At Cosentus, we often sign new clients who have a very messy accounts receivable. Sometimes these clients will tell us that they are barely able to stay afloat, as their medical billing company has not been billing their charges out or they do not refile claims or work denials. These troubled practices are only able to notice the lack of performance once their cash-flow has been negatively impacted. However, in our experience, there are predictable signs of an upcoming crisis that often start a good 6-8 months before your cash-flow is disrupted. In this day and age, you must outsource your billing, but also review the performance of your medical billing company every now and then to make sure they are doing their expected job.
Often times, medical practices are not even aware of any problems in their revenue cycle management until they begin to lose money. Most times the practice administrators will want to ask questions or review the performance of their billing service, but do not know the right questions to ask and are not aware of how to investigate and ensure their revenue cycle is being managed efficiently. Cosentus has put together a list of 5 warning signs to watch out for, along with the right questions to ask your billing service.
Download free checklist- The Ultimate AR checklist
Increasing Account Receivables
This is typically the first sign of a problem in the making. You must insist that your billing service provides you with an up to date AR report at the end of every month. The report should be broken down by payer and ageing buckets. Pay attention to the over-90 & over-120 days bucket, and see if you notice a growth trend in these buckets over a period of time. When combined together, depending on your specialty, these buckets typically should not be over 10-14%. Sometimes there can be a payer trend that is impacting the numbers temporarily. If this is the case, when you track the data from the past 12-16 weeks, you should be able to tell if the ageing is stable, increasing, or decreasing. The trend over a 12-week period should be reducing and stable, closer to 10%. If not, and your AR is ageing 20% or higher in the over-90 days bucket, you need to ask your billing service for an explanation and their plan to catch up.
You need to understand that the AR over 90 days is your revenue locked for over 90 days, and that is bound to disrupt your cash-flow. This jump in AR can be due to serious lack of diligence on the part of your billing service– they may not be refiling claims in a timely manner or the denials are potentially not being worked. A healthy percentage of claims submitted get denied and according to MGMA, 50% of all denials are never worked. Regardless of the reason, you need to get involved if you see an unjustified increase in the AR. You also have the option of getting your Revenue Cycle audited by an outside billing service. This will cost you roughly $2000-$3000 but will get you all the answers that you may need to stay on top of your billing and maintain a healthy cash-flow.
Cosentus performs a FREE comprehensive coding, billing and claims audit. Click the link below and sign up in less than 60 seconds. We will let you know how well your billing arrangement is working and provide you with a road map for increasing revenue. Zero obligations!
FREE Comprehensive analysis of your billing, coding and claims
You did all the work, you provided the best medical care to your patient, but your medical billing company failed to capture all the charges. This is a major issue when it comes to optimized billing and not only creates a loss of potential revenue, but can also result in claims being denied. You should be able to get the details of your charges from the billing company and you can easily tell if they are billing for all the services that you have provided. If you see charges that were missed, you need to question them. It may be that your billing service just missed it or that they did not believe it to be a payable service, but you and your biller should always be on the same page. A periodical audit of your billing and coding is suggested to catch this mistake early and take corrective measures. You can do this yourself or outsource to get your billing audited
Not Submitting Claims Electronically
If your billing company does not submit the majority of claims electronically, this should raise an alarm. If they are using modern technology, they should be able to submit majority of the claims electronically, which means faster reimbursement for you. Ask your billing service to share the numbers from their EDI portal, as this should give you a good indication of what is being submitted electronically as well as the ratio of the “first pass acceptance” of your claims. The first pass acceptance should not be under 97% and if it is, this indicates that the claims are not being scrubbed prior to submission. It is important to submit clean claims in a timely manner to ensure faster and more optimal reimbursement for your practice. Furthermore, the rejected claims need to be worked out within 24 hours and resubmitted with the necessary corrections. If your billing company is found lacking in these areas, they are likely costing you money in the near future and potentially right now. Time to start asking questions!
Too Many Denials
Claim denials can lock up your revenue in the AR and cause serious problems with your cash-flow. It is acceptable to have 3-5% denials, as even the best performing practices have some denials. However, if you have a 10% or higher denial rate, it is a strong indicator of failing revenue cycle management. Is your billing company conducting comprehensive denial management for you? This should also include preventive denial management, with the aim of reducing the future denial rate. Ask them if they use denial tracking to work all denials in a timely manner and eliminate denials caused by human errors, coding issues, or not submitting the claims to the correct payer. A billing company that does not want to invest in upgrading their technology or fine-tune their process to meet the current industry standards will always cause you to lose money.
Lack Of Visibility To Your Practice Data
If your medical billing company does not provide you with comprehensive management reports, you will always be in the dark about the financial performance of your practice. An effective billing service will always provide you with good reports, as they are sure about their performance and have nothing to hide. Only providing gross charges & payment reports was acceptable 15 years ago. Now, any high quality biller should be able to track significantly more. Failing to capture RVU’s and managed care rates are common signs of a biller who is behind the curve. Data is the clearest telltale sign there is. There are so many important practice decisions that you can make based on the data that is generated out of your revenue cycle. These include how much revenue you make from each of your patients, what type of patients bring in more money than others, how each of your physicians are performing, what should be the goal of your marketing, and more. Lack of transparent reporting is going to land you in a financial trouble. Comprehensive practice data analytics should be an integral part of your billing arrangement.
Medical billing is difficult, but it is not your job. It is supposed to be taken care of by your billing service. This is why you hired them in the first place. You should be guaranteed 99% clean claims submission, ZERO charge leakage, over 90 days AR to under 10%, and the financial goals of your practice being met month after month. We put this article together so that you can stay on top of your practice goals and ask relevant questions of your billing service. If you are not sure about the performance of your revenue cycle, we are happy to help. You can get a FREE comprehensive analysis of your billing, coding, and claims through Cosentus. Zero obligations!