How do you know if your billing agency is good?

(Editor’s note: In this second part of a two-part series on outsourcing your coding, billing, and collections, we discuss billing benchmarks and tips for how to get paid by the insurance company. In last month’s issue, we discussed how to determine whether to outsource.)

Do you know whether your billing agency is doing a good job? One way to determine that answer is to examine whether the agency is following the "80/20 rule," said Ann S. Deters, MBA, CPA, CEO and founder of SevenD & Associates, an Effingham, IL-based consulting and management company affiliated with 17 surgery centers.

Deters spoke at the recent annual meeting of the Federated Ambulatory Surgery Association.

She explained that when this rule is followed, 80% of receivables are 45 days are less. "Typically, most billers think the job is done after the bill is sent, but really their job only has begun," Deters added.

Many surgery centers have 9% to 20% of the receivables at more than 120 days old, she said. "That is not acceptable in any other industry."

However, you have to consider your mix of payers, says Diana T. Ellison, MBA, CASC, administrative director of Hamden (CT) Surgery Center. While Medicare generally pays her facility within three weeks, Medicare pays only 80% of patient’s bills, so they have to bill a secondary insurance, she explains.

"When you have a lot of Medicare patients, you’ll automatically have a lot [of receivables] at 60 days or higher," Ellison says.

It takes at least three or four weeks to receive payment from the primary payer, and it takes at least another three or four weeks to receive payment from the secondary payer, she says. "If some people have straight commercial or HMO plans that pay 100%, their days will be shorter," Ellison adds.

Another factor that affects your receivables is whether you bill electronically, which speeds payment, she says. "Obviously, that’s optimal," Ellison says. "But that’s not always financially feasible, and it’s not always feasible from a systems standpoint."

When determining whether to use an agency for outsourced billing, consider these other indicators suggested by Deters:

  • Contract data are entered onto the information system.
  • Copayment information is provided for each payer.
  • Write-offs are anticipated as charity work rather than responses to patients who don’t pay.
  • Copayments and deductibles payments are collected on the day of surgery.
  • A credit card payment plan is offered, especially for metropolitan areas.
  • The agency pursues payments for large and small claims.
  • The date of service to the date of billing is less than 24 hours.
  • Rejections are less than 2%.
  • The date of service to the date of collection is less than 45 days, with the best practice being 35 days.
  • The facility receives aged receivables reporting. If numbers are improving in one area, such as 60-90 days, ensure that those claims aren’t simply falling into the next level of 90-120 days.
  • Daily/weekly/monthly reporting is conducted. Billing/coding/collection is a daily function. The facility receives aged receivables reporting and payer fee reporting. Other reports that should be received include net revenue vs. costing information, and per-procedure and per-specialty reports.
  • A fully integrated billing/coding system is connected to the center’s computer network.

"Electronic billing will save you 15 days of collections typically, particularly with Medicare," Deters said.

  • Agency aggressively makes collection calls daily and contacts past-due accounts every seven to 10 days. Monthly payment plans are offered with a goal of full payment.
  • The facility is offered assistance in payer negotiations.
  • The agency does daily off-site backup.
  • The agency has omissions and errors liability insurance.

Managing in-house billing requires more administrative oversight, Deters maintained.

"Probably most importantly, the good billing services are going to focus on the business side of things, and that’s the cash management, and you can focus on the patient side," she said. "And in today’s environment, and with surgery centers getting busier, this is more and more of a necessity so that each one can contribute in its own way."