Predicting a Medical Practice’s Cash Flow in a Rapidly Changing and Punitive Healthcare Climate

Predicting a Medical Practice’s Cash Flow


Making intelligent decisions on a company’s future depends on a myriad of factors: Projected cash flow being a key metric.

Unfortunately, projected cash flow in a typical medical practice is getting progressively more difficult to ascertain. With the constant changes in healthcare, historical data may be an inaccurate measure of future revenue and a medical practice must continually adjust their projected revenues based on a number of factors.

Following are the few of the myriad items that can affect a clinic’s cash flow:

1). Expected reimbursement rates for patients who have enrolled through the government’s healthcare exchange.

If an existing patient moves into a new job that no longer has healthcare coverage and then decides to enroll in a health plan using a subsidized plan, then the reimbursements for that same patient could go down as much as 30% during the same calendar year for the same patient. Any new patient coming into the practice through the exchange will have also be reimbursed at a discounted rate.   Blue Shield has been paying some of their network providers 70% of the regular contracted rates for patients joining the insurer through the exchange, regardless of the percentages of subsidy.

2). Current penalties for Meaningful Use, PQRS and/or the related Value Based Modifier adjustment could reduce Medicare reimbursements up to an additional 9%.

If a practice is not current on their Meaningful Use attestation and if they are not participating in the Physician Quality Reporting System(PQRS), then the practice is currently and/or will continually be penalized.

Medicare costs are budgeted at $605.9 billion in 2015. This money has to come from somewhere. Penalizing physicians for not performing a complicated set of tasks is a great way to save money. Penalties for non-compliance could reach 9% of total reimbursements by 2016.

3). Current actual reimbursement rates per CPT code broken down by insurance carrier compared to contracted rates per code. An educational exercise is to have your billing company give you an actual breakdown of the total dollars collected on each CPT code billed and compare that number with the contracted rate for the code by the insurance carrier. A clinic may be surprised to find how much of their collections are lost by not coordinating their patient visits, with insurance verifications, including past due balances, co-pay and co-insurances, with the billing and collection departments.

A periodic financial analysis of the practice receivables is becoming a must. Once a practice administrator and/or Physician CEO understand the areas where there are shortfalls in the billing and collections process, an immediate plan of action should be implemented in order to stem the flow.

Predicting a Medical Practice’s Cash Flow


Predicting a Medical Practice’s Cash Flow in a Rapidly Changing and Punitive Healthcare Climate was last modified: September 15th, 2015 by sbhatia, Medical Practice and EHR Compliance Consultant