PRACTICE MANAGEMENT AND TAX TIPS YOUR WAY TO A POSITIVE BOTTOM LINE

1. PRACTICE MANAGEMENT AND TAX TIPSYOUR WAY TO A POSITIVE BOTTOM LINE Presented by Habif, Arogeti & Wynne LLP Certified Public Accounts and Business Advisors

2. Most Practices use the cash basis of accounting for tax purposes Income is taxed when it is received, not when charges are billed Expenses are deducted when paid, not incurred More on that topic later…

3. The Budget and Controlling Overhead Budget – Monthly benchmarking Prevent year-end surprises Assists manage cash flow on a monthly basis

4. Control of Overhead Software Investment Assistance QuickBooks - Multiple reporting capabilities Practice Management/EHR System - Georgia Retraining Tax Credits - Depreciation – Sec 179

5. High Expense Categories - Personnel Costs – Salaries, Benefits, HR Management - Insurance - Rent - Medical and Pharmaceuticals

6. Protecting/Controlling the Bank Balance Is any practice embezzlement-proof? Owner/Physician should be watching and be involved in practice financial processes

7. Who Prepares Checks to Pay Invoices? Office Administrator Office Bookkeeper Office Payables Clerk Physician/Owner

8. Who Signs the Checks? Who signs the checks? Physician/Owner should always sign checks Invoice should be marked as paid to prevent being resubmitted for personal gain (embezzlement) Is supporting documentation attached to checks being signed?

9. Where are the monthly bank statements sent? Duplicate statement should be sent to Physician’s home Physician should review checks that have cleared Gain knowledge of vendors in order to recognize unusual expenditures Safeguard against vendors being overpaid, supplies over-ordered, returned for credit and a check being requested

10. Is Your Practice Susceptible to Fraud? It can happen to you!!! Economy and problems families face open up the possibility If fraud suspected - Hire a firm with forensic division at once - Preserve the evidence - Prevent cover-up

11. Payroll Service Vs. In-House In-House - Can easily be done in-house - Cost savings can be realized - In-house is most costly to fix problems - One significant error could cover the annual cost of a payroll service

12. If a new Administrator wants to bring payroll in-house… DO NOT DO IT!

13. Why Use a Payroll Service? Saves time for practice personnel Takes responsibility for timely payroll tax deposits Takes responsibility for timely filing of quarterly payroll tax returns Will accept responsibility for errors with timely filing and will (most times) pay any penalties due to their error

14. What We Didn’t Tell You Regarding the Cash Basis of Accounting for Tax Purposes Fixed Assets, Depreciation and Debt - Notes payable, credits cards, etc. Phantom Income - No cash, yet you have taxable income Cost Segregation Study - Accelerated depreciation Retirement Plan Contributions and Accruals

15. Maximizing Revenue Provider Eligibility Patient Eligibility Charge Capturing Timely Efforts

16. Provider Eligibility Managed Care Organizations Staff awareness of plan participation Medicare Change Effective 1/1/09 Claims can only be filed 30 days retroactively for new enrollment (not 27 months) or change in location (not 90 days)

17. Medicare Rules (cont.) 30 days from Medicare contractor receives enrollment application 30 days from when provider begins furnishing services to Medicare patients Whichever timeframe is longer

18. Patient Eligibility Verification of demographic and insurance coverage at every visit Be certain referrals are in place Timing restrictions (screenings, and preventative care)

19. Charge Capturing Document and code appropriately If it isn’t written, it didn’t happen EHR versus hard copy Certified coder on staff End of day/month balance reports Missing ticket report Comparison to scheduler

20. Controlling Accounts Receivable Collecting Time of Service Payments Claim Follow-up Claim Denial Management Self Pay Payer Mix

21. Collecting Time of Service Payments Co-pays and deductibles cannot be written off Waiving them is based on federal guidelines for financial hardship Be ready for the opportunity to collect outstanding balance Track/monitor efficiency if collection co-pays and deductibles.

22. Claim Follow Up Electronic “clean” claims are paid within 14 days Staff Assignments By Carrier By Alphabetical Patient Listing Aging Report

23. Claim Denial Management Identify top 10 EOB denial list Divide denials into payer and practice issues Patient/provider eligibility Procedure not covered (bundling, lack of modifiers) Medical Necessity

24. OM should monitor time between date of service, when claim was received and when EOB was received Track EOB denial trends quarterly Quarterly staff meetings with MD’s

25. Self Pay Payer Mix Composition Patients with no insurance Balance due after insurance pays Uncollected co-insurance Patients’ Awareness of Payment Expectations Defined credit policy Patient is ultimately responsible

26. Defined credit policy Time of service payments Payment plans with specific due dates Be consistent System billing process Invoice after insurance pays Regular monthly statements Collections letters

27. Use “Address Service Requested” Follow up with patients on a regular basis Follow state collection laws

28. Practice Personnel Hire wisely Job Descriptions Training and continuing education Incentives – a motivating source Needs to be earned Measureable and achievable goals Rewards – group party, extra time off

29. Benchmarks A/R Aging Gross Collection Percentage Net Collection Percentage Days in A/R

30. A/R Aging Cardiology Internal Medicine Pediatrics Surgery 30 54.64% 66.65% 66.84% 48.61% 60 12.94% 11.70% 12.89% 17.47% 90 7.01% 5.66% 5.69% 8.75% 120 4.53% 4.04% 3.68% 5.66% 120+ 17.11% 11.79% 10.66% 17.47% Above statistics were published in the Cost Survey for Single-Specialty Practices: 2008 Report Based on 2007 Data published by the Medical Group Management Association

31. Days in A/R Total A/R divided by the Average Daily Charges Cardiology – 40.69 days Internal Medicine – 27.96 days Pediatrics – 30.62 days General Surgery – 47.82 days Above statistics were published in the Cost Survey for Single Specialty Practice:2008 Report based on 2007 Data published by Medical Group Management Association

32. Gross Collection Percentage Net Receipts Divided by Gross Charges Cardiology – 45.9% Internal Medicine – 63.75% Pediatrics – 65.78% General Surgery – 43.21 Above statistics were published in the Cost Survey for Single Specialty Practices; 2008 Report Based on 2007 Data published by the Medical Group Management Association

33. Adjusted Collection Percentage Net Receipts divided by Gross Charges Cardiology – 95.76% Internal Medicine – 95.42% Pediatrics – 99.94% General Surgery – 91.35% Above statistics were published in the Cost Survey for Single Specialty Practices: 2008 Report Based on 2007 Data published by the Medical Group Management Association

34. Disclaimer The information presented is done solely for informational and educational purposes. It should not be relied upon for purposes of regulatory compliance or as a guarantee for increased revenues or practice successes or failures in these areas. If legal or other professional advise is required, the services of a competent professional person should be sought