What this means to you: Having access to the denial reason/remark codes for a given CPT code by payer will allow you to understand globally what errors are causing most of your denied claims. In the example below, there were 114 occasions when Medicare was billed when another insurance company was the responsible party (reason code 22). Knowing this, you would be able to alter your eligibility checks and front office insurance verification processes to ensure that the correct insurance/responsible party is identified prior to sending the claim out, ultimately reducing your practice’s days in accounts receivable. Additionally, in this example, it is clear that there are issues with diagnosis assignment, additional information requested and even billing services after the date of death.  A complete understanding of your denials will guide you to the problem areas in your revenue cycle.

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• What 5010 is and who is affected
• The benefits of the new electronic standard
• Strategies to ensure a successful transition

It is important to fully understand the new 5010 HIPAA electronic standard, since it will impact all healthcare entities, including physician practices. The bottom line is this: If a practice’s HIT partners cannot handle 5010 transactions on January 1, 2012, its claims will be rejected by insurance carriers.

To learn more about 5010, click here and download the recorded webinar.

The classic response to this question is a quick shoulder shrug, followed by the return query, “Why does it matter?” After all, the value of secondary claims is usually just a fraction of that associated with primary claims. Most practices believe it costs more in resources (especially staff time) to chase secondary payments than they’re worth.

In the past, that was probably true. But now, I’m urging all practices to take a second look at their secondaries. They may be worth more than you think.

As you consider your practice’s secondary claims, it’s important to keep in mind a very basic concept: Ultimately, the patient is the party responsible for paying you for your services. If you think back just a few decades, you’ll recall that patients used to file their own insurance claims. They were the ones who shouldered the burden of orchestrating all payment—including that of primary and secondary insurers.

While this arrangement made the patient’s reimbursement responsibility clear to all involved, it often created cash flow problems for practices. It’s hard to run a business when you’re waiting for someone else—someone with no real financial motivation—to get around to asking his or her insurance company to pay you!

So gradually, more and more practices began filing insurance claims on behalf of their patients. Today, most practices do. Patients certainly appreciate the service, but it’s also a vital way to ensure more consistent cash flow for the practice. This arrangement remains a win-win situation on the whole, but secondary claims historically have been lost in the shuffle.

As stated earlier, the cost to collect secondaries has never seemed to justify the effort. But two trends may now invalidate that idea:

1)   the current economic environment and impending health reform initiatives are dampening earning capacity, thus making it more important to collect every dollar owed; and
2)   the increasing ability of clearinghouses to file secondary claims electronically makes it much more economical to collect those dollars.

Clearinghouses with large lists of payers able to accept electronic secondaries can be tremendously helpful. Have you ever filed a primary claim to Medicare, then waited forever on a secondary filed to AARP, for instance? Many clearinghouses can send and track those claims for you, reducing the resources you need to expend to bring in that revenue stream.

Bottom line: less time, less effort, and more money. And the payoff can be substantial.

How much money from secondary claims is your practice writing off?

That requires many things: Confirming that patients are covered for the care providers deliver, submitting accurate claims that trigger prompt payment, posting payments quickly so resources are immediately available, ensuring no cash is left on the table.

Perhaps the most effective approach to managing all aspects of the revenue cycle is incorporating a Web-based application to manage receivables for improved cash flow and increased profitability.

Efforts to ensure timely payment must begin even before providers see the patient. Eligibility verification products assist front office staff in confirming coverage and securing accurate demographic information at patient check-in. It is vital to obtain this information while the patient is in the office, so staff can identify what information is missing or what data needs to be corroborated.

Having real-time access to critical patient and insurance information — including coverage dates, benefits, ceilings, co-pays and more — enables billing staff to file a claim correctly the first time. By identifying service eligibility, they can often avoid claim rejections, the need to re-contact the patient, the need to re-bill the claim, and lengthy resubmission and re-adjudication processes. In fact, patient eligibility errors can extend a normal 10-day payment cycle to 45 or even 60 days.

Another factor that often interferes with prompt payment is the unsuccessful delivery of claims to the payer. While electronic submissions and remittance are designed to expedite payment, Web-based solutions must demonstrate a proven track record of consistently and reliably retrieving claims from a practice and delivering them to the insurer. A dependable product is critical for monitoring timely delivery and alerting staff to problems payers may have receiving a claim.

While many practices are auto-posting a significant portion of their claim volume electronically — as much as 70% — Web-based products are now available to support the balance. Some clearinghouses, for example, offer electronic e-processing by collaborating with banks to convert paper documents to 835 data. This process involves scanning paper files, lifting data from images and creating files that can be electronically posted. Digital data can be archived in a repository for several years. This approach provides additional value, like disaster recovery (DR) benefits. Data is secured in an off-site location, protecting it against adversities like fires or hurricanes.

