Kim Williams


Common reports that indicate the number of days your claims remain in accounts receivable or that reveal your periodic net collections ratio can help you keep an eye on the bottom line. But if those reports indicate trouble, what steps should you take to remedy them? Yelling at your billing staff won't help much. 

You need to pinpoint your problems by identifying them at their source. Luckily, billing workflow isn't very complex, allowing you to easily target your investigation. In addition to measuring more standard data, you can also measure performance at specific junctures during the collections process to obtain a more detailed picture of your revenue stream. Having this information will enable you to make workflow changes when necessary. 

Some performance metrics you may want to implement include: 

 How long does it take to enter your charges? Office visits should be entered within 24 hours of the visit, surgeries within three days. If that's not happening, there are only two possible explanations: either staff members aren't getting to it quickly enough or physicians are turning in their charges too late. Establish a written policy that requires a quick turnaround. This should be a top priority. 

 As long as you're evaluating your physicians' roles in billing, pull a few charts to see how long it takes each doctor to complete her documentation. You also can ask specific staff members to gauge this for you over one week. The greater the lag time between patient visits and their documentation, the more billing errors will occur. (Really, how long can physicians remember the details of specific visits?) Doctors should document office visits within three days at the very most, and surgeries within 10 days. But that's usually the exception rather than the rule, as illustrated by the documentation lag time of the physicians with whom my company, athenahealth, works. Clearly, there's room for improvement, and it's not an unattainable goal. 

Of course, it's not enough to simply complete patient charting in a timely manner. You need to do it right. Have a biller occasionally review individual physician's charts and give them advice on what they can do to improve. Maybe one doctor routinely forgets to measure the size of lesions before removing them, or doesn't indicate whether a patient's diabetes is under control or not. Oversights like that force billers to guess what happened or to loiter around the office, hoping to catch the physician. 

 We all know that insurers and employers are passing on more and more healthcare costs to patients in the form of higher copays. You can't brush off collecting these payments at the time of the visit, as it's difficult and more expensive to collect such charges afterward. If your management software doesn't gauge what percentage of your copays you are collecting, ask your front-desk staff to record the copays they collect as well as explanations for the ones they do not collect. Teach them how to politely ask for payments and how to look up how much a patient owes. 

 Patient deductibles are also rising, and many patients are now paying out of pocket. Run standard collections reports on patient accounts to determine your collection rate for this patient demographic. If the answer is "not great," develop written polices for collections staff to follow when pursuing these accounts. Include details that indicate how often they should send statements and when and how they should send patient claims to collections. For more on patient collections, read 

 You should also run reports on your private payers as well as payer-specific reports on a regular basis. This should give you a sense of your performance specific to third-party payers and let you know which payers are causing you the most trouble. Also track your appeals. Of all the denied claims you appeal, what percentage gets paid? It's probably more than you think, and knowing these numbers can encourage your staff to file more effective appeals. If your third-party collections are suffering, the most effective remedy is usually to assign specific staff members very clear responsibilities to improve the situation. Who in your office will follow up on claims? Who is writing appeal letters? Establish processes and assign names to ensure everything gets done. 

 Hopefully, you are using claim-scrubbing software that automatically checks for common errors - such as an ICD-9 and CPT mismatch - and holds such claims for correction prior to submission. If not, get it. Your existing billing software might contain a scrubbing module that you've never turned on; check with your vendor. Once you have the software in place, measure your scrub rate. That is, how many holds occur in your practice and what's causing them? Reduce the corrections you make repeatedly by creating a feedback loop. The people who correct your claims are not the same people who create them. Give your claim creators the information they need to file them correctly the first time. 

Remember that reviewing management reports is not a substitute for actually managing. It's not enough to observe problems; you have to fix them. Pick one identified problem each week or each month to tackle. Involve staff and other physicians in finding solutions. Develop plans for improvement and measure your success. 

Motivate your staff by allowing them to personally benefit from improvements. For example, give the staff member who collects the highest percentage of copays each month half a day off or a Blockbuster gift certificate. Competition helps, too. Regularly post employee performance by department, physician, or office location (depending on what you are measuring) so your "winners" will be recognized by everyone. 

Nearly every office can benefit from a more scientific approach to collections improvement. Taking it one step at a time - a process not unlike making a clinical diagnosis - will go a long way toward helping you determine the best treatment. 

is the senior client service manager for athenahealth, a revenue cycle management company for medical practices whose database of billing information is the statistical basis for this series. She can be reached via 

for more tools to assess the health of your practice.

This article originally appeared in the November/December 2006 issue of

Articles

What should you do when your reports indicate a billing problem?

Practice Management Lab: Pinpointing Your Collections Problems


The growing trend of “self-pay” patients is fast becoming a factor affecting the financial well-being of nearly every practice in the country. Over the past year, athenahealth has seen a significant rise in self-pay income as a percentage of the average medical practice’s total accounts receivable. 

