Spring cleaning is a time-honored tradition, where you open up the windows, let in the fresh air and scrub down your house – an annual rite of owning a home. As a dermatology practice owner, this spring is an opportune time to get your business’ financial “house” in order, finding ways to increase revenue without increasing costs as it relates to your dermatology medical billing.
Work Smarter, Not Harder
Dermatology practices are not immune to volatile economic conditions that impact most other industries. Whether times are good or challenging today, dermatologists need to foresee and prepare for a drop in collections and decrease in revenue at any point.
Oftentimes, the “knee-jerk” reaction is to aggressively attract and treat more patients, thinking higher volume alone will result in more money. Yet, there are considerable expenses associated with this strategy that reduce profitability, from marketing and advertising to the actual cost of service.
In fact, many dermatologists that travel down this path find themselves working harder and longer hours, only to increase levels of stress with marginal benefit to their bottom line. Something different must be done.
Focus on Your Outstanding A/R
There’s a much easier way to increase your revenue without expending additional resources, and it’s right there in front of you: your outstanding accounts receivable (A/R).
For example, take a practice that on average posts $100,000 in clinical charges each month. It’s not uncommon for that practice to have an outstanding A/R balance of 1.5 times that amount, or roughly $150,000, carried over each month. An average contractual adjustment rate of 25 percent* results in approximately $112,500 for which the practice has earned and is legally owed, but has not yet been collected.
Can you afford to walk away from this money, leaving well-deserved revenue on the table? For most practices, the answer is no. But where do you start? The first step is to assess whether your billing staff has the capacity and expertise to focus on A/R collections. If so, simply redirecting them with a sense of urgency to improve performance can yield significant results.
Collect on Unpaid Claims—Faster
When assessing your outstanding A/R, look first at your unpaid insurance claims. Collecting on a higher number of claims sooner than later will result in immediate revenue for your practice. Below are a few best practices to help facilitate smoother claims submission and, most important, faster payment:
- Identify patterns with insurance carriers—When working to resolve unpaid claims, it’s important to find a pattern relative to each insurance carrier. If you are able to discover a common factor, you can modify your billing style to avoid future denials.
- Review claims before resubmitting—Make the most of the information you have before spending time to gather more, by addressing the following items:
- Ensure that proper contractual adjustments are made to each line item
- Verify that CPT and ICD codes are for covered services
- Check modifiers; remember global periods, unrelated procedures on the same date of service and separately identifiable evaluation/management services
- Review insurance authorization and physician referral requirements
- Determine if the bill should be moved to a secondary insurance or the patient
- Create a strategy for easy “wins”—If all information appears correct and claims still require follow-up, prioritize your unpaid claim list to pursue the “low-hanging fruit” first. Considering the age of the claim and outstanding dollar amount to prioritize your list is a common way to increase your collections success rate.
- A less applied, but perhaps even more valuable technique, is to look closely at your payer mix, identifying those that are easiest to work with and have faster turnaround times. Are you required to complete an online form, mail a letter or make a phone call? If “Carrier A” processes claims in 10 days and “Carrier B” processes in 28 days, where should you start?Combining these principles with your existing A/R process can help resolve more claims in a shorter amount of time. Furthermore, receiving the outstanding funds quicker can make the average amount per claim less relevant to your overall strategy.
Don’t Miss These, Either
Beyond collecting on unpaid claims, there are several other opportunities for quickly enhancing your revenue stream. While they are seemingly basic concepts any office should apply, you’d be surprised at how many dermatology practices fail to capitalize on these areas, letting easy revenue slip away.
- Collect co-payments at time of service—Billing patients for their co-payments can delay revenue 30-60 days, or longer if not paid on time. Take advantage of the patient visit to capture revenue immediately by collecting co-payments up front.
- Collect past due balances at time of service—Similar to co-payments, take the opportunity to collect past due balances in person (at initial or follow-up appointment), versus billing them later. This requires communication between your scheduler, receptionist and billing staff.
- Charge for missed appointments—While practices have different opinions on this policy (to the point of controversy), some dermatologists charge a fee for missed appointments. If a patient does not provide notice of cancellation, you need to decide whether or not to charge for the loss of revenue you would have captured with another appointment.
- Review and adjust your fee schedule—At a minimum, assess your fee schedule annually to ensure you are capturing the revenue you’re entitled to. Review your schedule against all insurance contracts and make sure you’re charging the maximum allowable amounts. Don’t leave money you’ve earned in the payers’ hands.
- Transfer balances and send statements—Yes, as fundamental as it sounds, some practices delay (or overlook) transferring balances to patients. Simply doing so and sending out statements can generate faster payment and, thus, more revenue.
Consider Your Billing Alternatives
Assuming most, if not all, dermatologists are unwilling to walk away from their outstanding A/R or other areas of opportunity, they must determine how to pursue this incremental revenue. For those practices with efficiently managed, experienced billing staff and operations, it’s simply a matter of committing to A/R collections and getting started. Practices with limited or inexperienced billing resources, lack of systems and processes and no desire to manage the challenges with in-house billing, may want to consider outsourcing their overall billing – or revenue cycle management (RCM) – operations.
RCM outsourcing can lend extensive experience and expertise to help you increase revenue, maximize profitability and streamline your billing processes—enabling you to focus on patient care. If you do decide to outsource, carefully consider vendor qualifications and ability to meet your practice needs. At a minimum, your selected RCM company should have:
- Dermatology-specific billing expertise
- Experienced, professional billing staff
- Quality service and proven business performance
- Comprehensive, integrated solutions, including practice management, electronic medical record (EMR/EHR) and inventory management systems
- Strong leadership and management
- Satisfied customers and solid references
- Company stability and long-term commitment
By leveraging either your internal resources to focus on collections, or turning to an RCM outsourcing company to handle all of your billing needs and more, you’ll be well on your way to enjoying increased revenue—up to thousands of dollars—throughout 2017 and beyond.
- *For example only, as this rate varies based on a number of factors