Billing Systems Boost Cash Flow

December 15 2002
Commentary
John W. McDaniel
Edited by: Deborah J. Neveleff

Good computerized billing systems can reduce billing costs, accelerate payment cycles, and improve collections, experts say.

“The processes of billing, collections, and accounts receivable management are crucial to the financial success of any medical practice,” says John W. McDaniel, president and CEO of Physician Management Group Inc., practice management advisers in New Orleans (at www.physician-management.com). “In an environment of declining reimbursements and delays in claims processing, it is crucial that medical practices have sufficient software to process claims and monitor the timely payment of all claims. Today, manual billing is virtually unthinkable.”

Specialized Tools
Jennifer Bever, a consultant with KarenZupko & Associates, agrees. “Having billing software is critical for physicians today,” says Bever, MS, CHE. KarenZupko & Associates Inc., in Chicago, is a practice management consulting and training firm (at www.karenzupko.com). “Declining reimbursement and troublesome payment rules by carriers require that physicians have tools to help them effectively fight for every legitimate dollar due them,” she notes. “And just any old software won’t do.

Billing software must allow physicians to input data and then provide the detailed information they need for smart financial decisionmaking and strategic planning. Billing software should allow some basic functions, including links between diagnoses and CPT codes, multiple modifiers and diagnosis codes, line-item payment posting, employer and referral sources, paperless collection modules, and the option to send claims and statements electronically, says Bever.
Other basic functions to look for are extensive demographic data collection (such as multiple phone numbers and multiple e-mail addresses for insurers) and the ability to produce an array of management reports (such as accounts receivable aging, payment analysis, and detailed adjustment reports).

What’s more, a system that allows electronic submission of claims will encourage a group to submit claims in a timely manner, which is important for physicians concerned about cash flow. “Many billing systems today have at least a front-line edit function for electronic claims submission that checks basic demographic information and format,” Bever observes. For example, the front-line editor will check to see if a Social Security number has nine digits, which helps practices submit clean claims the first time. Some systems offer a second coding scrubber that checks for bundling and for correlation between the diagnosis and the code, which can improve coding accuracy, she adds.

The ability to check patient eligibility online can act as a revenue safeguard. “We are seeing systems in which the billing module can check for batch eligibility, meaning the system pulls all patients with appointments scheduled, say, within three days and sends out eligibility requests online,” Bever says. “A report shows which patients have confirmed eligibility and which ones the staff may need to check on.”

Systems also can help identify low payments by comparing payer schedules against fees during posting, says Sarah Wiskerchen, MBA, a consultant with KarenZupko & Associates. “Usually a claim denial will require staff to review the denial code on the explanation of benefits form and take action,” she explains. “Billing systems can be useful here if they allow for online claim editing.” With such a feature, staff can fix a mistake on the claim easily and resubmit it, she points out.

Finally, a good billing system helps track accounts receivable by using a paperless collection module. “Open accounts are pulled into files for employees to access on a regular basis,” Bever explains. “Special notes screens that have no restrictions on the length of note are key.”

Improving Documentation
Some billing systems will allow practices to track no-shows and recall patients for repeat tests or annual visits. “These activities can improve quality of care,” says Bever. “However, most billing systems don’t capture a great deal of clinical information because that gets into the realm of electronic medical records.”

A billing system is unlikely to be able to assist physicians with proper documentation, but an electronic medical record could do so, Bever adds. “Some integrated EMR-billing system products are coming on the market now,” she says.

The cost of such software varies. “Buying billing software is much like buying an automobile,” McDaniel says. “If the customer chooses to have more options, the price increases. As with any purchase, physicians should consider which additional tools are available in more sophisticated software and how these tools may assist the efficiency of the billing process and improve cash flow. Billing software can be purchased for as low as $500 to run on a personal computer and as much as $50,000 or more for a sophisticated billing software program that allows for the integration of electronic medical records.”

Bever has found that the more robust billing systems cost $25,000 to $40,000, but cost depends on the size of the practice and which modules are purchased, among other factors, she says. “The less costly systems (between $5,000 and $15,000) tend to have some lower functionality and reporting capability,” she adds.
Subscription services, which are available over the Internet, offer another option. “A practice should be able to compare actual expenses with each type of system,” says Bever. “A subscription service can offer savings because there is no server on site, and there is less need for on-site technical support. However, the pricing models are so varied that each case must be evaluated individually.”

Tangible Benefits
Summit Ophthalmology Group, an eight-physician single-specialty practice in Akron, Ohio, installed the Athena Health System billing program in September 2001. Athena Health (at www.athenahealth.com) is available as a subscription service over the Internet.

“Prior to adopting a new computerized billing system, we had significant problems with respect to making submissions to third-party payers, tracking accounts receivable, and managing claims overall,” says Richard Ellison, president of Summit
Ophthalmology.

