August 11, 2009 Feature

Payer and Patient Mix: Keys to a Healthy Private Practice

Two factors that have an enormous impact on a private practice are the combination of entities that pay for your services and the clinical diversity of the patients you serve. The way you control these two factors—payer mix and patient mix—can affect your practice's ability to stay afloat.

Payer mix refers to your payer entities, such as patients who pay out-of-pocket, private-sector insurers, and Medicare and Medicaid. Each payer generates a specific income, and you can identify which payers generate the highest proportionate revenue. You can also determine payers' payment speed, efficiency, and desirability by identifying components of each payer's revenue cycle: time lag between billing and payment and the percentage of paid charges.

You can increase profits by tracking and using this information to adjust the payers with whom you contract and the proportion of patients you accept from each payer category (self-pay, private insurance, Medicare/Medicaid).

To determine patient mix, you can assign different factors to patients' accounts to view patients across various parameters, such as age; codes from the International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM) that indicate the patient's diagnosis; and codes from Current Procedural Terminology (CPT®, American Medical Association) that indicate the professional services you provided. In computerized billing programs, it is simple to attach categorizing data to each patient; you can then run reports that show the most profitable patient types for your practice.

By combining both factors—patient type and payer—you can more specifically identify the most profitable providers and patient types (see Figure 1).

Generating Reports

Billing software designed for small businesses have excellent customizable entries for accounts and instant report-generating capabilities. To generate accurate reports from your accounting system, you should:

  • Incorporate the data you want associated with each account
  • Enter the data uniformly for each patient.
  • Update the data at appropriate times.

You can connect your patients' account profiles with data from invoices (issuance, due, and payment dates) and clinical records, such as the referring medical diagnosis; your diagnosis and ICD-9 codes from each visit; and CPT codes. You can also use codes from the Healthcare Common Procedure Coding System for devices, such as hearing aids, augmentative communication devices, speech-generating devices, and cochlear or laryngeal implants.

Analyzing the Data

A good time to perform a payer/patient mix analysis is prior to renewing contracts with private insurers or enrolling in a publicly funded program. Choosing the payers with whom you do business is one method of controlling payer mix. However, any observed differences in revenue may be attributable to changes in patient mix as well. Analyzing both patient and payer mix regularly will help determine reasons for revenue fluctuations. It's also important to remember that with higher patient numbers, the effect of any one common variable will be lessened.

Patient mix effects can be analyzed with or without regard to payer mix. For instance, a report to find your annual top revenue-producing services might list CPT codes from invoices by their revenue totals. If you have diagnosis information in your patient records, you can determine the diagnosis of patients for whom you provide these top-producing CPT codes. That information can also be connected to payer data and other information.

What can you do with this information? For example, you may discover that your practice generates the highest revenue under CPT code 92507 from patients diagnosed with autism who have private-sector insurers. You may then choose to intensify marketing efforts to attract patients with those characteristics.

Marketing might include purchasing ads or placing brochures where targeted patients will see them. You could also make yourself more accessible to your target group: If you want to attract more patients with autism, for example, you might locate your practice in a pediatric multi-specialty building or network with other providers (e.g., primary care pediatricians) who will refer patients or with whom you form a mutual referral agreement.

Conversely, you may decide to stop marketing to and accepting potential patients in your lowest revenue-producing categories, if your contracts permit you to do so.

With careful set up of accounting systems and routine monitoring and analysis, you can keep your practice on track financially.

Angela Foehl, MPH, JD,, director of private health plans advocacy, can be reached at afoehl@asha.org.

cite as: Foehl, A. (2009, August 11). Payer and Patient Mix: Keys to a Healthy Private Practice. The ASHA Leader.

  

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