In a recent issue, we offered pearls from a number of sessions presented during the Managed Care and Practice Enhancement Forum at the 1998 AAFP Assembly in San Francisco (“Take-Home Messages From the Academy's Managed Care Forum,” November/December 1998). Here are the highlights we took away from several more of the forum's presentations. We've distilled insights and tips from family physician experts and health care consultants to help you better understand the dynamic health care system and deal with the changes that are already affecting you.

An environmental scan and future directions

Kevin Fickenscher, MD

• The pressure to do things “better, quicker and faster” is coming to medicine. Such pressure is something other industries have already learned to deal with, but it will be a challenge for us.

• Over the next five years, major consolidation will continue, Fickenscher says. “The resources that need to be brought to bear to deliver care and create efficiencies simply cannot happen in smaller practices. Does that mean individual practices are going to go away? Absolutely not. But 80 percent of health care is going to be delivered by these large organizations.”

• Physicians will soon find they must invest more in technology, especially to gain data that will help them compete and demonstrate their value. Health care is “one of the most under-information-oriented industries there is.”

• Family physicians must get away from “brick-wall building” to survive these waves of change. “There is a real opportunity over the next five years for physicians to step forward and provide leadership on how to have a better health care system, but we must take hold of the reins.”

Dr. Fickenscher is senior vice president and chief medical officer of Catholic Healthcare West in San Francisco.

Maximizing income with appropriate coding

Emily Hill, PA

• Each CPT code you submit needs an accompanying ICD-9 code to justify it. “One diagnosis per line item of service” is becoming the rule for payers.

• Never submit a code for a diagnosis you've ruled out; instead, submit codes for the patient's signs and symptoms. Otherwise, the patient appears to the insurer to have the condition, which can increase his or her premiums and stand in the way of approvals for future insurance.

• Remember that you're legally liable for what you code. “You've got to call the patient's condition what it is,” Hill says. “You can't mask the truth with some diagnosis that you know is covered.”

• Family physicians may submit consultation codes. If you bill for consultation services, you must document the request for a consultation and give an opinion to the requesting provider. The opinion should be in writing; if it's made by phone, document the call.

• “If you're consistently coding 99212 for established-patient visits, you're undervaluing your services. Coding at the proper level is also important in dealing with managed care plans. They don't want to see all their members receiving the same level of service, because that has quality implications.”

Emily Hill is a reimbursement consultant based in Bald Head Island, N.C.

Conflict resolution

Ellen J. Belzer, MPA

• Conflict resolution is not about helping you avoid conflict. “Conflict avoidance is only going to keep things festering. It's not going to resolve the issue,” Belzer says. “Most conflicts, contrary to public opinion, do not die a natural death.”

• When a conflict arises, “resist your first negative reaction. Your conditioned response is going to be to meet the other party head to head.”

• Beware of the great compromise. Meeting the other party halfway is a “quick fix,” not necessarily a lasting solution. As Belzer points out, “If I want A and you want Z, and we compromise, you know where we end up? About M. It often does not meet either party's real needs.”

• Be direct but gentle. “A great part of conflict management is helping the other party save face, even when they're wrong.”

• Learn to pick your battles. “Not everything needs to be resolved.”

Ellen Belzer is a negotiation and mediation consultant based in Kansas City, Mo.

Understanding Medicare managed care

Lee B. Sacks, MD, and Lois Elia, RN

• Over the past several months, one health plan after another has been withdrawing from the Medicare managed care market or writing off millions of dollars in losses. “If they can't do it well, then certainly hospitals and physicians and IPAs are asking the question, ‘Do we want to be in this business?’” Sacks says.

• Making the Medicare managed care market even more volatile is Medicare+Choice, which began in January. “The intent was to expand options and have more managed care for Medicare enrollees,” he explains. The reality is that only a handful of plans have been approved for Medicare PSOs — “probably about 1 percent of what the federal government dreamt. The pendulum has swung from one extreme to the other, and there will probably be a correction moving back toward the middle.”

