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Computerized Cash Flow

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Diligence and automation are the keys to getting and keeping your accounts receivable under control.

By Steven Presement

Accounts receivable is generally a leading cause of intestinal distress for those paying the bills. Physical therapy practices face unique challenges when it comes to collections, but there are also opportunities not afforded in other types of businesses. Unlike most other businesses, in the physical therapy world, there are two phases to accounts receivable: phase one happens before the consumer is even treated and continues during the course of treatment; phase two occurs after the claim has left the building and is in the hands of the insurer and patient.

One of the unique opportunities in physical therapy is that you can verify exactly what you expect to be paid prior to the beginning of a patient’s treatment. You should verify, for each patient and for each insurer, exactly which services are and are not covered and how many visits, units, or treatment dollars are allowed. A few extra minutes on the phone with an insurer in advance of treatment will benefit both you and the patient. You will both have a clear picture of what can reasonably be accomplished given the restrictions of the policy. A surprise patient balance or discharge is not conducive to obtaining new, word-of-mouth business.

Track the Limits

Use your Practice Management software to record and track funding limits. You do not have time to review how close you may be coming to a patient’s limits with each visit. Let your software do that for you. It will alert you to an approaching financial dead end, leaving you with enough time to discuss options with your patient. Even the Medicare cap should be tracked in this manner.

With the high number of procedure and diagnosis codes, it is almost impossible for each therapist to remember what can and cannot be billed to each insurer. To address this, set up restrictions in your billing software. You can include a notation, such as, “I’m not allowed to bill code 12345 to Insurer ABC,” allowing you to immediately spot potential errors before they are even entered.

Using your software to automate modifiers will also drastically reduce billing errors. The GP modifier should always appear on Medicare claims. The KX modifier should appear automatically once the Medicare cap has been reached, and even the 59 modifier can be automated using the available CCI edits. Even the new PQRS and Functional Limitation Reporting can be automated. You should never miss a deadline.

It is unrealistic to expect your clinical staff to recall the rules and regulations of each insurer during the treatment coding process. Once you learn the rules of a particular insurer’s policy and follow those rules, the majority of charges will be paid without incident. The goal is to automate as much as possible, making maximum use of your computer’s brain.

Once the charges have been entered, they can generally be submitted either on paper (through the CMS-1500 form, a new version of which comes into play this winter) or electronically. While some insurers, primarily workers’ compensation and auto, still require paper claims, most others will accept electronic submission of claims, either directly or through a clearinghouse. For those of you afraid of clearinghouse costs, consider how much you are paying in postage each month. A good clearinghouse can be found for less than a dollar per day.

Paper billing should be strongly avoided. Paper claim errors involve weeks. First they have to be delivered, read, processed, and returned. Then they need to be mailed again, adding to their cost! An error on an electronically filed claim will be discovered and reported back to you for correction within a few days. Also, your software will capture the “easy errors” before they leave your clinic, including missing information, birthdates, gender, referring physician information, and diagnostic codes.

File Often

Whether you choose paper or electronic, file as often as you can. The more often your bills go out, the more often the checks will return. Bigger, less frequent billing will result in longer periods of no cash coming through the door, and if one of those big claims has an issue, it may be held up or denied. It’s called cash flow—not cash chunks.

When it comes to co-payments, coinsurance, and deductibles, do not be shy about asking your patients for payment. If you do not value your time, they certainly will not. Asking patients for $20 at the time of a service is a lot easier than asking them for several hundred dollars once a month. Do not let the amounts build. Smaller amounts collected more frequently are always more palatable.

Processing credit and debit card payments directly through your billing software also increases efficiency by reducing front-desk and day-end balancing time. Automated storage of patient credit card information (securely and with permission) helps reduce receivables even further since you can always ask patients, “May we charge this to the credit card that we have on file?” This is especially helpful should their wallet not make it into the clinic.

Phase two begins once the charges have found their way to the insurers, again either electronically or on paper. The key to collections during this phase is having a routine and diligence. The cycle involves reporting, identifying, taking actions, and then following up on broken promises, all of which can be automated using a computerized contact log and bring-forward system, generally part of any good billing software.

As outstanding balances get older, their history becomes more blurry, and they are typically harder to collect. A firm threshold should be established after which you begin to work on a collection. For example, when an outstanding patient balance exceeds 14 days, you might want to take action. When an insurer falls into the 30-day category might be the trigger. Your billing software’s accounts receivable reporting should allow you to filter by both the age and nature of the account.

Once the threshold has been triggered, take action. Start with the accounts that have just become overdue. Send statements. Make phone calls, recording notes in your automated bring-forward system about whom you spoke to, the nature of the discussion or actions, the next steps agreed upon, and the next follow-up date. Next, produce a report of those who have broken promises, meaning that their next action date has passed and follow up in the same manner. Make contact, record the outcome, and assign the next follow-up date.

This is a constantly repeating cycle, but spending a few minutes each day will have a far less negative impact on workload and cash flow than binging once or twice a month. If insurers and clients come to know that you will hold their hands to the fire, you will typically be paid more quickly. They do not want to hear from you about outstanding balances any more than you want to contact them.

For cash flow purposes, you should have a good handle on what is really owed to you. You may work in the world of usual and customary when the bills are going out the door, but you need to know exactly what you can expect to be paid, by fee code, by insurer, which again should be automated by your billing software. When you analyze your clinic’s cash flow, believing that you are owed $200,000 in “imaginary” money when in reality, you are only entitled to $30,000 could spell disaster.

In a perfect world, you have an endless time to work on collections, but more often, the case is that staff is stretched thin. As a result, the time spent on collections needs to be effectively managed. The same amount of time is required to collect on a $1,000 account as to collect on a $100 account. In other words, it takes the same phone call, the same explanations. If time is finite, work on the collections that would yield the best return. Spending an hour to collect $100 simply may not be the most effective use of your staff’s time. You may even want to consider ignoring unpaid claims that sit under a certain threshold.

Review at the End

Once the payment finally makes its way to you, review it carefully to ensure that the insurer met its obligation and that charges were not underpaid. During payment entry into a billing system, whether it is automated or manually entered, your billing software should alert you when a payment is less than expected for any reason. It is not good enough that payment has been made; it should be in the amount that you believe you are owed. Leaving money on the table with an insurer, simply because your process for payment entry is inefficient, is just as bad as not having collected the funds at all.

Remember to treat payment processing and Explanation of Benefit (EOB) entry as a learning experience. From this, you can establish what an insurer may or may not cover, which is good information to keep in your pocket for the next time. Insurers do not refuse payment “just because.” They follow a formula, which you should learn to save yourself time and money in the future.

Your own diligence, combined with the power of your billing software, should provide you with control over your cash flow. Remember, in a physical therapy practice, it is not a matter of a new rule every day; it is the same old rules being played out again and again. Knowing those rules will assist you in winning the game.

Steven Presement is president of Practice Perfect EMR and Management software. He can be reached at steve@practiceperfectemr.com.