How To Maximize Your Collections

How do you bolster collections at your practice? Ensure processes that prevent poor coding and minimize data entry errors. Have strong procedures in place to follow up with insurance companies and stay on top of patient statements. Incentivize the collections performance of your office staff. With cogent details on these steps and other measures, this author shares salient insights on making collections run more smoothly.

Collections and revenue management are the lifeblood of your practice. I always use the analogy that the collections process is akin to your “heart” and if your heart is not functioning properly, it will cause all kinds of other problems in your body. The same goes for your collection process and department. If you have any malfunction in this area of your practice, you will start to see all kinds of systemic effects in your entire practice.

   It is important to understand that revenue cycle management is more of a science than an art. You need a very specific system in place for your practice that the practice follows on a continual basis. I will never forget reading from one of the most famous management gurus and statisticians, Dr. Edward Deming, who helped rebuild Japanese industry after World War II. He said that “People don’t fail but systems fail.”

   I have witnessed this personally. You can have the greatest, most talented staff in the world but if you do not have the right systems and processes in place, they will never succeed. You are setting people up to fail and no matter how many times you fire and replace them, the problem will never get fixed until the system is fixed. This is so important in the management of your entire practice and especially your billing and collections department.

   I would like to share with you a five-point approach to addressing any problem as it relates to your collections or any other area of your practice.

1. Define. Define the problem clearly and how it is related to performance (net collections, accounts receivable days, etc.
2. Measure. Measure what you care about. Know your measure is good. (Use internal and absolute benchmarks.)
3. Analyze. Look for root causes and generate a prioritized list.
4. Improve. Determine and confirm the optimal solution.
5. Control. Be sure the problem does not come back.

   Now it is time to get into the details of what I call “The Top Ten Common Pitfalls in the Billing and Collection Area of Any Practice.”

1. Rectifying Incomplete Insurance Verification And Pre-Authorizations

A lack of consistent, proper insurance verification and pre-authorizations is probably the biggest problem in most practices because it slows down the insurance and payment collection process. The further the practice moves from the date of service, the less money you typically collect. We all know how difficult it is to collect money from a patient the longer it gets from the time of the visit. I have found that once a patient’s foot condition heals, his or her memory of even seeing a podiatrist tends to get lost. In addition, improper verifications and authorizations lead to services that cannot be reimbursed because if the insurance denies the claim due to no preauthorization, you typically cannot bill the patient for the service.

   The “kiss of death” is hearing the front office person say: “We’ll just bill your insurance and then send you a bill.” You must collect the patient’s portion up front and then bill him or her if there is a balance. This is your best chance of collecting the money owed for services rendered. Remember, you are most likely to get paid when a patient is in pain and in the office.

   You must also have a process in place that allows patients without valid insurance to receive service with prepayment options or a payment plan in place. One must ensure the front office staff is properly trained when it comes to collecting money from patients.

   There are many solutions for this first problem.

   Use an automated insurance verification tool. These tools are not a panacea but they do allow staff to focus on the areas that can be automated. There are many Web-based tools that are already built into the claims system and online options in the marketplace.

   Ensure that the pre-authorization process uses a questionnaire that gathers all of the necessary information and asks all of the required questions. If you do not gather all the necessary information up front, it will be very difficult to properly preauthorize services you are going to render to your patients.

   Constantly utilize feedback from claim denials to identify process, tool or personnel issues in your verification process. Review all claim denials and track them to identify recurring problems and issues. For example, if demographic errors are the most common reason for denials, then you know there is a training issue with personnel. If improper modifiers are causing rejection of claims, again, you are dealing with a training issue most likely with your doctors if they are the ones who are responsible for coding of claims.

2. When Front Desk Patient Collections Are Insufficient

The importance of proper up-front collections is growing daily. The number of patients on high deductible plans, in which patients are fully responsible for the first $2,000 to $5,000+ in medical bills, is growing by double digits every year. The deductible on traditional medical plans is also growing by double digits. It is important to realize that the probability of collecting from patients falls significantly as you move further away from the date of service (see “The Probability Of Collecting Patient Payments Over Time” at left).

   The majority of front desk employees do not like asking patients for money. If in doubt, they will tell them to wait for their statement. Most metrics used at the front desk consider collecting the co-pay a victory. The information required for more proactive front desk collections is rarely available to the front desk personnel.

