ACOs: The Medical Biller’s Basics

Kathy McCoy, MBA June 29th, 2011

Leave a Comment Latest by COMMENTOR NAME

What are the basics on ACOs for medical billing?Previously, we gave an introduction to accountable care organizations (ACOs) and why they are coming. But what about them? What do they do? What is required of an ACO? What does it take to become an ACO? This time, we’re going a little deeper into ACOs to help medical billing managers and staffers better understand the coming changes.

What is an ACO?

•     The result of the 2010 healthcare reform legislation.

•     A network of physicians, hospitals and other providers that share the responsibility for the delivery of patient care.

•     A way to improve the quality of healthcare while reducing its costs

What does an ACO do?

•     Makes a formal commitment to helping the healthcare needs of at least 5,000 Medicare beneficiaries for a period of at least three years.

•     Unites providers into a group for the purpose of pooling resources in order to improve care coordination and patient outcomes at reduced costs.

Do ACOs exist presently?

Some examples exist, and they helped inform the model set forth in this program. But the ACO concept is fairly new. (The term “accountable care organization” was coined in 2006.) More significant, though, is the fact that organizations are presently and actively enhancing their infrastructures and grouping into ACOs in order to meet the January 2012 launch of the Shared Savings Program. There are also examples of groups already calling themselves ACOs, some in advance of knowing precisely what constitutes — and is required of — an ACO.

What is required of an ACO and its member providers?

•     Provide and demonstrate better care at reduced costs.

•     A formal business structure to receive and distribute the shared-savings payments to its member providers

•     Be “meaningful users” of electronic health records (EHR)

•     Measure and demonstrate quality in patient experience, care coordination, patient safety, preventive healthcare and care of at-risk populations.

To be sure, these requirements are a tall order. In fact, there are growing concerns that the additional burden and costs associated with these (and other) obligations could lead to poor participation in the program. (More on that later.)

How can ACOs cut costs?

Everything is fair game, including removing cabinet doors for greater efficiency. In the ACO model, a committee of physicians and other personnel will look for new efficiencies throughout their operations. Along with the significant IT upgrades needed to meet the program’s requirements, ACOs will be looking for how they can also leverage IT to reduce paper, streamline processes and generally do more tasks more quickly and at a lower cost. Primary cost savings, of course, come with sharing resources among providers in the ACO and eliminating waste and redundancies, such as duplicate blood tests or conflicting treatment plans. Preventive care and coordinated care are also vital to reducing healthcare’s cost.

What else must an ACO and its affiliated providers do?

•     Have sophisticated healthcare information technology (HIT) systems. They need to track performance and measure clinical outcomes They must handle individualized care plans, preventive health, care coordination and a number of new reporting requirements. And they need to be able to achieve true data interoperability with other providers, an essential to the new accountable-care reality. .

•     Have the ability to communicate evidence-based medicine and clinical knowledge in an understandable way.

•     Provide patients easy access to their medical records

•     Establish a care-coordination infrastructure, including fielding case managers.

•     Review patient records to identify potential clinical concerns as well as cost efficiencies.

•     Engage in collaboration and discussion to enhance group skill and quality of care

•     Meet all of the rules and requirements of ACOs specified by the CMS in its recently published program specifics, which span hundreds of pages.

What is the incentive for an ACO?

It’s a carrot-and-stick operation. There are financial incentives, and they encourage early adoption. Meaningful use of electronic health records (EHR) is rewarded. Cost-cutting efforts will lead to significant long-term aggregate savings. Participation in the Medicare Shared Savings Program is certainly a primary driver. That all constitutes the carrot.

The stick is that an ACO must meet the standards of quality or lose its participation in the Shared Savings Program… and potentially its contracts.

What types of providers participate in an ACO?

In theory, all types of practices should be part of an ACO. The premise is to have an organization that is responsible for providing better care, that solves the current problems of people getting their healthcare in small component parts from a multitude of different sources. This means demonstrating outcomes that outperform historical measures. It means a focus on prevention and on coordination of care for chronic diseases and the elderly. This all requires a team consisting of a cross-section of healthcare disciplines and providers working together for greater efficiency and effectiveness. HOWEVER…

A significant problem surrounding Medicare’s Shared Savings Program at present is the fact that many providers are not planning to participate in it. The American Medical Group has expressed its concerns formally after 93% of surveyed members said they wouldn’t participate in the program without major changes to the rules. The American Hospital Association has asserted that startup and year-one costs for an ACO are many times higher than CMS estimated and, therefore, the financial incentives should be higher to encourage and enable providers to participate. This is what is happening presently, but we’ll dig deeper into it in a future post.

Stay tuned for more in our series on the topic of ACOs. We’ll cover the current concerns and criticisms about ACOs, and we’ll get into how accountable care and the sweeping changes are presently affecting medical billing and healthcare billing personnel.

