Physician Practice Management Insights: Revenue Cycle Tips When Beginning Your Practice

Physicians and other qualified healthcare professionals (QHPs) who choose to specialize in chronic wound management spend a significant amount of time honing their clinical skills. However, they often do not spend enough time polishing their revenue cycle skills before they begin caring for patients in an office practice and/or in a hospital outpatient wound care provider-based department (PBD). As part of our 2018 reimbursement edition, Today’s Wound Clinic solicitated wound care stakeholders, asking for volunteers to share their personal revenue cycle tips for their peers who may be opening their own wound care practices (or perhaps considering such a move). In response, this article shares some guidance provided by a podiatrist who manages his own practice and a certified medical coder who manages a consulting firm specializing in physician revenue cycle management that should benefit both new and established practices alike.

THE “TO-DO” LIST I WISH I HAD BEFORE OPENING MY CLINIC

Razu Suzuki, DPM, recently started his own office-based wound clinic after 12 years of working for a plastic surgeon. The brief “to do” list that follows here represents a compilation of important considerations he has learned:

1. Establish a bank account for your corporation and apply for a corporate credit card (well in advance of opening the clinic, if possible). The process may take several weeks.   
2. Create a marketing plan that includes internet marketing.
3. Design and order business cards, business letterhead, and business envelopes early enough to have on hand when the clinic opens.
4. Assemble a list of referring doctors and notify them when the clinic is open and seeing patients.
5. Decide early if you want to offer hyperbaric oxygen therapy (HBOT). Consider such details as startup costs, fire code compliance, and other safety issues.
6. Arrange for biohazard material collection and request a local waste management company to provide education for the practice (ie, what is/is not considered biohazardous material). Most wound dressings are not biohazards and can be disposed of with the regular waste. However, understanding specifics is important.
7. Hire and train staff in advance of the clinic’s opening. Do not wait until patients are scheduled to take this step.
8. Plan for a minimum of six weeks to train the office and professional staff to use any wound care-specific electronic health record (EHR). For example, our EHR vendor provided us with a six-week implementation training schedule.
9. Establish an account with several medical supply companies that can provide the equipment and supplies needed to open the practice and on an ongoing basis. Do this as early as possible because it takes time for credit approval and to order equipment, such as podiatry chairs.
10. Attend business and marketing seminars and ask questions while in attendance!
11. Hire a consultant to assist with the pro forma, business planning, revenue projections, etc.
12. Hire a healthcare lawyer and work with this individual/firm and an accountant to determine the type of business that is best for you. (Our practice is an “S” corporation.¹)

PHYSICIAN STEPS FOR OFFICE-BASED & HOSPITAL CLINICS

Sharlene Mullikin, CMC, RDMS, RVT, founder and chief executive officer of Texas Automated Practice Management Inc., Houston, reminds readers that all the steps for setting up a physician or physician group practice to operate in an office-based setting or a hospital outpatient wound care PBD are essentially the same. Each step that follows here is required to establish a practice’s ability to achieve accurate reimbursement and profitability. Anything that delays proper reimbursement can cause a cash flow problem early on.

