Build a Stronger Bottom Line

February 1, 2005

A conversation with billing experts on best practices

Billing Experts ...

Sharon Kletzky
Office Manager
Palm Beach Dermatology
Lake Worth, Fla.
13 physicians, 10 sites

Birdie Madeiras
Billing Manager
Martha's Vineyard Orthopedic
Surgery & Sports Medicine
West Tisbury, Mass.
Solo practice, 2 sites

Andrea Millaway
Director of Billing
Family Medicine Associates of Texas
Carrollton, Texas
9 physicians, 2 sites

Rocco Monto  MD
Principal
Martha's Vineyard Orthopedic
Surgery & Sports Medicine
West Tisbury, Mass.
Solo practice, 2 sites

Holly velez  RN
Practice Administrator
Island Coast Pediatrics
Ft. Myers, Fla.
8 physicians, 3 sites

Todd Welter
President
R.T. Welter & Associates
Denver, Colo.
Consulting firm specializing in reimbursement issues for medical practices


It should be no surprise that, when we asked physicians to tell us their top five practice headaches, dealing with payers and getting paid (not to mention the overwhelming amount of documentation tied to it) were among the most commonly mentioned.

Last year more than 20,000 of you visited the Billing and Collections section of our Web site, www.PhysiciansPractice.com, to look at articles, Q&As, to download tools and calculators, and to find vendors to help you collect and bill. And more than 250 of you asked billing questions of our Ask an Expert panel in 2004.

The bottom line? It's a major concern for physicians.

We asked a group of in-the-trenches experts -- office managers, billing directors, a solo physician -- to talk about what they do to keep denials at bay, days in A/R low, and cash flowing. Some of their ideas are outside the box (a computer-based "hotline" for physicians to ask questions of billers); some are tried-and-true (having written payment policies and using electronic billing). But they all serve as a reminder that stepping back periodically and evaluating the health of your billing operation is good preventive medicine for your practice.

Physicians Practice: What benchmarks or other measures do you use to track the success of your billing operation?

Millaway: We benchmark against median and best practices, the MGMA [Medical Group Management Association] standards. [These include] total days in A/R, aged trial balance over 120 days, gross collection rate, and adjusted collection rate. We also create a snapshot of data entry, what we've collected, how much A/R has been worked, and we present that to our head doctor every month.

Velez: We use practice management stats from a company called Practice Support Resources. What I really like about this is that they are region-specific and specialty-specific. We use those benchmarks to look at net collections and gross charges in comparison to other practices and our specialty. And our compliance manager looks at the bell curve for coding, overall percentages that the American Academy of Pediatrics recommended. 

Also, we've spent a lot of time educating providers and doing some extensive internal audits and bringing that feedback to the providers. This has really helped our facility get more in line with the norms ... MGMA benchmarks.


Welter: As a consulting firm, we really concentrate on aging when we look at clients' A/R. Every line item has to have a reason behind it: where it is in the aging, why is it still there, is it just being churned? A computer system with good reports helps so you understand how accounts are aged, and there's no funny business. ... I've seen accounts get re-aged, so it looks too good. I don't look at agings from a 30,000-foot level. I want to see them from a very granular perspective. Why is it going from aging category to category or bucket to bucket? 

Monto: Unlike some of the other practices here, I'm a solo practitioner. Basically, it comes down to Birdie [Madeiras, billing manager] showing me what codes I'm missing and giving me the feedback to improve. As far as benchmarks go, we have access to a very good national organization of orthopedic practice administrators, Bones, which gives us some industry standards to go against. The bottom line [for us] is what does it cost us to see each patient, and what is the amount of collections we're seeing for each patient ... and working to get that number as high as we can.

Velez: Something else we do is look at the average reimbursement by payer ... and renegotiating contracts. If they won't work with us, depending on the percentage of business to the total practice, we have terminated the worst three payers almost every year. It's amazing how the rest of our schedule will fill up with higher paying patients, and it's made a significant increase in revenue.

Physicians Practice: Where are the gaps in your process? What improvements are you working on?

