By Gil Weber, M.B.A.

It has become clear to most everyone that medical costs have spun out of control and that the healthcare system is under immense financial stress and in danger of meltdown. Everyone other than the �bean counters,� recognizes that there are no more savings to be wrung from the providers of patient care and that something new is needed.

Patients May Not Come in as Often or When Necessary
Many patients whose coverage changes to a CDHC plan and find themselves financially responsible for more than a $15 or $20 co-payment are going to think twice before going to a doctor for care or following through on a physician�s recommended course of treatment. It is easy to see how this could create problems for physicians and patients. Consider patient compliance with medications.

A patient might stockpile a medication so as not to incur another, possibly significant, out-of-pocket cost if the condition reoccurs. Additionally, a patient referred for tests or to a specialist may not follow through on the referral in the time frame recommended, if at all. These actions would save on a patient�s out-of-pocket costs and overall costs to the healthcare system, but they could also put the patient at increased risk.

If you are a general ophthalmologist who has referred your patient to a retinal specialist, it has always been a concern if the patient did not go to the referral appointment. You are expected to follow up and, at a minimum, document in the patient�s chart if he/she did not go for the recommended care. Most patients follow through and this monitoring is not all that burdensome.
With CDHC, patients may be less inclined to follow up with additional recommended care because of the added expense. This means more follow-up work for your staff to ensure that patients do as they are advised. Additionally, if you are the specialist to whom the patient was referred, it is a direct financial �hit� if that patient fails to present.

Further, CDHC raises financial worries for all physicians who are used to a managed care system in which patients regularly obtain both preventive and condition-specific care. If patients in CDHC programs stop coming in as often because they have to cover more of the costs, then the financial ramifications for all medical practices are ominous. Perhaps more troubling, if patients select their caregivers based simply on who is �cheapest,� then the financial fallout could be profound.

Patients in CDHC programs will start asking more questions as they try to decide if they really want to spend their discretionary dollars in your practice, such as:
- Do I really need the recommended care?
- Can I afford the care? Are there cheaper alternatives?
- Do I need the care immediately, or can I defer it for some period of time?
- Is the potential outcome worth the cost, or will my quality of life be pretty much the same whether or not I get the recommended care?
 

Aligning Practice Protocols for the World of CDHC
There are literally dozens of things your practice will need to do to prepare for, and respond to, the new financial challenges brought on by CDHC. I will mention just a few that I believe will prove most important.

Appointment scheduling. You cannot generate a dollar of income or earn a profit until you see a patient. Patients in CDHC programs typically are not limited to closed panels; they can go anywhere they want. Without these limitations, a crucial issue to consider is how you are going to get them to, and keep them at, your practice.
One of the first operational changes I recommend is retraining staff in the ways they think about appointment scheduling. I suggest trying to reschedule all follow-up appointments before a patient leaves your office.

I also recommend that staff confirms all appointments at least 2 days in advance. Unless you have an automated system, this will require staff resources, but the payback resulting from fewer no-shows and late cancellations may be considerable.

As more ophthalmology practices push out onto the cutting edge with electronic medical records (EMR) systems, they should begin to aggregate lists of patients with specific conditions. These practices can start proactive outreach programs to bring in identified patients for monitoring and follow-up of specific conditions.

Determine the patient�s benefits and financial responsibility in advance. Another critical task will be to determine plan benefits and financial responsibility prior to the day of service, eliminating nasty surprises at checkout.

If you are not contracted (non-par), then you can bill up to your Usual and Customary (full) charge. In non-par situations, you can and should ask for payment before the patient leaves the office. If you have a contract with the patient�s health plan, then the fee you collect is the contracted amount, but exactly when you can collect fees becomes more complicated. Here is an area where practices must be observant, aware and informed.
You are likely to encounter three collections scenarios, all controlled by your various provider agreements:
- Collection is allowed at the contracted rate at the time of service.
- Collection (other than co-payments) is prohibited at the time of service. The physician must wait
  until an Explanation of Benefits (EOB) comes back before billing the patient.
- Collection is allowed but discouraged. The payer suggests waiting until the EOB comes back before the physician bills the patient.

In order to collect the proper fee, your staff will need to know the contracted rates for each of your payers. If this information is not in your computer system, getting it there must be made a priority. Otherwise, administrative costs of processing these patients will skyrocket. Additionally, you will want to avoid situations where up-front collection from the patient is not allowed � where you can bill only after the fact. This not only adds to your administrative costs, but it also increases the risk of extended accounts receivable and, ultimately, write-offs on amounts deemed uncollectible.

Negotiate hard with payers for the right to collect any and all amounts due from the patient on the date of service. If you find a pattern of collection problems with any CDHC plan, consider dropping the contract and going non-par.

