Harold Ingram

Medical practices face a variety of challenges in 2012, from a 27 percent cut to Medicare rates and computer security issues to the conversion to a new Medicare transmission and reporting format.

“The required change to the ‘5010 format’ is a precursor to the implementation of ICD-10, the new diagnosis classification system to be implemented by October 2013,” said Harold Ingram, CEO of PerforMax, Inc., in Jackson, Miss., which provides services to physicians and practices in the Southeast.

“Because of the expanded diagnosis code set, the existing transmission format was unable to accommodate the new diagnosis codes,” Ingram said. “Not only does the ICD-10 classification system require more characters to identify a diagnosis, it expands the number of available codes from around 14,000 to over 70,000 codes. The expansion of the codes will also have significant impact on productivity and may also cause delays in processing and payment of insurance claims. The AAPC, American Academy of Professional Coders, expects that clinic productivity will fall and may last as much as six months following the implementation of ICD-10.”

Ingram cautions that while October 2013 seems a long time off, it’s not too early to begin preparing for the implementation of ICD-10.

“It is a little early to begin learning the new codes since they will not be finalized until October of this year. However, it is time to begin planning for the transition. The ICD-10 classification system will require much more detail than that of the current system. Practices should make sure the EMR and Practice Management systems being used will accommodate the new codes. They should also begin looking at cross-walks that can be obtained from Medicare to get an idea of what additional requirements and/or information will be needed. The practices should then review documentation to determine what will be needed to code properly. After this analysis on some of the major procedures of the practice, the physicians will need education on what additional information will be required to identify the proper diagnosis code and what will be required to substantiate it in the documentation. In some practices, implementation of the ICD-10 code set may prove very difficult without an adequate electronic medical record system.”

Congress agreed to a two-month extension of the Sustainable Growth Rate - an aspect of the Medicare reimbursement format that helps control rising costs in the system - in December 2011, which means something will have to be done about it this month.

“For a number of years now, the SGR has called for a reduction in Medicare payments because of the associated utilization, i.e., cost, associated with providing services for Medicare beneficiaries,” Ingram said. “Each year, and sometimes several times in one year, Congress has intervened and provided a temporary ‘fix’ by doing away with the reduction for a period of time. Each year, the SGR percentage reduction increases. If it is allowed to stand without Congressional intervention, physicians will severely limit and perhaps quit treating Medicare patients, a politically unacceptable situation. Physicians and staff must stay active politically to encourage congressmen to address a permanent solution to the SGR problem.”

“We are in the most turbulent times I have seen in my 22 years of business,” Ingram said. “The current Medicare reimbursement model is not sustainable. There are several programs through which the government is trying to change the reimbursement paradigm. To me at least, it is unclear in what direction the paradigm shift will occur. A number of people seem to think that the result will be in larger medical organizations that combine the services of primary care physicians, specialists and hospitals. This is certainly one reason we are seeing the acquisition of clinic practices by hospitals.”
The burden of paying for healthcare will eventually become overwhelming, especially on an increasing elderly population, Ingram said.
“A problem is that the Medicare ‘fee-for-service’ reimbursement method is not sustainable as it currently exists. Through grants and incentives, new payment paradigms are being explored. These include Accountable Care Organizations, and Patient Centered Medical Homes. The intent is to provide incentives to both physicians and hospitals to encourage them to utilize fewer or less costly methods to address patient needs. This will be coupled with the need to monitor results associated with the quality of the resulting care.”
Practices will need to keep a close eye on internal operations and costs.
“Some of the resulting payment plans, for example, may feature some sort of capitalization through which practices may be paid a fixed monthly fee to care for patients,” Ingram said. “To understand the impact of participating in this type of program, the clinic must understand what it is costing to provide services to make informed decisions.”
2012 will also see a continued rise in larger medical groups being formed, medical practices being associated with or owned by hospitals, or alliances between independent physician associations and hospitals.
“A physician or practice must understand the implications of becoming part of a larger group,” Ingram said. “A personal fear with larger, corporate group arrangements is the focus on the bottom line. The corporation is scrutinized and measured by the success of its profits. Although quality measurements are being included in the new paradigms, patient care may be at risk.”
Electronic medical records will continue to be an issue, Ingram said.
“For many, 2012 is the last year in which to qualify to receive the maximum amount of incentive money. Qualifying under the Medicare guidelines in 2012 will provide eligible professionals with payment of $18,000 each. However, qualifying in 2013 reduces the initial payments to $15,000 per eligible professional with further reductions occurring in subsequent years. If a practice wishes to qualify, it will need to begin immediately. Establishing an EMR is not an easy task and will take several months to implement.”
Security of patient information will see increasing scrutiny, Ingram said.
“Associated with HIPAA requirements are guidelines practices must follow to maintain privacy of patient information. These requirements are even included in the Meaningful Use that must be met to qualify for EMR incentive funds. Penalties for allowing unsecured patient information to be accessed by unauthorized people have been significantly increased. Mississippi will not be immune to this scrutiny. During December, for example, as part of expanded required reporting mandates, the University of Mississippi Medical School announced the theft of a laptop containing information on over 1,400 patients enrolled in a study it was conducting. Breaches in security will inevitably be another area in which physician liability will rise.”

A practice can assess its vulnerability by checking a list of security issues provided as part of the HIPAA guidelines, Ingram said.

“Security issues will include electronic, physical and personnel related activities. Practices must take security issues seriously. A starting point for a practice is the assessment guidelines provided by Medicare. For clinics without knowledgeable IT personnel, outside assistance will be required. Practices should begin now to implement protocols to help insure the safety and confidentiality of patient information.”

Ingram said the most effective solutions to controlling healthcare cost must include a feature where the patient assumes more responsibility for his or her own care.

“Perhaps something similar to Medical Savings Accounts would be workable,” he said. “Overall, patients with insurance pay only about 12 percent of the cost of medical care. Being responsible for a greater portion of their own care would cause patients to be more judicious in the use of their medical dollars. It would also create a more competitive environment requiring physicians to look closely at how to deliver cost effective solutions.”

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