COPM Operations

Wed, 22 Jul 2015 14:41:33 GMT

Hi Everyone! This week we start Operations! This covers Chapter 6 in your AOA Resource Manual.

We will cover Operational indicators, Reports and Policies and Procedures.

Let’s talk a little about Operational Indicators. Indicators make our reports. Some examples include financial indicators, operational indicators, Statistical indicators, and Staffing indicators.

Key indicators you might use on a regular basis include collection ratios, Days Billing Outstanding, Aging Accounts Receivable, or A/R turnover. These are likely a part of the financial reports you run daily, weekly or monthly. You may use statistical indicators to build budgets or for benchmarking purposes. These include Operating costs per procedure, Operating costs per physician, Revenue after operating costs, and others like this. Staffing and Productivity indicator helps with staffing and performance. You very likely use this information in your office every day.

Study tip: Look at your reports and identify the indicators you have studied. You may call your reports something different, but the information is the same.

Review Chapter 6 in your AOA Resource Manual to go over all the operational indicators.

Let’s try a sample question:

Accounts receivable / monthly billings (annualized) /360 days is the formula for which Operational Indicator?

A. Aged Collections Ratio

B. Operating Cost Ratio

C. Days Billing Outstanding

D. Total Operating Costs per FTE Physician

Answer : C Days Billing Outstanding, Also called the Accounts Receivable Ratio

Wed, 22 Jul 2015 14:45:31 GMT

Operational reports can help you in benchmarking your practice. Benchmarking is the process of comparing one's business processes and performance metrics to industry bests or best practices from other industries. Benchmarking can help you identify best practices and areas for improvement in your operational processes as well as help you make better informed decisions for your practice. Benchmarking your operations embraces everything from staffing and productivity to office
flow and analysis of procedures performed.

Review Benchmarking and think about how you use benchmarks in your practice.

Here’s a sample question:

Which of the following types of benchmarking would tell you how many patients per month each provider is seeing?
A. Staffing Benchmark
B. Operational Benchmark
C. Revenue Benchmark
D. Compliance Benchmark
Answer: B Operational Benchmark

Wed, 22 Jul 2015 14:47:01 GMT

Do you know the difference between a policy and a procedure?
A Policy is a set of principles, rules, and guidelines formulated or adopted by an organization.
A Procedure is a plan for the specific methods employed to express policies in action in day-to-day operations of the organization.
Do you have a policy and Procedures manual? Do you review and update it yearly?
Is your Policy & Procedure manual different from your Compliance and Employee Manuals?

Wed, 22 Jul 2015 14:47:15 GMT

How is everyone doing?

Let’s talk a little more about Policies and Procedures and the P & P manual.

Policies and procedures must be documented in writing for several reasons, including the necessity to defend an action, a behavior, or a practice before an arbitration body. A P&P manual for your program provides the constancy necessary to deliver services in an efficient and logical manner. Memos and oral tradition are insufficient vehicles to disseminate policies and procedures. A P&P manual exists to answer the what and how of operations. It also meets one of the structural requirements of a quality improvement process.

Is a P&P manual a must? Absolutely! The legal and regulatory climate alone has changed so rapidly during the last decade that a host of new policy areas have emerged. The most recent and perhaps most dramatic requirements relate to the Americans with Disabilities Act (ADA), which removes environmental, political and social barriers to individuals with disabilities. Are you prepared to comply with this welcome law and corresponding regulations? A P&P manual is designed to equip both employer and employees with a means to ensure compliance with all relevant rules and regulations.

How does a Company Policy differ from an Employee Manual?

A company policy manual houses ALL company policies and procedures. It is not necessarily shown to all employees and is mainly used in overall company governance, legal protection, and compliance.

An employee manual houses all policies and procedures an employee needs to know. Every employee must have one and must sign off that they have reviewed and understand it.

Here are a few policy tips:

Policies should always be in writing.

They should be reviewed every 2 years.

They may require a legal review.

Check for any updates in federal or state laws, or regulatory rules such as HIPAA

Address any emerging trends such as social media policies, etc.

