11 Leaks to Plug in Your Billing Department to Ensure Total Reimbursement

Most offices leave from 5 to 42 percent of their potential reimbursement on the table because they either lack proper processes, are understaffed, their staff is not adequately trained or appropriately incented, or the office has not invested in appropriate technologies. This is money that you have already worked for and should have earned but that insurance companies are keeping from you.

We have identified 11 primary "leaks" that cause you to leave money on the table if you do not plug these holes or optimize each area. Here are these leaks and the common mistakes made that keep you from getting every cent you have earned.

1. Mistakes in patient registration. Revenues are lost from not collecting or verifying insurance eligibility prior to seeing patients as well as forgetting to collect co-pays. This is also where and when a practice should address outstanding patient balances.

2. Missed reimbursable services. Around 3 to 5 percent of the services supplied or provided are typically missed and not billed out even though these procedures and supplies are reimbursable by the insurance carriers.

3. Inappropriate chargemasters and fee schedules. Depending upon the surgical specialty, your chargemaster (CDM) should be set to appropriate rates to make sure you are in line with your cost and regional pricing guidelines and that you are billing for maximum reimbursement for both in- and out-of-network facilities.

4. Down coding. Not billing and documenting appropriately is very common. If you are regularly down coding, you will receive less money that you deserve for the work performed. A coding audit can help you to understand if you are being too conservative or not documenting correctly.

5. Passive claim follow-up. We believe in proactive claim follow-up every 14 to 21 days until the claim is resolved. This allows you to reduce your cash conversion cycle. It also catches the 2 to 3 percent of claims that insurance payers typically "lose" since you are proactively following-up versus waiting for returned explanation of benefits (EOB) that will never come back.

6. Poor secondary filing processes. This can be a time consuming process that many offices or billing companies decline to do as the return on investment (ROI) on the cost to staff needed to perform this function does not always pay off versus the money you bring in. However, you could be leaving 2 to 4 percent of your reimbursement on the table, so this may be an area where added staff or adding the responsibility to a current staff member is worthwhile.

7. Line-item EOB posting. Each line of the EOB must be separately reviewed, posted and followed up by a member of your staff (if necessary) as opposed to facilities often simply identifying that an EOB had a single payment attached to it and accepting the entire EOB and all procedures as paid.

8. Poor or non-existent reporting. The billing manager should review key performance metrics on a daily basis and prepare a comprehensive monthly review or set of reports for each surgeon, cost center and any ancillary services. These monthly reporting packages need to be reviewed by all key stakeholders in the surgery center to understand how their activities are affecting the revenue and profitability of the center. If you cannot measure it, you cannot manage it. Understanding these details and how they affect your business are the building blocks for effective practice financial management.

9. Not tracking denial and rejection trends. Each area of the office needs to understand how their mistakes can affect reimbursement so that the same mistakes are not made twice. Optimally, you would create approximately 12 denial codes that identify why a payment was not made and track these codes on a weekly basis to help identify problem areas to focus on until they are all reduced to an acceptable level.

10. Outdated technology. Are your computers updated? Do you use a Web-based practice management system? Have you invested in a coding/claim scrubber? Do you submit claims electronically? Do you have a document imaging system? Do you use electronic remittance for posting? Have you reviewed electronic medical record options? The use of outdated technology may prevent your ASC from running its operations to maximum efficiency. The long-term benefits and savings of investing in new technology can often easily surpass the amount invested in the technology.

11. Making a decision on a billing company based upon price. You should understand the benchmarks and ranges for what billing companies charge in your area, particularly for your area of specialty, and understand that not all operations are equal. Oftentimes, a low price option is able to undercut the competition because the services offered may neglect some of the labor intensive actions that are required to chase down every penny you have earned. Check to see if there are hidden costs for items like billing secondary payors and patient statements that you need to factor in. Do a point-by-point operational comparison between your options to gain a complete understanding between the differences in service delivery. Optimally, you will find or build a service that provides the level of service detailed above. Saving a little money on the rate charged by the billing company is not a win if they do not collect everything they should.

To achieve all of the money you have already worked for requires fully optimizing each of these billing functions above or "plugging" all of these holes. Each area might only be responsible for between .5 percent up to 10 percent of your potential revenue. However, if you leave many areas poorly functioning, you can quickly find your center leaving up to 42 percent of your revenue on the table. We recommend a thorough review of each area to assess your exposure and then an ROI analysis to determine how much money you are leaving on the table versus the money it would cost to fully optimize each function.

Benchmark to track your success
You should also be benchmarking your results and tracking these trends. Some common goals:

• 97 percent collection rate;
• days in A/R fewer than 40 days;
• receiving 100 percent of your contracted allowables;
• less than 8 percent of A/R aged over 120 days;
• 100 percent collection rate at the front desk; and
• in the top 90 percent in your region for customary reimbursement from your carriers (since many ASCs are out of network).

We consider the first 85 percent of your payment the low hanging fruit and it should come in within 21 days if you have a strong billing team. It is the next 12 to 15 percent that is harder to obtain and more expensive for an office or a billing company to properly staff the functions that are required to retrieve your money. This is why it is important to ensure that you can profitably manage each of these billing functions so as to not leave any money on the table. You have earned this money so make sure that you have a team or a partner that is willing to go out and fight for every cent that you have earned.

Hunter Howard (hunter@medigain.com) is president of MediGain (www.medigain.com), a company dedicated to helping healthcare providers to preserve profitability with improved and low cost back-office processes.

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