MEDICAL BILLING BLOG

 In my last article I discussed some of the principles and best practices to consider when setting a practice's fee schedules. This Article focuses on how your allowables and fee schedules shape the EOBs and reports you will see every day.

Impact on the Explanation of Benefits (EOB):

The main impact that you will see on your EOB is from contractual adjustments. Here is how this works on an EOB:

Let's say you bill $150 for a certain CPT and that your UHC contract allowable for this CPT is $100 and your patient has an insurance plan with a 20% co-insurance. Your UHC EOB will look like this:

• Charges: $150
• Allowed: $100
• Contractual Adjustments: $50 (difference between your fee schedule and your UHC contracted rate)
• Patient portion: $20 ($100 contract allowable times 20% patient co-insurance)
• Payment from UHC: $80

So, the $150 charge leads to an $80 payment from UHC and a $20 balance transferred to the patient. The amount you charge for this CPT has absolutely no impact on the $80 payment. If you charged $300 instead of $150, all that would happen is that the EOB would show a Contractual Adjustment of $200 (Your $300 charge minus the $100 contractual allowable) instead of $50. This is a critical point. Many new physicians think that a higher fee schedule will generate more income - this is not the case from payers with whom you have a contract. In addition, many new physicians do not understand why they see these contractual adjustments each month. As you can see the combination of your fee schedule and payer contracts lead to these contractual adjustments.

A final point here, payers make mistakes. Just because they say the contract allows a certain fee for a CPT does not mean they are correct. This is why it is critical to compare your allowables to your contracted rates.

Impact on your billing reports

Your will see two main impacts on your reports due to the interaction of your fee schedule and your allowable:

1. Contractual Adjustment Entries: As outlined above, all of your EOBs will show contractual adjustments. This means that all of your collections reports will show some of your Accounts Receivable (AR) was moved off the report due to payments (cash in the bank) and some will move off your report due to contractual adjustments (no cash in the bank). This is normal. It is critical, however, that your billing system is set up to differentiate between write-offs due to denials, timely filing issues, etc and contractual allowables adjustments. Assuming you are comparing allowables to your contracts then the contractual allowable adjustments are not a source of concern. Other types of adjustments/write-offs are likely costing you money.
2. Value of your AR: Because of contractual allowables, $1 of AR does not represent $1 of potential payments. This means that when you see $300,000 in AR you need to keep in mind that this is not $300,000 in potential payments. In the EOB example above, the initial $150 in AR only represented $100 in expected collections. Understanding this is critical to financial planning for your practice.

In the next article in this series I will go into more detail on how to get a realistic understanding of your AR using what you know about your allowables and fee schedules.

Copyright 2009, Carl Mays II and the ClaimCare Medical Billing Company

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

In my last article I discussed why fee schedules are set at levels above what a practice would expect to collect. In this article I will discuss some of the principles and best practices to consider when setting a practice's fee schedules. Before I start let me point out that this article is not about negotiating your contracts with payers. Doing that requires many steps, including obtaining a strong understanding of your cost structure. I am focusing only on setting the overall fee schedule for the practice once you know your allowables.

The main goals or principles to consider when setting a fee schedule are:

1. Be consistent: One key element of a fee schedule is not allowing inconsistencies in how the fees were set to make it hard to understand the true value of your AR at any point in time. If some codes are set at 300 percent of Medicare and others are set at 150 percent of Medicare and still others are legacy fees that are a random multiple of Medicare then it becomes difficult to look at your AR and quickly understand how much it should yield in terms of your collections. On the other hand, if a fee schedule is set in a consistent manner then some simple calculations will provide you with a yield which can be easily applied to you AR to provide you with a quick estimate of what you should collect. In a future article I will outline how to calculate your practice's yield.
2. Don't leave money uncollected: One of the key ideas to keep in mind is that no matter what an insurance plan is willing to pay for a claim, they will never pay more than you bill them. So, if BCBS is willing to pay $150 for a level 3 office visit but you bill them $125, they will only pay you $125. In addition, some plans pay a percentage of billed charges. Not many do this and typically they represent a small percentage of the practice's charges, but there is no reason to leave any money uncollected. Finally, payer allowables can change throughout the year. If you are charging BCBS $150 (from our previous example) and at some point the allowable goes up to $165, you will only receive $150 unless you increase your fees. So, you need to set you fee schedule high enough that you never bill a contracted payer less than they are willing to pay and high enough that you can reasonable take full advantage of plans that pay a percentage of billed charges. Finally, you want to set fees high enough that you have "wiggle" room and are not caught off guard by unexpected shifts in your allowables (like the BCBS example I provided earlier).
3. Don't scare away patients: So, given the two principles above why not simply charge 10 times Medicare and be done with it? Well, there are two ideas to keep in mind here. First, many self-pay patients (or those with high deductible insurance plans) will call a doctor's office and ask what about the charge for an office visit or procedure. If the patient hears that your office visit cost $1,500 they will likely move on to the next practice.  The second idea that you need to keep in mind is that patients will see on their Explanation of Benefits (EOBs) that you charged $1,500 for your office visit. Even though the EOB shows you may only have been paid $150, the idea that you charged so much can easily lead patients to view the practice as greedy and unreasonable.

