Two different MHM clients – both consultant surgeons – have been advised by a specific insurance company that the fees for their initial and follow up consultations are being reduced. They are not amused, to say the least. But what can they do about it? Nothing.
Actually, that’s not strictly true. In a perfect world, there is much they can do. But we don’t live in a perfect world. We live in this one.
In a perfect world they can, for example, pass any reduction in fees on to their patients. Save of course their recognition agreement with the insurance company forbids them to do so. If they do they are at risk of de-recognition. Ah came the reply, the insurance company won’t find out. Yes, they will.
Or they can stop seeing patients referred to them by that specific insurance company. In both cases during the last half of 2017 that is over £10,000 worth of referrals. Both would suffer double percentage digit drops in private practice turnover. That is not good.
Both of these consultants, however, are by no means stupid. Neither of them just react. An immediate reaction is potentially the worst thing to do. Indeed many years ago MHM worked with one consultant who did just that when denied a fee by an insurance company. He even went so far as to tell the insurance company concerned unless they immediately put his consultation fees back up he would forgo his recognition with them and refuse to see their insured patients. They didn’t so he did. And immediately saw a 23% drop in the private practice turnover. Do NOT react. What is required is a considered response to all the options.
In the case of the MHM clients, I calculated what the drop in consultation fees would mean over a six month period against an assumption that the lack of referrals would lead to 25%, 50% or a 100% drop in patients from that specific insurance company. In all cases, for obvious reasons, there was a loss. But at least that loss was now quantified.
It is worth noting that the drop in consultation fees would not impact in a drop of surgical fees because surgical fees were excluded from the reduction.
That said a refusal to see patients from the specific insurance company concerned due to consultation fee reduction would automatically lead to a 100% drop in surgical fees as clearly if a consultant does not see a patient, it is extremely unlikely he’ll take that patient into a theatre.
Who is driving the car?
Sadly there are only two options in reality: accept the reduction or don’t accept the reduction. I’m afraid the insurance company really are in the driving seat when it comes to setting their fees and there is little a private consultant surgeon can do about it. Many years ago a private consultant surgeon could charge what they liked and to a certain extent with a self-funding patient, they still can. However, with insured patients, those days are long gone. Rightly or wrongly, those days are over.
So what should the private consultant surgeon do?
MHM suggests an analysis of how the reduction will impact on the private practice should be undertaken. That will at least quantify how the reduction will impact on the private consultant surgeon in actual financial terms. All the data will be contained in a sales ledger and with the aid of an excel spreadsheet, it’s relatively easy to perform the analysis.
Such an analysis also confirms how the reduction will impact on MHM for MHM charges a percentage of what is actually paid to the consultant. If that figure is lower then the MHM fee will also be lower. In other words, the pain is shared. Thus I don’t like it any more than the private consultant surgeon but I can’t do a lot about it either.
The bottom line remains to accept the fee reduction or reject the fee reduction. That I’m afraid is the reality.
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They are not just for tax reasons. They are not just to keep the accountant happy. There is time critical reason too.
A remittance advice confirms the values that have been paid in respect of invoices submitted by the medical practitioner. It is a mistake to assume that the invoice will always be paid completely. It may not be.
For example and taking one remittance received by an MHM client.
Of the ten invoices paid on the remittance, four of them detailed deductions made. Deductions were made against the value of the invoice originally submitted. 40% in other words.
This is why remittances should be checked. And before they are stored for tax reasons or to keep your accountant happy.
In the above example, each invoice detailed on the remittance was reconciled against the appropriate entry on the consultant surgeons debtors ledger. Only then was the payment made recorded appropriately. It was then the number of deductions was immediately identified. In this example, the total came to some £350.
The next step is to identify why the deductions have been made.
Whilst all four deductions were correct and were in respect of excess amounts it is surprisingly common for a deduction to have been made in error.
In the recent past, one MHM client had an invoice for surgery deducted in full because the patient’s policy had expired and had not been renewed. At least according to the patient’s insurance company it had expired. It had done so after the date of the surgery. In this case at the precise date of the surgery, the policy as “live” and consequently the insurance company was wrong to decline the invoice for payment.