Likewise, electronic remittance advice (ERA) features can drastically reduce processing costs, with fewer people required to post payments, allowing those efforts to be refocused towards managing exceptions. The risk of human error and posting inaccuracies is minimized.

Automated collection of secondary claims is another potential revenue stream that can be profitable for many practices. The average reimbursement for secondary claims across all specialties is $35, a sum greater than most co-payments. With the appropriate Web-based tools, the number of patient statements that need to be dropped to paper can be diminished and staff management time greatly reduced. Because the cost and hassle of secondary filing is minimized, practices no longer need to write off these outstanding balances.

There is little doubt that physician practices are able to improve their bottom lines by adopting technology that facilitates efficient patient eligibility checking, timely electronic claims submission, electronic claims posting and efficient submission of secondary claims. The result? A win-win situation that increases revenue and reduces administrative costs.

Lots of practices seem to have this in mind when they ask about billing for their nurse practitioners (NPs), physician assistants (PAs), and other non-physician providers (NPPs). Most want to know about the basic advantages and disadvantages of billing for NPPs under their own Medicare billing numbers. Here’s my response:

The biggest advantage of allowing an NPP to bill under his/her own billing number is that you don’t have to worry about incident-to guidelines, which limit how and where an NPP-patient encounter can take place. Under his or her own number, for example, an NPP can see a new patient, or a patient in the hospital. By contrast, billing under the physician’s number requires direct personal supervision (that is, the physician must be in the office suite). NPPs also aren’t allowed to see new patients if they bill incident-to under the physician’s number.

The use of NPPs will allow your physicians freedom within their schedules to generate additional revenue through new patient encounters, surgery, etc. The main disadvantage is that payment under the NPP’s number is limited to 85% of the physician fee schedule reimbursement. If the same procedure or service is billed incident-to using the physician’s billing number, it is paid at 100% of the fee schedule amount.

Another common question I receive involves the correct coding of diagnostic tests for patients with signs or symptoms. Figuring out whether to report the pre-test or post-test diagnosis to support the claim can get confusing, because it depends on the result of the test.

Medicare guidelines state, “If the physician has confirmed a diagnosis based on the results of the diagnostic test, the physician interpreting the test should code that diagnosis.” So, for example, if a patient is referred to a radiologist with a diagnosis of abdominal pain, and an abdominal CT scan reveals the presence of an abscess, the correct diagnosis would be “intra-abdominal abscess.”

Medicare also says, “If the diagnostic test did not provide a diagnosis or was normal, the interpreting physician should code the sign(s) or symptom(s) that prompted the treating physician to order the study.” Using the same example above, a CT scan that didn’t show anything would be coded to the abdominal pain. (All of this information comes from the Medicare Claims Processing Manual, Chapter 23, Section 10.1.)

Remember that when there are no signs or symptoms, then the test is not considered a diagnostic test at all, but rather a screening test. When a screening test is performed, the appropriate screening diagnosis code must be the primary diagnosis, regardless of whether the test returns positive or negative.

Another frequently-asked coding question that’s really interesting to me pertains to distinct procedure modifier 59—which is something many claims editing functions help to address. The problem crops up when a practice uses modifier 59 to override a Correct Coding Initiative (CCI) edit, but the claim is still denied. Many coders and billers wonder if they’ve used the wrong modifier.

While possible, it’s unlikely. Modifier 59 was specifically introduced to bypass CCI edits. It’s more likely that the edit you were trying to override had a modifier indicator of “0,” which means it can’t be bypassed under any circumstances—even if you use a modifier. Many edits have a modifier indicator of “1,” which means they can be bypassed with modifier 59 (or another modifier, depending on the circumstances) when, for example, the two procedures are performed on different body locations or at different times on the same day.

There is no doubting the complexity of coding and billing practices. It’s tough to stay current with rules that seem to change every day. So, as questions arise, please feel free to submit them in the comment box below. We’d love to keep providing you with answers.

It’s a difficult benchmark to discuss, because a practice’s size has a lot to do with it. A good ratio in a large practice is very different than one in a smaller practice — and understandably so. Larger practices not only achieve some economies of scale, but also tend to carve out employee responsibilities. While a large practice might have specified “coders,” “billers,” and maybe even a designated “Medicare specialist,” a smaller practice might rely on a single person to do it all in conjunction with other duties. Yet this ratio is still quite important.

