Overcoming schizophrenia in a mixed billing arena

Parallel payment systems can be managed

Just as your personality and dress for a board of directors meeting might be slightly different from your demeanor for your college fraternity reunion, your staff shouldn’t handle capitated contracts the same way they handle fee-for-service patients. And nowhere is that tenet more important than your practice’s billing system.

If your practice is like most of our readers’ practices, you handle a mix of capitated patients, discounted fee-for-service (i.e., preferred provider organization) patients, and even a few traditional fee-for-service customers. So how can you manage parallel payment systems to distinguish between these three reimbursement categories without feeling like the title character of The Three Faces of Eve?

Consider implementing the following strategies, say experts interviewed by Physician’s Managed Care Report:

Create a processing system that clearly distinguishes managed care patients from fee-for-service customers.

As your managed care business grows, you may want to invest in a managed care administration office and/or a utilization management department within your practice.

Regularly review cost information from your managed care patient base to make sure you are not spending more than you are reimbursed for capitated patients.

Metairie, LA-based Browne-McHardy Clinic, a 50-physician multispecialty clinic, dealt with a variety of issues when it first entered the capitated contracting world 12 years ago, says Bill Graffagnini, director of the clinic’s business office. "One problem was, how do you track capitated patients through your system? How do you make sure bills aren’t sent out to capitated patients? How do you properly identify capitated patients throughout the delivery system?" he explains.

The practice came up with a relatively simple mechanism to flag capitated patients. Both the front sheet on each capitated patient’s chart and the fee ticket that explains the services provided during a patient visit are stamped "HM" to alert administrative and clinical staff that these patients are in a different financial class. "Because of this designation, the data entry staff enter the charges and write them off immediately, which suppresses the amount from our accounts receivable. That way, we don’t spend time collecting money that’s not collectable. Also, when our staff sees the ‘HM’ stamp, they know utilization management is handled inside our clinic."

The practice also created what Graffagnini calls a "quick reference guide," a 10-page document that lists pertinent information on each of the health plans Browne-McHardy contracts with, such as which services require preauthorization and where to obtain authorization and referral requirements. For example, there is a list of participating network laboratories to use with patients who belong to a given health plan.

Judy Capko, a senior consultant with The Sage Group in Newbury Park, CA, suggests that practices set up a contract matrix that spells out different billing and eligibility requirements for each of the health plans your practice contracts with (see chart on p. 29 for an example). The matrix can be typed into your practice’s software system so that data on capitated patients are flagged when their names are pulled up, or the practice can flag charts manually (Browne-McHardy does both).

Here’s an example that illustrates the importance of a red-flag mechanism. Dr. Jones, a partner in an OB/GYN practice, sees a 35-year-old patient with a vaginal secretion. If this is a fee-for-service patient, Dr. Jones normally would perform the culture in his office and have his in-house lab check the results. However, for capitated patients, Dr. Jones would perform a swab test, but would need to instruct staff members to send the lab work outside to a facility participating in the appropriate health plan network.

The best way to educate staff members on how to handle capitated patients is to have an educational meeting with concrete examples and numbers, Capko says. "You must say, ‘We do $6000 worth of cultures a month. Because 30% of our patient base comes from Aetna U.S. Healthcare, we can’t afford to perform $2000 worth of cultures that we’re not in a position to get reimbursed for. You have a responsibility to help us do that. Here’s what you can do to help us do it correctly.’"

Browne-McHardy mainly relies on staff nurses to ensure that correct referral procedures are followed, although the clinic does provide education on operating in a capitated environment for new physicians when they join the staff.

One change that arose at Browne-McHardy when capitated contracting became a significant part of their business mix: adding staff. When the practice originally began accepting capitated patients, the additional administrative requirements were absorbed by administrative staff. But eventually, the practice decided to add a three-person HMO office plus four nurses and one medical director to make up a utilization management department, Graffagnini says.

"I brought four people in who worked with me at Travelers [insurance company]," he says. "It’s helpful to have someone with HMO experience, particularly in the area responsible for obtaining authorizations and referrals and preparing charts for utilization management review."

Browne-McHardy’s utilization management department reviews all utilization management requests for services above $250. (See chart on p. 30 for a copy of the authorization request form that clinical staff must fill out.) The utilization management committee compiled a list of procedures that nurses in the UM department can sign off on, and conducts a weekly utilization management committee meeting, chaired by the clinic’s medical director, to review all other cases. The medical director also is available to review urgent medical requests immediately.

When do you know when it’s time to create your own managed care department? The first indication should be when the relationship between physicians, staff members, and managed care patients deteriorates, Capko says. "If you’re getting complaints from patients on a daily basis and it’s enough to disrupt harmony in your office, it’s time to address it."

One final piece of advice from Capko: Pick your top CPT codes (10 at the most) and compare the dollar amount of services provided for HMO patients vs. the dollar amount of services provided for fee-for-service patients. "You want to see if you’re really providing more care over time than your contract allows for," she says. She recommends reviewing this data once a month when you first begin accepting capitated patients, and once a quarter thereafter, realizing that you probably will have month-to-month variations in these numbers.

[Editor’s note: Graffagnini is willing to share a copy of the Quick Reference Guide mentioned in this story with Physician’s Managed Care Report readers. Interested readers can contact him at (504) 889-5419.]