Otoscope Magazine of AOA Spring 2010

WHAT’SINSIDEWHAT’SINSIDE
2010 EXPANSION OF
LEGAL REQUIREMENTS
IN YOUR ORGANIZATION
AND BEYOND 18
Jeff Thompson walks you through the changes
occurring in 2010 with leave, discrimination and
privacy laws.
THINKING OF
DOWNSIZING? THINK
TWICE BEFORE YOU
CUT 8
You might want to reconsider cutting your next
employee. Pat Brown-Oliver explains why
downsizing might not be the best answer.
PATHWAY TO NATIONAL
HEALTHCARE REFORM:
AN OVERVIEW OF
AAO-HNS EFFORTS 11
The AAO-HNS gives an overview of its efforts to
assist in the efforts toward health care reform
in the United States.
ACCOUNTING 101:
HOW TO READ YOUR
BALANCE SHEET 21
Not a CPA? Don’t worry! Jeff Dudley walks you
through the basics to reading and understanding
your practice’s balance sheet.
IN EVERY ISSUE
From the Editor’s Desk
President’s Message
COPM News
AOA News
IN EVERY ISSUE
From the Editor’s Desk
President’s Message
COPM News
AOA News
Tips & Tricks for Better
Google Search 10
Take These Steps to Survive an
Insurance Audit 15
It’s a Jungle Out There . . . Are
You Prepared to Survive? 16
Exploring Alignment
Strategies to Protect Against
Reimbursement Uncertainty 26
Welcome to Our Newest
Members 28
Upcoming AOA Webinars 29
Please Come to Boston 30
AOA NEWS
INCLUDES:
AOA NEWS
INCLUDES:
TOP 10 WAYS TO MANAGE
YOUR ACCOUNTS
RECEIVABLE 13
Looking to improve your collections? Camille
White, COPM, offers 10 tips her office has
implemented that have shown results.
FORECASTING THE
UNKNOWN 6
Your fellow ENT managers share what they are
doing to prepare for the uncertain changes in
healthcare.
59.3%
40.7%
Subscription INFORMATION
Oto’s Scope is available to members
of AOA at no charge. This magazine
is published quarterly approximately
January, April, July, and October.
Please address all communications to the AOA office at:
Association of Otolaryngology Administrators
1844 Ardmore Blvd. • Pittsburgh, PA 15221
Phone: 412-243-5156 Fax: 412-243-5160
Email: AOA@oto-online.org Website: www.oto-online.org
NOTICE: Articles for Oto’s Scope can be sent via email or mailed to the AOA office. We welcome
your submissions. If you need more information, please call the AOA office.
Oto’s Scope is available to members
of AOA at no charge. This magazine
is published quarterly approximately
February, May, August, and November.
Please address all communications to the AOA office at:
Association of Otolaryngology Administrators
1844 Ardmore Blvd. • Pittsburgh, PA 15221
Phone: 412-243-5156 Fax: 412-243-5160
Email: AOA@oto-online.org Web site: www.oto-online.org
NOTICE: Articles for Oto’s Scope can be sent via email or mailed to the AOA office. We welcome
your submissions. If you need more information, please call the AOA office.

FromtheEditor’sDeskEDITORIAL BOARD
EXECUTIVE EDITOR
Robin L. Wagner, COPM
Pittsburgh,PA
EDITORIAL BOARD
James Benson, IV
Marienette,WI
Pat Brown-Oliver, COPM
OverlandPark,KS
Cheryl Fatzinger, CMA, MBA
Winston-Salem,NC
Amanda Fouch
OklahomaCity,OK
Mary Henshaw, MBA, COPM, CMPE
Olathe,KS
JoAnn LoForti, RN, MS
Fresno,CA
Mark Milinski
Norfolk,VA
Jeanne Rothamel, RN, CORLN, COPM
Waverly,IA
Laura Troyer
Akron,OH
Camille White, COPM
Macon,GA
EDITORIAL COORDINATOR
Caitlin Price
CONTRIBUTING WRITERS
Jeff Dudley, CEO
Reed Tinsley, CPA
Camille White, COPM
James Benson
Jeffery L. Thompson
Keith Rosen
AAO-HNS
Justin Chamblee, MAcc, CPA
John Gross, FHFMA
Mary Henshaw, MBA, COPM, CMPE
Caitlin Price
DESIGN / LAYOUT
Scribner Graphics
Rochester,MN
Spring 2010 Vol. 8, Issue 2
processes to make sure you are
current; make sure you have the right
staff for the right jobs; and generally
have a plan for the future. If you aren’t
great in finance, Jeff Dudley has a
great two-part article that will help you
understand all of the numbers on a
balance sheet. Your colleagues in AOA
have many best practices and great
things happening in their practices to
share with you. The power of the AOA
network allows you to get answers to
the issues in your practice both via the
website discussion boards and just
plain old networking.
We hope that you will spend some
time learning about the resources
that AOA has to offer. If you aren’t a
member of AOA, now is the time to join.
More than ever, you need resources,
education, and networking to help you
prepare for the future. The investment
will pay for itself in terms of the
time saved developing resources,
researching best practices and finding
consultants. We encourage you to join
the AOA today and utilize the network.
Best regards,
Executive Editor, Oto’s Scope
Executive Director, AOA
Dear Colleagues,
There are so many uncertainties
going on in health care right now. We
have a new health care plan, but the
jury is still out on just how this new
plan will impact how otolaryngology
physician offices are currently
managed. There is still no fix to
Medicare’s SGR. Regulation continues
to increase. It is almost a perfect
storm. How do we go about our
business and succeed in the business
of medicine? How do we plan for
what we don’t know?
The AOA is a great resource to help
you navigate today. We have resources,
networking and education to help you
and your practice succeed. We are
diligently working with the Academy to
join forces to bring even more education
and resources through the Business of
Medicine. We have successfully worked
with the Academy on a number of
initiatives this year, including: spread-
ing the word to AOA members about
some of their initiatives; gathering data
from both groups to present at CMS
hearings; and continuing to get the
word out on specific items that impact
otolaryngology. Our newest initiative is
a Business of Medicine Program that
we will present jointly on Saturday,
September 25, 2010, in Boston, MA.
We have a great list of topics to help
physicians and administrators engage
together in moving practices forward.
As you read through this edition of
the Oto’s Scope, you will notice the
theme is for otolaryngology practices
to try and figure out what physician
practices can do while waiting for all
of the stars to align. Don’t just sit back
and twiddle your thumbs while you wait
for changes in health care to arrive –
act now! Through some of the articles,
we suggest that you: be proactive;
make sure that you are providing the
best service available; evaluate your
In action lies wisdom and confidence.
–Albert Schweitzer
The people who get on in this world are the people who get up and look for the
circumstances they want, and, if they can’t find them, make them. –George Bernard Shaw
4 Spring Edition 2010 Oto’s Scope

Dear Colleagues,
The AOA has had a healthy
relationship working hand-in-hand with
the AAO-HNS for many years. Each
organization complements the other,
assisting in fulfilling the roles of both
the ENT physician and administrator.
Members of the AOA and AAO-HNS
have benefitted greatly from network-
ing, continuing education, practice
management information, and legisla-
tive advocacy. Together, we help one
another to run a successful business
while at the same time providing a high
level of patient care. Now, during this
time of health care law and reform,
our efforts to work together are more
necessary than ever.
The new health care law brings a lot
of uncertainty to us all – as patients,
as providers, and as employers. Many
people are speculating on what our
future reimbursement models will look
like. There is speculation that the inte-
grated/capitated global reimbursement
models of the 1990s will be revived.
Others are hopeful that SGR (sustain-
able growth rate) will be replaced with
a reimbursement formula more fitting
to today’s physician/patient environ-
ment. I believe the majority of us – as
managers and physicians – have the
same common goal of providing excel-
lent health care while maintaining a
fair and healthy bottom line.
Many practices are “tightening their
belts while they ride out the health
care storm.” However, many others are
taking this opportunity to grow. Many
practices are thinking of growth in
terms of increased market share and
patient visit volume, while other
practices are considering growth in
terms of adding ancillary services,
such as allergy, audiology, hearing
aids, radiology, videostrobeography,
President’sMessage
Kelly Ladd, COPM, CMPE
AOA President
transnasal, esophogoscopy, sensory
testing, and sleep labs. If you couple
this with the added “patient care value,”
the end result is one of increased
revenue enhancement.
We have all entered into the
uncharted waters of healthcare reform,
but you can be confident that the AOA
will be leading the way in providing
practice management resources to
help you chart your course. I hope you
will join us in Boston for our Annual
Educational Conference Sept. 22–25,
2010. We have an exciting agenda
filled with the latest news and infor-
mation regarding health care reform
along with incredible networking
opportunities amongst members from
all around the country. Together, we as
administrators and physicians can use
the tools made available through the
AOA to grow and overcome health care
adversity in these uncertain times.
Sincerely,
Kelly V. Ladd, COPM, CMPE
AOA President
AOA OFFICERS
PRESIDENT
Kelly Ladd, COPM
NorthwestENT&SinusCenter
780CantonRoadSuite330
Marietta,GA30060
Phone:(770)427-0368ext.202|Fax:(678)581-5969
E-mail:kelly.ladd@nw-ent.com
PRESIDENT ELECT
Todd Blum, MBA
EarNose&ThroatAssociationofSouthFlorida
900NW13thSt.Suite206
BocaRaton,FL33486
Phone:(561)391-3333|(561)338-6271
E-mail:tsblum@entsf.com
SECRETARY-TREASURER
Jeff Dudley, CPA
SacramentoEar,Nose&Throat
1111ExpositionBlvd.Bldg.700
Sacramento,CA95815
Phone:(916)736-6670|Fax:(916)736-9837
E-mail:jdudley@sacent.com
SENIOR EXECUTIVE COMMITTEE
MEMBER-AT-LARGE
Cheryl Fatzinger, CMA, MBA
PiedmontENTAssociation,PA
110CharloisBlvd.
Winston-Salem,NC27103
Phone:(336)714-1039|(336)768-4131
E-mail:cfatzinger@piedmontent.com
JUNIOR EXECUTIVE COMMITTEE
MEMBER-AT-LARGE
Mark Milinski
Ear,Nose&Throat,LTD
901HamptonRoad
Norfolk,VA23507
Phone:(757)623-0526|(757)623-0609
E-mail:mmilinski@entltd.com
IMMEDIATE PAST PRESIDENT
Karen Boyd, CMM, COPM
AshlandENT,Allergy&HearingAidCenter
2212MifflinAve.Suite130
Ashland,OH44805
Phone:(419)289-8919|(419)289-9563
E-mail:kboyd@ashlandohent.com
PARLIAMENTARIAN
JoAnn LoForti, RN, MS
CentralCAENT
1351E.SpruceSt.
Fresno,CA93720
Phone:(559)432-3724ext.228|Fax:(559)432-8579
E-mail:jloforti@ccent.com
CONTACT INFORMATION
AssociationofOtolaryngologyAdministrators
1844ArdmoreBlvd.
Pittsburgh,PA15221
Phone:(412)243-5156|Fax:(412)243-5160
E-mail:AOA@oto-online.org
Spring 2010 Vol. 8, Issue 2
Change is the only constant; hanging on is the only sin. –Denise McCluggage
Oto’s Scope Spring Edition 2010 5

