Posted by Link Grader on Fri, Sep 11, 2009 @ 02:54 AM
Scale is key when selecting a medical billing company. By scale I mean that the medical billing company should have tens and hundreds of providers across whom large, necessary investments can be spread.
For instance, If a $150,000 per year billing system administrator is required, then a medical claims billing company with 200 clients only needs each of its client to carry $750 per year of that person's cost. If a practice of four providers employed this person, then each provider would need to carry $37,500 per year of that person's cost; this is the value of scale. A medical practice can achieve significant advantages by leveraging the superior scale of a mid- to large-sized medical insurance billing company.
A medical billing company should be deploying technologies and resources that a typical medical practice simply cannot afford or support. Examples of technologies and processes that lend themselves to scale include:
- Advanced (and expensive) billing systems that offer state-of-the-art claim management and reporting abilities.
- Pre-submission claim scrubbers that deal with the different rules for adjudication that every unique payer has.
- A good billing system manager that stays updated with constantly changing claim submission rules from different payers. Sometimes claims can go several weeks before getting submitted, simply because many payers change their formatting rules so often. Medical billing companies are less susceptible to such tactics.
- Advanced collection tools, such as predicting payment yields from patients (such as the amount the patient owes times the likelihood they'll pay).
- A well-defined and managed billing process that will not grind to halt because a single employee is lost and eliminates errors before they propagate through the system.
- A dedicated group of individuals that follow-up on claims that have not had a response from the payer within a reasonable time frame.
These and other advantages show that most medical practices can't afford the personnel and technology to match the services that a good, properly scaled medical billing company provides.
Most of the costs associated with the processes and technologies are fixed, and medical billing services spread these costs over their entire client base. A medical billing company that serves a few hundred physicians is more likely to provide better services than one that serves only a few practitioners. What's more, smaller medical billing companies struggle just to use processes and technology that is equivalent of what most practices already deploy.
The bottom line is that it's always a good idea to check the scale of your medical claims billing company. The bigger ones are better able to collect from insurance companies and payers, who tend to do whatever they can to keep their money.
Copyright 2009 by Carl Mays II
Posted by Carl Mays on Mon, Jul 27, 2009 @ 08:51 AM
A series of successful class action lawsuits have led to positive changes for physicians - in theory. I say in theory because medical billing companies and medical billing departments must be vigilant to make sure that payers are living up to the promises they have made as part of their settlement agreements.
It is critical that quick action be taken each and every time that a settlement agreement is violated. If you believe that Unicare, Humana or BCBS are in violation of their agreement then you need to file a compliance dispute form. Each company requires a different form - of course - but there is no charge for filing a dispute. These forms can be found on the HMO Settlements Web site in the Compliance Center.
This dispute process has teeth and physicians have recovered millions of dollars in previously denied and underpaid claims. In addition, they have also saved millions more by avoiding repaying amounts that payers asserted were overpayments.
An example of the rules by which BCBS has agreed to conduct business will demonstrate how significant the changes have been. As a result of its settlement BCBS:
- May not seek overpayment recovery beyond 18 months (six months for insured plans) unless fraud is implicated;
- Must use a clinically based definition of medical necessity;
- Must adhere to most CPT coding rules, including payment for evaluation and management codes appended with modifier 25 and payment for add-on codes without reduction for Multiple Procedure Logic;
- Must pay for codes submitted with 59 modifiers to the extent they follow CPT rules regarding designation of separate procedures,
- Must provide 90 days advance notice of material adverse changes;
- May not require physicians to participate in all products,
- Must disclose their methodology for determining "usual, customary, and reasonable" amounts.
- Must not utilize global periods for surgical procedures longer than CMS', and
- May not automatically reduce CPT codes to codes of lesser intensity
In order for your practice to fully take advantage of these changes it is critical that you put in place processes to spot violations so that you can pursue the remedies that are proven to work (as described earlier). This is a great opportunity to take advantage of a more level playing field between providers and payers- do not let this pass you by. Make sure that the medical billing service or employee responsible for your medical billing is taking full advantage of these opportunities.
