Clashes with commercial payers. Struggles with non-paying patients. You know the drill. Despite the inherent complications of getting paid in today's healthcare environment, the bottom line is, your medical practice has to be profitable to survive, and the surest way to get there is to bill and collect accurately and quickly.

Easier said than done, you say? After all, coding is confusing, payers take their sweet time reimbursing for services, and patients have precious few incentives to pay for care promptly, if at all. Medical accounts receivable can be a downright mess.

Still, the importance of a well-run billing and collections operation is not lost on most medical practices. For example, according to a survey by the Medical Group Management Association (MGMA), when practices were asked to rank the importance of accounts receivable to other performance areas in relation to the strategic goals of their organizations, A/R received the highest mean score, above information technology, physician compensation and recruitment, physician-administrative management, and human resources.

To offer our readers some insight, Physicians Practice brought together five people who work on billing and collections every day to share the ideas, processes, and useful strategies they've learned along the way.

How much are you losing?

PHYSICIANS PRACTICE: How much do you think the average physician loses each year, or is forced to write off, because of inefficiencies in the billing and collections process?

Griffin: I've seen in the literature that it's about $30,000 to $40,000 per physician, but it's probably more when you really start looking. I have a physician friend in Anchorage whose practice was going bankrupt, so I took a look at what they were doing wrong. To start, they were not billing for any of their EKGs. There was a gap in the process — the physician would order the test, the nurse would do it, and then no one would inform the billing staff about it. They also realized they weren't coding their well-woman exams properly.

Looking at even a couple of problems like that in a group of four docs added up to more than $100,000 lost. So, when they say $30,000 to $40,000 — you figure people miss a little bit of their hospital work, and they forget to bill for certain procedures, or they don't use the right ICD-9 — it's probably more.

Royer: If you look at all the different ways you can lose money, easily 10 or 20 percent of collectible dollars get written off incorrectly as adjustments, get coded incorrectly or registered incorrectly, and are basically lost dollars. On top of that, as Dr. Griffin notes, there is more lost when a physician provides services and doesn't capture the charges or doesn't bill for them. That's easily 20 percent lost.

Tracking collections

PHYSICIANS PRACTICE: Tell us about how you measure the success of your billing and collections operation. How do you keep track of whether your payments from managed-care payers are correct — and what do you do if they aren't?

Royer: One of the main billing and collections benchmarks is the aged trial balance and what is outstanding per carrier. Then, of course, we look at what percent of total net revenue we've collected.

Carter: We look at a number of factors. Of course, charges versus collections and aged trial balance are key. We also look at our adjustments and rejections. I get a monthly report on payers so I know, for example, from January to February what the percent of rejections was, and whether it went up or down, for each of our payers. That tells me if I have one payer that's out of sync. If that's the case, I get on the telephone. And I don't usually go through provider relations — I go right to the person we have contracted with.

Royer: We do something similar. The computer can tell us whether our payments are within adjustment range and, if they're not, then we contact the payer. But we do talk to the rep or customer service; we don't go to the contract people, which is a great idea.

Griffin: We break down the accounts receivable by how long it has been due, by primary payer, secondary payer, and by patient, and see if there is anything outlying. I think it's really tough to compare how much you charge to how much you collect. If you charge 200 percent of Medicare and half your practice is Medicare, you're going to be seeing a lot less coming in compared to what you charge. On the other hand, if you lower your charges, your collection rate will improve, but your bottom line won't — so there is a certain balance to strike there.