by Elizabeth Woodcock, MBA, FACMPE, CPC
Bad debt is on the rise for physician practices, directly proportional to the increase in patient financial responsibility. This trend towards higher patient payments is not the only issue fueling the challenge, however. Perhaps in an effort to shore up profitability, insurance companies are also increasing the complexity of the reimbursement environment. Researchers estimate that interactions with insurers cost a whopping $82,975 annually per physician1 – and the optic is direr if processes are ignored, as administrative challenges result in write-offs.
Frustration can lead to challenges with employee morale and patient experience, so it’s an opportune time to ensure protocols are in place to ensure maximum reimbursement in an optimally efficient infrastructure. The following 11 tips can help your practice combat declining reimbursements with a focus on enhancing the revenue cycle:
High-performing practices recognize that the road to getting paid starts before the patient ever walks in the door. Incorporate an automated process for insurance coverage and benefits eligibility as the basic framework; then confirm the accuracy of postal and email addresses as part of the process. Embed sophisticated claims edits into the pre-claim release process to address problems before invoices are transmitted to insurers for processing. Timeliness is essential, but if you need an extra day to make sure your invoices are truly clean, take it. There’s no better place to demonstrate the old adage, “garbage in, garbage out,” than the revenue cycle. Clean claims translate directly into swifter cash flow. Without accurate information, claims will remain outstanding, denials will not be managed effectively, and statements will not reach patients in time. Obsessing about the front-end of the revenue cycle offers positive rewards.
Fostering a positive patient experience is a key component of an effective revenue cycle. Keep the patient informed and engaged because financial surprises are disastrous for the patient experience – and the probability of your getting paid. This includes providing information about the patient’s balance at every interaction; “Ms. Jones, the computer tells me that you have a small balance…” Train schedulers so the patient’s initial appointment scheduling call and the appointment confirmation communication can be opportunities to set payment expectations. Alternatively, provide an opportunity for an electronic tablet or kiosk to perform the work for you. An informed patient is certainly more likely to pay – and to remain loyal to your practice.
Propose the option to make payments over time for those who cannot pay in full, following a down payment of, ideally, 50 percent of the balance. Also, collect the “uneven” payment with the initial deposit – $135.45 of the $435.45 balance so that the remaining amount is a clean $300. Don’t stretch payment plans beyond six months, and only accept payment installments of $25 or more. Consider establishing twice-monthly payment plans, with payments debited every two weeks. Use a credit-card-on-file solution to automate the process. Provide the benefits of immediate payment; offer uninsured patients who pay in full at the time of service a discount for prompt payment, for example, 30 percent. These options greatly improve the odds of getting full payment while preventing you from spending an arm and a leg in staff time to administer payment plans.
If your practice provides 250 services each week, and 10 percent are denied or require re-work, it’s important to have resources available for the 25 that pile up and often have to be touched multiple times before resolution. Understand this volume and how best to disseminate the work. Instead of routing denials related to medical necessity or diagnoses to an administrative employee, get the work directly in the hands of a coder to be addressed. Create algorithms for work queue distribution, and hold stakeholders accountable for getting the work done. Revenue cycle staff, by their nature, are detail and results-oriented. Therefore, they may need help prioritizing their work. Throw away alpha-based sorting as the primary work organizer within the queue. Instead, encourage staff to process work in a hierarchical fashion. Furthermore, set a minimum amount for second-level appeals, such as $10, to reflect the cost point at which you will end up spending more to move through the secondary appeals process than the claim is worth. Whether it’s an appeal letter or simply a patient’s promise to pay off a balance, make sure you check back on issues for progress. Monitoring efficacy is the only way you’ll ensure your investment of time is paying off. Recognizing, measuring and monitoring work in the revenue cycle allows your practice to stay ahead of challenges by making data-driven decisions.
If you’re in the habit of sending 10 or 20 statements before getting serious about collections, you’re supporting the U.S. Postal Service but not your practice’s bottom line. Send two statements followed by a letter at the 75-day past-due mark to announce the account is going to collections unless it is paid or other arrangements are made within 30 days. Research proves that the payment rate on the fourth and subsequent correspondence is so negligible that it’s worthless to continue pursuing. Offer online bill payment, ideally, interfaced with your practice management system. Patients will appreciate the option to make payments via your practice portal, website or other secure platform, and you’ll save money by avoiding statement mailings.
Before you send off patient-pay accounts to a collection agency, install a procedure to detect insurance coverage. This coverage sweep helps locate insurance eligibility that may have been overlooked by the patient or a family member. Of course, it can also overcome mistakes made at the front office. Perhaps most importantly, it helps address challenges from the information – “face sheets” – transmitted from the hospital. If you can’t automate the insurance discovery process, be sure to check your state Medicaid database before sending any accounts to the agency. The ability to locate alternate coverage can take your self-pay bad debt from a good state – to one that is great.
Remove insurance-financial-medical jargon from your billing statements. Clean up the visual presentation and layout of statements so patients see more than a cluttered mess. Use plain English and a prominent, brightly colored box to tell patients what they owe (e.g., “You owe: [AMOUNT]”) and when payment is due (e.g., “Payment is due: [DATE]”). Simplifying statements results in faster payment.
You bill on behalf of your patients, so when something goes wrong with that process, ask for their help. If, for example, the payer denies a claim for information needed from a patient, contact the patient immediately. (Information-based denials are something you should address in your payer contracts. For example, allow the payer’s beneficiaries 30 days to respond to the payer’s request; if they don’t, you can transfer financial responsibility to the beneficiary.) Carbon copy patients on your appeal letters to payers. It will likely stir them to pick up the phone and call the payer. Of course, send statements to patients when bills are their financial responsibility, and hold them accountable for payment.
The reimbursement landscape is becoming more challenging by the day. To stay ahead of the curve, medical practices are embracing solutions that provide predictive analytics related to denials – when a service is coded, for example, an alert indicates the claim will be non-payable, allowing the “denial” to be addressed at the point of care. Artificial intelligence also has promise, particularly regarding basic processes like pre-certifications that require completion of standard elements over and over again.
Consider how many components are in a car – gas, oil pressure, engine temperature, tachometer – too many to name in this complex machine. Yet, we all rely on the dashboard to drive the car. Compile your revenue cycle dashboard – a meter of the accounts receivable, a chart of the receivables aging, a display of the credit balance, and a gauge of charges and collections. Engage predictive metrics on your dashboard as well – volume of CPT® codes, level of the evaluation of management codes, first-pass error rate for claims, and denials and payer mix, to name a few. This can’t be a one-time report; this dashboard requires accurate and timely inputs, as well as your constant review to ensure that the complicated machinery upon which your business relies – the revenue cycle – is under your attentive eye.
You signed all those contracts with payers, but are they really living up to the terms? Demand that payers give you the allowable amounts for the codes you use most frequently. Set up an automatic query in your practice management system to monitor each payers’ allowables for filed claims. You will be able to catch under-profile payments – those that are lower-than-contracted reimbursement. Also, be sure to flag every invoice where the insurance payer reimbursed you at 100 percent of your charge – that’s a sure sign that you are charging less than the allowable you are due.
To transition from bad debt to good revenue collection, these 11 tips – many of which can be implemented promptly – can help steer your practice in the right direction to combat declining reimbursement, while maintaining a positive patient and employee experience.
Endnotes
1 Morra D, Nicholson S, Levinson W, Gans DN, Hammons T, Casalino LP. US physician practices versus Canadians: spending nearly four times as much money interacting with payers. Health Aff. (Millwood). 2011; 30:1443-1450.
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