Conduct a 'Bottom-to-Top' Assessment of Your Billing Operations

It may be the Year of the Rabbit in the traditional Chinese calendar, but Rhode Island-based coding consultant Nancy Enos advises medical practices to think of 2011 as the "year of the audit." To stay safe and weed out the billing and collections problems stifling your practice's revenue stream, Enos recommends a "bottom-to-top" assessment of your entire billing operation. She says payer denials and under-performing accounts receivables can provide clues to cleaning up your entire revenue cycle and producing clean claims every time.

A billing operations assessment should include routine internal audits to spot coding and documentation errors so you can fix them promptly. We talked to experts in coding and billing to see where to get the process started - all recommended the bottom-to-top assessment approach. In other words, start with the outcomes and work backwards through the billing process to find the problems. The good news is that everything you do to keep physicians and other billing providers on the straight and narrow coding-wise will also aid your practice's entire billing operation - and, possibly, capture more of the revenue your physicians deserve.

First, about the audit landscape of 2011:

• The Recovery Audit Contractors (RACs) for the Medicare program continue nationwide;
• The Patient Protection and Affordable Care Act introduces the Medicaid Integrity Contractor (MIC) in all 50 states; and
• The Department of Health and Human Services, Office of the Inspector General's 2011 work plan sets its sights on Medicare physician E&M coding and medical necessity. The OIG will have a keen eye out for "EHR documentation practices associated with potentially improper payments." In particular, they're looking for medical records with identical documentation across different services and different patients - a pitfall of leaning too heavily on an EHR to help generate patient notes.

In the face of all this, Enos recommends a full-scale billing assessment.

Do audits

Start your billing assessment with auditing - not just an audit but a program of routine annual or biannual audits of all providers who bill for services. Enos recommends auditing 10 to 20 charts per physician at least once a year - more often, if there are concerns about coding patterns, a history of sloppy documentation, or if it is a new physician.

"It's all about the documentation," Enos says. "With auditors from the government going around knocking on doors, documentation for medical necessity is more important than ever."

Audits and comparisons to coding frequency benchmarks, such as Medicare provides, can spot physicians who may be undercoding or overcoding, as well as those who don't document well.

"I just finished auditing a bunch of charts from a neurologist and they were the shortest notes I've ever seen," Enos says. "I think I write more on my grocery list."

The neurologist was coding at an extremely low level to play it safe, but that means he was leaving money on the table so to speak. In a proper note, the patient problem is reflected in the documentation and justifies the diagnosis and the level of code that is billed for the service, she says.

But beware. "Auditing is not an exact science and you certainly could give the provider erroneous feedback if you are not good at auditing and don't have some training," Enos says.

After an audit Enos does four things:

• Explain audit results to each provider - the one-on-one sessions can be in person or via Web linkup;
• Present each provider with a graphic summarizing major audit results, especially deviations from benchmarked coding patterns;
• Share with the provider patient records marked up to show concerns, such as where documentation of medical necessity was insufficient; and
• Provide specialty-specific educational tools, such as at-a-glance summaries of what to document for each level of history, exam, and medical decision making.

Melody Irvine, a Denver, Colo., coding consultant, says working with physicians is a critical success factor in resolving coding related problems.

"Whoever is doing the audit for the practice has to come at it as the doctor's friend and adviser," she says. "I start out by saying, 'I'm on your side. I'm here to help. You guys are doing a great job but ...' and then we work through the audit results together."
 

Examine performance indicators

Provider documentation isn't the only area where practice billing goes wrong. Next, your billing operations assessment should examine key indicators of practice performance. Kevin Townsend, a billing management consultant with Doctors Management in Knoxville, Tenn., says he starts by looking at accounts receivables (A/R) and payer mix.

"The industry benchmarks will vary by specialty but looking at average days in A/R and aging A/R percentages will tell you a lot about the efficiency of the practice's billing operation," Townsend says.

If days in A/R are too high considering the payer mix and the specialty, then Townsend knows to dig deeper and look for problems.

Problems that can keep claims in A/R longer than industry and specialty benchmarks include:

• Front office collections of copayments, coinsurance, and other patient-owed amounts falling short of 100 percent;
• Charges routinely entered late or missing;
• Inaccurate coding that must be corrected; or
• Billing and collection processes that are slow and inefficient because of bad work flow design or inadequate technology.

