Published on 09/04/2018

In 1948, Dr. John Fredericks made a house call to sickly 14-year-old child out on the farm. An intramuscular penicillin injection was given, and Dr. John was appreciated. His collection for his services…. a ham hock and a freshly baked apple pie. Fast forward 80 years and you will see that billing and collections is a much different beast. Yes, BEAST. In general, physicians are not particularly comfortable with that part of medicine. We were trained to help people to the best of our abilities. Nowhere in the Hippocratic oath does it mention financial aptitude. Primum non nocere…. First, do no harm. That is what I remember.

The reality is that to continue to take care of our patients, we must be able to pay the bills to keep our doors open. Medicine is a business and we are foolish to think otherwise. Our abilities to bill correctly and maximize collections are the mainstay to a physician or group of physicians’ success. The key to this success is knowing the rules. These rules are established by insurance companies and they regularly change over the years and will continue to in the future. Insurance companies do this often to ‘trip us up’, so to speak, as their interest is to minimize payments for their health care expenditures (in fact, they term such expenditures as their ‘medical loss ratio’).

The more recent change in collections has been the paradigm shift of monetary responsibilities from the insurance companies to the individual policy holder (the patient). There has been a mass influx of high deductible health care plans and this will continue be the norm. This shift in responsibility requires a completely different thought process on our part regarding how you get paid for a procedure or visit. Billing departments have always been a very important part of any orthopedic group. That department has historically focused on filing and processing claims with insurance companies. But now, we must also devote a large part of that department to collecting from the patient.

So how do we address these challenges? Well, one initiative that helps significantly is educating the patient on the front end. That means having someone in the office that can run estimates for our patients. Surgical patient estimates should be done for most patients and should be done in a timely fashion. When provided several weeks in advance on elective cases, it gives the patient necessary information regarding their financial responsibility, time to prepare for such costs, and will ultimately decrease your cancellation rates the day before the surgery. When patients are sent bills post procedure, they can get very overwhelmed and confused, and sometimes angry. This often results in frustration on both ends and loss of payment.

We must also collect monies before any procedure is performed. I think most would agree on this statement and probably already do so. But the key is how much? According to a recent study, over 70% of Americans cannot afford a significant health care episode. What that means is that if a patient has a $5,000 deductible, most patients will not have that kind of disposable income. So, asking for the whole deductible is not a great choice. Most patients will pay their bills, but that payment needs to be over a period of time. We want to insure some payment, but without putting too much of an upfront burden on the patient. Our group’s current policy is 50% of the estimated patient responsibility. By no means is this the gold standard, but it seems to be fair for both sides. Again, providing these estimates and collections only a few days before surgery will not help as much and will result in increased cancellations, decrease physician efficiency and most importantly, create patient dissatisfaction.

So, what happens to the other 50% of the monies owed? We have seen that our insurance accounts receivable (AR) has gone down while patient AR has gone up. In fact, our top payer source is no longer an insurance company or Medicare, it is the patient. As such, we as a group, have shifted more resources from working on insurance AR to patient AR. Payment plans have become a large part of our group’s collection process. Additionally, there are various programs that can be utilized to aid in collections from patients. We use one of these currently. These companies are essentially a credit card company, but for medical offices and patients. Patients apply for credit and if approved, the credit card service will pay the physician office the total amount due and patients pay the credit card company in monthly installments like a traditional credit card service. This helps maximize collections and shifts needed resources away from chasing monthly payments from patients.

We also offer our own flexible payment plans to patients. These plans require scrutinization to assure the payments are being made. Most billing systems have an electronic or automated system for payments plans and will monitor this billing. We currently set patients up on twelve-month payment plans. They receive monthly statements that outline their balances and their payment requirements. We utilize a “card on file” functionality whereby the patient agrees to an automatic monthly withdrawal, like how typical gym memberships are set up. This allows for convenient and consistent payments. However, some patients are wary of placing a card on file, so they can elect to pay by other means, such as a check. We currently allow for up to two missed payments and after the second missed payment, they are sent to collections. This is our group’s policy, but others can create whatever is most appropriate for them.

Physicians are wired to be sympathetic to patients and their bills. Some physicians are more reluctant than others to send people to collections. My advice is to decide as a group, not individually, and stick with that decision. When done individually, the variances between one physician and another puts a greater strain on administration and unnecessarily consumes more resources.

