EOB
Based Reimbursement Analysis
This is an EOB driven inferential model that
uses expert system technology in the form of rule sets, continual
set theory and advanced statistical modeling. This process has one
purpose; to make sure that the practice is being reimbursed at the
most optimum level to match the commercial carriers Maximum
Allowable Payment (MAP). This analysis builds upon the Charge Master
Analysis to optimize commercial reimbursement for the practice.
Ours is the only EOB based reimbursement analysis system in
the country that absolutely, unquestionably guarantees its results
100%.
The associated reports show, for each
procedure code, its relationship to the MAP, if it was increased,
the methodology used and the actual net financial impact. There are
also reports that identify those codes that are currently being
billed below the Medicare Fee Schedule Amount and the selected
Minimum Charge Threshold. One report even identifies those codes
that are being billed above the practices preferential Maximum
Charge Threshold.
Knowing what it costs to perform a single
procedure may very well be the most important piece of information a
medical practice can have. Amazingly enough, this information is
known by less than 6% of medical practices nationally. How can we
possibly manage a million-plus-dollar-a-year business without having
any idea of what it costs to perform procedures or provide services?
Yet this is the dilemma facing most practices. Using this type of a
model for procedural cost analysis, the practice will realize, for
each code, the cost per unit, cost per occurrence, profit and loss
and break even fee needed to effectively negotiate fixed fee
contracts and perform much needed business practices as process
improvement and reengineering.
The Cost Accounting Analysis can be run based
upon a number of different expense scenarios. For example, to study
the internal resource utilization effects in the practice, we would
use total expenses less distribution of profits and bonuses relative
to the total adjusted RVU values. To prepare for a managed care
negotiation, we might use only fixed and variable costs and add in
physician salary levels based upon national salary surveys. For
practice performance costing, we would use only the variable expense
relative to the adjusted transitioned practice expense RVU. We will
work with the practice to assess the expense models needed to
produce the most effective set of reports. These reports are
available based upon either aggregated (global) or segregated
(individual) frequency data.
With the recent success of HCFA's Global
Pricing demonstration project, it won't be long before medical
practices will have to submit bids to obtain quality managed care
contracts. If we think that knowing the cost per procedure is
illusive, think about how rare it is to find a practice that knows
what it costs to manage a diagnostic event. How much does it cost to
treat a broken arm? Or replace a hip? Or manage a case of pneumonia?
We use procedural cost accounting techniques to calculate
case-management costs by event category to prepare the physician for
the inevitable task of bidding for managed care contracts. Another
use of this analysis is to clinically reengineer the practice. This
involves reducing costs through monitoring clinical practices and
outcomes and streamlining treatment costs without negatively
affecting the quality of care. This is one of the few
non-destructive methods of cost containment left.
This analysis may require the practice to
pull actual treatment protocols from their patients’ charts. Under
some circumstances, the medical staff will be able to estimate the
types and quantity of procedures performed for each major treatment
or diagnostic category. The ADRG cost analysis is performed in
addition to the Base service and uses the data produced from the
Procedural Cost Accounting Analysis.
Responsible for more reviews, audits and
overpayment demands than any other single issue, E&M utilization is
the most important compliance issue in the medical practice.
Improper E/M coding and utilization can do one of two things; cost
the practice revenue through unrealized revenues in cases of under
coding or cost the practice dollars in the case of overpayment
demands due to over utilization. In performing the E/M review, we
first look at the appropriateness of E/M code/modifier relationships
to insure compliance with current laws, rules and regulations. Then
we perform intra-category, inter category and global category
analyses and compare these to national averages to benchmark the
practice for potential audit risks and to identify areas of
potential problems with surgical precision.
A spreadsheet analysis, including tables and
graphs is generated for each segregation whether it is by provider,
location or specialty and includes a global database that can be
used for scatter graphing and cluster analyses. Then, using
proprietary mathematical modeling, we develop rapid-recognition data
sets and a unique acuity factor that can be used to analyze
utilization based upon the intensity of services for that specific
practice in order to normalize the national averages.
While there continues to be opposing opinions
as to the life cycle of capitation plans, they continue to be a
market force in many regions of the country. As a result, we have
developed a capitation cost analysis model that will identify the
profitability of any capitation proposal; whether for PCP full risk
contracts, specialty shared risk or just total contract rate
proposals. Too many practices blindly sign up for capitation
payment programs without having the slightest idea as to what the
cost of the contract will be. In a substantial contract, one that
accounts for more than 10% of the practice revenue, a bad capitation
contract can kill a practice. Using the practice’s own variable
expense amounts, the number of insured lives under the contract and
accessed utilization per thousand data, we will build a capitation
analysis for the practice. It will calculate the cost per thousand
members, the cost per occurrence, cost per member per month (most
common payment methodology), total contract cost and number of
expected visits under the contract. These items are detailed both
for each procedure code (line item) as well as for the entire
practice. Ours is the only system that uses standard deviation
statistical models on the utilization per thousand data to project
best-case / worst-case cost scenarios. In this way, the practice
will be able to calculate the profitability of any capitation
contract.
Many compensation experts believed that if
the physician generated 50% of the revenue, then s/he was entitled
to 50% of the income. This was fine until they began to realize that
for each dollar earned some amount of cost was involved. How can we
measure such a moving target? Simple. This model not only calculates
production by each physician and/or location, it also measures the
amount of resources consumed in the form of individual relative
value units. By taking this to the smallest common denominator, we
can show not only the amount of dollars the physician generated, but
what percent of the total expense was also generated. With the
increase in mergers and acquisitions of medical practices, this will
become the standard for determining physicians' salaries and
bonuses. Included in this analysis is identification of
profit/loss scenarios by physician, work effort and relationships of
these statistics to actual measured productivity. By using the full
power of this module, the service will analyze any combination of
physicians and/or locations by any control group. This is especially
valuable for larger organizations, academic institutions and
practice management firms. Finally, each physician is assigned an
acuity factor that can be used internally to solve the “my patients
are sicker” dilemma and to compare against national databases for
examining compensation issues.
In order to perform this additional analysis,
the practice must be able to track and report frequency data by
physician. The reports for this procedure will focus on those
physicians selected in comparison to the control group selected. A
control group can be any combination of physicians, a single
location, multiple locations or the entire organization. In order
to utilize this report for the development and evaluation of
compensation models, the practice should be able to track
physician-specific expense data, such as direct expenses and
distributed revenues.
In addition to the basic charge master
analysis, there are additional services broken down into major
categories and individual supplemental service components. As part
of the initial evaluation process, the practice completes the
Practice Evaluation Instrument (PEI) that will help to determine the
extent to which the analysis can help the practice.
The results of this evaluation will also provide the basis for
developing the proposal for the basis for developing the proposal
for the fees that can be expected based upon the specific services
requested. The following will describe the different component
services that are offered.