Practice Management Improvement Strategies

Boost your bottom line by collecting for services already being performed

Whether you’re an employed physician or in private practice, no doubt you’ve pondered ways to boost payments for your services. After all, your compensation is either directly or indirectly tied to collections. Reimbursement from payers isn’t increasing, you’re likely at maximum productivity and expenses aren’t declining. So how does one boost their bottom line? The strategy is simple. Collect for the services you are already performing.

Cheyenne Brinson, MBA, CPA
Cheyenne Brinson

With today’s higher copays where specialist copays can be upward of $70 and deductibles are higher, unpaid patient accounts receivable (A/R) amounts are soaring. To assess the opportunity in your practice, review the A/R report, split by patient and insurance responsibility amounts. How much is the patient portion? View patient A/R as “real money” because the claim has adjudicated and the amount remaining is what the insurance company has determined is patient responsibility. In contrast, insurance A/R is at the gross amount because no contractual adjustment has been made. Also, add the amounts written off to bad debt and the collection agency to the amount of patient A/R to obtain a full picture of the extent of your practice’s additional income opportunity.

At a granular level, the total payment amount received for a surgical procedure is a combination of insurance payment and patient payment. When the entire amount of a $1,200 elective surgery goes to the patient’s deductible and the patient never pays that bill, it means you were paid $0 for a $1,200 case. When a patient doesn’t pay a $60 copay for a $100 office visit, assuming insurance paid its portion, it means you were paid $40 for a $100 service.

Office services are a growing percentage of orthopedic revenue. Excluding ancillary services, office-derived revenue can be 50% to 75% of an orthopedic surgeon’s total revenue. This shift in revenue is relatively new and highlights the need for collecting from patients the amounts for which they are responsible.

There are two approaches for reducing patient A/R: collecting surgical deposits and collecting payments at the time of service for office visits.

Deposits for elective surgery

Once the decision for surgery is made, patients meet with a surgical coordinator who verifies the patient’s benefits, including the remaining deductible and remaining out-of-pocket expense. This information is provided in real-time in most modern practice management systems for all major payers and most smaller payers, too. Few payers today require a phone call to verify benefits. Furthermore, most major payers offer a cost estimator through Availity or NaviNet (check with each payer for specifics). UnitedHealthcare offers its own claims estimator. For payers that do not offer a claims estimator, staff can be provided a chart of payer allowables to use to calculate the estimate. Other vendors offer claims estimators based on average payments the practice has received. Although the intent is this is just an estimate, the reality is an unhappy patient who receives additional bills for the difference between the estimate and actual amounts charged. Also, collecting an estimated amount based on an average does not reduce the amount of work for the billing office because the department must still process patient statements and field questions from patients. It is the experience of this author to provide the most accurate estimate as possible to patients to fully reap the benefits of surgical estimates.

How much of the deposit should be collected? Many orthopedic practices attempt to collect 100% of patient responsibility from patients. Others seek to collect 50%. The amount to collect is strictly based on a practice’s preference and how successful it is collecting the remaining balance.

Although this article focuses on the financial benefits of collecting a surgical deposit, it is important to note that giving patients an estimate of their financial obligation prior to surgery is a way to provide good customer service. Anyone who has worked in health care long enough has encountered a patient who said, “But no one told me it was going to cost so much.” Providing the estimate is the first step in price transparency.

Establishing financial arrangements prior to scheduling surgery is the foundation for successful implementation. Often patients cancel surgery at the last minute because they are unable to pay their portion. Collecting in advance of scheduling reduces the number of cancellations. Consider the amount of time and effort it takes to schedule a surgery — the case must be precertified with the insurance company and then onboarded with the hospital or surgery center. Add to that the time to coordinate medical device representatives. If you haven’t done so, calculate the cost in man-hours to schedule a surgery. You may be surprised.

