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ACO's A Viable Concept? Print E-mail
Written by Michael Casanova   
Saturday, 15 January 2011 14:56

At the current annual percentage rate of healthcare consumption expressed as a percent of GDP, the Medicare Trust Fund will go belly-up (bankrupt) by 2017. Making matters worse, there is a critical need to provide more coordinated and cost-effective care to all Americans with emphasis on the growing number of seniors and other segments of the population with chronic illnesses.

Logic dictates  if we desire a different outcome under the same conditions we need to do something different otherwise insanity is indicated. To my mind, since we cannot change the human condition we need to change either the reimbursement system or the delivery system; and/or change our traditional values toward life, liberty, and the pursuit of happiness.

Accountability has long been identified as the culprit causing much of our system woes. That is, patients are insulated from healthcare costs, providers do not bear typical business risks, and insurers just raise their prices to meet demand for profits. In short, the traditional buyer-seller dynamics inherent in most other economic transactions are absent or have different consequences within the U.S. healthcare delivery system.  That is why some would say we Americans do not have a healthcare system at all or that our system is irrational. Accountable Care Organizations (ACOs) have been proposed as a new way to slow healthcare inflation and improve quality in traditional Medicare and even other third party payment programs.

ACOs are defined as provider groups, consisting at a minimum of primary care and specialists, and hospitals, which have the legal structure to receive and distribute payments to participating providers, provide care coordination, invest in infrastructure, redesign healthcare processes, and incentivize high quality, and efficient services.

The model is predicated upon: 1) provider led organizations that are collectively accountable for the entire continuum of care; that is, the bottom-line quantitative, and qualitative results for a defined population of patients, geographic area, and for a specific period of time; 2) the concept rewards providers for slowed inflation costs and continuously improving quality outcomes; 3) incentivizes reliable performance measurement to support improvements, and provides for consumer confidence that lower costs are achievable without sacrificing quality outcomes that Americans have come to expect; and 4) the times require we take a new approach to the old problem of healthcare inflation, potentially moving us into a new paradigm where local physicians and provider organizations have the accountability, license, and  incentives, to add greater value.  And since it's all local, profits return back to Main Street and not Wall Street.

You may ask, so what's different from current capitated-risk arrangements?  Essentially, what is different about ACOs, is that the locus of accountability has shifted from insurers and HMOs toward healthcare providers themselves and the actual delivery system that is closer to site of healthcare delivery and away from the "over-management" structure. For those of us seasoned enough to remember the IMC experiment, this seems strange. Proponents of retrying capitation schemes hope that past problems with capitation can be overcome by learning from these past mistakes by utilizing new risk-adjustment payment models. Thus, ACOs will offer a better vehicle for direct contracting with Medicare.  In a nutshell that is what is different according to your humble correspondent.  Here again, technology and the evolving marketplace promise to give us a possible solution.

Pundits point to Multi-Specialty Groups (MSGs), Independent Physician Associations (IPAs), and other organizational vehicles success in managing capitation in California and elsewhere. The assumption here is that providers are now more experienced, have improved infrastructure, and therefore are better able to managing financial risk than decades past. They argue that with payments based on risk-adjustment tools that account for adverse selection, ACOs, will be better able to become viable delivery systems even with sicker patients. In theory, ACOs will become more than a match for current more expensive healthcare delivery vehicles with better consumer-provider satisfaction.

One interesting twist on this old theme is the introduction of a combination of risk-reward sharing similar to the Medicare Prescription Drug Plan (PDP) established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Certainly this requires more analysis than the space here allows.

Another approach is to have an ACO for outpatient services and a different one for acute care to better manage the financial component costs between primary care, specialist, as well as, the technological and mortar and brick components instead of traditional Medicare part A and B comparisons. As if we could do away with any component either primary care, specialists, pharmacy or acute care components. We must not forget that healthcare is an assembly process requiring that ingredients work together in a highly effective manner for the benefit of the patient as well as the nation.

No doubt, there are many substantial challenges to rolling out the ACO concept, not least of which is antitrust protection just to mention one major hurdle. Nevertheless, the concept deserves further consideration.

The Patient Protection and Affordable Care Act establishes a national voluntary program in which ACOs apply for certification from the Department of Health and Human Services (HHS) to participate in a Medicare Shared Savings Program, which will be created on or before January 1, 2012. In addition, the law creates a Pediatric Accountable Care Organization Demonstration Project and expands the scope and purpose of the Medicare Rural Flexibility Program to allow for ACO incentive payments.

Michael Casanova is a healthcare executive, consultant, and author. Should you wish to opine he can be reached at

Last Updated on Monday, 24 January 2011 18:29
Practice Perfect Print E-mail
Written by Jeffrey Herschler   
Wednesday, 15 December 2010 20:02

It's tempting to delay any big decisions at the Group Practice level since (According to in an article entitled Health Care on Voters' Minds) Rep. John Boehner, R-Ohio, in line to be House speaker..., has vowed to "do everything" he can "to stop Obamacare." He included cutting off the appropriations necessary to implement the law.  It's better to sit tight until everything shakes out, right? 