perhaps be better to tell you what
YOUR colleagues are doing to prepare
for these vague uncertainties, and
share the changes that they see coming
in the next 12 months and how they
are planning for the future. After all,
that is the power of the AOA network.
Businesses forecast frequently.
Using complex business and mathe-
matical models, they can extrapolate
into the future and predict what is going
to happen. We agree that using these
models helps the past predict the future;
however, because health care is under-
going many changes, we thought it
would be best to find out what people
in the typical otolaryngology practice
are doing to stay ahead in these
uncertain times.
The Present
The future might seem rather cloudy,
but many administrators are being
proactive and taking action right now.
According to a survey conducted by
the AOA in the spring of 2010, most
C
hanges are occurring at a rapid
rate in the otolaryngology prac-
tice. Regulatory changes, health
care reform, and economic conditions
all play vital roles in the climate of ENT
practices. So what are the leaders of
these practices to do? Should we all
go get out our magic ball, seek out a
fortune teller, or maybe hit the casino
to gamble on the future? Or should we
hunker down to prepare for the storm?
Those are all scenarios that feel a little
like the otolaryngology practice in
today’s world. Well, we thought it might
FEATUREARTICLE
READER R I
• AOA survey shows what
administrators are doing now
to prepare for the unknown.
• Popular trends include:
implementing EMRs, adding
ancillary services, and utilizing
technology for efficiency.
respondents are preparing for the
future by looking to cut costs in all
areas of practice management. While
many are tightening their belts —
through attrition and not expanding
services or personnel — others are
looking at ways to decrease overhead
strategically without compromising
quality or patient service. Examples
included merging satellite offices,
renegotiating contracts and leases,
and tightening down efficiency and
processes. Some practices have
created walk-in clinics for patients
with poor reimbursing insurance while
others are focusing on accounts
receivable retraining to make sure
everyone understands their role in
A/R collections.
Although administrators and prac-
tices are evaluating processes to
operate more efficiently, practices
as a whole are also seeing an overall
decrease in revenue. Nearly 56% of
ForecastingtheUnknown:How
ENTAdministratorsarePreparing
forChangesinHealthCareBy Robin L. Wagner, COPM, and Caitlin Price
0
5
10
15
20
25
30
35
40
45
Postponing any
expansion of services,
physicians, etc
Postponing
capital
expenditures
Frozen hiring
for now
Not replace positions
when employees
were lost
Decreasing
operating
budget
Downsized
practice
Other
(please
specify)
Have you done or are you doing any of the following in 2010 for your practice? Please check all that apply.
%ofRespondents
continuedonpage7

cycle and staff retraining).
I Opening communication with
hospitals, other ENT offices, and
multi-specialty clinics to explore
opportunities.
I Increasing patient education and
marketing to educate patients on
ancillary services.
I Evaluating patient access and
patient scheduling for efficiency.
I Keeping an eye on having the right
employees in the practice and
allowing them to participate in
improving efficiency.
I Physician and physician extender
recruitment to assist with ancilla-
ries and patient volumes and access.
I Working with the physicians on a
plan for the future.
While some practices are choosing
to “wait out the storm,” dozens of
practice administrators are preparing
for the future. But the administrator
shouldn’t be the only one focused on
the uncertainties: Everyone in the
practice — from the person scheduling
the appointment and to the medical
assistant to the administrator and to
the physician — must be on his or her
toes and think about how to do things
differently. Have your staff begin asking
themselves questions as they are going
through their day. Some simple ques-
tions to consider are: Is this process
repetitive? Is there a better way to do
this? Can we automate this process?
Ask each staff person to take a close
look at his or her own position, at
what they do every day. You might be
surprised at the cost-cutting ideas
that come from “the trenches.”
respondents noted a decrease in reve-
nue in the last year. Many commented
that they are flat in revenue growth or
it has slowed. Respondents stated that
their practices are also experiencing
more uninsured patients this year:
52.4% reported an increase in unin-
sured patients and an increase in
Medicaid in the last year. This means
more work and less revenue for seeing
the same number of patients in many
offices. Administrators are also report-
ing a higher no-show rate, especially
those with high deductibles insurance
plans, making the deduction that
people are thinking twice before going
to a doctor.
In spite of what might seem dismal
by the numbers above, many practices
are managing to find areas to grow.
Approximately 41% of respondents
reported opportunity for growth in the
economic downturn. How are they doing
this? By adding ancillary services! Of
the respondents, 36% are adding or
expanding their hearing aid service,
while another 54% stated that they
are expanding one or a combination
of hearing aid sales, allergy, cosmetic
lines, CT scanners, and sleep labs
into their practices. These ancillary
services are also necessitating the
need to add additional physicians and
physician extenders in a third of those
seeing opportunities for growth.
The Future
Practice administrators will be faced
with many harrowing challenges in the
next few years. We wanted to know the
thinking behind their planning. There-
fore, we asked how administrators
think practice management will have
changed by 2012. While there were
no mathematical models employed or
fortune tellers in the group, the theme
was common: Everyone predicted that
business efficiency must get better,
technology must be used to leverage
efficiency, and everyone must manage
the accounts receivable and bottom
lines carefully. Are we all worried? Of
course! Should practices merge with a
hospital, MSO, or another practice?
Can they survive as a small practice?
The jury is still out!
Most administrators stated that they
will want to keep their eye on trends
and keep discussions open with their
physicians. However, until health care
is sorted out, most administrators are
going to focus on evaluating the entire
practice in regards to processes,
technology and potential areas for
growth that can help efficiency and
the bottom line.
Prepare Now for the Future
When asked what practices are doing
to prepare for the future, the majority
of practice administrators are working
hard to be proactive and are concen-
trating on many different opportunities
within their practice to navigate the
storm effectively, including:
I Implementing technologies such as
Electronic Medical Record.
I Implementing a website that
contains patient materials and
electronic means to communicate
with patients efficiently.
I Renegotiating insurance contracts.
I Evaluating efficiency in the accounts
receivable and billing cycles (some
through technology, I.E. practice
management systems; and some
through evaluation of the billing
FFoorreeccaassttiinngg tthhee UUnnkknnoowwnn continued from page 6
FEATUREARTICLE
59.3%
40.7%
In the economic downturn, have you seen the opportunity for growth?
continuedonpage8
44.4%
55.6%
Are you seeing a decrease in revenue?
Yes

One administrator gave this advice:
“Focus on ‘lean.’ Focus on identifying
problems, using a methodical approach
to improve the process and use all staff
for this technique. Everyone, physi-
cians especially, need to be involved
and participating.”
Not knowing what’s in store for
the otolaryngology practice can be
frustrating and worrisome. Although
we cannot predict exactly what the
future will bring in healthcare, develop-
ing a plan and getting everyone in your
practice on board will only enhance
your practice operations and bring your
team together to work through this.
FFoorreeccaassttiinngg tthhee UUnnkknnoowwnn continued from page 7
HUMANRESOURCES
managers, say, “Surely we have too
many employees,” or how about,
“the employees are paid too much.”
Here is where pencils start to get
sharpened, and this line item of over-
head can be reduced! As practices begin
to look at each category of employees,
another common thought is, “Aren’t
there too many people in the billing
department? These folks do not have
direct patient contact, so maybe, just
maybe, we can make some cuts here.”
Or how about in our reception area –
We sometimes hear ideas such as,
“Do we really need four receptionists
at check-in and check-out when we
only see 80 patients a day?” (Or how-
ever many you might have.) And then
there is the phone area – surely the
phones don’t ring that much. Can’t
we do this with at least two fewer
employees in that position? Practices
tend to lose those employees that
have direct patient care, but does this
make sense? Practices tend to feel
more comfortable about eliminating
positions such as schedulers, insur-
ance pre-certification clerks, or even
the audiology assistant.
If any of these scenarios sound
familiar — or you have had the same
thoughts yourself — then perhaps it
is time to take a look at the pros and
cons of decreasing staff. Does cutting
staff make sense, particularly those in
areas without direct patient care? Will
reducing in these areas benefit your
practice in the long run? I don’t know
about your practice in particular, but
typically, physician offices tend to run
lean and hire employees who can and
will do multiple job functions. The costs
of “downsizing” might be more than the
employee payroll you are saving. Sure,
with downsizing, you might save those
benefits such as health insurance, 401K
match, and PTO. But then you need to
factor in an increase in overtime,
decreased morale, and probably the
most important, risking patient satis-
faction, both in the quality of care they
READER R I
• Decreased morale could have
negative effect even if you’re
saving money
• Look for strong employees to
take on several jobs
T
his article is not going to talk
about surgery, but rather how to
“prep” your practice for financial
stability today and tomorrow. So, where
do we begin? Well, the first instinct is
to look at the large ticket items on your
expense sheet and immediately say,
“we need to cut the bottom line by 5%,
10% or 15%.” Your fixed items are
pretty hard to cut: For example, rent
can’t be cut for many of us unless your
lease is about to expire, or if you have
an opportunity to start negotiations on
this for one reason or another. So the
next large ticket item on the expense
sheet, which is always so tempting to
go after, is employee expense! Often
we hear physicians, and sometimes
continuedonpage9
ThinkingofDownsizing?
ThinkTwiceBeforeYouCutBy Pat Brown-Oliver, COPM

