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The Business of Anesthesia

The Business of Anesthesia. Illinois Association of Nurse Anesthetists April 18, 2009 St. Louis, Missouri Presented By Tony Hollingsworth, BBA, MHA Chief Executive Officer Anesthesia Business Solutions. The Business of Anesthesia.

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The Business of Anesthesia

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  1. The Business of Anesthesia Illinois Association of Nurse Anesthetists April 18, 2009 St. Louis, Missouri Presented By Tony Hollingsworth, BBA, MHA Chief Executive Officer Anesthesia Business Solutions

  2. The Business of Anesthesia “These recommendations propose that the AANA expand its current educational efforts to not only provide CRNAs with the tools and resources they need to understand the complex payment and practice rules affecting them on a daily basis, but also to ensure that CRNAs know how to apply what they learn. With tools and resources that focus on the business and financial aspects of anesthesia practice, CRNAs will be able to more effectively advocate for themselves, their professions and their patients. But becoming knowledgeable about the business aspects of anesthesia may require a cultural shift for many nurse anesthetists, because seemingly few CRNAs are well-versed in this area.” AANA Commission on Anesthesia Economics and Reimbursement Commission Report: August 2008

  3. Employed CRNA About 80% of all CRNAs Why Business? Understand Your Value Be a Better Employee Know Your Options

  4. Business? Multiple definitions of “business,” all with a recurring theme… “…One’s rightful or proper interest…”

  5. “Winning isn’t everything, it is the only thing.” Vince Lombardi

  6. Objectives: For you to…. • recognize payment methodologies for professional anesthesia services • utilize fundamental billing principles to evaluate fees schechedules from third party payers • evaluate the performance of accounts receivable management • understand the critical nature of compliance with Medicare fraud and abuse regulations

  7. CRNA Compensation Mean total income for Full-Time, Employee CRNAs $152,819.00 20% Fringe Benefits Cost of Time Off

  8. “Cost” “Value”

  9. What is Your Value? • Revenue Generation • The Amount Depends on … • Where You Work • Hospital • Physician Group • Care Team • Case Mix • Payer Mix

  10. Charges………Payments Charge Allowable Charge Adjustment Payment

  11. Charge The “Regular” Fee that You Charge • Market Value • Basis of Discounts • Says What you Think You Are Worth

  12. Allowable Charge The Amount You Can Actually Charge and Collect • Determined by Third Party Payers • Contractual Agreement

  13. Adjustment • Contractual Adjustment • The Difference Between Your Charge and the Allowable Charge

  14. Payment Total Amount Collected from All Sources • “Real Money”

  15. Gross Collection Rate Total Payments Total Charges  Example: Total charges = $5,650 Total payments = 3,100 Gross collection rate = 3,100 = 55% 5,650

  16. Net Collection Rate Total Payments _ Total Charges Less Total Adjustments Example: Total charges = $5,650 Total adjustments = 2,660 (40%) Total payments = 3,100 Net collection rate = 3,100 5,650 – 2,660 Net Collection Rate = 3,100 = 91% 3,390

  17. There are only two ways to improve your Accounts Receivable: 1. Collect it 2. Write it off

  18. Better Measures of Collection Performance • Expected Payment Versus Actual Payment • Allowable Charges Written Off • Applying Correct Discount • Days’ Charges in Accounts Receivable • Time to Submit Claims • Number of Claims Rejected • Distribution of A/R in Aging Categories

  19. Turnaround Time • Measure of how long, from the date of service, it takes to get paid • Measured in number of days • Calculated by dividing the average day’s charges (total annual charges/365) into the total Accounts Receivable • For anesthesia practices nationally, the average is about 75 days, but better practices are below 60 days • That means that on average, claims are paid within two months. • Medicare typically pays claims within 30 days • With electronic claims submission and payments, the benchmark for AR turnaround continues to drop

  20. Days Charges in A/R Calculate Average Day’s Charges • Total Annual Charges/365 Days • $174,879 Average A/R per Provider • $3,476.39 Average Day’s Charges $174,879 / $3,476.39 = 50.31 “Days” in A/R

  21. Attention to Adjustments • It is critical to know by payer, the amount of payment that is expected for any given claim • When payment is received and posted, if the actual payment is less than the expected payment, the collector should follow-up • Harried collectors may take the path of least resistance and simply adjust the underpayment as part of the contractual write-off • Easy.. and unfortunately.. typical method of making A/R performance look better than it really is.

