Maximizing Collections for Cash Flow

Would you like to increase your cash flow by 40 percent? Would you like to know how? One answer lies in your accounts receivable, according to management mavens Eileen Levis and Joyce Perrone. Your accounts receivable can be a leaky sieve - or a money chest - depending on how savvy and conscientious you are in managing this vital aspect of your business. These keys include tactics that can be incorporated into your accounts receivable management and collection strategy "game plan" to accomplish the goal of a smooth cash flow, bringing in as much as possible of payments due you. How big is the problem of uncollected accounts overall? "Huge," Joyce Perrone says simply. Perrone is a consulting partner for PROMISE Consulting and is practice administrator for De La Torre O&P Inc., Pittsburgh, Pennsylvania. "Sometimes I see practitioners working like maniacs, and they feel they are doing all right because of the money they're making each month, but many are not getting nearly what they should," she asserts. The problem is not confined to O&P practices but is general throughout the whole medical and allied health field, she notes. The six keys to success are interrelated in many ways, but in this article, well consider each separately, starting with: Smart Use of Computer Technology Eileen Levis "I can't emphasize enough using all available technology, which can increase your cash flow at least 40 percent," says Eileen Levis, president and CEO of Orthologix, Philadelphia, Pennsylvania, and president of the Pennsylvania Orthotic & Prosthetic Society (POPS). Submitting claims electronically saves vast amounts of time, Levis points out. She stresses how important it is to get all your ducks in a row before submitting your claim. The Internet is a powerful tool to help submit clean claims that get paid promptly. "Most insurers now have websites that allow you to check eligibility, claims status, and obtain prior authorizations," says Levis. The next best option is to use their automated phone systems, she adds. "Since being in my own practice, I have never seen revenues turn over so quickly!" Levis exclaims enthusiastically. "I attribute much of this to the technology available now." Extremely important is doing everything each individual insurer requires in preparing a claim before submitting it. "Getting all your ducks in a row" before submitting a claim includes setting up everything upfront with the patient before services are rendered. In terms of patient billing, invoices should be "patient-friendly" - easy to understand. Patients need to know beforehand that they will be getting an invoice and what the amount will be, and they need to agree to pay the balance in writing. Patients getting a surprise bill 60 days or so later definitely can cause problems. Also, if a patient has not been notified upfront the amount of the balance and has not agreed in advance in writing to pay the balance due, you have no legal basis for collecting, Levis points out. Using current computer technology has other advantages. For instance, besides getting claims paid at least three times faster, electronic transmission will stop your claim immediately if you have errors, Levis notes. With paper claims, you may not find out for 60 days that your claim was not "clean" and is subsequently denied. Plus: You can go online to a payer's website to check claims status - and you can likely check ten claims in the same time as it would take you on the phone to check one. Large payers can electronically transfer payments directly to your bank account. You dont have to wait for a check and make a deposit. Sometimes additional documentation and letters need to be faxed to the payers. "We use electronic faxing through our computer system; this allows us to store and retrieve faxes which can be extremely beneficial when additional documentation is requested and can ultimately increase the reimbursement time on pended claims," says Levis. A good software system can enable one person to do the work of two, Levis adds. An efficient software system should help you categorize your patients and payers - which in turn enables you to monitor the amount of business you are getting from different sectors, helping you in your marketing and planning efforts. You can spot trends and troubleshoot more easily. For instance, if a certain HMO is generally denying an AFO for certain diagnoses or denying certain L-Codes, you can become aware of that and start addressing the problem. Accounts receivable needs to be tracked frequently, even daily. A good software program is really the only effective way to track A/R - and the program must be able to generate reports that are reliable and easily understood, Levis says. You need to know immediately if problems are occurring with timely payments, especially from a particular payer, so you can target and address the problem before it continues and worsens. Past 120 Days, Collection Rate Plummets Joyce Perrone Joyce Perrone sounds an important warning: when claims or bills go past 120 days, the collection rate is only about four percent. Thats 96 percent of money you should be receiving thats down the tubes. With electronic submission of clean claims, Medicare claims are paid within 18 days, says Levis. No claims should go past 45 days in todays reimbursement world, other than perhaps auto or workers compensation and some public assistance cases that are still under investigation, she says. Thus, unpaid claims should be especially carefully tracked and handled as they draw close to the 30- and 45-day mark. And if you wait too long, you may run out of filing time! Sometimes if you need additional documentation or other information, and you don't submit it in a timely fashion, there is a good possibility you wont be paid if you are past the deadline, Levis warns, adding, "It's very important to pay attention to filing timelines, especially with Medicaid payers." Watch Those Write-Offs! Another area to look at carefully is write-offs. Legally, you need to make a bona fide effort to collect from all patients, and when you do write off uncollected payments, you need to document why you wrote them off, Levis notes. If you are a Medicare provider, you cant charge others less than you charge Medicare patients; otherwise you are in violation of your Medicare agreement. You can't write off Medicare patient co-pays without an attempt to collect; otherwise this can be construed as an illegal incentive to Medicare patients to come to you. However, since with other payers, there may be contractual differences between billed amounts and paid amounts, your staff needs to be aware of what these amounts are. Sometimes it's easy for unmotivated billing staff to write off uncollected A/R too quickly. Write-offs need to be tracked. Of course, at the opposite extreme, anyone who keeps sending out a bill for $5 to a patient each month "is just insane," laughs