TThhiinnkkiinngg ooff DDoowwnnssiizziinngg?? TThhiinnkk TTwwiiccee BBeeffoorree YYoouu CCuutt continued from page 8
receive and overall satisfaction with
your practice. For example, downsizing
in the billing department can result in
a reduction in your cash flow from
procedures not getting precertified,
lack of claims follow-up, and delays in
services being billed. Remember, when
two people take on the job of three,
something is going by the wayside.
Cutting out one front desk person can
result in delays in the waiting room and
unhappy patients and physicians. You
want your front desk personnel, who
are our first impressions, to appear
calm, efficient, and, most of all, happy
to be here. That impression is the most
cost-effective advertising we can have.
We want our phone personnel to give
that same impression over the phone
lines: that we are happy to assist them
in any way we can. Short tempered,
over-worked employees do not project
the image we want.
So then, if cutting back on staff
isn’t the answer, what is? Although it’s
always been a good idea to take a
look at each employee’s performance,
perhaps it’s important now more than
ever. Specifically, are there one or two
employees who just haven’t performed
like the rest of the team? Would their
absence be less noticeable and could
you “easily” incorporate their function
into one of those other stellar employ-
ees? You might want to talk to them
independently to give them a heads up.
Make sure all of the employees
know and understand that healthcare
is going to change. You need them to
get on board and go that extra step,
taking on a little more and getting it
all done. Now it is time to recognize
those employees who can multi-task
and perhaps let them know that there
is an opportunity for them to excel and
that you do appreciate their effort.
Cutting salaries and stopping raises
or bonuses are steps to be taken when
the time is right, and it makes good
business sense. But I caution you to
turn to this as a last resort. Losing
your employees who have helped to
grow your practice or causing morale
to plummet can be far more detri-
mental than that one employee’s salary
you are looking to save.
Pat Brown-Oliver, COPM, is the
Manager of Business Services at Head
and Neck Surgical Associates, Inc.,
in Overland Park, KS. She is also the
Chair of the COPM Advisory Board
and Education for AOA.
HUMANRESOURCES

Perform Calculations – To
figure out what 6.764 percent tax
on a $65 product, enter “$65 x
6.764%” and the answer will show in
the display box.
Convert measurements – How
many ounces in a gallon? Enter
“ounces in gallon.”
Currency conversions – Curious
what your money will get you in
another country? Use Google to convert
currency! Enter “120 dollars in Euros”
to see how far your dollar gets you in
Europe.
Track flights – Track your flight
for timeliness by entering your
airline and flight numbers.
Time Zone Differences –
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Locate
packages –
Track deliveries by
entering “track” plus
the tracking number
for direct link to the
status page.
Look up
addresses for free –
Type in the person’s home phone
number. If he or she is listed in the
white pages, Google will display the
mailing address. There is also a spot
on the home page to delete your
information is you don’t want it
displayed.
Area code lookup – Everyone
gets a call from an area code they
don’t recognize. Enter the area code,
and Google will let you know where it
is and show you a map of the area.
Find specific types of
documents — Search for PDFs,
Excel spreadsheets and PowerPoint
presentations. Use filetype:pdf,
filetype:xls, or filetype:ppt to find files
in those specific formats. Example: HR
manual filetype:PDF
Find a verbatim phare – Use
quote marks (“ ”) around the
phrase you wish to search. Example:
“EHR incentives”
Find narrowed-down
informatrion – Type a minus
sign (-) before words you wish
to exclude from your search. Google
will eliminate any entries that contain
words preceded by the minus sign.
Example: coding -game –computer
Spelling Aid – Enter a word
into Google to check your
spelling. Enter “HIPPA” and it will
suggest “HIPAA”.
Are you always looking for a way to make your job easier? Do you love learning about new
tips and shortcuts to make managing more efficient? Believe it or not, Google can help!
There are lots of little tricks to get the most out of your day on the computer, whether
for work or for play. Google can be used for a variety of small tasks – not just to search!
Below are several ways that you can make the most of Google.
Tips&Tricks
forBetterGoogleSearch
TECHNOLOGY

LEGISLATION
a platform to work strategically from to
achieve healthcare reform legislation
that would strengthen access to, and
the delivery of, quality healthcare for
the nation, while still preserving the
patient-physician relationship.
The coalition, consisting of approxi-
mately 20 medical specialty groups and
representing more than 240,000 sur-
geons and anesthesiologists, submitted
myriad comments and suggestions for
improving healthcare reform proposals
as they emerged from the U.S. Congress.
In an effort to better engage and
inform AAO-HNS members regarding
reform developments, the Academy
designed a new healthcare reform
webpage to outline and house all the
Academy’s efforts and position statements.
The webpage, www.entnet.org/hcr,
also includes links to the Academy’s
legislative alerts.
Activities in the U.S. House
of Representatives
The first healthcare reform bill,
“America’s Affordable Health Choices
Act,” was introduced July 14, 2009.
Based on the vast scope of the
healthcare reform proposals, multiple
committees in the U.S. House of
Representatives retained jurisdiction
over various portions of the bill. As a
result, three committees — Energy and
Commerce, Ways and Means, and Edu-
cation and Labor — each held hearings
and mark-up sessions to discuss the
impact and constructs associated with
the legislation. By the end of July, each
committee had voted in favor of the bill
and reported it from committee. On
July 22, 2009, the AAO-HNS delivered
a letter to the Tri-Committee Chairmen
outlining serious concerns with H.R.
3200 regarding its potential impact on
the physician-patient relationship. In
addition, the AAO-HNS recognized
physician-friendly provisions in the
bill, such as language to permanently
replace the flawed Sustainable Growth
Rate (SGR) formula, the absence of
“budget neutrality” across the physi-
cian spectrum, and resisting the
pressure to create an Independent
Medicare Advisory Commission within
the Executive Branch.
continuedonpage12
T
hroughout 2009, the AAO-HNS and
a surgical coalition worked
collaboratively to develop joint
principles for healthcare reform. These
joint principles provided the group with
READER R I
• AAO-HNS and surgical coalition
worked to develop joint
principles for reform
• Overview of activities in the
U.S. House of Representatives
and U.S. Senate since 2009
• AAO-HNS efforts continue at
www.entnet.org/hcr
PathwaytoNationalHealthcare
Reform: AnOverviewof
AAO-HNSEfforts

Following the initial debate on
H.R. 3200, House leadership worked
to combine the three committee-passed
versions of the bill. The final House
healthcare reform package, H.R. 3962,
the “Affordable Healthcare for America
Act,” was introduced on Oct. 29, 2009.
Following a period of lively floor debate
on Nov. 7, 2009, the House passed H.R.
3962 by a vote of 220 yeas – 215 nays.
The vote was largely on a party-line
basis; 39 Democrats voted against the
bill and only 1 Republican voted in
favor. Throughout the debate, abortion
funding and immigration language
emerged as two of the most conten-
tious issues. Although Democrat
leaders viewed the affirmative vote as
a major victory, many of the provisions
in H.R. 3962 were considered “dead
on arrival” in the U.S. Senate.
In an effort to reduce the overall
cost of healthcare reform legislation,
House leaders stripped the Medicare
physician payment provisions from
H.R. 3962 and introduced the language
in a stand-alone bill, H.R. 3961. The
“Medicare Physician Payment Reform
Act of 2009” incorporated the same
language originally included in the
healthcare reform legislation and was
passed in the House on Nov. 19, 2009,
by a vote of 243 yeas – 183 nays. The
AAO-HNS strongly supported the
passage of H.R. 3961.
Activities in the U.S. Senate
Although the U.S. House of Repre-
sentatives passed its healthcare reform
package, the latter part of 2009 was
spent in a “wait and see” game regard-
ing reform activities in the U.S. Senate.
The slim Democrat majority in the
Senate left little margin for error in
terms of developing legislation that
could garner the 60 votes required for
numerous procedural hurdles.
The Senate Finance Committee
and the Health, Education, Labor and
Pensions (HELP) Committee hold
jurisdiction over healthcare reform
efforts in the chamber. Both commit-
tees introduced and passed separate
healthcare reform bills that were later
merged to create the Senate’s compre-
hensive reform package. The “Patient
Protection and Affordable Care Act”
PPaatthhwwaayy ttoo NNaattiioonnaall HHeeaalltthhccaarree RReeffoorrmm:: AAnn OOvveerrvviieeww ooff AAAAOO--HHNNSS EEffffoorrttss continued from page 11
LEGISLATION
(H.R. 3590) was introduced on
Nov. 18, 2009, and debate promptly
began the following week. The AAO-HNS
and the surgical coalition attempted
for many months to influence the
development positively of the Senate
healthcare reform proposals. Unfortu-
nately, many of the most troubling
reform provisions were included in the
broad reform package. In particular,
the troubling provisions in H.R. 3590
included:
I The creation of an Independent
Medicare Advisory Board charged
with the development and imple-
mentation of binding Medicare
payment policies without
Congressional oversight or judicial
review;
I Mandatory Physician Quality
Reporting Initiative (PQRI) with
punitive penalties for non-partici-
pation and no clearly defined
feedback program;
I “Budget-neutral” bonuses for pri-
mary care and general surgery at
the expense of other physicians; and
I The inclusion of a 5 percent excise
tax on elective cosmetic procedures,
thus burdening physicians with tax
collection requirements and inviting
the Internal Revenue Service into
the examination room.
Based on the aforementioned
provisions and many others, the
AAO-HNS and the surgical coalition
opposed H.R. 3590. Although the AAO-
HNS and the coalition recognized and
supported the need for substantive
healthcare reform, it was imperative
that government officials focus on the
“right” reforms. AAO-HNS leadership
firmly believed that reform efforts
should not insert federal bureaucrats
into private relationships between
physicians and their patients, or
inadvertently hinder access to quality
healthcare in this nation.
As the end of 2009 approached,
Senate leaders continued to work
towards final passage of H.R. 3590.
The constructs of a public option
(in any form), language relating to
the funding of abortions, and the
possibility of a Medicare “buy in” were
the major issues that emerged in the
final weeks of the legislative session,
jeopardizing the likelihood of the
Senate passing a comprehensive bill
versus a pared-down version. Senate
leaders ultimately held the chamber in
session to pass a healthcare reform
package before the end of the year. A
“Manager’s Amendment” to H.R. 3590
eliminated the budget-neutral bonuses
to primary care and the 5 percent tax
on elective cosmetic procedures,
continuedonpage14

