Collect More Money!

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.

To help keep track of charges versus payments, we print out an Excel spreadsheet that shows us what we are supposed to get paid by each insurer for each service. We check every single EOB [explanation of benefits] and make sure payers are paying us what they are supposed to. Especially at the beginning of the year, [when contracts and rates are new] the payers do make errors - usually in their favor, never in ours. Then we have to call them. They usually see the error and just fix it. It's really worth it to make those follow-up calls, because the mistakes do add up through the year.

Williams: Practices definitely need to work with payers to make sure they fix whatever in the system is causing claims to be paid wrong. If the payer just goes back and re-pays you one claim at a time, the real problem never gets fixed and you are constantly fighting that battle.

Carter: Exactly, and that's what we ask them to do: to fix the code, or whatever the error is on their part. Then we ask them to pay us properly for the time frame in which we know we had the problem. We do pull from our own system to verify that they catch all wrongly reimbursed claims, but we have over 250 physicians, so it's imperative that payers cooperate.

A team effort: front desk and billing

PHYSICIANS PRACTICE: Let's talk about ways to make the front desk and the billing office work together [laughter from the group]. Obviously, those two groups need to collaborate. If you put garbage in on the front end, at the front desk, you'll have garbage at the back end, and the billing will never go out successfully. Yet the relationships between these two groups are sometimes antagonistic. So what have you tried to get them to work well together?

Turner: Recently, we've started doing some cross training, so that the front-desk people see what the billing people have to do to get the claims out clean, and how that directly relates to what they do. We also have the billing people go up front to see what kind of stress the front office is under. So there is kind of a mutual understanding now between the two groups. The training lasts for about a week.

The extra benefit for us is that the billing department is able to help our front office, which is currently understaffed. Billing people spend an hour every day helping out. It's become much more of a team atmosphere than it ever was before.

Carter: We've done a couple of things for these groups. Certainly, we talk to each other and try to stay in touch. We make sure people get to know each other, even if it's only by telephone.

Two years ago, we had changed software, so we had overtime work - front-end staff was coming in during the evenings and early in the morning to assist the business office with the transition. We heard lots of questions then and realized that the front-end team didn't really understand the billing process. So we started a training program, and we retrained the entire front office based on the issues and questions that came up. Additional training was also done in the business office.

We also have a process improvement committee in the business office. It includes people from operations, medical records, the billing department, and our call center. We identify problems and then, together, we write the policies and related procedures to solve them, along with an audit plan to make sure they are implemented and continue to work. Because we create those policies together and agree on them, we really have good results.

Williams: We've also found the "process action team" approach very effective. The people who are involved actually chart each step of a given process - and they have "ah-ha!" moments. For example, Mary will say that her next step is to pass the paper to Susan, but Susan says she never sees those pieces of paper. It makes the people who are doing the work define the process flow and fill in any gaps.

Patient surcharges

PHYSICIANS PRACTICE: We're hearing more and more that practices are charging surcharges, either for no-shows or rebilling. Are you doing this at your practices?

Royer: We do charge for no-shows, which we started doing a couple of years ago when our no-show rate went above 20 percent. We created a notice saying that we'd like to accommodate all our patients, but that when a patient misses an appointment, it keeps us from being able to help everyone. We asked patients to call us to cancel appointments if they had to, and said that if we didn't hear from them, they would be charged. We send it out to all new patients, along with other financial and general information about our practice.

We charge $25 for no-shows, so it's a little more than the cost of putting out a statement. But the purpose is more to educate patients than to make money. It has really worked for us. We didn't get the negativity that we were concerned about getting. And we always give a first-time freebie so that if someone calls in saying they didn't know they would be charged, we just write it off, no questions asked.

Griffin: We don't charge for no-shows. I have my office staff call all my patients for the next day and remind them of their appointment, and we actually have very few no-shows - maybe one a week on average. That's partly because patients don't have to wait very long to get an appointment with me. You could be seen the same day, even if you are a new patient. My take on no-shows, though, is that if someone misses appointments on a regular basis, I'm going to dismiss them from the practice because we're losing money.

