Let’s face it: The healthcare reimbursement system is brutal.
Insurance companies and other payers have developed an increasingly complex and often confusing set of rules and processes that lead to more denials, underpayments, and lost or ignored claims.
It’s becoming harder for doctors to get paid for the work they perform. In fact, most medical practices aren’t currently collecting everything they’ve earned.
Medical Billing by the Numbers (from the Centers for Medicare and Medicaid Services)
• 70% of claims are paid the first time they’re submitted
• 30% of claims are either denied (20%) or lost or ignored (10%)
• 60% of denied, lost or ignored claims will never be resubmitted
• 18% of claims will never be collected
Research from the Medical Group Management Association (MGMA) estimates that payers underpay practices in the U.S. by an average of 7% – 11%.
Add a 7% underpayment to the 18% of claims that aren’t paid at all, and medical practices are failing to collect, on average, at least 25% of the money they’ve earned by treating patients.
That’s a total of $125 billion left on the table every year by American medical practices.
How can your practice reclaim those missing funds?
Do It Right the First Time
When a claim isn’t paid the first time it’s submitted, the likelihood the practice will ever receive money for that work drops significantly. One of the best ways for practices to improve billing efficiency is to catch potential denials before the claims are submitted.
Software can help practices accomplish that with a robust rules engine that can automatically identify claims that are likely to be denied.
The top software solutions use an intelligent engine that constantly updates and adapts its rules so practices can stay on top of the latest claim denial trends and continually improve their collection rates.
Billing software with a proactive rules engine will:
• Increase the first pass resolution rate
• Improve speed of collections
• Decrease work for in-house staff
Get Paid in Full
Another problem keeping medical practices from collecting the full amount of money they’ve earned is payer underpayments. Practices are reimbursed different amounts for the same procedure due to the individual contracts the doctor has with each payer. It’s almost impossible to manually keep track of every payer contract, so it’s impossible to know when the practice is being underpaid.
Many practices are turning to software that can automatically compare the actual payments the practice received with the payments specified in each payer contract and send an alert when those numbers don’t match.
An effective contracts application helps your practice:
• Raise net collection rates
• Increase efficiency and organization
• Forecast future collections
The Power of Reporting
To make the best decisions it’s important for a medical practice to be able to mine data for billing and collection trends to figure out where the practice can improve.
The simplest way to do that is with an intuitive software system that allows practices to schedule reports to be created at certain intervals for on-going analysis, as well as generate custom reports on the fly when specific information is needed quickly.
Analytics can optimize your practice by:
• Creating easily understood reports for better decision making
• Reducing staff requirements and increasing productivity
• Catching mistakes and underpayments
The increasing complexity of revenue cycle management for medical practices is making it more important than ever to get a handle on the process and efficiently collect more of the money your practice is owed.
Installing your first practice management system or upgrading to a modern system with the features described above is a major step toward improving your practice’s accounts receivable operations.
What tips do you have for the tricky task of medical billing? Post below and let us know.