Practice Math Program Model

Use this skill when a practice needs to decide whether a Medicare between-visit program (chronic care management, remote monitoring, APCM, transitional care, and the like) will pay for itself before it hires, buys, restarts, or switches, or wants to…

This skill is Labor as Code™ for the unit-economics method in Getting Paid to Do the Right Thing. Labor as Code is a skill that encapsulates a person's knowledge, judgment, taste, and skill in durable, inspectable, versioned form. The know-how is pricing a between-visit program the way it actually spends money, per enrolled patient-month, with the Capture Ladder's losses built in, instead of multiplying a fee-schedule amount by a hopeful number of patients.

The method lives in "A Program Survives Only if Each Patient-Month Covers Its Cost," which teaches Practice Math and works it on Riverbend's choice between chronic care management and advanced primary care management (Table 11.2 and the APCM Practice Math box) and on Lakeshore's remote-monitoring rebuild (Table 11.3). "Every Case Here Starts With the Wrong Diagnosis" adds Hollis Street's APCM switch, the case for modeling a switch patient by patient. "Test One Program for Ninety Days Before You Grow It" uses the model to pick the first program. The worksheet is in the online companion's worksheets (intellectualfrontiers.com). Read them for the argument and the worked numbers. This skill runs the same model on the user's own inputs and never uses the book's illustrative rates as the user's.

The skill asks for every input. Allowed amounts, rates, minutes, labor cost, technology cost, attrition, fixed cost: each comes from the user, their remittances, their time study, or their payer contracts. The book's rates ($60 for CCM, $0.75 a minute, $6 of software, and the rest) are round illustrations the author chose, and the book says so every time. The skill never fills a cell with them. Where an input is missing, the cell reads "unknown," and the skill names who can supply it. The 2026 national amounts in the book's Table 11.1 are a reference point for checking a user's number, never a substitute for it; fee amounts change every year and vary by locality.

The skill keeps care minutes fixed. Care minutes are an input, and cutting them would raise the margin. A program that makes money by giving patients less of the work it exists to do has stopped being a care program. The skill never varies them between scenarios and never counts a care-minute cut as an improvement.

This is not billing, coding, or legal advice. Whether a code applies, whether two services can be billed together for a patient, and whether cost sharing can be reduced are questions for the practice's billing lead and compliance adviser. The skill models what the user tells it the rules are and marks each rule it relies on as "confirm with billing or compliance."

Before running

1. Name the decision. Start a program, restart one, keep or stop one, switch one (for example CCM to APCM), or choose between two. Name who decides: usually the partners.
2. Name the payer. Run traditional Medicare first. Each Medicare Advantage plan and each state Medicaid program gets its own column with its own inputs (Step 5).
3. Ask for the inputs all at once. Accept rough figures and record the source of each: remittances, Capture Ladder counts, a two-week time study, the fee schedule, a payer contract, or the user's estimate. If admin minutes come from an estimate rather than a study, say that the model's most important cost line is a guess.

Step 1: Fill in the inputs

The model's inputs, as the book defines them:

• Eligible patients: patients who meet the program's clinical and payer rules. This sets the ceiling.
• Participation rate: enrolled ÷ eligible. Decides whether the program covers its fixed costs.
• Served rate (the worksheet calls it the service completion rate): served ÷ enrolled, the share that got the program's required work this month.
• Allowed amount: what the payer allows per served patient-month, including the patient's share, averaged across served patients and including any add-on code.
• Patient cost sharing: the patient's coinsurance, and the share of it the practice actually collects.
• Billed rate: billed ÷ served.
• Collection rate: paid ÷ billed.
• Care minutes and admin minutes per enrolled patient-month, split as the admin-minutes study splits them, times a loaded labor cost per minute.
• Physician minutes: care-plan sign-offs, escalations, and the monthly review, times a physician cost per minute. Keep them in; they are real minutes taken from something else.
• Technology cost per enrolled patient-month, and for monitoring programs the device, its replacement, and the ones that never come back.
• Attrition: the share of enrolled patients who leave each month, and the minutes it takes to replace one.
• Fixed monthly cost that doesn't scale with enrollment (supervision, the weekly huddle, reporting), for break-even.