FINANCIAL
Invest in a strong practice
management system with com-
prehensive reporting capabilities.
Load all of your payer fee
schedules into the practice
management system. Your system
should allow for multiple years to be
loaded. If you do not have all of your
fee schedules and payment guide-
lines — including multiple surgery
rules — get them.
Pre-register patients when the
appointment is made in order
to obtain and verify insurance
information and referral authori-
zations prior to the visit. Issues
related to eligibility and referrals
are easier to handle in advance
rather than waiting until the patient
is there and the physician is waiting.
In addition to pre-certification,
verify surgical and diagnostic
benefits as well as deductible and
coinsurance information. Use this
information to calculate what the
patient’s responsibility is expected
to be (based on your payer contract)
and require this to be paid in full
before the procedure or test
is performed. We do this in our
office for all surgeries, in office
procedures, CT Scans, ENGs and
Allergy Testing.
Post office visit charges daily —
and surgery and hospital charges
at least weekly — comparing the
physician’s schedule to submitted
op notes and charges to ensure
the capture of all charges.
Set up and use Electronic Remit-
tance Advice (ERA) and Elec-
tronic Funds Transfer (EFT) for
all payers that offer it. Carefully set
up ERA to avoid any unintentional
write offs.
Create specific edits in your
practice management system so
that users are warned or stopped
before claims are created if an error
exists. (This is in addition to what
your clearing house will do for
general payer requirements.)
I CPT/ICD-9 edits such as modifier
-50 are not allowed with CPT
69210, or for 69210 only ICD-9
380.4 is valid. When valid denials
or bundling occur, ask yourself,
“Can I create a claim edit for this?”
I Service Location/Provider
Specific Edits — Edits for service
location billing policies, for as
Tax ID differences, or for account-
ing for physician revenue. For
example, in our office, CT charges
and revenue are shared equally
among all physicians, and we bill
continuedonpage14
O
ver the past few years, our office
has seen a steady improvement in
our key A/R statistics, from our
collection percentages to our days in
A/R. During that time, we have
identified some specific activities we
do that helped to drive these
improvements. These of course are in
addition to the usual recommendations,
such as collect co-pays and previous
balances at check in, regularly work
A/R reports, and denied or incorrectly
paid EOBs, etc. Here are the top 10
ways my office found that can improve
accounts receivable and improve
overall collections performance.
READER R I
• 10 ways to improve A/R and
overall collections performance
• Effective processes – and the
right people – make the
difference
Top10WaystoManage
YourAccountsReceivableBy Camille White, COPM
1
2
3
4
5
6
7

Managing Staff Effectively
I Hire the right staff — be willing
to make a change when you
recognize when you do not have
the right staff. Sometimes
someone who is great in the front
office is not going to be good at
insurance collections. Try to
match a person’s strengths with
the job description.
I Aggressive, knowledgeable,
organized, detailed insurance
collection reps can do wonders
for your A/R. Identify those on
your staff and do your best to
motivate and reward them to stay
with you.
I Provide feedback and regularly
meet to review performance, as
a group and individually. Our
Business Office Manager meets
monthly with each insurance
collections rep to go over their
individual reports, review trends,
and discuss any particular payer
or patient issue. This keeps the
manager in tune with what is
going on and holds the rep
accountable.
I Assist staff in developing ways to
manage their tasks effectively. In
the business office, no one is ever
really finished at the end of the
day. Your staff needs to know how
to prioritize, schedule and stay
on top of the variety of tasks that
they are responsible for.
By implementing and following
guidelines along with these and similar
activities in our office, our days in A/R
went from averaging 45 days three to
four years ago (which we thought was
super), to averaging 36 days now. Effec-
tive processes — plus the right people
— make all the difference. I am very
proud of our office staff and the work
that they do every day for our practice.
Camille White, COPM, AOA 2009-
2010 Web Liaison, is the Practice
Administrator at The ENT Center of
Central GA and Central GA Head &
Neck Surgery Center in Macon, GA.
those through a separate service
location called ENT Ancillary
Services to separately report
on those charges.
Daily activities must include:
I Submitting electronic claims as
well as correcting and resubmit-
ting any with errors.
I Working all denials to ensure that
time requirements for the payer
are met. Make sure everyone
knows what those time limits are,
for filing as well as appealing.
Don’t be the bank — try to avoid
setting up patient payment plans.
Offer alternative financing through
a third party. Yes, there are fees
associated with this (you do not
have to offer all of their plans), but
overall, you will still end up getting
paid more than you would have if
you set up a payment plan on your
own. Managing them is costly to
your practice, and a large majority
of your patients will not keep them.
TToopp 1100 WWaayyss ttoo MMaannaaggee YYoouurr AAccccoouunnttss RReecceeiivvaabbllee continued from page 13
PPaatthhwwaayy ttoo NNaattiioonnaall HHeeaalltthhccaarree continued from page 12
among other things. However, since
the Amendment failed to address the
AAO-HNS’ remaining concerns, the
Academy maintained its opposition
to the legislation. The Manager’s
Amendment passed on Dec. 24,
2009, by a vote of 60-39.
Last Steps
Following final passage of the
Senate’s healthcare reform package,
there was vast speculation regarding
Congress’ next steps. Since the
House and Senate passed drastically
different bills, many believed that
the two chambers would not be able
to coalesce around principles that
would enable them to complete
work on healthcare reform. Also,
the Democrats’ early 2010 loss of
a 60-seat majority in the Senate
further complicated efforts.
It became apparent that in order
to advance a bill to the President,
the House would have to pass the
Senate’s healthcare reform bill (H.R.
3590). As a result, Democrat
leaders in the House adopted a
strategy to pass the Senate bill
along with a “corrections” package
designed to garner the necessary
votes to pass the bill in the House.
The package was written to adhere
to the rules of the “reconciliation”
budget process. By utilizing
reconciliation, the Senate would be
protected from a Republican
filibuster and only needed a simple
majority, or 51 votes, to pass the
bill. The House passed the Senate
healthcare reform bill (219-212)
and the reconciliation package (220-
211) on March 21, 2010. The Senate
passed the reconciliation package
(56-43) on March 25, 2010, and the
President signed the two bills into
law on March 23 and March 30,
2010, respectively.
Although work on healthcare
reform from a legislative perspective
has ended, the implementation
phase will be a lengthy process. The
AAO-HNS’ Government Affairs and
Health Policy teams will continue to
collaborate with the surgical
coalition, Congress, and those
within the Executive Branch to
achieve critical corrections to the
bill and protect the interests of AAO-
HNS members and their patients.
For more information, visit the AAO-
HNS’ Healthcare Reform Information
webpage at www.entnet.org/hcr.
FINANCIAL
8
10
9

management (E&M) coding complaint
history form to help your providers
properly document and code the
services they render. These forms
are available from organizations that
provide coding seminars and from
companies who produce forms for
medical offices.
Keep Your Software Up-to-Date
More and more coding and
submission is done on computer, so
having software that is current is
essential to avoiding and passing
audits. Software that doesn’t allow use
of truncated codes and links to CPT
and ICD-9 is a most valuable asset.
Perform Your Own Audits...on Your
Explanation of Benefits (EOB)
By scrutinizing the rejections you
receive, you can gather valuable
information that you can use to train
your staff. Once you know what is
causing your claims to be rejected, you
can take steps and set up safeguards
to help avoid making those errors and
prevent rejections. All this means
cleaner claims that are less likely to
be audited or will pass an audit if
one occurs.
Keep Your Medical Records Current
If you can afford to, have a
prospective audit done for every claim
you submit. That’s the ideal way to
prepare for the possibility of a real
audit, but if you can’t, the next best
thing is to perform random post-claim
audits on a periodic basis. Consider
auditing each provider every six to
12 months. Nurses and physicians
can audit each others’ records for
documentation that supports the
chosen codes. Errors found on claims
T
here is no such thing as an audit-
proof claim. However, there are
steps you can take to help your
practice avoid audits or pass the ones
you’re subjected to.
Train, Train, Train
Surviving an audit is a little like
finishing a marathon. The better
trained you are, the more likely you
are to finish — even do well. Coding
isn’t something that only your coder
should know and understand. Practice
members, including clinical staff and
front desk personnel, should all have
a working knowledge of ICD-9, CPT,
and HCPCS, as well as carrier
regulations. If these staff members
aren’t comfortable with these coding
entities, more training is necessary.
This can either be obtained from
coding seminars or from an outside
consultant who can then be available
to assist when questions arise. If
money is tight, consider having your
best office coders attend seminars,
and then spend some time training
coworkers in the fine art of appropriate
coding. It would certainly be a plus for
this person to be a certified coder.
Keep Your Forms Up-to-Date
Encounter forms should be inspected
regularly to be sure they are accurate,
useful, and working efficiently for your
practice. Use the evaluation and
TakeTheseStepstoSurvive
anInsuranceAuditBy Reed Tinsley, CPA
READER R I
• 5 steps to avoid or pass audits
• Steps can put you in better
position should you be audited
that have already been submitted
must be reported to the carrier for
correction.
Yes, you could do all this and still be
audited. On the other hand, you could
skip all this, be audited, and be in more
trouble than you’ve ever imagined. No,
these steps will not audit-proof your
claims or your records, but adhering to
them can certainly put you in a better
position should that auditor ever come
knocking on your practice door.
Reed Tinsley, CPA is a Houston-
based CPA, Certified Valuation Analyst,
and healthcare consultant. He works
closely with physicians, medical
groups, and other healthcare entities
with managed care contracting issues,
operational and financial management,
strategic planning, and growth strate-
gies. His entire practice is concen-
trated in the health care industry.
Please visit www.rtacpa.com
OPERATIONS

1. In 2009, what % of all medical
claims were denied on first
submission?
a) about 5%
b) about 10%
c) about 14%
d) 20% or more
2. What % of the claims denied on
first submission are not
corrected and successfully
resubmitted?
a) less than 5%
b) 10% to 15%
c) 20% to 30%
d) 40% to 50%
3. Assuming an otolaryngology
practice with three (3) FTE
physicians: If 1 out of 4 co-pays
are not collected at the time of
service, how much revenue is
lost?
a) about $50,000 per year
b) about $83,333 per year
c) about $116,667 per year
d) about $150,000 per year
4. Again, assuming an otolaryn-
gology practice with three (3)
FTE physicians: If just 5% of
patients who could have been
coded as “new” patients are
coded at the same level of
service as established patients
instead, how much revenue is
lost?
a) about $4,500
b) about $9,000
c) about $13,500
d) about $18,000
READER R I
• ENT practices could add
6-figures to bottom line
• AOA to introduce A/R Manual at
Annual Educational Conference
5. 205 members of the Illinois
Academy of Family Physicians
coded six (6) progress notes
that had already been coded
by five (5) expert coders. How
many of the 205 physicians
coded all six (6) progress notes
correctly?
a) 1
b) 19
c) 56
d) 92
6. Considering our typical three
FTE physician otolaryngology
practice again, based on
national studies, how much
revenue is lost due to under-
coding each year?
a) about $82,000
b) about $132,000
c) about $182,000
d) about $232,000
7. Based on benchmarking studies,
practices with more staff per
FTE MD will...
a) have less total medical revenue
because overhead will be
higher.
b) have about the same total
medical revenue as practices
with less staff per FTE MD.
c) have more total medical revenue
per FTE MD.
continuedonpage17
It’sAJungleOutThere...
AreYouPreparedtoSurvive?By James T. Fatzinger, MBA
FINANCIAL
QUIZ:
It’s a Jungle Out There…
Are You Prepared to Survive?
N
o one needs to tell you how tough
it is to keep patients happy,
maintain staff benefits, prevent
providers from grumbling about
shrinking compensation, and — in
general — keep the lights on in your
practices. The lingering effects of the
recession, the shifting of health care
costs from employer-paid premiums to
employee out-of-pocket expense,
Medicare cuts…the list goes on and on.
But what if someone were to tell you
that you’re probably leaving money on
the table? And we’re not talking chump
change here! Many practices could —
and should — be able to add six-figure
numbers to their bottom line…for the
work they’re already doing! It’s the
truth!
Don’t believe me? Give the quiz, “It’s
a Jungle Out There…Are You Prepared
to Survive?” to your most business-
savvy physician. Trust me; you’ll get
his/her undivided attention!