"I've seen practices with problems in all areas, but usually it's just one or two of these areas," Townsend says. "It's always amazing to me how a problem in just one area of the billing and collection process can affect the entire A/R of a practice."

The next step is often sorting the average days in A/R by payer. The goal is to spot any significant deviations. Payer-specific A/R anomalies can be caused by a slow initial credentialing process for new providers or the practice neglecting to heed payer policies (about such things as modifiers, coverage services, bundling, or documentation needs). Sometimes, it is just the payer.

Next, Townsend digs into reports of payers' denied claims, also called "claims denied on first submission." Following the trail from denial reports - what Enos calls working from the bottom to the top - can isolate the origins of problems such as:

• Lack of medical necessity in provider documentation;
• Missing documentation from providers;
• Errors in registration made at the front desk;
• Lack of insurance verification (front desk, again)
• Missing, delayed, or flawed charge entry by providers;
• Failure to process referrals or pre-authorizations by billing or clinic staff; or
• Inefficient billing and collection processes throughout the practice's revenue cycle.

Linda Sullivan, director of patient accounts at The Oregon Clinic, a multispecialty group of 125 physicians and 40 midlevel providers in Portland, Ore., says her staff is diligent about reworking denials.

"Our insurance representatives are assigned by payer and they regularly review what we call 'exception reports' to look for the anomalies, the ones that aren't getting paid," Sullivan says. "We want those claims researched and fixed before resubmitting. If we don't, we'll just end up waiting another 20 to 30 days to see if it went through."

Put technology to work

Even though our coding and billing experts caution strongly against letting the EHR do the coding, they do advocate using technology to improve the billing process.

Townsend says he's a big believer in electronic remittance. He credits it for helping a 12-physician pulmonologist group he once managed to reduce the billing office workforce from 12 to five workers.

The Oregon Clinic, which uses electronic remittance and submissions with its two largest private payers, runs a lean 32-member billing staff (not including referral and authorization workers). That works out to 0.26 billing staff per physician, which is well below the average of 0.57 patient accounts staff per full-time-equivalent physician, measured nationwide by a Medical Group Management Association survey.
 

Sullivan says electronic claims submission and remittance, EHR, and other technologies play a large role in the clinic's low rate of days in A/R. By the end of 2010, that rate dropped to an average of 29 days - but has been as low as 7 to 14 days for the clinic's two largest payers. And that's with the amount of patient-owed debt nearly doubling from $2 million to almost $4 million in the past two years, thanks largely to more patients enrolled in plans with higher deductibles and out-of-pocket limits.

"Now, if a claim is over a month old, we know there's probably something wrong with it," Sullivan says. "With technology the way it is, if your days in A/R aren't going down every year, you must be doing something wrong."

So, in the Year of the Rabbit, maybe the race will go to the swift.

Ten Billing Improvement Questions

If the answers to these questions are no, your billing operations may need help.

1. Practice's financial policies are up to date and all patients get a copy.
2. Net (adjusted) collection rate is greater than 97 percent of charges billed.
3. Patients' insurance and benefits eligibility are verified before each office visit and service.
4. Front desk staff routinely confirm and collect all patient copayments, past-due balances, estimated deductibles, and coinsurance amounts at the time of the service.
5. Registration data are accurate and complete with a low error rate (<2 percent).
6. Claims denials (claims returned on first submission) by payers are low (<7 percent of claims filed).
7. Patients can ask billing questions and pay bills online.
8. Patient billing statements are carefully designed to provide clear information to patients.
9. Denials are tracked and worked quickly.
10. Prior authorizations are confirmed for all services required.

Source: Elizabeth Woodcock and Associates

In Summary

Ease worries about government coding compliance audits and improve your practice's billing results by taking the following steps to improve your billing operations:

• Conduct routine audits annually or biannually
• Work to improve medical necessity documentation
• Compare days in A/R to industry and specialty benchmarks
• Review aging days in A/R and compare to benchmarks
• Assess denial rates and patterns by payer
• Review denials by reason code
• Track down origins of denials
• Compare billing office staffing to national benchmarks
• Use technologies, including electronic payment and remittance if available

Robert Redling is a writer based in Tacoma, Wash. He has been practice management editor for Physicians Practice, Web content editor and senior writer for the Medical Group Management Association, and a speechwriter for the American Academy of Family Physicians. He can be reached via editor@physicianspractice.com.

This article originally appeared online as part of the April 2011 issue of Physicians Practice.