Encompass/Independent Contractor Income

[klebsiella12]

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Hey guys! I recently graduated residency and am working at an Encompass Health inpatient rehab as a 1099. I am completely new to the independent contractor/1099 model. I was told by physicians who graduated before me that the income at Encompass was pretty good. However, based on my experience so far, it's been far less than I anticipated.

When looking at the Medicare ERAs that details my claims/payments, I see that most of the time I am getting 50% of what I billed for. Say for a level 2/3 note, we bill for 160 or so, I am getting around 70-80 dollars for that. I even received an ERA from Medicare that showed I received 0 dollars for multiple patient claims/encounters. Does anyone have any experience with this or insight to provide? Anyone who has or is working at Encompass willing to let me know your actual average take home income monthly based on the number of patients you are seeing?

I would really appreciate any advice here! I know I took a complete risk going the 1099 route but want to see it through if its worth it! Thank you!

 

[RangerBob]

The independent contractor route is always nerve-wracking as a new grad. There's just so much uncertainty with what you'll actually make, and the normal monthly fluctuation in income as well.

That said, you normally only get about 50% of what you bill, as you're only going to get paid what insurance actually agrees to pay, and that's generally around 50% of what is billed. Why we (docs and hospitals) bill Medicare/private insurance twice what they'll pay is still unclear to me, but it's all more or less set (insurance pays what they pay and billers say we have to bill what we bill).

I used to make about $95 per patient per day, averaged out. That took into account H&P vs progress notes, Medical + secondary insurance vs MediCal (pays maybe $30 for 99232/level 2 progress note) as well as patients who haven't met their deductible/won't pay us anything. With the CPT changes last year I'm now closer to $80-85 per patient/day as it's harder to justify a 99233 (level 3 progress follow-up) on rehab. I know when I was averaging $95, folks up in the SF Bay Area were averaging closer to $110-$120, likely because Medicare reimburses more there, and possibly better payor mix. So there can be a lot of variability in what you earn.

We also get a stipend for being medical director/associate medical director. It adds a significant chunk to our income.

My understanding is many independent contractors with Encompass don't getting director stipends, and that Encompass relies on their physiatrists to see a large volume of patients per day to bring in a good income. 20 patients/day, at $80 per pt/per day brings in almost $400k if you do that 5d/week all year with a few weeks for vacation. That's a pretty good income and is doable, though it's busier than I prefer to be (I like my relaxed/early days).

It's not uncommon for some charges to be denied. Medicare just won't pay some things. Sometimes your biller makes an issue as well--ask them about it. Otherwise, your sanity may be better preserved if you ignore your biller statements. That can certainly be dangerous, but I find if I peruse them deeply it'll just take me to a anxiety-provoking place I don't want to be. I trust my billers, and I just check in with them if I get a general gestalt for things being off. Usually if earnings for a month are off, it's because we had an abnormal amount of non-Medicare patients (Medicare pays you the quickest), or my billers/medical records were on vacation and charges were delayed in getting sent out a week or two, etc

It also took about a year for my monthly income to stabilize. My first couple months were lousy. The next 4-6 or so were ok/decent. But it wasn't until 6-12 months that private insurer reimbursement really started rolling in.

 

[klebsiella12]

This was very helpful! Thanks for such a thorough response. If you don't mind me asking, what percentage of your notes are 99233 (level 3s)? I had spoken to another physician working at Encompass who told me he was billing all Level 3's which seemed like a lot and definitely hard to justify. Is there anything that can be done for patients that did not meet their deductible? That means that the 0's I saw for some of my patient encounters from medicare was not a mistake and actually because the patient didn't meet the deductible and I just am not paid at all for that? I appreciate it! I may need to stop looking at these Medicare reports because it kind of hurts to see so many 0's for work that I did, haha

 

[piviti]

I wouldn’t bill all level 3s for follow up, I would say 70-80% level 2 follow ups. H&Ps and discharge are like 90% 99223 and 99239 for me.

 

[RangerBob]

This was very helpful! Thanks for such a thorough response. If you don't mind me asking, what percentage of your notes are 99233 (level 3s)? I had spoken to another physician working at Encompass who told me he was billing all Level 3's which seemed like a lot and definitely hard to justify. Is there anything that can be done for patients that did not meet their deductible? That means that the 0's I saw for some of my patient encounters from medicare was not a mistake and actually because the patient didn't meet the deductible and I just am not paid at all for that? I appreciate it! I may need to stop looking at these Medicare reports because it kind of hurts to see so many 0's for work that I did, haha

I agree with above poster re 99223s and 99239s. I think my follow-ups align as well (75%-ish level 2's).

Billing all level 3's for follow-ups is a recipe to get audited.

