Regardless of the industry, business success clearly depends on getting paid for goods and services provided. In the healthcare sector, revenue cycle management (RCM) is more elaborate and complicated than it is in any other field.
In its most simplified form, medical RCM begins when the patient contacts a provider to make an appointment. It includes documentation of everything done and many additional details, such as what kind of practitioner(s) participated and in what kind of facility the appointment took place.
All this information must then be translated into medical billing codes and formatted into the acceptable claim form and submitted. Then there is a high likelihood that the payer will deny or reject the claim, requiring further investigation and resolution by the practice. Once the claim has been paid by the insurer, there is still often a balance due from the patient.
Clearly, in such an elaborate process, there are many opportunities for something to go wrong—on each and every claim. In order to minimize the number of unpaid claims, the following steps are recommended for inclusion in an ongoing quality management program.
Calculate the Clean Claims Percentage
The “clean” claims are the error-free ones that get cleared for payment on the first attempt. This statistic provides a good overview of how successfully the billing and coding processes are performed. We recommend 95% as the level your billing system should maintain.
Assess Accounts Receivable Days
“Accounts receivable days” (A/R days) means the number of days it takes to get paid for your insurance or government-payer claims. The smaller the number, the better the quality of your medical billing and the health of your revenue cycle.
A/R days can range from 30 to about 120 days. Based on our experience, when the number of days to complete collections exceeds 90, the number of paid claims drastically drops, so it is important to file claims promptly and minimize the time it takes to address rejections or denials.
Consider the Cost of Collections Percentage
The “cost of collections” is the total amount you spend each month on billing and collecting fees due to you. This includes the cost of labor for getting the patient’s information, confirming eligibility, billing, coding, follow-ups, and collections.
If your medical billing is being done by in-house staff, coming up with the exact cost of collections in a percentage format can be a little challenging. You need to make sure that you include the cost of all benefits you provide to your employees, which includes health insurance, annual bonuses, paid vacations, etc.
There can also be an indirect cost, both monetarily and in the additional administrative work created for the organization by having to manage an additional department to handle billing.
Once you have the cost of your billing department figured out, the next step is to divide this amount by the actual claim collection total (the money that goes into the bank). Multiplying the result by 100 yields the cost of collection as a percentage. If this percentage is above 4%, you should look into outsourcing your medical billing to a professional billing company like Medcare MSO to cut your costs and allow you to keep the most revenue possible.
Determine Your Net Collection Ratio
“Net Collection Ratio” (NCR) is the amount you are paid divided by your total charges minus required adjustments for a given period of time. This is essentially telling you how much of your allowed charges you actually received.
Outsourcing Medical Billing to Medcare MSO Increases Overall Revenue
Most hospitals, clinics, labs, and other medical facilities are leaving money on the table thanks to inefficient RCM. A professional billing company can increase your claims recovery from 15% to 20% in most cases, so it’s certainly worth looking into.
Perhaps the most important benefit of outsourcing medical billing company is the reduced stress and increased job satisfaction that medical practitioners experience when they are relieved of the burden of dealing with it.
Medcare MSO doesn’t charge a huge setup fee and flat rates for service packages that you may not need. Our services are customized to meet your needs and our fee is a small percentage of the money we collect for our clients. If you’d like to experience freedom from the hassles of medical billing and revenue cycle management and make more money at the same time, get a free demo today. If you have any questions, you can also reach us through our website contact page or call 800-640-6409.