A call to the insurance company concerned quickly identified and confirmed the insurance company were in error and the invoice immediately cleared for payment. Insurance companies do make mistakes. Not many thankfully but they do happen.
If the deduction is correct, however, then immediate action should be taken to contact the patient and a request made for payment – by the patient – be made.
So the number and reasons why deductions have been made by a private medical insurance company can easily be identified and subsequently actioned on behalf of the consultant surgeon.
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I’m often asked who is actually responsible for paying an excess or a shortfall.
Interestingly the question was asked recently by a consultant surgeon who had started his/her private practice two years earlier. He was of the opinion that such excess were the responsibility of the patient’s insurance company. They would be collecting excess or shortfall amounts from the patient on his behalf.
The responsibility for collection of such items rests very squarely on the consultant himself. Consider excess and the cause of excess?
When the patient obtains private medical insurance there will be an amount – or excess – agreed on the policy. The exact amount of the excess will depend on how much the patient pays for his/her policy.
Generally speaking the higher the premium, the lower the excess.
It’s just like car insurance. If you agree a £500 excess, the premium will be lower than if you only agree £100.
That’s fine – until you come to make a claim on your insurance.
So, when the patient claims the cost of your services off their insurance company there could well be excess for which the patient is liable. You however are responsible for collection.
The patient’s insurance company is not responsible.
The consultant who asked the question called a few days later.
To his horror, he had over £5,000 worth of uncollected excess in the previous two years unpaid which nobody was collecting.
The real question however is:
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This specific issue comes up frequently when MHM is asked to review the outstanding accounts of a private consultant surgeon.
There are two reasons normally why the patient believes they have already paid and more specifically the hospital has already taken payment. The first is
When the patient is registering at the hospital, he/she is frequently unaware or never even told the card details are for hospital fees only.
To overcome this, MHM recommends the client’s invoice bears the message “payment of this invoice is not covered by any debit / credit card details taken by the hospital”
To further help prevent the issue arising, MHM recommends that when the patient makes the booking for the initial consultation, he/she is told an invoice will be sent to them after the consultation.
Over the last year, twice MHM has amended the surgeon’s invoice to include the above sentence. In both cases, the number of outstanding self-funder invoices reduced.
The second reason is that the patient had a “package” with the hospital. Obviously the package covered the patient’s stay, surgery, anaesthetist and, most likely, follow up consultations.
This happens more often than is thought!
To resolve this issue MHM contacts the patient and request they check what was and what was not covered in the package. Payment of the surgeon’s initial consultation fee soon follows as the patient agrees the initial consultation fee is not covered.
BUT again when the consultant’s secretary confirms all items with the patient, the patient should have been advised the initial consultation was not covered.
Whilst there are in the real world some patients who do not pay upon receipt of an invoice, the vast majority do not pay or react to the invoice because they genuinely do not believe they owe the medical professional any money.
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I always check what is happening with shortfalls and excess for they are a major area of risk to a private medical consultant. Using a single private consultant surgeon as an example:
Taking a single consultant and looking at her work for a single week – out of 15 consultations 4 came back with excess / shortfall deductions totalling £575. So for a total of £2,500 worth of outpatient consultations £575 or 23% came back short. Looking back to the same week in 2016, the number of shortfalls / excess were considerably less.
The question as to why this is happening is not the immediate concern although I will blog about that next week if anyone wants me to?
The concern is what you should do about it.
If 23% of submitted invoice values continue to come back as shortfall or excess, the downside and potential loss to a consultant surgeon is significant.
What to do about it?
The very first thing to do is to make sure the patient has been invoiced for the amount due immediately. If payment is not received within a week then there is only one subsequent single course of action.
Phone the patient.
I do. Once I have the patient on the phone I take payment via a debit or credit card.
Sure you can write letters and even email but nothing gets a response like a ringing telephone. Most patients are unaware of the issue (yes I know when they open their policy they are made aware of excess values) but some think this is an issue between them and their insurance company. In other words, the patient thinks they need to pay the insurance company because the consultant gets paid in full by the insurance company.