To put this into action you need a systematic process (such as automated reporting) to identify violations by the payers. This process needs to be as automated as possible so that you can catch all violations and not just catch them when they have occurred in volumes o large to miss.
Next you need a process to easily file disputes if a violation has occurred. Again, this must be automated so that it does not always end up at the bottom of the "to do" list. Finally, you need to have a system to follow the disputes to their conclusion.
With these elements in place you can be confident that you are taking full advantage of the agreements that have been made by payers. In addition, you will have a new and powerful weapon in your arsenal to maximize the legitimate collections you are owed for the high value services you provide and the hard work that you perform.
2009 copyright by Carl Mays II and the ClaimCare Medical Billing Company
Posted by Carl Mays on Wed, Jul 08, 2009 @ 07:36 PM
This is the fifth and final article in my series on allowables. Now that we have covered how to understand your allowables, set your fee schedules, calculate your yields and value your AR, we are ready to discuss how to predict your practice's cash flow month-to-month.
In its simplest form, predicting collections can be done by taking your practice's average charges per month over the past year and multiplying by your weighted average practice yield. This calculation provides your average expected monthly collections. For instance, if you practice's average charges per month are $500,000 and your weighted average practice yield is 30%, then your average expected month collections should be around $150,000 ($500,000 X 0.3 = $150,000).
This does a good job of telling you're your average monthly collections and helping your understand if the collections your have budgeted for the year are supported by your charge volume. It does not, however, help you predict the month-to-month variations that can make managing a practice's cash flow difficult. These variations are primarily driven by changes in charge volume from month-to-month.
In order to capture the month-to-month variations it is necessary to add another element to your calculations; the distribution of the average month's payments by date of service. In other words, which month's patient encounters generated this month's collections? Once you know this you can apply your practice's average weighted yield to the portion of each preceding month's charges that will impact the current month's collections. This is easiest to see with an example:
Let's assume your weighted average practice yield is 30% and your collection distribution is:
- 15% of this month's collections come from this month's dates of service (month N);
- 40% of this month's collections come from last month's date of service (month N-1);
- 25% of this month's collections come from dates of service from two months ago (month N-2);
- 10% of this month's collections come from dates of service from three months ago (month N-3);
- 10% of this month's collections come from dates of service of 4+ months ago (month N-4+).
With this information in hand (which a good billing system or billing provider should be able to provide) you are ready to build a predictive collections model. If you use excel then you can build the model so that on one row your enter the practice's charges by month and then directly below you calculate the collections for the month. If we take the data from above, the calculation for each month would be (where n equals the current month):
((month N charges x 0.3 x 0.15) + (month N-1 charges x 0.3 x 0.4) + (month N-2 charges x 0.3 x 0.25) + (month N-3 charges x 0.3 x 0.1))/0.9 = Month N expected collections.
A couple of items of note:
- The faster your collections the more the current month's collections are dependent on the current month's charges.
- In order to simplify the calculation it is helpful to limit the calculation to the current month and the three previous months. This is what I did above and it is the reason that I divided the answer by 0.9. The current month and the preceding 3 months account for 90% of the current month's collections. When I divide the answer by 0.9 (90%), I take this 90% answer and extrapolate it to 100%.
Once you have constructed an excel spreadsheet with the formula's outlines above you can quite accurately predict your month-to-month collections and account for the impact of seasonal and vacation driven changes in your charge volume. In addition, with the collection prediction in place your can quickly spot billing issues before they have a chance to propagate.
Copyright 2009, Carl Mays II and the ClaimCare Medical Billing Company
Posted by Carl Mays on Mon, Jul 06, 2009 @ 10:48 AM
In my last post I outlined why yields are important and how to calculate them. In this article I want to follow up with a few more tactical points concerning medical billing yields:
- Calculating yields requires accurate data about your procedure mix, payer mix and your allowables. If you do not have all of this data then you have bigger issues than just no knowing your yield - you need a new billing system.
