Nov 09
20
Billing and Collections: Plug Revenue Leaks
Introduction
Shrinking reimbursements are beyond physicians’ control, but they can become more aggressive — and successful — in collecting all of the payments to which they’re entitled.
“Doctors are leaving a lot of money on the table,” says Elizabeth W. Woodcock, MBA, of Woodcock & Associates — a medical practice management firm in Atlanta, Georgia — and author of The Physician Billing Process: Avoiding Potholes in the Road to Getting Paid, second edition (2009; MGMA). Woodcock adds: “Physicians are already at volume capacity and can’t work harder to make up for decreasing income, but they can fine tune their collections to bring in more payment.”
Revenue leaks come chiefly from 2 sources: claims denied by insurers, which are often not resubmitted or are resubmitted past the allowable date, and patients who don’t pay their balances. Typically, about 7% to 15% of claims submitted to insurers are denied, although some practices’ rates are far higher.
Collecting from patients may become even more challenging. “Economic times are tough, and patients are having more trouble paying,” says Susanne Madden of The Verden Group, Nyack, New York, a firm that monitors managed care companies. A study published in The McKinsey Quarterly in June 2007 showed that physicians collect an average of only 40% to 50% of patient postinsurance balances. The spread of high-deductible health plans and the increase in the number of people losing jobs means that physicians may need to ramp up their billing and collection processes.
However, many physicians are unaware that their practices are bleeding revenue. By investigating further and tackling the issue, most physicians can boost their bottom line.
Physicians Need to Get Involved
Physicians don’t attend medical school to become billing experts. Still, they can’t afford to delegate all responsibility to the office staff.
“Doctors need to develop benchmarks for billing and accounts receivable,” says Robert C. Scroggins, Practice Management Consultant with Clayton L. Scroggins Associates, medical group practice management associates in Cincinnati, Ohio. Scroggins states: “To discover any problems, doctors need to monitor billing activity and accounts receivable each month.”
The first step is to create a spreadsheet showing key revenue benchmarks, including each month’s accounts receivable compared with the prior month and with the prior year at the same time as well as the amount of time from the date of service to submission of a claim, the number of denials each month, the number of denied claims resubmitted, and the time required to resubmit denied claims.
Drill down further and categorize the denials by type and by biller to determine the cause. This enables physicians to work with the appropriate staff members to improve their performance. “Many doctors’ offices focus on getting claims posted, but they spend no time on claims that get denied or need a second look,” says Madden.
To develop benchmarks, consider calling in a practice management professional who can help analyze accounts receivable, or look to a Web-based claims management company, which can analyze a practice’s claims acceptance and denials and identify snags.
Better Billing: Attack Denied Claims
Problems with patient eligibility and benefits verification; miscoding; duplicate submissions; mechanical errors, such as transposed or missing numbers; and billing the secondary insurance plan instead of the primary plan are among the top reasons why claims are denied.
“There are numerous pain points, but usually the biggest gaps are in verifying and eligibility,” says Madden. Further, “We’ve seen practices increase revenue from 7 to 35 percent by making improvements in these areas.”
Tactics to prevent claims denials include improving the patient registration and visit process; using technology, such as scrubbing software, clearinghouses, and Web-based claims management companies; and keeping your staff well-trained in coding and technologic skills.
Staff process: “The most important piece of advice is to have very good systems in place, focusing on the billing process,” says Scroggins. Breaking the process into steps can help identify where problems are occurring. “Outline the entire flow of a claim from start to finish. Start right at the front desk, where staff members get the patient’s current information and verify coverage.
“Go through the visit, and track how the fee ticket travels, how the fee ticket and encounter form make their way to the billing department, get submitted to the insurer, and payment is received back,” says Scroggins. Next, “Track the whole process, including who does what for each part.” Then tackle each step to make it as foolproof as possible.
For example, at the front desk, make sure that the staff members verify benefits, eligibility, and demographics at each visit. “Check for the patient’s insurance card every time,” says Woodcock. Also, “Check the patient’s ID to make sure there’s a valid postal address.” Offer online registration for new patients so that verification can occur before the patient arrives for the visit.
Scrubbing and eligibility software: Scrubbing software “scrubs” healthcare claims to catch mistakes before the claim is electronically submitted to a clearinghouse or insurance company. The software provides 3 categories of checks, or “edits”: generic, ie, whether data or a zip code are missing; edits by Medicare in its Correct Coding Initiative; and edits for individual payers. For example, ClaimStaker, from Alpha II Software Solutions, checks claim validity and coding and reduces errors on the front end.
Claims clearinghouses and claims management services: Many Web-based claims service providers perform verification and eligibility checks as a stand-alone service or as part of their package of services.
