When a practice’s medical billing staff or service fails to accurately claim all the revenue the practice has earned – for example, by under-coding to ‘save time’ or neglecting to use important modifiers – this naturally represents an immediate loss of revenue. But when the team begins to cut service corners or fall behind in coding knowledge, it also means the door is opened for much bigger problems to impact the practice.
Redoing work means repeat costs. Consider sloppy claims documentation, which leads to increased denials and associated lost revenue. Besides the missed revenue, there is an added cost for researching, re-documenting and appealing claims. That means wasted staff time – and, if physicians have to help out with the documenting, their precious time is wasted, too. Other tasks will suffer in order to accommodate this extra processing: newer claims submitted a bit later, patient statements somewhat delayed. And this, in turn, has costs: when claims go out later, the money comes in later – and when patient statements go out later, it can mean they won’t get paid at all. This, in turn, means higher collection costs over time – another hidden, but significant, cost.
Patient inconveniences are costly. Incorrect coding also creates multiple layers of problems. If a claim is denied and never appealed, will your patient automatically be sent a statement for the full amount? How much time will be spent responding to the patient’s inquiries about the unexpected bill?
Like incorrect coding, overly aggressive coding can also cause patients to end up with unexpected balances due. When incorrect or overly aggressive coding leads to unexpected charges for patients, this almost always creates additional costs. Besides additional customer service time to help patients understand (or rectify) ‘surprise’ bills, the hassle patients experience tarnishes the practice’s image. A negative experience with a practice’s billing staff or service can make the difference between a patient referring your practice or not. Even worse, some patients will be motivated to complain about billing problems online – tarnishing your physicians’ reputation. (A quick scan of negative physician reviews on Yelp.com, for example, will reveal just how closely tied bad billing experiences are to overall views of physicians.)
Inaccurate patient billing wastes time and aggravates patients – and also creates the impression that the practice is disorganized, which in turn rubs off on your physician(s). If patients become so annoyed they move on to other doctors, that lost revenue must be replaced with a new patient – and, of course, it’s much more expensive to attract and establish a new patient than it would be to retain an existing one.
When patients are inadvertently seen out-of-network – e.g., when a payer directory incorrectly lists your practice as in-network, and no one on staff catches the error before the visit – the ‘surprise’ amount billed can be significant, as can the degree of dissatisfaction!
Under-coding is anything but ‘conservative.’ In an effort to reduce denials and speed payments, some practices have resorted to habitual under-coding – thinking that lower codes will pass through payer systems quickly and require less documentation. But, even if this works for a while, over time any repetitive short-cut that’s used in lieu of accurate coding can set off alarm bells. Payers compare practice billing patterns, and any significant, repeated deviation will catch attention – and could lead to an audit. The disruption and additional workload required by an audit can be very costly to your practice.
Not all payers are created equal. It’s not uncommon for practices to have the majority of their claims-related problems stemming from a single payer – the old 80/20 rule in action. But, few practices take steps to compare the “hassle factor” of their contracted payers – or to try to address ongoing problems. For example, if you’re finding you get little assistance from your contact at a payer, or that it takes forever to receive a call back, you might be able to work with that payer to be assigned a new rep – and help to minimize costly delays and repeat contacts.
The bottom line: in billing, as in so many aspects of managing a medical practice today, little things make a huge difference over time. Keeping up with coding changes, being diligent about documentation up front (and urging your physicians to do the same), and insisting on accurate (versus “safe”) coding may not seem like huge steps forward for your practice – but, you’ll avoid problems that can multiply over thousands of annual transactions and create significant costs for your practice.
Reed Tinsley, CPA is a Houston-based CPA, Certified Valuation Analyst, and Certified Healthcare Business Consultant. He works closely with physicians, medical groups, and other healthcare entities with managed care contracting issues, operational and financial management, strategic planning, and growth strategies. His entire practice is concentrated in the health care industry. Please visit www.rtacpa.com