In our listing of informative articles, we have a disproportionately high number of articles addressing the ying and yang of pending healthcare reform. The reason is the topic of this post.

It is self evident that medical billing companies survive because of the revenue that doctors and other healthcare practices receive. The more doctors earn, the more medical billing companies will earn if they can keep the payment rates they get from their clients stable.

However, if the total revenue of a client decreases, the likelihood of medical billing companies maintaining their revenue stream decreases in geometric proportion. First, even at the same percentage rate that the medical billing company charges, less revenue to the doctor means less revenue to the medical billing company. However, there is another element that cannot be ignored.

If doctors find themselves working harder to earn the same or less money, if for example the eligibility for Medicaid is expanded and doctors find their mix of patients to include a higher proportion of Medicare patients, or if third party providers lower their reimbursement rates, the doctors and medical practices are likely to exert downward pricing pressure on their medical billing companies.

Obviously, for the medical billing companies to survive, they must be profitable and therefore there is only a certain amount of downward pricing pressure that can be expected to absorb.

However, the argument that there is a limit to how much room there is to squeeze has been propounded by medical practitioners for the longest time, and unfortunately, there does not seem to be an end to this downward spiral anywhere in sight.

The only reasonable way to plan for the future would be for the medical practices and medical billing companies to optimize their operations and streamline their overhead.

Simply stated, in order to survive, doctors and their respective medical practices as well medical billing companies will have to seek ways in which to streamline their operations, reduce overhead, and be more efficient while not allowing for a degradation in their respective services or they may very well see their bottom line adversely affected.

The introduction of HITECH as an overlay to HIPAA will only, at least initially, raise the operating costs of both medical practices and their respective billing companies.

It is possible, that if the EMR systems and their financial incentives are ever implemented as planned, they may, at least in a temporary manner, alleviate some of the pressure.

So why should medical billing companies, doctors and their respective medical practices care about healthcare reform Because in very direct way it will affect their livelihood.

American politics is very interesting. While the future of health care for many millions of Americans hangs in the balance, while Democrats working behind closed doors try to reconcile the House and Senate versions of the health care bill and are trying to present it to President Obama for signature by the end of the month, there is an election scheduled for Jan 19^th that may significantly change the balance of power in Congress and similarly effect the likelihood of health care legislation being passed.

January 19^th is the day that Massachusetts holds its election to fill the Senate seat of Ted Kennedy. The reason this election is so significant is that the Democrats have been able to push legislation through the Senate with 60 votes (including the vote of Senator Lieberman – the sometimes Independent and sometimes Democrat Senator).

It is this 60^th vote that gives the Democrats the ability to move legislation through the Senate immune from filibuster and other defensive tactics that could be brought by the Republicans to derail the process. In fact the last few votes leading up to 60, were secured with huge payoffs to the states of the last holdouts.

As a result, this band of 60 is held together by Senators whose votes are either conditioned on there being no significant change from the Senate version, or the promise of massive payment for the votes. The problem with paying for votes is that the rest of the 60 may be starting to feel like they passed up on a real opportunity by not demanding a financial windfall for their states. Even if the Senators do not feel that way, their constituents may feel that their elected officials (Senators) did not adequately represent their States. If that is not enough, there are now reports that members of the House of Representatives feel that the White House may be giving more deference to the Senate with their shaky 60 than the House of Representatives that has a greater margin. This means it is important for the Democrats to move this initiative as quickly as possible so that this delicate balace of competing interests does not unravel.

However, the Massachusetts race between Democrat Martha Coakley and Republican Scott Brown seems to be so close that no one wants to make any definitive prediction. What we can predict is that the effects of this election will reach much further than the state of Massachusetts, and that with the Obama Health Care initiative far from resolved, this Massachusetts Senate election will in all likelihood have very far reaching ramifications for many Americans in all of the 50 States.

What is troubling is that there are those who suggest that if the election is close, the Democrats may delay confirmation of the election for long enough to allow the Health Care legislation to pass through the Senate before confirming the election. Not surprisingly, the Democrats vehemently deny that they would resort to intentional delay despite reports that the courtesy extended by Massachusetts Secretary of State William Galvin that allowed Democrat Niki Tsongas to assume a seat in the House in 2007 would not be extended this time – the Democrats argue that the Senate is different than the House – who knows.