Millaway: Our biggest gap is just being able to cover all the bases. In the business office we do verification, we do data entry, we work the A/R, we have to look at overhead costs and increasing efficiency. We try to involve the staff in the solution because they're working on it every day. For example, if we have a lot of backlogged data entry, we say, 'OK, how are we going to deal with this?' People will come in on a Saturday, or do a half hour every day. It's better than just making a decision and trying to set it out to everyone. 

Velez: Obviously, communication is the big thing, especially when you have a central billing office that's off-site. The providers don't want to pick up the phone and call someone and say, 'Did I bill this correctly?' In our EMR, we've created what we call a coding box. It's like a hotline where the physicians can type in a [billing or coding] question. Before they leave for the day, they have a response back. Gaps can also happen with part-time providers, so we've paired up some of our coders with those specific part-time providers who need more training.

Kletzky: A big gap in any office is trying to get the correct benefits information. The claims representatives [don't always] give you the right information. It's like pulling teeth ... . We have our billing department verify insurance a day or two ahead, unless it's a walk-in appointment, and we cross-train everybody.

Monto: The most important interface is that initial contact between our office and the patient. Often, the real gap is in getting that patient information -- not just the information the patient brings, but all the [rest], whether it's workers' compensation, or additional secondary insurance, or changes in insurance. For us, the biggest gap has always been that initial capture of data. If you start out with bad data, it's hard to create a good claim out of that. 

Welter: I couldn't agree more. There's an attitude change that has to happen in some offices. The information collector, whether it's the billing office personnel or front-desk personnel ... the first contact with the patient is the most important person. It's not the entry-level job it once was. It is a battle to get good information so that you can generate a claim because you're really going to give away free service if you don't. To chase down a copayment or a deductible ... is ridiculous.

It costs you more to chase it down than it does [to collect it up-front].

Physicians Practice: Clearly, the role that staff plays in a good billing operation isn't lost on anyone. What are you doing to motivate staff and make sure they are trained to make good decisions?

Velez: Tuition reimbursement can be very expensive, and it's time-consuming to send [staff] to get their coding certification. We took advantage of a grant system here in Lake County, Fla. [whereby] a certified coder came to our office between 4:00 p.m. and 6:00 p.m. two nights a week for 12 weeks. It really didn't affect the flow of billing, and we were able to provide a lot of training over that time to four individuals. It certainly makes a difference in the audits.

Also, the nurses are [trained as] a backup to remind the providers when they're not ordering or coding things right, and that their documentation is there. The providers have been trained quite a bit about how to use modifiers. There's a lot more accountability and responsibility on their part, which has resulted in more buy-in.

Kletzky:  We have a bonus system, an incentive for employees not to call in sick, and they get it every month. Some other things tie into it, like attitude and teamwork, attendance and punctuality. But it's really worked in our office, and it gets employees to come to work, be a team player, and be courteous to the patients. We also give study sheets to all new employees to learn the coding and the modifiers, the CPT, and the ICD-9 codes.

Millaway: We have a protocol book with every procedure we do that employees review annually. We also keep a list of top 10 mistakes that new employees make, so they can be aware that these are things they [will encounter].


For write-offs, we have certain parameters: the amount of write-offs, any appeals that have been denied over $20. I also monitor write-offs from our daily sheets; I randomly select cases to make sure they're appropriate and that nobody's writing off more than they should.

Physicians Practice: What's the physician's role in all of this? What can they be doing to help the billing run more smoothly?

Monto: The most important area for providers on the front lines is charge capture. The biggest problem is that the throughput is so high in the office that it's very easy to miss the things that you should be billing for. The only way you can maximize collections is if the physicians are coding everything that they do that's appropriate. Part of that is education and collaboration between the people that do the billing and those that do the charging. 
Secondarily, it's about documentation. [The doctor] has to make sure that he keeps track of what happens, particularly when he's outside the office. The front desk has to have some way to monitor the physician's visits at the emergency room, on the floor, and in the nursing home. 