So, given the ideas above you want to set the fee schedule consistently high enough not to leave legitimate money uncollected but not so high that you risk alienating patients when they receive an EOB or are told the charges for the day.

An easy way to achieve this balance is to set the fees at a reasonable percentage of Medicare. Often family practices will use 150 to 200 percent of Medicare and specialist will use 300 percent of Medicare. The percentage you select should be informed by practices in your area and your own payer contracts, but you will typically be quite safe with 200 to 300 percent of Medicare. Before finalizing your fee schedule you should always make sure that none of your payer contracts have carve outs or allowables that exceed (or even come within 25 percent) of your fees. One safety net you should always have in place is a report that identifies any claims that paid at 100 percent of billed charges. If you see this, then your charges for the codes on that claim are too low and you need to revisit your fee schedule.

Now that we have discussed why fees are set above expected collections and how to think about setting fee levels, it is time to discuss how your allowables and fee schedules interact to impact the reports and explanation of benefits that are seen in a practice each day. This will be the subject of the next article.

Copyright 2009, Carl Mays II and the ClaimCare Medical Billing Company

There are many items that are confusing in the world of medical billing. One of the most confusing areas for individuals that are new to the business side of medicine is the idea of medical billing allowables. There are not many businesses where a bill is sent out for much more than one would expect to collect. In most business if you bill $100 then you expect to collect $100. In the business of medicine a bill for $100 is often sent out with the expectation that only $50, $30 or even less will be collected. Why?

This is primarily done for four reasons:

1. Simplicity. Not all payers pay the same amount for a medical procedure. If a practice tried to bill each insurer and each patient exactly what they expected to collect it would become an all consuming task to maintain the multiple fee schedules. The practice could easily end up with more than 25 fee schedules. In addition, all of the fee schedules would need on-going updating since many plans change the amount they will pay annually (and they change their fee schedules at different times throughout the year).
2. Revenue Enhancement. Medical practices will often see patients with insurance plans for which the provider is out of network. Some of these plans pay a percentage of billed charges. So, you do not want to set fees too low because for the plans that pay a percentage of billed charges the practice would leave money on the table that they could be collecting.
3. Comparability. If a practice continually changes it fee schedules (see point 1 above) then comparing charge volumes across months and years becomes less meaningful. For example, does the fact that charges are up 10% this June versus last mean more patients are being seen or that the fee schedule has changed? There are other measures that are easily decoupled from charge volume, such as patient encounters, but charge volume is the fastest and easiest metric for most billing software and departments to produce.
4. Compliance. It is illegal for a medical practice that accepts Medicare to charge any other entity a lower fee than they charge Medicare. They can always give discounts, but the fee charged must not be lower. By charging all plans and individuals the same amount, the risk of unintentionally running afoul of this rule is eliminated.

Now that you understand why fees are set higher than expected collections it is time to explore other elements of allowables:

• How are fee levels determined (or at least what is the best practice for determining fee levels)?
• How do allowables impact the reports and explanation of benefits that are seen daily?
• How can you use your understanding of allowables to better understand the meaning of your AR numbers?
• How can you use your understanding of allowables to better predict practice cash flow and expected collections?

These topics will be the subjects of upcoming blog entries.

2009 copyright by Carl Mays II and the ClaimCare Medical Billing Company

 Have you reviewed your compliance plan since the OIG released its 2009 workplan in October of 2008? If not, this is a good time to spend a little time reviewing your compliance plan - particularly in regards to how it applies to the areas that are receiving special interest from the OIG this year.

A significant thrust for the OIG this year is durable medical equipment (DME). This often maligned and misunderstood area will receive plenty of attention this year. In particular:

• power mobility devices,
• hospital beds and accessories,
• oxygen concentrators, and
• enteral nutrition therapy (tube feeding).

In addition, the OIG is revisiting how the DME error rates are calculated by Medicare. 

Key initiatives outside of DME that need to be kept at the forefront of your compliance checkup are:

• Physician expenses versus Medicare reimbursements for office visits, consultations and surgeries.
• "Incident to" services billed to Medicare. In particular, the OIG will be examining the qualifications of the non-physician providers providing incident to services to determine if they are truly qualified to provide the services.
• Independent Diagnostic Testing Facilities (IDTF) continue to receive special attention from the OIG. If you are an IDTF in an area with a large concentration of IDTFs then you will be at high risk of close Medicare scrutiny.
• The use of remote patient care in situations where Medicare requires face-to-face care.
• The OIG will also review the appropriateness of Medicare payments for sleep studies because there has been a sharp increase in sleep study payments in recent years.

