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Effective billing on a shoestring budget

By Mary Shaub, M.H.S.

The accounts receivable or billing department of the medical practice is often considered the unknown frontier of the medical practice. Clinical training in medicine does not emphasize how to collect money but rather how to render the service to generate the revenue. This article will focus on the “how to’s” of the billing and collection of money. It will encapsulate the essential components of an effective billing system that, if followed, can operate on a shoestring budget. There are four areas that will be addressed: the key components of a billing system, the training of personnel, the development of relationships and the use of electronic versus a manual billing system.

Defining the key components of the billing system begins with the planning stage, continues with implementation and finalizes with careful monitoring and evaluation. It is crucial that the key players of the practice, i.e., the doctor(s) and the office manager, develop a billing business plan. A “top down” commitment of the leaders is crucial for effectiveness. The key components of the plan are staffing, equipment, compliance programming, billing and financial policy and procedures, management information reporting and evaluation tools. The plan should address the responsible staff for each function in the billing process. The three major billing functions are obtaining the patient’s demographic and financial information and the services provided, billing the appropriate insurance or responsible party and collecting the money. This does not involve an investment of money but one of time.

Staffing and equipment needs incrementally increase as the practice grows. Many times at the beginning stages of the practice, the doctor or the office manager will perform many of the billing functions. Assigning the responsible staff for the billing functions will determine if the practice can combine duties with another job role, or whether an identified staff person is required. More mature practices will require multiple types of personnel to perform billing. Minimally, a more mature practice will require one good biller/collector per physician and a dedicated clerical individual who will perform the routine billing functions of pulling charts, copying records and organizing the mailing. The Medical Group Management Association’s resource library contains many good resources related to staffing.

Equipment needs will depend upon the number of staff and the orientation of the practice toward the use of electronics in billing. What are your minimum needs? The practice will need one each of the following: desk unit or work surface including an ergonomically correct chair, file cabinet, a Current Procedural Terminology Manual, International Classification of Disease – 9CM (with CD-ROM that can be loaded on multiple computers or used on a networked computer system), a personal computer with 56K fax modem and a good dot matrix or laser printer.

The compliance plan and the policies and procedures are interrelated. The foremost issue is to establish the team of people to develop the compliance plan and develop procedures; this team should choose the compliance officer. These two components provide the definition and foundation for the operation of the practice and the billing department. To use medical terminology, it becomes preventative.

The billing compliance plan will incorporate such things as office policies and procedures, job descriptions, documentation/coding procedures, staff development (physician and office staff), evaluation measurements, and disciplinary/grievance procedure tools. Initially, I would prioritize four areas: job descriptions including a one-page evaluation tool, a basic disciplinary/grievance procedure, a financial policy and documentation/coding requirements. Each of these areas affects successful billing directly. The initial cost is the time to develop them. A lawyer should review the final draft copy of the compliance plan.

Management information reports and evaluation tools are intimately linked. Effective management reports will provide the basis for evaluation and performance. These reports can be developed on an Excel spreadsheet if your billing system cannot generate them. There are four crucial reports: charges by payor, collections by payor, adjustment processed and an accounts receivable aging. These should be kept on a monthly basis and integrated into a rolling yearly report. Collection and financial ratios can be derived from these four reports as well.

The planning of the billing system is the most intense stage. It lays the foundation for implementation and evaluation as well as monitoring. Implementing the system with a good planning document is simply a matter of following the delineated steps. Evaluation and monitoring of the system should include a weekly review of accounts receivable activity, a monthly review of financial reports indicated above, and an annual meeting to review and revise systems.

Training of personnel cannot be emphasized enough. I am a firm believer in adequate training to provide the tools necessary to insure that the bills are going out correctly and staff understands new policies that affect payment. There are three areas where training is required. The first is in the policies and procedures of the practice so that staff provides the correct practice image to the patients and insurers. The second is in the area of consumer relations or customer service skills; the staff is the first impression to the patient of the practice. The third area involves the technical skills of using the billing system effectively and understanding insurance changes that affect payment and follow up activities.

Here are three no-cost training modalities. Attend free insurance-sponsored seminars; Medicare and Blue Shield sponsor regular training sessions. Invite insurance provider representatives to come to your office and provide training specific to their product; make sure they bring an up-to-date provider manual. Hold monthly internal staff meetings to review insurance newsletters and policy and to provide ongoing customer service training.

To maximize investment of training money, join professional organizations that provide ongoing training at a discount to members and provide regular staff development materials such as the Medical Group Management Association. Look for seminars that provide a volume discount for multiple staff attending and coordinate attendance with your on-call partner practices’ staff. If I had to choose two seminar topics that have the largest financial impact, they would address coding and documentation of physician services and customer service techniques.

The third component, developing relationships, is one of the oldest and most effective business and marketing tools. It exemplifies the adage, “You get more bees with honey than vinegar.” It is crucial to develop effective streams of communication with those entities that control the cash flow into your practice. Identify the key players of all your major insurance carriers. Call them on a regular basis asking for their suggestions to problems. For physicians, encourage contact with insurance medical directors. For office staff, identify a customer service representative or claims supervisor to whom information can be faxed. When inviting a provider representative to your office for staff training, provide them with a brown bag lunch ($10 investment that could generate thousands of dollars in processed claims). Send them a holiday greeting card; invite them to holiday parties. Say, “Thank you” when you have gotten special attention or send a thank you card. All of these networking tactics will make you the shiniest “squeaky wheel” when you have payment problems. Most of them involve a minimal cash investment but can generate thousands of dollars of additional revenue.

The fourth component of an effective billing system is the use of electronics. I would encourage every practice to perform a cost benefit analysis of the electronic versus the manual billing system. The manual system though seemingly to be less expensive will involve a higher staff cost for sending a claim, processing payments and rejections, and generating management reports. Each time the staff creates a handwritten claim, it costs up to four times the amount of staff time than to generate a new bill from an electronic billing system. A manually driven system is labor intensive. The cost of manually submitting a paper claim is between $1.00 to $2.00 per claim; the cost of submitting claims electronically is usually $.50 per claim or less.

There are two approaches to electronic billing: billing an insurance carrier directly through their software such as Medicare’s package or using a computerized billing system with the ability to bill electronically. The biggest advantage to electronic billing is that the speed of claim processing is 50 to 66 percent faster. If you select strategy one, claims can be submitted electronically but all payment posting is manual. With a computerized billing system that can cost as little as $1,000 to $5,000 depending upon their features, you are able to submit electronically and post payments electronically. Management reports are also computerized and can be generated regularly with little effort. The more sophisticated features of electronic billing would include using the Internet for claim submission and staff training, using scanners for remittance advice cataloging and using the computer’s fax to send resubmission of claims. This, however, is not the shoestring approach.

Upon careful review and consideration of the aforementioned points, one would begin to conclude that billing systems do not have to be the “final frontier where no ‘man’ dares to tread.” With careful planning and system considerations, the cost to a medical practice is minimal while the return on the investment maximum. Remember: plan, implement and evaluate the key components of the billing system. Train your office staff. Network and develop relationships. Consider the cost savings of electronic billing. The largest investment in this process is your intellect!

Mary A. Shaub, M.H.S., is president of Shaub Medical Consulting, based in Philadelphia, Pa.

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