How to Block Reimbursement Leaks That Drain Revenue

; Judith N. Aburmishan, MBA

Disclosures

July 19, 2012

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Ms. Leslie Kane: Hi. I'm Leslie Kane, Executive Editor of Medscape Business of Medicine. One of the most common problem areas in a medical practice is reimbursement. You have seen the patient, and you have done the work, but the money is not coming in. One expert estimates that as much as 20% of revenue is being lost because of poor reimbursement practices. To help you tackle that problem, we are here with Judy Aburmishan, a certified healthcare business consultant from Chicago. Judy, thanks so much for being with us today. I appreciate discussing this topic with you. If a medical practice has a sizable reimbursement leakage, wouldn't you expect the physician or the accountants to be aware of it and to know what is happening?

Ms. Aburmishan: The physician usually is not aware of it until the practice's checks are bouncing because the practice does not have enough money in the bank to cover expenses. The reason is that many, many physicians are so tied up with doing what they do that they do not follow up on how that money is collected. The accountants typically only go in to close the books once a year, so this is much more of a practice management issue that perhaps no one is paying attention to.

Ms. Kane: Let's talk about why reimbursement leakage happens. You have given several reasons for this. First is receiving incorrect demographic information. How does that come about and how does that affect reimbursement?

Ms. Aburmishan: Most insurance companies will deny a claim if your information is not exact. For example, the company may issue my card as Judy Aburmishan, but my physician writes down J.N. Aburmishan. This is not a clear match, so the insurance company may deny that claim. By the time the practice and insurance have gone back and forth and fixed it, it has taken 3, 4, or 5 weeks [to be processed] rather than [being processed] immediately. The practice may key in the wrong birthdate, which would also prevent a match. The insurance companies are going to use any excuse necessary not to pay an appropriate claim. They will not pay if the data do not match exactly.

Ms. Kane: You have also mentioned that staff often does not follow up on outstanding balances. Is this typically because there is not enough staff, or is it one of those distasteful tasks that the staff simply does not get around to?

Ms. Aburmishan: It is both. There may be inadequate staff, and they may be working a lot of hours just to get the basic data in and to record it. If the claim is denied, the staff may not follow up because it may be a small amount of money. In a primary care doctor's office, a claim for $38 or $40 that is denied may not seem to be worth the time and effort it takes to follow up, although it will matter as [these denied claims] add up.

Ms. Kane: What about not collecting copayments at the time of the visit? To me that is surprising. I thought it was standard procedure, but apparently it is not.

Ms. Aburmishan: [Collecting the copayment is not standard procedure] because many offices have people at the front desk who do not want to be confrontational. They think this is an additional piece of work that they do not want to be bothered with. I went to a doctor's office recently and wanted to pay at the time of service, and the office staff did not know what my copay was. They did not want to pull the chart and find it out. Ultimately, that doctor became a client of mine.

Ms. Kane: Now, here is a touchy issue: providing ongoing services to patients who do not pay their bills. I am sure there are plenty of mitigating circumstances, and this can be difficult. How do you deal with this? I am sure most doctors do not want to drop patients, [but what can they do]?

Ms. Aburmishan: There are certain very specific laws about this, and physicians must determine what their policy is going to be. They need to talk to a colleague who understands the rules about treating patients. The physician has to give a patient so much notice if the patient is going to be dropped. The physician must be consistent, so that if the patient calls in, the staff that answers the phone knows that this patient has been discharged. If the patient comes to the office with a medical emergency and the doctor runs out to resolve it, that means the doctor has taken on care of that patient again. The physician must understand the rules. Because they are trained to take care of people, it is very difficult for them not to take care when they are presented with a situation that requires their care.

Ms. Kane: How long should a physician wait? How long do you let it go if a patient is not paying?

Ms. Aburmishan: Usually you or your staff should have a conversation with the patient at least every 2 weeks. Then I recommend that within 90 days, patients should be notified that if they are not going to pay their bills, they will go into collection, and at the time they go into collection, they will be discharged from the practice. That gives them notice that they will be discharged from the practice. I normally advise clients to begin the process within 90 days. Often by the time all the paperwork is done and patients do go into collection, it can be 6 months.

Ms. Kane: Interesting. You have also mentioned insurance contracts that are not market rate or are provided to physicians who are not properly registered. That is one of the reasons for reimbursement leakage.

Ms. Aburmishan: Many physicians today are working with PHOs (physician hospital organizations), and often these PHOs are run by the hospital. The hospital will negotiate the physician's rates through a PHO contract agreement. When the physician asks to see what the rates are or what the contracts say, they may not be given all of the contract. We found a case recently where the physicians were being paid at 105% of Medicare. This is not bad, but it was 105% of 2006 Medicare, [which does not translate easily] to today's dollar. The other part of the problem is that physicians do not have much money to spend on staff. They do not have enough staff trained who can look at their contracts, make sure they understand the terms, make sure they negotiated the best benefit for themselves, or follow up with the hospital to make sure they understand what the hospital has negotiated for them, and how these factors relate to each other. If the hospital has negotiated a contract with one payer and the physician's office negotiates a different contract with that payer, generally the payer will pay the lesser amount of those contracts. Because the physicians do not have trained people to check that, they are paid whatever the insurance company sends them.

Ms. Kane: You have mentioned several different things that keep these reimbursement leaks happening. What can a doctor do to find out what is going on?

Ms. Aburmishan: Usually physicians need to hire someone who is an expert at this. But I want to be clear that not every one of these issues is happening in every doctor's office. Each doctor may have one particular issue or another that he or she is having trouble with. If the practice brings in an expert and lets the expert evaluate what is going on, the expert can help to structure the process so those kinds of things do not happen. For example, if the payer is not paying, it is brought to the physician's attention quickly so it can be resolved.

Ms. Kane: Do you have any concluding advice on this subject?

Ms. Aburmishan: I told a client recently that you cannot save your way into a profit. Do not think that if you cut your staff you will end up doing better. The number one place where you should have enough staff is in accounts receivables and patient receivables because the effort those people put in usually brings rewards that are much higher than their salaries.

Ms. Kane: This is great information. My thanks to Judy Aburmishan for joining us today. I am Leslie Kane from Medscape. Thank you for being with us.

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