Is the money your practice deserves floating out of the front door? Get it back by avoiding these common pitfalls.
Marsha Sosebee remembers her first day as a billing and collections team leader very clearly - but not very fondly. "I started my first day there with a 100-page [accounts receivable] report," says Sosebee of the three-physician orthopedic practice. "Collections, I couldn't even begin to tell you the percentages out, but by standards it was atrocious."
That was more than a decade ago. Looking back, Sosebee recalls discovering that repetitive collections mistakes, including failure to follow up on claims, poor communication, and lack of training, were adding up to big problems. "It was to the point that they had to bring in crisis management or they were going to go under," she says. As Sosebee began to address those issues and several others, things began to turn around for the practice. By the time Sosebee, now billing manager at a solo specialty practice in Dalton, Ga., moved on from that orthopedic practice four and a half years later, its net collections had reached 96 percent.
While your practice's financial situation may not be quite as dire as the one Sosebee encountered, it could be making similar collections mistakes that come at heavy costs - the consequences of which are magnified as reimbursement declines and overhead increases.
To ensure your practice is collecting as much of its hard-earned cash as possible, we asked Sosebee and other medical practice revenue experts to weigh in. Here's what they say are the five biggest collections mistakes practices make, and their recommendations for how your practice can reap higher returns.
Mistake #1: Failing to collect at time of service
Collecting patient balances - including copays, deductibles, and past-due charges - at the time of service reduces staff time and money spent mailing statements to patients, and it "eliminates those small balances from being on the books," says Joy Hicks, a medical practice revenue cycle consultant.
It also increases the likelihood that patients will pay in a timely manner, something that's becoming more critical as patients' portions of their bills make up a higher percentage of total reimbursement, says Jim Akimchuk, vice president of revenue cycle services at consulting firm Culbert Healthcare Solutions. "With the increase in patient responsibility that's coming through, it's becoming more and more incumbent upon the practices to collect their upfront dollars as quickly as possible," says Akimchuk.
To improve time-of-service collections at your practice, follow these four steps:
1. Verify and note. Make sure staff compiles the patient's portion of payment information, especially the copay and/or past-due balance amount, during the benefit verification process and prior to appointments, says Hicks. Staff should also note this information somewhere easily accessible, such as in your practice management system. That way when patients present for appointments, staff can quickly identify any payments that are due.
2. Ask appropriately. Instruct staff to avoid phrasing mistakes that can lead to failure to collect at time of service, says Akimchuk. Rather than asking patients, "Would you like to make your payment today?" staff should ask, "How would you like to pay your balance?" he says.
3. Provide resources. Train staff to ensure they know how to determine the patient's deductible and coinsurance, says P.J. Cloud-Moulds, owner of consulting firm Turnaround Medical AR Recovery. She recommends providing a fee-schedule chart listing your practice's most commonly used codes and each payer's corresponding contracted rate.
4. Proceed with caution. While providing staff with an updated fee schedule should "get you within cents of what the patient is going to owe," make sure your staff is not making unnecessary promises to patients when collecting, says Cloud-Moulds. "The worst thing they can say is, 'This is all you will have to pay.' The patient will hold you to it, and then you're adjusting off things [later] that don't need to be adjusted off."
Mistake #2: Failing to set expectations
Don't underestimate the importance of relaying payment expectations to patients as frequently and as far in advance of appointments as possible. "Establishing that expectation, as basic as that sounds, is actually something that has proven to be very effective in terms of increasing time-of-service collections," says Akimchuk.
To establish patient payment expectations effectively, your practice should have a documented payment policy that is shared with patients when they schedule appointments and when issuing patient appointment reminders, he says. In addition, staff should be as specific as possible with patients regarding their portion of the bill. For instance, after verifying benefits, staff should contact patients to inform them of their copay.
Relaying specific payment information is especially critical if staff finds that a patient will incur an unexpectedly high balance for the service requested, says Sosebee. For example: If the patient lacks adequate coverage. "It's important to let people know where they stand," she says, adding that if patients are aware of the high cost of a service, but opt for it anyway, it's more likely they will pay promptly when presented with their bill.
Staff should also notify patients of their expectations regarding any past-due balances when scheduling appointments and issuing reminders. "You should be saying, 'Oh, and I noticed you have an outstanding balance, can I get a credit card or a payment from you today while I have you on the phone?'" says Akimchuk. "Take the proactive approach of trying to address it before the patient gets to the practice."
Mistake #3: Failing to address denials
Don't ignore denied claims or fail to address them appropriately. While a few denials here and there may seem insignificant, those dollars and cents can add up to significant amounts of missed revenue over time, says Hicks. If your practice has limited resources to devote to reevaluating and resubmitting denied claims, at the very least it should prioritize those with the highest potential monetary value. Hicks recommends establishing a monetary threshold at which denied claims will be corrected and resubmitted, and at which they will be written off. "Nobody wants to write off charges, but if your time doesn't permit, you need to focus on the higher dollar amount and work those as you can," she says.
Short of taking a more proactive approach, the best way to address claims denials is to reduce the number your practice receives in the first place. Here are a few tips:
• Verify benefits and confirm insurance. This should be a no-brainer, but make sure your staff is doing all it can to verify benefits prior to appointments. "If we don't verify the benefits, then we may end up not having coverage for that particular area, and that's a denial right there," says Cloud-Moulds. In addition, staff should confirm that your insurance information on file is up to date when established patients schedule appointments.