Collect at the time of service

The critical step of collecting at the time of service is to inform patients of their probable charges when they schedule their appointment. A sample script is, “Based on the reason you’re coming in, it’s likely Dr. Bone will obtain X-rays of your knee. These X-rays are not covered under your copay. Based on the information I obtained from your insurance company and our contracted rates with them, we estimate you will owe approximately $XXX.”

Scheduling staff are provided guidelines that map reasons for a visit to probable services. They calculate patient responsibility based on the eligibility information they obtain from the practice management system. At first pass, this sounds like a complicated and time-consuming practice, but staff experienced with this practice will note it only takes them a few moments to generate the estimate.

When patients check-in, copays and past due balances are collected. When patients check-out, amounts for services not covered by their copay, but rather applied to their deductible or co-insurance, are collected. However, for staff to collect from patients, they need access to CPT codes for the services performed, including durable medical equipment, whether the codes are available through electronic health record pass-through or are indicated on a paper superbill/encounter form. The key is staff are provided the codes so they may collect.

How to get started

The first step is to obtain payer fee schedules and provide a mechanism for staff to access those fees in their calculation. Next, create an instruction manual that includes scripts and step-by-step instructions on how to read/interpret remaining deductible, co-insurance, and out-of-pocket benefit information inside the practice management system and determine which payers require accessing an outside resource. Reading and interpreting patient benefit information is the most challenging part of learning to collect amounts for which patients are responsible. Finally, provide staff training. To be successful, staff must have thorough training that includes practice. Create a training schedule that allows ample time for practice and for staff to become comfortable level with procedures they have been tasked to perform.

How to measure success

A few metrics can be monitored to determine if your time of service collections program is effective, including the following:

  • decrease in patient A/R;
  • increase in patient payments;
  • decrease in number of patient statements sent; and
  • decrease in number of patients and amounts sent to collections.

Disclosure: Brinson reports she is a consultant with KarenZupko & Associates Inc., which develops and delivers CPT coding and practice management workshops presented by the American Academy of Orthopaedic Surgeons in conjunction with KarenZupko & Associates Inc.

Whether you’re an employed physician or in private practice, no doubt you’ve pondered ways to boost payments for your services. After all, your compensation is either directly or indirectly tied to collections. Reimbursement from payers isn’t increasing, you’re likely at maximum productivity and expenses aren’t declining. So how does one boost their bottom line? The strategy is simple. Collect for the services you are already performing.

Cheyenne Brinson, MBA, CPA
Cheyenne Brinson

With today’s higher copays where specialist copays can be upward of $70 and deductibles are higher, unpaid patient accounts receivable (A/R) amounts are soaring. To assess the opportunity in your practice, review the A/R report, split by patient and insurance responsibility amounts. How much is the patient portion? View patient A/R as “real money” because the claim has adjudicated and the amount remaining is what the insurance company has determined is patient responsibility. In contrast, insurance A/R is at the gross amount because no contractual adjustment has been made. Also, add the amounts written off to bad debt and the collection agency to the amount of patient A/R to obtain a full picture of the extent of your practice’s additional income opportunity.

At a granular level, the total payment amount received for a surgical procedure is a combination of insurance payment and patient payment. When the entire amount of a $1,200 elective surgery goes to the patient’s deductible and the patient never pays that bill, it means you were paid $0 for a $1,200 case. When a patient doesn’t pay a $60 copay for a $100 office visit, assuming insurance paid its portion, it means you were paid $40 for a $100 service.

Office services are a growing percentage of orthopedic revenue. Excluding ancillary services, office-derived revenue can be 50% to 75% of an orthopedic surgeon’s total revenue. This shift in revenue is relatively new and highlights the need for collecting from patients the amounts for which they are responsible.

There are two approaches for reducing patient A/R: collecting surgical deposits and collecting payments at the time of service for office visits.