There are variations on this but the crucial point for the consultant is not to establish why. The point is to ensure he recovers the shortfall / excess efficiently.
That means speaking to the patient.
But if telephoning the patient is the most efficient way to tackle the issue, it does not automatically follow its the easiest. It has to be done professionally and with care. This is not a debtor I’m talking to on the telephone. It is a PATIENT!
The long suffering med-sec really won’t have the time to do this as professional and caring as she undoubtedly is. The majority of medical secretaries won’t want to phone patients for money and will be thinking this is the least enjoyable part of her job.
What if the consultant doesn’t employ someone to tackle this? What if they don’t do anything?
Assume it’s not £575 or 23% a week or £27,600 a year (£575 multiplied by 48 – not 52 weeks as you will have 4 weeks off a year). Assume instead its 10% for 24 weeks (i.e. roughly half) and allows for some patients paying without being contacted.
Thats still £13,800 per annum.
What’s significant is that when speaking to a group of private consultant surgeons I asked what they considered the biggest threat to their practice(s). Most popular is the anticipated further reduction in fees paid by private medical insurance companies. There is little if anything that can be done about that.
The second concern, however, is the number of shortfalls and excess.
It’s becoming a big challenge. A challenge that will get bigger in my view.
At this point, empirical evidence suggests its potentially leaving the back door wide open and enduring £13,800 worth of potential losses right off the bottom line.
I’d be really interested to hear from anyone who is seeing an increase in shortfalls etc.
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During a conversation with a friend of mine recently (he is in the medical industry too) I pointed out that our clients had a couple of things in common.
For one thing they are consultant surgeons.
And that means they are all supremely qualified. They are right at the top of the game. They have to be because the patient’s life is sometimes – literally – in their hands.
Then my friend made a really interesting point.
He said as a surgeon (he IS one) both he and other consultants are VERY used to asking for a second opinion from another consultant surgeon.
Yet he could not understand why therefore when it came to running their private medical practice AS A BUSINESS, there seemed to be a reluctance to go out and seek the opinion of an expert in running a private medical practice as a business.
Maybe its because after all the years of training, our clients are so highly trained and skilled they are almost hardwired to perform in a certain way. What is curious is that other professionals i.e. non medical have a similar tendency.
They too are reluctant to ask for expert help.
And there is nothing more dangerous than someone who thinks he knows but in reality doesn’t.
Worse still when he does not realise what he knows is wrong or inappropriate.
THEY DON’T KNOW WHAT THEY DON’T KNOW!
Silly example: my partner and I were having dinner with my friend and his wife recently. My partner (Lord knows why) enquired why ladies were required to remove nail polish or nail gel if they were having a surgical episode? In her opinion it was unnecessary. Because, according to my friend, the theatre staff attach monitors to the patient’s fingers to monitor her and nail gel causes problems with the connection. He knew what he knew but my partner didn’t know what she didn’t know.
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If you get the basics right many problems with getting paid aren’t allowed to happen. The basics mean the absolute minimum and mandatory requirements in order to present an account for your services. The basics are as follows:
Patient’s full name
Patient’s full address
Patient’s post code
Patient’s date of birth
Policy number of the insurance company concerned
Pre-authorisation number issued by the insurance company
Correct CCSD code
But it doesn’t stop there.
Your invoice should always have on it:
Your name and address
Your provider number
A unique invoice number
The date of the invoice
The date of the treatment / consultation
The right CCSD code
14 points. But if you don’t get all 14 on your invoices you make it harder for the insurance company to pay you!
If anybody wants a blank invoice that does satisfy ALL the above, go to the freebies tab on this website! If you are billing electronically – and you should be – you’ll still need the vast majority of the 14 points.
But the proof of the pudding is very much in the eating. Have a guess at what are the TWO major reasons an insurnace company does NOT pay your invoice?
1. you haven’t sent one (crazy but true)
2. you haven’t included the right information.
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This issue came up at the MDU meeting on “Setting Up a Private Practice” recently. A delegate enquired as to the difference between the two and what the difference can lead to in terms of shortfalls:
The delegate was an Orthopaedic Surgeon who was suffering from an increased number of deductions and wished to understand why.