  22. A collection increase of 1% $5,639.00 per provider

  23. Deductible Annual, Minimum Amount of Out-of-Pocket Expenses to be Paid By the Patient Before Insurance Pays Anything

  24. Co-Payment Percentage of Carrier’s Allowable Charge that Must be Paid By The Patient

  25. Non-covered Services • Medical Necessity • ABN – Advanced Beneficiary Notice

  26. Medicare Title XVIII (18) Social Security Act • Enacted in 1965 as part of President Johnson’s “Great Society” • Covers elderly, disabled and ERDS • Cost-based reimbursement - DRG • Part A pays hospital • Part B pays physicians and other providers

  27. Medicare pays physicians and other providers the lesser of…. • Provider’s actual charge • Provider’s “usual and customary rate” (UCR) • Area prevailing rate … now the Medicare Fee Schedule

  28. Medicaid Title XIX (19) Social Security Act • Enacted in 1965 • Joint Program – Federal and State • State Administers Program • Covers low-income patients

  29. Blue Cross • Officially founded in 1939 • Commission of the AHA • Established guidelines for members • 1960 Blue Cross Association formed • 1972 Severed ties with AHA • Today pays over $111 Billion in Claims per Year

  30. Blue Shield • Started in the Pacific Northwest by Lumbermen Paying Monthly Fees for Healthcare Services • 1939 First Blue Shield Plan Started in California • 1948 Nine separate plans join to form Association of Blue Shield Plans

  31. Blue Cross/Blue Shield In 1982, the organizations merged to form the Blue Cross/Blue Shield Association

  32. Commercial Insurance • Second only to “self-pay” as the most market driven component of the healthcare payment system • Flourished from the 60’s until the mid 90’s • Developed more competitive models

  33. Commercial Insurance Health Maintenance Organization (HMO) • Flat-fee Premium for All Services • Closed Panel of Providers • Capitation or Discounted Fee-For-Service • Contract and Credentialing

  34. Commercial Insurance Preferred Provider Organization (PPO) • Hybrid of Traditional Indemnity Insurance • Limited Provider Panel • Incentives Related to Utilization • Discounted Fee-For-Service • Contract and Credentialing

  35. Commercial Insurance Self-funded Plans • Most Large Employers Will Fund Their Employees’ Healthcare Plans • Third Party Administrator Manages the Plan • Usually an HMO or PPO Model

  36. Commercial Insurance Workers’ Compensation • State Mandated • Provided Through Commercial Carriers • Provides Healthcare Services to Employees Who are Injured or Sick on Their Jobs

  37. Self-Pay • 44 Million Americans Without Healthcare Insurance • Laws Guarantee Access • Cost Shifting • Cost to Provider is Lost • Emerging Trend to “Self Insure” • Patients Negotiate Discounts for Cash

  38. Third Party Payers PayerOverallAnesthesia Medicare 21.15% 30.00% Medicaid 7.92% 7.40% Commercial ---- 48.00% HMO 10.45% ----- PPO 45.12% ----- Workers’ Comp 1.62% 3.00% Self-pay 8.74% 3.00%

  39. Payment is not the center of the universe but… it drives the system Beneficiaries Premiums Contract Fee Schedule Credentialing Fee Schedule 3rd Party Payer  Provider -Physician -APN Facility -Hospital -ASC Patient Privileges

  40. Why Medicare Payment Methodology Has Become the Standard: • It defines clinical responsibility • It defines the payment process • It regularly publishes its fee schedule • It is adaptable to different regions These are theGood Parts!

  41. Calculation of Anesthesia Charge Total Base Units + Total Time Units x CF = Total Charge Example: Practice’s Normal Charge is “$90 per unit at 15 minutes” Anesthesia service for an appendectomy (6 units) Total anesthesia time 1.5 hours Base units = 6 Time units = 6 (90 minutes/15) Total units = 12 12 Total units x $90.00 per unit = $1,080.00 Charge

  42. ICD-10 • Scheduled for Medicare Implementation in 2011 • 5,500 New Codes • Implications for Computer Systems

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