1. Establish the practice’s legal name. Depending on any plans for future growth, select a practice name that works well for a group with multiple providers of various disciplines or a solo practice. Include the corporate entity type in the practice or entity name.
2. Establish the physical corporate address. Be aware that this address will be published with the insurance companies with whom you will contract and credential your practice. The address will be published on insurance websites as the business becomes networked with the payer. Use the primary practice location address; this is where patients expect to be seen. Using a home address could create a situation in which patients arrive at your residence.
3. Establish the practice’s mailing address. Set up a bank lockbox or a personal mailbox that is convenient and can be accessed often to gather checks and explanation of benefits (EOBs). If you choose to set up a bank lockbox, the bank will provide the mailing address for contracting and credentialing the practice “mailing address.” Bank lockboxes are secure, convenient, and linked to the business bank account. All checks, EOBs and correspondence are scanned and deposited directly into that bank account. You will view your EOBs and correspondence on the lockbox web portal sponsored by the bank. Nobody will need to handle the paperwork involved with making manual deposits of insurance payments and correspondence, such as requests for medical records. Note that, due to the high utilization of wound care, you will receive many medical record requests.
4. Incorporate the practice with the entity type. Select an attorney or accountant who has expertise in setting up the legal and accounting needs of the practice. Consider the type of corporation that will establish the practice and individual physician tax structure (eg, professional limited liability company,² professional association,³ limited liability company⁴).
5. Obtain a federal tax identification number that lists the legal name of the practice. Obtain a confirmation letter from the Internal Revenue Service. Medicare will require a copy of this documentation for the practice to become participating and will assign a provider transaction access number.
6. Open a business checking account. Business checks should list the “mailing address.” Medicare will require a copy of a voided check from the business checking account to set up an electronic funds transfer for payments from Medicare. State Medicaid programs, managed-care organizations, and commercial insurance payers will also require a copy of a voided check to set up electronic payments for claims resulting from your services.
7. Open a merchant service account. This type of account is very important for two main reasons: Many patients pay their copayment, coinsurance, and/or deductibles with credit cards, and some insurance companies reimburse physicians with a credit card. Although electronic check enrollment is a smaller percentage of collections, some patients do not have a credit card or prefer to pay same as cash. Electronic check usage costs less than credit card usage.
8. Register for a National Provider Identification (NPI) number through the Centers for Medicare & Medicaid Services (CMS) National Plan and Provider Enumeration System.⁵ Apply for an NPI for the entity (group). Each individual provider within the group must also have a registered NPI.
9. Start the contracting and credentialing process for your practice. To assure the practice receives payment for services rendered, this critical process should be started at least six months prior to accepting patients. Select an experienced contracting and credentialing company or a billing company that provides contracting and credentialing services. Once the corporation and the tax identification are established, experienced consultants will assist with the contracting and credentialing or handle the entire process. Credentialing establishes the group and each provider as participating in Medicare, Medicaid, commercial payers, and managed-care organizations. Credentialing with each payer links each provider’s NPI with the entity (group) NPI and tax identification. Read all payer contracts and demand that you receive the proposed fee schedules from each managed-care organization. Review the fee schedule and compare it to Medicare fee schedules that are available through the Medicare Administrative Contractor (MAC). Negotiate both contract terms and reimbursement fee schedules. Experienced consultants can assist with this task, which could make a big difference in reimbursement.
10. Hire a billing company or staff. Regardless of where physicians practice wound care and/or HBOT services, they must decide if it makes sense to hire their own billing staff or to contract with a billing company that can handle the entire contracting, credentialing, and revenue cycle. Coding and billing staff must know how to:
    • Properly code and bill all wound care Current Procedural Terminology (CPT^®) codes for Medicare, state Medicaid programs, commercial payers, and worker’s compensation.  Noncompliance with CMS guidelines will flag the provider for audit and create underpaid claims.
    • Verify insurance benefits. Because benefits for the hospital and professional services (physician) differ, both must be verified when work is performed in the PBD.
    • Obtain prior authorization. Because each insurance plan is different, each patient’s medical policy must be screened and verified to determine which CPT codes require prior authorization. When work is performed in a PBD, the prior authorization should include the facility NPI and tax identifier, as well as the physician’s tax identifier and NPI. If the physician’s identifier and NPI are not included on the prior authorization, the physician claim will be denied with no payment.
