Medicare’s actions this year have proven to be more of a headache than normal for medical practices. Although Congress once again delayed the implementation of the scheduled 21.3% reimbursement cut under the sustainable growth rate (SGR) formula, it came with a price and a deadline of Nov. 30, 2010. This means that we will experience a potential fourth delay in 2010.
The scheduled 21.3% cut was replaced with a 2.2% payment increase—retroactive to June 1—through November. Medicare has indicated that any claims that were processed at the lower rate will be reprocessed. For more details on this, see http://www.urologytimes.com/paymentincrease
Any Medicare claims that were processed between June 18 and July 1 will have to be scrutinized for accuracy. Initially, the backlog of claims with dates of service after June 1 were to be processed in batches every 10 days on a first-in, first-out basis at the lower rate dictated by the SGR cut.
After passage of the 2.2% increase retroactive until June 1, the Centers for Medicare & Medicaid Services ordered the Medicare Administrative Contractors to delay payments for services provided on or after June 1 as they retool their payment schedules to include the 2.2% increase. Therefore, most payments will be made at the higher price. However, you must monitor the services that may have been paid at the lower rate to be sure you receive the updated payment. Any payments made at the lower rate would have been made in the time frame listed above.
All patients billed at the lower fee for their 20% or deductibles (including the secondary insurances) can be re-billed at the higher price. According to Medicare rules, you should re-bill at the higher rate if any patient was charged the lower rate. As consultants, we would recommend that you do so.
How do you plan cash flow with more delays and/or significant reductions looming for Medicare? Obviously, Medicare has a significant effect on general revenue for the average urologist. Additionally, many payer contracts are indexed to Medicare payments, extending the effect of these changes. In the end, a delay is better than a reduction, but it does not help with cash flow.
While the obvious solution is to reduce dependence on Medicare and negotiate contracts that do not base reimbursement on current Medicare rates, the reality of the marketplace makes doing so difficult, if not impossible, for many practices.
For any non-Medicare or Medicare Advantage plan, attempt to negotiate a fee schedule based on older versions of the Medicare Resource-Based Relative Value Scale and a conversion factor indexed to a past time frame, or at the very least, a set date would be ideal for any payers wishing to index to Medicare. Although tough negotiating requires a willingness to walk away from a contract, some payers will listen to requests for fee schedule changes and carve-outs. Before attempting to renegotiate a contract, you need to establish your own parameters based on percentage of revenue and your market presence.
Another solution is to reduce your dependence on Medicare by changing your Medicare status. You have options, but you need to consider your practice capabilities and your market before acting. Begin by considering your relationship to Medicare, which falls under one of three categories:
Participating provider. Most urologists are currently participating providers. As a participating provider, you agree to accept Medicare rates for the services you provide. Charge what you wish, bill Medicare, and collect any deductible or co-insurance from either the patient or the patient’s Medicare supplement. Your status as a participating provider is determined each year during the last quarter; Medicare will renew your status each year if you do not submit a request to change.
Non-participating provider. A non-participating provider collects from the patient and submits a bill to Medicare. The patient is reimbursed by Medicare and any supplemental insurance. Your charges are subject to a limiting charge of 115% of 95% of the Medicare allowed amount, including all multiple procedure reductions. Your status as a non-participating provider can be changed each year during the last quarter; Medicare will renew your status each year if you do not submit a request to change.
Opt-out. Charge the patient whatever you wish; your contract is with the patient. The patient will not receive reimbursement from Medicare for any service you provide unless they successfully appeal the claim, which is unlikely. Supplemental insurance will also avoid reimbursing services provided by an opt-out provider.
You do not need to submit claims or adhere to Medicare rules if you are an opt-out provider. You can opt out of Medicare any quarter, and your status as an opt-out provider is set for 2 years from the date you opt out. You will have to re-enroll in Medicare if you wish to change your status as an opt-out provider after your 2-year period.
Understand that becoming a non-participating provider will cost you patients, assuming patients have an alternative. Plan for this by notifying your patients of your change in status at least 3 months in advance. This will allow your patients to cancel appointments, freeing space for others instead of having patients cancel the day of the appointment. The bonus of becoming a non-participating provider is that your cash flow is not affected by payment delays.
As these delays in reimbursement cuts occur, you will need to notify your patients of the potential that they are being overcharged, but that you will refund any amounts as the law becomes permanent. If Congress eventually allows the SGR to remain in effect, you may be required to refund patients that have been overcharged.
Opting out of Medicare will cost you even more patients than moving to non-participating; we recommend moving to non-participating status for at least 1 year before opting out, if possible. This interim move will make the financial change less drastic and will allow you to collect all outstanding balances from Medicare before your opt-out date, at which point all Medicare claims processing will come to a hard stop, including balances due from your time as participating provider.
Another way to reduce your dependence on Medicare without changing your status is to change the way you schedule patients. Close or limit open spots to new Medicare patients if your patient load allows a shift to more private-pay patients. This will take time to be fully effective, but eventually, as Medicare patients reschedule with other providers and fill the schedules of those practices, more private-pay patients may find longer wait times at these practices. Thus, in addition to closing or limiting spaces for new Medicare patients, you will want to step up marketing programs to attract private-pay patients.
The changes you need to make may require a change in lifestyle as well as practice operation. The question you need to ask yourself is whether you are willing to work less for lower revenue or work harder for lower reimbursements. Remember basic economics: If you are losing a penny a widget, you cannot make it up in volume.
Urologist Ray Painter, MD, is president of Physician Reimbursement Systems, Inc., in Denver and is also publisher of Urology Coding and Reimbursement Sourcebook. Mark Painter is CEO of PRS Urology SC in Denver.
