Payment collections, denials, and overdue patient balances should be met with diligent business practices.

Over the years, private-practice owners have asked me, “Where’s my money?” time and again. The answer can be difficult if you do not have firsthand knowledge of each of your patient accounts. Chances are, you do not, so the question is, “Do you have a biller or collector on staff who does?”

Getting paid for services rendered begins when you receive the first phone call from a patient. The flow will usually go this way: The patient is processed by the front-desk specialist and then is seen by the therapist, who submits his or her charge sheets to the biller for data entry and/or enters his or her own charges that get reviewed by the biller, who then submits the claim. Then, the therapist waits for the reimbursement check to arrive. A seamless operation, right? Yes, for the most part. But what if the reimbursement does not come in? Then, it is time for your collector to get busy and find out where the money is.

Ask Accurately

The first step to getting paid is to bill correctly. It is imperative that you have a well-trained staff that understands current procedural terminology (CPT) and ICD-9 coding, insurance contracts, rules and regulations, and the entire billing system; and then enters accurate data. I find most errors begin in the billing system. The billing staff is not completely trained on all of its functions, and/or the system in place is in need of an upgrade. Additionally, you must have all authorizations and/or referrals in place, and you must bill according to federal and state rules and regulations. Assuming that all of that is in place, and your patient data is correct, you should expect to receive payment for your services. However, that is not always the case. Maybe you have billed some HMOs before the referrals hit their systems. The result: No payment until you call and correct the situation. Maybe you have authorization and a referral—everything you need—and still no payment. Maybe you have sent all the requested information, and still no payment. What could be wrong?

Actually, you may be doing everything right—but that does not always mean that you will get paid. Communication between the front desk, therapist, biller, and collector is paramount to the success of getting paid for services rendered. The knowledge shared is important to not miss why some claims may have been billed a particular way or why others are being held up. In small practices, one employee may perform both biller and collector duties. Sharing problems regarding the computer system, data entry, delayed billing, electronic billing, and printing paper claims are just some of the reasons that can result in delayed payments or no payments.

A skilled collector knows that, in many cases, to receive payment, a call—or two or three—must be made. That connection is necessary to ensure that the claims not paid within 30–60 days are followed up to solve the problem and ensure that current and future claims will be paid. Follow-up is the key to ensuring that all unpaid claims billed out are paid.

I have found that in many of the clinics I have assessed, the follow-up on unpaid claims is poor and sometimes is almost nonexistent. I have also found that the person on staff who has been assigned to collect on past due accounts is not as efficient as he or she could be. All information needed to follow up on unpaid claims should be in your system. Notes should always be up to date, and they should include what the patient’s insurance benefit is, what the authorization/referral number is, and what dates it covers; and any and all correspondence that has transpired on the claim. Discharged files should be nearby, so if information such as a physician referral is requested, it can be easily found and faxed. Active files should not be too far away, either, for the same reasons.

Some paid claims may also end up being challenged because the payor believes the claims were paid in error. In a case like this, an investigation as to who is responsible for the claims must begin. This now involves making several phone calls to ensure that if a reimbursement needs to be made, the payment from the other source will soon follow.

Managing Patient Accounts

I have always found that the hardest unpaid claims to collect are patient balances. It seems that many patients put medical bills last on their list of what to pay. Collecting copays, some portion of coinsurance, and deductibles at the time of service helps reduce the amount of patient-owed balances. Collection of patient balances is one of the key functions of the front-desk staff, and there should be no excuses for not collecting them. Once again, a good billing system should be able to produce a daily report of patients who owe copays and other coinsurance balances. Also, having a strict “payment at time of service” policy and giving payment alternatives—such as cash, check, or credit card—to patients lead to a more successful collection rate.