- Calculating yields is more complicated for specialties that have issues such as multiple procedure discounts. In situations like this you must understand what percentage of each CPT's occurrence will be subject to these discounts to gain an accurate yield. This is also true if you have other discounts that frequently apply such as assistant surgeon discounts. A fast way to understand the impact that these issues have on your yield is to calculate the yield on fully resolved claims from your billing system and see how much your yield is lowered by the effect of these various discounts.
- The yield you are calculating is your theoretical yield. Your actual yield will be lower because of procedures that do not pay (e.g., preauthorization issues), patients that do not pay, bundling, duplicate claims, etc.
- You need to recalculate your yield at least annually when Medicare and other payers change their contracts. You also need to recalculate your yield if there is a large shift in payer mix or procedure mix.
- Looking at your yields between payers is a great way to compare the attractiveness of your various payer contracts. The payer yields moves away from looking at the multiple of Medicare that a payer says their contract pays and focuses instead on how the contract works for you and your procedure mix.
- Along a similar line of thought to the point above, you can calculate the yield of a proposed contract to understand it true value to your practice and use this knowledge to better negotiate with a payer. For instance, if your fee schedule is set at 200% of Medicare and a payer contract has a yield of 48%, then you know that for your procedure mix the contract is actually paying less than Medicare (if it was paying at Medicare then the yield would be 50%).
- Finally, ask you medical billing manager or medical billing company their thoughts on yields. If they do not completely understand yields and have thoughts on how you can use your yield to understand your practice, predict cashflow, compare contracts and negotiate contracts, then this is a major red flag in terms of their true understanding of medical billing.
Yields are a critical component of medical billing and practice management. The points above should help you become a "power user" when it comes to medical billing yields.
Copyright 2009, Carl Mays II and the ClaimCare Medical Billing Company
Posted by Carl Mays on Sat, Jul 04, 2009 @ 12:49 AM
This is the fourth in my series of articles on allowables and how they impact your collections and medical billing. Previous articles explored the reasons for setting fee schedules higher than expected collections and how this fee strategy coupled with contractual allowables impacts reports and EOBs. This article will discuss how to use the knowledge gained thus far to better understand the true value of a practice's AR.
Understanding the concept of yield is the key behind understanding the value of a practice's AR. From a medical billing standpoint, yield is the amount of a claim that should actually result in a payment versus a contractual adjustment. In other words, if your yield is 50%, then on a $100 claim you should received $50 in payments and will write-off the rest to contractual adjustments. In the first article in this series on allowables I discussed why you should set your fee schedule higher than your contractual allowables. Having fees higher than allowables is what results in yields that are less than 100%.
Calculating your practice's yield is straightforward. At its simplest level you take the allowable for a CPT and divide by the fee you charge for that CPT. Using the example above, if your fee for a given CPT is $100 and your allowable for that fee is $50, then your yield is $50 (what you should collect)/$100 (what you charge) = 50%.
This is a straightforward calculation. The complication arises because of the various payer contracts for a practice and the fact that the yield for a specific payer often varies by CPT (i.e., with BCBS you may have a yield of 50% for one CPT and 60% for another CPT).
This means that calculating your yield requires you to understand your procedure mix. To get a close estimate of your yield for a specific payer you can:
- Take your top 20 CPT codes and calculate the yield for each of these codes; and then
- Calculate a weighted average for the overall yield based upon the frequency of each of your CPTs;
To move from a close estimate to a more precise estimate your repeat the above procedure but instead of only using your top 20 CPT codes, you use as many as is required to cover at least 90% of your charge volume with each payer. Typically, however, the top 20 CPTs provde an accurate answer.