   There are some very key steps to take to improve your front office collections.

   Put tools in place that will provide front desk staff with the information they need for more proactive front desk collections. The front office staff should have printed out on their appointment scheduler exactly what they need to collect from the patient before the patient ever enters the office. Staff should have access to that information when the patient is in the office.

   Recruit front desk staff who are comfortable asking patients for money. The practice needs a balanced, mature person working the front desk who understands that it is the patient’s responsibility to pay his or her bills. Do not ever have a quiet, timid and introverted person working your front desk or you will see collections plummet.

   Provide the proper training for front desk staff in terms of patient collections. This is a must. You cannot blame a front office person for not collecting proper balances when he or she has not been properly trained. Too often, it is not the fault of the person working the front desk but the training process of the practice.

   Measure and reward staff for successful patient collections. You must have a daily, weekly and monthly goal with your front office collections team. It is amazing how many practices do not have this in place. Without this goal, it is hard to measure success. Have bonus plans in place for all front office staff when they meet their goals and reward them publicly.

   You cannot leave patient collections to chance. Employees need to know what to say and how to answer patient concerns. Here are three different scripts to use in training your front office staff to collect money at the time of service.
1. “How will you be paying today?”
2. Collecting a balance. “Ms. Jones, our practice’s policy is to request payment at the time of service. Your insurance plan requires a co-payment of $__. Will you be paying with cash, check or credit card? [Wait for card]. I also note that you have a balance of $_____. Can we go ahead and run your card to take care of that balance?”
3. Addressing concerns about your “new” policy. “Ms. Jones, I understand your concern but our office procedure has changed because of rising costs. Paying at the time of service keeps our administrative costs from going higher so we do not have to charge more for our services. Plus, it lets you take care of your payment now instead of waiting for a bill. Would you like to pay by cash, check or credit card?”

3. Insights On Poor Coding And Documentation Of The Patient Encounter

If you are not monitoring coding, then you are not controlling coding. The most common benchmarks are flawed because most physicians undercode. The two most common reasons for undercoding are concern that proper documentation is not in place and a lack of understanding of how close the provider is to justifying the higher code. It is important for physicians to understand the coding process and how your documentation will drive your coding and vice versa. You should avoid letting other people determine your coding. They almost always will weight compliance significantly higher than collections. I am not saying you should overcode but you should be able to code to the level that justifies what you are doing and your documentation must substantiate your coding levels.

   Physicians must attend training seminars or your practice should have ongoing training in house. Also read the blogs and stay up to date on all new coding initiatives. Our practice has a billing and coding committee, and a compliance officer who is in charge of disseminating coding compliance issues and updates to all physicians.
Ultimately, it is the physician who is responsible for proper coding and documentation so that is where the flow of information has to start and “waterfall” from there.

4. Preventing Unbilled Patient Encounters

Unbilled patient encounters cost the average practice tens of thousands of dollars per provider each year. The most common sources of unbilled patient encounters include: hospital rounding; superbills/encounter forms not turned in by the provider; and missing superbill/encounter form batches (faxed to a wrong number, improperly documented, stuck in a desk drawer, overlooked, improperly filed).

   There are some very straightforward processes that must be in place in your practice in order to prevent this leakage of revenue.

   Reconciliation of charges to the schedule. This process only works if every patient is in the scheduling system, even your surgical patients. Every single patient you see, no matter what practice location you see him or her at, must be in the scheduling system for this to work.

   Weekly report for each provider showing all charges by the place of service billed for the provider. This is a simple process to run and again can match up to the scheduling system if all patients are put into the scheduling system. I am also a big fan of letting physicians run their own weekly or daily reports to see if anything is missing since this will affect them the most when it comes to compensation.

   Missing batches report to identify gaps in the normal flow of charge batches. This report will work if you are keeping track of your encounter forms in sequential order.

5. Combating Uncorrected Billing Data Entry Errors

Data entry errors are probably the most common mistake made in a physician’s practice, especially those who see a high volume of patients on a daily basis. Therefore, it is easy for a data entry employee to miss a CPT code when entering charges from a large charge batch.

