ACMPE Paper, October By: Karen M. Bowman, FACMPE, CPC, CMOM

Transcription

1 ACMPE Paper, October 2010 By: Karen M. Bowman, FACMPE, CPC, CMOM This case study manuscript is submitted in partial fulfillment of the requirements for election to Fellow status in the American College of Medical Practice Executives This manuscript was prepared as part of meeting various recognition criteria as set forth and may be changed from time to time by the American College of the Medical Practice Executives (ACMPE). The experiences, thought, ideas and opinions set forth are solely those of the author. They do not reflect any position on the part of ACMPE with respect to their completeness, correctness or accuracy of the paper s contents, for example, on points of law or accountancy in effect at the time of or subsequent to the date of paper completion Medical Group Management Association. All Rights Reserved.

2 Taking Control of Accounts Receivable Date of Submission: July 15, 2010 This paper is being submitted in partial fulfillment of the requirements for ACMPE fellowship. 1

3 I. STATEMENT OF THE ISSUE A small gastroenterology practice experienced very low collections. The practice manager was responsible for many duties, including all billing aspects of the practice. The physician approached the manager on multiple occasions with concerns about the cash flow of the practice. The manager was unable to explain the low collections except to blame insurance companies for being slow to pay their claims. The physician believed her repeated excuses until the practice was having difficulty meeting payroll and office expenses. Finally, the physician realized the manager was incapable of resolving the practice s accounts receivable problems and the manager was terminated. II. ISSUES REQUIRING ATTENTION Outstanding accounts receivable numbers were more than four times the MGMA benchmarks for this specialty. The physician did not request or review accounts receivable reports at any time. He was shocked to learn the dollar amount owed by insurance companies and patients to the practice and the age of those accounts. The cash flow problem was so severe, the physician did not receive any income for several months in order to meet payroll obligations for the staff. The practice did not have a process for working the aged accounts. Aged insurance reports and patient accounts had not been worked for more than a year. Insurance payment posting was also extremely behind. Payments had been posted on many accounts; however, the proper adjustments had not been taken. Other payments had not 2

4 been posted at all. Insurance explanation of benefits had not been dated or filed in the past two years. These documents were found stacked in a corner of the manager s office. Statements had not been sent for more than a year resulting in large balances owed by patients. Collection policies were not in place for past due accounts. The front office was not required to collect co-pays or patient balances at the time of service. With statements not being sent to patients, this increased the accounts receivable numbers. The practice management software had several issues resulting in electronic claims being rejected. Physician names were incorrectly entered in the referring physician files and insurance company data files had not been updated with correct payer identification numbers; both resulting in hundreds of claims being rejected. These rejections attributed largely to the accounts receivable numbers being so severe. III. ALTERNATIVE SOLUTIONS CONSIDERED After terminating the practice manager, the physician/owner of the practice considered several options. One solution would be to hire his former practice manager who had worked for him several years before. He trusted this person and was very pleased with her job performance. The accounts receivable had never been an issue when she worked for him. Currently she managed another practice and would not be available immediately for fulltime work, if he offered her the job. He contacted this manager and requested help to get 3

5 the billing back on track until he made a permanent decision. She agreed to help him after hours. He considered hiring another practice manager. This could be a time consuming process to advertise the position, interview candidates and then select the manager. He had concerns of trusting his practice to someone he was not familiar with. In addition, it would be difficult to find someone who had experience with his specialty. This person would also require training on the practice management software. The third option he considered was to train another employee in the billing aspect of his practice. This employee was familiar with the practice management software; however, she was not trained in billing and coding. The former manager could train this employee, but this would be time consuming. He knew the employee s lack of experience could cause additional problems and this was of great concern to him. IV: SOLUTIONS AND IMPLEMENTATION OF THE PLAN After careful consideration of all options, the physician hired the former practice manager who had worked for him several years before. Her expertise was needed to gain control of his accounts receivable. He felt confident she would be able to accomplish this. She gave a one-month notice to her current employer and continued to work after hours correcting the billing. The first step taken was to enter all insurance explanation of benefits to determine the accounts receivable numbers. The practice had copies of all checks with the deposit tickets and she used these dates to enter the explanation of benefits. 4

6 An aged insurance report was reviewed next to determine the accounts receivable issue. This revealed that claims were not being received by numerous insurance companies. A review of the electronic claims reports was performed and numerous rejections and errors were found. This led to the discovery of corrupt data files. The referring physician files were incorrectly loaded resulting in hundreds of electronic claims being rejected by Medicare. According to the electronic claims reports, this had been going on for months. The former manager did not reconcile these reports and was unaware Medicare had never received the claims. Claims were filed weekly, with repeated rejections. These files were corrected and claims were sent successfully. Reconciliation of these reports was performed to ensure receipt of the claims by Medicare. Insurance company data files had not been updated resulting in rejections. The payer identification numbers were incorrect in multiple files. Hundreds of additional claims were involved. These rejections, along with the Medicare rejections, attributed to the accounts receivable numbers being so large. Corrections were made to all files resulting in successful claims submission. Reconciliation of claims reports was performed for verification. Next the manager pulled a report to determine the overall accounts receivable balance. This information revealed numbers that were more than four times the MGMA benchmarks for this specialty. The accounts receivable were worked with uncollectible accounts being adjusted off. These included insurance claims that were past the timely filing limit with no proof of 5

7 timely filing available and patient accounts that were more than a year old. Statements were released to the patients at this time. The insurance explanation of benefits that were found stacked in a corner of the manager s office were addressed. The manager verified the dates by utilizing the patient accounts in the practice management software. These were dated and filed appropriately. A collection policy was implemented for co-pays and patient balances. Co-pays were to be collected prior to the patient being seen by the provider. The patients were notified of this policy at the time the appointment was scheduled. A notice was also posted in the front office informing patients of the new policy. Patients were also informed about balances by the front office staff, with positive results. The manager created new billing policies with all insurance claims filed on a daily basis and monthly patient statements sent. The collection module of the practice management software was utilized and letters sent on accounts that were more than 45 days old. The manager and physician reviewed past due patient accounts for outside collection activity at 120 days. Within three months the majority of the issues had been corrected. In six months, the accounts receivable numbers were in range with MGMA benchmarks. The practice lost several hundred thousand dollars due to the inadequate job performance of the previous manager. With hard work, determination and implementation of new policies, the manager successfully gained control of the accounts receivable while performing all aspects of the current billing. 6

8 V. LESSONS LEARNED The physician must require and review monthly accounts receivable reports and hold the manager responsible for ensuring all billing aspects are performed timely. It is necessary for the physician to be involved in the collection policies of the practice. It is also imperative practices update data files of the practice management software. Attention to detail is required in loading data files and notices received from the software vendor should be reviewed for possible changes. Collection policies for co-pays and patient balances at the time of service are necessary in decreasing accounts receivable numbers and lowering billing costs. VI. RECOMMENDATIONS Managers who are not responsible for billing in their practice should be diligent in expectations from billing staff. It is imperative you have trustworthy employees who are trained in billing and coding. Certified professional coders can also be a valuable asset to any medical practice. The manager and billing staff should be able to ascertain any issues with the accounts receivable in order to prevent the situation that occurred at this practice from happening to them. The livelihood of the practice is dependent upon this. Managers should review monthly aged insurance and accounts receivable reports with the physicians. These numbers should be compared to the MGMA benchmarks for your specialty to get a true picture of your accounts receivable. If problems are found, investigate quickly to determine the issue and resolve it. 7

9 Lastly, if your office does not have billing and collection policies in place, these must be created immediately with training of your staff to ensure viability of the practice. 8