The confusion that surrounds medical billing has and still is a point of frustration for patients. In the past, patients received bills from hospitals, laboratories, physicians, and others, while explanation of benefits (EOB’s) from insurance companies gave wildly differing costs, causing endless confusion. Insurance companies attempted to mitigate this by producing an explanation of benefits to illustrate how much they saved patients with their ‘efforts’ (which was nothing more than paying whatever their fee schedules mandated). Now that more payment has shifted to the patient, they are much more attentive to these statements. The medical industry billing structure has been very opaque; EOBs are confusing and often show charges 400-500% of Medicare, which lends to distrust from the patient towards the biller (hospital, surgery center, medical office, etc.). Pre-surgical estimates and billing departments that can help explain these charges allows the movement towards more transparency. While it has been and remains the responsibility of the insurance carrier (as the relationship is, in fact, between the patient and insurance plans), physicians and physician groups need to provide these resources for patients so they all understand this process. Our assuming that the patient will be able to sort through this by themselves is more likely to lead to distrust, anger, and ultimately lack of payment for your services.

Collections are also heavily affected by our billing habits as well. Insurance companies are requiring more comprehensive operative notes from surgery. Previously these surgeries were coded and if the ICD-9 or 10 codes matched the CPT code, and the service was authorized, these claims were paid. Many insurance carriers have now employed or engaged coding specialists who review the operative notes and your coding. Payments are then made based upon their coding and code edit tools, not necessarily the codes submitted by you. Therefore, it is imperative that every procedure performed in a surgery is well documented in the operative note and that the eventual payment be audited by your staff.

One thing we try very hard to do is to get paid expeditiously and without the need to go through review. There are certain red flags that insurance companies pick up on during the coding process. Any code that is not correct will be denied and kicked back to the physician office. This delays payment and sometimes stops the payment altogether. Submitting the coding correctly the first time is imperative for timely and accurate payment. Our group has outsourced to a company to review codes based on operative notes and this has resulted in a marked improvement in payment on first submission and quicker payments. Our average time from surgery to payment has decreased significantly. The outsourcing of coding has also freed up our staff to work on other aspects billing and collecting.

I was personally concerned with this process initially. I looked at this thinking that while we might be paid timelier, were we going to under-code just so there was no confrontation with payers and therefore ‘leaving money on the table’? So far, we have not found that to be the case. Coding is reviewed by the performing physicians and we may change or modify the claim after insuring compliance with standard coding practices. We have found that the downside to fighting for procedures we perform and code for by adding more codes or modifiers has been that it flags claims and will delay payment and possibly compromise the payment altogether. Modifiers -22 and -59, for example, will automatically ‘red flag’ your claim and go to extended review by the insurance company. It should be noted that we still code with necessary modifiers, however, insurance companies have put so many stops in place that these claims often go unpaid if not followed closely by your billing staff. This is not to imply that modifiers should not be used, but rather, they should be used cautiously and appropriately, and that proper documentation is imperative before being submitted to the insurance carrier.

These coding reviews have been utilized as stop checks by insurance companies to ultimately deny claims. They execute this strategy knowing that most physician offices are likely backlogged with under-resourced back office staff who are trying to process claims and dispatch them as fast as they can. An insurance company will utilize these initial denials so that they can return it to the provider, making it fall on the physician and staff to appeal the claim. We have experienced that if an appeal is made with the accompanying documentation, they often pay. However, if that appeal is never made, they are not required to pay, and they win. It is as simple as that. Insurance companies are obliged to respond, by law governing prompt payment, to a claim within a certain period, typically 30 to 45 days. They do not have to pay in that timeframe but do have to respond. If denied or more information is requested, then re-submission or an appeal must also be made within a certain time frame (typically 30 to sixty days) from the date of the EOB. If no appeal or re-submission is made within this finite period, then no payment is required.

Another advantage to utilizing coding companies is they are professionally certified coders that will apply resources that specialize in orthopedic surgery. They keep up with coding changes that insurance companies change frequently. These coding changes are often on a quarter and/or monthly basis. It is almost impossible to stay up with this on your own. All insurance companies have their own set of rules, and some follow both theirs, CMS or CCI (Correct Coding Initiative). They can then deny claims based on whichever rule fits their agenda. Therefore, it is imperative to be proactive in this process and assure that the billing is appropriate per carrier and their most current rules and regulations.

These topics are sometimes scary and certainly overwhelming, but knowing the rules certainly helps to play the game appropriately. These complicated changes are largely why there is a big influx of physicians joining hospital systems, simply taking a paycheck and not worrying about the ‘business’ of medicine. I do not believe that is the right way to go. Whoever is smart enough to address these issues head on, be proactive in their approach, apply the necessary resources and expertise, and are willing to fight the fight, will win.