Once you have completed the above exercise for one payer, you need to repeat this for each of your top payers (you should do this for the payers that represent at least 80% of your payment volume). Once you have done this you can then get an overall yield for your practice by creating a weighted average yield for the practice based upon your charge volume (not payment volume) for the practice. The idea of a weighted average yield of the practice works well as long as your procedure mix and payer mix are stable. If either changes significantly, then you need to recalculate your yields.
With a weighted average practice yield in hand you can easily understand the value of your AR. If your practice yield is 50% and you have $500,000 in insurance AR then this AR is worth approximately $250,000. On the other hand, if you have $500,000 in insurance AR and a 30% yield, then your AR is worth $150,000. As you can see, understanding your yield is critical to understanding the true value of your AR.
Although developing yields can be tedious work, it is critical to know your practice's yield so that you do not make incorrect assumptions about the value of your AR or the cashflow impact of good and bad charge months.
Now that you understand your allowables, fee schedules, yields and AR value you are ready to predict and manage your practice's cashflow. Building and maintaining these predictions will be the subject of my next article in this series.
Copyright 2009, Carl Mays II and the ClaimCare Medical Billing Company
Posted by Carl Mays on Mon, Jun 15, 2009 @ 12:08 PM
I am taking a brief respite from the previously mentioned outline for the series of posts on allowables and fee schedules to mention a key point about allowables - they are often ignored by insurance companies. If you are not systematically comparing your payments to your contracted allowables you are losing thousands of dollars. Most likely, your revenue is 7% lower than it should be - that is right 7%!
A recent National Health Insurer Report Card compiled by the American Medical Association measured payment accuracy of seven major payers: Aetna, Anthem BCBS, Cigna, Coventry, Human, United Healthcare and Medicare.
All of these payers to some degree strayed from contracted payment rate. The worst offender was United (did not pay contracted rate in 38.4% of cases), followed by Cigna (did not pay contracted rate in 33.8% of cases), Aetna (did not pay contracted rate in 29.2% of cases), Anthem BCBS (did not pay contracted rate in 27.9% of cases), Humana (did not pay contracted rate in 15.8% of cases) and Coventry (did not pay contracted rate in 13.3% of cases). Even Medicare missed contracted payment rates in almost 2% of cases.
It is hard to methodically track these underpayments. From our experience at ClaimCare Medical Billing Services, as we look across multiple clients we will see the exact same CPTs being underpaid by the same amount by the same payer in a given month across all of our clients. The following month we will see the same payer switch to underpaying a different set of CPTs. These under payments are not huge but they add up quickly to big dollars for a medical practice. The combination of switching the codes being underpaid from month-to-month and keeping the underpayment amount "under the radar" can make this difficult for an individual practice to spot. It is also difficult for a billing office to spot if they are not comparing your payments to your contracted rates (and dealing with multiple procedure complexities properly).
At ClaimCare Medical Billing Services we have found that comparison of payments to allowables can increase a medical practice's collections by 5 to 10 percent. This of course requires a strong process, powerful reporting technology and the ability to track complex procedures methodically-in the end, it can however add thousands of dollars to your bottom line.
Copyright 2009 by ClaimCare Inc and the ClaimCare Medical Billing Company
Posted by Carl Mays on Fri, Jan 23, 2009 @ 06:33 PM
I have had several questions submitted about how to design a good medical billing bonus system. To help folks that are considering implementing such a system I thought I would share a few key elements of any good billing bonus system. An effective medical billing bonus system is...
- Significant enough that people care about whether they achieve the bonus (a good bonus system will increase the base pay by between 15 and 20% for outstanding performers);
- Paid monthly - less frequently than that and people tend to discount the value;
- Differentiates between up front processes (getting claims out clean) and back end follow-up (dealing with claims that have denied);
- Based upon objective and not subjective measures;
- Outcome driven and not effort driven (i.e., based upon how many claims resolved within 60 days not how quickly claims are submitted);
- OIG compliant (primarily gives no incentive for up coding);
- Not easily gamed through tactics such as writing off hard to collect claims; and
- Balances the individual and the team. Success in medical billing is a team effort that includes the front desk, the data entry people, the insurance follow-up people and the patient follow-up people. Not everyone on the team, however, typically contributes equally. The bonus should reward the team but reward the stars a bit more than the rest.
