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your tax return for 2010 has been filed – or will be shortly. Now you don’t want to think about income taxes. Understandable, but you would be wise not to wait until late December to start your 2011 tax planning.
Where do you begin? Every good tax plan starts with a tax projection. You – or your business manager or accountant – will have to run the numbers.
What has already happened this year? And what does the situation look like for the rest of the year?
Run some “what if ” scenarios once you have a base case – the best guess as to what your year will look like. What if my income is 10 percent higher? What if I purchase that new diagnostic equipment for my medical practice?
Here are seven ideas you can use between now and the end of the year to save taxes. All seven ideas aren’t for everyone. But it’s a good bet that a few items on this list apply to you.
1.CheckyourtaxpaymentsWhether you pay your taxes through withholding or by making
quarterly estimates, you do not want to have too much or too little paid in. Pay too much tax during the year, and the government has your cash to spend, when you could have invested it yourself. Pay too little, and you may be penalized – an outcome that is generally avoidable.
Be especially careful that your withholding is set correctly if you have income from more than one employer. You may need to provide new W-4 forms to adjust your withholding.
2.PurchaseahomeHome prices and mortgage interest rates remain low by historical
standards. Whether you are buying a new home or “moving on up,” the tax law will assist you with itemized deductions for home mortgage interest and real estate taxes.
The interest deduction is gener-ally available if you borrow money to remodel. And energy-efficient home improvements may even qualify for a tax credit.
3.BuybusinessassetsYour medical practice may ben-
efit from generous tax write-offs for the cost of new medical equipment, furnishings and other assets. The key to the deduction is placing the assets into service by the end of the year. Be sure to order them with sufficient lead time.
I n s i d e
I n s i d e
Sept. / Oct. 2011➜Eligibility for Medicare
bonuses has expanded
➜Accepting online payments can increase collections
See Tax planning on page 2
So
Two programs designed to increase healthcare quality and efficiency apparently don’t play well together.
Although the Electronic Prescribing and the Electronic Health Records programs have similarities in technology and reporting requirements, they are inconsistent, according to a 2011 Government Accountability Office (GAO) report.
The GAO noted the following inconsistencies:▲ The e-prescribing program offers compliance incentives
from 2009 to 2013, while the EHR program offers incentives from 2011 to 2016.
▲ The e-prescribing program imposes penalties for noncompliance from 2012 to 2014, when the program ends, and the EHR program specifies penalties beginning in 2015.
▲ Both programs require healthcare providers to “adopt and use technology that can perform similar electronic prescribing-related activities,” but to meet the require-ments of the EHR program, providers must use certified systems that satisfy the Department of Health and Human Services criteria. The e-prescribing program does not require certification.
The GAO sees a couple of problems resulting from these inconsistencies. Providers may have:
▲ To invest in systems without any assurance that they will meet the e-prescribing requirements
▲ To meet separate reporting requirements for the two programs to earn incentive payments from 2011 through 2014
From the study, the GAO arrived at some recommenda-tions for the Centers for Medicare & Medicaid Services “to help improve the effectiveness” of the e-prescribing and EHR programs “to encourage the adoption of health infor-mation technologies among Medicare providers”:
▲ Urge healthcare providers to select certified e-prescribing technology.
▲ Try to standardize the reporting requirements “to remove the overlap” for physicians who may qualify for incentive payments or have penalties imposed on them under both programs.
▲ Identify factors that helped or hindered e-prescribing implementation that could help EHR implementation. ❚
GAO report recommends losing program overlap
Where do you begin? Every
good tax plan starts with a tax projection.
