When providers and medical staff are asked about reimbursement in medical practices today, the first response might be a loud groan. Getting and keeping the reimbursements your medical practice deserve has become increasingly difficult over the past few years because of ever-changing federal and state rules and regulations, as well as the growing change in healthcare culture.
What is your pie? Your reimbursement is your pie, and it comes from patients and payers.
The revenue cycle includes everything from the point of initial patient contact for care through the collection of payment for the services rendered. Revenue cycle management success is about the fundamentals. Think zero to zero.
Correct reimbursement has many drivers. It includes appointment scheduling, insurance eligibility verification, referrals, precertification, coding, charge capture, claims submission, payment posting, claims rejection reports, accounts receivable follow-up, denied claims management, patient statements, and collection agency account placement. There is a direct correlation between the handling of these items to how and when the practice is paid and if the practice is paid the entire amount it’s owed.
Revenue cycle management is commonly broken into three stages: preservice stage, service stage, and post-service stage. Everyone, including the providers, should have a working knowledge of the three stages and how they can impact medical practice payments.
The first slice of pie
The preservice stage consists of all the activities prior to the patient receiving service from the provider. Here are some very important items that affect reimbursement:
Patient demographics: Garbage in, garbage out! If the information in the practice management system from patient registration is incorrect, a domino effect will occur that can dramatically decrease reimbursement. For example, if the patient or insured’s date of birth, insurance policy numbers, name, or address is incorrect, it affects everything from insurance verification to submitted claims to patient statements.
Insurance verification: To prevent claim rejections or denial, it’s vital that insurance verification be done prior to patient receiving services. Most practice management systems have a batch eligibility option within the system. Verification can also be checked via most payer websites if needed. The following information should be verified:
- Patient policy status: Is this policy active? What is the effective date? Who is the insured?
- Co-pay amount: How much money needs to be collected from the patient at the time of service?
- Deductible amount: Has the patient met their deductible? Verification of benefits in advance allows your practice to estimate the total patient responsibility. Patients with deductible are more likely to come prepared to pay if they are notified in advance the amount due at the time of the service.
- Type of plan: What type of plan does the patient have? Is the provider in network?
- Coverage details/plan exclusions: Does the policy cover the service the patient will be receiving? Is there a specific number of visits applicable to the practice’s specific specialty? If so, has the patient met or exceeded that number?
- Referral/preauthorization/precertification: Does the patient’s insurance plan require a referral or preauthorization? Always look at the back of the patient’s insurance card; in most instances, information is given to indicate what services require precertification. If in doubt, contact the insurance company. Never It is important to remember when obtaining a preauthorization/precertification via telephone that the first name and last initial of the insurance contact, agent ID (if available), date, time, and call reference (if available) is documented in the patient record.
Unresolved patient balances: Train staff on how to communicate with patients effectively. This will help not only in collecting outstanding balances, but it will help patient better understand why the balance is due (i.e., coinsurance, deductible, etc.).
Payment method on file (PMOF): Many of today’s medical billing software systems have the option to integrate a credit card merchant’s services into the system. Practices with a PMOF process can obtain prior written consent from patients to collection any outstanding patient responsibility amount after claims are processed by payers. A PMOF process also allows the practice to work with patients who request a payment plan. The practice can set it up in the software to charge the card monthly based on the practice’s payment plan policy. Patients can pick the day to charge the card each month. Some software can allow the total amount owed and number of months to be input into the system, and it will calculate the payment amount and process the credit card on the date specified.
The staff should be trained to handle questions such as the ones below in a professional, polite, and courteous manner:
- “Can’t you just bill me?” “I’m sorry, but I can’t bill you. As indicated in our payment policy, payment is due at the time of service. Payment collection at the time of service keeps our billing process streamlined and helps keep the cost down for our practice and our patients. It’s customary to pay for healthcare services at the time of service, so, would you like to pay by cash, check, or credit card today?”
- “My insurance covers everything. I don’t owe anything.” This is best handled during the check-in process when verifying information with the patient. “I see here you have XYZ insurance and your copay is $25. Would you like to pay by cash, check, or credit card today?” If a patient remains adamant, offer to contact his or her insurance company together.
- “I didn’t bring my credit card or check book.” This can be easily remedied simply accepting multiple methods of payment: cash, check, and all major credit cards. “I’m sorry, but payment is due at the time of service. Would you like to pay via [an alternate method]?” If the patient doesn’t have cash, check, or credit card on hand, consider asking him or her to call home to get the card number.
- “I can’t afford to pay this right now.” Any patient who has an unpaid balance should be contacted prior to the appointment to discuss payment options. Staff members should have payment plan guidelines that can be offered to patients when appropriate.