"No" says Alexandra Johnson, a practice management consultant for Coleman Consulting Group.  "The challenge to HC reform is being mounted by Republicans and many Democrats as well.  Regardless of whether the law is repealed, in whole or in part, the changes needed are significant and not the type of issues providers will be able to research, resolve, change and implement on a dime" she stated.  Furthermore, according to Board Certified Health Lawyer William Spratt (in the November 8th issue of the Daily Business Review), "If Congress revisits the overhaul law, it will not likely reverse the provisions that address efficiency, quality of care and cost-containment."

Meanwhile the HiTech Act and its carrot and stick incentives promoting EHR adoption is not part of Healthcare Reform. The HiTech Act is part of the Stimulus Package passed early in 2009 and is here to stay.  Therefore, it is essential for every practice to adopt EHR or face stiff penalties and competitive disadvantage. Please see EHR Incentive Program to learn more.  Also, an excellent source for information on EHR systems can be accessed by clicking here.

Another potential pitfall associated with the wait and see approach is the potential to run afoul of the Red Flags Rule.  According to the FTC (charged with enforcement of the rule) "The Red Flags Rule...requires certain businesses and organizations - including many doctors' offices, hospitals, and other health care providers - to develop a written program to spot the warning signs - or "red flags" - of identity theft."  The enforcement of the rule is scheduled to commence on Jan 1.  For a quality primer on the Red Flags Rule and how it might affect your practice, please see Todd Demel's article Understanding the Red Flags Rule in the Compliance Update section of this website.  Please note, recent legislation may let providers off the hook. See A Red Flag Reprieve for Health Care Providers? The Door Remains Open Pending Federal Agency Action for details.

With record setting budget deficits and countless instances of improprieties, it's no surprise that a pillar of the government's cost containment strategy is to fight fraud waste and abuse.  According to Mr. Spratt (again quoting from the November 8th DBR article), "...CMS will expand the role of recovery audit contractors and use new technologies to better detect and prevent fraud.  In addition, CMS will tighten its Medicare enrollment and payment policies to keep bad actors out of the program."  Not to be outdone, the OIG has announced a new program to curtail abuse.   If you missed last week's issue of FHIweekly, I encourage you to read Ben Frosch's excellent article entitled Breaking it down: Analysis of 2011 OIG Work Plan (Medicare Part B).  Most experts agree that a review of the practice's Compliance Program is necessary at least every year.   To locate a Board Certified Health Lawyer in your area, click here.

Yes we are in an extraordinary period of economic and regulatory uncertainty.  That said this is no time for inaction.  Let's hope Mr. Spratt is correct in his upbeat closing comments of the previously mentioned article: "Change in the healthcare system brings opportunity."

Last Updated on Thursday, 23 December 2010 06:53
Mistakes Physicians Make with Respect to their Malpractice Claims Print E-mail
Written by Mitchell F. Green, Esq.   
Friday, 01 October 2010 12:23

No matter how careful a physician is, chances are that during his or her career, he or she will be faced with a malpractice claim.  There are a number of do's and don'ts when the situation occurs.  Some of the biggest don'ts are as follows:

1.      Altering the Chart Notes - While facts may be remembered or are obvious, if they are not clear in the chart notes, it is possible to dictate and appropriately update notes.  However, backdating or alteration of notes can be disastrous.

2.      Failure to Ask the Insurance Carrier to Assign a Well-known and Qualified Defense Lawyer to Represent the Physician - Most malpractice carriers have a list of lawyers available in the physician's area to defend cases.  These lawyers vary by experience and have different philosophies regarding malpractice cases.  Physicians should ask their carrier early on to allow them and their other advisors to help select and maintain communications with assigned defense counsel, which can be an important step in avoiding or defending a malpractice claim.

3.      Failure To Have Private Counsel  - Lawyers assigned by malpractice carriers may be reluctant to take certain steps that may be beneficial to the physician, but might  make them less popular in the eyes of the carrier.  Private counsel may be able to demand that certain actions be taken during the defense process and can help look over the shoulder of the assigned counsel and strategize with same. 

4.      Failure to Request the Carrier to Settle the Case - It can make a big difference to the overall result whether a physician is settled out of the case, earlier rather than later, especially if a case is settled while the malpractice carrier is still solvent.  This also preserves the right to a bad faith claim against the insurance carrier if they have not taken all appropriate steps to settle the case within the policy limits.  On the other hand, asking the carrier not to settle can be detrimental to the physician in a number of ways.

5.      Failure to Take Steps to Protect Assets and the Medical Practice - Notification of a potential claim does not necessarily signal the end of the ability to take actions to protect assets and the medical practice from potential excess verdicts.  Though not as effective as steps taken prior to notification of a claim, a physician should still try to protect assets and the medical practice.  The ability to settle a case may hinge upon telling Plaintiff's counsel that there are no exposed assets, so that the policy limits and liabilities should be accepted. 