Different P & P manuals include:

General Policy & Procedure Manual

Employee Manual

Compliance Plan

Disaster Plan

HIPAA Policy

OSHA Policy

Thu, 23 Jul 2015 15:17:09 GMT

Anyone have any questions??? Be sure to post any questions or comments on Operations. You may be helping one of your fellow test takers!

Let's have some sample questions!

What does a Collection Ratio report describe?

A. the percentage of total gross charges that won’t be collected for services
rendered.
B. the collection margin for the group or the amount of work that needs to be
done relative to the actual revenue collected.
C. the amount of total cash flow available for physician compensation.
D. an overall picture of the financial productivity for a particular physician.

The Answer is B

The Collection Ratio provides a ration by which you can measure the effectiveness of the practice's ability to collect on charges. High ratios indicate high effectiveness and high efficiency and low value indicate low effectiveness and low efficiency. These ratios can be used to measure the productivity of the billing staff and their collections efforts and identify potential billing process problems.

How often is it recommended that you review your Policies and Procedures for changes in Federal and State Laws, HIPAA, OSHA, and timely information?
A. 2 years
B. 5 years
C. 7 years
D. 10 years

The answer is A.

It is recommended that you review all policies every 2 years for changes in Federal Laws, State employment laws, HIPAA, OSHA and other regulations, and emerging trend that need policies, such as cell phone use and social media.

Thu, 23 Jul 2015 15:20:35 GMT

Make sure you review Chapter 6 in the AOAO resource Manual on RVU's and RBRVS!

Let's try a sample question first to test your knowledge!

Relative Value Units ( RVU's) include which three components?

A. Work, Fee Schedule, and Facility
B. Work, Practice Location, and Payor
C. Work, Malpractice, and Payor
D. Work, Malpractice, and Practice Expense

The answer is D

Relative value units (RVUs) are a measure of value used in the Medicare reimbursement
formula for physician services. RVU is the Relative Value Unit used by the RBRVS.
Resource-based relative value scale (RBRVS) is a process used to determine how much
money medical providers should be paid for CPT codes.
It actually consists of three components: the provider Work RVU (representing the work of the
provider), the Malpractice RVU (for insurance related expenses), and the Practice Expense
RVU component which is valued for either the Facility PE RVU (hospital based) or the Non-
Facility PE RVU (non-hospital based; i.e. private practice). Each of these component values
is added up to arrive at the RVU value.
RBRVS is the Resource-Based Relative Value Scale. It uses value units (based on the
resources required or consumed to provide a medical procedure) to relate medical procedure
codes to each other on one scale (i.e. the Relative Value Scale). It was created at Harvard
University in 1985 and adopted by Medicare in 1989.

Thu, 23 Jul 2015 15:20:42 GMT

Thu, 23 Jul 2015 15:32:17 GMT

Here's a little review of Operational Indicators and Report formulas. review the Finance section of your AOA Resource Manual for more information. It is important to be able to identify the formulas and the information they give you, as well as how they are used in your practice.

Performance Reporting

EVALUATE OPERATIONS AND FINANCIAL REPORTS

Key concepts are needed to evaluate operations and financial reports. Some of the concepts are
listed below:
 Comparing data across fiscal years
 Financial ratios
 Reading and interpreting financial reports
 Knowledge of computer based tools
 Key Financial Operating Reports

Key Formulas

Practice Performance
(FTE = Full-time equivalent)
Total Gross Charges per FTE Physician =
Gross fee for service Charges /Total FTE Physicians
-provides an overall picture of the financial productivity of the group

Total Net Revenue per FTE Physician =
Total Medical Revenue / Total FTE Physicians
-provides important measure of the financial stability of the group of a way to compare
relative productivity and profitability between practices.

Total Operating Costs per FTE Physician =
Total Operating Costs / Total FTE Physicians
-provides indicator of the operating expenses incurred to provide patient care per FTE
physician. Used to monitor efficiency and cost effectiveness of operations

Total Medical Revenue after operation costs per FTE Physician =
(Total Medical Revenue)- (Total Operating Costs)
Total FTE Physicians
-identifies the amount of net income available for physician compensation and
reinvestment in the practice after operating costs are deducted. Identifies cash flow
and the group’s liquidity.

