Management of Pathology Practices
May 2005
The Basics of
Auditing Your Pathology Billing (III)
by Mick Raich, Vachette Pathology
This
article will cover auditing your pathology revenue generation strategy, which
includes Part A contracts, managed care contracting and marketing.
The
first item reviewed when auditing revenue generation from a typical pathology
practice is the group’s Part A plan(s).
Most hospital based practices have a Part A contract. The wording in this contract can greatly
affect the practice’s revenue. For
example, if the contract has punitive managed care terminology, this can
suppress revenue generation opportunities.
Usually the wording is as such: “group must maintain contracts with all
the managed care plans in which the hospital or health system participates.” This one clause can be very destructive.
Remember,
if the managed care entities know you are forced to sign with them their rates
will reflect your loss of leverage. There
are effective ways to negotiate around this clause.
The
next area we review when auditing a practice’s revenue generation is a complete
review of all managed care plans. There
are numerous pathology practices that cannot even find their managed care
contracts and furthermore have never attempted to re-negotiate these
contracts. This often leads to lost
revenue dollars. We have seen those
losses as high as $100,000 or more on some occasions. When performing a managed care audit it is
important to review the actual contracts, get actual fee schedules from each
plan, build a matrix of these plans and payments and then audit against actual
patient explanation of benefit forms (EOBs).
Often you will find that there have been higher paying plans assigned to
lower paying plans via a third party administrator (TPA) which leads to fewer
dollars for the practice. We have
numerous testimonials from practices that have gained significant income by
reviewing, re-negotiating and re-aligning their managed care contracts. Sometimes being non-participating (non-par)
with a managed care company may be the best choice for a practice.
Finally
when you audit a practice’s revenue generation you must consider the group’s
marketing efforts. Many pathology
practices do not have a focused marketing arm and only have the efforts of
their hospital or health system to rely upon.
Unfortunately, the hospital’s marketing plan is usually not in the best
interest of the pathology group.
There
are numerous practices that have strong, aggressive marketing plans and personnel
going after the outreach market.
Furthermore, the number of companies prospecting for outreach anatomic
pathology tissues seems to be ever expanding. This outreach market is only going to grow as
the population ages.
It is
important not to over look the marketing efforts of the practice. Each practice should have a monthly referring
physician report that details not only the referring physician volume but the
variance for the month, the charge dollars for the month and the collected
dollars tied back to the month billed by specific insurance plan. This report should also note the collection
percentage for each referring practice and have a charge summary listed by CPT
for a 12 month period. With this type of
data you can start understanding where your outreach revenue is generated and
who is responsible.
In
summary, these three areas are the most important when a practice looks at
their revenue and how it is generated.
Failure to keep track of and maintain these points can lead to a
weakening of the practice. Usually this
is seen over a period of time as the practice starts to lose monthly
revenue. Finally, the practice reaches a
point where their volume of work is increasing yet their actual revenue is
decreasing. At this point they usually
contact us.
Mick Raich is the owner of Vachette Pathology, a pathology
specific practice management firm. The
firm provides practice management, billing auditing, managed care negotiations
and marketing services to pathology practices across the nation. You can contact him with questions at mraich@vachettepathology.com or toll free at 866-407-0763, website www.vachettepathology.com