Now that you have your physician’s
attention, ask him/her to (a) send
you to “Leading the Way,” the AOA-28
Annual Educational Conference in
Boston, September 22-25; and/or, if
you’re not already a member of AOA,
(b) pay for your membership so you
can take advantage of members’
reduced registration rates. There you
will not only learn the answers to the
questions on the quiz above — you’ll
8. When compared to benchmarks,
how much revenue does the
average otolaryngology practice
lose due to the aging profile of
its A/R?
a) about $10,000
b) about $30,000
c) about $50,000
d) about $70,000
9. Based on national studies, what
is a patient account for $250
that is 180 days past due worth?
a) $180
b) $120
c) $75
d) $0
10. In the 46 months between
March 2005 and January 2009,
the number of lives covered
under high deductible health
plans (also referred to as
“consumer-driven” or
“consumer-directed” health
plans) increased...
a) 67%
b) 167%
c) 267%
d) 677%
learn what you can do to address
the revenue opportunities this quiz
points out.
Also at “Leading the Way,” the AOA
will unveil a brand-new resource, the
AOA Accounts Receivable Manual. Like
the quiz above, this resource will pay
for itself many times over. It will be
chock full of best-practice information,
policy templates, tools to help you
manage your A/R, sample collection
letters, training scripts, and much more.
We can all agree “it’s a jungle out
there.” The question is: “Are you
prepared to survive?”
James. T. Fatzinger, MBA, is the
principal of Effective Solutions, Inc.,
a practice management consulting firm
based in Advance, NC, specializing in
developing cost-effective, customized
solutions for medical groups. He is
on the faculty of Metropolitan State
University in Minneapolis and St. Paul,
MN, and the author of “Managing a
Diverse Workforce,” “Practical Research
Methods for Managers,” and “Manage-
ment Principles and Practices.” Jim
can be reached at (336) 940-3521
or effsolns@mindspring.com.
IItt’’ss AA JJuunnggllee OOuutt TThheerree......AArree YYoouu PPrreeppaarreedd ttoo SSuurrvviivvee?? continued from page 16
FINANCIAL

laws has been laid by the appointment
of employee-friendly individuals to
positions of power at governmental
agencies. An example is the new
Secretary of Labor, Hilda L. Solis,
who has been already quoted as
saying, “As Secretary of Labor, I am
committed to the vigorous enforcement
of our laws and will make use of the
full weight of my authority to find and
prosecute violators.” Her appointment
was soon followed by the hiring of 250
new investigators in the Department
of Labor’s Wage & Hour Division
(WHD) to monitor wage and hour
violations including overtime, minimum
wage and prevailing wage violations.
Additionally, Wilma Liebman was
appointed as Chair of the National
Labor Relations Board (NLRB). In
this the age of technology, these
government agencies will be able to
more readily share information across
departmental lines, thereby hitting
employers from all sides. Last, but
certainly not least, with the Senate
confirmation of a new U.S. Supreme
Court Justice, the new administration
had the opportunity to select the
newest U.S. Supreme Court Justice,
Sonia Sotomayor.
continuedonpage19
W
hat could possibly top 2009’s
changes to the American with
Disabilities Act, overhaul of the
Family Medical Leave Act Regulations,
mandatory E-verify, and threatened
pro-union legislation? 2010. We expect
2010 to be quite an eventful year for
employers with new legislation
including bills, executive orders, and
court decisions (from the new Supreme
Court). While it is hard at this point to
determine the complexities of these
potential laws, the current
administration has focused heavily on
the increased enforcement of existing
employment laws by government
agencies and the expansion of laws
already in place. Put simply, thus far,
all that is known is that employers will
face a tougher world. The following
is a summary of the areas where
we believe expansion of lawmaking
will occur.
The groundwork for implementation
and expansion of new employment
READER R I
• 2010 to bring implementation
of new employment laws
• Expansion of leave laws,
discrimination laws and privacy
laws
• Laws include: Family and
Medical Leave Act of 1993;
Employment Non-Discrimination
Act; Paycheck Fairness Act;
and more.
HUMANRESOURCES
2010:ExpansionofLegal
RequirementsinYour
OrganizationandBeyondBy Jeffery L. Thompson

Additionally, many proposed bills
have sought to expand the Family and
Medical Leave Act of 1993. Proposed
expansion of FMLA protection includes:
I Application to employers with 25
employees (currently an employer
must have 50 employees to be
covered);
I Expanding coverage to grandpar-
ents, same-sex domestic partners
and even part-time employees;
I Expanding leave for participation
in academic activities and medical
appointments (up to 4 hours in a
30 day period) of a son or daughter;
I Adding domestic violence as a
covered reason for leave; and
I Creating a paid FMLA system,
similar to the state unemployment
systems providing for up to eight
weeks of paid leave.
At this time, we predict that some,
if not all, of the above expansions will
be passed in some form over the next
three years.
Expansion of Discrimination Laws
As America grows more and more
diverse, cultural lines begin to be
blurred. It is no surprise that American
laws are evolving to account for this
change.
For years now, Congress has
debated legislation, similar to Title VII
of the Civil Rights Act, to prohibit
employment discrimination based
on sexual orientation and possibly
gender identity. The “Employment
Non-Discrimination Act” would protect
employees from discrimination based
upon sexual orientation or gender
identity, although it does not require
equal benefits for same sex-couples.
A similar bill recently failed to pass
the Senate by one vote, and it is antici-
pated that this, or a similar bill, will
be introduced for vote again in the
near future, now that the Democratic
majority has increased, and given
the change in the presidency.
Additionally, legislation has been
proposed that would strengthen the
“punishment” mechanism of Title VII of
the Civil Rights Act against employers.
Currently, Title VII of the Civil Rights
Act and the Americans with Disabilities
Act allow compensatory and punitive
damages based on the size of the
employer, but with caps being from
$50,000 to $300,000. Proposed legi-
slation, titled “The Equal Remedies
Act,” would repeal the caps, making
unlimited compensatory and punitive
damages available for violations of
Title VII and the ADA, regardless of the
number of employees in the organiza-
tion. This could significantly affect
small, medium, and large employers
alike.
In January 2009, the Paycheck
Fairness Act (“PFA”) passed in the
House of Representatives, simulta-
neously with the Lily Ledbetter Law.
While the Lily Ledbetter Law (which
effectively did away with the state of
limitations for discriminatory pay
decisions) was passed, the Paycheck
Fairness Act stalled in the Senate. The
PFA will significantly limit the defenses
to Equal Pay Act claims, add non-
retaliation provisions, authorize
additional compensatory or punitive
damages and other penalties, make it
easier to bring class action suits, and
require the Department of Labor to
develop “guidelines” for employers to
use in setting compensation.
continuedonpage20
On the horizon for private health
care practices we foresee a significant
amount of expansion in three areas –
expansion of employee leave laws,
expansion of discrimination laws, and
expansion of privacy laws.
Expansion of Leave Laws
The trend of employers allowing
employees flexibility in taking leave in
order to achieve the perfect work/life
balance is expanding. By way of
Executive Order, on January 30, 2009,
President Obama launched a Working
Families Task Force aimed at raising
the living standard of middle class
working families. The task force will
focus on policies to benefit the middle
class to create good paying jobs with
flexible, safe and fair workplaces. This
philosophy can further be seen in
proposed bills on Congress. The
“Healthy Families Act” would require
employers with 15 or more employees
who work more than 30 hours per
week to provide seven paid sick days
to employees to care for themselves
and their family’s medical needs.
The definition of family is liberal –
applying to anyone “whose close
association with the employee is the
equivalent of a family relationship.”
Employees would be able to take this
leave on a pro-rated basis as it is
earned upon being hired. The law
would allow employees to sue
employers for non-compliance.
22001100:: EExxppaannssiioonn ooff LLeeggaall RReeqquuiirreemmeennttss iinn YYoouurr OOrrggaanniizzaattiioonn aanndd BBeeyyoonndd continued from page 18
HUMANRESOURCES

covered breaches; clarification of the
notification requirements, including
who is required to issue and receive
notifications; and mandates for employee
training and complaint processes.
Pursuant to HITECH and the final
rule, the new regulations were effective
Sept. 23, 2009. While business associ-
ates and covered entities must comply
with the new breach notification
requirements effective Sept. 23, 2009,
fines will not be imposed until 180 days
after publication. Additional regulations
are expected later this year to provide
guidance with regard to other HITECH
provisions, which will become effective
in 2010. We certainly expect HIPAA to
be a hot topic in the years to come.
As you can see, the projected
path for 2010 leads to expansion
of employee-friendly laws. This trend
will challenge human resource
professionals, office managers,
owners, and administrators to develop
and assure compliance, while at the
same time minimizing the disruption
to organizational effectiveness.
Jeff Thompson is a partner with the
Macon office of Constangy, Brooks
& Smith, LLP. www.constangy.com.
Mr. Thompson’s practice focuses on
representing management in employ-
ment, litigation, labor matters, provid-
ing general advice to clients as well as
training clients on preventative meas-
ures to avoid litigation. Mr. Thompson
has represented firm clients in both
State and Federal Court as well as
before administrative agencies such
as the Equal Employment Opportunity
Commission, the Georgia Department
of Labor and the National Labor Rela-
tions Board. He can be reached at
jthompson@constangy.com
Expansion of Privacy Laws
With the expansion of the Internet
and computer-reliant businesses, it is
no surprise that laws protecting privacy
must be updated to reflect these
changes. When President Obama
signed the “American Recovery and
Reinvestment Act” into law on Feb. 17,
2009, it contained a section entitled
“Health Information Technology for
Economic and Clinical Health Act”
(“HITECH”), which, among other things,
made significant changes to the HIPAA
privacy and security rules, particularly
regarding breaches of protected health
information (“PHI”). As part of HITECH,
the Department of Health and Human
Services was required to issue final
breach notification requirements. On
Aug. 24, 2009, the interim final rule
regarding the breach notification
requirements were published in the
Federal Register. Included in the final
rule was a more detailed explanation of
22001100:: EExxppaannssiioonn ooff LLeeggaall RReeqquuiirreemmeennttss iinn YYoouurr OOrrggaanniizzaattiioonn aanndd BBeeyyoonndd continued from page 19
HUMANRESOURCES

