BSM Blog

While hiring an outside billing company is useful, your practice still needs to oversee the collections process. Follow along as BSM Senior Consultant Elizabeth Monroe covers the five metrics you should monitor to ensure successful practice collections.

NEED HELP TRACKING YOUR BILLING METRICS? Contact us today for expert advice and guidance.

Video Transcript

Hi, and welcome to this instalment of BSM Consulting's vlog. My name is Elizabeth Monroe. I'm a Senior Consultant here at BSM, and today, we're going to talk about Outsourced Billing: The Top 5 Metrics That You Should Watch.

Does your practice use an outside billing company to administer your revenue cycle management? If yes, like many other medical practices that have hired a billing company to process payments, you may have done this in the hope that it would make your life a little easier.

But hiring an outsourced billing company does not come without its challenges. While you might be tempted to “wash your hands” of billing and want to “trust” that the billing company will handle everything, that simply is an unrealistic expectation. Even when partnering with an outstanding billing company, the practice must have dedicated resources to ensure that overall processes are running smoothly and also to address patient questions and issues. Consider establishing metrics that you follow each month related to your billing.

Here’s our suggestions for the top 5 metrics you need to watch from your outsourced billing company. These should not take long to review but are crucial to ensure successful cash flow.

Review Accounts Receivable by aging bucket. When setting up your monthly reports, ensure that your billing company provides your aging metrics. What we mean by aging metrics is that you know how long a claim remains unpaid. Most of your claims will be paid in 30 or 60 days, so most of our A/R should be in these buckets. But you need to closely monitor your 90-day and your 120+ day metrics to avoid timely filing issues.

Your aging A/R report should include your aging by payer and by patient balances. By receiving this report each month, you can quickly identify if there is an issue collecting money. You will also see if you are having challenges with a specific payer or if patient balances are getting too high. If the billing company is responsible for patient collections, these reports can help confirm that it is sending patient statements and calling to collect outstanding debts.

Track the number of days sales outstanding. Days sales outstanding represents the adjusted A/R balance divided by average daily collections. The lower the number, the better. The higher the number, the more attention you will likely need to give to the associated processes and reduce collection times.

This metric can help you identify the lag between the date from charge entry to the date you get paid. In most practices, it takes 19–33 days from the patient’s visit to receive payment for a clean claim. If your billing company takes longer, you may need to inquire why.

• Is there a lag for the doctor to close the chart?
• Is there a delay in posting primary or secondary payments from insurance?
• Are there errors on the claim that cause a delay in posting or submitting?

By keeping your eye on this metric, you can better identify issues that result in extended collection times.

Review write-offs and adjustments. Whenever someone is “adjusting money” off a patient account, you want them to document why.  The most common reason for adjusting monies off an account is for contractual write-offs, meaning the practice charged an amount for the services but received a lesser amount from the insurance company. Any remaining balance that does not transfer to patient responsibility will need to be adjusted off the balance. There may be other reasons for write-offs. These can include:

• Office write-off. The office directs the billing company to write off a charge.
• Risk write-off. For risk management purposes, meaning there might be an unhappy patient, and the practice elects to write off the charges.
• Professional write-off, which is typically at the discretion of the doctor.
• Bad debt write-offs, meaning that the practice is transferring the balance to a “bad debt” and will write off any amount that it has no reasonable expectation of collecting.
• Miscellaneous write-offs. These should be rare — as we always want to include a reason and details for writing off monies.

Except for contractual write-offs, it is a best practice to review all write-offs each month. You may also want to approve any bad debt write-offs, in which case you need to check this list promptly so that the billing company can make the appropriate adjustments.

Check the list of common practice issues. The billing company should communicate reasons that cause delays in filing a clean claim. These issues can include:

• Doctor delays in closing charts, extending the time to submit the clean claim;
• Incorrect demographics or insurance information entered into the patient’s chart; or
• Incorrect diagnosis, CPT codes, or modifiers.

For any rejected claims, identify the common denial codes provided by the payer. By receiving this information monthly, the managers and staff can reduce internal mistakes, improving the billing company’s ability to process claims quickly.

Issue patient refunds and credit balances. Each month, the practice should receive a list of patient accounts that are owed a refund. No matter how well the front office collects co-pays and co-insurance, you will always need to reconcile patient accounts and return money. The practice is contractually obligated to return patient refunds in an efficient, timely manner. By processing these refunds each month, you can reduce the practice’s liability and ensure positive patient relations.

So thanks for joining us today. Just as a reminder, monitor these five metrics from your outsourced billing company:

1. Review Accounts Receivable by aging bucket
2. Track the number of days sales outstanding
3. Review write-offs and adjustments
4. Check the list of common practice issues
5. Issue patient refunds and credit balances

We hope this helps you create a good relationship with your outsourced billing company and improve practice collections.

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