• There are tremendous opportunities in Medicare managed care — particularly the opportunity to increase market share and have greater control over resources because beneficiaries receive all their care within your system.

• Medicare managed care is different. “If you just assume that you can move into this and do the same things you're doing for your commercial population, you're probably going to get a rude awakening, because the patients are sicker, the dollars at risk are much greater, and these are patients who, typically, have not been in managed care before,” Sacks says. “So there's a big learning curve.”

Dr. Sacks is president of Advocate Health Partners in Oak Brook, Ill. Lois Elia is vice president of medical services.

Mastering the basics of capitation

Ron Rosenberg, PA, MPH

• Beware of capitation agreements that don't specify the services to be included in the per-member-per-month (PMPM) payment. Know which services are to be reimbursed separately as fee-for-service (FFS) carve-outs and which services you'll be expected to provide under the PMPM.

• When considering capitation agreements, ask the insurer for data about the patient population's past service utilization in capitated plans. Also analyze the demographic profile of the population.

• “You can't competently contract to provide services for a prepaid dollar amount if you don't know the costs of those services,” Rosenberg says. To calculate the cost of your practice's services, combine overhead and a proxy for owner-physician compensation (what it would cost to replace the owning physicians with physicians of equivalent experience); add the total relative value units (RVUs) for your services; divide the overhead and physician costs by the number of RVUs. If you know your cost per unit of service, you'll know what payment per RVU you'll need to cover your costs.

• Physicians also should know the profit of their practices. Calculate practice profit by subtracting from your total income the cost of your overhead and the proxy for owner-physician compensation.

• Rosenberg's tips for managing a capitated population's use of primary care services include telephone triage and management of patients; maximizing patient encounters by scheduling multiple services for a single visit; and spreading out annual exams so they don't cluster (and increase your costs) at certain times of the year.

Ron Rosenberg is a practice management consultant based in San Rafael, Calif.

A case study in computerized patient records

Brian M. Ralston, MD

• MacNeal Health Network is gradually converting its existing charts to computerized patient records (CPRs), scanning each patient's chart when that patient makes an appointment.

• The system is helping doctors work more efficiently. “Now I can respond to phone messages about patient care as I get them,” Ralston says. “I just access the patient's record as I'm dialing the number to return the call. From a management standpoint, this has been a real increase in efficiency for me.”

• Although individuals may be hesitant to use CPR technology, MacNeal hasn't seen barriers among its physicians generally based on age or previous computer experience.

• The most important factor affecting doctors' willingness to use CPRs has been the system's speed. A system should take no more than one second to display requested information.

• Don't buy a CPR system based on vendors' demonstrations or reports of what their systems will do. Site visits are critical; they greatly reduce the risk of buying “vaporware.”

• Keys to success in implementing a CPR system include getting physicians' input into the system's design and functionality, rolling out the system incrementally, having high-quality technical support and developing protocols for installing the system at different sites.

Dr. Ralston is a family physician with Mac-Neal Health Network in Chicago.

Legal issues in managed care contracting

Frank Gamma, JD, MBA

• Before signing up with a plan, investigate its market leadership, its financial solvency and how well it works with physicians. If it goes bankrupt, you will be left holding the bag on unreimbursed care.

• Before accepting a PMPM or discounted FFS rate, calculate the effects on your practice of being paid at that rate for your top 20 CPT codes. Remember that although your reimbursements may be discounted, your overhead won't be.

• Although agreements that you can end on short notice may give you flexibility, they also put you at risk of being dropped from the insurer's panel on short notice. Long-term contracts generally protect physicians' interests better.

• If possible, include in your managed care contracts a clause that if the plan's representatives “unreasonably” interfere in the physician's exercise of medical judgment, the plan will forfeit its ERISA exemption, which protects it from claims arising out of patient care.

• “No contract is so fixed in stone that you can't do something about it,” Gamma says. “Often, all it takes is attaching an amendment. Especially if the plans are in the process of building their provider panels, they may well just accept the contract as you've amended it.”

Frank Gamma is a health care attorney based in Berkeley, Calif.