For more information, see our previous posts on ACOs, including a glossary of ACO terms, summary of public comments on the proposed ACO plan, and an assessment of what ACOs mean for practices.

Read More

Medical Billing Software Video Update: Ramping Up For ICD-10 Coding

Kathy McCoy, MBA June 27th, 2011

Leave a Comment Latest by COMMENTOR NAME

Learn how to prepare for ICD-10 diagnosis coding and avoid problems from expert Nancy Maguire in this webinar provided by Kareo medical billing software

By now, physician practices and medical billing services know a change is coming on October 1, 2013 that will dramatically impact their medical billing and current way of doing business. That of course is the date set by the federal government for full implementation of ICD-10-CM, which will completely replace ICD-9 coding. Transitioning to ICD-10 diagnosis codes will be like learning a new language.  Providers will need to be using ICD-10 coding for medical billing on claims based on dates of service from October 1, 2013 going forward–or they will not get paid.

Noted coding authority Nancy Maguire, ACS, PCS, FCS, HCS-D, CRT recently conducted an informative webinar on this life-changing transition on behalf of Kareo medical billing software. Nancy is the author of the Nancy Maguire GPS to ICD-10-CM Planning and Implementation Guide, and is a nationally-renowned procedural and diagnostic coding instructor, boot camp trainer, and workshop leader.  Kareo periodically sponsors webinars featuring experts such as Nancy to provide strategies for improving your cash flow through better medical billing and coding and effective practice management. Her webinar, Preparing for ICD-10-CM: The Nitty-Gritty of Diagnosis Coding, was attended by well over 400 professionals.

During the first part of her presentation, Nancy explained some of the major differences between ICD-9 and ICD-10 codes and the manuals that explain them. For instance, ICD-9 codes are usually three to five digits long. ICD-10 codes use three to seven digits. Why? ICD-10 contains many “combination codes” that include two or more conditions/symptoms in one code descriptor. They also include a code for laterality in addition to the type of encounter. Because of the greater detail, the ICD-10 manual has over five times the number of codes—68,000 codes–versus ICD-9, which lists approximately 13,000 diagnosis codes. The ICD-10-CM manual has 21 chapters, while ICD-9-CM codes only covered 17 chapters in the tabular list. 

Why the move to ICD-10? Although the United States has been using ICD-9 coding for 34 years, the rest of the world does not. Moving to ICD-10 will make U.S. data compatible with the rest of the world, which will be useful for comparing morbidity, mortality and best practices. ICD-10 offers greater flexibility to add new codes and an enhanced tracking capability. Theoretically, there will also be a  reduction in the need for additional information being sent to payers. This remains to be seen, of course.

Whatever the reasons, moving to ICD-10 is not optional. There will be no grace period, although it is likely that medical billers will be working with both sets of codes for a period of time as they submit claims for those dates of services running up to October 1, 2013.

So if you oversee the medical billing or coding for a medical provider, it isn’t too soon to start familiarizing yourself with ICD-10. To hear Nancy’s complimentary educational webinar and learn more, click on the video above.

Read More

How Will ACOs Affect Your Medical Billing? Part I: A Glossary of ACO-Related Abbreviations/Acronyms

Kathy McCoy, MBA June 24th, 2011

Leave a Comment Latest by COMMENTOR NAME

Make sense of the alphabet soup of ACOs and how they will impact your medical billing

As part of our series on Accountable Care Organizations (ACOs) and the coming healthcare reality they represent, Kareo is committed to helping medical billing personnel make sense of it all. And the topic has a fair number of complexities. So, in addition to presenting the information in sensible portions, we want to make it as understandable as possible. This includes unraveling the acronyms that surround the discussion of ACOs. Here’s a short list:

          ACO   Accountable Care Organization, a voluntary group of healthcare providers/suppliers designed to better coordinate care and improve efficiency of delivery for better outcomes at a reduced cost.

          ARRA   The American Recovery and Reinvestment Act of 2009, the federal law that provides new requirements and incentives to improve the quality of healthcare while reducing its costs. ARRA’s initiatives are the impetus for the shift toward accountable care.

          CMS   Centers for Medicare and Medicaid Services, the federal agency in HHS that administers Medicare, helps run state Medicaid programs and administers health insurance portability standards. CMS is also responsible for HIPAA standards and quality standards for long-term care facilities and clinical laboratories.

          HHS   The U.S. Department of Health and Human Services

          PPACA   Patient Protection and Affordable Care Act, the law that requires HHS to establish the Shared Savings Plan and, as a result, Accountable Care Organizations.

          SSP   Shared Savings Program, an incentive program by which an accountable care organization and its participating providers can be rewarded a share of the money their efforts have saved Medicare. Must be established by January 1, 2012.