Williams: I haven't seen too many practices charging these small fees. It becomes another burden to collect, and it has the potential to create ill will with patients.

Overcoming overdue accounts

PHYSICIANS PRACTICE: How do you handle overdue patient accounts? Do you ever dismiss patients from your practice for nonpayment?

Carter: We send out three statements to patients, giving them every opportunity to call us and make payment arrangements. The third and final statement says that if we don't receive the amount due within 10 days, they will be turned over to a collection agency. What we really do is wait 20 days to make sure we haven't missed it in the mail or in the system. But at that point, we do turn them over to a collection agency.

The other thing we do to ensure that we don't run into problems is that our EOPA [Executive Office of Patient Affairs] office, the legal department, and customer service all have action codes to refer to when a patient calls in. We look at those before we turn patients over to see if they had called before with a dispute about the bill or some complaint. Otherwise, they get turned over to collections without any need for physician signatures. We don't dismiss patients for not paying; we continue to see them.

Williams: We work with a lot of academic practices, and you rarely see a patient dismissed there, because many times there is a commitment to provide care to the indigent or people who supposedly can't pay their bill - even if that includes some people who just don't pay. It's a public relations issue. In private practices, I think the problem with dismissing is the ill will that's created. People will work very, very hard to get a patient to make some effort before they actually send the patient away. There also may be liability issues with dismissing a patient; Dr. Griffin can probably speak to that.

Griffin: What we do is meet once a month and review which patients are being considered for transfer to collections. The decisions get made right then - should they be sent to collections, or if not, what is our plan? It might be to contact the patient and arrange a payment plan, but we let them know that if they won't work with us, they will go to collections.

On the liability issue, physicians can dismiss patients. Talk to your malpractice carrier. They can give you a form to notify patients in writing that you plan to end the relationship. (See the sample form in the Tools section of this site.) There is a certain amount of time during which you still have to see the patient for emergencies, and they need a chance to find another physician. I think the real liability lies in not discharging patients who aren't working with you in good faith.

Royer: We will discharge patients, but only after we've tried every other avenue. It has to be a patient who is really blatant with a breach of trust. We are very lenient if someone wants to work out some kind of payment plan. Our goal is to keep the relationship and get the money in.

We also worked with our malpractice carrier to get a letter to send out - actually two letters. The first one asks the patient to contact us to work out a plan or pay us within 14 days. If we don't hear from them, the provider reviews the chart to determine if there are medical or continuity of care issues that would prevent us from discharging them. If not, we send a second letter to the patient stating that we've tried to work with them, but they will be discharged if they don't pay within a specific amount of time. If they don't pay then, we do dismiss them and send them to collections.

Collecting copays

PHYSICIANS PRACTICE: Let's move on to copays. It's easy for patients to say they forgot their checkbook to avoid paying. What have you done to improve your collection rate when it comes to copays?

Griffin: We have an electronic system that prints a slip at the front desk for the receptionist. It says when the patient needs to come back and why, and how much their copay is, along with insurance information.

Typically, the people who don't want to pay their part tend to be the self-payers, so we have a policy like Blockbuster Video. If you are a self-payer or you are someone who forgets your checkbook every time, we have you sign an agreement with your credit card number and expiration date on it. Then, if you "forget your wallet," so to speak, we can say, "Oh, that's fine. We'll just put it on your credit card as you agreed."

Royer: Originally, we had patients pay copays at check-out, as they were leaving. When we changed it to payment at reception, we saw a huge turnaround - they do pay now. And if somebody says they don't have their checkbook with them, we have a statement we ask them to sign that is similar to Dr. Griffin's. It states that they understand that their insurance requires them to make a copay for a visit, and that they will send it to us within five working days. Our copay collection rate increased from about 40 percent to 75 or 80 percent.

Capture those charges

PHYSICIANS PRACTICE: What about charge capture? As Dr. Griffin mentioned earlier in his example about EKGs, it's very easy for physicians to simply not bill for services they have rendered. What have you done to improve charge capture, especially in the inpatient setting?