Several features of the Athena Health System appealed to the group’s physicians. “One important feature of the system is the ability to scrub claims prior to their official submission to the insurance company for payment,” Ellison notes. “As part of that process, the system identifies reasons that claims might be rejected by the insurer, enabling us to make corrections and submit clean claims almost 100% of the time.”

The group has seen some tangible benefits as a result of the computerized billing system. “There has been a significant decline in our accounts receivable outstanding,” says Ellison. “In addition, we have seen improved payment turnaround time from most of our insurers.”

A large proportion of the group’s patients—about 60%—is covered by Medicare. “Medicare typically has been one of the better payers overall,” Ellison notes. “Therefore, in terms of timeliness and responsiveness, we have found that the improvement in claims payment of some third-party payers has been a bit more dramatic than it has for Medicare.”

The billing system also helps to improve charge capture because it includes an integrated scheduling function. “The system makes the physicians and the staff aware of scheduled visits for which no charge entries have been made, so that we are able to track all patient visits and make sure they’re matched up with a proper charge for that visit,” says Ellison. “In many specialties, claims fall through the cracks, but computerized billing and scheduling systems can prevent this problem.”

One benefit of the system is that it has allowed the group to focus on its clinical mission without being distracted by administrative problems. “As a result of adopting a computerized billing system, we now have a good handle on our financial picture, such that we feel we are in greater control of our economics,” Ellison states. “We are now able to spend more time focusing on patient care.”

The system has a direct clinical effect as well. “Since implementing the system, I have been able to track my patient population with respect to diagnosis codes much more effectively,” Ellison notes. “Therefore, I can search for patients who have a particular diagnosis or I can quantify the numbers of people in a particular diagnosis who come in over a particular period of time.”

A Positive Response
“Most billing software is relatively easy to learn, given a basic level of proficiency in using computers as well as an understanding of the billing process,” McDaniel explains. “With the exception of software that is purchased off the shelf, all vendors provide a reasonable level of training.”

For an average person with some basic computer experience, these systems are not usually difficult to learn, Bever adds. “Vendor training is suggested for all staff unless the practice is very large, when a train-the-trainer or super-user approach is suggested,” he explains. “I do not recommend trying to save money by cutting training. The staff’s ability to use the system is critical to getting a return on the investment. Practices should be sure to allocate some training time at three months postinstallation to ensure that all valuable features are put into use.”

Implementing the system at Summit Ophthalmology went relatively smoothly, says Ellison. “It was really a twofold process,” he explains. “A lot of work was done by Athena Health System behind the scenes. We submitted information with regard to our payers and Athena validated and verified provider numbers and credentialing. In other words, we did some paperwork that Athena Health then processed for us. The second step was the training of our office staff to use the system. The training occurred over two days—on a weekend—prior to our go-live dates. We also held approximately three days of office training, during which Athena Health personnel were present to help our staff make the transition from the classroom to the live situation.”
The system has changed the physicians’ practice flow. “Making the initial adjustment to using the system was a bit disruptive,” Ellison admits. “However, once that transition was completed, the new practice flow was better than the original.”

Unquestionably, the automation of billing processes is a useful step, Ellison states. “There is great value in the cost savings that accrue from staff not needing to spend time tracking down paperwork or resubmitting claims,” he says.

Patients are largely unaware of the implementation of this system. However, patient satisfaction may have increased due to fewer billing and payment hassles, Ellison adds. “The staff in our insurance and billing department have commented that the number of questions from patients has decreased substantially,” he notes. “The staff did notice that the phone was ringing less often, and that they were handling fewer problems from patients.”

Tips for Providers
For physicians evaluating a number of systems for present and future needs, McDaniel suggests that each practice consider its needs depending on the size of the practice and the management reports the practice wants to review. “It is a waste of money to purchase a system to offer tools that the practice will rarely use,” he says.

Physicians seeking the best system should first understand what they want, Bever advises. “Many practices start by listing all the features their current system lacks,” she notes. “Finding the right system also means investigating many options so that the physicians know what new features companies are offering. Sometimes a company offers a feature that physicians had never considered but may find appealing. Physicians also should involve staff in the decision. After all, they will use the system most and are likely to have insight into important details a physician might overlook. We also recommend visiting a practice using the system under consideration so physicians and staff can get a feel for the product in action.”

The pitfalls to avoid when implementing an electronic billing system include not getting system updates, cutting training short, not allowing enough time for the transition or implementation phase, adding “dirty” data to a clean system, failing to do file maintenance, developing duplicate accounts, not using the features available, not buying the vendor support, and experiencing poor vendor support but not failing to contact the vendor again for another solution.

While successfully implementing an automated billing and scheduling system solves a major business problem for physicians, Ellison cautions that it is not a panacea. “Given the health care system today, other business problems still exist, and new business problems will continue to develop,” he observes. “We will just move on to different challenges. But the computerized billing system prepares physicians to successfully tackle new challenges.”--Edited by Deborah J. Neveleff, in North Potomac, Md.