Benefits – the values insurance companies pay to the Orthopaedic Surgeon on behalf of their insured patient in line with the terms of the patient’s policy.
Fees – the professional fee charged by the surgeon to his patients for his services
There is a big difference between the two.
For example if the orthopod charges the insurance company patient a fee of £250 but the insurance company benefit is paid out £190 there will be a shortfall of £60 due from the patient. Have 10 shortfalls a month and he is immediately out of pocket by £600.
Not understanding the difference between benefits and fees shortfalls therefore soon adds up to a potential significant loss.
But it’s not quite as simple as that.
Some Health Insurance Companies request the consultant to become “fee assured”. In this case the Orthopaedic Surgeon – just like any other healthcare professional – can only charge a fee which the insurance company agrees. Normally the FEE equates to the BENEFITS payable by the insurance company and hence there are no shortfalls. Sounds great! Save of course benefit fee may be less than the Consultant fee!
As an aside consider some consultants still charge LESS than the PMI are prepared to pay and / or continue to loose money due to shortfalls.
The issue gets really complicated because even if the consultant has charged a fee in line with the PMI level, shortfalls still arise. Normally this happens when the total costs exceed the total benefit payable under his or her policy.
For example: take a patient with £5,000 worth of benefit. Consider the patient who has incurred consultation fees, test fees, surgeon fees, anaesthetist fees, and hospital fees and out patient fees. They may total, for example, £5,250. Thus the shortfall is £250, which will be owed to the one of the medical professionals involved in the treatment.
Obviously if the patient’s policy has £10,000 worth of benefit there won’t be a shortfall but the point I’m making is that generally speaking the emergence of shortfalls is driven by the benefit available and not only the value of fees being charged.
So, if the total benefits are £5,000 but the total fees are £5,250 there is a shortfall due of £250 from the patient. The Orthopaedic Surgeon concerned was unaware of such shortfalls and/or did nothing about them, thus they rapidly built up and would easily have totalled many thousands if left unattended.
But now he understood the difference between benefits and fees, how they had lead to shortfalls.
AND he was now in a position to do something about them.
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Take for example, a patient who requires an injection which may be performed by a private orthopaedic surgeon at an outpatient consultation.
Thus you raise an invoice for, as an example, £185 [£90 for the consultation and £95 for the injection] Please be aware for the purposes of this article the values are fictitious!
Upon receipt of the invoice by the patient’s insurance company, the value is rejected; as you CAN’T charge both for a consultation and an injection on the same invoice on the same day. You can charge for one or the other but not both. So you are paid £90 for the injection only. What is interesting is that the immediate reaction from some consultants could well be to charge just for the injection and argue that is the right thing to do. That said, its already been suggested that the alternative and better way would be to have the patient attend an outpatient consultation on, for example, March 10th and then attend for the injection on March 25th. See the patient twice in other words. In such case the consultant CAN charge for both.
Not sure that’s in the patient’s best interests though but if the aim is to max revenue its certainly in the best interests of the consultant. I’m certainly not saying its right or wrong. I am saying it’s an option.
Where it gets really tricky, is that some insurance companies WILL let you charge for a consultation and an injection at the same time. Others will let you charge for some injections at a consultation but not all injections. Some, as mentioned, will not allow a charge for consultation and injection regardless if they happen at the same event.
And don’t forget not only do different insurance providers pay different rates for consultations; they also pay different rates for the injection too.
Gets a whole lot worse when the injection is pre-authorised as the fee for a consultation is higher than that for the injection, the orthopaedic surgeon charges for the consultation only yet the insurance company is expecting an invoice for the injection.
Unless you check each consultation and injection episode with the insurance company concerned, you will be! More likely you will actually undercharge at some point in time. For example: if the insurance company DOES allow a fee for consultation and injection, if you charge only for one sooner or later?
You’ll be out of pocket.
Feel free to drop me (Pete) an email if you’d like to learn how to avoid the perils of unbundling.
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August is the silly season with people on holiday at various times throughout the month, as we all know. Returning in September it’s catch up time!
