Medical Practices Facing Woeful Collection Rates

Feb 13, 2017 at 04:31 pm by Staff

Based on an average physician practice submitting 83 claims daily, industry collection statistics are sobering: multispecialty practices collect only slightly more than half of accounts receivable within 30 days. Up to two-thirds of physician practice revenue is lost because of billing leakage.

More to the point, a full 30 percent of claims are denied (or ignored) on first submission. Of those claims, 60 percent were never resubmitted, per the Center for Medicare & Medicaid Services (CMS).

It doesn't help to learn that 42 percent of claims are coded incorrectly, per a recent U.S. Department of Health & Human Services (DHHS) study.

"It's estimated that doctors in the U.S. leave approximately $125 billion on the table each year due to poor billing practices," said Leidy Arguelles, CPC, CPMA, revenue cycle operations manager at Florida-based Bravado Health, pointing out that practices should have a target of 5 percent of claims with coding errors, and that practices should collect 90 percent of their accounts receivable within the first 30 days.

Up to 80 percent of medical bills contain errors because of strict insurance medical billing and coding practices and regulatory changes, Arguelles pointed out.

"The rules are constantly changing, requiring physicians and administrators to spend time and money on continuing education, software, or staff training to stay current, having a direct effect on the cash flow and profits of a practice," she said, pointing to the implementation and balance of three pillars of medical billing - back office, front office and technology - to headline a well-defined revenue cycle strategy.

Back Office

Don't settle for writing off or waiting on owed money, urged Arguelles.

"Work with someone who knows your contracts, payer rules, patient responsibilities and timeframes inside and out," she explained. "They should run an extremely tight ship and be up-to-date on all changes each year with your specialty, down to your local coverage determination (LCDs). These critical areas should be communicated and marked immediately for any correction, so that a billing team is sending clean claims the first time - and quickly."

Known as the first-pass resolution rate, it should be in the upper 90th percentile, lower than 100 percent only because rules change constantly and rogue denials exist, noted Arguelles.

"You just need a team who catches it immediately and provides correction immediately where needed," she explained. "Additionally, having the notifications with proper timeframes in place to know when something needs to be corrected, is also crucial to timely, accurate payments, which also means cash flow. So, if a payment doesn't come back in the predetermined, understood timeframe, or it doesn't come back paid to the full contracted rate, then collections and appeals should be automatic, immediate and efficient in terms of action, which ultimately affect the success."

Front Office

From front desk to physician to patient and insurance collection, a practice's RCM partner should be able to help adjust these areas to maximize collections owed, based on contracts with payers, said Arguelles.

"For example, many denials and rejections reflect poor front desk training, process and incentives," she said. "In fact, it's often the lowest paid employee who is the most crucial piece to ensuring proper collections, both by the payer and the patient. They also account for the biggest deficit in the practice collections overall. Having a billing team that can quickly find these issues - narrowing in on the root cause and quickly making corrections through good training and buy in with the practice - is crucial to optimal success as well."


A successful practice must be electronic, emphasized Arguelles.

"While some may want to debate the clinical charting side of things, the billing portion must be automated as much as possible for efficiency, timeliness and tracking," she said. "At the same time, it's not easy to use technology to its fullest, even if you've bought or subscribed and trained on a top system. So, you should have a partner who understands how to help optimize the use of the investment you've made, and do this over time, as they find areas that will yield proper return on investment (ROI), even if it's just the investment of time."

For example, even though an electronic system may already have templates, setting those up with fewer keystrokes can be liberating and more profitable when done correctly, said Arguelles.

"And if they're really good, they can also help you understand where features, interfaces and other technology can be implemented to increase efficiency, volume and revenue," she said. "Finally, it's always a big bonus if they have experience with multiple systems and software, so they can truly convey objective and effective best practices."

When all three areas are covered, a strong RCM partner should be able to assess billing practices, find accounts receivable leaks, and implement a plan that secures 100 percent of money owed.

"As in any investigation, a more thorough assessment is likely to provide more enlightenment," said Arguelles. "A good evaluation should include information such as your denial report and clearinghouse rejection report, which can shed light on error trends and enable process improvement. Reviewing your accounts receivable by aging report and most frequently used CPT codes helps identify bottlenecks in the billing process and which services you're collecting the most on. These are some of the items you should have prepared when doing a review of your practice's revenue cycle."

When a billing partner operates quickly and efficiently through experience, process knowledge and technical know-how, a practice should expect vast improvement, said Arguelles.

"For example, a 30 percent denials will go down below 5 percent ... 60 percent of non-resubmissions go to 100 percent resubmitted and paid to full contracted rate," she said. "More importantly, you should see your practice in a whole new light, where physician owners experience less stress, have a growth strategy securely in place, and enjoy better quality of life."

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