John A. Lutz, FACMPE, FACHE presents to the Northeastern New York Medical Group Management Association. The presentation entitled, What Can We Expect in 2009?, discusses the new administration, the economy, an uncertain future, unrealistic expectations, physician shortage and demanding patients.

1. Northeastern New York Medical Group Management Association What Can We Expect in 2009? John A. Lutz, FACMPE, FACHE Principal – Lutz Healthcare Consultants, LLC December 9, 2008 Clifton Park, New York

2. NEW ADMINISTRATION ECONOMY IN RECESSION UNCERTAIN FUTURE UNREALISTIC EXPECTATIONS PHYSICIAN SHORTAGE DEMANDING PATIENTS NYMGMA – December 9, 2008 What Can We Expect in 2009?

4. 1. THIRD PARTY PAYERS 2. HOSPITALS 3. REGULATIONS 4. PHYSICIAN SUPPLY 5. PATIENTS 6. OPPORTUNITIES TO THRIVE NYMGMA – December 9, 2008 What Can We Expect in 2009?

6. MEDICARE: – Medicare Improvement for Patients & Providers Act (MIPPA) 2008. - 0.5% Conversion Factor (CF) increase through 2008. - 1.1% CF increase for 2009. - 2-year voluntary program to test appropriateness criteria 2010. - established accreditation for advanced imaging 2012. - Budget Neutrality Factor (BNF) movement in payment formula. - Without Congressional action CF would have been 5.4% lower. - CMS will continue to propose payment cuts until new leadership is in place. NYMGMA – December 9, 2008 THIRD PARTY PAYERS

7. BNF – First implemented in 2007 to prevent the changes in Work RVU’s from increasing Medicare expenditures more that the statutory permissible amount. The 2008 increase in this factor eliminated any increase in the 0.5% CF change. Pre-MIPPA – Physician Payment Formula (RBRVS): [RVU (Work) x BNF x GPCI (Work)] + [RVU (Practice Expense) x GPCI (Practice Expense)] + [RVU (Malpractice) x GPCI (Malpractice)] x Conversion Factor = MEDICARE ALLOWED PAYMENT NYMGMA – December 9, 2008 MEDICARE (CONTINUED)

8. MIPPA – Revised Physician Payment Formula: [RVU (Work) x GPCI (Work)] + [RVU (Practice Expense) x GPCI (Practice Expense)] + [RVU (Malpractice) x GPCI (Malpractice)] [ BNF x Conversion Factor = MEDICARE ALLOWED PAYMENT In 2009, the BNF is applied to the CF which will be $36.0666. The more technical revenue, the greater the negative impact! NYMGMA – December 9, 2008 MEDICARE (CONTINUED)

15. NYMGMA – December 9, 2008 REGULATIONS Self-Auditing: Preventive Medicine for your Practice If you have been in practice management, you know that “the best offense is a good defense”. From Personnel Regulations to Tax Regulations. You do your best to know what you are doing, so document your efforts. Recovery Audit Contractor (RAC) Program – Code Correctly! First there was HIPAA; soon there will be “RED FLAG” Regulations. The Federal Trade Commission (FTC) has delayed the compliance date of the regulations that may require medical practices to establish an Identity Theft Prevention Program to May 1, 2009.

16. NYMGMA – December 9, 2008 REGULATIONS Anti-Markup Rules : See MGMA & CMS Websites for details. Independent Diagnostic Testing Facilities (IDTF ): CMS proposed requiring physician practices that perform diagnostic testing to enroll as IDTF’s; the proposal has been deferred indefinitely; however, MIPPA requires accreditation by January 2012. Advocacy – Get Involved! Call your elected officials! Support MSSNY & other advocacy organizations with real data.

22. NYMGMA – December 9, 2008 OPPORTUNITY TO THRIVE Your staff is your greatest non-physician expense – do you have the right people in the right roles? Practices with more FTE support staff were more profitable than those with fewer FTE support staff .

23. NYMGMA – December 9, 2008 OPPORTUNITY TO THRIVE Objectively Assess/Audit Your Practice : What are our goals? Do we have a plan & timetable to accomplish them? Are we moving in the right direction to achieve them? Can we create alternative revenue sources? Are our expenses appropriate? Can we do provide quality care in alternative ways? Are we coding & documenting compliantly? Establish specific metrics to objectively measure your performance.

24. NYMGMA – December 9, 2008 Have a safe, happy & health Holiday Season! Thank you!