Strong From the Start
Set up your practice and control your bottom line.
By Bryanne Johnson and Dominique Zordich, JD
In the flurry of excitement when starting a business, it’s easy to overlook the initial set up of your practice to control your revenue and to ensure you are keeping a pulse on your practice.
Those initial steps impact your success as you navigate through the highs and the lows of owning a practice. Whether you are starting a new practice or have been practicing for 40 years, it’s wise to periodically evaluate the initial set up of your practice and assess its impact on your bottom line. This article explores several key items to consider as you look to establish and cultivate a new practice or want to check-in on an existing practice.
ESTABLISHING INSURANCE CONTRACTS
One of the first questions a patient will ask a provider is, “Do you accept my insurance?” This is a loaded question—we all want to be able to tell the patient, “Yes, we accept your insurance and we are an in-network provider.” Out-of-network is a daunting phrase for both patients and providers who may be unfamiliar with insurance, which is why successful practices prioritize becoming a participating or in-network provider with insurance networks. But before you start accepting any and all contracts once an insurance panel opens, it is important to take the proper steps to ensure you are setting your practice up for long-term success:
- Do your homework. Review local insurances that are common in your area and research their policies, reimbursements rates, and other key information. For instance, is the insurance a flat-rate payor? Does it include a cap on modalities or units per day? What is the fee schedule and what percentage of the fee schedule is being offered in your contract?
- Develop a niche. Does your clinic use specialty equipment, or do you have a certification that allows you to specialize in a certain area or treatment style? Specialty services can set your practice apart from other providers and can give you an edge while negotiating a contract with a payor.
- Know your neighborhood. Are you in a densely populated area, or are you the only provider in the region to offer a specific service to the insured in your area? These can also be great negotiating points when trying to get into an insurance panel or negotiating a rate with a payor.
- Do not settle! Advocate for your practice, our profession, and the importance of the specialty services you can provide. Knowing your worth will give you the confidence you need when interfacing with insurance companies.
- Show them the money—literally. Utilize outcomes, quality measures, Net Promoter Scores®, and other metrics to prove your value to the insurances’ beneficiaries.
CREDENTIALING AND RECREDENTIALING LOCATIONS AND PROVIDERS
Once you have executed your insurance contract, the next step is to set up credentialing for each practice location and for each individual provider. While this process may seem intimidating, remaining organized and in constant contact with each insurance company is key. Typically, the contracting and credentialing department at each payor can guide you on what documentation is required in order to attach your locations and individuals to your established group contracts. This takes time and you can expect that once a credentialing application is submitted to the insurance, it can take between 30 and 120 days before you receive a response. Key points to navigate this process include the following:
Ensure Accurate Effective Dates for Your Practice and Your Providers
- Be sure to inquire with the payer about backdating of effective dates. Some insurances may backdate to the date that the application was received. If you are expecting an approval, you can be riskier with these insurances and start to see patients for this payor once the application has been confirmed received.
- Do not bill a new payer contract until you have confirmed the effective date. If you bill claims with dates of service prior to receiving your fully executed contract, you will surely receive denials that will not uphold appeals. Knowing the effective date of a contract or a provider’s participation date is a critical piece of the credentialing process. This will ensure your claims are paid and help avoid unnecessary denials.
Ensure Proper Timeframe for Credentialing
- Familiarize yourself with the amount of time it takes to receive approval for credentialing and re-credentialing. These time frames vary considerably payor to payor.
- Ask for confirmation of receipt when submitting an application and follow up every two days until confirmation is received.
- After you have received confirmation of receipt, follow up every two weeks until approval is received.
- Keep a spreadsheet to organize the credentialing progress, monitor follow up intervals, and track responses.
- Set reminders to ensure no follow-ups are missed.
- Always get a reference number for every single call you make to an insurance company!
Ensure Billing and Credentialing Departments are Communicating
- Your billing and credentialing departments should have a solid process in place for communicating credentialing status and how that status directly affects the submission of claims.
- It is essential that your credentialing department shares all crucial information with your billing department, including: pending, approved, and terminated credentialing status; claims that need to be held and when those claims can be submitted; and contract intricacies to ensure that the EMR and claims reflect the contract details.
ESTABLISHING A FEE SCHEDULE WITHIN AN EMR
The fee schedule is an arbitrary number (typically marked up from the Medicare fee schedule) that gives you an idea of what your reimbursement per visit will be for each date of service rendered. Marking up the fee schedule allows you to capture all different payor and payor sources allowed amounts. For example, personal injury protection (PIP) and auto insurances generally pay more than Medicare, but billing these claims at the Medicare fee schedule will limit your reimbursement.
