Avoiding Healthcare & Insurance Issues

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Avoiding Healthcare & Insurance Issues
Before we can show you how to turn your practice into a Fortress and an Engine in the next Lesson, we have to show you what to avoid in your practice so that you don’t cause any insurmountable financial damage to yourself or your practice. In addition to personal lawsuits, Doc-tors need to worry about business issues as well. This is consistent with our previous discussions about the “business of medicine.”
Many physicians have a false sense of security and believe that malpractice insurance will protect them from lawsuits. We agree with you that a medical malpractice claim is not “likely” to result in a significant depletion of your estate. However, if you go to trial and lose, you could be in serious financial trouble. According to Current Award Trends in Personal Injury (Copyright 2007), half of all jury awards for medical malpractice claims in 2005 exceeded $1,184,000. The average medical malpractice jury award in 2005 was $3,830,000. If you consider that most doctors carry $1 million of per occurrence medical malpractice liability insurance, half the doctors who lose a judgment will be out at least $200,000 and the average personal loss from a judgment will exceed $2.8 million of the doctor’s own money (after insurance has paid its limits).
In addition to medical malpractice threats, there are unexpected risks that carry an even higher likelihood of causing asset depletion. As a Doctor, business issues include liability for your business as well as liability that may result from regulatory issues and administrative investigations (i.e., OPMC, HCFA, Stark, HIPAA, OIG, etc.) and contract issues (i.e., Medicare Medicaid Fraud investigations, over-billing claims, and refund audits from insurance companies). These types of claims are increasingly overshadowing the threat of medical malpractice because, unlike malpractice risks, they are usually not covered by insurance, leaving the physician to privately fund the defense costs out of pocket. In addition, mistakes in regulatory issues can even land a Doctor in jail. No other risks in this book carry such a serious threat.
In this chapter, we will discuss some of the specific healthcare and insurance related risks, explain how they can be avoided, and offer suggestions on how to protect yourself from mistakes that may occur even when you do your best to avoid them.

Employee at Mac ComputerHIPAA
The Health Insurance Portability and Accountability Act (HIPAA) of 1996 was originally en-acted to enhance (not guarantee) certain health care insurance coverage for Americans. HIPAA also creates a national, standardized set of rules for maintaining (security) and protecting (confi-dential) patient medical information known as PHI (Protected Health Information). The failure to institute a good faith and reasonable office compliance program, to provide privacy notice to patients concerning their rights, to protect against the unauthorized release of confidential records and implement security safeguards for data in transit and maintained in the office could potentially place physician owners, their employees (including administrative office staff) and even business associates at grave risk for monetary fines and even criminal penalties for the unauthorized disclosure of PHI which is enforced by the OCR. Such penalties and sanctions could include civil penalties and fines for each violation ($100 per violation with a maximum penalty of $25,000/year for identical penalties) and for intentional violations of the law could even include criminal penalties (i.e. fines between $50,000—$250,000 and imprisonment terms from 1 to 10 years).

Over-Billing Issues
A key operational element in the business of medicine is the process of billing, coding and collecting professional fees from insurance companies. In some cases the payers are insurance companies and in other cases, the payers may be Medicare or Medicaid. Aside from the United States tax code (which we will call the most complex system of rules in the history of mankind in Lesson #7), the Medicare coding system may be the most complex system of rules ever created.
Despite best efforts to train administrative staff, medical offices are regularly audited by insurance companies, Medicare and Medicaid. These audits routinely result in claims of over-billing. Many Doctors fight a losing battle against the large insurance companies (and their teams of attorneys) and ultimately have to surrender funds they previously collected for services rendered. Unfortunately, when the audit comes from Medicare or Medicaid, Doctors have more to lose than just money. A Doctor found guilty of Medicare fraud can actually go to jail. Because of the significant costs resulting from both Medicare fraud and commercial insurance carrier audits, we will examine them both separately.

Medicare Fraud
Anyone who provides, or receives, healthcare services, could commit Medicare fraud. Fraud is defined as an intentional deception or misrepresentation that someone makes, knowing it is false, that could result in the payment of some unauthorized benefit. Abuse, on the other hand, involves actions that are inconsistent with sound medical, business, or fiscal practices. Abuse di-rectly or indirectly results in higher costs to the Medicare program through improper payments that are not medically necessary. In the eyes of investigators, fraud and abuse both have the same effect. They steal valuable resources from the Medicare Trust Fund that would otherwise be used to provide benefits to Medicare recipients.

Fraud Investigations
The federal law enforcement agency responsible for investigating Medicare fraud is the Department of Health and Human Services, Office of Inspector General (HHS-OIG). In some cases, HHS-OIG may involve other agencies, such as the Federal Bureau of Investigation (FBI), the Internal Revenue Service (IRS), or the Postal Inspection Service.
Many complaints are simply misunderstandings or billing errors and can be resolved fairly easily. Some complaints help identify abusive billing practices. The Medicare contractor will educate the health care provider, collect any overpayment, and then follow up to make sure the provider does not make the same mistake again. Other complaints involve Medicare fraud. These cases often require long, complex investigations by federal law enforcement agencies.

