Cover Story: Get Paid for What You Do

Like most pediatric practices, Somerset Pediatric Group, with five offices in northern New Jersey, has watched reimbursements decline while nonclinical services have escalated.

Faced with a mountain of paperwork for its patients, the practice finally succumbed to a prevailing trend in pediatrics: charging parents for services that insurance companies are unwilling to cover.

“It came about because the schools instituted so many forms,” says Holly Parlavecchio, the group’s chief administrative officer and the chairperson of the New Jersey Pediatric Society Practice Managers. “The increasing number of forms was astronomical. They weren’t coming in [only] at the time of the visit; they were continuous.”

Somerset Pediatric Group isn’t alone. More and more pediatric practices are charging for supplemental services, yet many practices resist these administrative charges because they are worried about ethical or legal considerations. If you’re already charging patients or if you’re just considering putting new financial policies into place, make sure you understand your practice’s rights and obligations.

Is it the right thing to do?

Is it OK to make money off non­clinical services? Many practices ask themselves this question; they wonder if it’s unfair. If that’s how you are thinking, you might be approaching the problem from the wrong angle.

“In pediatrics, there isn’t a whole massive list of additional things you can do or ancillary revenue sources that you can apply,” says Chip Hart, director of pediatric solutions at Physician’s Computer Company, which provides pediatric-specific practice management software.

“It’s not like adult medicine, which has really exploded with that.” Hart has worked in pediatric practice management for 20 years and is the author of the blog Confessions of a Pediatric Practice Management Consultant.

Pediatric practices are less concerned about finding new revenue sources, as is often the case when a group charges patients directly for a new service, as they are with simply being reimbursed for the extra time they’re spending on activities demanded by schools, clubs, camps, and sports teams. “What you’ve seen over the last five or 10 years is a real growth in the amount of administrative overhead pediatric practices are expected to provide with no extra reimbursement to pay for it,” Hart explains. “In the good old days, you came into the office, you paid your cash, and you left. Now you can have a patient whom you have never even see that you have to do three or four hours of paperwork and phone time for - and then you never get reimbursed.”

Nearly every pediatrician has been in the situation where a mother calls to discuss medications but then proceeds to ask questions about bedwetting and immunizations and anything else that’s on her mind. Physi­cians and nurses spend a lot of time answering such calls, but how often do those calls get billed? Very rarely.

In the past, pediatric practices were expected to provide those services for free and recognize it as one of the costs of doing business. But it’s gotten to be too much. It’s not a nuisance - it’s a huge, uncompensated expense.

Don’t think so? Consider: If you have an average patient population of 5,000 children, each of whom needs at least one form filled out, one phone consult during office hours, and one prescription refill, it’s easy to put a number on the amount of billable hours you are losing in a year. Now think about the number of patients who miss appointments.

Still feel like it’s unfair to put a price on your practice’s time?

Stop drowning in paperwork

Of all the areas where pediatric practices are hit hardest, paperwork ranks as the first. The sheer number of forms received is staggering. Ten years ago a practice could expect the occasional physical form, no more than a page or two long; now the list of forms you receive could be longer than the patient’s actual medical history.

Catawba Pediatric Associates in Hickory, N.C., found themselves awash in forms. “We get camp forms, daycare forms, insurance forms,” says Debbie Cashion, practice admin­istrator since 1981 and past chair of the North Carolina Pediatric Society Practice Managers.

Catawba Pediatric finally instituted a simple policy of $10 per form. “We’re charging for forms if they don’t bring it when they come for their actual sports physical or check­up,” explains Cashion. “If they bring it in at the time of their check­up, we do fill it out and don’t charge.”

Somerset Pediatric charges even less - only $5 per form - but builds in an incentive for parents, by filling out any number of forms for free - no matter how many - if the parent brings them in on the day of the pa­tient’s routine exam. Says Parlavecchio, “If the doctor is in the room with you, they have the chart open, they have the paperwork out, and will fill out anything you want. After that if you bring in a form it is a $5 charge. That’s for every form after or before your routine physical.”

For both practices the idea isn’t so much to increase revenue as it is to manage the burden on staff. “Truth­fully, it’s a nuisance charge,” agrees Parlavecchio. “It’s for the staff to pull the chart or pull it up in the computer system and for the doctor to review and sign it.”

The other area where pediatric practices often see a drain on staff time is records retrieval and duplication. “With the new HIPAA laws that came out several years ago, the whole medical records arena has really enhanced,” says Parlavecchio. “You have to get special approvals, you have to get written consent to transfer, records have to be in a sealed envelope. When all of those rules started to come out based on the HIPAA laws, we started to charge a dollar per page for all records.”