Year-end tax planning for you and your practice
A financial and management bulletin to physicians and medical practices from:
The technical information in this newsletter is necessarily brief. No final conclusion on these topics should be drawn without further review and consultation. Please be advised that, based on current IRS rules and standards, the information contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty assessed by the IRS. © 2011 CPAmerica International
Your Healthy Practice
CERTIFIED PUBLIC ACCOUNTANTS
3330 W. Esplanade Avenue • Suite 100 • Metairie, Louisiana 70002
(504) 838-9991 • Fax: (504) 833-7971 • www.kl-cpa.com
CERTIFIED PUBLIC ACCOUNTANTS
3330 W. Esplanade AvenueSuite 100
Metairie, Louisiana 70002
4.SetupaqualifiedretirementplanIf you have your own practice, you can benefit from tax
deductions to fund your retirement. Many types of qualified retirement plans have to be set up before the end of the year, although you have until April 15, 2012, to establish an IRA or a SEP (simplified employee pension). If you have employees, contributions you make on their behalf are also tax-deductible.
5.ConverttoaRothIRAIf you have retirement savings in a traditional IRA, you can
convert to a Roth IRA, regardless of your income. The downside is that you have to pay tax this year on the untaxed amounts in your IRA. The upside is that future earnings on those funds will never be taxed, once you have had a Roth IRA in place for five years.
6.ManageyourincomeYou may be able to control the amount of income your
medical practice earns in 2011 by deciding when to bill your patients. If you use the cash receipts method of accounting, you generally pay tax on income when you receive the cash.
By billing out promptly and delaying your expense payments, you may increase 2011 income. This strategy may be advantageous if you expect to be in a higher tax bracket in 2012.
Conversely, by delaying your billing and paying your expenses quickly, you may defer income into 2012.
But be careful. You cannot unreasonably delay billing. Deferral of income generally means you do not pay tax on that income until next year.
7.ReviewyourestateplanWhile not necessarily resulting in a direct tax savings,
reviewing your estate plan is generally a good idea. Congress made major changes to the estate and gift tax rules beginning in 2011. It is a good idea to meet with your tax adviser and your estate attorney to decide whether your will should be revised.
You may also decide to make gifts to children or grandchildren before the end of 2011. And the sooner they are made, the more tax you may save if you gift income-producing assets.
Most people spend more on taxes than any other expenditure. It only makes sense to schedule time to work on plans to reduce this burden as much as possible. – Michael Redemske, CPA
Tax Planning continued from page 1
Place new medical equipment and
furnishings into service by the end of the year to deduct their costs.
For providers new to Medicare, eligibility to receive 10 percent Primary Care Incentive Program bonuses on certain services is determined using only the prior year’s claims data with no minimum enrollment period.
This rule became effective July 1, 2011, and will apply for the duration of the bonus program to all providers during their first year in Medicare.
To receive a bonus on services provided on or after Jan. 1, 2011, and before Jan. 1, 2016:
▲ Providers must have a specialty designation of 08 (family practice), 11 (internal medicine), 37 (pediat-rics), 38 (geriatrics), 50 (nurse practitioner), 89 (certified clinical nurse specialist) or 97 (physician assistant);
▲ Providers must have billed Medicare for CPT codes 99201 through 99215 and/or 99304 through 99350; and
▲ Eligible codes must account for at least 60 percent of the allowed charges paid to the provider under Part B (excluding hospital inpatient care and emergency department visits) for the prior two years, except for providers new to Medicare.
▲ Claims must be reported under a qualifying National Provider Identifier.
▲ Providers must qualify each year.
Eligibility determinations for those newly enrolled in Medicare will be completed after the third quarter. By Nov. 28, 2011, Medicare contractors will post on their websites a list of newly eligible providers.
The first payment will be a lump sum based on services furnished for the year, and providers will receive the payment after the fourth quarter.
Subsequent payments will be made quarterly based on each quarter’s eligible claims as long as the provider continues to meet eligibility requirements. – Irene E. Lombardo
Eligibility for Medicare bonuses has expanded
Try these five strategies to substantially increase the chance of collecting outstanding balances:▲ Turn paper checks into electronic transactions. A check reader
enables your staff to process a check like a credit card. The check is verified, the patient signs a printed authorization slip, and the amount is processed through the Federal Reserve’s Automated Clearing House (ACH) and deposited into the practice’s account. Electronic check conversion speeds payment, ensures sufficient funds and saves time by eliminating trips to the bank. It can also prevent the return of checks for insufficient funds.