Turner: Most of it comes down to physician education: reminding them what is billable and reminding them to get it on the superbill. Double-checking is important. For instance, I cross-check our records against the hospital sheets we get that show the birth of every baby. I also look at the reports on operations and make sure nothing has been missed there. For a time, I'm sure there were some NSTs [non-stress tests] that were slipping through, but I review the sheets that come from the hospital that show whether an NST has been done, and I charge appropriately. But it's also constant reminders to the physicians.

Griffin: I agree with that. The onus is on the physician to be responsible. And if you have a system where you are being compensated according to your productivity, then it becomes your business to make sure the services you provide are actually billed for.

Carter: At Kelsey, our physicians are paid based on productivity. We audit charts against the visit record, and then we actually attach dollar figures to what was missed. We've found that cost-based education has really made a significant difference in capturing charges.

Williams: We're starting to see more people using handheld devices for charge capture, especially in the inpatient setting. We're also finding better results when physicians carry a pad of forms to fill out that fits in their lab coat pocket, instead of having to remember to fill out an 8x10 piece of paper when they get back to the office.

Decreasing denials

PHYSICIANS PRACTICE: What processes do you have in place to monitor, follow-up on, and reduce denials?

Carter: We appeal everything that can be appealed. After the first appeal, if it still comes back denied, we look at the dollar amount to see if it's worth resubmitting.

We track denials by location, specialty, physician, and payer. If the denial is for lack of medical necessity and it can't be supported, for example, we write it off as not medically necessary and send it to the physician with a dollar figure. We know exactly how much we had to write off for each physician each month. We also can see if we have some payers who are just denying, denying, denying.

If we find we are getting a lot of denials from a payer for one particular code - and we know we are using that code accurately - we will appeal it regardless of the dollar amount.

I am presently working with one insurance company that represents about 5 percent of our business, and right now they are 60 percent of our denials. We are telling them that this is unacceptable and warning them that we might not go forward with a contract renewal. It's only by tracking denials that we are able to make that kind of decision.

Royer: Unlike Kelsey-Seybold, we've never dropped a payer because of denials. In New Hampshire, we only have a few payers. We can't afford to lose one!

Williams: During contracting, you should include clauses requiring payers to pay on clean claims within 45 days. That's not as strong as having the force of a state-based prompt payment law behind you, but it does give you some leverage when you go back to your provider rep to complain about claims hanging out there 60 days or more.

Turner: We follow a very similar plan [to Carter's]. We appeal when we can. We also have patients sign waivers if we think there may be a conflict. For example, some payers are now saying they don't consider ultrasounds medically necessary. Well, with certain diagnoses, our physicians do consider them medically necessary. So we may have those patients sign a waiver acknowledging that their insurer may not find this medically necessary, and if the payer doesn't cover it, they are then responsible for the balance. We try to keep patients educated. That has saved us a lot of time.

Who should code?

PHYSICIANS PRACTICE: Coding is always a big issue. Who handles it? Who decides what code is going to be billed?

Royer: For us, it's the providers. They know the job they did. We don't have coders.

Carter: And even though we are a large physician network, our physicians are also responsible for coding. We have a coding department that does training and auditing, but they do not do the coding. All of our physicians do their own coding.

Griffin: It's the same for me. I do my own coding, as does my PA, and I think we really need to. We're the only ones who really understand, for example, "OK, this is diabetes with renal complications," and so on. Otherwise, it seems like it would take a lot of time for someone else to dig through and try to figure out what the codes were.

The value of staff

PHYSICIANS PRACTICE: The heart and soul of any billing office is the staff. What do you do to find good quality billing help?

Carter: We look at personalities. We want staff to come in as a patient advocate. But we do require billing experience. The requirements are included in our job descriptions.

Royer: We don't necessarily look for people with experience in medical billing. We do a lot of training. For me, it's a matter of finding someone who can be compassionate and caring with a patient who isn't paying on time, and at the same time, really work toward the common goals of having the patient stay with us, and bearing responsibility for getting the money in.

Pamela L. Moore, senior editor, practice management for Physicians Practice Inc., can be reached at pmoore@physicianspractice.com.

This article originally appeared in the July/August 2002 issue of Physicians Practice.