Editor’s note: Part one of a two-part series.
Why does a particular hospitalist practice require more than the typical amount of financial support from a hospital? This is one of the most common questions I am asked. This month and next, I will provide a thorough list of potential answers.
SHM’s “2007-2008 Bi-annual Survey on the State of the Hospital Medicine Movement” showed that hospitals pay an average of $97,400 per year in support per full-time hospitalist. I suspect that amount is higher now. Nevertheless, hospital executives and hospitalists should understand the reasons why the hospital support that is required for their practice might be more or less.
A comprehensive list of potential reasons would include dozens of factors, and my intent is only to highlight some of the most common and significant ones.
Documentation, Coding, Billing, and Collecting
This is an area in which many, if not most, practices have room for improvement. One very simple way to estimate how your group is doing on these things is to think about how you’re performing on the following tasks:
- Do the hospitalists really understand the documentation requirements for each CPT code, and is their performance in selecting CPT codes audited regularly (e.g., annually)?1
- Does the group have a reliable method of charge capture that minimizes problems like lost charges? Is there an established “chain of custody” of this information, from the hospitalist to the biller?
- Is there a rigorous review or audit of the biller’s performance? Does the group monitor metrics, such as days in accounts receivable, collection rate, etc.? Is there a periodic audit of the biller? An audit could be as simple as tracking down five to 10 billed encounters from six months prior for each doctor in the practice, and reviewing the status of each bill (e.g., paid, written off, or perhaps the bill has vanished or never made it into the billing system).
- Is revenue appropriately applied to the hospitalist cost center? For many hospital-employed hospitalists, payors might be including their professional fee payments on the same remittance advice as hospital inpatient payments (due to same tax ID number). The hospital’s business office might be unable or unwilling to break these payments into hospital and professional fee portions and apply them correctly. Hospital-employed hospitalists should know whether their collections are being applied to their revenue center accurately.
The two factors that govern the amount of professional fee revenues a hospitalist practice will collect are the integrity of the billing process (described above) and the payor mix. The payor mix for most hospitalist practices is roughly 55% to 60% Medicare, 5% to 10% self-pay, 5% to 10% Medicaid, and commercial insurance for the rest.
A hospitalist practice that is significantly different from this example should expect professional fee collections to vary accordingly.
Hospitalist Fee Schedule
My experience is that very few hospitalists know their own fee schedule. The term “fee schedule” is generally used to mean the billed charge for each type of service provided. A hospitalist fee schedule usually fits on a single page, with a list of CPT codes (admits, consults, followups, etc.) down one column and the charge for that service in a second column to the right. It would be reasonable to post the fee schedule in hospitalists’ offices.
Groups that use electronic charge capture, in which the doctor enters into a computer the CPT code to bill for each patient daily, can often see the related charge for each code as it is entered.