Managing a medical practice has gotten more and more difficult, owing to the increase in government regulation and the decrease in revenue per patient. One process that hasn't changed much is collecting fees billed and unpaid. The process is essentially the same, even though technology makes keeping track of this information easier. What has changed is the increased importance of doing it right.

Forty years ago, physicians were able to bill what they wanted and usually received a good portion of that amount without much effort. Often, physicians and managers don't spend much time on accounts receivable. It seems that things are going well, and there are always other things that need immediate attention. However, in the current environment, insurance companies and patients are holding on to their funds longer and the reimbursement per visit is dropping, so collecting every dollar becomes crucial.

So how does a busy practice make this happen? The key element is having a process that is followed every time and not putting off parts of the process to do "more urgent" things. It usually pays to have one full-time collection staff member for every three physicians. This means that for one physician, their billing staff needs to spend one third of their time following up on unpaid patient fees. Surprisingly, this is seldom the case.

Looking at the top 3 reasons why practices don't get paid by insurance companies will begin to identify what isn't getting done in a physician's practice. They are:

1. The patient isn't eligible for the service provided. With the changing landscape of health insurance coverage, individuals and employees change insurance frequently, or key items in their coverage are excluded by their new plan.

2. Demographic or other identifying information for the patient is missing or incorrect; this includes the spelling of the patient's name, their exact address, Social Security number, and birth date, among other data.

3. The codes and modifiers on the claim form do not conform to the requirements of the patient's insurance plan.

The first rule of collecting billed fees is to collect accurate data early and often. When the patient calls for an appointment, collect all necessary data before making the appointment. Ask whether the reason for the visit is an accident or injury. Ask whether the patient has secondary insurance coverage. Make sure you have all of the patient's demographic information correct, and that the patient has coverage for the reason why they are coming into the office.

Before the patient comes in for their appointment, verify the insurance coverage. Most software programs today do this in the background via an Internet link to the insurance company's website. Make sure to do this several days in advance, and follow up on any exceptions immediately so that the patient has time to resolve the issue before they come into the office.

When the patient arrives at the office, verify all the necessary data again and make a copy of their insurance card. Ask again whether they have secondary coverage. Ask again whether the visit is due to an accident or injury. Ask whether they have moved homes or changed employment, and verify the information on file.

The second rule is to take full advantage of the patient visit. The only time the patient, physician, and insurance card are in the same place at the same time is during the visit. The physician should clearly indicate what procedure was done and, if possible, have the staff member who checks out the patient be cross-trained in billing, so they can verify that all of the data necessary have been recorded. For example, it is easier to identify that a procedure was done to the left arm at the time of the patient visit than to add this information to the chart or billing record at a later date. The closer to the patient visit that the bill can be sent, the more accurate the information will be.

Once the basics are part of your standard procedures, you can then focus on eliminating other issues, as described below.

Insurance Company Receivables

In addition to the basics, the following are some of the more important procedures that should be in place in your office regarding insurance company receivables:

• Bill quickly. Most insurance companies have time limits. If you bill after the limit, you may not get paid. However, the goal is to bill immediately. If your office is set up with the ability to send bills daily, it should strive to bill within 24 hours of the patient visit. Every day that passes between the date of the patient visit and the issuance of a bill decreases the collectability of the charge.

• Employ educated people. This doesn't mean that all of your billing and collecting staff must come to your practice fully experienced; it means that they must get regular education and training on the correct coding methods. It also means holding regular meetings with other physicians in your practice to train them on changes in the coding requirements.

• Let technology work for you. Many practice management software programs have the ability to load fee schedules for each of your contracts. Do this for your top 5-10 clinicians' plans and run the exception report that shows each time an insurer does not pay you for a particular claim. Group the denials in several different ways, and look for problems. Is one of your staff having more of his or her claims denied? Is one of the physicians getting more denials than another? If so, a problem may lie with the way that particular person creates claims. Is one of the insurance companies denying certain procedures more than others? If you have key information in your billing system, use the reports available to look for repeating errors so that you can identify the cause of the error and correct it before too much time elapses.

• Have data easily available. Make checklists for what needs to be asked for each insurance plan, so that nothing is missed. Have referral requirements, by plan, available as a reference. Run reports that summarize data by code or by plan, so that the staff knows what issues are coming up and can prevent them before the bill goes out. Have a summary of the key office actions required for each insurance product the office takes.

• Have procedures for problems that were previously encountered and solved. This falls under the saying, "Don't reinvent the wheel." If payments were being missed for secondary insurance claims or if payments were being denied because the office keeps billing the insurance company when the visit stems from an automobile accident, create a procedure that identifies the error and stops it. It can be something as easy as a checklist of questions to ask for every claim filed, or marking a file that has special issues with a certain color—anything that flags the error and interrupts the normal course of action.