FINANCIAL
always balance.
So let’s break down the components
and terminology of the formula, and
then we will discuss what to look at on
the balance sheet.
First, the Assets consist of current
assets and non-current assets.
Current Assets
By definition, your current assets
will have a “life span” of one year or
less. What that means is that anything
classified as a current asset will or can
be easily converted to cash, liquidated
or depleted in one year or less. These
assets include cash and cash equiva-
lents, accounts receivable, inventory
and prepaid expenses.
• Cash, the king of most of our
practices, is probably the easiest of
the assets to understand, but can
create the most problems for us:
Simply, this is the money in your
bank accounts and the petty cash
drawers in your office.
• Cash equivalents are very safe
assets that are easily converted into
cash and have little or no penalty
for doing so. Examples of cash
equivalents are: money market
accounts, certificates of deposit
maturing in one year or less, or
U.S. treasuries with a one year or
less maturity.
• Accounts receivable in a medical
practice primarily consist of the
charges owed to the practice by
insurance companies, patients or
third-party payers. Most private
practices are on the cash basis of
reporting for income tax purposes,
which means income is recorded
when cash is received, and expenses
are recorded when cash is paid out.
As a result you typically do not see
accounts receivable on the balance
sheets. That does not mean you
ignore these receivables, as they are
the key to your king (cash).
You can easily add them to your
balance sheet by recording them net
of your adjustments. For example, if
you have $250,000 in receivables,
and your collection rate averages
40%, then you would record them at
$100,000 ($250,000 * 40%). If you
do this, you will also need to add
this same amount to your retained
earnings (the $100,000 represents
earnings yet to be recognized in the
income statement) to balance the
balance sheet. You might have some
miscellaneous receivables recorded
for money advanced to a physician
or an employee, but remember:
These obligations should be repaid
to the practice within one year to be
classified as a current asset.
• Inventory would represent any
goods that the practice might have
on hand to sell to patients, such as
hearing aids or some other durable
medical equipment for sale. This is
another asset that you probably will
not see in most practices.
• Prepaid expenses consist of prac-
tice expenses that you have already
paid for but do not want to expense
entirely in the month that were paid.
Good examples of this are your
general liability insurance, med/mal
insurance and property taxes.
Non-Current Assets
Non-current assets are assets that
are not easily turned into cash or
continuedonpage22
Y
ou don’t need to be a Certified
Public Accountant (CPA) or an
Investment Banker to be able to
understand the financial statements of
an ENT practice. Your practice gene-
rates them either monthly through its
own accounting software and staff, or
you have them compiled periodically by
your tax CPA. Regardless of how your
statements are generated, you need to
review them on a monthly basis.
Most practices generate financial
statements that include a Balance
Sheet and Income Statement. Some
will also create a Statement of Cash
Flows. A fourth statement that might be
used is the Statement of Shareholders’
Equity. Whether your practice creates
just the first two or all four statements,
it is important to understand what you
are reading. By doing so, you will be
able to uncover problems and correct
them in a timely manner.
Balance Sheet
So what is a balance sheet? A
balance sheet is simply what the
practice owns (assets) and owes
(liabilities). The difference between the
two is your shareholders’ equity. Put
into a simple formula:
Assets = Liabilities + Shareholders’ Equity
This equation solves the simple
principle of a balance sheet: It must
READER R I
• Learn the basics to reading
your balance sheet
• Definitions of assets, liabilities,
shareholder’s equity
• Putting it into practice to read
your balance sheet
Accounting101:HowtoRead
YourBalanceSheetBy Jeff Dudley, CEO

Now that we’ve covered the assets
on the balance sheet, let’s look at what
balances our equation by starting with
liabilities. There is a similar theme
with liabilities that we saw with assets
in their two main components:
obligations payable within a year
(current liabilities), and those due
beyond a year (long-term liabilities).
Current Liabilities
• Accounts payable are the most
common current liability. These
represent the aggregate of all the
invoices for goods and services you
have purchased for the benefit of the
practice.
• Accrued expenses are also
common and represent certain
expenses that you want to recognize
in the current period, but have not
received the invoice for. Most
common items are things such as
accruals for bonuses, profit sharing,
wages, insurance and service
contracts.
• Line of credit facilities with your
bank are typically on an annual
basis, so any amount owed would be
a current liability.
• Current portion of long-term debt
would be that portion of term debt
that will be repaid in the next 12
months.
Long-term Liabilities
• Long-term debt is the most
common item we see as a long-term
liability and would be net of any
current portion of long-term debt
above.
• Capital Leases are leases in which
the leaseholder effectively acquires
ownership interest in the asset
being leased — may also be found
in this classification, again net of
any current payments due.
The remaining component of the
balance sheet equation is
shareholder’s equity.
Shareholder’s Equity
• Capital stock represents the
amount of initial and subsequent
investments of money into the
business by the shareholders.
• Retained earnings are the
accumulation of the practice’s after-
tax income or loss since inception.
In other words, each year the
practice will recognize either
income or a loss. This number is
added to the previous year’s
accumulated total. That total
amount represents the “retained”
income used for reinvestment in the
business.
By definition, the sum of capital
stock and retained earnings is called
net worth and can be calculated by
modifying our balance sheet formula as
follows:
Assets - Liabilities = Shareholders’ Equity
(Net Worth)
Using your new-found knowledge
With a better understanding of the
key terminology in the balance sheet,
we can turn our attention to looking at
an example balance sheet and what
you can learn from reviewing it:
continuedonpage23
are not expected to be turned into cash
within a year, and/or have a life-span
of more than one year.
• Tangible assets, the most common
non-current asset, are recognized by
you in the form of furniture, office
equipment, computers, buildings
and land. These are often classified
on the balance sheet as property
and equipment.
• Investments, such as in a surgery
center or office building
partnership, would also be non-
current assets, as these types of
assets are not easily converted to
cash within one year.
• Intangible assets are another type
of non-current asset that you might
see on your balance sheet, most
likely in the form of goodwill and
possibly a patent or copyright.
These assets are not physical in
nature and are often the result of
acquiring a practice (goodwill) or
investing in a process that creates
something of value (patents or
copyrights). Both of these are very
uncommon in our arena.
AAccccoouunnttiinngg 110011:: HHooww ttoo RReeaadd YYoouurr BBaallaannccee SShheeeett continued from page 21
FINANCIAL

current obligations. This is why No. 1
above is so important! In our example
balance sheet, we have included our
expected net accounts receivable,
which represents the cash we expect to
receive in the current year. Our CA is
$413,000 versus CL of $363,000,
resulting in a difference of $50,000.
This is a lot of money for most of us,
but maybe not for this business! You
will want to look further to get comfort
that you will be able to pay the
$363,000.
4The receivables recorded in our
example —$180,000 — represent
what we expect to collect based on our
historical collection percentage.
However, we need to look at the
strength of the accounts receivable
by examining the aging. Your practice
management software allows you to
run an aging report. The accounts
receivable aging is a report showing
the amounts owed to the practice by its
customers, and also the length of time
the amounts owed to the practice have
been outstanding. You want to review
where the money is in terms of aging.
Where does the vast majority (75%)
of the accounts receivable balance
lie? Is it less than 60 days old? If so,
then you should be in good shape. On
the other hand, if more than 50% of
your aging is 60 days or older, you
might have a cash flow problem
coming. The problem with receivables
is that there are several explanations
and/or problems that occur, which is
out of the scope of this article. The
points here are: a) You need to
understand where receivables are in
the aging process; b) why they are held
up; and c) the collectability of a
receivable decreases over time.
Therefore, don’t ignore the strength or
weakness of your receivables, as
everything has a significant impact on
your ability to pay your obligations.
Never assume that you will collect all
of your net receivables.
5Remember: Current assets and
liabilities represent items that
have a “life span” of one year or
less. In most cases, when we are
looking at our monthly balance sheet,
our concern is the next 30 days. So
another good measurement is to
compare your cash balances to the
continuedonpage24
1Are these the final statements
for the month? It does no good to
do a review if all of your cash receipts
have not been posted, as well as the
payables. This boils down to: Were your
bank accounts reconciled, and have all
the expenses been recorded for the
accounting period (month)? Because
cash is king to our practices, you want
a picture (balance sheet) that reflects
what you truly have (assets) and what
you really do owe (liabilities). If the
bank accounts have not been
reconciled, you certainly do not know
how much cash you have available to
pay your obligations. Likewise, if all of
the expenses for the period have not
been posted to your accounting system,
then how do you know the full extent of
your current obligations?
2Do you balance (Assets =
Liabilities + Shareholders’
Equity)? If this isn’t true, go back to
the preparer of the statement and have
it fixed!
3Do Current Assets (CA) exceed
Current Liabilities (CL)? This is
an indication of your ability to pay your
FINANCIAL
Assets
Current Assets
Petty Cash 1,000
Cash In Bank 151,000
Money Market 26,000
Total Cash and Cash Equivalents 178,000
Accounts Receivable, Net of Adjustments 180,000
Inventory 20,000
Other Current Assets
Prepaid Med/Mal Insurance 24,000
Prepaid Property Taxes 11,000
Total Other Current Assets 35,000
Total Current Assets 413,000
Fixed Assets
Furniture and Equipment 625,000
Leasehold Improvements 180,000
AD - Furniture and Equipment (214,000)
AA - Leasehold Improvements (60,000)
Total Fixed Assets: 531,000
Other Assets
Investment in Surgery Center 160,000
Org Costs 40,000
AA - Org Costs (32,000)
Total Other Assets: 168,000
Total Assets 1,112,000
ACME Ear Nose and Throat Associates
Balance Sheet
April 30, 2010
Liabilities and Shareholders' Equity
Current Liabilities
Accounts Payable 128,000
Accrued Expenses 32,000
Accrued 401K/Profit Sharing 28,000
Line of Credit 100,000
Current Portion of Long-Term Debt 75,000
Total Current Liabilities 363,000
Long-term liabilities
Note Payable - CT Scanner,
Net of Current Portion 125,000
Note Payable - Surgey Center,
Note Payable - Equipment, Net
of Current Portion 300,000
Total Long-Term Liabilities 525,000
Total Liabilities 888,000
Shareholder Equity
Common Stock 200,000
Retained Earnings ( 73,000)
Retained Earnings - Current Year 97,000
Total Equity 224,000
Total Liabilities and Shareholders' Equity 1,112,000
The following items are not necessarily in order, but it is a good place to start!

