PUBLISHED BY: CareCloud Corporation 5200 Blue Lagoon Drive, Suite 900 Miami, FL Phone: (877)

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2 PUBLISHED BY: CareCloud Corporation 5200 Blue Lagoon Drive, Suite 900 Miami, FL Phone: (877) Copyright 2015 CareCloud Corporation. All rights reserved. No part of the contents of this publication may be reproduced or transmitted in any form or by any means without the written permission of CareCloud Corporation. CareCloud and the CareCloud logo are registered trademarks in the United States, other countries or both. All Rights Reserved.

3 6 KEY STRATEGIES FOR MEDICAL A/R MANAGEMENT Even though the overall U.S. economy is improving, let s face it the healthcare reimbursement system remains brutal. Many medical groups continue to struggle, looking for relief from the mounting pressures on their profitability. Declining reimbursements (60%); rising costs (50%); requirements from the Affordable Care Act (49%); and the transition to ICD-10 (43%) top the list of financial challenges that more than 5,000 physicians reported in the Practice Profitability Index. (1) Providers are working hard to defend against reimbursement cuts and to lower their operating costs all while still providing top-quality care to patients. Complicated medical billing processes aggravate the situation. Many payers often release confusing rules and processes that make billing staff work harder to get paid. Despite their best efforts, many practices continuously contend with denials, underpayments, and lost or ignored claims. As billing complexity continues to increase, so does the importance of taking proactive steps to collect more of your money from payers.

4 6 KEY STRATEGIES FOR MEDICAL A/R MANAGEMENT 2 BY THE NUMBERS: MONEY LEFT ON THE TABLE Unfortunately, most practices do not collect everything they earn by some industry estimates, many leave up to 30% of potential revenue on the table. (2) Here are some other sobering figures: The Medical Group Management Association (MGMA) points out that 50% to 65% of denials are never worked. Primary drivers include lack of time or knowledge about how to effectively dispute them. (3) Furthermore, the MGMA reports the average cost to rework a claim is $25. (4) That might look like a small amount initially, but it can add up. For example, a practice that avoids reworking 100 claims and the related phone calls, investigative work, and appeals could save $2,500 every month. The AMA reports claim error rates for commercial health insurers dropped from almost 20% in 2010 to 7.1% in That s good news, but on the flip side, the AMA also estimates savings of about $43 billion if insurers had correctly and consistently paid all claims since (5)

5 6 KEY STRATEGIES FOR MEDICAL A/R MANAGEMENT 3 REGULATORY CHALLENGES BRING ADDITIONAL PRESSURE On top of all this, the regulatory landscape continues to shift. It may take years to gauge the full impact of the Affordable Care Act for most medical groups and ICD-10 looms large on the horizon. Among other challenges, ICD-10 coding could cause a drop in first-pass claim rates. Denial rates could jump an estimated 100% to 200% in the early stages of the transition. (6) Shoring up your A/R processes now becomes a critical step to minimize disruption from ICD-10. How can practices capture more of what they earn? In this white paper, learn six best practices to help your practice effectively track, manage, and, most importantly, collect your accounts receivables (A/R). ADOPT ELECTRONIC TRANSACTIONS Medical groups can save time, money and reduce administrative hassles through use of electronic transactions, the AMA emphasizes. (7) HIPAA also provides guidance on common electronic transactions, including claims and encounter information, claims status, payment and remittance advice, eligibility, and more (8). Make sure your medical billing software facilitates electronic transactions. For example, confirm that the system will accept electronic remittance advice (ERAs) from payers. ERAs standardize reports so computers can easily read detailed payment information. They also make it easier for practices to ensure payments match the contracted amounts from payers.

6 6 KEY STRATEGIES FOR MEDICAL A/R MANAGEMENT 4 INCORPORATE AUTOMATED BILLING RULES When payers reject a claim the first time around, the likelihood the practice will ever receive payment drops significantly. Therefore, one of the best ways for practices to improve their billing effectiveness is to catch potential denials before claim submission. Medical billing software with automated billing rules built in can help spot potential errors before you submit claims, so you can resolve issues proactively and minimize payment delays and denials. These solutions can facilitate: 1. Higher collections, faster Catching potential denials early allows practices to submit cleaner, more accurate claims that improve first pass resolution rate (FPRR). This also accelerates the average time for practices to get paid. 2. Less work for staff Getting more claims paid the first time eliminates the time-consuming tasks of reviewing denials and then going back and forth with payers to resolve issues. 3. Lower costs. Considerable financial savings can result when automated billing rules remove the need for phone call follow-ups, investigative work, and appeals to rework claims. Billing rules continuously change, so be sure to select software that constantly updates rules without any additional work on your end.