Assume your practice secretary is on leave for the last two weeks of August, therefore, all clinic lists have to be invoiced for the last two weeks of that month and thus a particular patient’s follow up appointment invoiced.
Standard practice in such a case is to check if the initial consultation has been paid.
In this example, the initial consultation had not even been invoiced as the clinic list for that day hadn’t been supplied and audited against the invoice register! If it had it would have been discovered that none of the consultations for the day had been invoiced.
And the total clinic was worth £1,450.
Thus whilst shortfalls/excess/non-payment may cost the consultant money, not raising an invoice is 100% guaranteed to lead to non-payment.
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I very recently wrote about this issue and have been asked if the increase was just a blip and possibly “one of those odd things”???
Therefore auditing the work of the same consultant surgeon I wrote about in mid-February:
Week commencing Monday, March 24th and ending Friday, March 28th he saw 18 patients. Total invoices sent to various insurance companies came to £2,200.
The insurance companies subsequently advised 21% or £460 would be subject to shortfall/excess. February the same number was 23% or £575.
Therefore the consultant is now required to collect £460 from the March patients with the balance of £1,740 being paid by the insurance companies.
Some consultation fees were declined completely. Others were only partially paid with the balance deemed “shortfall” or ‘excess” i.e. the £460 is due from the patient(s). If this week is taken as a norm and multiplied by 48 (assume the consultant has 4 weeks holiday each year) –
He will undertake just under £106,000 worth of outpatient consultations throughout 2014.
He will be left with around £22,000 worth of shortfall and excess fees to collect.
Even if we apply the same criteria as employed previously and assume only 50% of shortfalls/excess will remain unpaid. Whilst that’s still £11,000 even though it has dropped from the original Feb calculation which projected £13,000 it hasn’t moved that much.
Incidentally of the original £575 worth of excess/shortfalls for Feb only £50 remains unpaid.
But now is the time to start thinking about what is happening to your practice because £11,000 is one HUGE perspective more so as surgical fees continue to be reduced by the insurance companies.
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Just taking ONE client as an example.
Week ending Friday, February 14th: out of 15 consultations, 4 (four) came back with excess/shortfall deductions totaling £575. So for a total of £2,500 worth of revenue from outpatient consultations £575 or 23% came back short. Looking back to the same week in 2013, the number of shortfalls/excess were roughly half this.
The question as to why this is happening is not the concern. The concern is what are you going to do about it. If 23% continues the downside and potential loss to the consultant is significant. There is only one real way to resolve this issue. Phone them!
Sure you can write letters and even email but nothing gets a response like a ringing telephone. Most patients are unaware of the issue but some think this is an issue between them and their insurance company. In other words, the patient thinks they need to pay the insurance company. They think the consultant gets paid in full by the insurance company. There are variations on this but the crucial point for the consultant is not to establish why; its to ensure he recovers the shortfall/excess efficiently.
But if telephoning the patient is the most efficient way to tackle the issue, it does not automatically follow its the easiest. It has to be done professionally and with due diligence. The long-suffering med-sec really won’t have the time to do this as professional and caring as she undoubtedly is. I promise you faithfully, she won’t want to phone patients for money and will be thinking this is the least enjoyable part of her job.
There is an alternative though: do nothing. Some patients actually will pay but this assumes they a) are aware of the shortfall/excess and b) make it good straight away.
What if they don’t?
Assume it’s not £575 or 23% a week or £27.6k a year (£575 multiplied by 48 – not 52 weeks as you will have 4 weeks off a year). Assume instead its 10% for 24 weeks (i.e. roughly half of the current numbers) and allows for some patients paying without being contacted.
The potential losses for the consultant, in this case, reduce to £13,800 per annum. That’s a chunk of change in anybody’s book still.
What’s significant is that at a number of client meetings recently I’ve asked what the client considered the biggest threat to the practice during 2014. Most popular was a further reduction in private insurance fees. That may indeed turn out to be a big problem.
But at this point, empirical evidence suggests its potentially leaving the back door wide open so to speak and enduring £13,800 worth of potential losses right off the bottom line.
I’d be really interested to hear from anyone who is seeing an increase in shortfalls etc and their views on remedies.
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