While charging per form or per page is the most popular approach, practices also can consider implementing an annual fee for nonclinical services. By asking practice members for a small yearly contribution, practices likely could cover the cost of a variety of administrative services. For the pediatric practice with 5,000 kids, a fee of $20 per child or $40 per family could yield between $40,000 and $80,000 - enough to cover the cost of an extra staff person, for example.

If you’re still on the fence about the idea, Hart recommends you look at administrative charges in a proactive way. “What I tell people is you can turn around something that has, for the last 10 or 20 years, been a chore for which you do the least amount possible,” says Hart. “When you approach these things with an eye for actually giving better custom­er service, you do it with a totally different attitude and you get better results. In the end, your patients won’t begrudge you the money if they feel like they’re getting something better in the end.”

Charging for no-shows

Adult practices have been charging no-show fees for years. Why can’t you do the same?

“There are more and more people charging for no shows, abso­lutely,” says Hart.

“They are probably still in the minority, but I am always surprised when I see people who don’t charge. I think whether you charge or not is very much a matter of your local custom.”

It’s also a matter of your patient population. Unlike many adult practices, pediatric practices are often very Medicaid-dependant. That is the experience of Catawba Pediatrics.

“Our practice is almost 50 percent Medicaid, and a lot of those are the ones that miss [appointments],” says Cashion. Catawba “used to charge for no shows before I came here, but they could not collect it.”

Indeed, collecting fees from Medicaid patients can be difficult, but you also can work directly with state Medicaid offices. A select few reimburse no-show fees, but others will at least get in touch with no-show families and let them know it’s a problem.
“A lot of the Medicaids are actually pretty responsive to their patients misbehaving,” says Hart.

Catawba Pediatrics, though, drop­ped its no-show fee in favor of a “three strikes” rule. The first time a patient misses an appointment, the family receives a letter. Strike two: a warning letter. “If they miss a third time they get a contract termination form from our practice, which gives them 30 days to find another doctor,” says Cashion.

Implementing new policies

Whether you decide on an annual administrative fee for paperwork and records or take the pay-per-form approach, it’s important to take a few steps before you charge patients anything.

The first place to check is with your state board of medical exam­iners or state medical society. Many of these organizations offer guidelines on how much to charge patients for nonclinical services. Somerset Pediatrics’ charge of $1 per page for copying medical records is actually based on the New Jersey State Board of Medical Examiners’ guidelines, for example. There also may be state regulations regarding how much a practice can charge for certain nonclinical services, so be sure to ask.

You also need to pay close attention to existing contracts with insurers, which outline what services are covered and what aren’t. It is not at all uncommon for insurers to indicate that a particular service is “covered, not paid,” which basically means the insurer assumes all ancillary costs are covered by the billable procedure. Even if this isn’t true (and it usually isn’t), your practice could be in big trouble if you bill the insurance company and try to charge patients on top of it.

Before you decide on any fee, look around and find out what other practices in your area are charging. Although you can’t make an agreement on fees with another practice - that’s price-fixing, and can be pros­ecuted as a criminal offense - you can make sure that your fees aren’t the highest in the area.

You should also give patients as much notice as possible. Both Parlavecchio and Cashion recommend three- to six-months advance warning about any new fees. If you have the money, you might consider a mailing to all your patients. Other­wise post a notice on your practice’s Web page, hand out flyers at the front desk, and be sure staff remind callers about the new fees at the end of every telephone call.

No matter what you do, there will always be some patients who claim not to have heard about the new fee. Others will be angry and might even threaten to leave the practice. If there’s one thing experience has taught all of our experts, it’s this: Don’t believe the threats.

“The number of people who actually leave is always very small, if it happens at all,” says Hart.

Somerset Pediatric was the last practice in its area to begin charging such fees, and many patients were upset about it. “There were definitely patients who threatened to leave, but I don’t think anybody really followed through,” says Parlavecchio. “Unfortunately, they can’t go anyplace else, because there isn’t anyone else who doesn’t charge.”

If it hasn’t happened yet in your area, it probably will, says Hart, who adds: “I think pediatricians need to stop being afraid to get paid for their work.”

Robert Anthony, a former associate editor for Physicians Practice, has written for the healthcare and practice management industries for six years. He can be reached via editor@physicianspractice.com.

This article originally appeared in the October 2008 issue of Your Best Practice.