Convert every rate to per enrolled patient-month. If the user gives care minutes per served patient-month, say so and convert once, alongside. The book's rule: model every program per enrolled patient-month, never per paid claim. Dividing collections by paid claims hides every patient the practice carried and didn't get paid for.

Step 2: Compute three scenarios

Use the book's two lines of arithmetic, exactly:

revenue per enrolled patient-month =
  allowed amount × served rate × billed rate × collection rate
  × (0.8 + 0.2 × share of coinsurance collected)

contribution margin per enrolled patient-month =
  revenue
  − (care minutes + admin minutes) × labor cost per minute
  − physician minutes × physician cost per minute
  − technology
  − attrition × minutes to replace a patient × labor cost per minute

The factor in parentheses is traditional Medicare's split: Medicare pays 80 percent of the allowed amount and the practice collects some share of the patient's 20 percent. For another payer, ask what the member owes and replace the factor with that payer's split; if the user doesn't know, mark it "not stated; ask."

Build three columns:

• Low: the program goes badly. Use the user's pessimistic value for every input, and put a denial reserve in the collection rate even if the collection history is good.
• Base: the user's best estimate of what a competent operation produces in its first year.
• High: the user's optimistic values.

Where the program is running today, add a Today column from actual numbers. Show every line of the calculation in a table, per enrolled patient-month, so the user can recalculate one case by hand.

Then apply the book's test to the base case. Reject it as a base case if it needs perfect enrollment, perfect collection, or cheap labor, or if it assumes a served rate above anything the practice's own ladder has shown without a reason the user can name. If the program works only in the high column, it doesn't work.

Step 3: Compute break-even

break-even enrolled patients = fixed monthly cost ÷ contribution margin per enrolled patient-month

Compute it for each scenario and express it as a share of eligible patients. Compare it with the current enrollment. A scenario with a negative margin never breaks even at any size: growth multiplies the loss. Say that plainly whenever the low case, or today's program, is negative.

Step 4: Find the input that matters most

Run a one-at-a-time sensitivity check. For each input except care minutes, set it to its low value and then its high value, hold everything else at base, and record the margin both times. Rank inputs by the size of the swing. The ranking must follow the numbers, not the loudest explanation.

Name the three killers the book identifies when they show up:

• Participation, which works twice: the share of eligible patients who enroll decides whether the program reaches break-even, and the served rate decides how much of each enrolled patient-month becomes revenue. Both are operations problems of capacity and queue design.
• Admin minutes. The payment is fixed; the admin minutes are the practice's. If they haven't been measured, point to the administrative-denominator-reduction skill.
• Collection rate. It can look harmless when the ranges are narrow. Collection doesn't drift; it falls off a cliff when a payer changes a rule, a consent form goes missing across a cohort, or a vendor's notes stop supporting claims. Recompute the base case at a sharply lower collection rate the user names, and show what's left.

For the top three inputs, name the single operational change most likely to move each toward its high value and how the practice would measure whether it did. Reject any change that raises the margin by cutting care minutes, enrolling patients who don't need the program, or billing for work that didn't happen.

Step 5: Run each payer separately

For each Medicare Advantage plan or Medicaid program, the method stays the same and the inputs change. Ask the questions from the book's Table 11.4 and mark each unanswered cell "not stated; ask":

When the user pastes contract or manual excerpts, extract only what the text states. A general-purpose AI fills gaps with what's typical, and typical isn't the practice's contract. Flag any plan that runs its own care-management program for the same members; duplicate calls annoy patients and the plan may not pay the practice at all.

Step 6: Model a switch patient by patient

For a switch between programs (the book's case is CCM plus transitional care management to APCM), model the panel as it actually is, not as an average:

1. Group the patients the switch would touch by how they bill today (for example, base code only, base code plus add-on, event services like transitional care) and by the level or tier they would bill under after the switch.
2. Compute monthly revenue before and after for each group from the user's rates, and the change in admin minutes (for APCM, the counting that goes away).
3. Include what the switch gives up and what it adds, as the user's billing lead confirms them. For APCM the book names three: payment depends on the patient's level, and a large share of a primary care panel may sit in the lowest level; billing it attests that a set of capabilities exists; and it can't be billed with individual CCM, PCM, or transitional care management for the same patient in the same month. Price the added fixed cost of the capabilities. If the practice's components live in one person's head, flag that billing would attest to capabilities it doesn't reliably have.
4. Compute break-even enrollment for the new program with its own fixed cost.