If you need to adjust your fee schedule for any reason it is important to remember that your payment percentage will change, as well. Payment percentage is a historical calculation of the paid claims divided by the amount that charged for those claims. If you track paid percentage and disallowance on certain codes, once you change your fee schedule, that percentage will also change and will affect your ability to compare that percentage to your historical data. Ideally, you should establish your fee schedule upfront and consistently track your paid percentage to identify the trends in your reimbursement. Developing an accurate paid percentage will provide you another key metric to monitor the health of your practice.
SETTING UP PAYORS AND PAYOR RULES WITHIN A DOCUMENTATION SYSTEM
Make sure you are establishing each payor with the correct payor guidelines.
AMA vs CMS
The main difference under AMA guidelines is that the AMA does not calculate the total time or cumulative time of a treatment session. They consider each unit and each unit must be at least 8 minutes in order to bill for it. This is why some people call the AMA guidelines the “Rule of 8s.”
Per CMS, in order to bill one unit of a timed CPT code, you must perform that associated modality for at least 8 minutes. Medicare calculates the total time spent in a treatment session and divides by 15 to figure out how many units are rendered on a given service date. Simply put, Medicare takes total time and uses Table 1 to determine how many units were rendered on a particular treatment session.
Each payor also has a specific set of rules around modifiers, evaluations, authorizations, etc. Make sure these items are set up properly from the start to avoid denials, patient balances, and messes on the back end!
THE FRONT-END BASICS
Insurance verification and authorizations play an essential role in avoiding denials and patient ineligibility for services. They are also a key component in your customer service.
While it is the patients’ responsibility to know their benefits, we are all aware patients often do not even know what a deductible is let alone how much they have remaining on it. If you do not present this information at the time of service, you could be dealing with an angry patient down the line after he or she receives a statement.
INSURANCE VERIFICATION AND AUTHORIZATION PROCESS
There are several things that should be obtained when an insurance verification is completed. These include: payable benefits, co-pay amounts, co-insurance amounts, deductible amounts, effective date of plan, additional coverage details, whether authorization (or prior authorization) is required, confirmation of claims address, the patient’s yearly maximum, etc. While some insurances allow you to check benefits online and they can be completed fairly quickly, other insurances require up to an hour (!!) spent on the phone to obtain benefits. Ensuring this process is done correctly on the front end will save your team a significant amount of time and resources on the back end to avoid denials, as well as make your practice more money to get claims paid the first time around.
As we continue to navigate through everchanging reimbursement models, new edit changes and constant fluctuations of authorization requirements, it is important to continue to maintain, manage, and measure the health of your practice. Below are some key performance indicators to track consistently:
Denial/First Pass Payment Rates
How many denials are you receiving and how many claims are paid on the first submission? Many factors go into these metrics including accuracy of patient intake and registration information, correctness of insurance verification and authorization information, and how claims are being submitted per payor guidelines. A very efficient practice will have a denial rate under 5% and a first pass claim rate higher than 95%.
Percentage of Receivables over 120 Days
How quickly are you collecting the money you are owed? You should be aiming for less than 10% in the 120+ aging bucket. There are always going to be issues with specific claims but a healthy practice has about 75% of their AR in under 60 days outstanding.
Payer Mix/Expected Revenue per Payer per Visit
Who are your top 5 to 10 payers? What are they paying you per visit? Your overall cash flow is very dependent on your payor mix and what each payor is paying you per visit or per unit on average. This is an important metric every practice should monitor closely. Maybe it is time to try to renegotiate contracts, to consider going out-of-network with some insurances, or to use your marketing dollars more strategically.
THE POWER OF REVIEW
These are only a few of the metrics to review on a consistent basis. Customize what metrics matter most to your practice and review them regularly. Using these processes and key performance indicators will provide an overview of the health of your practice and allow you to control your revenue effectively.
Bryanne Johnson is the founder and CEO of Lincoln Reimbursement Solutions, a revenue cycle management company. She may be reached at firstname.lastname@example.org.
Dominique Zordich is Compliance and Quality Control Manager at Lincoln Reimbursement Solutions, overseeing insurance eligibility, payor verifications and payor authorizations. She may be reached at Dzordich@lincolnrs.com.