In-House Billing: Assessing The Pros And Cons
Should you go with in-house billing for your podiatric services or use a billing company? A leading practice management consultant presents the pros and cons of each option, and offers inside secrets for evaluating the effectiveness of either option. “No one will care about collecting your money more than you.” While that may seem to be stating the obvious, it puts all owners of practices in the position of making the decision as to who will take on this task. Do you delegate this critical task to a key member of your office staff or do you farm it out to an outside billing company? Whatever decision you make, it is essential to monitor the situation, gauging the effectiveness of your billing and collections, and the impact upon your practice. In some circumstances, it is an easier decision to make. For example, if you are starting your own practice, one option is purchasing a practice management system that includes billing software and hiring someone with billing experience who will also perform other office tasks. The other option is interviewing billing companies and selecting one to do your billing.
Asking The Right Questions Of Potential Office Staff
Perhaps you are leaving an established practice and moving to a new area, or opening up your practice fresh out of a residency or fellowship. You either inherit the previous owner’s billing staff or you post advertisements and ask colleagues and friends to recommend staff for your office. You begin interviewing potential staff even though you may have never interviewed for a staff member who will be responsible for your billing and collecting. What do you ask? Who do you trust? What are they supposed to do? In order to interview and hire the right person, it is important to have some basic education in the art and science of medical billing. When you send a claim to an insurance company describing the service you performed for a patient, the insurance company processes the claim and then sends you a check (reimbursement) and an explanation of benefits (EOB) that describes how the amount of the check is calculated. The typical EOB will include the patient’s name, ID number, the date of the office visit, the procedure code, the billed amount, the allowed amount, the amount paid, the amount adjusted and the patient payment. When you interview someone for a billing position, he or she should be able to explain all of the EOB info. I like to ask questions that challenge a potential staffer’s knowledge. You could ask the following: “How come the insurance company only sent me $48 when I submitted a claim for $125? If I bill $125, why don’t I get paid $125? How much of the adjusted amount can I bill the patient?” The correct answers are, if you agreed to participate (par) with the payer, you agreed to accept the payer’s fee schedule. If you are par with the payer, you accept its payment and the patient’s co-payment as payment in full. You cannot bill the patient for the difference between the payer’s fee schedule and what you collected.
Why You Might Interview A Billing Company
Say you find someone you like and he or she appears to be competent. You have checked his or her references, and hired the person. However, if you are just starting up a new practice and are seeing 20 patients a week, you do not need a full-time billing person. This person should also be able to fill in either as a medical assistant or a receptionist. In fact, if you are starting up a new practice and are not very experienced in billing, you should also interview a billing company. Billing companies will usually be able to offer more expertise and provide backup for a staffer who has to wear other hats in addition to handling billing for your practice. However, be aware that the billing company may not spend a lot of time answering the questions of a small practice. You are paying the billing company a small amount, usually a percent of your collections between 3.5 percent and 7 percent, or a flat fee in rare cases.
How To Ensure Your Billing Person Is Top-Notch
If you just purchased a practice and the billing person is established with the practice, how do you know if the person is doing a good job? How do you know he or she does not keep some of the collected funds for fun money? There are a number of steps a small practice (one to five providers) should do on a regular basis to make sure the staff knows the doctor is watching and they have to be accountable to the doctor. It also lets you know how competent they are in collecting money for you. When it comes to evaluating a billing person’s effectiveness, one should first look at the aged accounts receivable (A/R). This is the amount of money owed to you over specific time periods. Remember that the A/R shows you gross amounts owed and not the actual expected collections. We have established a benchmark for all practices, regardless of their specialty, that we compare to what the practice management system (PMS) prints out. Our benchmark for a practice’s A/R is as follows: Timeframe Percentage of all dollars owed (goal) 0-30 40% 31-60 25% 61-90 20% 91-120 10% 120+ 5% (days of aged A/R) When we work with practices, it is not uncommon that the PMS report for A/R will look like this: Timeframe Percentage of all dollars owed 0-30 40% 31-60 10% 61-90 8% 91-120 17% 120+ 25% (days of aged A/R) Also see the chart, “Is Your Practice Up To Par In A/R Collection?,” above. The chart depicts the goals of A/R collection versus the actual A/R collections for an average practice. In this example, the follow-up in this practice is not a consistent part of the billing process because the billing staff is focused on collecting the claims they know they can collect quickly. There may also be no identifiable process for sending claims to collection and then writing off claims that are truly uncollectible (after getting the doctor’s approval). As a result of this inconsistent and undisciplined approach, these claims get older and as they get older, they become worth less and the staff tries to ignore them. As the owner of the practice, it is essential to review your A/R report each month and compare it against our standard. A second step of any basic evaluation is to observe how many patient statements are mailed out for the co-pay or that are mailed out for balances over 90 days old. It is positive reinforcement to the front desk staff when they begin to train the patients that they have to pay their co-pay at the time of the visit. When your front desk staff is more disciplined about collecting the co-pay at the time of the visit, it decreases your practice’s costs for postage and decreases the staff’s time to print out a statement and stuff an envelope. It also increases your collections. Increasing the co-pays at the time of visit is a double-edged sword. Once the staff collects it, you have to make sure it goes into the bank. Most staff members are honest. However, in case you have a staff member who wants you to share the co-pays with him or her, either you or the office manager should compare the sign-in sheet with the receipt book (each person who pays should get a receipt), and the funds collected with the amount posted in the computer. Try to have at least two people do this. When they present their data to you, you can compare what each staff member says the practice collected. The co-pays collected, receipt book total and amount posted in the computer should all be equal. The person who collects the funds should not be the same one who prints out the amount posted in the computer.