A small panel with a concentrated group of heavy users and frequent discharges can lose money on a switch that suits a larger panel. The book's rule: model the switch patient by patient before you move the whole panel.

If lowest-level patients would owe a monthly coinsurance for a program they may never notice using, say so; the consent conversation has to name it, and the patient has to be able to see what the program gives them.

Step 7: Keep cost sharing and avoided work honest

• Cost sharing. The model carries one input, the share of coinsurance collected. Say that its larger effect is on participation, at the Offered → Enrolled rung, and that the evidence on how much cost sharing holds down enrollment is qualitative; the user measures it on their own ladder. Routinely waiving the patient's share is a compliance question with serious consequences. The skill never models a waiver as a choice the practice makes on its own; it marks it "compliance adviser to decide."
• Avoided work. Unplanned calls that don't happen, emergency visits that don't happen: real, hard to measure, easy to exaggerate. Put avoided work on its own line, measured the way admin minutes are measured, and keep it out of the margin. Never use it to rescue a program whose margin is negative.

Step 8: Conclude with a decision and its reasoning

State one of these, citing the specific rows:

• Start (or restart) with a crawl. The base case is positive at realistic participation, collection, and labor cost, and break-even sits at a size the practice can reach. Name the inputs the weekly huddle should watch first (the top of the sensitivity ranking) and hand the model to the crawl-walk-run-launch-plan skill for days 11–20.
• Fix first, then start. The base case goes negative only because of an input the practice controls, usually admin minutes or the served rate. Name the input, the target value that turns the base case positive, and the measurement that would show it.
• Don't start, or stop. The base case fails the book's test, or today's program loses money and no realistic change in the inputs the practice controls fixes it. Say what would reverse the decision.
• Don't switch yet. Write, in one paragraph, the conditions under which the switch would win (for example, a lower share of heavy-use patients, fewer billable transitions, or enrollment reliably above the new program's break-even), and the date to rerun the model, such as when next year's fee schedule comes out.

Where the book's own material presents two defensible paths, present them side by side. The common case is two programs whose margins rank differently at different sizes: one breaks even at a size the practice already has and teaches the operation the other needs; the other has a better margin per patient but a higher fixed cost and a larger break-even. Give each option its numbers, what makes it the right call, and the enrollment or input level at which the answer flips. Riverbend's rule is the shape to follow: move to the larger program "when we can reliably enroll and serve" its break-even number of patients, "and not before."

Where an unknown cell could change the sign of the base-case margin, say so, and make the recommendation conditional on filling it: the two-week time study, three months of remittances, or a plan's written answer. Where too many inputs are unknown for any case to mean anything, say that, list the missing inputs, and name who supplies each.

For the partners, the model replaces the revenue slide. Report contribution margin per enrolled patient-month, next to the served rate and admin minutes, never gross collections alone. A revenue line with no cost line beside it can make the worst program in the practice look like the best one.

Checks before calling the work done

• Every input traces to the user, with its source recorded. Delete any rate the skill supplied.
• Everything is per enrolled patient-month. Any per-served or per-paid figure is labeled and converted once.
• Care minutes are identical in every column.
• One case recalculates by hand to the same margin.
• Break-even is shown for every scenario, and negative scenarios say "never."
• Each payer has its own column, or the conclusion says the model covers traditional Medicare only.
• Avoided work sits outside the margin.
• The conclusion is start, fix first, don't start or stop, don't switch yet, or labeled options, with reasoning.

What this skill does not do

It doesn't supply fee amounts, labor costs, or rates, and it doesn't borrow the book's illustrative numbers as defaults. It doesn't decide whether a code applies, whether services can be billed together, or whether cost sharing can be waived. It doesn't count avoided work or downstream savings as program revenue. It doesn't make the decision; the partners do, with the three columns in front of them. A three-case model is a hypothesis about the practice. It says which program to start with and which inputs to watch; only a small, watched crawl says which column the practice is actually in.