• Run an aged patient accounts receivable report, by insurance plan, at least monthly. Billing systems can provide many types of reports that are not used regularly; however, the aged patient accounts receivable report can be invaluable. This report takes all unpaid claims and groups them into one amount based on the time elapsed since the bill was sent. For example, if the report shows $40,000 in Medicare claims in the 90-day "bucket," this means that it has been 3 months since $40,000 of claims were filed and they have not yet been paid. If this report is run regularly, you can use it to identify when certain companies have stalled payment; their receivables will be larger in the older categories than they have been in the past. You can also see whether one of the insurance plans is becoming more difficult to work with, because their accounts receivable will be getting larger in each category every time you run the report.

• Follow up, follow up, and follow up. Once the bill is sent, there should be a regular procedure for follow-up with the insurance companies on nonpayment. The procedure should include what items should be reviewed, what actions to take, and how often follow-up should be performed. For the sake of accountability, the collection staff should also report to a designated staff member each week to ensure that this process is being followed as it was designed. A good rule of thumb is that unpaid insurance bills older than 45 days don't get paid without some kind of action on the part of the office staff or physician.

Patient Fees Receivable

Collecting from patients has become more and more important as the size of deductibles and copays has risen. No longer can the physician be happy to get the insurance payment and waive the copay or patient portion. For a practice to survive, it now has to collect everything it is allowed. Several items need to be included in the office billing and collecting procedures to maximize collections:

• Have informed patients. Make sure that patients are informed about and acknowledge the billing and collection procedures of your office. They should be clear that you are billing their insurance as a convenience for them, but they are the primary individual responsible for the charges. Even though you participate in a managed care plan, that only means you have agreed to a specific amount for the procedure. If the insurance doesn't pay for any reason other than that the amount is not allowed, the patient is responsible for payment.

• Request payments early. Inform the patient that you will be collecting the copay and any other amount that might be due at the time of the visit. In some cases, practices collect the copay when the patient presents in the office to streamline the check-out procedure, so this fact need to be communicated to the patient when the appointment is made. Many physician practices will send a nonacute patient home if payment is not available.

• Estimate the patient portion of the bill, and ask for it immediately. More and more, a medical practice can get the information necessary to estimate how much a patient will owe on a patient visit or procedure. Estimate the amount, and ask for payment at the time of the visit or in advance for an expensive procedure. If payment cannot be made in full, ask for a payment plan.

• Request payments often. When patients call in to make an appointment, have a computer system that informs the operator of any unpaid balance, so that he or she can tell the patient that payment of past charges needs to be arranged before the patient can see the physician. The person booking the appointment can then transfer the caller to the billing department to set up a payment plan. Then, when patients come into the office for their appointment, the reception staff can ask for payment of the balance or payment of the agreed amount; this needs to be completed before the patient can see the doctor.

Medical practices need to adopt business practices from other industries. If someone ate at a restaurant and didn't pay, they would not be served at the restaurant the next time. Why do patients think this doesn't apply to physicians? Make sure you clear your policy with your attorney and that you are aware of patient abandonment laws.

• Take credit cards for payment. Not only should a practice take credit cards for payment of current charges, it should offer to automate monthly payments from a patient's debit or credit card to resolve larger balances. Offer a slight discount if the patient agrees to a scheduled monthly repayment plan. Many surgical practices are now requiring deposits or authorization to charge credit cards for the patient's portion of the balance before they will do a larger-ticket procedure.

• Send regular communication to patients. Be precise about when you send statements or bills to patients. Send one bill when the insurance company is billed. Send one statement within 2 days of receiving the explanation of benefits from the insurance company stating clearly what the patient's portion of the payment is. Send two more statements in the next 30 days (you don't have to wait to bill once a month), with a notice on the last bill that the unpaid balance will be turned over to collection if payment is not received or arrangements made with the office within the next week. Post this policy in your office, and include it in patient information material. Put it on the bill and on the website. Be friendly, but clear: You expect payment.

• Have a financial assistance plan. If patients have financial trouble paying their bill, have a procedure for handling that, with a sliding scale for discount based on the patient's income relative to the poverty level. It is important that this policy be followed exactly, so that the office cannot be accused of discrimination.

• Have a policy for sending receivables to collection and resigning as the patient's physician. Contact reputable collection agencies and work with them to identify good procedures for turning over unpaid accounts. Make sure they have tactics that you can live with. Also check with your attorney on patient abandonment issues. Normally, specific notice is needed if you will no longer see an ongoing patient.

The most important thing when managing the collection process is to have a plan and work the plan, on time, every time. Don't let bills not go out because "something came up and the biller was needed at the front desk."