MEDICAL BILLING BLOG

Without any intention to sound like a broken record... there is yet more data indicating how critical it is for medical practices to have a solid patient collection process in place. A new survey indicates that health savings accounts are growing in popularity.  Both the number of accounts and the amount of money in those accounts are growing at a significant rate. A recent study from Celent, a consulting company that works with banks, showed that the number of HSAs increased 46.1 percent between January 2008 and January 2009, and the money in HAS accounts grew by 62.6 percent. HSA accounts have an average account balance of $1,561. This number is likely significantly understated because most banks do not consistently purge inactive, zero-balance accounts.

What does this mean for medical practices? It means that they need have a solid set of tools, processes and policies in place for collecting the portion of their income that is the patient's responsibility. Some of the key elements of a world-class patient collections process are:

1. A clearly communicated patient collection policy that is consistently communicated to patients before they see the doctor;
2. An automated insurance verification tool that allows the front-desk to easily verify coverage and confirms the key parameters of the coverage (deductible, co-insurance percentage, and the amount of the deductible met for the current year);
3. An easily used tool that allows the front-desk to inform the patient before he leaves the office how much he will likely owe after the claim is adjudicated. This allows patient to pay their portion of the healthcare bill before they ever leave the office;
4. Quick claim submission and follow-up so that patients that have not paid their bill before leaving the office can be sent a patient statement as quickly as possible after the date of service;
5. Well designed patient statements that eliminate many of the issues that cause patients to treat bills from physicians differently than they treat credit card or utility bills;
6. Payment processing tools that automate and monitor payment plans; and
7. A system for ranking patient balances for follow-up effort based upon expected collections - not simply on the magnitude of the patient balance.

If you medical practices has not invested in developing a world-class patient collection process then you are likely losing at least 10% of your practice's potential revenue.

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Copyright 2009 by Carl Mays II. Carl is President and CEO of ClaimCare Medical Billing Service, one of the largest medical billing companies in the United States.

   Like many of you, I am continuing to discover that more and more business is being conducted over the Internet and, specifically, by way of e-mail.  When I first began speaking professionally, I never imagined I would ever book engagements without communicating with the meeting planner on the telephone and through traditional mail.  Along came the popularity of the fax, which changed procedures somewhat, but nothing like the changes instigated by the Internet explosion about 10 years ago that began noticeably affecting the manner in which my speaking engagements were booked and continues to become more common.   

   Recently, I spoke for the first time with a meeting planner when she met me as I arrived at a conference in Arizona for which she had booked me as the keynote speaker.  Up until then, all communication with her had been via e-mail, except for the signed letter of agreement and deposit check I received through the postal service.  Even the questionnaire I require to be completed as I customize presentation preparations was handled through e-mail and never discussed on the phone.  To top that, however, I had another engagement where even the letter of agreement was taken care of over the Internet and the speaking deposit was made via Internet transfer.

   All of this is being shared in this column because it is hot on my mind as a result of a recent conversation with some other speakers who have been in the business for a long time like I have.  And the thing about it is, no matter the profession in which you are involved, if you have been around for very long then you know what the changes have been like in your specialty - and how things continue to change.     

   As many businesses can attest, the Internet affects all services and products.  In my case, selling books and other materials through my Web site has replaced flyers, brochures and various traditional methods. And I'm sure that many readers of this column agree with me when I say that letters received through traditional mail are becoming few and far between (except for bills - and even the billing companies are emphasizing more and more that consumers receive and pay bills via Internet).  In response to my columns, e-mails arrive weekly.  On the other hand, I can't remember the last time I received a column-response letter through the post office, which used to come frequently.       

   And with the introduction of MyMerlin.net, our new mentoring Web site for students and others, I am receiving some e-mail responses and questions that at first glance appear to be written in hieroglyphics or some alien language.  It's a continually-changing writing style that is popular with contemporary texters, tweeters and other such communicators.  In discussing this with school teachers, I am told that some students are trying to merge this communication style into text written for school projects.  Based on their frames of reference, experience and ages, teachers are dealing with this in various ways.

