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The billing and collection process closely resembles the clinical processes used to evaluate and manage a patient’s medical eye problems. During a medical examination, all components of the history and/or exam must be completed. If even one is omitted, an incorrect diagnosis could be made and improper treatment could be initiated, usually with suboptimal results. Similarly, as a practice owner, it is your responsibility to ensure that each step of the business process is carried out correctly and completely, to markedly increase practice revenue.
Medical billing has long been recognized as a perfect example of the 80/20 rule. You can bring in 80 percent of your billing revenue with only 20 percent of your effort, whereas collecting the remaining 20 percent of revenue requires 80 percent of your effort. This rule certainly holds true for billing and collection in ophthalmology practices.
In this article, we’ll look at the difference between mediocre and outstanding billing and collection results. We’ll also identify where applying extra attention can increase your practice’s collection of receivables from around 90 percent to 100 percent.
Defining billing and collection performance is the first step to improving that performance. What measures or benchmarks can you use to determine your level of performance? Where do you start? Should you begin with the charges that are posted into your practice management software, or is there a better alternative?
Since the real purpose of any practice’s business process is to ensure payment for the clinical services provided, start by quantifying those clinical services. Then, given the practice’s contracts and payer mix, assess whether the amount of money being collected is equivalent to the contracted value of the services provided. Begin by reviewing existing processes.
Identifying Billing and Collection Core Functions
A commonplace set of billing and collection core functions includes:
- Patient registration;
- Charge capture;
- Charge entry;
- Claims submission;
- Payment posting; and
- Follow-up/accounts receivable (A/R) management.
These processes are in place even when they are not discretely defined and managed. They will bring in 80 percent to 85 percent of your expected income, assuming that services are coded accurately and claims are submitted regularly.
So what is required to bring in that last 15 percent to 20 percent of your income? Consciously and effectively managing core processes can increase performance to a degree. However, there are some key steps which, when added to the basic billing and collection process, will ensure the process works optimally.
In evaluating the business process of hundreds of ophthalmology practices, as well as our own billing operations, we’ve identified a set of processes that improves collection performance ratios. If these steps are not in place, uncollected revenue is left “on the table.”
How to Improve Billing and Collection Performance
- Verify insurance coverage and confirm eligibility. After registering the patient in the practice management system, it is important that your staff have a process for verifying that the insurance information in the system is accurate and the insurance is in force. They should collect any additional information available on copayments, covered versus noncovered services and the status of the deductible. Your staff should also identify available automated processes that can transmit the appointment schedule in batch mode two or three working days prior to the appointment date. These automated processes should include a report that is generated and returned to the practice showing each patient’s insurance status. The practice must contact all patients who fail the insurance-eligibility check to verify their insurance data. If required, staff must manually check with the patient’s identified carrier.
- Preauthorize when necessary. When a patient’s insurance coverage requires preauthorization, it should be obtained before the service is provided. Health maintenance organization (HMO) patients lacking authorizations are a major source of lost income. Many HMOs have a 48-hour limit on retroactive authorizations. This is especially important in retina, pediatrics and oculoplastics practices. Often, one procedure is preauthorized, and then either a different or additional procedures are required. These changes should be routed to the proper individual immediately so that changes in the authorization can be made. If there is a delay in reviewing or correcting authorizations and the retroactive authorization for the added/different procedure(s) is not obtained in a timely manner, the insurer may not pay the claim. In many instances, there are no effective appeals processes in place for claiming these lost revenues.
- Verify insurance information on patient arrival. Most modern practice management software packages have the ability to accept scanned images. An insurance card scanner attached to each front-desk workstation is the easiest and fastest way to make sure the practice has accurate information in its files. When a new patient arrives, scan the insurance card into the system, creating an image in the patient’s record. At each return visit, request that the patient show the insurance card, and have staff compare it to the image in the system. This accomplishes two things: first, it allows verification of up-to-date insurance information, and second, it increases front desk staff efficiency by enabling them to obtain an image of the insurance card without the need to leave their station. If your practice-management software does not accommodate images, installing an insurance card scanner at the front desk and having staff scan an image into a file (which can be printed later) will increase front desk efficiency.