Warning! A patient may state that he participates in a funded, high deductible health plan combined with a health savings account (HSA) or a health reimbursement arrangement (HRA) and that you can submit a claim for payment against this fund rather than ask for payment on the spot. Beware! His participation may be a fact, and submitting claims against his account may be allowed, but the existence of such an account does not mean that it is sufficiently funded to pay your bill in full or in part. Staff must verify the account�s funding every time care is to be provided and a claim generated against the account�s balance. If the funding is not there, ask the patient to pay then and there and offer to help that patient obtain reimbursement.

Establish a patient payment policy, and stick to it. Whatever policies you have followed in the past, review them with an eye to this new world of CDHC where the patient rather than the payer is responsible for most of the bill. Remember that prompt payment laws do not put any obligations on the patient � they only apply to third-party payers. This means that your cash flow could be adversely affected if patients do not pay their shares on the date of service or in a timely manner. For example, they may delay authorizing payment from their funded accounts until enough money is in the account to cover the charges in full. You have to be aggressive with policies designed to reduce your exposure to patient accounts receivable.

Policies should include carefully thought out protocols for hardship cases and past-due balances. It is especially important that you have a written policy for dealing with patients from CDHC plans who have past-due balances and then present for additional non-emergency care. I urge you to make the strongest efforts to collect past due balances before providing additional care. The practice should have a firm, written policy for dismissing patients who repeatedly fail to bring their accounts current.

Establish mechanisms for patient financing and/or structured payments. If your practice provides elective services, then you are used to working with companies that provide patients with financing at attractive rates (and at nominal cost to the practice). If you have not worked with a company that finances patient debt, then you need to get familiar with such arrangements and make them a part of your practice offerings.

You can also encourage patients to allow automatic debiting from their funded medical accounts. In such an arrangement, the patient authorizes the employer to transfer money directly from the patient�s account to the physician as soon as the employer verifies the obligation, assuming that the account is sufficiently funded by the employer�s contribution, the patient�s contribution or both. I recommend that you consider setting up a patient promissory payment system. It should require the patient, or financially responsible party, to sign a promissory note that would include at a minimum:
- Patient�s name and that of the financially responsible party, if different
- The total amount of the patient�s debt and a payment schedule
- Other data elements.

You are advised to seek the guidance of a qualified financial (loan) adviser to create an appropriate and binding legal agreement establishing both the debt and consequences of failure to service that debt..
How much is this going to cost? With patients in CDHC plans facing significant out-of-pocket expenses, they are going to be asking a lot of questions about the costs of your services. In the past, your usual and customary charges really did not matter all that much to them, nor did what an insurer paid you. Now pricing is going to be an issue.

I suggest careful review of your fee schedule. Whether it is built on some multiple of Medicare allowable or another methodology, it is important that the fee schedule be applied consistently across all of the services you provide.

Once the fee schedule makes sense, you will want to put limits on which staffers are authorized to discuss pricing with patients and how much they are allowed to reveal. You might encounter some regulations or requirements in certain managed care contracts that specify how or what information needs to be made available to patients. Be sure that staff members responsible for discussing fees with patients understand what they can, and should, reveal.

Remember this important point: with increased pricing transparency, a �shopping� environment is an expected consequence. Some patients will be making their physician and care selections with little or no regard for quality care but based on the bottom line. That is certainly going to lead to another financial concern: discounts.

Can I get a discount? Are some of your patients going to try to wheel and deal for your services? Count on it. Consumer groups have started advising the public to ask for discounts from their physicians. Patients who would not think of asking a plumber or car mechanic for a discount are being told to ask the doctor for one.

While in the past you might have had a rarely used �day of service� discount for patients who paid their bills in full on the day of service, this might become something that comes up for discussion more often. A modest discount offered in exchange for up-front, full payment of charges could result in good word of mouth to other patients. Remember that you should not waive co-payments, since collecting those is almost certainly an obligation of your provider agreements.
If you choose to offer a discount to those who pay their obligations in full, be certain that you are not discounting so much that total compensation falls below the contracted amount from your lowest paying third-party plan.

Collect, collect, collect. Practices must do a superior job collecting as much as possible at the front end. Failure to do so could saddle practices with considerable bad debt, something they typically did not face when insurance companies regulated by state and/or federal laws paid most of the bill and patients only had to come up with a nominal co-payment.

Your practice should do everything possible to assure that there are no surprises for patients at checkout. Each patient�s potential financial responsibility should be reviewed prior to the day of service, and the patient should be told in advance that payment is expected on the day of service. Your staff will not know the exact amount owed until after the patient has been seen, but at a minimum staff needs to know the broad specifics of each patient�s coverage and then convey that responsibility to the patient.

It may seem callous to suddenly focus so much on asking for and collecting amounts owed by the patient, but the emergence of CDHC necessitates a new way of doing business. You simply cannot afford to forget that medicine is a business. OM

Gil Weber, M.B.A., is a nationally recognized author, lecturer and practice management consultant to practitioners and the managed care and ophthalmic industries and has served as director of managed care for the American Academy of Ophthalmology. He can be reached at (321) 255-6018, gil@gilweber.com or at www.gilweber.com.