One of the most challenging issues facing the back office of any medical practice is the efficient use of personnel in the collection of accounts receivable. On a normal day, an office may see anywhere between 25 and 100 patients per physician.  At the same time, there are hundreds, if not thousands, of outstanding accounts receivable that must be continually monitored for optimum collection. Most practices would consider collecting accounts receivable more efficiently to be one of their priorities. So how does a practice go about doing this?

One of the first issues that should be addressed is the evaluation of the amount of time spent by the staff on accounts receivable collections. It is important to ensure that the A/R staff is spending their time as effectively and efficiently as possible. In order to do this, it is necessary to empower the staff with the appropriate tools. This starts with an appropriate accounts receivable/billing system. Any good system will have the ability to differentiate between those outstanding accounts that need attention by the staff from those that are simply in the normal timeframe of collection from the appropriate insurance company.  If your system has the ability to identify “expected payments” for each service rendered (this is normally based on the insurance coverage by the patient) combined with the information from the contract your group has with the insurance carrier and the payment history for the same procedure codes, then your system can routinely advise management of the total amount of collectible accounts receivable by insurance carrier.  Monitoring this amount, and having an aged accounts receivable by carrier, will allow for better use of billing staff time.

Additionally, the use of electronic records for incoming Explanation of Medical Benefits paid (EOB) documentation will additionally allow the computer system to provide optimum tools for the staff to use. Whether your computer system provides the ideal circumstances or not, the staff needs to spend time first on the older and larger accounts receivable. The ability to sort accounts receivable based on age, as well as on dollar amount, will lead to the best use of the staff time available.

One of the other issues that will frequently raise its head in the billing function is a particular insurance carrier delaying payment or changing their pattern of rejections.  For this reason, it is very important to continually monitor the outstanding accounts receivable aging by carrier. Whether it is done electronically or manually, certain parameters should be applied to each insurance company based on a contract and their history of payment. As an example, if XYZ insurance routinely pays clean claims in 40 days, there should be a trigger for any claim that is outstanding to that carrier for 60 days. If the carrier begins to fail to meet their required timeframe, two things should happen:           

• The carrier should be notified in writing, as well as with a phone call to the Group’s representative, to determine if there is any problem;
  
• The insurance company should be notified of the imposition of any interest or other penalty as appropriate in the contract.

The use of this technique will help “nip in the bud” the occasional changes that may occur in an insurance company’s payment policies.

An additional area that requires attention is: Secondary Insurance Companies.  When a patient has more than one insurance company, the “primary” insurance company will always be billed first. Once the primary insurance company has made its payment, billing to the secondary or tertiary insurance company should then be completed. In certain circumstances (primarily Medicare patients who have MediGap coverage with a carrier related to a Medicare intermediary) the secondary insurance payment will be made automatically. In many circumstances however, the billing office must generate a new claim which, in some circumstances, may require the initial EOB to be attached to the secondary insurance claim. The ability to quickly identify those claims requiring secondary insurance billing and to generate the bills on a timely basis will greatly enhance the speed of collection and reduce the overall time needed in the billing department.

An area that is often overlooked is collection at the time services are rendered. It is far more effective and efficient to collect funds at the counter when the patient is there than it is to send a bill and try to follow-up after the service is completed. This is especially true when patients have co-payments and deductibles at the beginning of the calendar year. Simply asking the patient whether they have a co-payment and/or deductible will sometimes provide the correct information, leading to the ability to then request payment. An efficient way to obtain the co-payment and/or deductible information would be to get that information directly from the carrier in advance of the patient visit. One to two days before the patient is scheduled to visit, a call to the carrier for this information will provide a practice with the ability to notify the patient when they are in the office of their responsibility. The ability to then accept credit card payments and/or checks will again speed up cash receipts and reduce the collection efforts significantly.

It may also be important, depending on the practice, to establish a policy with regard to uninsured or uncovered services. Most practices will attempt to maintain their fee schedule at an optimum level for total reimbursement by all carriers. Nonetheless, it is understood that many carriers, through contractual relationships, will pay substantially less that the fee charged. In most instances, it is allowed (and may be appropriate) for a practice to offer a discount to an uninsured patient, or one undergoing a non-covered service for prompt payment. Again, the ability to make the collection effort at a time that services are rendered will reduce or eliminate the need for follow-up effort by the billing and collection staff.

