In June, the Medical Group Management Association released the results of a questionnaire that ranked members' most pressing practice management challenges. In this edition of “Practice Makes Perfect,” we will tackle No. 5 on that list: Managing finances with the uncertainty of Medicare reimbursement rates.
MGMA recently sent a letter to Congress urging them to permanently repeal the sustainable growth-rate formula during its 2014 post-election session, ending the practice of passing short-term SGR patches. Practice administrators and executives have been forced, almost annually, to plan for potential reductions to Medicare reimbursements. While this is an ongoing and difficult situation for medical practices to navigate and prepare for, there are ways to reduce expenses or augment practices' revenue to prepare for a potential cut to Medicare reimbursement rates.
An initial step in better understanding the potential effect of a Medicare reimbursement decline is to determine the organization's financial exposure. In other words, of the practice's total collections, how much reimbursement do you expect from Medicare and what changes would need to be made if 21% of this revenue was cut?
I've worked with many practices seeking ways to enhance their revenue or operate more effectively. Some have expanded their scope of professional or ancillary services or made improvements in contracting with payers. Many have considered utilizing nonphysician providers to give clinicians more time with complex patient cases.
Another revenue opportunity that has become increasingly popular in the past three to five years is incorporating quality and patient satisfaction benchmarks to supplement reimbursement from various government and commercial payer plans. This takes some work and often an initial investment to identify opportunities and operationalize the various initiatives promoted by the different payers. However, over time a well-managed quality program could increase practice revenue by 5% to 10%.
If your practice is considering implementing a quality program, be sure to assess components such as: