Improving Healthcare Profitability for Providers Part 4: Improving Collections

I hope the past three posts have helped healthcare practices begin to think about all the important ways that they can improve profitability without working harder, seeing more patients or laying off staff. This post will focus on methods to improve collecting what you bill.  I have seen many practices increase production as a solution to increase profits.  Typically that is done without an eye towards collections.  When this happens everyone works harder, gets burnt out and administrative cost rise but total revenue barely goes up.  We at BHM Healthcare Solutions recommend to first improve the collection process.  We also have a saying that what is measured is managed so our first step is setting up metrics and benchmarks.

Here are three ways to measure performance in collections:

1. Months in gross fee-for-service AR – this benchmark tells you how many months it takes to get paid –Divide total AR by 1/12 annual gross fee-for-service charges.

2. Percent of total AR over 120 days –Top performing organizations will see less than 10% of AR more than 120 days old

3.Adjusted fee-for-service collection percentage – focuses on the money you expect to collect. Take 12 months of collections, subtract refunds to insurers and patient, and multiply the difference by 100.  Divide this figure by gross charges for the same period minus contractual discounts set by insurers.

The above three simple measures are a good place to start tracking monthly. The next step is to set organizational goals. Because collecting balances is numbers oriented, it is important to set quantifiable work goals which helps produce results. Set both organization wide, and individual collector goals. Develop standard processes for collection of account receivables. Finally award employees for meeting collection goals.

Finally it is critical to utilize collection technology. Some examples would include:

1. Utilize Electronic Claims –Will enable you to receive payment much more quickly –Send claims directly to the payer, rather than going through a clearinghouse whenever possible

2. Utilize Electronic Remittance and Fund Transfer –Automatically post payments and capture information eliminating hours of manual data entry

3. Scan documents instead of making copies

4. Utilize online statements and payments

5.Utilize PDAsUtilize charge-capture software and take it to the hospital where doctors often forget to document services rendered

Improving Healthcare Profitability for Providers Part 3: Optimizing Coding

The first two blog posts on improving profitability were about reducing no shows and collection at point of service.  Today’s post will be on the importance of corect coding.  We will use the example of outpatient psychiatric services but the concept holds true for any situation.  You as providers need to make sure the services that are being delivered are coded accurately and correctly thus maximizing reimbursement for services rendered.

All E/M and psychiatry codes are currently included in Category I. Nearly 1/3 of all services reported by physicians are E/M services. The CPT codes reported on the health insurance claim form or billing statement should be supported by the documentation in the medical record.  Three similar CPT codes:  90862, 90805, 99214. All three have different requirements and significantly different reimbursement rates.  In fact if your practices is billing $100,000 per year in  90862 but are actually delivering a more comprehensive service ( as most of our clients do) than by correctly coding the practice can bill an addition $67,000 by correctly coding and documenting services delivered.  That is a 67 percent increase.

The exact codes are determined by the combination of different levels of history taking, examination, and medical decision-making performed by a physician or certain face to face time.The following components are used to determine the level of E/M service: History, Examination, Medical decision making, Counseling, Coordination of care, Nature of presenting problem, Time.

Correct documentation is critical and cannot be addressed here.  For correct E&M coding either time or complexity of patient encounter is the critical factor.  Please contact us for more information on how your healthcare entity can improve it’s bottom line.

 different requirements and significantly different payments