The Third Lever of Practice Profitability: Accounts Receivable

Once services have been rendered to patients and bills have been generated, the money owed to your practice is now deemed “Accounts Receivable” (AR). Although different tactics are needed to collect these outstanding claims, AR includes money due from both insurance companies and patients. Poor coding, high claims denials, and low resubmission rates, coupled with weak upfront cash collections, can result in as much as two-thirds of physician practice revenue lost to billing inefficiencies. Strong AR management can help your practice optimize revenue.

Know Your Numbers

There are many metrics available to evaluate and manage AR. The options are endless and often overwhelming. Knowing which specific metrics are right for your practice may depend on your local market, managed care contracts, or payer mix. Days in Accounts Receivable is a great basic starting point, but you must dig deeper for the whole story. While all practices share the same goal of bringing cash in, we must understand why it’s not coming in to address areas in need of improvement.

Managing Patient AR

With an estimated 25% of all healthcare revenue now the patient’s responsibility, practices must proactively manage this aspect of AR with a similar approach and importance as their payer accounts. A strong patient collections policy must be in place so that staff members know how to effectively communicate with patients about their financial responsibilities. Cash collections from patients must start with the very first patient contact by obtaining valid insurance information. Once claims have been submitted and processed, any remaining patient balance can now be billed. Effective patient billing practices such as indicating that payments are “due now,” offering a variety of payment options (credit card and online payments), and establishing consistent policies for placing accounts into collections will assist in effectively managing patient AR.

Managing Payer AR

Payer AR typically represent a much larger portion of a practice’s total outstanding accounts, thus having a much greater impact on your practice’s bottom line. Additionally, payer accounts can often be much more complex to recover. Key metrics to consider for managing payer AR might include:

  • First pass resolution rates
  • Denial rates
  • Resubmission rates
  • Aged accounts receivable by days outstanding, compared to prior years

What’s more, drilling down into these metrics at the individual payer level may provide keen insight into technical issues related to specific managed care contracts. Since payer requirements for claims submission change frequently, these insights may lead to training opportunities for staff to implement new procedures when submitting claims in the future.

Time is Money

Once the metrics for patients and payers are evaluated and focus areas are identified, the practice should develop strategies for quickly prioritizing and addressing receivables. These strategies may include implementing stronger upfront cash collection processes, training staff on better understanding payer contracts, or reevaluating the priority levels assigned to outstanding accounts.

The experts at Practice Partners Inc. can help drill down into your data to evaluate the metrics that are right for your specific practice and recommend procedures to improve AR efficiency. Contact us to learn more about how we can help improve your practice’s bottom line.

One of the most unique and challenging aspects of the American healthcare delivery system is the process of billing and collecting for medical services.  Becker’s Hospital Review reported on one study by Health Affairs that revealed the amount of time practices spend interacting with health plans equates to more than $68,000 per physician each year. What’s more, practices also incur additional costs, such as billing software, to get reimbursed.  To minimize these costs, successful practices must continuously evaluate their billing and coding processes to keep pace with the ever-changing landscape of third-party reimbursement.   

Start at the Beginning 

It may sound simple, but effective billing practices start during the very first interaction with a patient, usually before the patient arrives in the office.  Collecting accurate insurance and benefits information at scheduling paves the way for a smooth and efficient collections process down the road.  

Once benefit information has been obtained, verification of those benefits is essential so that office staff can determine the patient’s specific plan type, network status, coverage allowances and out-of-pocket responsibilities. Careful eligibility verification is key to minimizing collection delays and claim denials 

Accurate eligibility and verification processes also confirm a patient’s co-pay and coinsurance responsibilities, which allow staff to educate patients and request point-of-service payments. Effective point-of-service collections decrease the likelihood of bad debt later in the Revenue Cycle process.  

Coding is Key 

Coding is a critical aspect of the billing and collections process and is essential to the practice’s bottom line.  A successful coding department must actively seek to minimize denials and maximize reimbursement. A few strategies for achieving this include:   

  • Generating Accurate ClaimsConduct a coding review of a small sample of your cases annually. Utilize the results to focus on opportunities for improvement among the staff.  
  • Providing Ongoing Training to Staff – Based on results of the coding audit, provide regular training to staff members to improve coding accuracy and to provide insight on specific requirements within various payer contracts  
  • Ensuring Legal and & Contractual Compliance by conducting annual or semi-annual audits.  

