Business

What you need in a practice-management system

A column answering your questions about the business side of your practice

By Karen S. Schechter amednews correspondent— Posted Aug. 21, 2006.

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Question: There is so much hype about electronic medical records, but is anyone still looking at practice-management features and functions when they are shopping for new systems? Is there anything new that I should be aware of as I look for a new system for my practice?

Answer: With or without an attached electronic medical record, the office's practice-management system is critical to its value. This system supports scheduling appointments and billing and collection functions necessary for the practice to realize revenue for its services, whether documented on paper or in the EMR.

Because of the constant changes in health care reimbursement, government programs and other influences, physicians must make sure that their practice-management system provides the features and functions necessary to address those challenges.

Most practice-management software systems are able to capture the data important for billing and collections. The key is to make sure that once those data are entered, the office staff has access to them in a useful format. The basic data elements that the system must be able to capture and process cover patient information -- number of patients by plan, age, gender, ZIP code, ICD-9-CM and CPT codes -- and billing information by payer -- charges, payments, adjustments and denials.

With this basic information, the physician can determine a lot about the health of his practice in the managed care environment. By reviewing the ZIP codes of patients in a specific plan, the physician may begin to understand the socioeconomic status of that population.

The physician can compare by ZIP code the number of patients seen under a plan with the demographics provided by the plan. Armed with this information, the physician can easily make comparisons between what the plan offers (with respect to patient population and rates) and what is actually occurring in the practice.

Analyzing ages and gender can help the physician determine the practice's patient load, what services will have to be provided and the level of utilization. It might also be used as evidence to be presented during contract negotiations to argue for better pay, and/or whether stop-loss and carve-out provisions should be included.

Billing information can be used to analyze how well a plan pays for key procedures. The physician also can see which plans bring in the sicker patients.

It is important to look at denied services and associated dollar amounts by payer. If the practice is continually being denied payment on certain procedures that are among its primary services, it may be time to consider dropping that particular contract.

This information should be readily available in most billing software packages. If the software cannot produce the necessary reports, the billing system data might have to be transferred to automated spreadsheets.

While meeting these basic criteria may help the practice survive, it really takes more to come out ahead in managed care. Investing in a new billing system that automates key managed care procedures may be more cost-effective in the long run.

A good billing system with an integrated or add-on managed care package should enable the practice to:

Maintain payment schedules for each plan. The schedules might include the co-payment amount, the deductible, a list of what services are covered (or not covered), referral requirements and stop-loss provisions. Once a patient's information is entered into the system, it is linked to the appropriate plan that informs the office staff how to process charges and payments and monitor the accounts receivable.

Enter and track referrals, and create and maintain treatment plans. Referral tracking should include incoming as well as outgoing referrals. The system should alert the user when a referral requires authorization. If the referral is specified with a specific treatment plan, the system should be able to keep track of the authorized number of services (by type and dollar amount) and automatically check the actual occurrence against the plan limitations.

Track denials and reduced payments. This information is helpful in identifying opportunities for improvement or might be the basis for meaningful discussions with payers. The front-desk staff might need additional training if denials are being caused by incomplete and/or inaccurate patient demographics and/or insurance information. Physicians and billers might require instructions on linking appropriate diagnosis and procedure codes. Or, perhaps there is a problem with the payer's system in that it is incorrectly rejecting a service.

Handle capitation payments. Capitation is diminishing in many areas; however, it still exists. The system should be able to reconcile capitation payments with the value of the visit to ensure that the practice is getting the anticipated amount. Reports comparing the capitation rate plus co-pays with the value of the service provided should be reviewed regularly to ensure a plan's profitability.

Maintain membership lists. The ability to verify eligibility ensures that a patient's coverage is confirmed before service is rendered. Some systems offer EDI capabilities that transmit up-to-date membership lists electronically. A better-performing practice should be handling these functions either manually or via an automated billing/practice-management system.

If they are being done manually, it is advisable to evaluate the personnel costs and the quality of the results. In some instances, it might be more cost-effective to invest in a system upgrade or new system in order to enhance opportunities to improve the practice's cash flow and/or its ability to function more effectively.

The bottom line is, in the scurry to implement EMR, be sure to remember the importance of the practice-management system.

Karen S. Schechter amednews correspondent—

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