Three Topics Warranting Concern

I'd like to share some thoughts on my mind as a facility owner. Reimbursement for Custom Orthotic Work As the cost of doing business increases, the Medicare freeze continues. Meanwhile, additional procedure codes are being created which lower reimbursement for the growing "prefabricated" portion of our business. At first glance, prefabricated orthoses may seem to cost less, but we are still expected to provide expedient turnaround while the fitting and follow-up requirements may be greater. While the relative demand for custom -fabricated orthotic services decreases, we still need the highly skilled practitioners and technicians for the more challenging cases. With less custom work and lower reimbursement, we will see fewer and fewer qualified people available, making it even more costly to offer. With the prefabricated portion of our business not carrying its share of our sales dollar, it's vital that reimbursement for customfabricated services be increased. Buy-Sell Agreements for Owners A "buy-sell" agreement or "stock purchase" agreement between owners of a business is a document that spells out what is to happen if one of the owners were to die, become disabled, or to retire before the other owner. The classic scenario presented in favor of a buy-sell agreement is when the remaining owner is suddenly equal partners with a deceased owner's spouse. The intent of a buy-sell agreement is to assure that buyout payments are made to the surviving spouse/estate without bringing the company down. The terms of the agreement must be unambiguous to avoid a costly legal battle. There are many possible methods to value a company, many of which won't reflect current market value of the business. In the case of death of an owner, lifeinsurance policies (on the owners' lives) are frequently the vehicle to fund the buyout. Consider buying a policy for the case of "disability" to ease the financial strain of a buyout. (This is different from a traditional "disability" policy that continues monthly income of the disabled person.) One way to determine the buyout amount would be to simply agree that the company purchase and maintain disability and life insurance policies that will serve as, and fund, the buyout payment amount. Contracting It used to be that patients could go almost anywhere with their orthotic/prosthetic prescription. A Medicare beneficiary still can do this provided that he/she hasn't signed up with a managed care organization (MCO). Increasingly, the O&P provider must have a contract/ authorization in place with the client's insurance carrier/MCO to be reimbursed, so regardless of the size of your operation, keeping up with contracts is crucial. If you let a contracting group handle this for you, get a guarantee that information about the number and type of referrals you receive is kept strictly confidential, particularly if you contract with an organization that has any affiliation with a competitor who might like to know the quantity and type of work that is being done in your area. (The same goes if you purchase goods from such a company) Building contractors have a creed that says, "If you win every bid you make, you're bidding too low!" Be willing to refuse contracts that don't fairly reimburse for the level of care you provide. Many hospitals and MCOs feel it is wise to have more than one provider in place, so don't give up if you're initially told they already have a provider. Larger O&P providers have an advantage over smaller providers when it comes to quantity discounts for purchases, and they may save by consolidating their advertising and contracting efforts, but they also have challenges that smaller, locally-owned companies don't. When negotiating for contracts, smaller providers can emphasize their responsiveness due to their independent and local ownership. Randy McFarland, CPO, is president of Sunny Hills Orthopedic Services, Fullerton, California. He may be contacted at randy@sunnyhills.com

Three Topics Warranting Concern

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