BILL APPLING

Today's economic and legislative climate, coupled with our technology driven world, have made it increasingly difficult to deliver cost efficient care to patients. Doctors realize the importance of keeping up with the business of healthcare, which is why Memphis Medical News welcomes the new column, Medical Economics, as a resource guide for physicians. The more you understand what is happening on the business side, the more you can focus on what's most important, the practice of medicine.


There are two very important and costly mandates which will have tremendous impact on physician practices if physicians do not proactively work through organizations such as the TMA and the AMA. Physician administrators are working hard through the National Medical Group Management Association (MGMA) to contact legislators in Washington and educate them, as best they can, as to the horrendous financial impact that will cause physicians to consider pulling out of federal programs. Last month we talked about Electronic Medical Records and CMS's hook that went along with the funds that physicians could apply for. This month we will talk about two equally significant concerns that will impact health care.

The first is the cost of moving from the International Classification of Diseases, Ninth Revision (ICD-9), to the 10th revision (ICD-10). This may be higher than expected, according to a study commissioned by the MGMA and other healthcare stakeholders. CMS recently mandated the change to ICD-10 codes by October 1, 2013. To comply with this new rule a practice would have to:

- Update or replace practice management-system software

- Train clinical and administrative staff

- Review and modify organizational work flow

- Re-evaluate vendor, clearinghouse and health-plan contracts and data requirements

- Develop appropriate processes and budgets to implement these new requirements


The total costs of ICD-10:

- Small practice (three physicians) $83,290

- Medium practice (10 physicians) $285,000

- Large practice (100 providers) $2.7 million


Requiring several times as many codes as the previous code set (ICD-9), the mandate will affect every aspect of business operations for physician practices and clinical laboratories, including:

- Staff education and training;

- Business-process analysis of health plan contracts, coverage determinations and documentation

- Changes to super-bills

- Increased documentation

- Cash flow disruption


The other area creating emotional stress and financial anxiety for physicians, is the RAC (Recovery Audit Contractors or what I refer to "bounty hunters") program. The RACs are paid a contingency fee; that is, the RACs receive payment based on the amount of the improper payments they correct for both overpayments and underpayments. Each RAC contingency fee is established during contract negotiations with CMS and as such, the contingency fee varies for each RAC.

Available to RACs are powerful data mining software programs which can pinpoint coding irregularities. Even worse, RACs can spread the error rate of a specific coding mistake, determined by their audit of a sample of claims, to every claim ever filed with that code retro-effective up to three years.

There are very few defenses a practice may employ with RAC's. One of the best is an active compliance program including the CMS-recommended minimum audit of 10 charts per practitioner per year.

RACs and the conversion to ICD-10 can mean substantial blows to a practice's fiscal wellbeing. The prudent practitioner will be forearmed against ICD-10 with early planning, training, and informed implementation and against RACs with knowledge, budget, and compliance. The even more prudent practitioner drafts letters to his AMA or specialty organization and his representatives at all levels of government.

I suggest you make your voice heard.


Bill Appling, MBA, FACMPE, is president of Watkins Uiberall Health Care Consulting. He has faculty appointments at the University of Memphis in the Fogelman College of Economics and Business, where he teaches in the Masters of Health Care Administration program.