We’ve also observed changes in the mix of types of self-pay collections, which come in several different flavors. Self-payments can take the form of copays, coinsurance payments, deductible payments, or out-of-pocket payments by uninsured patients. 

The deductible category is the fastest-growing portion of the self-pay segment by far, probably due to the current boom in consumer-directed health plans, which have quickly turned into a nationwide phenomenon. Athenahealth has calculated that deductibles as a share of A/R in medical practices have grown more than 19 percent since 2003. 

For most practices, this has meant shouldering an increasingly complex collections burden that represents significant operational costs. Costs associated with self-pay include the administrative burden of tracking down patients for payments due and the time and effort needed to determine how much patients will owe considering the care they require, what their insurance covers, and the amount remaining on their deductible. Practices must also deal with the additional accounting complexity of common consumer-directed healthcare scenarios that call for them to refund payments made using health savings account dollars and to estimate the mix of taxed and pre-tax dollars and accounts for tax reporting. In the end, practices often wind up writing off a much larger portion of self-pay revenue than insurance-paid claims. 

Looking at recent material from our database, you can get a sense of the magnitude of these hidden costs. Compared with copays (which almost never get written off and have an average of 16 days in A/R), deductible dollars take more than four times as long to collect, and a whopping 18 percent of deductibles ultimately get written off. 

To lessen your exposure to this growing problem, you can either reduce the portion of your business that is self-pay (which may not be practical for some practices) and/or adopt proven “best practices” for improving self-pay collections. 

Since your patient mix is always changing and plans frequently alter their coverage options, it’s difficult to determine how much your practice will be affected by self-pay. One tool that may help can be found at 

 and athenahealth, ranks payers nationally and regionally on a number of metrics, including the percentage of charges specific payers refer to patient responsibility. PayerView data - featured in last month’s cover story, which you can read at 

 - may give you a sense of which of your payers contribute most to your self-pay business and help you evaluate the impact of changing your payer mix if you have the option to do so. 


When it comes to improving your ability to collect self-pay, one simple concept should be your guiding principle: time of service (TOS). TOS is the golden moment for collecting payments from patients - the further you get from TOS, the less likely you are to collect at all. Critical factors that will determine your success in collecting at TOS are: 

Knowing what the patient’s responsibility is going to be.

 What care is the patient going to receive? What is the patient’s coverage for that care? What is the remaining deductible? 

 to the patient before the appointment and at the appointment both the amount owed and your expectation for payment at TOS. 

Developing and implementing a clear protocol

 for your staff members when they ask for and collect patient payments. 

Sounds simple, but in practice, of course, collecting from patients is by no means easy, particularly when it comes to determining an individual patient’s financial responsibility. Why is this so difficult? 

Many payers do not have updated information on the remaining deductible for individual patients, and accessing such data can be very time-consuming, requiring phone calls or fax requests. We recommend getting in touch with all of your payers and asking them to identify the easiest way to get deductible tracker information for their customers. If a payer does not supply the information, formally request a change in the policy through as many channels as possible. 

Once you have determined what a specific patient owes, politely make clear to the patient your expectation for payment at TOS. To ensure that you’ll collect the payment, develop a clear, written policy that you effectively communicate to both staff and patients; know when it’s time to cut your losses and turn delinquent accounts over to collections; and measure your performance and make changes in your payment policy when necessary. 

By far, the most effective thing you can do is develop a well-defined payment policy, require your staff and patients to review and sign off on it, and train your team to follow it consistently. A clear policy not only educates patients on what is expected of them; it also limits the stress on your staff. When staff members know that the rules have been spelled out for patients and that there’s a consistent process the practice follows each time, they’ll find it much easier to adhere to the process themselves. 

A good internal policy will set out the following basic rules for different self-pay situations: 

 Full or partial payment is expected at TOS. 

 Full or partial payment is expected at TOS. Based on the amount due, set benchmarks for advising your billing department when a patient with an outstanding balance is next scheduled for an appointment. Establish consistent criteria for requirements, guidelines, and approval processes to develop payment plans for patients with outstanding balances. 

Your front-desk staff should be able to advise your patients about their benefits and their responsibilities, and then collect at check-in. For services that require more than a copay, you may want to create payment schedules and ask that the balance be at least partially paid before the new services are provided. 

The longer it takes to collect, the less you will collect. In our experience, the average practice has less than a 25 percent chance of collecting after a statement is mailed to a patient. By the time a fourth statement is sent, the collection rate falls to roughly 4 percent.

Kim LaFontana is vice president of payer performance management and Kim Williams is senior client service manager for athenahealth, a revenue cycle management company for medical practices whose database of billing information is the statistical basis for this series. They can be reached via 

This article originally appeared in the July/August 2006 issue of Physicians Practice