Time is Money  

Accurate billing and coding processes result in more timely payments from patients and payers. Identifying Key Performance Indicators to evaluate the timeliness of these aspects of your Revenue Cycle will provide keen insight into your processes.  Metrics such as Days to Bill, Days in AR, Billing Turnaround Time, and Speed to Payment can highlight areas in need of improvement.  

Contact us to learn more about how Practice Partners can help you analyze your billing and coding processes to improve your practice’s bottom line.  

Earlier this year, the Centers for Medicare and Medicaid Services (CMS) issued a price transparency mandate to hospitals across the nation. This new regulation requires that hospitals make their charge masters publicly available. In theory, this information will allow patients to gain a better understanding of their costs – before care is consumed. It remains to be seen if the reality will match the intention.  

Price transparency has been in the healthcare headlines for years; however, one of the biggest hurdles to real transparency is the variance of managed care contracts – especially for independent medical practices.  Independent medical practices are at a disadvantage when it comes to negotiating with payers; they do not have the same leverage of practices associated with hospitals, health systems, or other large networks. And, payers have used this to their advantage.  

Before entering into payer negotiations, you must arm yourself with knowledge.  

Analyze your Current Contracts 

At least annually, you should analyze all of your managed care contracts. Create a checklist that includes the following points and then answer the questions as they apply to each of your contracts. 

  • Contract length  
  • Days to submit claims 
  • Days to pay claims 
  • Percentage of claims denied 
  • Reimbursement rates for specific services 

Find Areas of Opportunity 

After completing your analysis and getting an “apples-to-apples” comparison of each contract, look for areas that can be improved. Boosting reimbursement rates, while important, is not the only item to consider. For example, look at how long it takes a payer to reimburse your practice – it should be 30 days or less. Also, if a payer has an unreasonably high percentage of denied claims, find out why and what you can do to ensure claims are approved on the first submission.    

Understand the Market 

Know who the biggest players are in your market – both from a payer and a provider perspective. The larger the market share a payer has, the more power they have to squeeze rates and narrow networks. In terms of other providers, try to find out which payers they contract with, their volume, and their level of care quality. This information can help you better position your practice during contract negotiations and know which payers will be more likely to give you the most favorable terms.  

Unfortunately, there is no magic formula to ensure your practice is getting the best reimbursement rates possible. Regularly reviewing your contracts and analyzing the market conditions will allow you to have a better understanding of your position with each payer. This is the key to making sure you get the most favorable reimbursement rates and contract terms.   

Contact us to learn more about how Practice Partners can help you analyze your managed care contracts to improve your practice’s bottom line.  

 

 

Recently, MedPage Today published its 2018 Salary Survey. The report analyzed the salary information submitted by 7,753 healthcare providers. According to the survey results, on average, physicians made $8,039 less in 2018 than they did in the 2017.

To add insult to injury, many physicians are also reporting that their workload is increasing due to a variety of factors such as regulatory compliance requirements that bury them under a mountain of paperwork. In fact, in the same survey, recordkeeping and burnout were listed as the worst aspects of their jobs by more than half of the respondents.

Despite the push for value-based payments, most physicians’ salaries are tied to a fee-for-service model. Therefore, many physicians believe that the only way to increase their earnings is by increasing patient volume. While boosting volume is one way to grow revenue, there is a drawback to this method: the finite number of hours in a day.

Physician compensation is tied to the medical practice’s profitability – the more profitable the practice, the higher the physician’s compensation can be. Typically, there are ample opportunities to improve overall profitability within a medical practice. Patient volume is just one area to consider.

In fact, while working with medical practices across the country, Practice Partners identified 5 areas that, when optimized, can significantly improve a practice’s bottom line:

  • Reimbursement
  • Billing/Collections
  • A/R
  • Expenses
  • Access

Over the next few months, we’ll discuss each of these topics in a series of blogs titled, The 5 Levers of Practice Profitability. The goal of this series is to help independent physicians discover how they can enhance the business side of their practices to achieve their financial goals.

Contact us to learn more about how Practice Partners can help you ensure your medical practice is positioned for long-term success amidst an everchanging healthcare industry.

Organizations around the globe have been using Business Intelligence technology, data and support systems to guide their operational strategies and improve business efficiencies for years. With business intelligence, organizations can access historic, current and predictive data to enhance workflows, improve policies and procedures, and optimize finances.  

