Twelve questions to ask your billing staff in an increasingly profit-impaired world
Click Here to Manage Email Alerts
“You may not be able to read a doctor’s handwriting and prescription, but you’ll notice their bills are neatly typewritten.”
– Earl Wilson
“The lack of money is the root of all evil.”
– Mark Twain
“Cash is more important than your mother.”
– Alan Shugart
Ours is a largely fixed-fee business, which has been sustainable in a relatively low-inflation environment. Inflation-driven profit impairment is something our profession has justifiably feared and held its breath over for more than a generation.
Those of us old enough to remember the upward roar of inflation in the 1970s have been on the lookout for a repeat performance. Our wait has ended. The U.S. inflation rate is now 8.5%, unmatched since the early 1980s.
Absent an act of Congress, ambulatory care professional fees paid by Medicare, which supplies about 60 cents out of every dollar spent in ophthalmology, will continue to stagnate and decline here and there, while private payers will continue to nudge fees lower wherever they can.
The table offers a simplified illustration of the highly leveraged result when softening fees meet higher operating costs in a model solo practice.
There are numerous ways, combining both harder work and smarter work, to mitigate rising costs and flat or falling fees per unit service:
- See more patients with the same provider, facility and staff resources.
- Provide more services, especially direct-pay services (premium IOLs, elective plastics, augmented testing and the like) to each patient.
- Increase the surgical density of your practice by pivoting to a referral center model.
- Hire more associate providers to generate more passive income for owner-physicians.
- Contain costs wherever possible (closing down less productive satellites, dismissing low-output staff, negotiating better vendor terms).
- Moonlight to augment falling income.
- Reduce personal costs, allowing you to continue to live within your falling means.
One of the most overlooked areas where you can push back against profit impairment is revenue cycle management, or RCM — your billing department, to apply the old-school term.
Here are 12 questions to ask your administrator and internal or external RCM team.
1. “What is our time lag from service to posting?” Typically, staff are able to review and post charges from a superbill or its electronic equivalent within 24 hours of you seeing a patient. In the fastest settings, posting is at checkout or even in the exam room. So long as speed does not lead to excess error, compressing this first step in the revenue cycle launches fee recovery in the right direction.
2. “How soon after we post charges do we submit claims?” Ideally, this should be the same day or 24 hours later at the most. At 48 hours, things are getting a bit stale.
3. “How many days a week do we submit claims?” The correct answer is 5 days a week except in small practices with limited staff coverage.
4. “What is our claims denial rate?” Your staff should respond with an answer of 5% or less. The causes of denial (missed keystrokes when entering demographics, mismatched diagnoses and procedures) should be tracked and worked on, not just passed off as irreducible human error.
5. “What is our ‘missing ticket’ or ‘open ticket’ report telling us about the quality of our billing work?” Missing or open ticket reports show when patients have been seen in the clinic but their charges have not yet been posted. Open ticket reports are properly generated weekly or slightly less frequently on a spot check basis. A low number of open accounts is reasonable (a day or so of visits just seen, plus a limited number of stray accounts in which coding or provider confirmation is still pending).
6. “What is our net collection ratio?” This ratio is the percent of allowable charges the practice is able to recover. To keep things simple, imagine you have established a gross charge of $150 for a service with an allowable charge of $100. Medicare sends you $80. The patient pays you $15 out of the remaining $20 and skips out on the rest of the bill. Your net collection ratio on that particular charge would be 95%, which is the lowest level this billing metric should go in most settings.
7. “What is our gross collection ratio?” This simple ratio is the practice’s collections divided by gross charges each month. The percentage value can be high or low and still be perfectly fine, depending on how gross charges are set. The figure is often around 60%. But what we want to observe and track is the volatility of that ratio. If the value swings widely — 50% one month, 30% after that and then back up to 65% — it can indicate that staff are serially falling behind and catching up with RCM work.
8. “What is our accounts receivable ratio?” This is the total month-ending accounts receivable divided by the same month’s gross charges. Any one month’s ratio is not that interesting. But if you track this figure monthly over time, you should typically see it settle in at or under 1.2. Again, as with the gross collection ratio, you are looking for relative consistency from month to month and the absence of adverse trends. A rising accounts receivable ratio may indicate that accounts are being neglected.
9. “What percent of our open accounts are out over 90 days?” The lion’s share of claims you send out are paid within 60 days. Beyond this, some payments are held up by clerical tardiness, practice errors or payer foot-dragging. Typically, 12% or less of your open accounts, which you can easily spot on the last page of your aging report, should be in the 90-day and older column. This percent can be sub-8% in a tight practice or approach 20% and still be normal in a Medicaid-based practice.
10. “What will we see if we spot check the aging report and examine the status of older/larger open accounts?” In well-run settings, RCM staff have a plausible, well-documented reason for each old/large account you ask about at random. As you go through this exercise, you do not want to hear, “Hmm, I’m not sure what’s up with this account. I’ll research it and get back to you.”
11. “What is the labor productivity of our RCM staff?” While there are several measures of this, the most helpful is the billing staff time it takes per practice transaction, in which a transaction is any patient visit — even postops, as a convention — or any surgical case. The norm is ±0.3 billing staff payroll hours, or about 18 minutes, per transaction. Here is a simple example: A practice has 3,500 visits per month, plus 150 cataract cases. It employs 6.0 full billers. There are an average of 173 payroll hours per month. So, (6.0 staff × 173 hours) ÷ (3,500 visits + 150 surgeries) = 0.28 hours.
12. “How do our retinal drug collections compare with our drug expenses each month? Are we controlling inventory and achieving appropriate markups?” The markup on your retinal drugs is the difference between what it costs to buy them and the drug payments you receive. The markup percent is the markup divided by the original cost. To keep things simple, if you paid $100 for a dose and were reimbursed $106 for that dose, you would have a $6 or 6% markup. If you examine a table (or derivative graph) of month-by-month retinal drug collections and costs over time, you should see a modest markup that comes to around 6%, sometimes a bit higher.
- For more information:
- John B. Pinto is the author of several books on ophthalmic practice management, including John Pinto’s Little Green Book of Ophthalmology: Strategies, Tips, and Pearls to Help You Grow and Manage a Practice of Distinction, UP: Taking Ophthalmic Administrators and Their Management Teams to the Next Level of Skill, Performance, and Career Satisfaction (with Corinne Wohl), Simple: The Inner Game of Ophthalmic Practice Success, and Ophthalmic Leadership: A Practical Guide for Physicians, Administrators, and Teams. Available now for purchase at slackbooks.com. Receive 20% off with promo code PINTO20. He can be reached at 619-223-2233; email: pintoinc@aol.com; website: www.pintoinc.com.
Collapse
Read more about
Click Here to Manage Email Alerts