “non par” reveals that Practice charges are often discounted automatically by 20/30% then payment is made at 70/80% of the reduced amount.

8. If this is true, an adjustment in fees may lead to an automatic increase in reimbursement.

9. While this is not always the case, average fees in the range of $18-$20, when increased to $25+ have resulted in a significant increase in payment.

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Part B Reporting Focus

1. Hospitals and Medical Schools utilize accrual accounting.

2. Most billing system reports provide data on charges processed and cash posted.

3. For a busy Chair /PDAS the best focus is on reports that puts everything in focus by month of service.

4. This should start with the Hospital Division accessions showing those that are billed as professional only.

5. The Referred Division, assuming services are billed globally, should always be kept separate.

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Part B Reporting Focus

6. The best report format will display processing in columns showing each month of service.

7. Keep these in quarterly blocks for ease of reading and focus.

8. The Power of the Pyramids allows the Chair to track activity and see problems at a glance.

9. Your Billing Manager should expand this report to also focus on adjustments:Contractual discountsCollection agency write offsTimely filing denials Charge reversals for coding errors

10. This is not recommended for a high level overview.

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PRIOR Jan-14 Feb-14 Mar-14 TOTAL PROCESSED

Surgicals 919 930 923

Non Gyn Cytology 62 55 56

January (02/05/14) 89,323 211,808 301,131

February (03/04/14) 89,694 206,459 296,153

March (04/02/14) 732 (1,180) 90,865 187,335 277,752

April (5/02/14) 201 5,434 13,198 106,354 125,187

May (6/03/14) 1,868 2,215 4,279 13,440 21,802

June (7/02/14) (938) 0 260 (678)

July (08/04/14) 569 (504) 0 1,615 1,680

August (09/03/2014) 1,798 1,106 632 203 3,739

Total by MOS 94,491 307,635 315,433 309,207 1,026,766% of Charges Processed

In Current Month 69% 65% 61%

January (02/05/14) 82,368 14,099 96,467

February (03/04/14) 27,914 51,318 4,215 83,447

March (04/02/14) 7,026 23,379 64,927 5,879 101,211

April (5/02/14) 1,363 5,628 19,601 69,908 96,500

May (6/03/14) 1,718 3,710 5,802 26,235 37,465

June (7/02/14) 1,250 2,796 5,314 10,574 19,934

July (08/04/14) 5,817 5,235 4,242 2,827 18,121

August (09/03/2014) 861 718 604 248 2,431

REFUNDS (3,266) (1,795) (505) (993) (6,559)

Total by MOS 128,317 105,088 104,200 114,678

Collection % 34% 33% 37%

BUDGET = 34% 104,596 107,247 105,130Variance 492 (3,047) 9,548

3,805 14,758 5,769

GOAL = 70%

ACCOUNTS RECEIVABLE

CHARGES

CASH RECEIPTS

MONTH OF SERVICE

ACCESSIONS

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PRIOR Jan-14 Feb-14 Mar-14 TOTAL PROCESSED

Surgicals 623 459 629

Non Gyn Cytology 37 25 28

January (02/05/14) 16,836 213,508 230,344

February (03/04/14) (1,088) 75,863 145,849 220,624

March (04/02/14) (1,375) 0 47,903 178,297 224,825

April (5/02/14) (230) 252 1,822 79,815 81,659

May (6/03/14) (865) 0 4,796 21,397 25,328

June (7/02/14) (1,872) 0 145 (1,008) (2,735)

July (08/04/14) (1,719) 504 0 0 (1,215)

August (09/03/2014) (2,588) (2,065) (1,180) (547) (6,380)

Total by MOS 7,099 288,062 199,335 277,954 772,450% of Charges Processed

In Current Month 74% 73% 64%

January (02/05/14) 145,497 5,598 151,095

February (03/04/14) 20,022 80,218 3,462 103,702

March (04/02/14) 11,022 53,288 71,638 7,463 143,411

April (5/02/14) 7,559 11,889 20,803 90,959 131,210

May (6/03/14) 5,180 2,891 4,653 31,597 44,321

June (7/02/14) 2,991 2,398 5,885 16,143 27,417

July (08/04/14) 5,152 5,192 6,887 9,510 26,741

August (09/03/2014) 1,012 1,198 1,642 1,434 5,286

REFUNDS (648) (669) (1,425) (2,742)

Total by MOS 198,435 162,024 114,301 155,681

Collection % 56% 57% 56%

BUDGET = 57% 164,195 113,621 158,434Variance (2,171) 680 (2,753)

4,367 5,136 8,097

GOAL = 75%

CASH RECEIPTS

ACCOUNTS RECEIVABLE

MONTH OF SERVICE

ACCESSIONS

CHARGES