A well designed bonus system for a medical billing department can be a challenge to design and implement, but it can pay huge dividends in terms of employee motivation and aligning their incentives with those of the practice.
Copyright 2009 by Carl Mays II, President, ClaimCare Inc
Posted by Carl Mays on Sun, Jan 18, 2009 @ 02:08 AM
We are fast approaching the end of January and the point in the New Year when the majority of people's New Year's resolutions have already failed. This is, however, the time for renewed efforts to focus one's resources on achieving the desired goal. There are two keys to reaching your goals:
- Treat your set backs as temporary failures and not total defeat (i.e., just because you broke down and smoked a cigarette does not mean you should just say I failed on my goal to quit smoking); and
- Break your goal down into manageable pieces (i.e., I will lose 2 pounds in January; 2 lbs in February versus I will lose 25 pounds this year).
These ideas do not only apply to personal goals, but to business goals as well. If you are trying to improve your medical collections in 2009, you should build upon these concepts. So, given these two points what is the best way to achieve a New Year's resolution of improving your medical billing? The best place to start is with the goal of getting your claims out the door clean. This is a great starting point because it does many wonderful things:
- It focuses you on the most critical aspect of billing. If the claims go out the door clean you will find that all of the rest of the challenges start to become much more manageable;
- It allows you to focus on achievable, smaller goals (85% of claims go out clean in January, 87% go out clean in February, etc);
- Set backs position you for better performance tomorrow. How? You look at the claims that did not go out the door clean and learn what went wrong. Do you have a problem at the front desk with gathering demographics? Do you have a problem with training your data entry people? Do you have one physician that consistently codes incorrectly? Do you have one payer that really dislikes one of your common procedures?
- It lends itself to technology aids. Invest in a scrubber that will help you find coding problems before you submit the claims (see our blog entry on claim scrubbers). Invest in insurance verification tools that will make it easier to have clean demographics. Invest in coding tools that will help improve your data entry performance.
So, as we approach the end of January this is the time to double down:
- Measure your current performance level;
- Set your medical billing goals high (96% of all claims will be paid on first submission);
- Break them down into bite size pieces (I will improve clean claim submissions by 2% each month), and
- Adopt the mentality that you will learn from your mistakes.
With this approach you can make 2009 your best medical billing year ever.
Copyright 2009 by Carl Mays II, President, ClaimCare Inc
Posted by Carl Mays on Tue, Oct 07, 2008 @ 04:51 PM
Revenue Cycle Denial Management has become a universal and often abused term in medical billing. Some use the term to describe a means of addressing claims denied for medical necessity. Others use the term to describe how some information is tracked for a specific payer, set of procedures or a place of service. Still others try to use it to describe what they do daily in the physician's office.
If you were to ask your billing department or a current medical billing company (1) what is their Revenue Cycle Denial Management strategy; (2) what process do they use to methodically measure it and (3) what are the quantifiable results of it, you would most likely get a lot of blank stares.
Few billing departments appreciate the value a good Revenue Cycle Denial Management system can bring to a medical practice. A robust Revenue Cycle Denial Management system provides methodical management data for the billing process; the data are then used to (a) increase and (b) accelerate cash flow. The system accomplishes this needed service by tracking, quantifying, and reporting on every claim billed for which any payer denied the service. The reporting should be comprehensive, tracking all denials (not just selected denials). If used properly, the system can reduce first-time claim denials by over 50 percent. In our experience we've come across many practices with no way of monitoring if the payer is denying their claims at excessive or unwarranted rates, or even for what reason. These practices are probably losing 10-20 percent of their total revenue.