    • Respond quickly to medical record requests. Otherwise, the practice will not receive payment for services. Remember that payers’ utilization management for wound care and HBOT is very high and records are frequently requested for HBOT, surgical debridement, and the application of cellular and/or tissue-based products. When these record requests stack up, revenue becomes stalled.
    • Appeal denied claims with medical necessity letters and documentation.
    • Request payment from patients in a confident, professional manner.
11. Purchase malpractice and liability insurance. A malpractice certificate will be required during the credentialing and contracting process.
12. Apply for hospital privileges at any facility where you will see patients who are living with chronic wounds. This service can be added to the credentialing and contracting process. Check with your billing company if they will oversee this task.
13. Establish a compliance program. Compliance for successful revenue cycle management is required for the hospital- or office-based physician to assure correct and accurate reimbursement and to assist in preparation for a CMS audit. Both the physician and the billing staff must know the compliance guidelines for CPT code utilization for wound care services and procedures, local coverage determinations (LCDs) released by the MAC that processes claims, medical coverage policies released by contracted payers, workers’ compensation in the respective state, and documentation.
14. Select an EHR to document wound care services. Select an EHR that tracks wound healing progression and reports quality measures that reflect your wound care outcomes. Customize the documentation templates to align with Medicare LCD and private-payer policy guidelines. Train all staff on navigation and data entry to achieve compliant documentation for each patient record.
15. Establish fee schedules for the practice in the billing software. Enter each payer’s contracted rates into the software and update the information annually. Establish the practice’s charges, enter them into the software, and update that info annually as well. (Note that this step will assist in monitoring underpaid claims.)
16. Create a new-patient “welcome packet.” Collecting the patient-responsible portion of allowable rates is one of the most challenging segments of revenue cycle management. If each patient’s insurance benefits are properly verified and each payer’s current fee schedules are loaded into the billing software, the staff should be able to collect the patient’s copayment, coinsurance, and remaining deductible at the time of service. Because patients who are living with chronic wounds require frequent visits, an unpaid balance can accumulate quickly. Collecting the copayment, coinsurance, or deductible is always more manageable when front-desk staff members are face to face with the patient during the check-in process. Because many patients cannot afford to pay the entire portion of the allowable rate at each visit, patients should be asked to sign a financial agreement for the physician’s service during the first visit and encouraged to sign a credit card agreement that authorizes the practice to process a designated amount each month to pay the account balance. This should be done during the initial visit, because, once the patient’s wound is healed and he/she is discharged, the motivation to pay the bill could no longer exist. Many patients who are provided care in the hospital PBD do not understand that they will receive a bill from the PBD and a separate bill from the physician. Therefore, physicians who perform wound care and/or HBOT services in hospital PBDs should either hire staff to represent their practice and collect payment from the patients or contract with the hospital to share an employee to perform this work. The patient’s welcome packet is a professional and friendly means of assimilating the patient into the revenue cycle management process. The packet should include (at minimum) the following:
    • Welcome letter (When providing care in the hospital PBD, the welcome letter should explain that the patient will receive two bills.)
    • Financial agreement
    • Authorization of treatment and assignment of benefits
    • Credit card or electronic check authorization.
17. Ensure that clinical, front-desk, billing, and support staff members are trained in every aspect of safety compliance, including Occupational Safety and Health Administration, HIPAA, and all other state and federal laws that mandate your setting of operation. 

Kathleen D. Schaum oversees her own consulting business and is a founding member of the Today’s Wound Clinic editorial advisory board. She can be reached for consultation and questions at kathleendschaum@bellsouth.net

References

1. What is an S corporation (S corp)? CSC. 2018. Accessed online: www.incorporate.com/s_corporation.html

2. Dube Dwilson S. What does PLLC mean in lawyer terms? Chron. 2018. Accessed online: https://smallbusiness.chron.com/pllc-mean-lawyer-terms-63934.html

3. Rayne E. PA vs. LLC. LegalZoom^® No date. Accessed online: https://info.legalzoom.com/pa-vs-llc-23145.html

4. Definition of a limited liability company or LLC. LegalZoom^® No date. Accessed online: www.legalzoom.com/knowledge/limited-liability-company/topic/limited-liability-company

5. National plan 7 provider enumeration system. CMS. No date. Accessed online: https://nppes.cms.hhs.gov