About the author: 

Mitchell F. Green, Esq. is a partner at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. located at:

4000 Hollywood Blvd. Suite 485 S
Hollywood, FL 33021

You can reach Mr. Green at 954-966-2112 or visit


Last Updated on Thursday, 07 October 2010 09:24
Breaking it Down: Analysis of billing options for Group Practice Print E-mail
Written by Amy Monagan   
Sunday, 08 August 2010 10:59

When it comes to payers in the health industry it's no secret that they have a tendency to withhold payment or underpay. With the national average of accounts receivables aged over 4 months standing at 17.7%, I think it's safe to say that everyone understands the need for billing management. However, when it comes to billing management there are a few different options that a provider can choose.

A physician can go online to Craigslist, find someone who has a billing background and knowledge of their software, and hire that person to be the in house biller.  This allows the physician tight supervision and transparency of work that is done.  On the other hand, I caution that you ensure the person hired has a fully working knowledge of billing.  I was speaking to an in house biller a few weeks ago and he honestly had no idea what a claim modifier was. Another consideration, will the in house biller have enough time and resources to follow up on every claim and every underpayment? While I am not trying to dissuade you from hiring your own biller, I'm simply giving you a bit more knowledge so you can be better informed when it comes to the billing operations in your practice.

The second option, a physician can choose to go with an outside billing company that uses the physician's technology. These tend to be smaller companies that will come to your practice and build the personal relationship with you and this has a very comforting effect. It's nice to have a relationship with the person who is handling the livelihood of the business.  The downside to this option is the limited resources. Being a smaller company they have X number of employees that can learn only so many systems.  It's difficult to learn and fully grasp different types of billing software for each client.  Also, do they have the resources to follow upon every claim and underpayment, what if that person goes on vacation or gets sick, who will follow up on your claims?  If you do choose this type of billing service remember to do your homework. There is no certification process in starting a billing company, just Google "how to start a billing company" and you'll get step by step instructions. So again, a little homework goes a long way if you choose this option for your practice.

Lastly, a physician can choose to go with an outside billing company that uses their own technology. These tend to be larger companies with hundreds of clients and hundreds of employees.  It goes without saying that the personal relationships with your biller diminishes greatly, but the personal service isn't completely gone.  The physician will have greater supervision and transparency than with the former due to reporting systems already in place. The technology allows for follow up on every claim whether the underpayment is larger or small. These larger companies are designed to level the playing field with the payers; they understand your contracts and what you are owed for your services.

Whether the physician chooses to go with either type of outsourced billing company, take a look at the % of their claims still unpaid after 4 months.  If it's higher than the national average, you may want to continue your search. Reason being, after 4 months it is unlikely that claim will be paid, so the higher percentage tells me the billing company isn't going to bat as often as they should. In today's economic times every penny counts and I would want my billing company to go after the money I'm owed.

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Last Updated on Sunday, 08 August 2010 11:15
Three Good Reasons that You Should Take a Salary from your Company Print E-mail
Written by Jeff Kramer, CPA   
Sunday, 08 August 2010 10:52

 First and foremost, if you operate an S corporation and have taken distributions, or draws, from the business, you could raise red flags with the IRS by having no salary. Disclosure of distributions is required on the corporate tax return, so the IRS is aware of payments. The following excerpt was taken directly form an S election acceptance notice received by a newly formed entity: 

"We would also like to take this opportunity to inform you of your tax obligations related to the payment of compensation to shareholder-employees of S corporations. When a shareholder-employee of an S corporation provides services to the S corporation, reasonable compensation generally needs to be paid. This compensation is subject to employment taxes. Tax practitioners and subchapter S shareholders need to be aware that Revenue Ruling 74-44 states that the Internal Revenue Service (IRS) will re-characterize small business corporation dividends paid to shareholders as salary when such dividends are paid to the shareholders in lieu of reasonable compensation for services. The IRS may also re-characterize distributions other than dividend distributions as salary. This position has been supported in several recent court decisions."

Another reason that may apply to you is payment of health insurance premiums. If you are paying for your own health insurance, including your spouse and/or children, you could be missing out on a large tax benefit by not taking salary from your company. Although health insurance payments are deducible on your personal return, they are limited on Schedule A by your adjusted gross income (AGI) and possibly phase-out limitations. Taking salary from your company in an amount greater than or equal to the annual health insurance premiums allows you to deduct them as a full adjustment against other income giving you a greater tax savings.

Lastly, if you have children/dependents under the age of 13 for which you incur child care expenses, both you and your spouse need to have a salary in order to deduct any qualifying payments.

As each situation is unique, please make sure to consult your tax advisor to ensure that you receive the appropriate tax advice.

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Last Updated on Thursday, 23 December 2010 06:54
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