Successfully managing a practice can present challenges in terms of setting appropriate prices, identifying bad debt, monitoring employee efficiency and more. Here’s a look at the answers to a few frequently asked financial questions to help guide your practice’s financial health.

FAQ 1: What is the common practice for establishing “charges”?

While it is up to each individual practice to determine how it chooses prices, a frequently used approach is to set charges at 200 to 400 percent of Medicare reimbursement, with the low end of this range for office visits and the high end for surgeries. Outside of that, the main “rule of thumb” is to set charges higher than the highest commercial reimbursement. If your practice chooses to offer discounts for upfront payment, a 30 percent rate is common.

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Cash flow has long been considered the most critical indicator of how well a medical practice is performing. Many practices use this metric exclusively to determine the status of their finances. In reality, there are a number of other metrics that practices should be reviewing when assessing their revenue cycle.

Join us on Tuesday, March 13^th at 1:00 pm EDT, for a complimentary webinar, Determine Your Practice’s Financial Health. Register Now.

During the one-hour webinar, revenue cycle management expert Elizabeth Woodcock, MBA, FACMPE, CPC, will discuss:

• Four key billing metrics and how to calculate them.
• Converting billing metrics into business intelligence by understanding factors that drive them.
• What could be “hiding behind” the numbers.
• Strategies to improve your revenue cycle.

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The month of January presents opportunities to not only consider the year ahead, but also look back at the year just passed. With this in mind, we wanted to take a look at our most popular blogs from 2011. As you’ll see, most of them merit revisiting as your practice plans for the future.

• HIPAA 5010 – Understanding Two Important New Requirements. This blog focuses on two changes medical practices must make to their claims submission process to be 5010 compliant: using a physical address as the provider billing address and incorporating nine-digit ZIP codes into billing provider and service facility addresses. While many practices have made these changes, we’re finding that some still need to do so. It’s important to note that technology vendors cannot make these changes for practices; practices must make them on their own.

• How Paper Claims Will Be Impacted by 5010. This blog clears up some confusion that still exists today about how 5010 affects paper-based claims. While most providers filing claims with Medicare and other payers need to be compliant with 5010, those providers or payers who meet certain exceptions to the HIPAA requirements and still file on paper aren’t subject to 5010 requirements. If you’re among those providers, you can continue filing paper claims as always—at least for now.

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The New Year always brings new challenges for healthcare organizations, and 2012 is no exception. Case-in-point: The transition to 5010 is already testing the financial health of practices—and that only took effect on January 1.

While much of the 5010 transition seems to have progressed smoothly, it’s imperative that practices across the nation carefully monitor their cash flow and bottom line throughout the year to make sure that this trend continues. Spikes in rejections and denials, for instance, can be the first warning signs of problems—and may or may not be related to the 5010 transition.

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Keeping on top of your revenue cycle is not a once-a-week or twice-a-week job. Every day, practices should enter charges, submit claims, and work any rejections and denials. The more attention these various efforts get, the faster your practice will get paid.

Setting expectations is the key—especially in a busy office with so many other pressing duties to attend to. The only way to ensure a constant flow of revenue is to set expectations for physicians, coders, and billing staff regarding timeliness and efficiency.

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For a long time, the practice I work at – North Platte Nebraska Physician Group – used a clearinghouse that made us feel as if we were sending claims into thin air. Although we were sending claims electronically, we never knew where they were in the processing cycle. Too often, we found ourselves bumped up against timely filing limits that hurt our reimbursement.

So we searched for a new clearinghouse that would provide the tools and the customer service we needed to improve our financial picture. After an in-depth review of our options, we selected an Internet-based organization for its terrific customer service, plain English reporting, and easy ability to view claims all the way through the revenue cycle. This new system has helped cut our timely filing reductions, decrease the number of duplicate claims, and improve our accounts receivable (A/R) tremendously.

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After 18 years managing all aspects of the revenue cycle within the healthcare industry, I’ve noticed many practices often submit claims to insurance companies only to later receive a denial because they didn’t include a key element that the payer requires—an element they didn’t even know  had to be included. In frustration, the practice fixes the issue and resubmits the claim, then moves on to the next claim. This effort costs valuable time and delays cash flow. But what have they learned?

The key to effective cash flow is to really manage denials, not just resubmit claims. In today’s healthcare environment, it’s important for practices to avoid examples such as the one above by taking just a little time to understand claims processes from the payers’ perspective. After all, payers don’t decide the care a patient should receive. Their role is simply to: 1) identify what they will reimburse, and 2) set guidelines for how they will reimburse.

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As manager of collections and reimbursement for Radiation Oncology Services of America (ROSA, Inc.), I am constantly thinking about ways to enhance the collections process and speed up reimbursement. Although there are many good practices worth considering when trying to improve the reimbursement process, the following are a few I’ve found to be most beneficial:

• Foster good relationships with front end staff. Our organization has a centralized billing office that works claims for all of our 16 radiation therapy locations. This means that we at the billing office are geographically separated from the clinics with which we work. Because of this, it’s critical we maintain a good working relationship with front end staff based on mutual respect and effective communication. That way, everyone is on the same page about what is needed to support a clean, efficient, and successful claims process. For example, a good working relationship helps ensure that front desk staff understand the importance of collecting and sending accurate patient demographic and insurance information. Read More ›

When a claim is denied, one of the first questions you should ask yourself is whether prior authorization was obtained for the services listed on the claim. If the answer to this question is “yes,” then you have to dig deeper to determine why it was denied—and how to prevent such denials in the future.

Unfortunately, claims with prior authorizations are denied more often than you might think. There are five common reasons for these denials that you should take into account and ways to avoid them:

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As the Business Office Manager for an orthopedic practice that sends out 650-700 claims a day, I rely on my clearinghouse to support efficient and accurate revenue cycle processes.  There are 23 physicians, 12 physician assistants, and 15 therapists at Orthopaedic Specialists of the Carolinas—and we’re growing. We need tools as dynamic as our practice.

That’s one reason why, in January 2008, we transitioned from our former traditional clearinghouse to a web-based clearinghouse solution. We’ve found some distinct advantages.

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