Knowing the real reason is key to solving the problem
Orthopaedic surgeons frequently ask, “Why are my receipts down?” It’s an issue in both small and large practices, regardless of location, and applies on a monthly and/or quarterly basis.
All too often, the response is overarching, oversimplified, and doesn’t really get at the root of the problem. For example, the following are typical answers:
- The insurance companies are simply not paying or are delaying payment.
- The billing company or the billing staff messed up.
- I can’t reach patients and get them to pay.
- Payers have reduced professional fee payments again.
Although these answers may, in part, be true, they are just high-level, off-the-cuff responses. A thorough review of revenue cycle systems and processes might show that these indicators are actually symptoms of much deeper
Shrinking receipts may be a clue to deeper problems within a practice—from credentialing issues to collection practices to improper coding.
A true diagnosis
The revenue cycle of an orthopaedic practice is complex, with many touch points that have a direct effect on its efficiency and effectiveness. Practically everything that occurs in a practice each day has an impact on the practice’s ability to maintain a profitable revenue cycle. Identifying the instances that hamper prompt payments is key to remedying the situation.
An in-depth analysis of every stage of a practice’s revenue cycle will enable a physician to identify the real problems affecting receipts. For example, if “the insurance companies are just not paying,” the physician needs to know why they are not paying. Is it due to improper coding, timeliness of submission, credentialing errors, or something as simple as a typographical error?
Similarly, if the response is “Professional fees have been reduced again,” the physician needs to know whether that truly is the case or whether another factor applies, such as a negative shift in the payer mix or a systems upgrade at the insurance company that resulted in the loading of the wrong fee schedule.
The following are some of the issues identified in orthopaedic practices as the actual causes of a decline in reimbursements.
The accuracy and efficiency of a practice’s credentialing process is vital to cash flow. Not only must all providers be enrolled and approved, but their status with the appropriate insurers and corresponding hospitals must be maintained. Errors and delayed credentialing for a provider or facility can result in payment delays.
The amount of follow-up and the submission of materials and provider information can sometimes be daunting, but if they are neglected, a serious bottleneck in reimbursements can result.
Practices should verify a patient’s eligibility for services prior to the actual appointment. Otherwise, the practice runs the risk of providing services for free.
Technology to verify coverage for patients’ procedures should integrate with the practice management system for work-flow efficiencies. As soon as the patient is scheduled for a procedure, the insurance verification process should begin.
Pre-authorization or precertification is another issue. Payers are requiring pre-authorization for more procedures and services, especially for physical therapy and advanced imaging. In addition, many no longer allow retroactive authorization.
Time of service collection
Orthopaedic practices should be collecting 6 percent to 7 percent of receipts at the time of service. Often, physicians and their staff have a hard time asking for deductible or coinsurance payment upfront. Although showing compassion to patients is understandable, collecting these fees upfront is vital to the future of the practice. Failure to do so quadruples the cost to collect the same amount later and severely reduces the likelihood of collecting it at all.
A negative shift in payer mix
An issue that is often not identified and therefore not managed is a negative shift in a physician’s payer mix. This is defined as an increase in the percentage of poor payers (such as Medicaid or HMOs) compared to traditionally good payers (such as commercial insurance and workers’ compensation). When this happens, even proper payments from payers may result in a lowering of the timeliness and level of reimbursement compared to previous years or quarters.
A proactive measurement of the practice’s payer mix can provide the vital information needed to manage this critical aspect of the revenue cycle. Physicians can identify which payers they no longer want to accept and where they may want to spend time marketing to increase patients covered by better payers.
The scrutiny placed on proper coding in orthopaedics today has never been higher. With the implementation of ICD-10 (scheduled for October 2014), orthopaedic practices will be faced with almost 141,000 new codes—more than 60 percent of which are dedicated to the musculoskeletal system.
Improper coding is both an issue of lost revenue and a liability issue. In the view of the Centers for Medicare and Medicaid Services, undercoding is just as bad as overcoding.
The best way to maximize reimbursements and maintain compliance is to use a Certified Professional Coder (CPC) to manage the practice’s coding. Naturally, the CPC should have extensive experience in orthopaedics and obtain specialized certification such as the Certified Orthopaedic Surgical Coder designation.
Timeliness of submission
A hectic case schedule may mean that physicians put off submitting surgical cases for billing—sometimes for 15, 30, or even 45 days. Late submissions cause delays in payments and, even worse, may result in denials because the surgical case was not submitted within the payer’s established time frame. By setting up a reconciliation process, practices and physicians can ensure that all office visits and surgical cases are submitted properly and on time.
Dealing with denials
The number one reason for a controllable denial is inaccurate and/or incomplete insurance information. The practice must create and implement front-end processes for improved results. It’s better to do extra work on the front end to avoid sending improper information to payers than it is to lose money on denials.
By understanding that declining reimbursements and increased denial rates are now the norm, practices can identify and focus on why denials are happening and institute monitoring and management processes. A concentrated effort can save a practice a significant amount of time and money.
Physicians may be underpaid by an insurer without realizing it. Every payment must be tracked to ensure that the practice is not being paid below the contracted rate. Even very successful practices have been shown to have underpayments amounting to more than six figures. For this reason, practices should establish a process to monitor each payment and compare it to the contracted fee schedule.
Prescription for an improved revenue cycle
The road to recovery and increased reimbursements begins with an in-depth review of how the practice’s revenue cycle is managed. It is the only way to identify the underlying factors contributing to declining receipts. Once a practice has reviewed the indicators outlined in this article, it will identify and be able to treat the true problem, not just the symptoms.
Andy Salmen is director of business development with Healthcare Information Services. He can be reached at firstname.lastname@example.org
- Identifying the real reason for a decrease in revenue is key to solving the problem.
- Issues that should be addressed include credentialing, insurance verification/precertification, collections, coding, and payer mix.
- Understanding the reasons for denials and comparing payments to the fee schedule can help resolve issues with payers.
February 2013 Issue
Search AAOS Now
- AAOS Now
- Current Issue
- AAOS Now ePub Edition
- Editorial Information
- Writers' Guidelines
(To view in Chrome download Google add-in for RSS feeds)
- Twitter Feed
- News in 10
- The Annual Meeting Daily Edition of the AAOS NOW
S. Terry Canale, MD
E-mail the Editor
Volume 8, Number 12
- Cover Story
- Clinical News & Views
- Research & Quality
- Managing Your Practice
- Your AAOS