Some services follow up on denied claims and let staff make online corrections, resubmit the claim, and provide analytic reports to help tactically address accounts receivable.
Instant alerts for insurer policy changes: Insurers’ frequent reimbursement policy changes can foil a practice’s best billing efforts. “There could be between 600 to 1800 policy changes a month, between all the insurers,” says Madden.
Make sure that staff stays on top of change notifications. One way to do that is to subscribe to an email alert service, such as the Verden Alert. Its service monitors 170 managed care companies daily for policy and procedure changes and sends an instant email alert to notify your office. The subscription costs $575 annually, and tracks 10 insurance companies that the physician chooses, for 2 specialties.
Staff training: Coding can seem as complex as the US tax system, and staff members sometimes rely on using whatever codes with which they’ve become most familiar.
“Often, the office manager or the person who has been there longest does the coding, but their skills may be out of date, or perhaps they haven’t kept up with changes,” says Madden.
For physicians, it’s well worth making the investment to keep the staff current and knowledgeable in coding and technology. The Centers for Medicare & Medicaid Services offers an online coding training program at http://www.cms.hhs.gov/OutpatientCodeEdit/40_Resources_and_Training.asp. State chapters also hold training seminars from time to time.
Coding skills are critical, but so is having sufficient staff to follow up relentlessly on denied claims. Evaluate your biller’s workload, and weigh the cost of an additional salary against potential lost revenue.
Collecting From Patients
Frustrating, time-consuming, often unsuccessful. Those words typically describe the experience of trying to collect patient balances.
According to the Commercial Collection Agency Association, the probability of collecting is 73% after 3 months, 57% after 6 months, and 29% after a year. For very small amounts, the figures may be even less. While you’re trying to collect, it’s costing you anywhere from 17% to 30% of each bill to run after payment.
To avoid having to chase after patients who dodge payments, make a point to collect payments at the time of service, especially when patients don’t have coverage. Some tactics can make that easier to implement.
Be firm about payment up front: “Historically, doctors are used to sending bills,” says Woodcock. Further, “If you go to WalMart, you know you won’t get out without passing the cash register and paying, but when patients go to a doctor’s office, everyone is trained to say, ‘send me the bill.’”
To change that mind-set, put up signs in the office to make it clear that payment at the time of service is required. Woodcock advises: “Instead of asking, ‘would you like to pay?’ ask, ‘how would you like to pay?’ As the staff member is asking, she should start writing out the receipt, demonstrating that she’s expecting payment.” Tell patients of the office payment policy when phoning for their appointment reminders.
Take credit cards: Most physician offices that accept credit and debit cards see an immediate spike in payments. Even accounting for the fee to the card company, physicians come out way ahead by taking credit and debit cards. Credit cards can be especially helpful with consumer-directed or high-deductible health plans, of which it’s difficult to know exactly how much the patient owes you at the time of service.
“I advise the front desk to take the imprint of the patient’s credit card; bill half the amount, and say they will bill the remainder and send a statement when they learn the final amount from the insurer,” says Madden.
Use a collection agency when necessary: There are as many collection strategies as there are ways to treat the common cold. Some experts suggest 1 phone call, a minimal number of statements, and then a collection agency.
Rather than send repeated invoices, keep the process short and sweet, advises Woodcock. “Doctors should only send two or three statements, not six,” says Woodcock. Furthermore:
Each time they send a statement it costs about a dollar, between postage and staff time. I recommend sending one statement immediately after the patient visit, and another 30 days after. The third statement should be a letter, letting patients know that they have 15 days to respond before the account will be sent to a collections agency.
Scroggins advises monthly statements with an increasingly strong message. “As statements age, put dunning messages onto the statement. At some point, the most effective step you can take is to send a separate letter — in its own envelope, not stuck in with the statement. Letters are more likely to get to the decision maker responsible for that bill.”
If you need to up the ante, look for a “soft” collection rather than harsh collection tactics. Before working with a collection agency, ask to see their letters to consumers and their phone call scripts.
Collection agencies typically charge a percentage of collections. The average national collections company fees range from 12% to 50% on the basis of age, type, and quantity of accounts, according to National Asset Management, a commercial collection service.
Woodcock adds: “Don’t tell the patient you’re going to send the account if you don’t intend to act on it.”
Summary Points
- Many denied claims are never resubmitted, or get resubmitted too late to receive payment;
- Physicians should examine monthly accounts receivable benchmarks to see where problems are occurring;
- Technology, such as scrubbing software, clearinghouses, and Web-based claims management services, can help create clean claims and prevent denials;
- Collecting from patients may become more challenging due to patients losing their jobs and high-deductible health plans;
- Chasing after payment costs physicians from 17% to 30% of the unpaid bill; and
- Getting paid at time of service helps eliminate collection problems.
Much thanks to MedScape.com.