   There is a technique called “hash totals,” which can quickly identify these issues. Here is how the process works.
• The employee adds up the CPTs (the actual numeric value of the CPTs such as 99301 + 99201 = 198,502) on the superbills (this is a hash total).
• The system (or another employee) generates a second hash total.
• If the totals do not match, then the data entry person searches for the source of the difference.

6. Why Initial Claim Rejections Can Hurt The Bottom Line

Why does it matter if you see a lot of initial claim rejections? Certainly, one can quickly fix these and rebill them.

   Unfortunately, this is a sign of a larger issue around the billing process. It takes a lot more work to fix issues the further they propagate down the billing process cycle. Not all errors are caught quickly. Many will turn into denials that at best will lead to payment delays and can easily turn into outright payment losses for your practice. You may have limited manpower in your practice. Using it on issues that you can avoid in the first place is inefficient and typically leads to less work on the opportunities that can truly increase your collections.

   A solid claims scrubbing process will solve this problem. Claims scrubbing will optimize your claims for faster and potentially higher reimbursement. With a good claims scrubbing process, 90 percent of claims can get paid on the first submission. There is both a manual and electronic process for claims scrubbing. In our practice, every single claim line gets scrubbed and reviewed by a professional coder before it even leaves the system. If the coder picks up an error, the doctor receives notification and can rectify the problem.

   The billing people should never change coding entries without the doctor’s consent. Now if the doctors take too long to respond, this will also cause problems so you must have buy-in from all your doctors. There are also electronic claims scrubbers who will audit claims from the electronic health record to the practice management system, and from the practice management system to the clearinghouse.

7. Insights On Inefficient And Ineffective Insurance Follow-Up

If the staff is not properly trained and they do not have a good system for following up on claims that have not been paid, the practice will have a major revenue problem. Sometimes, you will not catch it until it is too late. I am going to focus mostly on the solution and treatment part of this problem.

   The following are key indicators of a good follow-up process.
• You need to have a data-based process that allows your team to continually look for ways to avoid recurring problems.
• The staff must be trained to work accounts in bulk and identify erroneous patterns.
• The reports or queues that drive the follow-up process should not be paper-based and they should allow the staff to sort accounts along multiple dimensions/criteria.
• One should align staff incentives to promote best practices.
• Ensure a rigorous process to review the follow-up process with the staff on a biannual or annual basis.

   I think it is also very important to hire the appropriate staff on the front end and have a very rigorous selection process. I would highly recommend the website www.physiciansdna.com and have each employee take this profile as a tool to help you assess certain traits that might be good or bad for a potential candidate. This is one of the most difficult and most important departments in the company.

   Recruit the best staff. A dedicated human resources team evaluates applicants, who must pass a proprietary billing testing process, which assesses both skill and will. Hire folks who are experienced but can be trained to your additional specifications.

   Train to develop desired quality. Junior staff members must pass a demanding apprenticeship program. This program develops junior team members into expert billers who are capable of following the billing process and delivering on pre-determined targets. In addition, train the staff throughout the year on the latest payer rules, follow-up techniques and compliance guidelines. A dedicated compliance officer is responsible for all additional HIPAA and Office of the Inspector General.

   Retain the best staff and release the lowest performers. Evaluate the staff twice a year to assure proper development and progress. Properly reward the best performers and ask the lowest 10 percent of performers to leave.

   Staff specialization. The billing team will be composed of dedicated specialists in coding, demographic data entry, charge posting, follow-up and patient collections. Each position is designed for employees to excel in their roles. Ensure that they receive proper supervision and incentives. They need to understand the “big picture” and reports.

   Incentives for billing staff. Monitor all positions in the billing process and incentivize them to perform optimally. The incentive system, while highly motivating for the staff, needs to fall within the parameters established by the Office of the Inspector General for an acceptable incentive system in a medical billing environment.

   The standard targets should be: 85 to 90 percent collected within 60 days and 96 to 99 percent collected within 120 days. The billing process and compensation levels for the staff center on these benchmarks, and the practice needs to achieve them consistently. People who consistently miss the benchmarks need retraining. If they continue to miss benchmarks after retraining, you need to find their replacements.

8. Fixing A Poor Follow-Up Process

Sending 10 patient statements to your patients is not a good patient follow-up process. You would be amazed at how many practices in the medical field in general take this approach.

