Accounting Information

By Yuval Lirov

A new industry of high-technology medical billing has mushroomed under the auspices of its promise to streamline the collections process and leave doctors with more time to care for their patients. Though many high-quality services and systems exist, an overwhelming variety of options and attractive (yet unsubstantiated) performance claims from some providers have charmed busy doctors into making poor strategic decisions for their practices. "It is surprising how many clinics use a 5-year ROI analysis to justify an investment in technology that will become obsolete in 2-3 years," says Dr. Frischer, a Clinical Professor at Stony Brook University and three times named in New York Magazine's survey of the best doctors in the Metropolitan Area.

Billing Quality Statistics

In order to understand how bad the providers' financial situation is, it is important to recognize that in an average practice, 17.7% of accounts receivable are 120 days past due. In other words, about 1 in 5 procedures billed today won't get paid until four months from now. Although this may not seem to be a problem, as it would be expected that the money will come eventually, in fact an unpaid claim that is 180 days overdue has less than 1% chance of ever being paid. This may be good news for insurance companies, but it is certainly bad news for doctors.

Importantly, the very fact that these statistics are news to some practices is part of the problem: many medical practices don't even know their basic financial parameters such as "AR past 120," though it is a standard metric in the industry. As a rule, medical practices seem to be uninformed when it comes to their finances, but it's a safe bet that any payer still in business knows exactly how much has been collected and how much is owed, down to the last penny.

Uneven Playing Field

Providers and payers are playing tug-of-war on opposites sides of the same claims, but the payers have made significant investments in infrastructure and personnel, akin to coming equipped with special gloves, drying agent for the mud, and erythropoietin for the players on their team. Providers, on the other hand, are playing in the worst of conditions. Except for the initial claim submission, they are completely passive at every step. They wait for the payer to review the claim, wait to receive the errors, wait for the review of the corrected submission, and wait, and wait.

In the medical practice this "waiting" can be difficult to appreciate because everyone is busy with new submissions, resubmissions, and reconciliations --there is always a mountain of work to do. There is little time to take a more active role. So how can everybody be so busy if so little is getting done? Several reasons: The work is so painfully boring and the error rate is so high (45-55% on average!) resulting in a significant amount of the staff's time expended on resubmitting claims so error-ridden they had should not have been submitted in the first place.

BillingWiki - a Shared Repository of Billing Solutions

The rules of the game will not change in the foreseeable future, and the payers will continue to own the tables for at least that long, but today's medical practice is not doomed to lose every hand. More and more practices are learning that by playing the game smarter, they can spend less time thinking about collections and more time with patients. What's the secret? It boils down to finding errors before the payer even knows the claim exists. This is no small task, but clever operations-research-types have identified major trouble spots in the process and made dramatic improvements in a variety of ways. BillingWiki is a collaborative repository of such solutions.

BillingWiki offers fresh perspectives on the complexity of medical billing, which is consistently underestimated by medical practices everywhere. "As a free, collaborative resource open to the medical community," Dr. Frischer says, "BillingWiki is an indispensable guide. BillingWiki is the Wikipedia of medical billing." BBC News has called Wikipedia "one of the most reliably useful sources of information around, on or off-line."

Yuval Lirov, PhD, author of "Practicing Profitability - Network Effect for Revenue Cycle Control in Healthcare Clinic and Chiropractic Office: Scheduling, SOAP Notes, Care Plans, Coding, Billing, Collections, and Audit Risk" (Affinity Billing) and "Mission Critical Systems Management" (Prentice Hall), inventor of patents in Artificial Intelligence and Computer Security, and CEO of Vericle.net - Distributed Billing and Practice Management Technologies. Yuval invites you to register to the next webinar on audit risk at BillingPrecision.com.