Simon Brignall continues to explore the common themes arising from consultants wanting to address their issues around medical billing and collection.
The issues covered in last month’s article revolved around how to ensure you have set up the practice effectively so you can carry out the medical billing and collection function simply, securely and efficiently.
Now I will address the operational aspects of this vital area.
The raising of the invoice is the first step in the revenue cycle process, which is why in my last article I stressed the reasons why you need to bill promptly.
It never fails to surprise me to see how many practices fail to follow this golden rule, as it is not uncommon for me to find practices running many weeks or even months behind.
The invoicing task requires accuracy as well as speed, which is why it is important that there is a checking process.
This is to make sure that the invoice is accurate and contains all the relevant information before it is sent to the relevant payment company or patient.
Mistakes made on invoices not only reflect badly on the practice, but they can also lead to losses in income through undercharging or delays in payment if the invoice does not contain all the correct information.
Raising invoices to the private medical insurance (PMI) companies needs to be done quickly so that there is the best chance of it being settled in full or even at all.
In recent years, some of the main UK PMIs have introduced rules providing fixed time periods following the treatment date in which they need to have received the invoice.
Where the practice fails to invoice in line with these requirements, the insurance company will deny payment and the practice will not have the option
to seek recompense from the patient.
If there is a delay in sending the invoice, there is also the risk that the policy benefit limit is exhausted by claims from other consultants. This means the amount becomes the liability of the patient, which creates more administrative work for the practice and that the outstanding amount is often harder to collect.
Over the past few years, there has been a major push by insurers to send invoices electronically. This benefits the insurance companies by providing a standard automated pathway, but there is also a huge benefit to the practice, as it means the invoice should be assessed and paid quicker.
As Independent Practitioner Today has reported, the self-pay area has grown considerably over the past ten years and is now either the largest or second largest area of revenue for many practices and it continues to grow. The impact of the pandemic on NHS waiting lists will only support this trend.
The raising of self-pay invoices to patients should always be a priority in a practice, as this area has the greatest risk of bad debts.
Under this heading, I also include invoices raised for shortfalls that are caused by the terms of the insurance policy, such as patient excesses, benefit limits or co-payments.
There are times when a practice should also consider requesting payment in advance, particularly when treating patients who do not reside in the UK, the invoice amount is considerable or where the practice undertakes a very large element of self-pay.
It is important that a practice has the full range of invoicing and payment options required to best service these patients. At Medical Billing and Collection (MBC) we offer our clients a range of payment pathways including the ability to:
Invoice patients electronically;
Collect payments 24/7 via our payment portal;
Raise invoices and collect monies in advance, on the day and post-treatment depending on their specific needs.
Reconciliation is another area we find continually causes problems; often the practice is way behind with the reconciliation process or the remittances not reconciled correctly against the invoices raised.
Even practices who manage to send out the initial invoice on time find this can be where the process starts to unravel.
A regular complaint from consultants can be that they are unsure what the true picture of their outstanding debt is or whether an invoice has been paid or not. Lack of access to accurate data at this key stage means that is impossible to have an effective chase process.
Each insurer should send a remittance to the practice when it makes payment, which is typically done electronically direct to the practice bank account.
The problem is that it is common for the practice to not receive a remittance or that it is mislaid and so unless the practice is chasing the insurer or reconciling the bank account regularly, these invoices remain outstanding.
When this happens, it can then lead to further problems, as the remittance which has been missed and so not reconciled may have led to a shortfall being identified which should have been invoiced to the patient. This means practice cash flow suffers and also can increase its bad debts.
Reluctant to pay
Even when the issue is finally discovered, invoicing patients months after the event is never a good thing, as it can lead to complaints and often means people are more reluctant to pay.
At Medical Billing and Collection, we are well versed in this problem, as when we chase a backlog of outstanding invoices for a practice, we encounter these issues all the time.
The way to rectify this is to make sure remittances are reconciled the day they are received, identify any outstanding ones and ensure these are chased regularly with the insurers.
This will ensure you keep on top of outstanding invoices and know at the earliest opportunity if you must invoice a shortfall to the patient.
This is the area we find gives most practices the biggest operational problem and is a task that is often deferred for a range of reasons such as:
- Practice workload;
- Lack of transparency around aged debt;
- Staff who feel uncomfortable with the credit control role.
Few practices find it easy to deal with the patient on both a medical and financial level, as it can lead to many issues on both sides.
Every invoice potentially needs chasing, including invoices sent to the insurers. Reasons for a delay in processing the invoice can be:
- Non-receipt of the invoice due to EDI (Electronic Data Interchange) issues or postal problems;
- Non-preauthorisation of treatment by the patient;
- Incorrect membership number or lapsed policy details provided by the patient.
For a robust chase process to be effective, it must be clearly defined and routinely applied. There needs to be clear understanding of who is responsible for this role so that there can be accountability for its execution.
Once the chasing process has begun, it needs to be followed up or the patient will think you are not being serious. It will reflect on the professionalism of the practice and will often give the patient permission to withhold payment.
The process should allow for a mixture of communication methods used to contact the patient as well as the sending of formal letters. All this needs to be recorded with a log of any action taken.
4 Debt decisions
Once all the avenues in the chasing process have been exhausted, the practice needs to decide whether to send the patient to debt collection.
What you do will typically depend upon the patient, the circumstances and the associated costs.
If you decide not to send the patient to the debt collectors, then the practice should consider writing the amount off as bad debt, as it is unlikely the patient will choose to pay the outstanding amount in the future.
You may choose to consult your accountant, as they would know the individual circumstance of the practice and will be in the best position to offer the correct advice.
Finally, the practice needs to be able to raise financial reports from both a business and tax perspective. HM Revenue and Customs (HMRC) takes the view that you are responsible for your own tax affairs and it does not consider ignorance or negligence as a reasonable defence.
You should be able to run reports which show the number of invoices raised, payments received and outstanding invoices monthly to ensure all financial aspects of your practice are in order.
Having access to accurate and up-to-date financial data on your practice ensures you can identify any issues and act to address these quickly.
Historically, HMRC has looked upon the private medical sector as being a prime area where the financial affairs are not as robust as they should be. This has resulted in a higher percentage of investigations compared to other business sectors.
We provide our clients with 24/7 access to their data via our reporting dashboard, which has an array of reports to analyse the practice and our account managers are happy to field any request for tax information from their practice’s accountant.
In my experience, most people underestimate the importance of the medical billing and collection side of the practice. I can assure you that it is not easy and, with the demands on a modern practice, it is getting harder and harder to do it internally.
If you decide to continue to carry out this process in-house, then I hope the areas covered over these two articles provide a useful guide.
If you do not want to invest the time and effort to do this internally any more or if any of the problems I have identified strike a chord, then you should consider outsourcing this crucial area to a medical billing and collection company and let the professionals do this for you.
Simon Brignall (right) is director of business development at Medical Billing and Collection