Stay tuned for more in our series on Accountable Care Organizations, the changes they will bring and how it all affects the people and processes involved in medical billing.

Learn more about how you can make your medical billing easy in the face of these coming changes.

Read More

Complimentary Webinar: What You Can Do to Prepare for Medicare Payment Reductions

Kathy McCoy, MBA June 21st, 2011

Leave a Comment Latest by COMMENTOR NAME

Tuesday, July 26, 2011
1:00 PM EDT/10:00 AM PDT

Learn how to minimize the pain of Medicare pay reductions with advice from a medical billing expert

Physician practices face certain Medicare cuts for not participating in CMS incentive programs and possible payment cuts if the “doc fix” for payment calculations isn’t passed. What should practices do in the last half of 2011 to protect their finances? How does this affect your medical billing? This webinar will describe key strategies including:

Why you should participate in at least one of the CMS incentive programs
• How to evaluate incentive programs and determine which are best for your practice
• How to review schedule management techniques to optimize revenue
• How and why your practice should collect money for services already provided
• And much more

Register now to learn how to protect your practice from Medicare pay reductions

Question-and-Answer Session — Ask your tough questions and get answers to your current concerns about how to protect your practice in the event of Medicare payment reductions.

Who Should Attend
Private practice owners, office managers, billing managers, billers, billing service owners and others concerned about minimizing the pain of Medicare payment reductions.

About Your Speaker:
Betsy Nicoletti, M.S., CPC

Expert Betsy Nicoletti will teach you the steps you should take to protect your practice from Medicare pay reductionsBetsy Nicoletti is the author of The Field Guide to Physician Coding and the 2007 Physician Auditing Workbook, as well as founder of She developed The Accurate Coding System to help doctors get paid for the work they do. She simplifies complex coding rules for practitioners and engages physicians in a positive and respectful way, which encourages attention and accuracy in their coding. Besides doing auditing and compliance work, she is a speaker, writer and consultant in coding education, billing and accounts receivable.

Betsy holds a Masters of Science in Organization and Management from Antioch, New England, and has worked in and around physician offices for over 20 years. She became a certified coder in 1999. Betsy is a member of the National Speakers Association, the Medical Group Management Association and the Healthcare Financial Management Association.

Register now to learn how to protect your practice from Medicare pay reductions

Read More

Video Update on Denial Management – Improve Medical Billing Results with Prevention, Management and Follow-up

Kathy McCoy, MBA June 15th, 2011

Leave a Comment Latest by COMMENTOR NAME

If it seems like insurance companies and medical providers are sometimes working at cross purposes, it’s because payors are in the business of reimbursing only for services as delineated in their contracts with patients and physicians. Medical providers, on the other hand, often provide care for their patients that may or may not be reimbursed via medical billing. This simple truth is the reason why you should be paying close attention to denials. Leaving money that you have earned “on the table” is not only short-sighted, it’s a long-term recipe for financial disaster.

In an educational video recently completed for Kareo medical billing software, leading practice management expert and author Elizabeth Woodcock, MBA, FACMPE, CPC, outlines a three-pronged strategy for improving the results of your medical billing through denial management. When you consider that every denial you receive ends up costing you $14.92 in staff time, supplies and lost cash flow, it’s clear that strategically addressing denials can have a significant impact on your income. Elizabeth’s video is the latest in a series sponsored by Kareo for improving your medical billing, reimbursement and cash flow.

Elizabeth’s first tip is to focus on the details of your contractual relationship with each payor. You will want to be sure there is a clear definition, spelled out in writing, of medical necessity—one of the more common reasons for denials. There should also be a stated time frame for filing deadlines. Elizabeth recommends trying to negotiate a period of 120 to 150 days, rather than the standard 60 to 90 days.

The contract should also spell out the negotiated time frame for “take backs” during which insurance companies claim you owe them money. Some states have statutes that spell this out but if not, be sure you have an acceptable time frame in writing. And finally, be certain that the payor is using recognized code sets—such ICD-9 and CPT codes—for billing purposes.

In the video, Elizabeth offers more pointers for denial prevention and follow-up that can greatly improve the results of your medical billing.  Watch the full video now.

Watch another video by Elizabeth Woodcock on Key Performance Indicators: How To Keep Your Medical Billing On Track

Elizabeth Woodcock, MBA, FACMPE, CPC, is an expert, author, speaker and trainer in practice management operations and revenue cycle management whose clients include Kareo medical billing software. She is a co-author of “The Physician Billing Process: Avoiding Potholes in the Road to Getting Paid.”

Read More

Medical Billing Update: Parsing the Public Comments on ACOs

Laurie Morgan June 14th, 2011

Leave a Comment Latest by COMMENTOR NAME

ACOs inspired plenty of comment on how the idea would affect medical practices and medical billing

Accountable Care Organizations (ACOs) were advanced as a money-saving program for Medicare through the Affordable Care Act (ACA), but the mechanism to allow physicians and hospitals to participate and share in the savings must still be defined by a legislative rule.  The CMS proposed an ACO rule in late March, and accepted public comments through last Monday, June 6. 

