After managing medical practices for more than 30 years, I have found that most doctors’ offices lose some of their accounts receivable and business income on a consistent basis. Why does this happen?
Increasing income for your practice doesn’t necessarily require adding new services or products. This article delves into some of the potential areas in a neurosurgical practice where some “additional” income can be harvested.
The primary area under review is the billing and collections of the accounts receivable.
- Check insurance eligibility of all new patients. Print out this eligibility for the medical record or attach it to the electronic medical record. Not doing so could be a costly area of lost income. Preexisting condition, often due to changes in jobs with a lapse in insurance or COBRA coverage, is the primary pitfall for denial of payment. When new patients come to their appointments without their insurance cards, our practice reschedules their appointments to protect the practice from denied payment due to incorrect or incomplete information. Remember: Most patients can’t afford to pay cash for neurosurgery.
- Collect all copayments, coinsurance, and deductibles at the time of service. Don’t collect these at the front desk; talk to the patient in a private area of the office. If the patient is unprepared to pay, reschedule the appointment. It is very hard to collect this money after services are rendered. The better strategy is to inform the patient at the time the appointment is scheduled of which fees will be collected.
- Send every denial on a claim back to the insurer for a review. This process takes time but can result in a payment over and above the original payment.
- Be diligent in collecting patients’ balances. We use two billing reminders, the Friendly Reminder and the Final Notice; both of these notices look like checks. Using these billing reminders has increased our collections to 60 percent of all notices sent.
- Turn delinquent accounts over to a reputable collection agency as soon possible. Our practice sends one patient statement. If there is no response in 30 days, we send the Friendly Reminder. If there is no response in 30 days, we send the Final Notice. If there is no response in 10 days, we then turn the account over to a collection agency. The collection fee is added to the patient’s balance. Patients are notified of this policy by a statement at the bottom of the patient information sheet that tells them they will be responsible for collection costs if the account is turned over to a collection agency for nonpayment. Patients complete the information sheet on their first visit and every time they experience a demographic change.
- Have new patients sign a patient responsibility policy. Our practice’s Patient Responsibility Policy states our collection policy and has a schedule of payments for a range of balances. This upfront disclosure helps patients know at the first visit about the practice’s policy regarding collection of fees.
- Do not accept a letter of protection from an attorney, if at all possible. An LOP might be presented when a patient’s primary payer is auto insurance and there is no secondary payer (such as health insurance). The usual personal injury payment is $10,000 total. This money can be taken for medical bills as well as lost wages. The patient usually has to retain an attorney to secure payment on medical bills. Payment can take years. If payment is received at all, the attorney will often offer a reduction in payment to settle the account. Allowing LOPs to remain on your accounts receivable for years is just plain “bad business.”
- Ask patients whose primary insurance is auto to bring an exhaust letter or personal injury payment worksheet to the initial visit. This letter or worksheet will be attached to the healthcare insurance claims to reduce coordination of benefits paperwork. This will speed up the payment of these claims.
- Work the Insurance Pending and Accounts Receivable lists every month from beginning to end. Working these two reports will dramatically increase revenue. Hire a part-time employee if necessary to complete this task. This employee will more than pay for himself.
- Thoroughly investigate all refunds to insurers.Don’t refund any money unless the refund request is in writing and you are sure that the reasoning is correct. If you feel that the request is incorrect, write to the insurer explaining why. Your practice doesn’t need to be the center of a fight between payers.
- Make no exceptions to your office collection policy. For example, “professional courtesy” is a write-off forbidden by most managed care contracts. Your managed care contracts spell out what the practice can and cannot do to deliver medical care and collect payment for that care.
- Institute solid internal controls to prevent fraud. Fraud alone can cause a practice a significant loss of income that can never be recovered. To reduce the likelihood of fraud, a process that contains checks and balances should be implemented. For example, one employee should open the mail, another employee should enter the charges and receipts, and a third employee should balance the receivables every day. The practice manager should receive and examine the documentation and balancing reports every day.
- Use practice management software to compare payments with managed care fee schedule allowances by Current Procedural Terminology code. As payments are posted from explanation of benefits forms (EOBs), the correct allowable will show on the payment screen. For our practice, which has many managed care contracts, this feature allows us to confirm correct allowables quickly and efficiently. If the EOB is incorrect, the managed care plan must be contacted for an explanation. Incorrect allowables on EOBs can occur as much as 30 percent of the time. Are the insurance companies keeping your money by paying you less than you are owed?
- Examine your managed care contracts every year. If your contracts are written on a percentage of the current Medicare fee schedule, you have lost as much as 18 percent over the past two years due to decreases in the relative value units of neurosurgery codes. If possible, in your managed care contract negotiations try to “carve out” the 10 to 15 procedures that your neurosurgeons perform most often and set them at a higher rate than the rest of the contract. This item alone can add more income to your practice without increasing the number of procedures performed.
More Ideas…
In addition to billing and collections, the following are some other areas that can increase your bottom line.
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Every year it is worth your time to examine the major items in your overhead. Have your insurance agent research your health insurance, general liability insurance, professional liability insurance, and workers compensation insurance. Look at the available options on a spreadsheet with details of each quote. Take bids on office supplies, banks, lawyers, accountants, technology connectivity and medical supplies. A word of caution: Don’t take the lowest quote at face value without considering the quality of the service as well.
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Cut down on staff overtime. This can be one of the most costly areas in any neurosurgical practice. Analyze how you can prevent overtime. For instance, the office doesn’t have to staff every position all day long. Staggering lunch hours to cover the phone and front office adds to the practice’s customer service image by providing a live voice option when other practices are closed for two hours.
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Make staff education and communication a high priority. This is one of the most important investments any practice can make. Don’t train employees for a few days and then walk away, leaving them to fend for themselves after that. It takes six months for any employee to be completely trained. Many new employees leave during the initial probation period due to utter frustration because of inadequate training. New employees can’t learn their job by osmosis. It’s a hands-on learning process with management supervision.
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Try to diversify the number of the managed care contracts in which your neurosurgical practice participates. Any practice with more than 20 percent of its income dependent upon one insurance plan sets itself up for financial hardship if the contract is terminated for any reason.
Our neurosurgical practice follows all the above suggestions consistently. We have crafted a practice with benchmarking in the exceptional range for areas such as billing and collections.
Practice management is a constant challenge. Education and networking have given me the tools to strive to make my practice the best it can be. Now for the first time there is an organization for neurosurgical practice managers that provides the tools to accomplish tasks like increasing your practice’s bottom line. The organization is NERVES (Neurosurgery Executives Resource Value & Education Society). More information about this organization is available at www.nervesadmin.com.
Barbara P. Hurlbert, CMPE, [email protected], is practice administrator for Lyerly Neurosurgical Associates in Jacksonville, Fla., and secretary of NERVES.