Lessons Learned From Competitive Bidding
November 2019 Issue
Competitive bidding has been a hot topic for years. When we first started hearing about competitive bidding, we were able to dismiss it easily as we thought it wasn't going to have a big impact on O&P directly (or at least not for a while).
Fast forward to the summer of 2019, and common questions we received in our office were regarding competitive bidding. Most of the questions came with a sense of urgency.
While answering these questions and assisting clients with the bidding process was not what I would classify as fun or energizing, it was eye opening for us. I have summarized some key lessons I took away from the process in this article.
Assessing our procedure codes, costs and fee schedules should not only take place when an insurance carrier (Medicare and/or the competitive bidding process) is requiring us to do so. This process should take place routinely. We need to know which items and codes are profitable and how big or small those profit margins are. Which procedures are really driving our business? When do we need to change vendors for a certain product? To do this you need to create a spreadsheet to identify your product costs along with the costs to provide it, and subtract that cost from all the applicable fee schedules.
What referrals and procedures make up your business? In preparation for the competitive bidding, we assessed the overall business, that included all referrals and associated procedures codes for the items identified in this round of bidding. What percentage of sales were from these particular codes? What would be the projected ramifications to our bottom line if we lost this business? I would suggest that everyone do a similar assessment of your practice and make any changes proactively. Assessing your business routinely puts you in the driver's seat.
What are the underlying opportunities? While the preparation and delivery for these deadlines was tedious at times, it brought up opportunities. I would consider this a teaching opportunity by sharing this information with your office staff. In most cases your biller or administrator is not aware of the cost/profit value added to an appointment type. He or she applies the same protocols for a custom KAFO as for a walking boot. Being educated on the cost and value of an item or a visit may put things in perspective. For example, knowing that the cost of the walking boot is only around $30, even if the administrator has not yet received prior authorization, he or she may consider not rescheduling a patient's appointment who is scheduled to receive it. Instead, the administration may consider making an exception on delivering it without an authorization to preserve a positive patient and referral source relationship, and promote good Yelp and Facebook reviews.
Organize your paperwork and know your numbers. I cannot express this enough: We need to know our numbers like we are going on an episode of Shark Tank. We should know our profit margin, our cost of products, and our operation cost of doing business. When we get away from managing and knowing those numbers, we are opening ourselves up to poor business practices. If you don't know your numbers, you don't know your business
Nothing lasts forever. Don't get complacent with your current success. Plan for not just now but for the future.
To quote Marcus Lemonis, "In any business, you can't be complacent. If you are, you are going backwards."
Erin Cammarata is president and owner of CBS Medical Billing and Consulting. She can be contacted at email@example.com.