▲ Obtain credit or debit card signatures-on-file at the point of service. By providing a signature-on-file, the patient authorizes automatic payment of any balance from the credit or debit card after the claim is adjudicated. The cardholder does not have to sign the sales draft authorizing the charge. Be sure to use software that encrypts card information in a secure database that complies with the payment card industry and all major credit card requirements.
▲ Offer automatic extended payment arrangements. When large sums are due, either pre- or post-treatment, set up an automatic monthly payment plan using the signature-on-file authorization discussed previously. This enables the patient to pay over a specific period, ensures the practice has a regular revenue stream and reduces the cost of collections.
▲ Provide a line of credit through a healthcare credit card. These programs offer patients financing over a specified period. The lender pays the practice the amount bor-rowed, and the accounts receivable responsibility is removed. Because these are “no recourse” loans, the practice is not responsible should a patient default. Be aware, there is a monthly fee based on a percentage that can run from about 7 percent to 10 percent.
▲ Offer a discount. Some healthcare providers are offering prompt-pay discounts, as well as discounts to those who are uninsured or who pay in cash. – Irene E. Lombardo
Five more ways to speed payment, reduce receivables
If your practice is finding it harder to collect patient balances due, you’re not alone. But what can you do about it?
The fastest-growing portion of bad debt, according to research conducted by the management consulting firm McKinsey & Company, stems from insured patients who fail to pay balances due after their insurance has paid covered charges. The findings suggest lack of financing options, inefficiencies in billing practices and consumer confusion are major drivers of nonpayment.
Revenue cycle concerns are not new. But researchers predict even greater pressure on physicians to deal with retail-revenue-cycle challenges due to rising copayments, higher deductibles and a shift from hospital to physician- or clinic-based settings expected under health reform.
Collecting payment at point of sale is, of course, ideal but usually limited to copayments or estimates. Until real-time claims adjudication is widespread, practices need to address the drivers of nonpayment and adopt new methods for receiving payment.
One solution many practices are choosing is the option of online payments, which can provide flexibility and conve-nience for patients. Consumer bill-paying habits have changed significantly during the past decade, with online bill payment now mainstream. Fiserv’s 2010 annual Consumer Billing and Payment Trends survey found 45 percent of all households with Internet access pay bills online through either their financial institutions or biller direct services.
What’s more, Internet use has made consumers accustomed to 24/7 access to their account information. Intuit Health’s Health Care Check-Up Survey found 73 percent of Americans surveyed would use a secure online communication solution
to pay medical bills and communicate in various ways with their doctor’s office.
Between 2008 and 2010, online patient payments for medical bills tripled, increas-ing from 3 percent to 9 percent of gross dollar volume of all patient payments, according to InstaMed, a healthcare pay-ments network. That number is expected to grow rapidly in coming years.
BenefitsFor patients, a practice’s online presence enables them to:▲ View, manage and pay their bills▲ Get answers to frequently asked billing questions▲ E-mail the office with specific queries For a nominal cost, practices offering e-billing and online
payment collection can:▲ Reduce manual processing▲ Reduce paper statement and postage costs▲ Lower the number of accounts receivable days▲ Increase cash flow▲ Improve patient satisfactionOnline payments accepted can include credit cards, debit
cards and transfers from bank checking and savings accounts.Practices that do not have their own websites can still enjoy
the benefits of online payment. Many electronic medical payment-processing companies can provide a payment site customized for an individual practice. Patients are directed to the site from their billing statements, and payments are directed to the practice’s bank account. – Irene E. Lombardo
Accepting online payments can increase collections
September / October 2011 Your Healthy Practice2 September / October 2011 Your Healthy Practice 3
4.SetupaqualifiedretirementplanIf you have your own practice, you can benefit from tax
deductions to fund your retirement. Many types of qualified retirement plans have to be set up before the end of the year, although you have until April 15, 2012, to establish an IRA or a SEP (simplified employee pension). If you have employees, contributions you make on their behalf are also tax-deductible.
