What to do when insurers and patients just won't pay
Some minor adjustments in your collection procedures can change how fast—and how much—you get paid
From the January 1999 ACP-ASIM Observer, copyright © 1999 by the American College of Physicians-American Society of Internal Medicine.
By Bryan Walpert
If you want to rile Gary Gotthelf, ACP-ASIM Member, just mention the word "billing." The Pensacola, Fla., internist estimates that about a quarter of his claims are rejected, delayed or just disappear somewhere inside the inscrutable bureaucracy of an insurance company.
"Insurance companies are shafting us big time," Dr. Gotthelf said. "I hear about something daily. It's a major problem."
Delays or denials by insurance companies are only part of the problem for physicians. Some patients fail to pay, even after receiving several written reminders and phone calls.
While most internists eventually do get their money—in 1996, they collected on average 97.7% of the dollars they billed—nearly 24% of accounts receivable were more than 120 days old, according to the Medical Group Management Association (MGMA). "While physicians eventually receive payment, it is not always quick," said David N. Gans, MGMA's director of survey operations.
Before you blame insurers and patients for your billing woes, experts say that there are some simple ways to improve how you get paid. A few adjustments in your billing office and collection procedures can increase both the payments you receive—and the speed at which you receive them. Here are some suggestions:
- Know how to fill in a claim. This is about as basic as it gets: Make sure the claim is filled out properly and that all the necessary fields have the required information such as codes, policy numbers, birth dates, employer name, etc.
"If you send it in right, it gets paid," said Marcia Walker, office administrator for Internal Medicine Associates, a six-physician practice in Frederick, Md. "If you don't send it in right, insurance companies will find every little error because they don't want to pay these things."
- Know what the payer wants. Each payer has different requirements. Beginning in October, for example, Medicare began requiring providers to include the full year—1998 instead of 98—in the claim date field.
"Medicare and Blue Cross and other big vendors publish their requirements," explained C. David Carpenter, a partner with PCSi HealthCare Consultants in Southern Pines, N.C. "It's important to become familiar with those, to be able to look at a claim, either on screen or printed out, and make sure all the blocks are filled in properly."
Consider having your employees attend seminars put on by Medicare, Medicaid and other payers, Mr. Carpenter said. Physicians frequently overlook this step because it means the practice will have to pay for travel expenses and lose the employee for a day, but the training typically pays for itself.
- Divide the workload. It's difficult for one person to know all the rules, so consider dividing claims by payer among billing clerks, said Elizabeth Woodcock, a Charlottesville, Va.-based consultant with MGMA.
For example, one clerk could be devoted full-time to Medicare, another to Medicaid and workers' compensation and a third to the Blues and commercial insurers. By concentrating on just one payer, a billing person can better understand that payer's rules and know how to work the system when problems occur. And by developing a relationship with the payer, billing clerks often can get to the right people quickly and in some cases circumvent bureaucratic rules, such as the restrictions on the number of claims that can be discussed per call.
- Update patient information frequently. Filling out the right fields in a claim is only half the battle. An invalid policy number or the wrong identification number may be enough to get the claim back unpaid. Suddenly you've lost four to six weeks.
Check patient insurance and employment information every time a patient walks through the door, not once a year. And key those changes into your system immediately instead of putting them aside for later.
- File claims electronically. Practices that have switched to computer-based claims typically send an electronic file directly to public payers like Medicare and indirectly to commercial insurers through a clearinghouse.
There are many advantages to filing electronically. For one, your staff doesn't have to spend time printing claims, stuffing them in envelopes and mailing them. As a result, they can better spend their time following up on rejections or patients who haven't paid. Insurers receive a batch of claims instantaneously, or if you go through a clearinghouse, they receive them more quickly than by mail.
Claims are also paid more quickly. Medicare, for example, processes electronic claims in two weeks vs. four to six weeks for paper claims, noted Robert B. Connelly, consultant/administrator with The Health Care Group, a consulting firm in Plymouth Meeting, Pa.
