Same_Day Surgery Manager

The big question: To bill, or not to bill?

By Stephen W. Earnhart, MS
Earnhart & Associates
Houston, TX

If you are the director or employee of a hospital-based surgery facility, don't think this topic doesn't apply to you. Read on.

A big debate in the freestanding ambulatory surgery center (ASC) business has always been, "Is it better to outsource our surgical services billing to a company that only does that service, or save a few bucks and do it ourselves?" (Yes, hospital staff, this does apply to you. You just don't hear about it as much. Read on.)

In the old days (pre-Obama), it probably was a tossup. I don't do my own dentistry. I could save some money drilling my own teeth, but would I enjoy it? Just as painful is billing. It requires staff (yes, they can be cross-trained to do other stuff), a good coder (getting harder and harder to find), and lots of liability to the facility. For the centers that did our own billing, it seems as if that correspondence file got bigger every day from claims that were denied simply to preserve cash for the payers that had to be worked daily by our staff so we would get paid. The strain on management resources to oversee the "days-in-accounts/receivable" questions seems to overtake patient satisfaction issues. Something is wrong with that process.

With the upcoming (like a speeding bullet!) changes in our healthcare system, many physicians that refer patients to our surgeons are going to be paid more to do less, meaning that surgical referrals are going to slow down and less surgery will be done. Anyone remember capitation? Doctors are going to be cutting back on referrals to specialist (surgeons) and consequently -- right or wrong, good or bad -- surgery is going to go down. Period. Until things resolve, we are going back to the dark ages in our healthcare delivery system.

So, what does all this information have to do with billing? It means that we need to focus on two areas: expenses and revenue. Revenue enhancement and revenue cycle management are going to become greater issues for all of us. If you suddenly had a pay cut from your job, what would you do at your home? Well, the same thing is going to have to happen at the workplace.

Our experience has been that we find many centers that do their own billing leave far too much money on the table. More facilities are good at collecting the bills, but many quarters, dimes, and nickels are left. You need that change now. An improperly filed claim for payment automatically adds another 30 days before you receive payment. In our past 20 audits, we found that 35% of all claims filed by facilities were improperly filed or had some minor errors that denied payment, hence the growing correspondence file on claims that need to be re-filed. Of those claims that needed to be re-filed, more than 45% were not even re-filed within 30 days. Add another 60 days before you get the check. Scary, but of the claims that were re-filed, there were errors on 25% of those!

Sometimes it is best to leave it to the professionals.

Of my visits to centers where they are doing their own billing, 75% of my time with the management team is spend on dealing with some issues related to accounts receivable. Of the centers where it is outsourced, less than 10% of my time is related to those issues.

Hospitals, you are no exception to this; you probably just don't have to deal with it on a day-to-day basis. Make no mistake, it does affect you. Any facility that is only collecting 60% of the money they have earned, and even then it takes over 90 days to receive it, is going to be affected!

Be aware of it and start asking questions. Questions that all should ask are:

1. What is our collection rate?

2. How much is written off as uncollectable?

3. How much is lost due to incorrect underbilling or other billing errors?

4. What are our days in accounts/receivable?

As we do less and less surgery, collecting what we have earned is going to become a real issue. Only you can decide for yourselves the best course of action for your facility. [Editor's note: Earnhart & Associates is a consulting firm specializing in all aspects of outpatient surgery development and management. Earnhart & Associates new address is 238 S. Egret Bay Blvd., Suite 285, Houston, TX 77573-2682. Phone: (512) 297.7575. Fax: (512) 233.2979. E-mail: Web:]