5.ConverttoaRothIRAIf you have retirement savings in a traditional IRA, you can
convert to a Roth IRA, regardless of your income. The downside is that you have to pay tax this year on the untaxed amounts in your IRA. The upside is that future earnings on those funds will never be taxed, once you have had a Roth IRA in place for five years.
6.ManageyourincomeYou may be able to control the amount of income your
medical practice earns in 2011 by deciding when to bill your patients. If you use the cash receipts method of accounting, you generally pay tax on income when you receive the cash.
By billing out promptly and delaying your expense payments, you may increase 2011 income. This strategy may be advantageous if you expect to be in a higher tax bracket in 2012.
Conversely, by delaying your billing and paying your expenses quickly, you may defer income into 2012.
But be careful. You cannot unreasonably delay billing. Deferral of income generally means you do not pay tax on that income until next year.
7.ReviewyourestateplanWhile not necessarily resulting in a direct tax savings,
reviewing your estate plan is generally a good idea. Congress made major changes to the estate and gift tax rules beginning in 2011. It is a good idea to meet with your tax adviser and your estate attorney to decide whether your will should be revised.
You may also decide to make gifts to children or grandchildren before the end of 2011. And the sooner they are made, the more tax you may save if you gift income-producing assets.
Most people spend more on taxes than any other expenditure. It only makes sense to schedule time to work on plans to reduce this burden as much as possible. – Michael Redemske, CPA
Tax Planning continued from page 1
Place new medical equipment and
furnishings into service by the end of the year to deduct their costs.
For providers new to Medicare, eligibility to receive 10 percent Primary Care Incentive Program bonuses on certain services is determined using only the prior year’s claims data with no minimum enrollment period.
This rule became effective July 1, 2011, and will apply for the duration of the bonus program to all providers during their first year in Medicare.
To receive a bonus on services provided on or after Jan. 1, 2011, and before Jan. 1, 2016:
▲ Providers must have a specialty designation of 08 (family practice), 11 (internal medicine), 37 (pediat-rics), 38 (geriatrics), 50 (nurse practitioner), 89 (certified clinical nurse specialist) or 97 (physician assistant);
▲ Providers must have billed Medicare for CPT codes 99201 through 99215 and/or 99304 through 99350; and
▲ Eligible codes must account for at least 60 percent of the allowed charges paid to the provider under Part B (excluding hospital inpatient care and emergency department visits) for the prior two years, except for providers new to Medicare.
▲ Claims must be reported under a qualifying National Provider Identifier.
▲ Providers must qualify each year.
Eligibility determinations for those newly enrolled in Medicare will be completed after the third quarter. By Nov. 28, 2011, Medicare contractors will post on their websites a list of newly eligible providers.
The first payment will be a lump sum based on services furnished for the year, and providers will receive the payment after the fourth quarter.
Subsequent payments will be made quarterly based on each quarter’s eligible claims as long as the provider continues to meet eligibility requirements. – Irene E. Lombardo
Eligibility for Medicare bonuses has expanded
Try these five strategies to substantially increase the chance of collecting outstanding balances:▲ Turn paper checks into electronic transactions. A check reader
enables your staff to process a check like a credit card. The check is verified, the patient signs a printed authorization slip, and the amount is processed through the Federal Reserve’s Automated Clearing House (ACH) and deposited into the practice’s account. Electronic check conversion speeds payment, ensures sufficient funds and saves time by eliminating trips to the bank. It can also prevent the return of checks for insufficient funds.