If you are in a high risk group (such as an IDTF, DME supplier, a sleep study provider or a heavy user or remote/web-based patient consultations) then you should dig into the details of the OIG workplan and perform a thorough scrub of your compliance plan.

To view the full 2009 OIG Work Plan, please visit: http://www.oig.hhs.gov/.

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

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:

1. 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
2. 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

If you are not aware and prepared for the 2009 cardiology billing and coding changes you may be leaving a lot of money uncollected.

The 2009 cardiology coding and billing changes are the most significant that have been seen since the mid 1990s.

Cardiology practices were hit harder than the average physician by this year's changes (with a 2% reduction in Medicare fees instead of the 1% increase seen by the average physician) driven in large part by changes that will impact imaging performed in the office.

Keep in mind the 2% reduction is an average number. Some practices will be well above this (especially heavy users of echo services) and others will actually see fee increases.

Here are examples of some of the upcoming changes:

• Significant changes in the codes used for follow-up on implanted devices (all of the old codes have been replaced) and external devices. The updated codes include new codes for interrogation and reprogramming of ICM and ICD devices, Pacemaker and Loop recorders.
• Global periods related to device follow-up now include global periods of 30 or 90 days. The new codes are now service specific (i.e., either an interrogation evaluation of a programming evaluation).
• Wearable cardiac telemetry devices (for instance Cardionet type service) now have specific codes. You no longer bill with an unlisted code. These new codes include the complication of global periods.
• The echo services are also seeing new codes. When you do an echo with a Doppler and color flow you'll have a new code to submit that bundles these services into one code. The same is true for a new stress echo code that bundles the stress test code and stress echo into one code.

These changes are far greater than the normally "tweaking" that occurs at the beginning of each year. If you cardiology billing department is not fully aware of the changes and how to respond to these changes it could have a significant negative impact on your practice. Be sure to invest in the proper training, coding resources and billing system upgrades to be prepared for 2009 cardiology billing.

Copyright 2009 by Carl Mays II

 Each state has passed a Clean Claim Law. The level of benefit these laws provide to medical practices and facilities starts on the low end with states such as South Dakota that provide little more than a slap on the insurance company's wrist to states such as Texas which levy substantial financial penalties on tardy payers.

The basic idea of the law is that a payer has to respond to a clean claim within a set time (usually around 30 days for electronic claims). In order to utilize the clean claim law effectively you must have a tracking system built into your medical billing process that flags:

• To which insurance companies does your state's clean claim law apply (some payers are exempt);
• The date your practice initially submits each medical claim;
• Events that stop the clean claim clock (e.g., an information request from the payer),
• When your practice has taken actions in response to payer requests;
• The date when you received the payer's final adjudication decision.

The idea of systematically tracking all of this information may be daunting, but with a smart system design it is possible and most definitely a worthwhile undertaking. After submitting a few Clean Claim law violation reports you will see your claims pay faster. I have seen situations where payers have actually called just to assure the practice that claims will be quickly processed.

One way to quickly get started using the clean claim law is to run a trial on a payer that you feel consistently takes more than 30 days to ajudicates claims. Find a small number of large claims for this payer that have gone past 30 days and then conduct a trial run with those claims. This will allow you to learn the fundamentals of how to submit and monitor complaints and see the results of your complaints.

Copyright 2006 by ClaimCare Medical Billing Services

ClaimCare Medical Billing Services has interviewed countless candidates that have just graduated from a medical billing school and coding school. As a rule, we find that the courses in medical billing school (and coding school) add little value or knowledge to the resume of an individual with no medical billing experience. Typically graduates we hire from medical billing school start in our apprenticeship program alongside individuals that have not enrolled or graduated from medical billing school (i.e., they start in the exact same role as folks that have not made the investment in money or time for medical billing school).

The terminology and concepts taught in medical billing school no more prepare a person to be a full fledged medical biller than reading a book on how to drive a car prepares one for the challenges of actually driving a car - it is practice behind the wheel that is required. The academic elements can be helpful - just like supplementing practice behind the wheel with a manual on safe driving makes sense. Unfortunately, however, this is only true if the academic material is accurate. Medical billing companies have found that often students have been damaged by medical billing schools that either teach incorrect medical billing concepts or leave the students with a sense that they have nothing left to learn.

Most individuals would be much better off saving their money and finding a medical billing company or medical practice that will let them join and start with basic medical billing work such as calling on claims to verify status or verifying patient insurance information before the visit. Both of these activities give individuals a solid base for launching a medical billing career.

If you approach organizations with this plan in mind it is quite likely that you can find an entry level opportunity. Such an opportunity will allow you to earn an income while learning medical billing and will look much better on your resume than medical billing school.

Once you have established skills as a medical biller, then it can be helpful to study for and take a certified coder exam. A certified coder with no medical billing experience, however, is not in great demand.

So, if you want to break into the field of medical billing please consider pursuing an apprenticeship model it will serve you (and your future employer) much better than a medical billing school education.

Copyright 2008 by ClaimCare Inc.