The second slice of the pie
The service stage is the point where the patient receives services from the healthcare provider and other clinical staff. Things to remember that affect reimbursement during this stage are:
- Medical record documentation (compliance and reimbursement): Everyone knows the phrase repeated over and over regarding medical record documentation — “if you didn’t document it, it didn’t happen!” If a service is not documented, it cannot be coded. If a service can’t be coded, it can’t be reimbursed.
Documentation in the MR is a key instrument in planning and evaluating patient care. It is important to be accurate, specific, and thorough. Use these tips to insure compliant medical record documentation:
BE specific to the patient.
BE specific to the condition at the time of the encounter.
REFLECT accurately the services performed.
SUPPORT the necessity for the services.
IDENTIFY clearly who performed the services and assessments received.
IDENTIFY clearly the author of each note or entry.
IDENTIFY clearly the date and time note or entry was made.
- Medical record documentation (malpractice and patient): Proper medical record documentation is the best defense against malpractice. Good medical record documentation is extremely important when dealing with patients who are abusive, don’t follow advice, or present the same complaint without improvement.
The final slice
The post-service stage is after service has been provided to the patient. That includes coding, charge capture, claim submission, accept/reject report, payment posting, patient statements, A/R follow-up, denial management, refunds, collection agency assignments, and financial reports.
- Coding: The role of a coder is to verify the patient’s medical record transcriptions of doctor’s notes, any ordered labs, requested imaging studies and other sources to ensure the work has been done. Medical codes must tell the whole story of the patient’s encounter with the physician, and they must be as specific as possible.
- Charge capture: Internal controls are key to this process. Poor charge capture can lead to thousands of dollars in missed reimbursement. In many practices, scheduling is not considered a key component as it relates to charge capture, but it is by far one of the best reconciliation resources available. Most practice management systems today give practices the ability to reconcile charges billed to services billed via an unbilled charge report. This report helps determine when a charge has been created but not billed or an appointment is created but no charges have been entered.
- Acknowledgement/accept/reject reports: These reports should be worked daily. These reports will let you know if a claim has been accepted or rejected by the payer. If it is accepted/acknowledged the claim is allowed in to the payer adjudication system. This is a big difference between rejected and denied claims. A rejection is very different from a denial. Rejected claims are not The payer does not consider them received because they don’t allow the claim to make it into adjudication system. Errors on rejected claims must be corrected and resubmitted. These reports can be used as a vital resource if a payer dispute arises for timely filing or claim never received issues.
- Clean claims: The best way for medical practices to improve reimbursements is to insure percentage of clean claims is a high as possible. Each time a claim is submitted, the practice loses money. Most practice managements systems offer a rules engine and/or a claims scrubber that should be utilized prior to claim submission to the clearinghouse. The rules engine and claim scrubber should be updated frequently. This can save the practice a tremendous amount of money.
- Denial management: It’s important to know the difference between a soft denial and a hard denial and have staff trained in both. A soft denial is a claim that has been denied for issues such as medical records not received, invalid codes, unable to identify patient, etc. These claims denials can be easily rectified and resubmitted or routed quickly. Hard denials are claims that may result in an appeal for reasons such as not medically necessary and/or non-covered services. These claims take more time to decide the appropriate course of action. All denials should be worked quickly and efficiently and are often a source of missed opportunity for getting the reimbursement medical practices are entitled.
- Key performance indicators (KPIs): Key performance indicators tell you how well your medical practice is meeting set goals and objectives. Monitoring key performance indicators will make your medical practice more profitable, efficient, and patient-oriented. Here are just a few that should be monitored closely.
- Net collection rate calculation (total receipts [minus] refunds, then divided by charges [minus] contractual adjustments): Practices use this calculation to see how much money is lost due to things like non-contractual adjustments, bad debt, untimely filing. In a nutshell, it tells the practice how well it’s collecting on eligible revenue.
- Denial rate calculation (total claims denied for a period divided by total claims billed for a period): This helps identify how well denials are managed.
- Days in A/R (total accounts receivable divided by average daily charge): This gives the practice an idea of how well it manages the A/R. The lower the number of days, the more efficient a practice is in collecting monies due.
- Adjustment to collections ratio (total adjustments for a period divided by total collections for a period). This is very important and should be monitored carefully. It allows medical practices to monitor fluctuations in adjustments. It will alert you if potential collectible accounts are written off in error.
Revenue cycle management is complex and hard to manage. Reimbursements on claims filed and patient balances are the core of your revenue cycle. While this may sound like common sense and easy to accomplish, it’s not. The execution of effective revenue cycle management is a challenge for everyone involved. Many practices don’t invest the time, expertise or internal systems to make sure they get paid the maximum they’re owed as quickly as possible.
Here’s hoping you get your slice of pie!
If you have questions about the best practices for healthcare billing systems, please reach out to us at KraftCPAs.
This article first appeared in Nashville Medical News.