Stop same errors being recycled
Simon Brignall continues his analysis of the repetitive nature of the problems private practices experience with their medical billing.
In my article last month, I cited the example of Bill Murray’s character Phil Connors in the 1993 film Groundhog Day and how he repeats the same day over and over until he learns from the error of his ways.
To save you from the various missteps of taking this journey in your private practice business, I detailed just some of the common problems I hear when consultants outline their medical billing challenges.
Now let’s look at more of the issues that just keep cropping up again and again.
Failure to reconcile payments
For many practices, the inability to reconcile payments is one of the most common problems and is often allied with their failure to deliver a robust chase process.
All successful businesses need to know the total of how much money they are currently owed.
This is even more important for medical practices, because the allocation of payments from insurance companies often results in the requirement to raise a separate invoice to the patient for the outstanding balance when the original invoice amount is not settled in full.
These outstanding balances can occur when there is either a shortfall or an excess. A shortfall is when the balance of the invoice is not settled in full by the insurer for a variety of reasons such as:
- The rate of fees charged;
- The policy is exhausted from a previous claim;
- The claim is not covered under the policy’s terms and conditions.
Problems arise when invoices are not reconciled in a timely manner because the outstanding funds negatively impact the cash flow for the practice.
It is important to note that any delay in raising these invoices to the patient not only makes the practice look unprofessional, but also often leads to the patient choosing to defer payment.
Aged debt
One of my first meetings I had was with a dermatologist who had an aged debt going back several years. The total amount outstanding was more than his annual turnover.
Payments had not been consistently allocated to invoices and, to make matters worse, many remittances from insurance companies had been lost because they had been sent to the wrong address.
This meant that, despite some of the funds having been received, shortfall invoices had not been raised and outstanding payments with the insurers had not been followed up.
Because the consultant was embarrassed about the state that the practice finances had sunk to, he had chosen to write off some of the money owed rather than tackle the problem.
First steps
One of the first steps in our onboarding process is to make sure all the private medical insurers are notified that we are the billing provider and the new contact point for this information.
The dermatology practice also catered for a large proportion of self-pay patients who were offered the ability to pay via a variety of payment methods, including bank transfer, cheque, cash and card payments.
Unfortunately, as these payments were not uniquely identified and allocated against the relevant invoice when they were received, patients were frequently chased for payment by mistake when, in fact, they had paid. So the practice looked unprofessional despite the excellent clinical care it had provided and it often received negative reviews.
When I meet with a consultant to discuss their practice, the figure that I am generally quoted for their aged debt ranges between 10-20%. But we find this is often an underestimate of the actual figure we take on when we take the practice on board.
We define ‘backlog’ as any outstanding invoices that were previously raised by the practice. The average ‘backlog’ our company has taken on during its ‘intensive care process’ for consultants we have partnered with this year is 19%.
The backlog figure we were discussing at a recent meeting trebled in size as talks progressed. This was because the consultant initially felt too embarrassed to declare the actual amount outstanding.
It helped when I was able to put things in perspective and explain that we have had practices with hundreds of thousands of pounds outstanding, as well as clinics where the amounts were into seven figures.
Facing up to the extent of the problem is an important first step, but you still need to implement an effective reconciliation process supported by a robust chase procedure.
Challenges around chasing
Without exception, chasing is the area we find gives most practices the biggest operational headache and is the task most often deferred.
Many practices find conversations that mix medicine and money challenging and consider they detract from the patient’s experience of the care they receive.
In our experience, all invoices need to be routinely chased, including invoices sent to insurance companies.
Reasons for a delay in the processing of invoices can be:
Non-receipt of the invoice due to Electronic Data Interchange (EDI) issues or postal problems;
Treatment that was not pre-authorised;
Incorrect membership numbers 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 who is responsible for this role so there can be direct accountability for this activity.
Once the chasing process has begun, it needs to be followed up or the patient will think you are not being serious. This will reflect on the professionalism of the practice and will give the patient permission to withhold or delay 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 alongside a complete log of any action taken.
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 involved in the treatment 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 a bad debt, because it is unlikely the patient will choose to pay the outstanding amount in the future.
You may choose to consult your accountant, who will know the individual circumstances of the practice and will be in the best position to offer the correct advice.
It is not uncommon for the practices I meet with to have a bad debt rate of 5%, but we have a bad debt rate of less than 0.5% and in some instances this is as low as 0.19%.
Visibility
To analyse and make informed decisions about your practice and have confidence in the billing process, as well as monitor its effectiveness, it is important to have access to accurate, real-time financial data.
I am constantly amazed how many consultants do not have access to current financial information about their practice. This means their ability to review and manage their practice is impaired.
At Civica, we provide our consultants with real-time access to their practice information and offer a range of tools in our reporting dashboard to analyse this data.
Additionally, I often meet with consultants for review meetings to discuss their practice, where we examine a range of financial and activity data – often extremely illuminating .
This typically includes the total value of work invoiced, where this work was done, the patient types seen, types of procedures carried out and aged debt.
This ensures each consultant has a good overview of their practice and allows them to focus on areas of interest and make informed decisions when required.
As you can see from issues I have covered over these two articles, it is very easy to have billing and collection difficulties and often these problems result in unnecessary losses of income.
If you review your practice and feel it is weak in any of the areas I have outlined, then you really do need to take time to put adequate steps in place to address this.
One option may be to consider outsourcing this vital element of your practice to a medical billing and collection company instead.
Simon Brignall (right) is director of business development at Civica Medical Billing and Collection