Moreover, electronic claims are rejected almost immediately by the computer—not returned by mail weeks later—if any information has been left out. "Either that same day or the following day, the practice can get into those claims and resubmit them," Mr. Connelly said.
The software you'll need to submit claims electronically is sometimes part of the practice management system you already use for billing, scheduling and other business functions. But setting up electronic billing arrangements can cost as much as $2,500 per recipient, depending on the vendor and the payer. Expect to pay about 40 cents per claim to file through a clearinghouse.
If those costs seem high, consider the benefits. "Even though you're paying these to clearinghouses, you're saving postage and paper to mail them off and the time for the employee to sit there and print out 200 insurance claims and divide them up," Mr. Carpenter said.
- File claims frequently. If billing personnel are not getting claims out the door within three to four days after service has been rendered, they are taking too long.
Some physicians like to file claims even more frequently. Frederick Internal Medicine, a four-physician practice in Frederick, Md., has filed daily for the past five years. "If I wait until the end of the week, I'm looking at 200 claims," explained Robin Laumann, the practice's office manager. "If I file daily, there's not as much paperwork. Instead of getting a check once a week from Prudential, I get checks daily. Our accounts receivable stays low."
- Make sure you get what you deserve. Know what you are allowed and read the explanation of benefits (EOB).
Brian Kane, CPA, president of HealthCare Advisors Inc. in Annandale, Va., suggested setting up a grid with the insurance companies across the top and the main 10 to 15 CPT codes on the left side. Fill in what insurers are required by their contracts to pay for these procedures; that way, billing personnel can check them against the EOBs.
"You'll see an increase in cash flow," Mr. Kane said. "A majority of the carriers are not reimbursing practices based on their negotiated fee schedule."
Over the past few years, Sharon Pizzato, office manager for Dr. Gotthelf's office in Pensacola, discovered that two large insurance companies were underpaying her. In one of the cases, she was able to recover about $3,000 in unpaid fees.
"Read your EOBs and make sure they're paying you correctly," she noted. "Go back and fight for that five or 10 dollars they're shorting you."
- Collect patient payments up front. Insurance reimbursements are only part of the accounts receivable equation. Experts suggest that practices collect all copayments before the patient leaves the office. To avoid surprises, educate new patients about your policies as soon as they make an appointment.
Because patients do occasionally request a bill because they forgot a checkbook or don't have cash, Carol R. Aiken, practice administrator for Pennyrile Family Physicians in Hopkinsville, Ky., said she has a strategy: "We let them do that maybe once. We let patients know that in the future, they cannot do that. We give them a prepaid postage envelope to mail the payment in."
- Go beyond the copayment. Some practices collect the deductible and the 20% required by some fee-for-service plans. You can ask patients whether they have met their deductible; many know. To collect the 20%, create a grid of your top 10 CPT codes and the 10 most popular insurers so you know how much a patient will owe for a given procedure, suggested Jeffrey E. Davis, CPA, director of the Health Care Services Group of Glass, Jacobson & Associates in Owings Mills, Md. Keep it in sight at the front desk.
Ms. Pizzato from Dr. Gotthelf's office uses a "cheat sheet" that outlines the deductible and copayments required by various insurance companies. In addition, the numbers come up on the office's computer system, alerting employees that a particular insurer, for example, requires a $10 copay on office visits and obliges the patient to pay 5% of the allowable charge for blood work.
- Give patients many payment options. Providing a variety of options—including credit cards—helps ensure payment. Some doctors don't like credit cards because they charge a fee. "But for that 50 cents, you get the money up front," Mr. Davis said. "It's a no-brainer to use every method possible."
That's because billing is expensive. Ms. Laumann, practice manager of Frederick Internal Medicine, figured out years ago that sending more than 300 bills to patients a month had driven up billing expenses unnecessarily. According to her calculations, it costs $4.13 to bill a patient because of factors such as time, paper and postage.
