Expected Reduction in Pediatric Revenue

Isn't it odd that oil companies have been haphazardly spending money for the past few years but now cutting back as oil prices plummet? While there are some expenses that can be legitimized with the higher price of oil, now that crude prices are less than half of what they were in recent history, they are looking under every nook and cranny to cut costs.Does this sound familiar?

For the past few years Pediatricians have experienced a boom in payments thanks to the Affordable Care Act parity payments (federal subsidies to pay select CPT codes at 100% of Medicare rates). As of today, Congress has not agreed to extend them. Like the oil companies, all of our clients are looking under every nook and cranny to cut costs or stymie the potential revenue reduction in 2015. Even if Congress does intervene to continue the parity payments, we believe the information below will provide some help addressing a variety of financial issues in your practice.The loss of parity payments is predicted by PMI to have the largest financial impact on 2015 (yes, even ahead of ICD-10 implementation).

Whether you are employed by a practice/hospital or own your own practice, this will have a direct effect on your compensation and practice work flow. For the employed Pediatricians, they may not be able to reach their production bonuses. For Pediatricians who own their practices, the reduction in revenue is a deduction from their take home pay. For those employed by hospitals or large networks, they may have their paychecks reduced during the next budget season because they are no longer covering their costs.While Russia is pumping oil as fast as they can to make up for their cash flow shortage, Pediatricians can only add so many sick visits to offset their expected revenue losses.

PMI recently completed an analysis of the State of Louisiana Medicaid fee schedule for 2015 (assuming the parity payment does not continue). We found that pediatricians can expect to be paid as little as 60% of Medicare rates instead of the full 100% they have received over the past few years. This lowers previous payments from $69.30 to $49.84 for each 99213 billed (28% decrease). Further analysis revealed that established infant preventative care visits (99391) will see a decrease of over 36%. Much like the State made the payment for vaginal and c-section deliveries the same to promote a higher percentage of vaginal deliveries, are they not discouraging well checks for children by decimating the reimbursement for this important service?

We concluded our analysis by showing that the impact from eliminating the parity payment can easily top over $80,000 per Pediatrician if they see as few as 15 Medicaid patients per day. For a typical Pediatric practice with 3 providers, this means as much as $250,000 could vanish from the bottom line in 2015. This potential deduction in actual deposits into the checking account will have to be absorbed through lowering expenses or seeing more patients.Despite the outlook, there are things you can do to minimize the impact.

Here are 9 things you can do to take charge of the situation...

1. Control Spending... For every check written, ask how it either supports your mission or helps improve the bottom line. If it fails to do either, eliminate the expense.

2. Monitor your practice by reviewing the monthly reports and key performance indicators (click here for free videos to help you). If you are an employed physician, ask to see your revenue number each month to track how you are doing.

3. Support efforts from the AAP by going here to participate in their petition drive to keep the parity payments coming.

4. If you are a member of AAP, find out about SOAPM and all it does to help you make the right business decisions.

5. Let your state Medicaid programs know that you want fair payment for taking care of your state's future. For example, in Louisiana, the Medicaid program budgets 71.92% of Medicare rates for 99213 ($49.84) yet consistently pay over 150% Medicare for radiology professional services (and over 200% for other specialties).

6. Challenge your managed care contracting organizations to help offset the shortage. If possible, determine what percent of Medicare they are paying other specialties and ask to be paid at the same higher percent of Medicare a variety of other specialties are accustomed to receiving. The Medicare rates already factor in the medical training, practice expense and complexity related to the CPT code being billed. There is not one valid reason certain CPT codes are paid a measly 60% of Medicare while others are paid in excess of 200%. With extremely rare exception, Pediatrics is usually at the bottom when such organizations are negotiating for doctors from varying specialties.

7. Challenge state Medicaid directors (and private Medicaid contractors) to make equitable payments comparable to what are they paying other sub specialties.

8. Find ways to legally align yourself with other Pediatricians to speak with your State Medicaid directors in a unified voice. Whether through your state AAP chapter or forming your own Pediatric-specific contracting organization.

9. Invest in people who can help you implement these ideas. Whether you contact PMI to help with any of these ideas or rely on a strong office manager to do it for you, surround yourself with a team of competent individuals who can help you succeed- while you focus on seeing patients.

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