It is a good idea to review your A/R reports with your administrator and billing manager on a monthly basis with a good solid review each quarter to make sure your staff is collecting all the money due you.  Often, it is discovered that practices are not optimizing their collections, not because the staff does not want to do a good job but because they are either overwhelmed with the current insurance company climate or the department is understaffed.  When reviewing your billing department, focus on the following questions:

• How long does it take for your charges and payments to be entered?  Does your staff stay up-to-date?  (Charges should be entered within 24 hours and payments should go in the bank daily and be posted within three days of receipt)
• How often are your insurance claims sent out?
• Are patient statements routinely sent at least once per month?
• How long after a claim is submitted is it called on or resubmitted if unpaid?
• What role does the front desk staff play in the billing process?  Are they doing a good job?
• Run your A/R aging schedule by payor and look at all claims older than 120 days and ask your staff how they are working those claims.
• How many months of charges are in your total A/R balance?
• How does your staff work appeals and denials?
• Do they feel like they have enough training on your current computer system?
• What is the staff allowed to write-off and what do they bring to the manager’s attention? If the staff is overwhelmed they may be writing off accounts too quickly or writing off claims that were improperly denied in spite of timely filing (a favorite trick of certain carriers).
• What reconciliation processes are in place to make sure that all services rendered are being billed?
• What controls do you have in place to safeguard cash and how do you make sure that all monies are posted to the patient’s accounts and put in the bank?
• You also may want to ask your billers if they had an extra person what tasks they would give that person to do?  If it sounds like the replies are revenue-producing tasks which will produce at least 3 times the additional staff needed then it might be time to hire an additional person. They will pay for themselves!

The ability to determine which carriers are rejecting claims, and necessitating the billing department to start over, both delaying the ultimate receipt of the funds and costing dear time for the limited staff, will also enhance the efficiency of the office.  Many practices will perform an analysis of rejections by carrier and by staff member. Each type of rejection can then be tracked to limit or eliminate repeat occurrences of the same issue, often avoiding the issue being confronted later in the case of a second carrier following the same protocol at a later date.

The ability to perform the analysis of what has gone wrong before, and to correct the internal policies and procedures to avoid these same issues being repeated, will usually be well rewarded. By way of example, the knowledge that Carrier A is rejecting otherwise clean claims due to a lack of a referring physician in the case of an office consultation can lead to either an additional claims “scrubbing” routine or a manual review of this area before the claims are submitted to this carrier.  Also, the knowledge that biller C is responsible for 35% of the rejections due to lack of date of birth on the billing submission, while she is only responsible for 10% of the practice’s billing will lead to the knowledge that additional training and/or supervision may be required. This type of enhanced information on the rate and type of rejections can lead to a better incentive system for the billing department, and the front desk staff, based on a reduction of the rate and type of rejections from the base lien level.

Let’s not forget there is another option. Your practice may benefit from outsourcing their billing. This is a common issue that often arises when a medical practice is deciding whether to buy a new updated practice management system because they have recently found out that theirs will not be supported in the future or because they are having trouble finding quality billing staff and their accounts receivable balance is climbing. It may be a good idea for the medical practice to at least explore the billing company option to see what it can offer and how much it will cost compared to what they are paying now.  In order to interview a billing company you need to know the right questions to ask.

Some things to consider when interviewing a billing company or reviewing a billing company contract are:

Talk to the company about their history and their philosophy:

• Make sure the company is stable and has a history of good service
  
• Ask them to explain their philosophy on the billing process. Listen for their commitment to follow-up, daily claims submission, appropriate staffing, dedicated staffing
  
• Ask them about their commitment to training and keeping updated on changes with the carriers
  

Review the billing company processes and procedures with them.  Make sure they will guarantee the following:

• Enter charges and payments daily
• Submit claims daily to assure an even cash flow
• Send patient statements at least monthly, preferably as soon as balance becomes the patient’s responsibility
• Assign you a dedicated account representative for: data entry, customer service, and a supervisor responsible for your account who can deal with any problems or complaints from your patients

Other issues that need to be determined:

• How are refunds handled? Who issues the refund check?  How quickly are the refunds sent out? Will they assure that they will adhere to federal/state guidelines regarding refunds?
• Will they review and update your fee slip annually to respond to CPT code changes?  Who is responsible for this? A certified coder?
• Request that they notify your office when problems and negative trends arise with specific carriers?
• At what point is an account determined to be uncollectable?
• Do they have their own collection company or do you choose your own?
• Will they still collect a percentage on these accounts? They should not get any reimbursement once an account is turned over to collections. You do not want to give them an incentive to turn over accounts, nor should you pat twice for the same service.
• Can they provide you with good references, and then make sure you really check them out in depth.

Each of the various items outlined above, individually, may appear to be somewhat simple and straightforward. In total the ability to maximize the use of the staff time and optimize the efficiency and effectiveness of the billing department in total relies upon a complete and coordinated cycle in the collection process. This cycle begins at the billing desk when the patient is there, collecting those funds that are available, and making sure that all insurance and mailing information is correct and updated, and then, utilizing the time appropriately, making certain that those items that begin to fall behind are caught early. Most practices find that these steps greatly increase the total efficiency of the accounts receivable collection function.

David H. Glusman, CPA, DABFA, Cr.FA, CFS is Co-chair of our Healthcare Services Group and has over thirty-three years of experience providing specialized services to group medical practices. Contact David at dglusman@marg.com.