It is also important to set up a system to collect patient accounts on which the collector has exhausted all efforts. This could be an attorney who will send out one or two letters and make a phone call to patients with outstanding balances, or a collection agency who will take similar action. Typically, most attorney’s offices or collection agencies take one third of what is collected. You should not have to pay any additional fees to use an outside agency unless the case is going on for further litigation. In the end, patient balances up to $300 that are not collected by your outside source are usually written off as a bad debt, because it can cost you more to take the patient to court—and that is not always a guarantee of payment.

I usually recommend that patient statements go out at least once per month. For 100% patient balances, I encourage that statements go out every 15–20 days in three cycles. Statements that go out a second and third time should include a progressive note; by the third time, the note should state that the account will go on for further outside collection if it is not paid in full in 10 days. I believe that if a patient does not respond to a series of statements, he or she will not pay—whether you send three statements or 300. The objective is to move quickly and not let the account age to the point where you may not be able to find the person and thus lose out on collecting options. Quickly passing the account to your outside agency increases your chances of collecting—receiving two thirds of the payment is better than none at all.

Dissecting Denials

Another very important factor in facilitating prompt payment of claims is to answer daily requests for information and daily denials immediately. My rule is that if you are receiving more denials in a day than you can handle in a day, you have a serious problem that must be rectified immediately in order to stop denials for repetitive reasons.

What is a denial? A denial is a written response from an insurance company with regard to a claim you submitted stating that the claim is not valid and will not be paid. A claim could be denied for several reasons, such as the patient’s insurance does not cover physical therapy, the patient’s insurance is not valid at the time of service, the claim was submitted over the filing limit, no authorization or referral is in place at the time of service, or you are not a provider. Although some denials are flat-out wrong, a phone call will still be required to straighten out the problem, to turn the denial around, and get paid; or to ask the patient for assistance.

Do not be confused about the difference between a denial and a request for more information. Many times, you receive a request for more information, such as a copy of the physician’s prescription, a copy of an explanation of benefits from the primary insurance, or copies of notes. These are not denials—no one is saying you will not be paid. What they are are notes from the insurance company stating that payments cannot be processed without the requested information. Many times, the information can be faxed or emailed. If you answer the request immediately, chances are very good that you will receive a check within a week. However, a follow-up call is a good idea to ensure that the insurance company received the information and that a check is being processed.

Reviewing Reports

A good way to keep your aging accounts current is to run an accounts-receivable report every week.This report tells you how old each account is. Typically, an accounts-receivable report lists patient accounts as follows: current, 30–60 days old, 60–90 days old, 90–120 days old, and more than 120 days old. Many billing systems will let you change those categories to whatever you like.

All business owners should become familiar with and learn how to read their accounts-receivable report. By reading this report and other financial reports from your system, and by checking the daily mail for denials, you will uncover where you may be having trouble with payments. The goal here is to determine those accounts that are aging but are still collectible, and those that are not. If you determine that some accounts are not collectible, you must record the reason why to ensure that revenue is not lost for that reason again.

Having weekly meetings with your staff and asking them direct questions regarding the status of patient accounts and insurance issues will also help you evaluate your staff’s skill level and productivity. For example, in your weekly meeting, you should be asking questions regarding billing issues that are affecting reimbursement (number of units and coding), inconsistencies or changes in reimbursement, take-backs on accounts, the number of denials, new insurance information that will affect reimbursement positively or negatively, and specific patient problem accounts. 

By reviewing your accounts-receivable report each week, you will be able to see accounts that continue to age. Then, you can ask questions regarding their status and how and when they will be paid. You can also learn how to go into the system and randomly check patient notes to see that accounts are consistently being checked. Your collector should have clear, understandable answers to all of your questions. 

In the end, you should know where your money is.

Diane McCutcheon has been an independent business-management consultant throughout the United States for more than 8 years. She has more than 25 years experience working in physical-therapy clinics and in managing business-office operations. Through assessments and strategic planning, she has assisted clients by increasing staff productivity, creating seamless operations that improve office efficiency and procedures, and maximizing billing and collection systems, resulting in timely reimbursement for services rendered. She can be reached at dmccutcheonbmcsi@aol.com