Not much you can do for patients who don't meet their deductible, but there's a lot your billers can do--they can wait to bill insurance. Often by the time patients are on rehab and your billers bill their insurance, they may meet their deductible. But if your charges get in before the hospital's charge's/surgeon bills, then perhaps they still have a deductible left. And when patients get sent bills, it's pretty common not to get paid--they are getting so many bills from so many providers that they forget/lose the bill(s), ignore it because they're overwhelmed, or just don't have the money. At least that's what happens in our region. The way I see it is I just bill insurance. If a patient pays their portion I'm ecstatic.

Billers sometimes get things wrong and bill the wrong insurance. Or the hospital has it wrong and brought the patient under Medicare but they actually had private insurance or MediCaid, etc.

If you feel like you have lots of non-paying accounts, ask your billers what's going on. I do that. I am getting reimbursed somehow for most of the patients I see (typically insurance, but some patients do actually pay their bills). If I saw lots of non-paying accounts I'd ask my billers what was going on and verify if it's a biller issue, hospital issue, or patient issue, etc.

 

[klebsiella12]

Thank you! My last question is regarding what you all send to your billers. Say we have a patient that came in for the usual acute metabolic encephalopathy, when you're billers are assigning ICD 10 diagnoses codes, do they just keep that encephalopathy diagnosis daily for the entire length of stay when billing? Are the ICD 10 diagnoses that we submit to our billers supposed to change based on what exactly was addressed for the encounter that day or do you just submit the main diagnoses from your H&P and keep it the same their entire length of stay for billing purposes? Does this affect audit risk vs our compensation in any way?

 

[RangerBob]

Thank you! My last question is regarding what you all send to your billers. Say we have a patient that came in for the usual acute metabolic encephalopathy, when you're billers are assigning ICD 10 diagnoses codes, do they just keep that encephalopathy diagnosis daily for the entire length of stay when billing? Are the ICD 10 diagnoses that we submit to our billers supposed to change based on what exactly was addressed for the encounter that day or do you just submit the main diagnoses from your H&P and keep it the same their entire length of stay for billing purposes? Does this affect audit risk vs our compensation in any way?

I use one diagnosis for the stay. I have always kept it fairly generic (stroke, hip fracture, encephalopathy) and it seems fine. My colleague likes to specify the diagnosis further (ischemic R MCA stroke, etc), but my billers have told me what I'm providing them is fine.

Realistically you are unlikely to ever get audited if you're submitting appropriate charges. If you document 10 H&Ps and another 30 level 3 follow-ups, well, that's close to impossible (and if you're billing by time, it literally is impossible). If you only bill level 3 follow-ups, again, that is an audit risk. I've been told of docs who do that though and did not get audited. Others were so afraid of getting audited they only billed level 1's, which means they're leaving a lot of money on the table. So don't be either--bill what is appropriate.

Document appropriately, and you'll be ok. Like with your taxes, random audits are technically possible (I've only heard of egregious cases being audited though). In of themselves, audits are really not anything major to worry about if your notes support your charges.

 

[Issa_Mithras]

I work at Encompass. Similar to RangerBob, I average about $90 per patient visit in gross collections. We don’t do discharges as consultants though so probably why it’s a little lower than them.

Your Medicare reimbursement numbers seem too low by about half. Our billing company bills Medicare around $300 for a 99223 and we collect ~55-60% or ~$175. You should talk with your billers to make sure you’re in that ballpark.

The 1099 thing is a roller coaster though, and there are still tons of curveballs even now many years into it. I’ll have months where I collect less than half what I expected, some months I make way more. Billing delays can be due to oversight on your billing company, or insurance companies dragging their feet, but usually both. It’s pretty unavoidable so you need to be able to weather that storm constantly. The numbers usually always work out though when the dust settles. I’m collecting right about 55-60% of my billed total after about 4 years.

 

[RangerBob]

I work at Encompass. Similar to RangerBob, I average about $90 per patient visit in gross collections. We don’t do discharges as consultants though so probably why it’s a little lower than them.

Your Medicare reimbursement numbers seem too low by about half. Our billing company bills Medicare around $300 for a 99223 and we collect ~55-60% or ~$175. You should talk with your billers to make sure you’re in that ballpark.

The 1099 thing is a roller coaster though, and there are still tons of curveballs even now many years into it. I’ll have months where I collect less than half what I expected, some months I make way more. Billing delays can be due to oversight on your billing company, or insurance companies dragging their feet, but usually both. It’s pretty unavoidable so you need to be able to weather that storm constantly. The numbers usually always work out though when the dust settles. I’m collecting right about 55-60% of my billed total after about 4 years.

I should have mentioned the "roller coaster" as well. I see the same things. Occasionally I take in 50% of my average monthly billings in a given month, and then at other times it's significantly higher than average.

It's very important as an independent contractor to be mindful of these type of things and prepare for it (ie, have a decent emergency fund!)