Maximizing Technology Benefits, Minimizing Costs
One of the problems associated with having a private practice is the information technology (IT) necessary to run a practice. You will usually need a PMS even if you do not do your own billing. You and your staff must be trained on it. Keep in mind that there are always upgrades that often wind up costing more than anticipated. However, if you have a small practice, try to purchase one of the simpler systems that does not have the bells and whistles. Otherwise, you may end up paying for what you don’t need most of the time. Submitting claims electronically facilitates electronic reimbursement that is automatically posted in your system (electronic remittance posting). This procedure saves time and reduces the need for billing staff. As an example, in the efficient larger practices I have worked for, the ratio of full-time equivalent (FTE) providers to billing staff is about 4.5:1.
Do You Have A Backup Plan Or Process?
There are some very busy practices that I have worked for that had one staff member do all the billing. This does keep the cost down. However, when that person goes on vacation, leaves or is out sick, there is a noticeable drop in the cash flow. If you have one person in your practice who does the billing, it is a good idea to make sure there is one other person who works on a part-time basis with your billing staff. I always ask the billing staff or the office manager if they make a backup of the system each day. They usually reply that they do. I ask them where they store the tape/disk. Most reply that it is either stored in a fireproof safe or it is left on a desk in the office. Do not store backup tapes in the office or in fireproof safes. A normal fireproof safe is not heatproof and the data on the tape can turn into mush if the safe gets hot. I institute the process of sending the Monday tape home with the office manager. It is brought in each Monday and the backup process is repeated. On a daily basis, the front desk staff member should take the backup tape home. That way, if there is a fire in the office, the data is saved. In the highly unlikely instance of a fire in the office and the front desk staff member’s home, there is still a tape left with the data. In the worst case scenario, you lose one week’s worth of data.
Pertinent Pointers In Evaluating A Billing Service
While determining the effectiveness of a billing company is similar to determining the effectiveness of in-house billing, the setup is very different. Here are a few key points to consider. Setup. There is usually a setup fee that covers the costs of: • linking your PMS with the billing company; • setting up the billing company’s files for your practice; • the electronic submission to Medicare and other payers; • the electronic remittance if available; • a virtual private network (VPN); and • firewall and other security items. Transmission of claims. You can either complete paper claim forms and send them to the company in batches, or enter the patient demographic and clinical information into your system and send it electronically to the billing company. Keep in mind that if you send your claims in paper form, the billing company enters the data into its system. If you decide to leave the company later, it may become a problem when you want all your data back. If it is possible, have your staff enter all the data into your system and have the billing company enter your server to perform its billing functions. This way you can always have the data in your server. It is easier to block them out later if you want to change companies rather than having them send your data to a new billing company. Plus, you can also enter data into your system that you may have left off a claim or change and correct information. When funds are paid, the billing company can hold the checks and deliver them to you in bulk (usually not a good idea) once a week. Another option is having the billing company fill in preprinted deposit slips and deposit the checks into a lock box at a branch of your bank (a better idea). Have the billing company send you a bill for its services. Do not let the billing company take funds out of your collections. Billing companies also should not charge you a fee for co-pays you collect at the office. The EOBs that show how much was paid or why a claim was denied are usually available online. Over time, there will be fewer companies sending paper EOBs. Another alternative is to have the payer send your checks and EOBs to the bank’s lock box directly. The bank then deposits the checks and sends the EOBs to the billing company. If you can arrange this, it will keep everything important under control. There are times when a patient brings in a payment with a statement that the billing company mailed to him or her. Make sure your patient contacts the billing company and tells the company the patient has paid. Otherwise, the billing company will continue to bill and annoy the patient. More and more billing companies put their entire process online. Accordingly, you or your staff can access your “online billing report” at any time for any claim to get the status of a claim, find out why something is taking longer than expected or check up on the billing company’s progress. You should also check the effectiveness of these companies against an A/R standard. Most billing companies will suggest and work with a collections bureau for those claims that they cannot collect. Make sure no one goes to collections without your approval. Ask the billing company about its backup processes. You can always ask the billing company to send you a tape each week and return the old one to them. Fee. Most billing companies charge a percent of their collections as their fee. I have seen the charge range from 4 percent to 8 percent. Sometimes there are additional services that require a higher charge. If your practice is a mostly surgical practice, the rate should be closer to the lower end of the fee spectrum. If you are in a large practice that has a volume of general podiatric patients and surgeries, you may consider a two-tiered fee schedule with a lower fee for the surgeries and a higher fee for the office visits. Mr. Peltz is the president of Peltz Practice Management and Consulting Services. He can be reached via phone at (845) 279-0226, via fax at (845) 279-4706 or via e-mail at speltz1@aol.com. For related articles, check out the archives at www.podiatrytoday.com.