Perrone, since it's estimated that the cost in employee time, postage, etc., is $15 or more per invoice. Again, a good software program can quickly and efficiently give you the information you need to track write-offs. The most important aspect of successful collections and A/R management is: Giving A/R Importance and Priority Whether your practice is a small "Mom and Pop" or a larger organization, and whether your billing staff is one person or ten or more, successful A/R management starts with you. Understanding your payer population, having a well-trained, motivated staff, and keeping on top of what's happening all tie in with how you regard the importance of accounts receivables management. Know Your Payers As mentioned, your staff needs to understand the nuances of your payers and their processes and how they want claims submitted. Perrone points out that Paretos Principle, or the "80-20 Rule," applies here - you are getting about 80 percent of your money from about 20 percent of your payers, so attention especially needs to be focused on these. Your staff needs to be very familiar with the HCPCS codes and with amounts and payment levels to be expected from different payers. They need to know each payer's process for appeals. Some insurers have online training available; some will actually bring it in-house to your practice, and some have periodic training sessions that your staff can attend, Levis points out. Medicare has continual educational offerings both online through "MedLearn Matters" and at alternate sites, she adds. A/R Needs Dedicated Time Accounts receivable needs dedicated attention. All too often, an office staffer may be doing everything from answering phones to updating patient information, and simply works the A/R when she can find a moment. "For the best cash flow, you need someone who focuses on just your A/R, even if it's only three-four hours a day," says Levis. "And with so many changes going on with payers, that person probably could take a day a week just to update educationally, depending on the variety you have in your payers." The increased revenue and cash flow more than justifies the cost of having a dedicated person, whether full- or part-time, she says. In larger practices, different individuals can specialize in the various payer and patient categories. "For instance, you could have someone who focuses on just the Blues, someone else who specializes in workers comp, etc.," Levis says. In hiring, Levis strongly urges finding someone who has previous O&P or at least medical billing experience. Skills can be transferred from one medical-related specialty to another, but the intricacies of medical billing are often too complex for someone totally outside the field, she explains. For Perrone, keeping on top of things includes a monthly A/R meeting. In a nonjudgmental atmosphere, the billing staff members talk about what is happening in their particular areas. Numbers are reported and compared with previous months. Treating Your Staff Well Of vital importance is that your billing staff is decently paid, well-treated, and appreciated. After all, if someone is being paid minimum wage, berated frequently for not producing more, and treated rudely, what is the incentive to go the extra mile to bring in the money? Some environments can be so hostile that the general tone is simply to shut up, crank out the work, and leave as soon as you can get a better job, Perrone notes. Not exactly the atmosphere you want for your staff! A common thread Perrone often sees in her consulting work with struggling companies is underpaid and underappreciated billing staff, or situations where the office staff has so many other responsibilities that they can't really give A/R the focus it needs. "A company may pay top dollar for a fabulous prosthetist or orthotist, but pay the billing staff the cheapest possible," Perrone says. She remembers an orthopedic practice that paid big money to hire a great orthopedist, but the administrative end was understaffed; personnel were paid low wages and treated rudely by the physicians. "And they had $2 million in uncollected claims that were more than 120 days old!" Another told her that his billing staff turned over about once a year, because "they keep wanting more money." "Don't we all," Perrone laughs, noting that this practitioner would have saved money in the long run by training and treating his staff well and giving them periodic raises instead of hiring new people frequently, with the accompanying costs, training needs, and overall hassle. Levis adds, "Managing any successful business requires people skills and some level of management training. ALL staff members from practitioner to technician to support staff should be motivated, awarded for their accomplishments, compensated fairly, and feel they are an important part of the team." Listen to their input; they are at the front line. Practicing good human relations by paying and training your staff well and showing appreciation for what they do isn't only right thing to do, its the smart thing to do - and will show up in your bottom line, says Perrone. Keeping on Top of Things Sometimes the A/R can appear clean and in good shape at first glance, but appearances can be deceiving. Again, too many claims may be getting written off and getting written off too quickly, without a serious effort to collect. Perrone remembers one practitioner that actually was only collecting about 50 cents on the dollar, although he thought he was doing fine. A practice's A/R can be like a tree that looks healthy on the outside but is actually rotting from within, Perrone noted. A cash flow crunch can be a calamity just waiting to happen. Other hidden problems can involve billings that are simply sent out over and over again when unpaid, rather than anyone trying to figure out what the problem is and to solve it. "There can be a real problem with a payer that isnt being recognized and addressed," says Perrone, citing a situation in which one staffer kept sending out the same bills to Medicare. The problem wasn't seen right away, since there was enough cash flowing in and fat in the system. When it finally came to light, resolving the problem took a considerable amount of work and time. The situation could have been fixed much faster and easier if the staffer had brought it to the managers attention sooner or if the staff had been having regular A/R meetings. Even with careful, conscientious work, a motivated staff, and clean claims submission, realistically problems will still arise in this imperfect world. What should you do? Levis and Perrone provide troubleshooting tips in a related article, and PrimeCare Executive Director Cathie Griffith discusses how a network can help its members. However, putting the principles discussed in this article to work will go a long way in helping your cash flow become a torrent instead of a trickle.

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