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The Bottom Line: Getting Paid for What You Do

 

The current economic environment for Pediatricians is increasingly challenging. Private payers are experiencing decreasing profits, and the highest disapproval rating in history. This translates into increasing costs to patients in the form of higher premiums, increasing co-pays, and increasing deductibles. To Pediatricians this means more pressure to sign contracts at lower reimbursement levels, even though they represent a small part of the dollars paid by insurers for health care. There are also more uninsured children, many of whom qualify for SCHIP. This is generally through a Medicaid expansion with variable Medicaid levels of reimbursement, typically at less than Medicare equivalence. The 2002 Medicare reimbursement 5.4% decrease also has negative Medicaid and private payer implications.

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All the while, pediatricians are experiencing increasing practice costs as they struggle to maintain a business. These costs include health insurance premiums in double digits, skyrocketing malpractice premiums meeting competitive staffing salaries and hiring additional employees for administrative purposes, costs of new equipment, and increasing office rent. They are coping by eliminating staff positions, decreasing their employees' health insurance benefits, joining purchasing alliances, working longer hours and accepting lower salaries.
 
How can Pediatricians increase their revenue? They can increase production by seeing more patients, a rate limited step. They can pursue management efficiencies and decrease costs wherever possible. They can increase their contractual reimbursement through aggressive negotiations. But most effectively, they can code correctly for services rendered, resulting in a relative and dramatic increase in production.

Pediatricians are also facing compliance program requirements which, although another administrative headache, have positive economic possibilities. These programs include developing effective internal procedures for payment policies, for coding and for billing practices. These have the potential to correct under billing including capturing services not billed, correcting under coding, and increasing coding based on time. There should also be reduced denial of claims with "clean claim" billing resulting in increased revenue and decreased administrative costs.
 
Where do Pediatricians intersect in the healthcare finance/delivery model? They have real value to payers and patients alike. This is directly related to the cost of their services and quality of care inherent in the medical home model. Pediatricians do have power to negotiate, to advocate and to change outcomes for children. Though their power is limited as individuals, power is increased in groups. Pediatricians must learn to become better business people in order to properly negotiate in a market-based system. It is no longer a time to apologize, whine or take a back seat.
 
Contract time is critical. With contract deliberations everything is negotiable: negotiate and renegotiate! In addressing financial issues, know your financial risk including the percent of your patients with each payer. Use a reimbursement "ruler" for comparison, most consistently based on the Resource Based Relative Value Scale (RBRVS). This should have a floor and ceiling, i.e.: 120-150% RBRVS. Address business issues including recognition of the entire CPT coding system (especially important for special needs children), prompt pay/billing relationships, and utilization management issues. Be aggressive! Look for win/win relationships with payers! Know your negotiating position and whenever possible have data to support your position and value. Create, utilize and maximize relationships including the AAP, state chapter AAP, state medical association and AMA, insurance brokers, business (human resource coordinators), state department of human services and politicians. Look for alignment of issues and incentives with health care and advocacy organizations. Promote the medical home as a win/win provider with value in decreased ED utilization, decreased length of hospital stay, and improved pharmacy management.
 
Most importantly, focus on improving coding. It is the easiest and most effective way to increase your bottom line without working harder. It also has the bonus of decreasing liability and resulting in accurate encounter based information flow critical to tracking and demonstrating provider value. Let's improve our bottom line by working smarter, we can't work harder!

 
The recommendations in this publication do not indicate an exclusive course of treatment or serve as a standard of medical care. Variations, taking into account individual circumstances, may be appropriate. This content is for informational purposes only. It is not intended to constitute financial or legal advice. A financial advisor or attorney should be consulted if financial or legal advice is desired.  
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