   Here is an overview of a good patient follow-up process.

   Separate patient follow-up from insurance follow-up. Different skills are required for these functions.

   Recruit great patient service agents. People skills and collection skills are more important than medical billing skills when it comes to patient collections.

   Vary your tools/approach with the patients. Here are some good options.
• Maximize front desk collection activities
• Send patient statements daily
• Make patient phone calls using an auto-dialer
• Send a letter in lieu of another statement
• Review non-payers for the value of personal appeal
• Use credit bureaus to assess the viability of collecting the funds
• When necessary, move to collections quickly

9. Getting Feedback On Billing And Improving Processes

You need to get answers to two main questions when it comes to process reporting: How well is the staff performing office billing? How can I improve billing in my practice?

   The other challenge you face is with performance metrics. Benchmarks can be misleading and the metrics themselves can be manipulated. Some of the most common benchmarks used are: days in accounts receivable, amount of accounts receivable over 120 days and net collection rate.

   The metric I prefer is the Theoretical Collection Yield. This is a new term for many but my goal is to stimulate some new thinking and different ways to look at how you run your collections process. What would your collections be in a perfect collection environment (only collectible charges are billed, all charges are collected in full)? One can calculate this by taking the actual fees, payer mix, allowables and CPT mix for a practice.
The advantage of this calculation is that one cannot manipulate it. It provides an absolute measure, quantifies the dollars that are being left on the table and helps identify improvement opportunities. Here are some examples of Theoretical Collection Ratio assumptions.

   You would do this based on the date of service so for 2011, you would take your top five payers and your top 15 CPT codes, and extract them into an Excel spreadsheet.

   Let us assume that you collectively should have received a theoretical number of $2 million but on these codes and payors, you received $1.5 million or 75 percent of what should have been collected. One needs to reduce this theoretical number between 1.4 and 3.4 percent to reach the target collection number because:
• multiple procedure discounts will lower the theoretical collection rate by between 1.4 and 3.4 percent; and
• uncollectible charges will reduce the theoretical collection rate by between 0.9 and 2.3 percent.

   This results in a 2011 target collection rate of 94.3 to 97.7 percent. The actual 2011 collection rate was 75 percent, a shortfall of 19.3 to 22.7 percent.

   Applying this range of gross collection shortfall to your 2011 charge mix results in an estimated revenue loss of between $386,000 to $454,000. This will take some time to understand but it is an exercise that could be very useful for your practice analysis.
Here are some other things you should be tracking.
• What are your sources of denial? Why?
• What is getting written off and why? Is too much getting written off?
• How does your time to case vary by payer?
• How many of your denials are due to verification issues?

10. Acquiring Adequate Reporting And Data For Practice Management

You must have an essential framework for managing your practice and need to understand some of the following financial management issues. What are your best/worst insurance payers and contracts? What are your most/least profitable procedures and types of service? Who are your best/worst sources of referrals? Are you coding consistently and how can you improve your coding?

   The solution is to develop custom reporting for your practice. Alternately, you should be able to get this data out of your system.

   Standard reports. This includes special practice management reports such as accounts receivable aging and collection/charges by CPT, provider, location, etc.

   Online dashboard reports 24/7. Develop reports that provide a quick overview of your facility’s billing health.

   Comprehensive account health and improvement opportunities reports. Develop a series of supplemental reports aimed at eliminating the systemic sources of revenue loss and identifying the sources of profit improvement. These reports should be available anytime. In addition, all of these reports should be a part of quarterly detailed account reviews. The starting point of the report framework is an equation that breaks out the key elements that drive a practice or facility’s profitability.

   Special focused reports. Develop reports to answer detailed questions, such as, “What are my modalities for each week by referring doctor?”

Final Notes

I hope the aforementioned tools and strategies will make a measurable difference in your collections. Hopefully, you will be able to use this information to elevate your practice management to another level.

   Dr. Helfman is the CEO of Extremity Healthcare and the CEO of Village Podiatry Centers in Atlanta. He is a Fellow of the American College of Foot and Ankle Surgeons. One can reach Dr. Helfman at dhelfman@gmail.com.

   The author acknowledges Carl Mays II, MBA for his help in the implementation of these best practices in Extremity Healthcare and Village Podiatry Centers.