Our Physician Practice Revenue is Declining – Should it be?

Should your practice revenue be declining? The answer is no. You should probably be receiving slightly more revenue than in prior years.

Wooden signpost with two arrows and black words on them.

Here are a few of the reasons your revenue should be the same or higher this year:

        1. Medicare is approving $35.8279 per RVU, which is slightly higher than 2015’s conversion factor of $35.7547.
        2. If your commercial contracts didn’t change, payors should be continuing to approve payments at the same level as in prior years.
        3. More individual lives are covered.
          • Even if the coverage is at a governmental rate (Medicaid or Medicare), you should be receiving income from procedures that you probably wouldn’t have received.
        4. Your denied claim rates should be consistent year over year.
          • Although there was initial concern that payors would significantly increase denials due to ICD-10 edits, Medicare and commercial payors have been cooperative through the process resulting in denied claims being approximately at the same level as under ICD-9 in 2015 and prior years.
            • What should your denied claim rate be? (Without regard to correcting eligibility)
              • Pathology denial rate should be no more than 4-5%.
              • Radiology denial rate should be no more than 4-5%.
            • Accounts being turned over to collections should be decreasing.
              • Why? Because of the increased coverage by Medicaid, accounts that were once uncollectible are not receiving reimbursement.
            • Although unemployment and underemployment statistics are debatable, unemployment on the whole has been trending down.

If you are continuing to produce the same quantity of procedure RVUs (Relative Value Units) in 2016 and your payor mix and contracts haven’t changed much, your revenue stream should be as good as, or better than 2015.

Even a slight decrease results in dramatic financial loss. A ten million dollar practice that leaves 3% unbilled or uncollected, instantly loses $300,000. It pays to monitor your progress.

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