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  Hiring a Billing Company Might Improve Collections

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Practice Management Feature – June 2011

Tex Med. 2011;107(6):51-54.

By Crystal Conde
Associate Editor

In 2007, Peter Gosselink, MD, co-owner of Live Oak Medicine in Marble Falls, saw his patient volume swell, making it difficult for his busy staff to stay on top of billing and follow up on claim denials in a timely manner. 

"To collect every cent you're owed from an insurance company requires diligence. You need to have a close eye on what has been paid and what hasn't, and it's tough to manage that as your patient volume is increasing," he said.  

Feeling overwhelmed, Dr. Gosselink contacted Texas Medical Association Practice Consulting, which referred him to Medorizon, a billing company specializing in electronic filing of insurance claims, workers' compensation claims, patient balance billing, and collection of old receivables.  

Today, the family practice has three full-time physicians, two part-time nurse practitioners, and 10 employees. About 40 percent of patients are on Medicare; the rest have private insurance coverage. 

While outsourcing hasn't totally eliminated his billing hassles, Dr. Gosselink says it has alleviated the every-day follow-up.  

Medorizon accesses the practice's electronic health record (EHR) system to capture daily charges. Dr. Gosselink says he gets monthly reports on pending charges and a status update on claim denials.  

The practice also can log onto Medorizon's system directly for a real-time billing and collections snapshot.  

Dr. Gosselink says there's no question that hiring an outside billing company increased the practice's collections. Early on, the practice collected more than $20,000 in past-due bills. According to Dr. Gosselink, outsourcing billing responsibilities also improved the practice's turnaround time on collections and assured him that all collections were coming in. The physician pays the company a percentage of collections.

Steve Loeschen, DO, a solo practice family physician in Austin, also decided to outsource billing to reduce the time his staff spends following up on claims. Dr. Loeschen has been an AMCA LLC client since 2000. The medical billing company offers data entry, monitoring and review of explanations of benefits, patient billing, management of accounts receivable, and follow-up on unpaid claims and patient balances.  

"The billing company sends me reports regularly so I know how my practice is doing financially. I like working with a company that can expedite the billing process for my practice," he said. 

Before signing a contract with an outside billing company, physicians should evaluate their options. Doing some research on the front end can help physicians choose a legitimate company and avoid billing and collections headaches down the road. (See "Questions to Ask Billing Companies.")  

Do Your Homework

When evaluating a billing company, Dr. Gosselink suggests physicians choose one with a payment model based on a percentage of the practice's collections. This method of compensation gives the company an incentive to focus on collecting every penny it can, he says.  

He warns that as a practice's billing volume increases, the percentage it pays to the billing company could increase to a level that makes outsourcing unfeasible. At that point, the practice may be better off hiring a full-time employee to handle billing in house. 

"If your practice collects $1 million in a year, and the billing company receives 7 percent of collections, that means you're paying $70,000. You could hire an employee for less than that. If the billing company isn't willing to adjust the percentage it collects as your volume increases, you might want to look elsewhere for billing services," Dr. Gosselink said. 

TMA Practice Consulting can help you determine whether it's best for your practice to handle billing in house or to outsource the responsibility. With a billing feasibility assessment, TMA Practice Consulting reviews your practice's billing and collections procedures, front office processes, and accounts receivable, and does a cost-benefit analysis.  

The feasibility assessment includes the following:   

  • Collection system analysis: a calculation of collections ratios and review of the aging categories of accounts, as well as a comparison of the ratios to specialty benchmarks.  
  • Insurance processes review: a review of insurance verification claims-processing and account follow-up procedures the practice follows, as well as identification of possible causes of common denials. 
  • Workflow/job function review: a review of practice workflow to determine how efficiently the practice handles billing and collections. 
  • Cost-benefit analysis: a comparison of the cost of outsourced billing vs. in-house billing (includes space, staff, software, and process changes).    

To perform a billing feasibility assessment, TMA Practice Consulting reviews the following documents:   

  • Monthly and annual summaries of charges, payments, and adjustments; 
  • Annual summaries of procedure codes and their frequencies;  
  • Accounts receivable aging report by payer (including carrier and self-pay balances); 
  • Payer mix analysis report by charges and by payment;  
  • A random sampling of remittance advices/explanations of benefits for recently paid and denied claims for all payers; and 
  • Copies of all forms used by the front desk and business office.   

To inquire about TMA Practice Consulting billing feasibility assessments, call (800) 523-8776, e-mail TMA Practice Consulting, or log on to the TMA website.  

Make the Right Choice

Medorizon President Mike Hale says reputable companies should track claims to make sure they're paid on time, back up servers every day, provide access to qualified billing and collections personnel, and keep up with industry-specific billing and collections procedures. 

To ensure the billing company is credible, physicians should get references from colleagues who work in their specialty and ask for a demonstration of the system, he says. (See "Tips for Choosing a Billing Company.") 

"They should also find out if the billing system includes a practice management component that can help physicians determine where their revenue is coming from. The practice management software can analyze the practice all the way down to the details, including reimbursement by procedure code and by insurance company," Mr. Hale said. 