What is typically missing from troubled billing operations is the lack of the management-reporting expertise needed to extract the data in a concise and meaningful way coupled with a lack of methodical, measured billing process needed to correct mistakes.
ClaimCare Medical Billing Services' comprehensive Revenue Cycle Denial Management system has two main purposes. First, to provide feedback on why and how many claims are not being paid on the first submission to the respective payers. The second is to fix these issues. ClaimCare Medical Billing Services' Revenue Cycle Denial Management software databases have been designed to track, quantify, and report on all denials for all payers. The standard output tracks, by payer, the number of claims denied and the reason for the denials. This is coupled with our Dashboard reporting for a quick visual management. With these unique reports our team can easily identify which payers are inappropriately denying claims; we can also compare these payers to their peers for proper trending and follow-up. The unique output for each practice allows us to refine the payer specific rules and build our own rules to prevent future payer denials. Payers that are chronic violators are pursued to resolve how and when they intend to process and pay outstanding claims. If the issues persist, there may be grounds to charge penalties stipulated by the Clean Claim Law (to the extent it exists in the state). Only by quantifying and analyzing the problem can you discover how to improve on the process. A real Revenue Cycle Denial Management system gives you a way to optimize and accelerate cash flow. ClaimCare Medical Billing Services' system has a proven track record of improving revenues between 5-20 percent.
You can take advantage of ClaimCare's Denial Management success with our Old AR Recovery service.
Copyright 2007 by Carl Mays II
Posted by www.claimcare.net Admin on Wed, Aug 13, 2008 @ 12:33 PM
Everyone hears about the fact that much of the cost of healthcare is driven by the expense of processing and adjudicating claims. What is often not mentioned is what is truly at the root of these expenses - payers that are attempting to withhold from physicians the money they are due. I mentioned in an earlier entry how ClaimCare Medical Billing Services constantly sees payers systematically underpaying claims. We also see claims that have been properly submitted and for which we have proof the claim was accepted simply "lost" by payers and the claims have to be resubmitted (sometimes multiple times) in order to secure payment. Now, here is a shocking fact - over 50% of claims that are "lost" or are underpaid are never pursued by physicians (and therefore the payers never have to pay the money they owe to the physician or facility). This means that payers have a powerful economic incentive to play games and make the medical billing process complicated. Here is another shocking fact - it costs the average insurance company about $25 each time a representative has to get on the phone and discuss a lost or underpaid claim with a medical billing specialist. A final key fact is that most payers "grade" each provider. The lower a provider's grade (i.e., a D versus an A) the more likely the payers are to lose or under pay the provider's claims. Why? Because these providers have no track record of catching these problems and pursuing them.
So, how do all of these fact tie into my title about Medical Billing Services fighting the rising cost of healthcare? If each and every underpaid or lost claim is pursued (which is what Medical Billing Services should do because they have the scale to have groups of people that do nothing but follow-up on such claims) then eventually payers will lose all economic incentive to play games and make the billing process complicated and expensive. Imagine if every physician pursued every claim until it was paid in full. The payers would see their cost to adjudicate the claims rise and they would see their payments to providers rise because the lost/under paid claim games would no longer prevent providers from ultimately being paid. This combination would lead to each physician ultimately being paid quickly and without fuss because the insurance companies would lose significant money by playing games ($25 per extra phone call generated by the games) and they would gain nothing since payments would only be delayed, not avoided.
There is lots of talk about the dream system where claim adjudication happens in real time and physicians immediately receive their reimbursements. Such a system will never happen until the economic incentive payers have to maintain a difficult, complicated and veiled system are removed. This, is what medical billing companies can do by doggedly pursuing each claim and insuring that every one of their clients is rated an "A" by all of their payers.
For more information visit ClaimCare Medical Billing Services or go to the Contact Us page.
Copyright 2008 by Carl Mays II