Penalties
The U.S. Attorney General’s office targets health care providers for civil and/or criminal prosecution. Some of the penalties for someone convicted of Medicare fraud are listed More

Handling Long-Term Care Needs Before They Arise

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Handling Long-Term Care Needs Before They Arise
Some people are lucky to accumulate wealth because they are in the right place at the right time. Others are unfortunate and lose assets because they are in the wrong place at the wrong time. Doctors obviously don’t believe in relying on luck to build wealth. If they did, they wouldn’t spend so many years in training. Would it surprise you to learn that, after all that hard work to build careers in medicine, most Doctors ultimately leave their wealth accumulation and asset protection to chance?
We are not saying that Doctors don’t work hard after they get into practice. To the contrary, the opposite is true. Doctors work too hard when they need to be working smarter. This chapter explains how Doctors can efficiently protect themselves from long-term care risks, get a valuable tax deduction, and preserve their valuable retirement assets. This is a key to working less, as it allows a retiring Doctor to quit practice with a smaller, yet more effective, safety net!
Before we discuss long-term care insurance and how to most efficiently purchase the right policy for you, we need to first see how big a risk the expenses associated with long-term care really are.
Why Is Long-Term Care A Big Risk?
According to the AARP Research Report on Long-Term Care (Ari N. Houser, AARP Public Policy Institute, October 2007 (http://www.aarp.org/research/longtermcare/ternds/fs27ritc.html)), on average, two-thirds (69%) of people over age 65 today will need some long-term care. The average duration of need, over a lifetime, is about three years. Women live longer and have higher rates of disability than men, so older women are more likely to need care (79% v. 58%), and, on average, need care for longer (3.7 years v. 2.2 years).
In the U.S., the average stay in a nursing home is between two to three years. In some areas of the country, the cost of nursing home care or quality around-the-clock in-home care may be $200-$300 per day. This means that the average home healthcare stay costs between $150,000 and $320,000. Additionally, the U.S. Health Care Administration reports that costs are increasing 5.8% per year and are expected to more than triple in the next 20 years. At these projected rates, the costs may be between $500,000 and $1,000,000 by the time you or your spouse need long-term care. Are you sure that you, your parents, and your in-laws all have hundreds of thousands of dollars in “extra” funds within your retirement and estate plans to cover this highly plausible expense?
In some parts of California, the cost of living is well above the national average, and so the cost of long-term care is also substantially higher than the national average. Within the state, there can be vast differences between urban and rural areas, with the urban areas being more costly. According to a Genworth Cost of Care study released in April 2008, long-term care costs in California increased as much as 44% over the past five years. The increases are, in part, due to a shortage in the health care workforce to care for the growing number of elderly people.
Costs of in-home care are significantly higher and can amount to $150,000 to $320,000 per year. These costs will continue to increase at disproportionate rates because of the growing number of baby boomers in need of care over the next 30 years.
Long-Term Care Insurance (LTCI) covers health insurance costs for those people who cannot take care of themselves. These costs may include nursing home care, in-home care, and many other expenses. This chapter will explain why and how the most financially astute Doctors make long-term care planning a high priority in their planning. More specifically, this chapter will discuss the need for LTCI, why is often overlooked, why the government won’t help you, what types of coverage exist, and how they can help you.

A photo by Anna Dziubinska. unsplash.com/photos/mVhd5QVlDWwThe Need For Long-Term Care Insurance (LTCI)
There are two basic reasons why many Americans may need to obtain long-term care insurance. First, modern advancements in medicine, science, and technology have helped to increase the average life expectancy of people. Predictably, with this increased life expectancy, there is a greater chance that people may suffer a debilitating illness that will require them to seek significant long-term care. Even though medicine keeps people alive longer, there are still incurable diseases that don’t kill you, but will leave you requiring assistance. Neurological disorders like Alzheimer’s are perfect examples. An Alzheimer’s patient could need significant care for 15 or 20 years before dying. These advances in medicine can come with a hefty price tag for some people.
With the trends of increasing life expectancies, in conjunction with the increasing costs of medical expenses, long-term care will impact an increasing percentage of the population and can be very expensive. Doctors are aware of the increased life expectancies and rising medical costs, but need to be consciously aware that long-term care costs can easily wipe out retirement savings and eliminate any inheritance you would have otherwise left for children or grand-children (or would have received from your parents or in-laws). When armed with the right information, Doctors can make the decision to include LTCI in their comprehensive plans and work with their advisors to do so as cheaply and efficiently as possible.
In addition, having a plan for long-term care demonstrates a desire to have quality care in the event it is needed and represents a financial prioritization of that desire. Having a system in place will make it more likely that necessary care and assistance is provided earlier. Children of aging parents often delay getting help because they are concerned about how it will be afforded. According to the National Census Bureau (2006), the average national income is $48,201 and adult children may be ill-prepared to spend from their own income for supplemental care and reluctant to request spending from their parents’ funds to obtain the needed help.
An AARP Study, Valuing the More