7 6 KEY STRATEGIES FOR MEDICAL A/R MANAGEMENT 5 TRACK DAILY AGING OF RECEIVABLES The sooner a practice follows up on late payments, the lower the likelihood that the claims will end up lost or ignored. Traditionally, practices track receivables based on 30-day increments and take different actions depending on whether receivables are 30 days old, 60 days old, 90 days old and so on. However, this 30/60/90 model no longer applies. Because each payer operates according to its individual schedule, two 30-day-old receivables from two different payers might require completely different actions. Medicare might pay in 14 days whereas a regional payer takes 40 days or more. If a practice follows up on all unpaid claims after 30 days, the action is way too late for the Medicare claim and too early for the regional payer claim. Your best bet is to act according to each payer s schedule. Thinking that sounds easier to say than accomplish? Software that facilitates tailored A/R actions can help. Many of these systems can automatically generate a letter, resubmit a claim, or create a collection incident and send it to the collector s queue. This can reduce the amount of time A/R staff members need to spend manually tracking claims.

8 6 KEY STRATEGIES FOR MEDICAL A/R MANAGEMENT 6 TRACK AND WORK DENIED OR IGNORED CLAIMS User-friendly A/R management software can make it much easier to identify and quickly respond to denied or ignored claims. For maximum efficiency, look for essential features from this checklist: 1. Collections queues An automatically updated list of assignments helps optimize collectors efficiency. 2. Broad scope The ability to see all denials and lost/ ignored claims helps you keep close track of all unpaid claims and take swift action when necessary. 3. Electronic claims status checking Checking claim status electronically where possible lets you know when to expect a payment or follow up on a claim. 4. Standardized denial types When systems note denial type justification, enrollment, authorization, coverage, medical necessity, etc. you can act on them faster and identify trends to avoid future occurrences. Automating these components of the revenue cycle not only boosts your efficiency by reducing manual work, but it can also help you get paid faster and lower your Days in A/R.

9 6 KEY STRATEGIES FOR MEDICAL A/R MANAGEMENT 7 EFFECTIVELY MANAGE PAYER CONTRACTS Payer underpayments represent another challenge to medical groups of all sizes trying to optimize collections. The blame falls on multiple, complex contracts in many cases. Imagine four different patients come in for the same Level-3 office visit. Even though they each receive the same service, a practice could be reimbursed four different amounts because of variability in contracts with individual payers. Tracking underpayments manually is nearly impossible with all the other demands on practice time. Software to the rescue again to identify these more easily, select a solution that stores contract details and automatically compares actual payments versus negotiated rates for each payer contract. 7% 11% The average MGMA estimates that payers underpay U.S. practices (9)

10 6 KEY STRATEGIES FOR MEDICAL A/R MANAGEMENT 8 ANALYZE A/R WITH MODERN REPORTING TOOLS Many physicians and administrators still work with cumbersome practice management systems that make it difficult to analyze and fully understand their accounts receivables. Upgrading to a system with robust analytics can help keep your finger on the pulse of your business, easily identifying areas where you can improve efficiency and revenue. For additional insight, adopt software that can sort denials by payer, provider, billing amount, etc. and generate customized reports quickly. CONCLUSION The revenue cycle for practices is increasingly complex and difficult to manage. It s more important than ever to act now, control the process and efficiently collect more of the money payers owe your practice, particularly with the impending transition to ICD-10 coding. Implementing a modern practice management system that will allow you to follow the best practices outlined in this report is one major step toward improving your practice s Accounts Receivables management. Better billing and collections not only saves practices money and adds to their revenue. It also allows practices to focus more time on what they do best caring for patients.

11 REFERENCES 1. Second Annual Practice Profitability Index. 2014, CareCloud/QuantiaMD. on.carecloud.com/ppi-report.html 2. MGMA In Practice blog: 3. MGMA In Practice blog, March 28, 2014, How to Avoid Unclean Claims. com/blog/how-to-avoid--unclean--claims 4. Ibid 5. AMA National Health Insurer Report Card advocacy/topics/administrative-simplification-initiatives/electronic-transactions-toolkit.page 6. Medical Economics Claim denials: 15 ways to fight back May 8, medicaleconomics.modernmedicine.com/medical-economics/rc/claim-denials/claimdenials-15-ways-fight-back 7. AMA Administrative Simplification Initiatives topics/administrative-simplification-initiatives/electronic-transactions-toolkit.page 8. Centers for Medicare & Medicaid Services: Transaction and Code Set Standards. TransactionCodeSetsStands/index.html?redirect=/TransactionCodeSetsStands/02_ TransactionsandCodeSetsRegulations.asp 9. Capterra Medical Software Blog: 3 Ways Software Can Improve Medical Billing. capterra.com/3-ways-software-can-improve-medical-billing/