In many practices, it’s viewed strictly as an “expense” indicator. However, I feel strongly that it’s also a significant overall gauge of your practice’s financial health. That’s because the lower your billing staff-to-provider ratio, the more consistent your revenue cycle tends to be.

A high billing staff-to-provider ratio potentially points to underlying revenue cycle problems, including too many rejections, denials, and appeals. These are all time- and labor-intensive activities that could increase the need for billing staff—and thus raise the ratio. Automated tools can be used to address some of these problems and reduce the ratio, even if it already happens to be fairly solid.

Real-time patient eligibility tools, for instance, are one way to help decrease denials. Online claims editing capability (including CCI and LCD compliance edits) can speed rejection turnaround. With fewer rejections and denials, of course, comes a lessened need for appeals. And maximizing electronic claims submission, ERA and EFTs allows you to post payments quickly, with minimal manual labor.

Before you calculate your practice’s staff-to-provider ratio, however, it’s essential to know how to do it correctly. It seems simple enough: Count up the doctors in your practice and divide by the number of billing staff, right? Well, not quite.

Rather than count each physician individually—a common mistake—practices must make sure to count physician full-time equivalents (FTEs). To properly calculate the number of physician FTEs within your practice, divide the total number of patient encounters performed during the past year for your entire practice by the average number of yearly physician encounters, (This number will be between 3,600 and 4,800 depending on your specialty. Primary care tends to be on the high end at 4,800 and single surgical specialists, like orthopedics tend to be on the low side at 3,600.). The reason that you want to perform your FTE calculation in this manner is to accurately account for physicians who work part-time, job share, or work any other less-than-full-time schedule.

To calculate the number of billing staff FTEs, you’ll want to define an FTE as an employee who has been compensated for 2,080 hours of work (40 hours/week X 52 weeks/year) during the last year. Like the physician FTE calculation, this will take into account any employees that work any schedules more or less than 40 hours per week. Hours to include in this calculation should be related to any personnel that participate in the physician revenue cycle including data entry, coding, payment posting, accounts receivable follow-up, patient statement processing, etc.

So, an example calculation might go like this:

For the twelve months ending June 30, 2010:

Billing Staff Employee 1 was compensated for 2,080 hours of work = 1.0 FTE billing staff (2,080/2,080)
Billing Staff Employee 2 was compensated for 1,720 hours of work = .83 FTE billing staff (1,720/2,080)
Billing Staff Employee 3 was compensated for 1,500 hours of work = .72 FTE billing staff (1,500/2,080)

Dr. Koch performed 1,800 encounters = .5 FTE physician (1,800/3,600)
Dr. Sjogren performed 3,600 encounters = 1.0 FTE physician (3,600/3,600)

Billing Staff FTE count = 2.55 FTE (1.0+.83+.72)
Physician FTE count = 1.5 FTE (1.0+.5)

Physician to billing staff ratio of 1.70 (2.55/1.5)

The Medical Group Management Association (MGMA), in its 2008 book, Benchmarking Success – The Essential Guide for Group Practices, provides a benchmark standard ratio of 2.7 billing staff per physician in an average billing office. The 2.7 figure was derived by averaging the reported staff ratios across the many different physician specialties broken down within the publication. That number does not take into account the particulars of practice size, or any other factors that might alter it, but it’s perhaps a good starting point for your own investigation. No matter what your ratio, though, I urge you to view it as a barometer of your revenue cycle. Consider whether you have an opportunity to arrive at a better ratio by automating some of your processes.

Are you tracking your billing staff to provider ratio?  Share your experiences in the comment section below.

Join us on Tuesday, August 24 at 1:00 p.m. EDT, for a complimentary webinar: 5010 – Opportunity or Chaos?  Strategies to Survive the Transition. In under an hour, you’ll hear Ken Bradley, Vice President of Strategic Planning at Navicure, and Bryan Koch, Vice President of Strategic Services at Navicure, discuss what your practice needs to do in order to prepare for 5010, including:

• What 5010 is and who is affected
• The benefits of the new electronic standard
• Strategies to ensure a successful transition

Register now.

A/R>90 is a measure of a practice’s ability to get claims paid in a timely manner. This measure represents the amount of A/R older than 90 days as a percentage of the total A/R. Here’s how to calculate it: Take the dollar amount of the A/R that is greater than 90 days from the date of service, and divide that number by the dollar amount of your total A/R.