• Ask questions. Speak to a payer representative directly if questions arise during the benefit-verification process, says Cloud-Moulds. Document the representative's name, the date and time of the call, and the rep's answer. That way you have recourse if she provides incorrect information that leads to a denied claim. "You can always go back and say, 'Well, I spoke with this person and this is what she said,'" says Cloud-Moulds.
• Don't miss the obvious. Avoid small errors that trigger denials, such as the misspelling of a patient's last name, by asking direct rather than open-ended questions when gathering patient information, says Hicks. For example, ask "What is your address?" rather than, "Is all your information up to date?"
• Don't forget important questions. Watch out for coverage limits that result in denials, says Cloud-Moulds. For example: If a Medicare patient has received home health services, he may need a home health discharge before you can receive payment for treating him in your practice. "Medicare will not pay, or they'll pay and then turn around and ask for it back, and that hurts - a lot," she says.
• Don't be lazy. Monitor claims denials. This will help you identify claims-related mistakes to avoid in the future. It will also highlight payer policy changes you may be unaware of, says Hicks. "Once you find that out you can change your processes."
Mistake #4: Getting complacent
Don't be satisfied with the status quo. Instead, institute performance goals for your staff and collections department as a whole, says Hicks. She suggests establishing productivity standards, such as a number of claims that should be worked each day; and quality measures, such as a monthly collections goal. "Without having a standard, a lot of people get complacent," she says.
One great collections performance measure is average days in accounts receivable, says Cloud-Moulds, noting that financially healthy practices operate with the fastest claims turnaround. She suggests setting goals for your average days in accounts receivable depending on your payer mix and typical claims turnaround speed. For instance, set the goal of having a percentage of total claims (perhaps 80 percent) completed within 30 days; a smaller percentage of claims (perhaps 10 percent) completed in 30 days to 60 days; and so on.
Regardless of the particular goals you set for your practice, it's critical to ask staff for input when defining them. "If you have them help you set that goal and they believe it is reasonable, they're more likely to reach that goal," says Cloud-Moulds. In addition, if your practice institutes standards and goals, it's only fair to provide staff with adequate training and resources to meet them, says Hicks. For staff heavily involved in collections, she advises providing at least three to four educational opportunities (such as conferences or webinars) annually. If time and budget for such endeavors is lacking, ask one or two key individuals to attend and relay what they learn to the rest of your staff.
Mistake #5: Missed opportunities
Don't overlook tools that can make your job easier. A variety of technologies are available that streamline collections processes and improve efficiencies. Though these new tech tools cost money upfront, experts and users agree that the long-term payoff is huge.
One such user is Brittney Wachter, business manager at Excel Eye Center, a 10-physician, three-optometrist practice in Provo, Utah. Five years ago Excel began using a Navicure Web-based clearinghouse solution and claims scrubber. Among the positive results: faster claims statuses, ease in addressing claims issues, and reduced denial rates, says Wachter. "Cost-wise we are spending more because [this technology] wasn't something we had before, but our return is so much higher and greater," she says.
Here are some other collections-related technology tools that experts say practices should consider:
• E-eligibility software. Instead of using staff to verify benefits, use technology. Electronic-eligibility software from vendor ADP AdvancedMD, for instance, electronically checks and updates patient coverage information.
• Collections module. Some practice management systems allow users to create customized patient and payer collection work lists. This enables staff to make smarter decisions regarding what accounts to focus on and when, says Monty Miller, CEO of San Diego-based Momentum Billing.
• Monitoring tools. Use technology to monitor collections and identify recurring problems. Vendor RemitDATA's Reimbursement PRO tool, for instance, measures five performance indicators, including most common denial codes and denial rates by procedure.
• Patient portals. Consider implementing a patient portal that enables online bill pay, says Hicks, noting that the easier it is for patients to pay, the more likely it is they will pay. "A lot of people are going to online payment for just about everything and the physician [office] is no different."
Payment plan policies
Patient payment plans are a great way to ensure patients who are struggling financially can pay for services. Follow these three rules to implement a successful payment plan at your practice:
1. Set limits. Work with patients, but not at the expense of your financial well-being. Payment plans should last no longer than six months, especially if you aren't charging interest, says Marsha Sosebee, billing manager at a solo specialty practice in Dalton, Ga.
2. Allow exceptions. In cases of true financial need and when deemed appropriate by managers or physicians, make special allowances. Consider extending payment plans or offering a longer duration to pay, says Sosebee.
3. Follow up. Be prepared if patients fail to comply with the plan, says Jim Akimchuk, vice president of revenue cycle services at consulting firm Culbert Healthcare Solutions. "Diligent follow-up on those payment plans, a clear understanding of what your next steps will be - if payment is received, if partial payment is received, if no payment is received - those are all processes that, if in place, will ensure that you are doing better from a collections perspective."
As reimbursement declines and overhead increases, it's critical for practices to ensure they collect as much of their hard-earned cash as possible. Here are some tips:
• Improve efficiencies by collecting patient payments - including copays, deductibles, and past due balances - at time of service;
• Ensure patients are prepared to pay by relaying payment expectations - including when, how, and how much they will be charged;
• Reap higher returns by reevaluating, resubmitting, and monitoring denials;
• Improve collections performance by instituting standards and goals for your staff and collections department; and
• Streamline collections and improve efficiencies by using technology.
Aubrey Westgate is an associate editor at Physicians Practice. She can be reached at email@example.com.
This article originally appeared in the July-August 2013 issue of Physicians Practice.