Billing Blunders

During consulting engagements with practices all over the country, I have heard physicians and practice managers brag about the performance of their billers. These practices may think their billing operations are working perfectly, but even the best-run billing offices take more time than they should to collect while losing some collections altogether. It could be the staff's fault or yours, but either way, it's your money -- so it's your problem.

It's not enough to have the "right" number of support staff or the "right" billing system. Whatever the structure of your billing operation and regardless of your human or financial resources, to bill accurately and get paid promptly, you must keep a broad perspective on the entire billing process -- seeking out chronic mistakes and acting to fix them.

With that in mind, I offer the following four common mistakes that hinder peak performance in the billing process:

Not focusing on the process

Although the billing staff is often blamed for receivables problems, the potential for billing glitches may originate elsewhere in the practice. For example, consider what often happens in the front office: Within minutes of opening the door to the practice, the front office is consumed by chaos. Accuracy of insurance and patient information is the least of the front-office staff members' duties. Indeed, not only is it low on the priority list, many front-office employees resent the billing office. As one front-office employee told me, "all they do is give us more work and point out all of our mistakes."

Considering practices often pay front-office staff less than the local fast food restaurant (and billers usually much more), it's not hard to see how the "front/back" resentment develops.

In the midst of chaos, information is exchanged -- information that you need to bill and collect successfully for the services you render. If this information isn't correct, you won't get paid, period. Front-end mistakes cost the billing office a lot of time - and cost the practice a lot of money. Why do practices have "follow-up" billing staff anyway? Many of them spend each day cleaning up mistakes made in their own practice.

Practices avoid such breakdowns when they consider the billing process as a "cycle" and not an office. The revenue cycle is everyone's responsibility. Without this cultural change, you'll continue to spend money -- and lots of it -- correcting your own mistakes and delaying your own revenue stream.

Neglecting critical information

Although the volume of paperwork processed in the billing office can be overwhelming, it can't be tossed aside. Most of this paperwork contains valuable information you need to manage your receivables.

For example, most practices not only don't know what their payer contracts state, they don't even have copies of them. It's astonishing that multimillion-dollar businesses are being run this way. Although fees or allowances are arguably the most important piece of information contained in a contract, the administrative requirements are also important. Among these are appeals, credentialing, authorizations, non-covered services, and timely filing deadlines. If you don't even have a copy of the contract, you certainly can't negotiate it.

Once the contract is signed, the paperwork becomes even more important. Edit reports, for instance, are transmitted back to the practice when claims submitted electronically fail to clear the carrier's or clearinghouse's transmission filters. Although edit reports are often easily fixed, they are sometimes put aside or ignored. Yet because these claims have been transmitted, the practice's system considers them filed. Thus if they aren't edited and resubmitted, they're almost impossible to track. That's why many practices learn, several months later, of a batch of claims that was never edited and resubmitted. Even if you catch them in time to resubmit them, you've delayed your cash flow significantly.

Frustrated by the volume, and lacking time, staff often pile statements returned in the mail to the side for someone to get to it later. If that stack of returned mail is left to pile up, no one will realize, for example, that the patient's mailing address has changed, and next month's statements will also get returned. Without intervention, your stacks and stacks of returned mail are being submitted repeatedly to bad addresses. What is that doing to your practice? It is obviously costing money, because each statement costs at least 50 cents to send, and it isn't generating revenue.

Insurance companies utilize explanation of benefits (EOB) forms to return payments, as well as to indicate a rejected service. Since no money is involved in rejections, this correspondence is often put aside. But the explanation for the rejection can be found on the form, and the explanation is the key to following up on that service -- and getting paid. For example, the insurance company may reject the service for "medical necessity," and the practice could resubmit the claim with a copy of the office or operative note to support the service. Instead, many billing offices are so intent on account follow-up that they don't have time to respond to payer rejections.

You might also receive correspondence from patients with insurance information that your registration process missed. Patients often write on the back of their statements or send a letter with corrected information. Again, if this information is simply put in a pile of mail, your practice is missing a tremendous opportunity to collect.

Don't let the paperwork overwhelm your practice. Know what it is, and know who's responsible to get it done. Don't spend all day filing it. Work it, document it, and move on to the next task.

Failing to follow up

In an effort to improve collections, the billing office may send out appeals, tracers, collections letters, payment plans, and so forth, but protocols and follow-up are often forgotten. Before long, it's too late to collect the money. For example, the billing office sends a patient a collections letter that indicates the patient has 15 days to pay the bill "or else." A year later, another staff member runs across the account again -- still unpaid, and with no action having been taken. If you were the patient, would you then pay the bill under such circumstances? Probably not, because it's taken a year to follow-up on an account in which you gave the patient a 15-day deadline.

When working correspondence regarding a denial from an insurance company, it's often necessity to resubmit or appeal the claim. If you don't keep an eye on your progress, your efforts may never pay off. Although sophisticated billing systems can track and monitor collections automatically, manual "tickler" systems such as calendars or files by date can work equally well. The key is to define a protocol and follow it.

Drowning in the details

With so many details to know and follow in medical practice billing, it's a daily battle just to get paid. The details can cause billing staff to get mired in minutiae, but to advance, practices must take a broader view.

No matter how small or large your practice, no matter the specialty, look for trends in billing glitches. Look for repeated insurance rejections for the same services, claims that are denied for registration errors, and copayments that weren't paid at the time of service. If you work each account without considering the bigger picture, you'll never be able to stem the tide of problems. Many insurance companies have automated their processes, and if they deny a service for bundling, for example, they are likely going to do it every time. If you're in the trenches working each denial individually, you'll never fix the broader problem.

Consider recent statistics for claims worked per billing staff member: According to the Medical Group Management Association, billing staff in the "better performing" accounts receivable operations handle approximately 9,920 claims annually, compared to a national median of 6,667 claims. It isn't that the billing staff in these better performing operations is working 1.5 times faster to reach those numbers; it's working strategically. If the claim is clean, no human intervention is even needed. There is a mindset to find and fix problems, so they have fewer of them.

Don't get me wrong - the details are critical. However, maintaining a broader view is essential to preventing the details from getting out of control. Don't let the meetings with carrier representatives turn into a formality. Although most experts agree that insurance companies will deny even "perfect" claims 5 percent to 7 percent of the time, the average denial rate for physician practices exceeds 10 percent.

To stay ahead, watch for internal mistakes. Keep a folder for each of your major payers. In it, have your billing staff place examples of problems. Address them during staff meetings, and integrate time of service collections and accurate registration into the performance evaluation of front office staff.

Insurance companies won't pay for your mistakes. On the contrary, since they make money by holding onto yours, they love for you to make mistakes. Identify the problems that come up chronically, and resolve to fix them.

Elizabeth Woodcock, MBA, FACMPE, is director of knowledge management for Physicians Practice. She can be reached at ewoodcock@physicianspractice.com.

This article originally appeared in the September/October 2002 issue of Physicians Practice.