For example, let’s say your A/R report looks like this:

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You would add the total A/R for all aging buckets greater than ninety days (in the illustration above, that equals $429,608.51) and divide by total A/R ($2,124,042.74 in the illustration above). So, for this example, A/R>90 would be calculated: $429,608.51 ÷ $2,127,042.74 = 20.19 percent.

While not necessarily cause for alarm, the practice in our illustration may want to take a closer look at its aging claims. If your A/R>90 is less than 12 percent, consider yourself a “best performer.” A/R>90 that runs about 15-21 percent is fairly average, but a number approaching 25 percent or above indicates underperformance.

For this benchmark, it is critical to utilize an aging approach based on dates of service. That is the only way to obtain a true starting point from which you can measure each individual claim. I sometimes see practices using a transaction/re-aging approach, which typically ages a claim based on either the first claim submission date or a subsequent submission date. I believe this is problematic, because it holds the potential to dramatically skew the true aging of a claim.

Here’s an example: Let’s take a claim with date of service 01/15/2010 that is submitted to the carrier on 01/22/2010. On 03/01/10, if we were to use the transaction/re-aging approach, we would age this claim at 37 days vs. 44 days using the date of service approach. If this claim were to be re-filed/resubmitted on 03/10/2010 and still not resolved on 4/10/2010, the recalculated aging of the claim at that point would be 31 days. Using the date of service approach, the aging of this claim would have been 84 days. You can see that these two approaches provide vastly different numbers. With the date of transaction/re-aging approach you may not realize that you have a problem with your aging that needs to be addressed.

That said, there is some benefit in utilizing the transaction/re-aging A/R approach. It provides a practice with an understanding of whether its A/R is being worked appropriately. Ideally, in this approach a practice would see its aging buckets greater than 90 days at levels of $0 (or some minute amount that might typically represent appeals, worker’s comp, and no-fault claims where no re-filing/resubmission is necessary).

How are you tracking A/R>90?  Share your experiences in the comment section below.

What this means to you: The proper coding of Evaluation and Management codes ensures protection for a practice from both a high compliance risk and lost revenues perspective. Utilizing comparative data sets, as shown on the graphs below, allows you to gauge where your practice falls on the risk spectrum (too high E&M levels = elevated risk of compliance audit) as well as how much revenue your practice is potentially leaving on the table (too low E&M levels = potential lost revenue). Note: Just because your practice falls inside or outside the guidance of these distribution curves does not mean that you practice is doing anything incorrectly. The bottom line is: Correctly code your E&Ms based on the examination, history and medical decision making components of the patient encounter and you will be fine.

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Rather than contemplating an EHR purchase or PMS evaluation in the context of “what’s available,” consider how well these technologies will serve as your platform from which to custom-build, taking into account future needs as well as current ones.

It is similar to the time when, as a teenager, I went to buy my first stereo system. I saved up, went to the store, and there they helped me design my own system to suit my listening style. Two speakers or four? Turntable or tape player? Headphones? The stereo store catered to my taste, my music, my needs – and I ended up with a system that was perfect for me.

It’s the same concept with HIT. I often go back to an interesting article posted many months ago on amednews.com that—for all the pros and cons—still remains quite relevant. It addresses the fact that many organizations are considering updating their PMSs just because they can get a “package deal” from an EHR vendor. That’s not necessarily a bad thing. However, you must be certain you won’t be limited by these systems. Think long-term. Don’t shackle future functionality with current system constraints.

One key point to consider: Are you investing in open systems that promote connectivity with a wide range of revenue cycle applications? Among other benefits, the ease of information exchange promoted by open systems fosters both increased efficiency and error reduction (because information doesn’t need to be re-entered into disparate systems).

Be careful. While I definitely advocate analyzing your PMS and other systems in tandem with your EHR, make sure you don’t inadvertently short-change PMS or other functionality by tying your selection solely to an EHR vendor’s offerings. A vendor that limits the software packages you can pair with your PMS, for example, may force you to choose an application unable to support your mission-critical goals such as claims processing or revenue cycle management.

No two healthcare organizations are the same, so the “one-size-fits-all” technology approach simply isn’t feasible. You must have the flexibility to pick and choose among various technologies – perhaps using an EHR system from one vendor and a PMS or lab reporting application from another. In fact, from my experience, I can say without reserve that this is one area where open systems are vital.

I urge you to keep this in mind as you consider which technologies will best position your organization for future prosperity. Be alert to attempts to hinder your selection of complementary software. Consider your EHR options. Consider your other technology options. Choose those you feel will best fit your unique requirements – resulting in “sound” decisions for today and tomorrow.

What has your experience been when considering EHR and PMS options. We would love to hear from you. We invite you to share in the comments section below.