Millaway: What we've done is make the physicians aware that this particular plan doesn't pay for an office visit and a physical, or an office visit and a procedure together. If they know that, they can be wiser about how they're taking care of the patient, so the patient won't have such a large bill they have to pay out of pocket.

Listening to us in the business office regarding noncovered services and things like that has helped our physicians be more mindful of what's going to happen to the patient once they get the bill. 

Velez: I think what Dr. Monto said about charge capture is key. We also have physicians that are on committees. We call it the FACT committee -- Finance And Coding Team. Then we have physician-champions: one's in charge of risk management; one's in charge of reviewing policies; one looks at reviewing finances. So we have their buy-in and we have them communicating in meetings about what they're seeing ... . Our providers want to see those errors brought back to them, but at the end of the day, they want to be educated, and they want to improve ... .

Welter: I'm all for the physicians being involved, but I think there's a limit. A doctor I just spent the day with talks about insurance coverage with his patients while he's treating them. It's just not his call to make, and he should leave that discussion to his office manager or billing staff. He just doesn't have the ability to do that, especially in the amount of time he needs to move through patient visits and provide care. 

Monto: In a solo practice environment -- with any type of practice in a small community -- I don't think the practitioner has the luxury to just abdicate completely from the billing process. I agree you should not be discussing it during the visit, but I think it would be naove to think that those issues don't come up, particularly with a fairly high percentage of self-pay patients. What helped our practice get out of making decisions on the fly was to come up with a structured policy toward that end: let's take a certain approach toward our self-pay patients and our write-offs.

Physicians Practice: What do you do to make sure patients know what's expected of them when it comes to payment?

Monto: On our island, one of the important industries is construction. We have a fairly large population of workers from Brazil and Jamaica. They don't carry traditional insurance plans and they're considered self-pay. Those who do have insurance have such a high deductible that they might as well not have [it]. 
The most successful thing we've done to keep this practice viable is to adopt a policy for our self-pay patients. We have an `a la carte menu: the office visit is one fee, and additional services are at set fees that allow us to at least toe the line and not generate a large amount of uncollectible write-offs. Then we have a standard discount for surgery. The patients know that, and they've been very receptive to it.

Madeiras: We've been able to increase self-pay [collections]. Before, [patients] would be given a bill that was way over their heads, and they just would opt not to pay anything. Now they're notified of what they owe ... it's usually 50 percent of a surgery charge and we can set up payment plans.

Monto: The surprising thing is the amount of goodwill that it's engendered in the community. Certainly a lot more of the patients who may not have sought medical care other than in an emergency room have been getting care for themselves and their families. It's been a very positive thing in this very small, tightly knit community.

Velez: With regard to discounting self-pays, we don't want to become a collection agency, and we don't have time to document financial need by evaluating [patients'] income and assets. One of the things we did was to look at our average reimbursement on some of the procedures we were doing. If most insurance companies were reimbursing us $10 for a vision test or a screening test, and we were charging $20, we lowered those fees to what we were getting on average from the insurance companies to help the self-payers out.

We have a very clear and specific financial policy brochure, as well as an office policy brochure, that our patients' parents are handed when they check in for the first time. We have to have their signature on file that they've been given these policies and they understand and agree to abide by them. 

Millaway: One way we communicate with the patients is with short handouts that we can stick on an encounter form that tells the patient about our fees, or if they need to sign a waiver -- just little messages that are geared toward that particular patient. We have also reduced our fees to be more in line with our managed-care companies.


The other thing we do is if [the payer is] requesting information like coordination of benefits or student status, we're going to transfer that balance to the patient and tell them, 'You're holding up the process; here's what you owe.' That usually prompts them to get whatever they need to the insurance company to get them to pay. 

Physicians Practice: Probably most of you have made the transition to electronic billing in some form. What results have you seen?

Velez: We've been doing HCFA electronic billing for probably 15 years. The [HIPAA] transaction code sets, of course, started requiring other insurance companies to be able to receive and respond electronically. That has resulted in a significant difference in our days in A/R. 