Business intelligence systems create data-based tools and analytics to facilitate informed operational decision making, while tracking progress against short- and long-term goals to effectively manage and anticipate change. Through interactive software programs and systems, an organization’s leaders can access this data through program-specific analyses, visualizations and statistics. Programs help decision-makers decide what metrics are most relevant to their business goals and objectives, and what information will be most helpful in informing broader operational approaches and strategies.   

While the healthcare industry has been slow to adopt these strategies and technologies, more and more medical practices are adapting existing business intelligence and data analytics tools to optimize their practice’s finances and operations. Appropriately leveraging relevant business intelligence allows practices to operationally manage at a peak performance level to increase operating margins and income.  

An effective approach to harnessing the power of business intelligence ensures crucial business metrics are tied to existing operational processes. Connecting the two and leveraging that relationship can help medical practices establish Key Performance Indicators (KPIs) around profit levers including: 

  • Access 
  • Revenue 
  • Billing 
  • Accounts Receivable 
  • Overhead 

Implementing easy-to-access dashboards and scorecards removes the ambiguity from planning and status reporting. With high-level, at-a-glance KPIs and status updates available to the broader operational team, administrators can quickly and effectively understand where they stand in relation to broader short- and long-term goals, and adjust their strategies accordingly. Leveraging business intelligence on a broader scale allows for the creation of action plans to address poor performance without losing time trying to establish where inefficiencies exist. The inefficiencies are identified and can be quickly mitigated thanks to the relevant data provided through the business intelligence systems. 

Practice managers and administrators who implement business intelligence systems and strategies will have the data readily available to develop and execute on actionable metrics and goals, while also accessing the flexibility needed to ensure those metrics and goals remain relevant. Managers and administrators can easily measure changes within their goals, and plan accordingly based on projected financial, operational and growth needs. Through reliable forecasting and predictions, operational teams can act proactively rather than reactively, empowering them to make the informed decisions needed to achieve their desired outcomes.

With healthcare increasingly becoming a consumer-driven market, many patients are more acutely aware of the process and costs behind their healthcare. High deductible health plans have added a new layer to the patient / physician relationship, and physicians now have the opportunity to meet – and help define – the emerging patient-as-a-customer standards.  

High Deductible Plans 

High deductible health plans are popular among both consumers and companies who offer employee health care benefits. While healthcare consumers do have significantly higher deductibles under these plans, and therefore, are responsible for more out-of-pocket medical costs, they pay a smaller monthly premium. Many people choose to set aside the money saved on premiums away for health-related expenses in tax-free health savings accounts (HSA). Consumers get more control over the health care decisions, and insurance companies foot less of the bills.  

Now, as more patients make the decision to utilize high deductible health plans, many physicians are finding that patients ask more questions about their health care and the additional costs that may arise. Additionally, because patients are spending more from their own pockets, their expectations are higher. 

Transparency and Patient Experience 

Physicians are responding to healthcare shifting to a consumer-driven market by not only providing price transparency, but also care transparency. Today’s healthcare consumers expect frictionless transactions in their physician’s office. Additionally, patients have elevated expectations around service standards and the quality of their healthcare. This shift means physicians must manage each patient’s expectations around appropriate care and outcomes. By educating patients in the beginning about realistic outcomes and appropriate care plans, physicians can mitigate the risk of a patient having an unpleasant experience in the medical office.  

Further, since many patients are taking on more financial responsibility for their medical care, physicians now have the opportunity to explain the necessary care in terms of dollars and cents. These conversations can help deter patients from demanding tests that are either not required at the time or are completely unnecessary. This allows the physician and patient to work together to determine an optimal, cost-effective care plan. Patients gain a feeling of control over their own care, which improves their level of patient satisfaction.  

The idea of healthcare becoming  more consumer driven may seem challenging.  However, it gives physicians an opportunity to align their workflows and practice management policies to create a better patient experience. This creates an environment for building long-term, loyal patient relationships. 

Contact us to learn more about how Practice Partners can help your medical practice better meet the needs of today’s healthcare consumers.

When you are setting up a new medical office, there are a multitude of details that require attention to ensure that the practice is ready to open when expected and that the office operates efficiently from day one. Practice Partners will help you simplify and expedite this complicated process.With success in launching numerous practices, we are well equipped to advise you on personnel issues and staffing; operational systems; vendor selection; and marketing your practice to potential patients. Read more