I've been exploring the business end of things this year as I haven't had much exposure to it during residency. I feel like I'm missing something because I've been told by many attending psychiatrists that if you go into private practice, it's not feasible to accept Medicare. Also been told that it's impossible to have a therapy based practice if you take insurance.
However, when I look up the Medicare fee schedule, the lowest reimbursement for a 99213 + 90838 is relatively high. These are the codes for weekly therapy, right? $70 + $115. Doing the math, it comes out to over 250k/year for a normal practice.
Am I missing something?
Conceptually before I started my practice, this was where I started. You want a number to help with projections. A worst case scenario and this was what I prepared for - a medicare only practice. The tricky thing for this is it takes time to build your practice, so what's the rate of growth to get up to this point with a 100% medicare practice? More feasible if you are the geriatrician who targets 20-60% of their practice with rounding in nursing homes. As others have pointed out this
GROSS value of 250K is the well with which you draw from to then pay all your overhead. Your lease, you EMR, your phone bill, your liability insurance, business cards, computer cost, office furniture, website creation, website maintenance, etc. To get an idea of what overhead is really like for an insurance based practice, click on my thread:
Building a private practice, N of 1. Enjoy. Month zero: Grand plan was to use money from inpatient gig where independent contractor doing own billings to expedite insurance paneling, so all I had to do was switch over the practice address once opened. Long story short, not a quality place I...
forums.studentdoctor.net
Post #221 has a decent snap shot of what overhead can look like for a 3 month period (a quarter).
Its not impossible to have a therapy only practice if you take insurance - those doctors are wrong - it will likely mean you will make less per hour than what a more med check focused practice could achieve. Are you prepared to make less money for this model of an insurance based therapy practice? Perhaps you can skew things in your favor and only take the top paying insurance in your local area - assuming they actually pay more than medicare. But now that you limited your insurance panel, how long will it take you to fill with just Orange Crescent Moon insurance? Then again, how saturated is your market? How many ARNPs and Psychiatrists in your area, or perhaps even NDs?
That 250K, after you subtract your overhead (mine is currently about ~80K) will then need to subtract your health insurance. Do you have a family? For me and my family my health insurance + HSA contribution comes out to about ~20K per year, purchased directly from an insurance company. So that brings you to (250K - 80K overhead - 20k health insurance = 150K), which will need to subtract retirement so multiply by 0.8 (20% to SEP-IRA we'll say), which brings this (150K to 120K). Now you need to pay taxes on that 120K, which also is about 20%, leaving you with (120K x 0.8 = 96K). 96K divided by 12 months comes out to about
8K/month NET.
Medicaid is a much lower payor than Medicare and definitely off the table in my state. Medicare has more strings attached than commercial plans, but it generally pays easier. It often reimbursed less than commercial plans though.
How are you calculating your $250k?
$185/hr is terrible pre-overhead. Most people wouldn’t start a pp with those numbers.
I actually dove in head first with my practice with projections of $180/hr.
What I think OP is also forgetting here is the facility fee part of things for hospital systems. When you're part of a hospital system working in a clinic seeing mostly Medicare patients, the hospital is also billing a facility fee to Medicare (which you can't bill if your'e solo if I'm remembering correctly). So the hospital can afford to pay you 250K with benefits because you end up bringing in more than that overall with your professional + facility fee (which offsets things like the billing department, front office staff, etc).
Also remember that hospitals will allow a bit of loss in order to provide a service that they really need in the system and will just make up for it with higher billing procedures/specialities. So if they need geri-psych or a psychiatrist that takes medicare cause they have a bunch of patients being referred from primary care with nowhere to go, they''ll take a little bit of a loss to recruit someone for these patients.
So yes, in short it's much more feasible to work for a larger system taking Medicare than trying to carve that out on your own.
Facility fee billing is diminishing. Some places are being called out on this, and some patients are paying attention and putting their foot down. I believe Medicare also is doing away with facility fees for outpatient services. Better health/hospital systems see the value in Psychiatry and are willing ro run some loss in the department for greater population management. Scat filled Big Box shops - which is is the increasing trend - are less likely and willing to axe psych departments / staff, or having shady medicare reducing intake processes. I know of one organization that limits by county/parish/borough - which is not permitted by medicare.
Facility fee billing is not an option for private practice doctors.
1) You have to hire a clearinghouse to bill Medicare, which will increase overhead.