So let’s look to see how where we are.
Cash $ 178,000
A/P due in 30 days (118,000)
Accrued Expenses ( 20,000)
Current L-T Debt ( 6,250)
Cash Available $ 33,750
It looks like we are in decent shape,
and if we wanted to pay down on
the line of credit, we could feel
comfortable in paying $15,000 to
$25,000 this month.
If, in the above example, we found
that we had a deficit in cash availa-
ble (more obligations than cash),
you would want to look deeper for
the reasons behind this situation.
That would require looking into
other areas that affect the above
balances. For example, your paya-
bles due in 30 days might have some
that actually are due beyond 30 days,
thus overstating the $118,000 above.
This might happen because of data
entry error or maybe the A/P clerk is
going on vacation and wants to do a
check run to cover the next 45 days.
Your doctor(s) might have come off
a month where a lot of them were on
vacation and charges were low, thus
affecting your current cash balance.
The month could have been during
spring break and you just were
slow. If you understand your
business, you know where to get
your answers, and it will help you
understand your situation.
I believe that your CAs and CLs are
the keys to managing the business —
from the first day of the month to the
last day of the month — because so
much of what we do daily ends up in
these areas: patient visits, employees,
medical supplies, the lights in the
building, etc. All of these flow through
the CA or CL side of the balance sheet.
With that said, we cannot ignore the
rest of the balance sheet.
liabilities due over the next 30 days.
You will need to start by running an
accounts payable (A/P) aging report to
get the portion due in the next 30 days.
An accounts payable aging report helps
the management to evaluate which of
their payments are going to be due at
which date. This helps the manage-
ment to assign or manage the amount
required to pay the vendors when they
are due. Assume we have $118,000 of
A/P due in 30 days, and our accrued
expenses and accrued 401K/profit
sharing require another $20,000 in
cash payments this coming month. Is
there anything else we need to add?
Don’t forget the current month of
principal payments on your long-term
debt. Because this represents the
next 12 months, we will just divide
the $75,000 by 12, which gives us
$6,250. Do we plan on paying down
our line of credit? In most cases, that
answer come after we perform this
analysis.
FINANCIAL
The long-term portion
Let’s take a look at the longer-term portions of our balance sheet. Usually, we incur debt to pay for durable goods
(medical equipment, furniture and leasehold improvements). In our example, we have $805,000 in fixed assets with a book
value of $531,000, meaning that we have expensed (through depreciation and/or amortization) $274,000 of the original cost
Assets
Current Assets
Petty Cash 1,000
Cash In Bank 151,000
Money Market 26,000
Total Cash and Cash Equivalents 178,000
Accounts Receivable, Net of Adjustments 180,000
Inventory 20,000
Other Current Assets
Prepaid Med/Mal Insurance 24,000
Prepaid Property Taxes 11,000
Total Other Current Assets 35,000
Total Current Assets 413,000
Fixed Assets
Furniture and Equipment 625,000
Leasehold Improvements 180,000
AD - Furniture and Equipment (214,000)
AA - Leasehold Improvements (60,000)
Total Fixed Assets: 531,000
Other Assets
Investment in Surgery Center 160,000
Org Costs 40,000
AA - Org Costs (32,000)
Total Other Assets: 168,000
Total Assets 1,112,000
ACME Ear Nose and Throat Associates
Balance Sheet
April 30, 2010
Liabilities and Shareholders' Equity
Current Liabilities
Accounts Payable 128,000
Accrued Expenses 32,000
Accrued 401K/Profit Sharing 28,000
Line of Credit 100,000
Current Portion of Long-Term Debt 75,000
Total Current Liabilities 363,000
Long-term liabilities
Note Payable - CT Scanner,
Note Payable - Surgey Center,
Note Payable - Equipment, Net
of Current Portion 300,000
Total Long-Term Liabilities 525,000
Total Liabilities 888,000
Shareholder Equity
Common Stock 200,000
Retained Earnings ( 73,000)
Retained Earnings - Current Year 97,000
Total Equity 224,000
Total Liabilities and Shareholders' Equity 1,112,000
Fixed Assets
Book Value
Long-term debt
Depreciation/
Amortization
continuedonpage25

investment for $160,000, with a loan
of $120,000 on it. Your main concerns
will be: Is the investment generating
enough cash flow from distributions to
cover my debt service? If I had to sell
it, would I receive more the $160,000?
If the answer to both is yes, life if good!
If not, then your real concern is the
cash flow. When do you see it generat-
ing enough cash to pay the debt? Maybe
it was a new center and cash flow has
not ramped up; maybe there have been
some issues with utilization that impact
cash flow. The problem here is that it is
an investment, and we typically do not
have much control over its operations.
So what does that say? Do your due
diligence before committing and borrow-
ing funds so that you don’t have to
worry about the cash flow!
The last thing on the balance sheet
that we have not touched on is share-
holders’ equity. This can be a source of
“funds” to assist in the cash flow of the
business, meaning if there are profits,
you might retain them in the form of
retained earnings, which would ulti-
mately turn to cash to pay for obliga-
tions. Or there might be additional
capital contributions by the share-
holders. The problem most of us have,
is that we usually do not have signifi-
cant retained earnings because any
earnings are usually passed through
to the physicians as wages in order
to avoid double taxation. (Earnings
retained in a corporation are taxed and
if they are distributed afterwards in the
form of dividends.) Most physicians
probably don’t want to write checks for
additional capital contributions! The
message here: Manage the rest of the
balance sheet and Shareholders’ Equity
falls out – remember our equation:
Assets - Liabilities = Shareholders’ Equity
(Net Worth)
In other words, if we are collecting
our cash and not spending or
borrowing beyond our ability to repay,
Assets will exceed liabilities, leaving
positive Shareholders’ Equity.
In summary, we could get into a
bunch of financial ratios and really
confuse the heck out of you! However,
that is financial reading for another
day. You do not have to be a finance
guru to identify problems on the
balance sheet. Your key to sleeping at
night involves understanding your
receipts and payment cycles. Without
charges, you have no A/R, which
results in no cash, which means you
can’t pay the bills to keep the lights on
and staff happily employed. What you
don’t want in our CA versus CL
analysis is a situation where the cash
side of the equation (cash and
receivables) is deteriorating, and the
payable side is increasing. This is
where a look at historical data helps.
What was our situation last month, last
year, etc.?
If your receipts cycle is strong, you
have a good collection percentage,
good turnaround time between billing
and receipts, and good processes in
place, you should rest peacefully at
night!
Jeff is responsible for the day-to-day
operations and focuses his attention
on financial matters and strategic
planning of the organization. Mr.
Dudley reports directly to the Presi-
dent and Board of the group. Mr.
Dudley joined SacENT in December
2000, his first venture into healthcare.
However, he brings more than 20 years
of experience in financial and opera-
tions management. Mr. Dudley joined
the Association of Otolaryngology Ad-
ministrators (AOA) in 2001, and has
served on Leadership Counsel since
2004, currently as Secretary/Treasurer.
Mr. Dudley has a Bachelor of
Science in Business Administration
from California State University,
Chico and a Masters of Science in
Accountancy from California State
University, Sacramento. He spent
4 years with KPMG Peat Marwick and
obtained his California Certified Public
Accountants license during that time.
This license currently has an inactive
status.
to our income statement. Our long-
term debt is $600,000, which includes
the current portion of long-term debt
of $75,000. In this amount, we have a
$120,000 loan (including the current
portion) for our investment in a surgery
center. The number we are interested
in is the $480,000 ($600,000 in long
term debt minus $120,000 loan) in
long-term debt on assets that have a
book value of $531,000. You always
want the book value of assets to exceed
the debt you have on them. This will
create built-in positive cash flow on
your balance sheet.
How is that? Your fixed assets are
expensed to your income statement
every month through depreciation and
amortization. This activity results in
taking income (cash) away from your
profits (wages to your doctors) and
leaving it in the bank account to the
principal portion of the debt. Thus, your
debt service, principal and interest
payments — in a perfect world — will
match what is expensed each month:
the depreciation/amortization and
interest. (I say in a perfect world
because usually the timing differences
between the depreciation/amortization
expenses that you recognize for tax
purposes likely will not match exactly
your principal payments each year.)
What the above analysis tells us,
though, is a high-level overview of our
ability to pay long-term debt without
looking for other sources. If, in our
example, long-term debt exceeded the
book value of assets, you would need
to look for other sources of cash to
ultimately pay the debt. That could
come from the sale of assets for a
gain, the excess of CA or CL, retained
earnings or additional capital
contributions.
Other assets typically do not have a
huge impact on most private medical
practices. You may or may not have an
investment in something, like a surgery
center in this example. You just want
to make sure that you do have other
assets recorded on your balance sheet
and that you will gain some form of
economic benefit over the coming
years. Otherwise, the asset should be
disposed of or written off. In our
example, we have a surgery center
FINANCIAL

Other means might include looking
externally, but still focusing on the
private practice. For instance, many
practices are considering merging with
others to form larger single-specialty
or multi-specialty groups to take
advantage of the strengths that come
with greater numbers. Such strengths
include greater purchasing power, a
better ability to negotiate with payers,
and less call coverage. The merger
and acquisition strategy is clearly one
that can work and carries many bene-
fits, but the time, energy, and cost
expended reaching this point can be a
significant drawback. The process of
taking various practices that have very
different identities, philosophies (both
clinical and operational), overhead
structures, income distribution plans,
and trying to meld them together is
no small feat. It requires extensive
planning and due diligence in order to
succeed, so much that many practices
simply don’t have the energy to go
down this road. Yet, taking action to
ensure their practice is sustainable
going forward is still needed.
As a result, many physicians and
practices are looking for hospital
support; not in the form of employ-
ment, but a less invasive approach to
collaboration. There are many compli-
ance issues that require adherence
when collaborating (at least in a
financial sense) with a hospital. The
transaction must be “above board,”
meaning it is consummated at fair
market value and in no way involves
the potential value of referrals. These
key compliance issues are outlined
in the Stark Laws and Anti-kickback
continuedonpage27
W
ith changes continuing in
Medicare reimbursement and
healthcare reform uncertainty,
physicians are seeking ways to insulate
their practices and compensation of
what may lie ahead. While hospital
employment is one method of accomp-
lishing this, many physicians have
limited interest in such a close hospital
affiliation. Physicians often perceive
employment arrangements as “loss of
total control” of their practice, one of
the many aspects of practicing
medicine they appreciate most.
As a result, physicians are looking
toward other means of protecting
themselves and their income. Physi-
cians and practices can accomplish
this many ways internally. This
includes expanding service offerings
and hours of service, becoming opera-
tionally leaner, and adopting new
technologies - allowing more efficiency.
READER R I
• Physicians looking for options
to protect themselves and
practices
• Alignment strategies: Pay for
Call, Service Line Management,
Clinical Co-Management,
Medical Directorship,
Professional Services
Agreement for Comprehensive
Services
ExploringAlignment
StrategiestoProtectAgainst
ReimbursementUncertaintyBy Justin Chamblee, MAcc, CPA
OPERATIONS