Also, we hired a Medic [now Misys Healthcare Systems] consultant to be our financial manager. We have certainly realized our return on investment by hiring her and putting her in charge of our financial practice management system. She knows all the ins and outs and really taught us how to use it to its full potential, saving us a lot of dollars. 

Kletzky: A year and a half ago, we moved totally to electronic medical records. The reports we are using are phenomenal. When we're posting, we're looking for errors, mistakes, appeals ... . We don't have to look for misplaced charts ... . We can look at the chart and know why the doctor billed for what. It's just so much easier. 

Monto: Having made the transition to electronic billing about a year and a half ago as well, there have been some significant advantages in the claim processing speed. There's definitely been a reduction in our denials and an increase in our collections. We were able to survive a very rocky tourist season last summer by improving our overall collections, even though we had less volume. I think that's a very tangible benefit.

However, you have to be aware that [electronic billing] may trigger audits from some of the large carriers. The minute that we applied for our electronic number, Medicare assigned us an audit. We were in the process of transitioning from a paper record to an electronic record. In our initial audit we were hammered, but then when they came back and re-audited three months later with the electronic system, we sailed through with flying colors. You can't just go electronic on one end and expect that you're not going to have to do some heavy lifting on the other side.

Welter: Well, I have not heard of that. I do believe that there are [audit] triggering events, and apparently that's one of them. But I think the gloom and doom, 'They're coming to get me,' surrounding audits has passed to some degree.

Millaway: We've been on electronic billing so long it seems like ancient history. We do get quick notification of denials -- we get those denials back the next day, and we can fix them and get them out the door.

It helps with our cash flow, and we process claims every day so that we know what's going out and what's coming in.

Physicians Practice: Do you find it's better to have your billing office in-house or outsourced?

Welter: We suggest that people do it themselves if they can. The trick is you've got to have the right people. You've got to have a team. The downside to outsourced billing ... is that it feels very removed. If the physician fills out a superbill and it disappears into a black hole, that's the beginning of the end. You've got to communicate back and forth. People seem to be afraid to ask the doctor for information. The feedback loop is just invaluable to the billing process.

Monto: I can speak from the experience of having 150 superbills disappear into the FedEx universe. That's just one of the daily headaches that go along with outsourcing. I think it depends on the practice and where they are in their evolution to decide whether it's better to [bill] in-house or out of the house.

We realized that we were losing a little bit of control. We were about 100 miles away from our billing company, and we had some physical barriers that made it very difficult to maintain a tight interface between them and our office. You leave a lot of money on the table then, and it creates a lot of confusion and bad feelings between the patients and the billing and the office. You need the right personnel to do this, or it just doesn't work. We're much more accountable for what we do because it's our own people doing it.
 
Kletzky: [Our offices] all have our own billing operations. Personnel is really important. You have to hire someone who's going to take interest in what they do and in the account. If you get someone who is just there to fill their eight hours, and has the 'It's just a job' attitude, I don't think that works.

Millaway: I've come from both [sides]. At my previous job, we had a billing corporation, and here we do it ourselves. I can't begin to say how much of a difference it makes to have the accountability, the close relationship with the doctor.


When you're a high-volume, low-dollar practice, you don't see an advantage to outsourcing because they work the high dollars. If they don't get to all the dollars, yours get dropped.

Welter: Billing has sort of an 80/20 rule to it. About 80 percent of it takes about 20 percent of the effort. It's that last 20 percent where the real profitability of the practice and the physician is -- and it becomes the most expensive part to get. That's true whether it's done in-house or outsourced. But when it is in-house, it really becomes a focus. That is a 20 percent we will spend time on because we know the impact to the bottom line. A billing service that may not be the best ... in their eyes, it may not be worth it.

The message to those who have billing services and those who do it in-house is that you have to play an active role in billing, both the manager and physician, to really understand, to ask questions, to look at the aging, to do all of those things.

Joanne Tetrault is director of editorial services for Physicians Practice. She can be reached at jtetrault@physicianspractice.com.

This article originally appeared in the February 2005 issue of Physicians Practice.