Such is the lament of many physician/CEO’s.
The reality for medical billers is that they average a 5% return on every dollar collected on behalf of a medical practice. If they pursue a $150 claim that has been rejected, the maximum they can receive for their trouble is $7.50. The maximum the practice can lose is $150. It is obvious who has the most to lose or gain in this scenario.
With insurers increasingly denying claims for technicalities and for their own cash flow benefit, the problem of rejected claims is only increasing.
For the medical billing company, initial claims can be submitted in bulk which is where the economies of scale for the billing company come in.
The rejected claims have to be handled on a case by case basis.
If the rejected claims take more than a few minutes to work on for a billing company, then it does not make sense for the billing company to work on these rejections. This is simple economics.
The billing company would prefer to spend that same time submitting new claims, in bulk, generated from new office visits. This cycle goes on and on and the medical practice’s aging gets worse and worse until the claims become uncollectable.
How do you stop this crazy cycle? Basically, a practice has to grow a third arm and go outside their comfort zone. There are a few ways to attack this problem.
1). Hire a new employee. To hire an experienced employee who has the diligence and know how to work denied claims and also make inroads in changing how a practice operates is probably a great solution.
The problem is that this is a mid-management type of position and will require investments in overhead and uncertain returns in the short term. The new employee must be a cultural fit, must get along with the billing company and the many employees within the company that are part of the billing process and must be able to deal with the level of frustration dealing with denials long enough so the investment will generate a return. How many practices have the cash required to gamble with an additional mid management salary?
2). Go to a medical billing collections company. Truth be told, I have never worked with any collection company, in any industry, that has done anything that I could not have done. Plus a typical collections company takes a huge cut of the receivable, once they do collect any low hanging fruit.
3). Work with a company that has outsourced experienced employees that earn 20% of the average US salary and work on a contingency basis with this company. I know that a lot of people may disagree with this solution, but the reality is that the world has become a worldwide marketplace, with different countries having different strengths. Cost effectively collecting labor intensive receivables is not a strength of the United States.
The solution with the least risk seems to be clear. The problem is how do you find such a company?
This is where a practice consultant that specializes in “out of the box” solutions can be of great benefit to the busy CEO and/or Office Administrator. Preferably the consultant has experience working with outsourcing, is a medical coder and understands the importance of cash flow in a running a business. The consultant not only handles the outsourcing but also manages the outsourced collection process from finding the perfect collections company, negotiating a rate for collections that benefits all parties involved and manages the process from patient appointment to the depositing of the money in the bank.
Suresh Bhatia is the lead consultant/founder of The EMR Doctor (emr-dr.com) a medical practice boutique consultancy based in Los Angeles California. Suresh was previously a CFO/Practice Administrator for a Beverly Hills medical practice and a Vice President of Operations for a Southern California IPA.