By Thom Schildmeyer, President, Aesyntix Health, Inc.
Over the last three months, we have had a significant increase in providers asking about cash flow. Specifically, they want to know whether or not they should open up their practice to more payers and/or seek alternative revenues sources. The complaint is the same: “I am working hard, but my income continues to go down.”
Oftentimes, the “knee-jerk” reaction is to aggressively try to attract and treat more patients, thinking higher volume alone will result in more money. Yet, there are considerable expenses associated with this strategy that can reduce profitability, from marketing and advertising to the actual cost of service.
In fact, many providers who travel down this path find themselves working harder and longer hours, only to increase levels of stress with marginal benefit to their bottom line. I recommend something different.
Focus on Your Outstanding A/R
Fortunately, there’s a much easier way to increase your revenue without expending additional resources. And it’s right there in front of you: your outstanding accounts receivable (A/R).
For example, take a practice that on average posts $50,000 in clinical charges each month. It’s not uncommon for this practice to have an outstanding A/R balance of 1.5 times that amount, or roughly $75,000, carried over each month. An average contractual adjustment rate of 25 percent* results in approximately $56,250 that the practice has earned and is legally owed, but has not yet collected. (* this rate varies based on a number of factors)
Can they afford to walk away from this money, leaving well-deserved revenue on the table? For most practices, including this one, the answer is no. But where do they start? The first step is to assess whether their billing staff has the capacity and expertise to focus on A/R collections. If so, simply redirecting them with a sense of urgency to improve performance can yield significant results. This practice does have the resources and did look to redirect.
Work Your Unpaid Claims
When assessing your outstanding A/R, look first at your unpaid insurance claims. Collecting on a higher number of claims sooner than later will result in immediate revenue for your practice. Below are a few best practices I suggested to this practice to help facilitate smoother claims submission and, most important, faster payment:
Identify patterns with insurance carriers: When working to resolve unpaid claims, it’s important to find a pattern relative to each insurance carrier. If you are able to discover a common factor, you can modify your billing style to avoid future denials.
Review claims before resubmitting: Make the most of the information you have before spending time to gather more, by addressing the following items:
– Ensure that proper contractual adjustments are made to each line item.
– Verify that CPT and ICD-9 codes are for covered services.
– Check modifiers; remember global periods, unrelated procedures on the same date of service, and separately identifiable evaluation/management services.
– Review insurance authorization and physician referral requirements to determine if an authorization is (or needs to be) in place.
– Determine if the bill should be moved to a secondary insurance or the patient.
Create a strategy for easy “wins”: If all information appears correct and claims still require follow-up, prioritize your unpaid claim list to pursue the “low-hanging fruit” first. Considering the age of the claim and outstanding dollar amount to prioritize your list is a common way to increase your collections success rate.
A less applied, but perhaps even more valuable technique is to look closely at your payer mix, identifying those that are easiest to work with and have faster turnaround times. Are you required to complete an online form, mail a letter, or make a phone call? If “Carrier A” processes claims in 10 days and “Carrier B” processes in 28 days, where should you start?
Combining these principles with your existing A/R process can help resolve more claims in a shorter amount of time. Furthermore, receiving the outstanding funds quicker can make the average amount per claim less relevant to your overall strategy. And ultimately, this is one step towards working smarter, not harder, to increase your bottom line.
About the Author
Thom Schildmeyer is President of Aesyntix Health, Inc, a leading provider of billing and purchasing solutions for dermatologists and cosmetic surgeons. He has more than 20 years experience consulting with practices in the areas of financial analysis, practice valuation, human resources, training and development, sales management, marketing, and patient relations.