Cash flow—or the lack thereof—is a standard indicator of any business’s financial health. And if you have a rehab therapy private practice, your cash flow depends on a wide variety of factors—from your intake process to your payer contracts. In an ideal world, all of your patient demographics and insurance information would be 100% accurate—100% of the time—and all of your payer contracts would ensure payment within 30 days of claim submission. Then, before you can even check out those aging buckets, bam! All of your claims go out clean—and receive prompt acceptance upon first submission to boot. As great as this all sounds, ideals aren’t always attainable, and I’m going to go out on a limb and guess that you aren’t Emeril Lagasse. However, that doesn’t mean you can’t achieve better billing results by improving the processes you have in place. Whether you bill in-house or outsource to a third-party company, here are four things you should evaluate in your billing process:
1. Payment Policy
Your front office staff fails to collect a patient copay before you provide services to that patient, and you wind up having to chase down payments after the patient has left. What’s more, your front office staff gathered inaccurate patient information and failed to verify the patient’s insurance. Even if forgotten copays and failed insurance verification are only every-once-in-a-while mistakes in your clinic, they are costly ones—especially when it comes to the productivity of your billing staff. When your biller has to spend time verifying patient insurance and benefits, he or she is essentially filling the role of an aide—which means he or she isn’t spending as much time chasing your cash. This is no good, and it’s a problem you can easily prevent.
Create a clear payment policy, and educate your staff on how to follow it. For example, establish clear rules for when your employees must collect copays—and how they should collect those amounts (e.g., cash, check, or credit). Set proper expectations—not only for your staff, but also, perhaps more importantly, for your patients. Create a payment policy notification and post it where patients can easily see it. If you have a website, create a special section dedicated to those policies so current and prospective patients can get further clarification regarding your rules. Once your patients understand that they are fully responsible for their copays, deductibles, or coinsurances—and there’s no room for confusion as to when those amounts are due—you and your staff will spend way less time hunting down lost payments.
Beyond having solid payment policy, you must ensure your front office staff is well-versed in the importance of insurance verification and accurate demographic collection. According to this PPS article, “Everything starts with a complete and accurate intake process.” If there are inaccuracies in patient data, your biller will have to verify and resolve those discrepancies before he or she can submit the claim—and that could cause payment delays. Your best—and most profitable—bet is to get the information right the first time.
You’re constantly receiving returned invoices when your patients have moved, or your patients are slow to pay.
If it seems like your patients take forever to pay their invoices, remember this: The sooner you mail out an invoice, the more urgency you create on the patient’s end. In other words, your patients will get the idea that your clinic is not loosey-goosey on its billing policy. Again, setting the proper expectation can help you avoid sending your patients to collections. Additionally, you should:
- Send statements on a regular basis.
- File all electronic claims within 24 hours of the patient’s visit.
- Write or print “address service requested” on hard-copy invoices before you mail them, so if the mail is returned, the post office will provide you with the proper addresses for a small fee.
With the right policies—like those listed above—in place, your patients will receive their invoices with the understanding that you expect them to provide prompt payments.
You’re not quite sure how your A/R is aging. Your claims might be getting paid every 90 days, but you just can’t seem to keep track. Did you submit that claim last month—or this month?
In this Advance article, PT business consultant Chuck Felder explains that “A/R aging is a critical exercise to gauge the efficiency of your billing procedures and the profitability of payer contracts.” This one is a tough one to track manually. If you haven’t already, get a software or a service to help you manage A/R aging. All claims should fall under one of five time categories, measured from submission date:
- Current (under 30 days from submission)
- 30 days
- 60 days
- 90 days
- 120 days or higher
Ideally, the majority of your claims will fall into the first two categories—current and within 30 days. Generally speaking, the shorter the payment cycle, the better. To get a bigger picture of your cash flow, start tracking your A/R aging for a few months, and remain on the loyeaokout for payment patterns. The more familiar you are with your clinic’s norm, the less time it’ll take for you to recognize that something is amiss.
If you do notice that some payments are taking longer than usual, have your biller follow up with the responsible parties. And if you encounter a situation in which an error isn’t to blame—and the payer contract in question has a claim reimbursement period of more than 30 days—it might be time to renegotiate the contract or diversify your payer mix.
You haven’t been all that great about promptly mailing patient statements and reminders (as discussed in tip number two), and some of your patient accounts are extremely overdue.
Remember to send your patients regular invoices, and when a patient whose payment is overdue comes into your clinic, give him or her a friendly, in-person reminder about the outstanding balance. A personal interaction is more likely to result in a payment. You’ll also want to make sure your biller is following up with your payers regarding unpaid and underpaid claims every 30, 60, 90, and 120 days. In some cases, it could take up to 60 days to uncover simple billing errors, but the more frequently you monitor your unpaid claims, the better your chances of identifying such errors sooner rather than later. In summary, be on the lookout for claims that aren’t processing as quickly as they should—and start communicating with your patients as soon as you notice their accounts are overdue.
You may not be a celebrity chef, but if your cash flow is stalled, it’s not too late to spice up your billing processes. With that said, an updated workflow isn’t effective without the right team in place to back it up. Stay tuned to the WebPT Blog; on Monday, we’ll talk about how to ensure your billing staff is up to snuff.
Have billing advice? Lay it on us in the comments section below.