▲ Obtain credit or debit card signatures-on-file at the point of service. By providing a signature-on-file, the patient authorizes automatic payment of any balance from the credit or debit card after the claim is adjudicated. The cardholder does not have to sign the sales draft authorizing the charge. Be sure to use software that encrypts card information in a secure database that complies with the payment card industry and all major credit card requirements.
▲ Offer automatic extended payment arrangements. When large sums are due, either pre- or post-treatment, set up an automatic monthly payment plan using the signature-on-file authorization discussed previously. This enables the patient to pay over a specific period, ensures the practice has a regular revenue stream and reduces the cost of collections.
▲ Provide a line of credit through a healthcare credit card. These programs offer patients financing over a specified period. The lender pays the practice the amount bor-rowed, and the accounts receivable responsibility is removed. Because these are “no recourse” loans, the practice is not responsible should a patient default. Be aware, there is a monthly fee based on a percentage that can run from about 7 percent to 10 percent.
▲ Offer a discount. Some healthcare providers are offering prompt-pay discounts, as well as discounts to those who are uninsured or who pay in cash. – Irene E. Lombardo
Five more ways to speed payment, reduce receivables
If your practice is finding it harder to collect patient balances due, you’re not alone. But what can you do about it?
The fastest-growing portion of bad debt, according to research conducted by the management consulting firm McKinsey & Company, stems from insured patients who fail to pay balances due after their insurance has paid covered charges. The findings suggest lack of financing options, inefficiencies in billing practices and consumer confusion are major drivers of nonpayment.
Revenue cycle concerns are not new. But researchers predict even greater pressure on physicians to deal with retail-revenue-cycle challenges due to rising copayments, higher deductibles and a shift from hospital to physician- or clinic-based settings expected under health reform.
Collecting payment at point of sale is, of course, ideal but usually limited to copayments or estimates. Until real-time claims adjudication is widespread, practices need to address the drivers of nonpayment and adopt new methods for receiving payment.
One solution many practices are choosing is the option of online payments, which can provide flexibility and conve-nience for patients. Consumer bill-paying habits have changed significantly during the past decade, with online bill payment now mainstream. Fiserv’s 2010 annual Consumer Billing and Payment Trends survey found 45 percent of all households with Internet access pay bills online through either their financial institutions or biller direct services.
What’s more, Internet use has made consumers accustomed to 24/7 access to their account information. Intuit Health’s Health Care Check-Up Survey found 73 percent of Americans surveyed would use a secure online communication solution
to pay medical bills and communicate in various ways with their doctor’s office.
Between 2008 and 2010, online patient payments for medical bills tripled, increas-ing from 3 percent to 9 percent of gross dollar volume of all patient payments, according to InstaMed, a healthcare pay-ments network. That number is expected to grow rapidly in coming years.
BenefitsFor patients, a practice’s online presence enables them to:▲ View, manage and pay their bills▲ Get answers to frequently asked billing questions▲ E-mail the office with specific queries For a nominal cost, practices offering e-billing and online
payment collection can:▲ Reduce manual processing▲ Reduce paper statement and postage costs▲ Lower the number of accounts receivable days▲ Increase cash flow▲ Improve patient satisfactionOnline payments accepted can include credit cards, debit
cards and transfers from bank checking and savings accounts.Practices that do not have their own websites can still enjoy
the benefits of online payment. Many electronic medical payment-processing companies can provide a payment site customized for an individual practice. Patients are directed to the site from their billing statements, and payments are directed to the practice’s bank account. – Irene E. Lombardo
Accepting online payments can increase collections
September / October 2011 Your Healthy Practice2 September / October 2011 Your Healthy Practice 3
your tax return for 2010 has been filed – or will be shortly. Now you don’t want to think about income taxes. Understandable, but you would be wise not to wait until late December to start your 2011 tax planning.
Where do you begin? Every good tax plan starts with a tax projection. You – or your business manager or accountant – will have to run the numbers.
What has already happened this year? And what does the situation look like for the rest of the year?