Gross Collection Ratio =
Net Fee for service or Collections
Gross Fee for service Charges
-provides the collection margin for the group or the amount of work that needs to be
done relative to the actual revenue collected

Operating Costs
Total Operating Cost as a Percent of Medical Revenue =
Total Operating Costs / Total Medical Revenue x 100
-identifies the group’s overhead ratio or the percentage of revenue that is spent to
cover operating costs. Subtracted from 100 it represents the amount of money
available for physician compensation or reinvestment in the practice.

Total Support Salary Expense per FTE Physician =
Total Support Staff Salary Expenses/ Total FTE Physician
-Identifies the average support staff salary expense per physician. Indicates cost
effectiveness

Total Medical and Surgical Supply Expense per FTE Physician=
Total Medical and Surgical Supply Expenses/ Total FTE Physician
-Identifies the average medical and surgical supply expense allocated to each
physician. Indicates cost effectiveness of supply usage and if supply costs are
reasonable.

Total General and Administrative Expense per FTE Physician=
Total General and Administrative Expenses/ Total FTE Physician
-Identifies the average general and administrative expense allocated to each
physician.

Accounts Receivable

Accounts receivable per FTE Physician =
Accounts receivable /Total FTE Physicians
-provides an average measure of the group’s charges that are outstanding per FTE
physician. Can assists with identifying potential problem areas in the billing and
collection procedures.

Adjustments as a percent of gross charges=
Adjustments/gross charges x 100
Bad Debts due to fee for service as a percent of gross fee for service charges
Bad Debts due to fee for service activity / gross charges x 100
-identifies the percentage of total gross charges that won’t be collected for services
rendered. Identifies the practice’s ability to collect for services rendered.

Adjusted Collection Ratio =
Net revenue or Collections / adjusted charges
-provides effectiveness of ability to collect adjusted gross charges. High ratios indicate
high effectiveness and high efficiency and low value indicate low effectiveness and low
efficiency.

Months Revenue in Accounts Receivable =
Total Accounts Receivable / Annual Adjusted charges x 1/12(.083)

This is often an area that gives people stress. PLEASE ASK QUESTIONS or share any tips your have! Your participation in this discussion forum will help you and others be better prepared for the exam!

Fri, 24 Jul 2015 15:18:04 GMT

How is everyone doing?

Let's finish the week with some sample questions!

What is a set of principles and guidelines formulated or adopted by an organization or practice?
A. Rule
B. Procedure
C. Policy
D. Benchmark

Answer C Policy .
The Policy defines the what and the procedure defined the how!

Which type of Policy Manual would best address what to do in the event of a total power failure?
A. Compliance Plan
B. Employee Manual
C. OSHA Manual
D. Disaster Plan

Answer D. Disaster Plan

Which type of Policy Manual would best address what to do in the event an employee cuts him/herself?
A. Compliance Plan
B. Employee Manual
C. OSHA Manual
D. Disaster Plan

Answer C. OSHA Manual

Which operational report provides an average measure of the group’s charges that are outstanding per FTE physician?
A. Accounts receivable per FTE Physician
B. Total Supply Expense per FTE Physician
C. Total Net Revenue per FTE Physician
D. Total Gross Charges per FTE Physician
Answer A
Your Accounts Receivable per FTE Physician would provide the outstanding charges per physician

Which operational report identifies the amount of net income available for physician compensation?
A. Total Net Revenue per FTE Physician
B. Total Gross Charges per FTE Physician
C. Total Supply Expense per FTE Physician
D. Total Medical Revenue after operation costs per FTE Physician
Answer D
Physician compensations amounts would be calculated after operations costs are deducted from revenue.

Provider Productivity Models

Mon, 27 Jul 2015 21:00:46 GMT

I am in the process of revising our productivity model for 6 equal share partners and two mid level providers. We currently pay productivity on Audiology , ENT and Allergy. Allergy is a strong revenue stream for us, and some of my partners are concerned with the inequities in our current model wherein we divide all allergy revenue equally (excluding the Medicare, Medicaid & Tricare due to Stark).

I am interested in recommendations on models that work well, in addition to information on Stark compliance.