The following article is written by Kevin Weinstein, vice president of marketing for ZirMed.
If you think you're working harder than what your balance sheet shows, you're probably right. The average orthopedic practice earns tens of thousands of dollars more every year than it actually makes. So what happens to all that lost income?
The key is to capture the money that's been earned, but not realized. For example, each year multi-specialty medical practices lose an average of more than $51,000 of earned income per physician due to inadequate patient payment and collection practices. Statistics show that an additional $85,000 is lost every year, on average, due to the cumulative effect of claims denials, zero-pays and underpayments.
Correcting such situations is never quick. But neither is it impossible. Here are five practical strategies for dramatically improving your realized revenue — and your profits:
1. Eligibility verification. Constant changes in employer plans, coverage, deductibles and patient co-pays can test the mettle of even the most experienced front desk staff. Insurance cards, for example, identify co-pay obligations — but patients often don't carry the most current insurance card, or know when their insurer's terms have changed.
Federal insurance reforms have made it easier for individuals to obtain and transfer insurance, increasing the likelihood that your practice's coverage information is outdated. And with the increase in high-deductible policies, patients are often responsible for a much greater percentage of total fees than in the past.
Accurate verification of coverage and patient obligation, before services are rendered, is the first step in improving realized revenue. Automated solutions can help. Not only do they reduce claims errors, but they also can save 75 percent of the labor costs incurred through manual verification. Most important, they ensure that your clinic knows the full amount of co-pays and deductibles before services are rendered.
2. Payment flexibility. "Paper or plastic?" is no longer a question reserved for the grocery checkout line. The world is increasingly moving away from cash and checks and toward credit cards, debit cards and even e-payments. According to the American Bankers Association, 49 percent of people currently pay bills by check, compared to 72 percent in 2001.
Patients are increasingly regarding their healthcare providers as just another "retailer". They expect to be offered payment options — and if they don't find it, they have one more reason to change providers. Yet offering payment alternatives need not raise your operating costs. In fact, by making it easier to pay at the point of service, you lessen the need for paper bills and collection notices.
Patient payment platforms can help your office increase the collection of co-payments, co-insurance and deductibles at the time of service. Certain platforms even enable you to schedule automatic payments from the patient's credit card or checking account.
With more than two-thirds of all Internet-connected households now paying bills online, it makes sense to offer electronic statements with easy online payment options. E-payments, whether by credit card, bank transfer or other means, can be automatically posted to your practice management system, saving staff time and effort.
3. Claims management. Perhaps the fastest way to reduce accounts receivable days and improve cash flow is to ensure that claims are submitted quickly and without errors. No one wants to wait a month or more to find out that a claim was rejected due to a simple transposition or misspelling.
Claims management systems can often pay for themselves in this regard, flagging clerical mistakes before submission and enabling your staff to research, edit and resubmit claims when necessary. What's more, such solutions continually track claims status, ensuring that individual claims have been sent, received and are in process with the payor.
4. Electronic remittance advice solutions. It's not enough these days to simply pursue zero-paid and underpaid claims. To really improve efficiency, it's important to gain an understanding of why claims are rejected.
Managing denials effectively is a process of both analysis and prevention. For instance, if it's found that claims are repeatedly being denied because services were rendered after a patient's coverage was terminated, there may be a weakness at the front desk. A claims analysis can identify the problematic workflow points or suggest procedural changes that can solve the problem.
ERA analysis can also help make billing staff more efficient. By discovering the idiosyncrasies of a particular payor, staffers can remedy recurring issues and improve the chances for positive outcomes.
5. Patient collections. According to revenue figures from a recent Medical Group Management Association survey, 20 percent of office revenues come from patient co-pays — yet most practices only collect 60 percent of those fees. That means the average practice is leaving 8 percent of its total annual revenue on the table.
To ensure co-payments at the time of service, ask for payment as the patient arrives — not after service. Also, estimate the patient's responsibility beforehand, and get up-front authorization to charge his or her credit card within a range of that estimate. Other steps you can take include sending out statements more frequently than once per month, offering online payment, and making multiple payment options the norm.
Many practices write off outstanding patient balances of $25 or less. All this does is encourage non-payment, especially among patients who have $10 co-pays. Thanks to automated collection software, the cost of pursuing past-due collections has dropped to under $5, making it possible to clear up these low balances and increase your monthly income.
For patients who are temporarily uninsured, underinsured or have high deductibles, instruct your staff to work out a suitable payment plan. Make sure they are discreet; your patients will appreciate your sensitivity.
For orthopedists and other specialists, implementing systems and practices to improve profitability may seem like a move to operate as a business more than a medical practice. Keep in mind, however, that by making your policies patient-friendly on both the clinical and business sides, you can avoid risk, collect a greater share of the payments owed you and ultimately, improve your viability as a valued healthcare provider.
Kevin Weinstein is vice president of marketing for ZirMed, a Louisville-based technology company providing revenue cycle management solutions to healthcare providers. Mr. Weinstein can be reached at kevin.weinstein@zirmed.com.