When shopping around, Mr. Hale advises physicians to make sure the billing companies they're considering don't alter diagnosis codes or levels of service on claims. 

"When the diagnosis won't support medical necessity, we let the physician know. We give doctors a list of the codes and let them make any corrections. If a billing company starts trying to tell a physician to bill at a higher level of service, the physician should be cautious and consider that a red flag," Mr. Hale said. 

Christy Petru, president of AMCA, says physicians should thoroughly evaluate billing companies before choosing one. She says physicians who fall victim to improper billing practices could lose money.  

Whether you handle billing in your practice or hire an outside company, it's important to have a compliance plan to help prevent submitting erroneous claims. The U.S. Department of Health and Human Services Office of Inspector General (OIG) developed compliance program guidelines for individual and small group physician practices, as well as billing companies. 

For in-house and third-party billing, OIG emphasizes a seven-step approach for developing and implementing a compliance program:   

  1. Conduct internal monitoring and auditing. 
  2. Implement compliance and practice standards. 
  3. Designate a compliance officer, contact, or committee. 
  4. Conduct appropriate and effective training and education. 
  5. Respond appropriately and promptly to detected offenses, and develop a plan to correct them. 
  6. Develop open, effective lines of communication. 
  7. Enforce disciplinary standards through guidelines well publicized to the staff.   

For more information on compliance program guidance for individual and small group physician practices, read the Federal Register, Vol. 65, No. 194 [PDF]. 

For more information on compliance program guidance for third-party medical billing companies, refer to the Federal Register, Vol. 63, No. 243 [PDF]. 

Build a Partnership

Ms. Petru says physicians should expect billing companies to offer these basic services:   

  • Data and charge entry – if not tied directly to the EHR; 
  • Payment entry;  
  • Accounts receivable follow-up, including submitting appeals and working denials; and  
  • Reports and data analysis.   

A billing service and medical practice should work as partners, she says.  

"The practice plays a huge part in the success of the relationship. The billing company can't get you paid if your practice isn't sending the proper information or you aren't coding appropriately. Billing companies are only as good as the practices they support," she said. 

Working with a billing company has many benefits, Dr. Gosselink says. 

"The world of billing and collections is always changing. By working with a credible company, they keep us up to date and ensure we're billing accurately. We can also contact our billing company at any time to ask reimbursement and coding questions. The company will even do onsite visits to work with staff on the system and help us with any problems," he said. 

Ms. Petru says that type of partnership with a practice's billing company is pivotal and suggests physicians plan for a one- to two-month cash flow reduction while staff members become familiar with the new system. She says by month three, however, the practice is able to financially make up that short-term reduction in cash flow. 

"Stay in the loop, and know what is happening between your office and the billing company. Don't assume because you aren't hearing anything that all is good. Ask questions of your staff and the billing company," Ms. Petru said.    

Crystal Conde can be reached by telephone at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by email.


Questions to Ask Billing Companies

 Before you sign a contract for services with a billing company, Mike Hale, president of Medorizon, and Christy Petru, president of AMCA, LLC, advise that you ask it the following questions:   

  • Does your company charge any setup fees? 
  • Do you provide an electronic medical record (EMR)?  
  • Is your billing system compatible with the practice's existing EMR system?  
  • Does your billing system include a practice management component? 
  • How long is your contract, and what are my options if I'm not happy with your company's services? 
  • Does your company provide training on the billing system for my office staff? 
  • How long have you been in business? 
  • What medical specialties do you have experience with? 
  • How many clients and employees do you have currently?  
  • Is your current staff capacity sufficient to handle my account? If not, how soon can you ramp up staff volume to meet my needs? 
  • How many employees will be assigned to support my account?  
  • Who would be my point of contact at your company? 
  • What is the flow of information from the physician's office to the company? 
  • How often are claims submitted for payment? 
  • How is patient information stored, and what security and privacy measures do you have in place?  
  • How soon do you follow up on accounts receivable and claims denials? 
  • How long will setup time take before the billing company can start sending claims? 
  • What does the billing company need from the office daily, weekly, and monthly to ensure efficient collections? 
  • Is your company willing to adjust the percentage it collects as my billing volume increases? 

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  Tips for Choosing a Billing Company

 When contracting with an outside billing service, TMA suggests that you minimize your risk through the following measures:   

  • Request a copy of the service's compliance plan – the Department of Health and Human Services Office of Inspector General's Compliance Program Guidelines for Billing Companies or a billing compliance manual.  
  • Exchange a business associates' agreement to ensure the confidentiality of protected health information. 
  • Ask if the service has periodic audits performed by an outside auditing firm. 
  • Inquire about continuing education and training of billing staff. 
  • Request three references of current medical practice clients, and call them to ask about the company's performance. 
  • Inquire about the qualifications and certifications of the service's billing staff. 
  • Have an attorney review the contract. 
  • Request a redacted copy of the standard financial reports the service gives its clients. 
  • Ensure the service has insurance coverage for errors and omissions. 

Source: Texas Medical Association Practice E-Tips (subscribe online)

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