- Collect copayments in office. Copayments, collectible deductible payments and payments for noncovered services, such as refractions, must be collected at the time of service. The relatively low dollar value of these collections makes sending patient statements cost prohibitive. Also, payments not collected at time of service have a lower likelihood of being fully collected.
- Audit charge captures weekly. Modern practice management software packages include a standard report that compares completed appointments to charges entered. You or your staff should run that report weekly to identify patients seen in the office for whom no charges were entered in the billing system. For this report to be effective, all services, including patient encounters, testing, office procedures and surgeries performed in an ASC, should be scheduled in the system. No revenue can be collected for services provided that are never charged.
- Check charge-entry accuracy. With more and more practices using interfaced or integrated electronic medical record and practice management software packages, it is critical to check provider-entered charges prior to submission. An experienced biller/coder should check all provider-entered charges for modifiers, Correct Coding Initiative edits and other coding distinctions such as location (left to right), technical and professional components and any requirements of individual insurance carriers. Practices that omit this step usually see much higher denial rates and receivable totals.
- Assess your fees. Many practices have one or more fees below their insurance contract payer allowable. If you charge less than the insurance contract allows, you will receive 100 percent of your fee, but this leaves some justifiable income uncollected. Analyze your fee schedule to ensure that your standard fee for each service provided is higher than your highest contracted payment.
- Enter charges promptly. As a process performance standard, your staff should always enter all charges in the system and transmit them by the end of the business day following the one in which the service was performed. Charge-entry delays back up your business processes and contribute to a higher level of unpaid claims.
- ‘Scrub’ automated claims. Even with an experienced biller/coder entering or checking all charges, many of the better available software packages have built-in claim edits that can flag claims with a high likelihood of rejection. This allows those claims to be corrected before submission. If your practice management system does not have this feature, you can purchase third-party software packages that “scrub” claims prior to submission.
- Submit regular claims on schedule. Claims should be submitted daily to the claims clearinghouse. If daily submission is not practical, claims should be submitted no fewer than three times a week. Delaying submissions slows down payments and, by delaying claims adjudication, can increase the likelihood of timely filing rejections.
- Check clearinghouse rejections. Your staff should check for rejections by the clearinghouse within 24 hours of batch claim submission. Many errors in charge entry will not be caught by your practice management software claims scrubber but will be caught at the clearinghouse level. Correcting and resubmitting claims within 24 hours will eliminate the time it would otherwise take for the carrier to reject the submission.
- Review payment posting. There are several components to the payment posting process that should be in place:
- Electronic remittance posting. Even if your system can post payments electronically, the remittance file must be checked for rejected and underpaid claims. Electronic remittance posting is not completely automatic; failing to check each payment visually for correctness can cost a practice lost revenue. This is especially true if your system is automated to the point where balances are automatically adjusted after autoposting of payments, even if the payment is $0.
- Work rejections. Rejected claims should be dealt with as they are encountered in the payment posting process, rather than set aside to be worked on later. Many practices lose significant revenue because they do not deal with rejections in a timely manner so that rejected claims can be refiled within acceptable time frames.
Next time, we’ll continue discussing improvements, beginning with A/R follow-up.
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About the author: This article is an adaption of the original version, which appeared in the American Academy of Ophthalmic Executives (AAOE) April 2012 Executive Update. It was written by Ron Rosenberg, a member of the AAOE Consultant Directory and president of the Practice Management Resource Group. This firm specializes in the financial performance of ophthalmology practices across all subspecialties. Their consulting engagements are designed to assess business process and workflow, as well as collection performance. They also offer outsourced billing services that are exclusive to ophthalmology.