So all of the media coverage of the change that may take place later in 2010 when the midterm elections are held and the composition of both the House of Representatives and the Senate may change – may in fact occur to some degree as early as next week.

As we approach February 2010, HIPAA enforcement will be expanded by the implementation of recently established HITECH guidelines. The Department of Health and Human Services (HHS) has issued the rules regarding to the implementation of HITECH and in fact will be in the forefront of the enforcement of these new protocols.

One of the key features of the new mandate of HHS is to ensure and seriously enforce the privacy of Protected Health Information (PHI).

Now for the irony.

Frederick J. Nickerson, 46, pretended to be a U.S. Secret Service Agent and earlier in January slipped past security at – you guessed it – HHS – and was not stopped until he got to the 6^th floor suite of offices of HHS Secretary Kathleen Sebelius.

Apparently, Nickerson presented what appeared to be a secret service badge claiming to be employed by the agency, claiming that he needed to see Secretary Sebelius. To add to his deception, apparently, Nickerson made overtures to make it appear as if he was carrying a gun. Needless to say he is not an employee of HHS or of the Secret Service.

Having achieved access to the executive offices, Nickerson apparently sat for a while taking care of his own personal business and making phone calls on his cell phone. It was only when a witness remembered seeing Mr. Nickerson’s picture on a circular warning of his unusual interest in seeing the Secretary that his improper entry was discovered.

Let’s all remember, HHS is the entity that will be enforcing the security of Protected Health Information in the newly expanded HIPAA and HITECH realm.

We enter 2010 with great uncertainty. There are two versions of a proposed healthcare overhaul, one from the House, and one from the Senate which must be reconciled. There are skeptics who believe that the differences are so great that the two bills will never be reconciled and/or the reconciled version will not be signed by the President Obama.

Let’s face it, one of the guiding themes of the Obama campaign was universal healthcare with a “government option” – and at this point it is clear that “universal” will be substituted with “expanded ”and the government option may in fact not be an option.

Issues regarding abortion, the employer mandate, the relative burdens on the state, and the total cost of the bill loom large. The message from the Senate is that to maintain the 60 votes, certain Senators will not allow deviation from the Senate bill while members of the House are not supportive of the Senate’s version.

However, third party insurance providers are trying to ascertain how they will be able to effectively and profitably run their insurance companies under a yet to be determined regime.

If we take a very macro view of insurance providers it is clear that their business model is relatively simple. They collect premiums from the insured and pay for medical treatment. The difference between what they collect and what they spend for medical treatment, less operational overhead are their profits.

When we read about questions of forward going profitability and/or necessary restructuring of the insurance carriers – the effect of the changes brought on by new legislation must by definition affect either the employers or individuals who are paying the premiums, on the one hand, or on the other hand, the doctors and hospitals who are paid by those companies. It is reasonable to assume that the proposed changes that are causing the insurance companies to scurrying about, will in some way influence the reimbursement the doctors and hospitals receive.

It is reasonable to assume that the forthcoming legislation will, in addition to continuing to raise premium rates and seek to limit coverage, further limit reimbursement to doctors and adversely affect their income. The only possibly mitigating factor may be that the increased number of insured individuals will drive more patient traffic to doctors, however; all that will probably do is make the already overburdened doctors offices that much more burdened. In terms of per visit reimbursement, in all likelihood there will be some diminution. This is especially so, as the eligibility for Medicaid will probably be expanded. Typically, Medicaid patients are the least profitable component of a medical practice.

I believe that it will be more important for doctors to streamline the paperwork/productivity of their practices and optimize the efficiency of their non-medical employees while taking careful looks at their operational expenses if they hope to tread financial water in the years to come.

As the future of medical care in the United States unfolds I hope to continue sharing my views with our readers.

Several differences remain between the Senate bill and the House bill. The Senate is expected to prevail on killing the “public option,” leaving House Democrats hopeful they will win on other points, including efforts to make coverage more affordable.