Then and Now
Decades ago, healthcare billing was a very simple task. Many providers would handle the whole process themselves. They’d fill out the claim form by hand, put it in an envelope, and send it to the insurance payer via postal mail. Several weeks later, they’d receive a check in return. This was the way it was. It was pretty simple for many, and few of the doctors during that era anticipated that it would turn into the monster it is today.
Now, billing matters are rarely handled by providers, even solo practitioners. The quick tasks that were once performed in small offices have become long processes that are managed by rows of cubicle workers. Some of the larger corporate chain practices employ thousands of billing specialists that make up a large portion of their administrative staff. Few providers do their own billing anymore and for a good reason. It’s very complicated and extremely time consuming. Even the manner in which claims are sent has drastically transformed with technology advancement over the years. Some payers such as Medicare don’t even accept paper claims anymore. Keeping up with changing tides can be a struggle. Even younger doctors starting their first practice amongst this wave learn quickly that it comes with its steep learning curve, despite being more aquatinted with software and having basic computer literacy.
Bad Billing Means Bad Revenue
This billing monster is likely your practice’s largest administrative workload. It’s the culprit for many providers that fail to keep up and even close the doors to their private practices. If billing isn’t performing well, revenue is bad.
In this article I’ll be covering the fundamentals of the billing cycle and how to setup each element for success and efficiency. Even if you’re not the one handling billing, it is vital to your practice’s sustainability and growth that you understand these concepts that I’ll be going over.
You’ll realize that failing in billing is a matter of choice, not your destined outcome.
The RCM Cycle
A lot to cover here so let’s jump right in! The billing cycle is often referred to as RCM, which stands for Revenue Cycle Management. It’s basically the industry term for billing in its full cycle. So when you hear others talking about RCM, you’ll know exactly what they mean after this article. I’ll be sure to give advice based on my own experience as I walk you through the cycle here.
Patient Intake
The first element in the RCM process is Patient Intake. This is the patient onboarding phase where they fill out their demographic and insurance information, sign the documents provided by the practice, and authorize treatment of care.
Eligibility & Benefits Verification
Next, is eligibility verification. This step verifies that the patient has coverage for the provider rendering care to that patient. Verifying deductibles, copays, coinsurance, and specific procedure coverage are also part of this process.
If the practice doesn’t already have an electronic or online means of intake setup, I would highly recommend putting one in place. Giving the patient the ability to register their intake forms before the first visit brings numerous benefits. First, less time in the waiting room filling out paperwork. Second, the employee spends less time entering the patient’s data into the system. I can also vouch that attempting to read handwriting leaves a lot of room for error. Most importantly, having the patients information before the first visit gives the practice time to do an eligibility verification, checking for benefits, and thus confirming if the patient should even be scheduled for a visit, just in case there is no coverage, or good coverage available. Eligibility checks can be performed over a phone call, payer portals, and even in advanced practice management software that syncs with a modern clearinghouse. Many clearinghouses have real-time access to payer data, making clearinghouse eligibility checks very reliable .
Encounter/ Charge Entry
Once care is rendered, the provider, assistant, or scribe will enter the encounter details of the visit into the medical record. Different components of the patient’s history, evaluation and management performed, and SOAP formatted assessment notes will be the main elements of entry here.
Okay, the notes are submitted. Then comes charge entry. It is most compliant for doctors to enter the encounter’s procedures and ICD-10 diagnosis codes themselves. But this isn’t always possible. This can be time consuming, and some providers just aren’t that familiar with all the recent updates in medical coding today. But if the charge entry isn’t entered correctly, claim denials or underpayments will likely result.
Practices need to be able to balance compliance with profitability right?
The best strategy here is to bridge the communication between the EMR notes and charge entry. In other words, the provider simply notes what happened during the visit, and a certified coder or other qualified individual interprets what codes are applicable to the description given.
Do keep in mind that federal CMS fee schedules are updated on a quarterly basis and private payers update theirs at least every year. This means that a routine check should be done to maintain the right charge amounts and prevent any claim from being underpaid. For many states, it is perfectly compliant to charge 20% above the fee schedule as a common practice. Charging the exact fee schedule amount isn’t always the smart way to go. Let’s say Medicare pays $100 dollars for a particular procedure, but Cigna pays $130 for that same code. Be diligent on this matter so you don’t miss out on potentially higher payouts. I’ve met some providers who worry about overcharging, even when it’s perfectly legal in their state. It’s important to note here that every insurance payer has an adjudication process where they only pay the allowed amount of your claim. So regardless of overcharging, they will still only pay what they determine to be within their limit. Yeah, sometimes there’s exceptions, but usually that’s just because insurance reps screw up.
Claim Submissions, Effective Scrubbing & Clearinghouse
This is a larger process than just clicking the submit button. Check with your practice management software vendor that claim scrubbing is an included feature. Your software should be able to have a thorough auditing ability that verifies all appropriate fields are checked and that your claim contains everything in proper format. Once submitted, your claim is converted into an 835 file format. You don’t need to remember that but I’m just educating for clarity here. The file is transferred to your clearinghouse vendor who also has an automated scrubbing process. The clearinghouse verifies the patient demographic and checks that the insurance information matches that patient. When anything is incorrect or missing, the claim is rejected before being sent to the payer. The clearinghouse is only able to do this when they have an affiliation with the insurance payer.
