Establish Baseline Metrics When Outsourcing Billing Operations
By Rebekah M. Stewart, JD, MBA, CPC, CHC
Third-party billing companies provide a valuable service for providers who need assistance not only in Medicare, Medicaid, and private payer claim submission, but for those who are looking for outside expertise to optimize reimbursement, increase efficiency, and decrease overhead cost. If you establish upfront communication strategies and be an active partner with your outsourced billing firm by monitoring key revenue cycle metrics, you will have a direct influence on your return on investment (ROI).
It’s important to create the basic framework to have a positive and productive relationship with your third-party billing firm by addressing operational performance standards and financial billing metrics, and providing suggestions for ongoing communication. Here’s how to do it.
Determine Performance Standards
Each practice and billing firm account manager should hold a kick-off or “on-boarding” discussion at the onset of the contract, and a yearly discussion on the practice’s work flow, growth, and financial goals. Another annual task for the same individuals should be to develop and agree upon specific and measurable performance standards for the fiscal year. Up-front discussion allows aligning the provided billing services with the practice to support internal financial and operational goals, equipping both parties with a common framework to objectively monitor effectiveness of services, and identifying and proactively remediating when standards are not met.
Standard items on the agenda for discussion are:
- Timeframe for clean claim submission after complete information is provided by the practice;
- Timeframe for payment posting;
- Response and follow-up time for customer service calls and written correspondence;
- Communication method and frequency of significant Medicare and Medicaid updates, payer changes in policy, and intermediary bulletins;
- Response timeframe when documentation requests are received for audit inquires initiated by or on behalf of the practice; and
- Detail and frequency of practice management reports (for example, charges entered, payments posted, accounts receivables, credit balances, write-offs).
Although a practice may be anxious to transition the billing to the outsourced firm as soon as the contract’s ink is dry, key practice members should be actively involved in planning, discussing standards, and evaluating the practice’s dynamics to help ensure a common understanding of expectations and goals.
Implement Billing Activity Metrics
In addition to creating overall performance standards, practices should request regular activity reports with key metrics or core indicators that provide a dashboard view of production and profitability. At a minimum, a monthly dashboard report and a month-to-month and yearly trend report should include the following:
- Daily, weekly, and monthly charges;
- Gross and net collection rates;
- Denial percentages broken down by category and procedure code;
- Rejections broken down by rejection code and payer;
- Outstanding accounts receivable (A/R) age;
- Days in A/R calculated;
- Volume of charges and payments by provider;
- Total number of procedure codes billed by provider;
- Percentage of write-offs; and
- Analysis of credit balances and refunds.
The dashboard should be an intuitive, robust document that can provide quick insight into the performance of the practice. It also should allow the practice to determine if the goals discussed during the kick-off meeting are on target with respect to items such as volume, procedure mix, collections, and days in A/R. Although the metrics above are typical core indicators, each practice should work with its billing firm to customize the dashboard based on changes in priorities, risk identification, and performance feedback.
Communicate for Continued Success
As with any successful relationship, communication is key. Performance standards and reporting metrics requested from the billing firm are only as useful as the feedback data provided by the physician practice. Weekly or bi-weekly calls with the billing firm account manager to interpret data, identify red flags, and discuss obstacles in claims submission will provide a forum to monitor and remediate challenges proactively—before it is deemed as a performance issue. A regular metrics and claims review also provides an educational opportunity for both parties to collaboratively work through problems, suggest opportunities for process improvement, and ultimately, leverage resources to meet established billing targets and validate the investment to outsource.
Rebekah M. Stewart, JD, MBA, CPC, CHC, is a manager in Huron Consulting Group’s Life Sciences Advisory Services practice. She focuses on health care and billing compliance, compliance program effectiveness, risk assessments and mitigation planning for health systems, academic medical centers, and third-party billing companies. Rebekah also serves on the board of the National Association of Health Services Executives – Virginia Chapter.
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