2) You’d be well served to look at the legal industry’s information about how many in office hours become billable hours. Being in the office for 40hrs does not equate to billing for 40hrs. Pre-auths, billing inquiries, patient communications, forms, phone calls, bathroom breaks, business management, staff management, and general life hassles will destroy how many hours you can actually bill for, and get paid. Even if you’re a god, and write down every instance of 99080, and get paid for that.
3) The population base is inherently prone to behaviors that will mess up your hourly average. The elderly will reschedule at the hint of inclement weather, or the hint of family activities. The cognitively impaired can complain to Medicare that you’ve never seen them, which can trigger an audit. The truly disabled will have some hospitalizations and/or transportation difficulties that interfere with care. The “disabled” will have something better to do.
4) Medicare prohibits sending someone to collections, which can mess up your take home. You can ask, you can beg, but you can’t do much else. Which wouldn’t seem so bad, until you realize that since Medicare is a governmental agency, so violations are felonies, not civil matters.
5) Medicare is notorious for stopping all payments when you move offices. They move slow in processing the paperwork. So you can sit around, paying staff, hoping that your huge check arrives in the next couple months.
6) Carefully look at the provider enrollment agreement. There are MANY requirements that you would never suspect.
Edit: 7) remember that in PP your own health insurance (but NOT your own occupation disability insurance) goes into your overhead. That complicates how you estimate that.
As PsyDr pointed out Medicare patients take more time, energy than non-medicare patients. This eats into the bottom line. I currently take medicare because my original plans to do ECT. I'm not doing ECT as things happened to unfold. I will eventually by opting out of Medicare which will allow me to take cash for medicare patients. The young patients who are on medicare for disability are often more consuming or complex and require more time than just whats scheduled for appointment. Get a call or message, 'oh, by the way doctor crisis X just happened and I'm suicidal again' or 'my eating disorder is worse, I'm passing out, barely able to stand but no, I won't go to the hospital or do another eating disorder residential program.' Or your patient is willing to do chemical dependency treatment or go to an eating disorder clinic [needs higher level of care] but you can't find any facility to take medicare. Or they need a psychologist, because well you are the med check Psychiatrist, and none of the psychologists take medicare or are full and not accepting new clients. Or you get medicare patients who are pissed at their adult children, but don't want to do any therapy of there own or really work on themselves - which is fine if they are stable - but when they routinely have exacerbation of mood symptoms +/- SI, its frustrating that they don't want to do any PHP/IOP and even if they did, unlikely to get approved - let alone see a psychologist. Medicare, even for your 20yo on disability, requires a prior auth for ridiculous meds like vistaril. Medicare has difficult to understand EOB statements with "sequestration" deductions in them. To top it off, medicare requires you to have CMS Fraud and abuse training yearly. You know those institutional bureaucratic pointless training modules you do every year? Many of those are because of Medicare/CMS. Medicare patients, are prone to also poorly select their advantage plans, so they end up on an HMO!!!!! Not only are they limited already with medicare they doubly worse it by picking the HMO variety - but have no clue what they, or more likely the
health care broker had just selected for them. My only patient that won't do telemedicine visits, is medicare aged patient - so I lose money because these are billed as phone call encounters. The differentials expand tremendously with geriatric patients, for instance I have one now that likely has some form of cancer, that I have been coordinating the atypical nature of symptoms with their PCP, to do more substantial work ups on, and low and behold has clots of unknown origin now... Trying to coordinate with PCPs is pain at some places because they just list their institution phone number that requires 5 minutes of navigating their Scat phone trees - instead of being professionally courteous and say here is my cell phone, call me at 5PM on my drive home from work. Oh, and we haven't even touched upon the interpreter needs of a Medicare beneficiary - which come out of your pocket... Medicare patients also struggle the future that is here and now, online scheduling, online portals, passwords, emails/portal messages, online bill pay, etc.
No thanks... I'm ready to opt out as of yesterday.
I've been called on my after hours phone twice in the past 2 years. Once by a patient who thought their cold was serotonin syndrome, and once by a geriatric patient who didn't understand what the after hours phone was for.
Another problem with Medicare is that most patients have secondary insurance, which increases the complexity of billing. Also, Medicare patients will frequently switch to Medicare advantage plans, which can create even more problems
Yeah, this is a pain. Exciting for my assistant at first to learn and figure out but even with the several months it took us to understand nuances, including one insurance you have to wait 30 days for the primary medicare to post its EOB, before submitting to the secondary - otherwise they deny it - completely adds extra time for support staff which means mone,
higher overhead. 