Deposits for elective surgery

Once the decision for surgery is made, patients meet with a surgical coordinator who verifies the patient’s benefits, including the remaining deductible and remaining out-of-pocket expense. This information is provided in real-time in most modern practice management systems for all major payers and most smaller payers, too. Few payers today require a phone call to verify benefits. Furthermore, most major payers offer a cost estimator through Availity or NaviNet (check with each payer for specifics). UnitedHealthcare offers its own claims estimator. For payers that do not offer a claims estimator, staff can be provided a chart of payer allowables to use to calculate the estimate. Other vendors offer claims estimators based on average payments the practice has received. Although the intent is this is just an estimate, the reality is an unhappy patient who receives additional bills for the difference between the estimate and actual amounts charged. Also, collecting an estimated amount based on an average does not reduce the amount of work for the billing office because the department must still process patient statements and field questions from patients. It is the experience of this author to provide the most accurate estimate as possible to patients to fully reap the benefits of surgical estimates.

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How much of the deposit should be collected? Many orthopedic practices attempt to collect 100% of patient responsibility from patients. Others seek to collect 50%. The amount to collect is strictly based on a practice’s preference and how successful it is collecting the remaining balance.

Although this article focuses on the financial benefits of collecting a surgical deposit, it is important to note that giving patients an estimate of their financial obligation prior to surgery is a way to provide good customer service. Anyone who has worked in health care long enough has encountered a patient who said, “But no one told me it was going to cost so much.” Providing the estimate is the first step in price transparency.

Establishing financial arrangements prior to scheduling surgery is the foundation for successful implementation. Often patients cancel surgery at the last minute because they are unable to pay their portion. Collecting in advance of scheduling reduces the number of cancellations. Consider the amount of time and effort it takes to schedule a surgery — the case must be precertified with the insurance company and then onboarded with the hospital or surgery center. Add to that the time to coordinate medical device representatives. If you haven’t done so, calculate the cost in man-hours to schedule a surgery. You may be surprised.

Collect at the time of service

The critical step of collecting at the time of service is to inform patients of their probable charges when they schedule their appointment. A sample script is, “Based on the reason you’re coming in, it’s likely Dr. Bone will obtain X-rays of your knee. These X-rays are not covered under your copay. Based on the information I obtained from your insurance company and our contracted rates with them, we estimate you will owe approximately $XXX.”

Scheduling staff are provided guidelines that map reasons for a visit to probable services. They calculate patient responsibility based on the eligibility information they obtain from the practice management system. At first pass, this sounds like a complicated and time-consuming practice, but staff experienced with this practice will note it only takes them a few moments to generate the estimate.

When patients check-in, copays and past due balances are collected. When patients check-out, amounts for services not covered by their copay, but rather applied to their deductible or co-insurance, are collected. However, for staff to collect from patients, they need access to CPT codes for the services performed, including durable medical equipment, whether the codes are available through electronic health record pass-through or are indicated on a paper superbill/encounter form. The key is staff are provided the codes so they may collect.

PAGE BREAK

How to get started

The first step is to obtain payer fee schedules and provide a mechanism for staff to access those fees in their calculation. Next, create an instruction manual that includes scripts and step-by-step instructions on how to read/interpret remaining deductible, co-insurance, and out-of-pocket benefit information inside the practice management system and determine which payers require accessing an outside resource. Reading and interpreting patient benefit information is the most challenging part of learning to collect amounts for which patients are responsible. Finally, provide staff training. To be successful, staff must have thorough training that includes practice. Create a training schedule that allows ample time for practice and for staff to become comfortable level with procedures they have been tasked to perform.

How to measure success

A few metrics can be monitored to determine if your time of service collections program is effective, including the following:

  • decrease in patient A/R;
  • increase in patient payments;
  • decrease in number of patient statements sent; and
  • decrease in number of patients and amounts sent to collections.

Disclosure: Brinson reports she is a consultant with KarenZupko & Associates Inc., which develops and delivers CPT coding and practice management workshops presented by the American Academy of Orthopaedic Surgeons in conjunction with KarenZupko & Associates Inc.

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