Having these features is very essential to claim submissions, which is why choosing great software and clearinghouse vendors is so important. I’ll hit that topic in another article though.
I’m surprised when I hear there are still billing services out there who only send paper claims via mail or fax. This is such an outdated play. Even auto and workers comps claims can be submitted electronically through select clearinghouses. Electronic submissions will ensure your claims arrive faster, meaning faster payment, and they’ll provide better status tracking.
Accounts Receivable (AR)
AR is when the biller receives an EOB, explanation of benefits, and then posts any payments listed. EOBs can also be returned via the clearinghouse in the form of an ERA, electronic remittance advice. Don’t worry about these long names. Just know that AR is when your biller handles the reception of EOBs. Again, better software will help billers be more accurate when posting payments. Billers should be able to balance out the payment with the allowed amount, adjustment and patient responsibility. The adjusted amount is what the insurance did not allow for coverage. The allowed amount makes up the total of the payment and patient responsibility. And if you didn’t guess, patient responsibility normally refers to copays, deductibles, and coinsurance.
Denial Management
Of course, some claims aren’t paid, thus the EOB displays a denial. Most denials fall into common categories such as coordination of benefits, lacks medical necessity, prior authorization required, improper modifier, provider not covered under plan, or non-covered service. Each of these common denial types are corrected or appealed in a unique manner. This is the most time consuming part of RCM.
Ideally, an employed biller or billing service would be proactive with such denials. You see, many denials are trending. If a biller sees a trend in denial types, the biller would hopefully have the common sense to prevent such denials in the next claim batch submitted. This way, the next batch of EOBs don’t come up with denials in the first place.
I remember when I worked in denial management for a big corporate healthcare company. The executives were asking for feedback to improve the claims process. One employee bluntly replied, it would help us eliminate some of the simple, time consuming denials if we could just train the employees who are sending the claims. We were left jaw-dropped when the executive responded that such training will never happen.
Many large corporate billing departments and outsourced billing services have this huge disconnect. To be proactive with denial management and thus denial prevention, it is best that the individual handling denial management is the same person submitting claims for that practice. This is the most important piece of advice that I have for you in this article so let me be clear… If the person handling denial management is not the one submitting claims or at least working next to the person submitting claims, there will always be a higher volume of denied claims, creating more work for corrections, and delaying payments. And it doesn’t matter whether your practice is billing in-house or outsourcing to a billing service. This concept still applies either way.
Reporting
If the reports you’re receiving can answer these questions, then you’re gold!
What is your average monthly revenue?
What is your most profitable payer?
What is your claim success rate?
What procedures are most profitable?
How much does each patient owe after the primary and secondary payers have adjudicated and processed their claim(s)?
The better your reporting, the more you know the health of your practice’s finances. Organized reporting should give you itemized statements that will help you in filing your taxes. It should reveal exactly what your goals are going forward.
Patient Invoicing
Many practices think this comes before the service is rendered. This can work for copays, but charging deductibles and co-insurance can be messy if not handled later. Unless the visit is for a high dollar amount procedure, such as surgery, you want to invoice patients after you have an EOB, because it displays exactly what the patient owes. Charging large amounts to patients before billing insurance can lead to refunds, confusion, and ultimately angry patients that leave bad reviews. Even if you did an eligibility check that confirmed John Doe has a $1000 deductible, there’s still the risk that another practice is currently billing claims for other treatment he’s receiving elsewhere. Such a scenario would likely change what the patient owes you. Okay, the one exception…. If you insist on charging patients for deductibles and co-insurance before receiving treatment, I would only recommend doing so when the eligibility check, treatment, and claim submission are all performed within the same day.
If the patient is coming in for routine care, it’s not a bad idea to setup automated transactions. This way you don’t have to deal with collecting. If you’re able, put their card on file from day one and virtually swipe away. I would advise, however, that you make sure that you have an automated charge authorization in place before going this route.
Patient responsibility is often the largest area of lost revenue. This isn’t always because patients are just bad at paying their invoices. It’s often just a lack of collecting on behalf of the practice. It doesn’t have to be a long tedious process. Just being proactive with it ahead of time will set collections up for success down the road.
Let's Recap the Big Priorities
Now there’s a lot we went over in this article. There are some topics such as choosing software and clearinghouses that I’d like to expand on in other articles. For now, let's review what's most important.
Note the main concepts of proactivity. Be proactive with your patient intake and eligibility verification to enable verification before scheduling patients for their visit. This is best done by setting up an online intake registration. Some practice management software vendors offer this type of feature.
Be proactive with your denials. Make sure that your biller, in-house or outsourced, is preventing trending denials from happening again when submitting the next batch of claims.
Take initiative to get a reporting system in place, so that finances are organized and that you know what goals you should be setting going forward.
Lastly, setup patient responsibility in a way so that your invoicing is clear. Make sure you’re charging what insurance designates to patient, leaving no discrepancies to be argued.
The rest will come more easily once these measures are put in place.
Please reach out to us for any questions!
Thanks for reading!
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