Statutes. Further, if they are part-
Statutes. Further, if they are part-
nering with a tax-exempt hospital,
there are certain Internal Revenue
Service guidelines that must be
adhered to.
Physicians can partner with hospi-
tals many ways in a legally compliant
manner. These transactions tend to
be mutually beneficial as the practice
is recognized (monetarily) for a key
service performed, while the hospital
is able to ensure that particular service
will be available to their community
going forward. It is very important for
physicians to be aware of key align-
ment strategies and begin exploring
their potential, if they are not already
in place, such as:
I Pay for Call — Due to the increased
pressure placed on physicians as a
result of higher levels of uninsured
patients using the emergency
department (ED) as their primary
means of healthcare, as well as
shrinking call panels, many hospi-
tals are beginning to provide
compensation to physicians for ED
call coverage. In many cases, this
is only after a certain number of
uncompensated days are provided
each month. For this to occur, a
legitimate burden associated with
the ED call coverage must exist.
Further, the focus on these
EExxpplloorriinngg AAlliiggnnmmeenntt SSttrraatteeggiieess ttoo PPrrootteecctt AAggaaiinnsstt RReeiimmbbuurrsseemmeenntt UUnncceerrttaaiinnttyy continued from page 26
nering with a tax-exempt hospital,
there are certain Internal Revenue
Service guidelines that must be
adhered to.
Physicians can partner with hospi-
tals many ways in a legally compliant
manner. These transactions tend to
be mutually beneficial as the practice
is recognized (monetarily) for a key
service performed, while the hospital
is able to ensure that particular service
will be available to their community
going forward. It is very important for
physicians to be aware of key align-
ment strategies and begin exploring
their potential, if they are not already
in place, such as:
I Pay for Call — Due to the increased
pressure placed on physicians as a
result of higher levels of uninsured
patients using the emergency
department (ED) as their primary
means of healthcare, as well as
shrinking call panels, many hospi-
tals are beginning to provide
compensation to physicians for ED
call coverage. In many cases, this
is only after a certain number of
uncompensated days are provided
each month. For this to occur, a
legitimate burden associated with
the ED call coverage must exist.
Further, the focus on these
arrangements is to alleviate the
burden associated with seeing
unassigned patients. In no way is
any of the potential compensation
intended to remunerate the physi-
cians for taking care of their own
patients who present in the ED.
There are several different ways that
ED call coverage is compensated.
The most traditional, and widely
used, method is a daily stipend.
Essentially, this is compensation for
a 24-hour period of call coverage.
Thus, the physician covering the ED
that day would be eligible to receive
the stipend (subject to the inclusion/
fulfillment of any gratis days). Many
hospitals are also exploring a
variable payment process wherein
the compensation provided is tied
directly to the uninsured patients
seen and services provided in the
ED. Thus, the physician will only
be paid for actual work performed.
Typically, this is on a per wRVU
basis or is tied to the Medicare
reimbursement rates. While this
variable payment helps to align
the compensation with the burden,
in many cases it is ineffective in
enticing physicians to take ED call,
as it does not address the overall
personal burden of being on call.
Meaning, there is a toll on a
physician’s quality of life from
providing ED call coverage, even
if they do not have to come see
a patient in the ED.
I Service Line Management —
Many hospitals do not want to simply
pay for call, but they want to partner
with a practice to provide ED call
coverage, as well as certain admin-
istrative and non-billable clinical
activities. Typically, these are
encapsulated in a professional
services agreement with compensa-
tion provided either in total or based
on the individual services provided.
Many service line management
arrangements are coupled with
other initiatives that involve quality
or cost-saving incentives. This way,
the service line in question receives
excellent oversight from physicians,
but also the physicians and hospital
can work together to achieve clini-
OPERATIONS

costs were lowered from $10,000
down to $5,000, the hospital and
physicians may share equally in the
savings, resulting in the physicians
receiving a $2,500 payment. Once
the maximum efficiency is achieved
with the cost savings, the gain-
sharing arrangements lose their
luster and tend to fade away. With
clinical co-management, the focus
is more so on achieving and then
maintaining the low level of costs.
If the costs are maintained at a
low level, it continues to trigger a
payment to the physicians year over
year. Thus, the focus on maintain-
ing costs at a low level continues
indefinitely into the future.
I Medical Directorship — Medical
directorships have been around for
a long time, but in the past many of
these positions have been filled by
physicians without compensation.
Due to the increased time
physicians are spending in their
practices to generate a fair market
value wage, more hospitals are
beginning to compensate for these
services to ensure they continue to
have the proper clinical and admini-
strative oversight. Typically, these
are compensated on an hourly basis
using a fair market value hourly
rate. Very rarely are there medical
directorships that simply pay an
annual stipend. Much more focus is
on ensuring that any payment made
is tied to actual work performed.
Thus, physicians are required to keep
logs of the time spent performing
services and then submit them to
the hospital for payment. Further,
most medical directorships include
some sort of annual maximum pay-
ment amount to ensure the hourly
payments made do not become
excessive.
I Professional Services Agreement
for Comprehensive Services —
This is often referenced as
“employment lite,” denoting that a
practice still retains its identity as a
private practice, but turns its billing
and collection function over to the
hospital. The hospital then bills and
collects for the physician’s services,
paying them a fair market value
collections rate for the services
they provide, either in total, per
work-RVU, or some other measure.
This is a very attractive model to
physicians as it allows them to
largely retain their autonomy as a
private practice, but reduce their
exposure, somewhat, to continued
declines in their income as a result
of the hospital becoming the
primary source of revenue. In many
instances, a professional services
arrangement is a “stepping stone”
cal excellence or reduce costs
within the service line.
I Clinical Co-Management — This
involves a hospital and physicians
partnering to achieve certain goals
within a specific clinical service
line. Usually, these goals are
focused on quality and operational
measures and results in funds being
paid to the physicians once these
measures are achieved. Clinical
co-management can also include
some medical directorship compen-
sation. An example of a clinical
co-management arrangement could
include a focus on cost savings,
wherein if the costs within the
service line are reduced and remain
at a certain benchmark threshold,
this would trigger an incentive
payment to the physicians. Thus,
the hospital and physicians would
be sharing in any cost savings that
would be achieved. This is similar
to some gain-sharing arrangements,
with notable caveats. Mainly, with
a gain-sharing arrangement, the
hospital and physician would share
in the actual cost savings. Thus, if
continuedonpage28
EExxpplloorriinngg AAlliiggnnmmeenntt SSttrraatteeggiieess ttoo PPrrootteecctt AAggaaiinnsstt RReeiimmbbuurrsseemmeenntt UUnncceerrttaaiinnttyy continued from page 27
Eastern
Donna Hank
Hope Lynn Straut
Patranella Majewski
Barry Rafanelli
Tammy Marks
Angely Ramos
Lee Larocque
Kathleen Eddowes
Tineke Hall
Great Plains
Shannon Lakin
Paula Meisinger
North Central
Predrag Sukovic
Hayley Burton
David Luick
Stephen Meier
Rachel Gajda
William Van Kempen
Steven Sandquist
Cathy Cheshire
Pacific
Kellie Moreman
Darlene Dedmon
Kathie Pulley
Judie Inteso
Southern
April Ballard
Rosalia Calheta
Suzanne Murphy
Christopher Lee, MD
Mary Guest
Melissa Parks
Tricia Long
Southwest
April Richardson
Patrick Fraley, MD
Brenda Tumlinson
Stacie Chapman
WelcometoOur
NewestMembers!
OPERATIONS

• Access to a network of ENT administrative professionals
from across the country.
• Educational programming specific to otolaryngology
administration, including regular webinars and our Annual
Educational Conference.
• Online resources, including downloadable forms, policies,
procedures, job descriptions, and more
for your practice.
• Regularly updated resources,
including our ENT-Specific Salary
and Benchmarking Surveys, and our
Clinical Support Staff Manual.
Wednesday, June 30 | 1:00 p.m.
Eastern
The Shove: No Matter Where You
Are, It’s Time to Begin Again
Presented by Susan Good, Au.D.
JULY . . . . .Wednesday, July 14 | 1:00 p.m.
Eastern
ICD-10 Transition: Will You Be
Ready?
Presented by Deborah Grider,
CPC, CPC-I, CPC-H, CPC-P, COBGC,
CEMC, CCS-P
Wednesday, July 21 | 1:00 p.m.
Eastern
Myths and Facts about EMR
Implementation
Presented by Judy Boesen and
Dr. Lewis Romett
Need Education? Upcoming AOA Webinars
You Can’t Afford Not to Join!
What can AOA offer your practice?
AOA Webinars allow you the opportunity
to enjoy quality educational presentations,
specifically geared toward otolaryngology
practice management, from the comfort
of your own office. Need credit for your
continuing education? Typically, you can
earn 1.5 CEUs for each AOA webinar that
you attend. And if you miss a webinar,
purchase the recording on CD to listen at
your leisure. You can’t beat the value and
convenience that our webinars offer. For
even MORE value, AOA members can pur-
chase webinar bundles – the more you buy,
the more you save. But hurry, because this
offer ends on June 30!
Check out the webinar page of our website
for more information on bundles, recordings,
registration, and a complete listing of our
webinar offerings, which are updated
frequently. With an average of one webinar
per week, we’re sure to have something to
peak your interest. Visit www.oto-online.org/
webinars to find out more!
Register for one of these upcoming
webinars today and see how easy it can be
to get the education you need to take your
career to the next level.
JUNE . . . . .Wednesday, June 2 | 1:00 p.m.
Eastern
The Sniffles, Sneezes and Stuffiness
of Sinus and Allergy Coding
Presented by Teresa Thompson, CPC
Eastern
Microsoft Excel: 11 Things an ENT
Administrator Must Know
Presented by Drew Franklin, MBA,
CMPE
Eastern
The Nurse Practitioner in ENT and
Allergy
Presented by Judith Lynch, MS, MA,
APRN-BC, FAANP
Eastern
How Ancillaries are Changing
My Practice
Presented by Jeff Dudley
To sign up for a webinar or order CD’s of previous webinars,
please go to www.oto-online.org/webinars

Otoscope Magazine of AOA Spring 2010

Otoscope Magazine of AOA Spring 2010

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Otoscope Magazine of AOA Spring 2010