Physician Revenue Metrics: Lessons from the Pandemic
We do not need to tell you that the pandemic hit medical practices hard. As fewer patients scheduled appointments and non-essential care was paused, physicians were left with fewer options—and their revenue dropped. According to a 2020 MGMA survey, the average physician-owned practice lost between $78,000 and $175,000 in revenue per full-time doctor in 2019-2020.
While we are starting to get a handle on the pandemic, that means your practice has some catching up to do. In this article, our physician and medical practice attorneys highlight some lessons we learned and suggest practical steps you can take to improve your practice’s profitability and revenue stream.
Lesson 1: Claims Denials Are Rising, and You Need to Be Prepared
Since the beginning of the pandemic, the average practice’s denial rate increased by a shocking 11%. However, payers’ rationales for these denied claims have not changed much at all. The the most common reasons cited for denied claims include:
- Eligibility and registration errors
- Authorization issues
- Service Not Covered denials
Roughly 86% of these denials could be avoided. Some of this spike was certainly due to the difficult circumstances we were all living in. Staff attrition might have left you short-handed and with knowledge gaps. Additionally, as your typical preventive and elective care dried up, your office was left with more complex, emergency cases—and these are the claims that are most prone to errors and payer scrutiny.
While it is understandable that your claims processes were imperfect during the early stages of the pandemic, you cannot afford to ignore avoidable, preventable revenue losses.
As you process claims, do your best to provide all the necessary information. However, do not stop there. Carefully track your claims’ progress and appeal denials when appropriate. (Our attorneys can help you determine how to proceed with complex individual or batch appeals, if you have questions.)
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Lesson 2: Claims Are Also Getting Underpaid
When we talk about claims disputes, denials are usually at the top of mind. However, we are seeing a trend of underpaid claims, too. For example, the California Medical Association has reported such widespread problems with payments for COVID-19 rapid antigen testing that it asked the state to investigate the issue. The organization reports that at least two commercial payers (Anthem and UnitedHealthcare) were issuing payments that did not even cover the cost of the test kit.
Other physicians are reporting similar problems with their telehealth claims.
While getting $15.00 less on a claim might seem insignificant if it is a one-time event, consider the scope of your practice. Suppose you file 10,000 claims each year that are underpaid by $15.00 each. That is a $150,000 loss in revenue—and that amount is worth speaking to a physician and medical practice lawyer about.
It is a good idea to regularly audit your claims. You can identify underpayments early on, so you can act quickly to remedy the situation. And, more importantly, you can identify and correct operational issues that might replicate the problem over and over again.
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Lesson 3: Leverage Your Value and Renegotiate Your Payer Contracts
Scarcity of care can lead to unwanted healthcare outcomes; COVID-19 made that abundantly clear. As a frontline healthcare provider, you should be fairly compensated for the invaluable work you do.
As more payers transition to value-based care and payment structures, it is essential that you express your practice’s value proposition. If you are providing exceptional care that helps reduce your patients’ complication rates, work within an underserved community, or have a reputation for efficient and effective care, now is the time to highlight that.
With help from a physician or medical practice attorney, you might be able to renegotiate your provider-payer contracts with more favorable terms.
- Exceptions that improve your fee schedule
- Increased time to submit a claim or file an appeal
- Escalation clauses that help you keep pace with inflation
Lesson 4: Many Patients Are Delaying Their Appointments, and This Trend Is Costly
Today, many people are hesitant to return to their doctors’ offices. One in five people delayed care during the pandemic. The number of children who are missing well child appointments is so significant that the American Association of Pediatricians launched a #CallYourPediatrician marketing campaign in 2020.
This led to a significant decrease in patient encounters over the last year. For physician-owned practices, the drop ranged from 11 to 18%. For hospital-owned practices, it was a jarring 35% to 50% reduction.
And while telehealth can help offset some of these losses, it is unlikely that it fully replaces your lost revenue.
According to Deloitte’s 2020 Survey of U.S. Healthcare Consumers, your patients are more engaged and concerned with their wellness than ever before—you just have to nurture your relationship and get them back in the door.
To help encourage these appointment-adverse patients, consider improving your patient experience:
- Automate appointment reminders using software that texts or emails your patients, including follow-ups about necessary recare
- Build trust by promoting office updates and events like vaccination clinics through your newsletter and your social media accounts
- Create systems that boost efficiency and encourage more on-time appointments—especially if you are allowing fewer people in your waiting room
- Offer online scheduling and payment options
- Consider offering late or early appointments
Lesson 5: Do Not Ignore Your Operating Expenses
Most practices reported significant increases in their overhead and spending, much of that due to the skyrocketing cost of PPE. (Some practices, about 15%, reported that their costs associated with personal protective equipment more than doubled.) The average practice spent about 57% on PPE than they did pre-pandemic.
This burden fell most heavily on physician-owned practices that did not have the buying power of larger healthcare organizations. However, we would encourage you to build up your vendor relationships now.
Bryant Legal Group: Respected Medical Practice Attorneys in Chicago
Bryant Legal Group has earned a reputation as one of Illinois’ premier law firms for medical practice and payer-provider disputes. We have helped healthcare providers across the state renegotiate their contracts, navigate their complex provider-payer claims, and manage their revenue cycles.
We take a client-centered approach that is practical, sophisticated, and aggressive. If your organization has questions about boosting revenue and profitability, please contact our office for a free consultation. We can help you understand your legal options and rights.
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