Win the Billing Game

Even if you're satisfied with your accounts receivable by indicators, it's a good idea to conduct an annual review of your billing and collections processes. In addition to helping you observe performance outcomes, a process review will give you insight to timeliness and cost -- facets that are also important yet often overlooked.

Let's walk through the billing and collections process while demonstrating where you should focus your review.

Registration

The first stage of your revenue cycle begins the first time a patient calls your practice. This introduction to your practice is a great time for you to set the tone for billing.

Here are some questions to ask as you examine this part of the billing and collections process:

• Are you establishing an expectation with the patient that billing and collections are important?
• Are you capturing accurate demographic information, as well as insurance coverage and benefits eligibility?
• Are you aware of the patient's financial responsibility at the time of service (copayment, coinsurance, deductible)?
• If the patient is not covered for the services he is expecting, are you contacting him at least a few days' prior to the appointment to indicate that the services are not covered and payment is expected?

Front office

When the patient arrives at your office, you should be armed with information to expedite the billing process at the time of service. Start by reviewing his insurance coverage and demographic information with him. 

Second, you should collect copayments and other time-of-service payments when the patient checks in. This saves time and resources later, and improves cash flow.

• Are you verifying demographic and insurance information with the patient at every visit?
• Have you included information about expected payment in your appointment reminder call?
• Are you monitoring your performance on time-of-service collections -- including money collected and uncollected?
• Are you accepting all forms of payment and collecting up-front at least a portion of the bill from self-pay patients?

Coding and charge capture

Rendering a service doesn't guarantee that it's going to be paid for correctly by insurers. For that, you must capture the service and code it accurately. Consider the following:

• Are you capturing all charges and ensuring their accuracy?
• Are you providing ongoing training in procedure and diagnosis coding?
• Are you reviewing denials from insurance carriers regarding coding issues such as bundling and downcoding?
• Are you reading all of your carriers' bulletins and implementing training accordingly?
• Are your charges posted within five days for all services, outpatient and inpatient?

Claims submission

Once the charges have been posted and scrubbed, they are ready to be transmitted to insurance companies and patients. 

Claims should be submitted electronically whenever possible, as that will quicken the process. Maintain a copy of the transmission report to prove the claim was submitted. Be sure to work the error report and resubmit all corrected claims.

For claims that must be filed on paper, consider certified mail, and submit claims every day. The sooner your claims are in, the sooner you're going to be paid, and the less opportunity insurance carriers have to earn interest on your money.

• Are you submitting claims electronically? Daily?
• Are you working the error report from claims not successfully passing through the electronic transmission?

Payment posting and follow-up

If the services were coded and billed for correctly, your practice should be receiving payment within 30 to 45 days.

Key each payment into your billing system within two business days of receiving it, and deposit payments every day. The necessity of accurate and timely payment posting cannot be overstated. Even a seemingly tiny mistake can require a refund or a tremendous amount of effort to resolve.

Staff should research all underpayments and denials within five business days. The claims should be resubmitted, appealed, or -- if inappropriately billed by your practice -- written off. If you appeal, include a letter of explanation and any supporting documentation.

If patients or insurance companies overpay, process the refund after researching the reason. Refunds should be processed within 60 days of receiving the overpayment, or according to the relevant carrier or state regulation. If refunds increase or become overwhelming, review a sample of accounts to determine if the root cause is a payment-posting problem. 

Every week, run a report of all unpaid claims more than 45 to 60 days overdue. If the carrier allows for the status of claims to be reviewed online, do so; otherwise, contact the carrier about outstanding claims. As claims are paid, transfer any appropriate balances to the patient as soon as possible.

• Are you using technology to avoid manual posting processes (and associated overhead)?
• Are you pursuing reimbursement for denied payments and underpayments?
• Are you processing refunds correctly and in a timely manner?
• Are you researching unanswered claims and ensuring that they are processed appropriately?

Patient collections

At high-performing practices, patient collections are managed primarily at the front office. This decreases the billing office's workload and allows those staff members to focus on insurance receivables.

Patients should receive a series of billing statements. The format of the statements should be reviewed annually, with input from patients if possible; a clear statement will reduce the number of patients' billing-related calls.

After sending two to three statements, write the patient a letter indicating his obligation to pay. Consider another letter to follow after a period of 15 days giving the patient a payment deadline. When that passes, send the account to a collection agency.
Measure the effectiveness of your agency quarterly by evaluating the percentage of accounts they collect on. If the performance is below your standards, then hold a meeting to discuss strategies to improve collections, or hire another agency.

Staff should be working statements returned with bad addresses or outdated insurance information. Key this information into the patient's account and reprocess the claim.

• Are you maximizing your front-office's involvement in patient collections? 
• Are your statements clearly written?
• Are you monitoring the performance of your collection agency?
• Are you working all communication from patients, such as bad addresses?

Bad debt

Bad debt is a general term describing all uncollectible accounts -- from insurance companies going bankrupt to services that should never have been billed in the first place.

Write off these accounts using a series of codes that will allow you to track the reasons for the write-offs. For example, having a code for "untimely filing" will allow you to determine if this is a problem in your practice.

If your practice works with a collection agency, the write-off also is the point at which you transfer the account to the agency. But even when accounts are written off, your billing system will retain the information. If you're lucky enough to be paid, simply reverse the bad debt and post the payment to the account.

• Do you evaluate accounts before writing them off as bad debt?
• How do you track and monitor bad debt?
• How do you post payments that are received on bad debt accounts?
• Do you manage your bad debt so that your billing staff focuses on active accounts?

There's no doubt that the revenue process is complicated. Even the steps that I outlined above can vary by market, according to the insurance companies you deal with. But don't give up, because the complexity is only increasing -- as is your need to get it right.

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

This article originally appeared in the May 2003 issue of Physicians Practice.