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Issue Date: November 2007

Is a Seismic Shift Coming in Health Reform?
A shift may be occurring as politicians and health policy experts consider
moving away from a single-payer system similar to those in the United Kingdom, Canada, and France to a universal coverage system such as in the Netherlands and Switzerland. A universal coverage system in the United States would include government subsidies and consumer-driven features that allow patients and private insurers to pay for care at hospitals and from physicians. Democratic and Republican politicians, including some of the candidates for president, believe a single-payer system is unpopular. It is often labeled as socialized medicine. But these same politicians recognize that most Americans want universal coverage.

Take Steps to Avoid Claim Denials
Few medical practices can afford to give away income as a result of claims denials. Yet, some practices ignore denied claims, finding the cost and effort of pursuing them not to be worth the time and expense. Consultants estimate that the average practice loses about 10% of gross billings due to lost, forgotten, or incorrectly prepared charges. Experts estimate that reviewing, revising, and resubmitting claims costs at least $4.40 for each rejected claim. “For this reason, it’s very important to make sure claims are accurate the first time around,” says Roberta L. Buell, a reimbursement consultant in Sausalito, Calif.

Conflicting Ideas for Health Reform
As the presidential campaign moves toward the primaries next year, candidates have issued proposals to reform the nation’s health care system. Democrat Hillary Clinton, for example, has suggested a plan that would require no new federal bureaucracy, allow patients to choose their own physicians and hospitals, and provide coverage for the uninsured, among other measures. Republican Mitt Romney also has a plan that seeks to foster competition to make private health insurance affordable, provide access to quality health insurance for every American, enhance the portability of private health insurance, and slow the rate of inflation in health care spending.

Physicians Becoming More Sophisticated
Physicians are becoming more sophisticated in their approach to political realities involving reimbursement, says Dean Gesme, MD, an oncologist with Minnesota Oncology Hematology, PA, a 40-physician group in Minneapolis. The factor that has fostered this new level of sophistication is the Medicare Prescription Drug Improvement and Modernization Act of 2003. Since the act became law, oncologists have learned about its implications and how it has affected reimbursement. The law reduced the amount oncologists are paid for certain services, and these reductions were difficult for many oncology practices. As a result, some oncologists (and some cancer patients as well) have learned how to get the attention of federal health officials and members of Congress about Medicare reimbursement.

The Benefits of a Captive Insurer
Physicians are often interested in captive insurance companies (CICs) because they provide a way to protect one’s assets if they are established and maintained properly. Many advisers believe there is no better way for successful physician practice owners to create such a flexible and efficient planning tool as a captive insurer. Successful physicians typically face significant financial risks. As a result, they often are interested in asset protection and in building tax-favored wealth over the long-term. Of course, many want to find practice buy-out and estate planning opportunities as well. All of these factors make a CIC an attractive and important financial-planning and risk-management tool. What’s more, the interest level in a CIC is likely to be even more pronounced among high-liability and high-income specialists such as allergists, oncologists, pulmonologists, rheumatologists, and others.
The disadvantage is that establishing and running a captive insurer is costly. But if it is managed well, the returns a CIC provides will more than offset the costs. A CIC is a fully licensed insurance company domiciled either in one of the states that has special legislation for small captive companies or in an offshore jurisdiction that has similar legislation enabling such captives. Whenever a CIC is established offshore, it is critical that the CIC complies with all U.S. tax rules and must be handled by captive managers, tax attorneys, or CPAs experienced in these matters. For any CIC, the general rules are simple. It must be established with a real insurance purpose, it must serve as a facility for transferring risk and protecting assets, and the transaction must make economic sense. Beyond these general rules, there is much flexibility in how the insurer can benefit its owner.

Broker Sees Positive Trends Developing for Physicians Selling Their Practices
In this interview, Kevin Schon, president and CEO of PrimeCare America in Glidden, Iowa, discusses the role PrimeCare America plays in buying and selling physician practices, and serving as a placement agency for health care professionals. The company helps physicians and other health care professionals to find financing for purchasing practices and offers practice appraisal and practice management services. In an interview with Editor-in-Chief Richard L. Reece, MD, Schon described the current market for physician practices.