Since 2001, general operating costs for physician practices increased by 52.64%, which exceeded revenue gains for that same timeframe, according to an Medical Group Management Association cost survey. How then, can a practice meet the expectations of its health care consumers and the requirement of the many regulatory agencies while remaining financially viable?
Most medical practices begin by taking a hard look at each line item in their budgets. Invariably, personnel costs are identified as a significant expense. Medical practices would be well served evaluating the work flow process of both the front and back office personnel.
Does your internal staff have the competencies to effectively and efficiently bill for and collect for clinical services? Internal billing may be a suitable option if your accounts receivable in the zero to 90-day period is at least 88% and your net fee for service collection rate is close to 100% without inappropriate contractual or timely filing write-offs. If your billing staff cannot meet these benchmarks, outsourcing revenue cycle management may be a better option for your practice.
Outsourced billing and collection can reduce payroll, tax and employee benefit costs, free up valuable office real estate for additional revenue generating capabilities and improve overall collections. It will eliminate the worry of cash flow management if key billing office personnel take extended leave or suddenly separate from the practice.
Another thing that outsourcing allows is for your staff to focus on operational efficiencies and excellent customer service, rather than laborious private and governmental payer’s rules, policies and coverage determinations. Improved patient service generally results in improved satisfaction, and those satisfied patients are likely to refer others to your practice.
When selecting an outsourced revenue cycle management company, verify the company’s ability to handle real time claim adjudication and payment. This will assist the practice in cash flow management. After three months of service, request metrics that show the percentage revenue collection increased and payment delays or denials decreased. Request and participate in monthly meetings to monitor reports as well as results and question emerging trends.
If your practice does not have a financial policy, now is the time to develop one. Financial policies should be simple to comprehend, clear and concise, and presented in an easy to read format. All front and back office personnel should be familiar with and comfortable educating patients about this policy.
The financial policy can be available on your website, patient portal or can be emailed to your patients when they make their first appointment. Upon arrival to the office, all patients should be presented with and sign a hard copy of the policy. A copy should be given to patients for their records. Patients should be educated about the policy at the time they make their initial appointment, when their appointment is confirmed and when they arrive in the office. It should be exceedingly clear what the expectations are for payment, and unless there are extreme extenuating circumstances, there should be no deviation from the practice’s financial policy. I suggest you encourage clinical providers to refrain from negotiating or discussing the financial policy with patents, and instead, refer the patient to a knowledgeable senior staff member who can explain and reinforce the practice’s policy.
Well-managed practices collect all co-payments, deductibles and coinsurances upon the patient’s arrival to the office, before the service is rendered. It is more effective to collect the required payment prior to the patient being seen by the provider, rather than at check out. Offer effective payment options such as credit cards, debit cards and money orders. Be prepared to advise patients where the closest bank and/or ATM machine is located. When you collect the required copayment at the time of service, you eliminate the need for patient billing statements, mail processing, envelopes, postage and staff time for accounts receivable follow up.
The estimated cost to send out a bill for a missed co-payment is close to $12. This accounts for the workflow process associated with processing the mail, receiving, posting and processing the check. Be efficient and collect required co-payments correctly the first time. Don’t accept a check from any patient who has bounced a check for insufficient funds in the past. Instead, require that patient pay with a credit card or cash. You will save the practice in bank transaction charges and the personnel costs associated with reprocessing the “bad check.” Some practices have eliminated check payments all together. Consider what makes sense for your practice.
Another option is remote deposit. It is a way to process payments without sending checks to the bank. With remote deposit, you can scan an image of a check, send the image to your bank and see the funds added to your account more quickly. Remote deposit will likely save time and money. You will eliminate trips to the bank where a staff member waits on line to make a deposit. Staff time will be used more effectively.
With the improved sophistication of EMR practice management software, almost every office has the ability to check patient eligibility. Use your practice management insurance verification and eligibility module to check each patient’s insurance every single time the patient is to be seen in the office. Patients are anxious and concerned with their medical problems, so advising the front desk staff of an insurance change is not their priority. Patient insurance must not only be verified, but deviations from what is reported and actually in effect must be addressed.
Insurance eligibility is a two-pronged approach. After verification has been requested, follow up on the reports to verify you have the correct information. In the event that you do not have this capability in your practice management software, staff can manually verify insurance or stand-alone modules can be purchased.
While a practice should be focused on efficiency, it should also be sensitive to those patients who require financial assistance. Having a patient financial assistance program or charity care program is a value added service to your patients. There are numerous financial assistance policies available which are based upon the previous year’s federal poverty level. Financial assistance should only be available for those who require medically necessary services.
Some practices allow patients to qualify for 100% charity care if their family income is at or below 300% of the Federal poverty guidelines. Other parameters include patient responsibility for 20% to 80% of their bill if their family income is between 301% and 400% of the federal poverty guidelines. Medical practices should predetermine the dollar amount of financial assistance they can provide in one year and track this amount monthly. Many practices set this amount annually at a percentage of net collections.
Patients should be required to complete detailed financial assistance applications and provide supporting documentation. Physicians and/or senior management should review these applications and provide a determination within 30 days. Review all financial assistance applications for appropriateness. Patients who state they are unable to afford a $50 office visit copayment but report spending more than $75 per week on tobacco products should be handled according to predetermined practice guidelines for assistance. Alternatively, consider offering a cash discount to self-pay patients who pay in full at the time of the service. Many practices are discounting their fees to non-insured cash paying patients if the patient pays in full at the time of the service.
No single policy or procedure will be the magic wand that dramatically improves billing and collection efficiencies. But taken together, these changes in work flow process can improve bottom line collections.
Anne M. Dunne is Grassi & Co.’s Director of Healthcare Consulting. Anne is a Registered Nurse (RN) and holds dual certification in nursing case management and Multiple sclerosis nursing. In her role at Grassi & Co., Anne helps Grassi’s healthcare clients with various practice management issues, including practice and clinical service expansion, revenue cycle analysis, practice benchmarking, operational assessments, HR management, coding, and documentation and audit/compliance issues.