Run some “what if ” scenarios once you have a base case – the best guess as to what your year will look like. What if my income is 10 percent higher? What if I purchase that new diagnostic equipment for my medical practice?
Here are seven ideas you can use between now and the end of the year to save taxes. All seven ideas aren’t for everyone. But it’s a good bet that a few items on this list apply to you.
1.CheckyourtaxpaymentsWhether you pay your taxes through withholding or by making
quarterly estimates, you do not want to have too much or too little paid in. Pay too much tax during the year, and the government has your cash to spend, when you could have invested it yourself. Pay too little, and you may be penalized – an outcome that is generally avoidable.
Be especially careful that your withholding is set correctly if you have income from more than one employer. You may need to provide new W-4 forms to adjust your withholding.
2.PurchaseahomeHome prices and mortgage interest rates remain low by historical
standards. Whether you are buying a new home or “moving on up,” the tax law will assist you with itemized deductions for home mortgage interest and real estate taxes.
The interest deduction is gener-ally available if you borrow money to remodel. And energy-efficient home improvements may even qualify for a tax credit.
3.BuybusinessassetsYour medical practice may ben-
efit from generous tax write-offs for the cost of new medical equipment, furnishings and other assets. The key to the deduction is placing the assets into service by the end of the year. Be sure to order them with sufficient lead time.
I n s i d e
I n s i d e
Sept. / Oct. 2011➜Eligibility for Medicare
bonuses has expanded
➜Accepting online payments can increase collections
See Tax planning on page 2
So
Two programs designed to increase healthcare quality and efficiency apparently don’t play well together.
Although the Electronic Prescribing and the Electronic Health Records programs have similarities in technology and reporting requirements, they are inconsistent, according to a 2011 Government Accountability Office (GAO) report.
The GAO noted the following inconsistencies:▲ The e-prescribing program offers compliance incentives
from 2009 to 2013, while the EHR program offers incentives from 2011 to 2016.
▲ The e-prescribing program imposes penalties for noncompliance from 2012 to 2014, when the program ends, and the EHR program specifies penalties beginning in 2015.
▲ Both programs require healthcare providers to “adopt and use technology that can perform similar electronic prescribing-related activities,” but to meet the require-ments of the EHR program, providers must use certified systems that satisfy the Department of Health and Human Services criteria. The e-prescribing program does not require certification.
The GAO sees a couple of problems resulting from these inconsistencies. Providers may have:
▲ To invest in systems without any assurance that they will meet the e-prescribing requirements
▲ To meet separate reporting requirements for the two programs to earn incentive payments from 2011 through 2014
From the study, the GAO arrived at some recommenda-tions for the Centers for Medicare & Medicaid Services “to help improve the effectiveness” of the e-prescribing and EHR programs “to encourage the adoption of health infor-mation technologies among Medicare providers”:
▲ Urge healthcare providers to select certified e-prescribing technology.
▲ Try to standardize the reporting requirements “to remove the overlap” for physicians who may qualify for incentive payments or have penalties imposed on them under both programs.
▲ Identify factors that helped or hindered e-prescribing implementation that could help EHR implementation. ❚
GAO report recommends losing program overlap
Where do you begin? Every
good tax plan starts with a tax projection.
Year-end tax planning for you and your practice
A financial and management bulletin to physicians and medical practices from:
The technical information in this newsletter is necessarily brief. No final conclusion on these topics should be drawn without further review and consultation. Please be advised that, based on current IRS rules and standards, the information contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty assessed by the IRS. © 2011 CPAmerica International
Your Healthy Practice
CERTIFIED PUBLIC ACCOUNTANTS
3330 W. Esplanade Avenue • Suite 100 • Metairie, Louisiana 70002
(504) 838-9991 • Fax: (504) 833-7971 • www.kl-cpa.com
CERTIFIED PUBLIC ACCOUNTANTS
3330 W. Esplanade AvenueSuite 100
Metairie, Louisiana 70002