- Track your denied claims by payer. "See if you can spot a pattern," suggested David L. Warren, a CPA with Larson, Allen-Cherry Bekaert LLP in Richmond, Va. "A lot of times it could be the same mistake over and over again. If you don't investigate, you'll never know why you've been denied."
- Get involved. Mr. Kane went into an ob/gyn practice last year and found between $300,000 and $400,000 in old accounts receivable. He managed to collect about 80%, boosting each of the four physicians' incomes about $80,000 that year.
The problem? Physicians were not involved with billing. "The billing department was not doing its duty and no doctor was overseeing what was going on," Mr. Kane said. "They were just being told 'We're filing claims.'"
To avoid that type of problem, Mr Kane said, insist that billing staff show you reports at least monthly of aged accounts receivable, denied claims and patients that are eligible to be sent to a collection agency.
Bryan Walpert is a freelance writer in Denver.
Tips for putting the squeeze on those long overdue claims
No matter how carefully you craft your billing process, some insurance claims will be delayed or underpaid and some patients won't pay. And won't pay. And won't pay.
Here are some tips to squeeze money from those unpaid claims:
- Follow up promptly. Use the turnaround time in your insurance contracts as a guide for how long to wait for a claim before contacting the insurer. But after a reasonable length of time—45 days, for example—pick up the phone.
Carol R. Aiken, practice administrator for Pennyrile Family Physicians in Hopkinsville, Ky., begins with a phone call warning the insurer that it is in violation of its contract and that the practice will begin charging interest if the payment is not received. Then she sends a certified letter.
In one case, after phone calls and a letter, the insurer excused the late payments as the result of technical problems. Ms. Aiken took a tough stance. "We verbally let them know, in a nice way, sorry you're having problems but you're still in violation of the contract," she said. The company paid the claim—and the interest.
- Follow up quickly with patients. If a patient doesn't respond to a bill, Pennyrile Family Physicians sends a collection letter at 60 days, a more firm letter at 90 days warning the account will be placed in collections, and a phone call at about 120 days, Ms. Aiken explained.
If the patient still does not respond, the physician is asked to authorize sending the account to collections. Once an account goes to collections, the patient is sent a certified letter discharging him from the practice—giving two weeks to find another physician.
- Accept payment plans. Robin Laumann, office manager for Frederick Internal Medicine in Frederick, Md., said few accounts there go to a collection agency because most people are willing to make payment arrangements. She lets patients decide how much they can afford, even if it's only $5 a month.
When Ms. Aiken sets up a budget plan, she requires the patient to sign a promissory note. Balances must be paid within six months. Additional charges during that time are not included in the plan.
Having the patient fill out a set of reminder postcards is cheaper than printing out bills. But Jeffrey E. Davis, CPA and director of the Health Care Services Group at Glass, Jacobson & Associates in Owings Mills, Md., recommends debiting a patient's checking account or credit card. The bank will provide a form for the patient to sign.
- Don't get behind. When C. David Carpenter, a partner with PCSi HealthCare Consultants in Southern Pines, N.C., asks practice managers for the name of the person responsible for following up on pending claims, "the response is usually 'We do that as we have time' or 'So and so used to do it' or 'Gosh, we haven't done that in several months,'" he said. "It doesn't take long to where it's seemingly an insurmountable task to . get current."
Similarly, it's easy for patients to slip through the cracks. "What usually happens is you send three or four statements, then somebody's supposed to call them but it usually gets skipped," Mr. Carpenter said. "Then maybe you send a couple of past due notices, then put it on the doctor's desk to be approved to send to collections. The next time somebody needs that chart it's pulled off the desk and the doctor doesn't get around to it."
- Ensure communication between reception and billing. Patients who ignore calls and letters still get sick and eventually make new appointments. Because that's an ideal time to bring up payment problems, the billing department needs to know when a patient with an overdue bill comes back into the office.
If you schedule appointments manually, billing should regularly review patient schedules to determine which patients have overdue accounts. Some computer systems allow you to flag the account so that it flashes a message alerting the receptionist to call billing.
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