   I received a recent e-mail regarding MyMerlin.net that began with: "?4U" (Question for you).  Following the question that dealt with the disposition quiz I developed for the site, the e-mail concluded with: "TIA" (Thanks in advance).  Now, I will tell you, I am not into texting, but I did rather easily recognize the "?4U" part and deciphered the "TIA" closing.  I struggled through the question enough to comprehend its essence.  Maybe next week I will share with you the question and my reply to it.  It is something of interest to just about anyone, and I think of special interest to readers of my weekly column.

   TAFN (That's all for now).

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About our guest Blogger:

© Carl Mays, father of ClaimCare CEO Carl Mays II, is an author and speaker at over 3,500 events.  Contact carlmays@carlmays.com or 865-436-7478.  His motivational speaking and book information can be found on http://www.carlmays.com/.  The Student Mentoring site MyMerlin.Net for students and others is based on his book and program, "A Strategy For Winning."

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

   Since I refer to Dale Evans Rogers in today's column, I guess I had better mention for my younger readers that she was once widely-known as "Queen of the Cowgirls" and teamed up with "King of the Cowboys" Roy Rogers to entertain many kids, including me, with movies and television shows. After hanging up her spurs, she became a much-in-demand inspirational speaker and writer. She passed away at the age of 88 in 2001, preceded in death by her husband Roy in 1998. 

   In her 1986 book, The Home Stretch, Dale wrote, "I don't know Carl Mays, but..." And then she went on to tell about something in one of my books. When I had a speaking engagement in Palm Springs a couple of years later, I contacted Dale prior to the trip and we made arrangements for me to visit with Roy and her. They had a home in Apple Valley and a museum in nearby Victorville, about 70 miles from Palm Springs. 

   A year later, Dale and I shared the speaking platform at a corporate conference. She emphasized the importance of assuming people with whom we live and work have good intentions. She said even when they mess up, still assume they were trying to do the right thing but just didn't get it right - and then work together to remedy the reason for failure. She admitted she had been burned by using this approach, but the few "burnings" were outweighed by the great dividends she and others received. Dale said, "I realize some people think this approach is not realistic, that it is naïve, superficial, phony and dangerous. Nothing could be further from the truth. Through the years I have discovered only tough-minded people have what it takes to develop and maintain a healthy and inspiring positive attitude in dealing with people and situations." 

   Dale's words came to mind when my son Carl II, CEO of ClaimCare, sent me a quote from Indra Nooyi, CEO of PepsiCo. She learned from her father in India, "Whatever anybody says or does, assume positive intent. You will be amazed at how your whole approach to a person or problem becomes very different. When you assume negative intent, you're angry. If you remove that anger and assume positive intent, you will be amazed.  Your emotional quotient goes up because you are no longer almost random in your response. You don't get defensive.  You don't scream. You are trying to understand and listen because at your basic core you are thinking, ‘Maybe this person is saying something to me that I'm not hearing...' 

   "In business, sometimes in the heat of the moment, people say things. You can either misconstrue what they're saying and assume they are trying to put you down, or you can think, ‘Wait a minute. Let me really get behind what they're saying to understand whether they are reacting because they're hurt, upset, confused, or they don't understand what it is I've asked them to do.' If you react from a negative perspective - because you didn't like the way they reacted - then it just becomes two negatives fighting each other. But when you assume positive intent, I think often what happens is the other person thinks, ‘Hey, wait a minute, maybe I'm wrong in reacting the way I do because this person is really making an effort.' " 

   Dale Evans and Indra Nooyi came from very different backgrounds, but both women gained the same valuable perspective to help them achieve success in their endeavors. 

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About our guest Blogger:

© Carl Mays, father of ClaimCare CEO Carl Mays II, is an author and speaker at over 3,500 events.  Contact carlmays@carlmays.com or 865-436-7478.  His motivational speaking and book information can be found on http://www.carlmays.com/.  The Student Mentoring site MyMerlin.Net for students and others is based on his book and program, "A Strategy For Winning."

 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:

1. 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.
2. 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.
3. The yield you are calculating is your theoretical medical billing 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.
4. 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.
5. 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.
6. 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%).
7. 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

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:

1. Take your top 20 CPT codes and calculate the yield for each of these codes; and then
2. 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

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

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