As could be expected with any important legislation opened to general public comment, there were some wide ranging reactions!  Hundreds of comments were posted publicly on the website.  Many significant issues were raised, especially through thoughtful submissions by leaders of the nation’s healthcare organizations as well as scores of individual healthcare professionals.   It will be interesting to see if and how the final rule – which is expected to be revealed later this summer – addresses some of the more challenging comments, which included:

  • Too much risk

Participating ACOs won’t just benefit from shared savings if they succeed, at some point the ACO must also share the downside risk that Medicare costs increase for their patients.  Moreover, as the AMA noted in its comment letter, the extremely steep costs of technology investments most ACOs would need to make to comply with the terms or the program already represent a substantial risk to ACOs – having to also accept the uncertain downside on Medicare patient costs may make the program just too risky overall.  Without knowing more about how the benchmarks will be determined or what they can really control, many prospective ACO teams may opt to sit on the sidelines for now. 

The current rule proposal also seems to carry a high penalty for ACOs that can’t meet CMS’s standards quickly.  As the Robert Wood Johnson Foundation observed in its comment, the rule as currently drafted seems to make it impossible for ACOs that fail to get a future shot at qualifying again – a seemingly inconsistent idea for a brand new, still uncertain initiative, and an impediment to trial. 

  • No scaling down for rural areas

Although CMS provided some amendments to its first draft of the ACO rule that were intended to lower the bar for rural medical providers, commenters like the NRHA and the AAFP still believe the structure is too weighty for adoption by smaller practices and smaller hospitals. 

This not only has the potential to limit the effectiveness of the program, it could have more troublesome unintended consequences for rural health care if, for example, larger market systems aggressively recruit rural doctors and patients to urban areas to expand their numbers.

  • Bias towards hospital-centered ACOs

Anti-trust rules and the need for significant technology, legal and management resources to run an ACO seem to make hospitals the inevitable drivers of ACO formation.  The AMA commented that the upside potential of ACOs for hospitals could accelerate the trend of hospitals buying medical practices, particularly primary care practices.  This in turn gives hospitals increasing market power – which ultimately (ironically) erodes the competitive environment that can help keep costs down and ensure patient choice.

  • Fee-for-service status quo

Many commenters noted that the layering of ACOs on top of the existing fee-for-service Medicare payment model is unlikely to encourage reduced billing by providers.  As the AAFP put it: “Unless or until CMS is able to pay ACOs (and, in turn, facilitate ACOs paying their participants) in a manner more consistent with the desired outcomes (i.e., through a blend of fee-for-service, partial capitation, etc.), we do not believe the Medicare ACO program can succeed.”

  • Unclear or unfair patient assignments

Under the proposed ACO rule, patients are tied to an ACO based mainly on their relationship with a primary care physician in the ACO.  The current provision would assign patients passively to an ACO based on the physician who has provided the preponderance of their primary care – even if they haven’t had the role of managing the patient’s care, or had that role exclusively.  The ACO’s ability to actually consolidate the patient’s care might be very limited depending on the patient’s previous patterns of healthcare utilization.

For example, as the MGMA noted in its comment letter, many Medicare patients live seasonally in different parts of the country.  While living elsewhere, they’ll receive Medicare services from physicians who aren’t participating in their ACO – and, the ACO’s savings accounting will be affected by those billings, even though they’re completely outside the ACO’s control.  MGMA also noted that many Medicare patients seek the majority of their care from specialists that they work with directly – limiting the impact of the primary care-based ACO savings approach.

  • Primary care physicians limited to one ACO

The currently proposed ACO model appears to limit primary care physician participation to just one ACO.  However, since primary care physicians typically refer their patients to a wide range of specialists and facilities, it is unlikely that any one ACO would include all the organizations and colleagues a primary care physician collaborates with already.  By restricting the primary care physician to a single ACO, the rule would force primary care physicians to either limit the options they offer their patients or refer outside of their ACO team.  The AAFP predicts that this aspect of the regulation, if unchanged, will mean “very little incentive for even the most sophisticated primary care practice to pursue Medicare ACO participation.”

  • Potential for perverse incentives

The authors of the proposed rule delivered many components designed to prevent “gaming the system,” but with any government program, the potential for manipulation is always lurking. ACO commenters identified a few undesirable possibilities.

For example, in its comments, the AAMC observed that teaching hospitals could be disfavored by ACOs because of the extra payments they receive from Medicare for their educational programs.  Since these payments would presumably count in overall cost calculations, ACOs would likely prefer to use non-teaching hospitals whenever possible.

Another example, provided by the medical home advocacy group PCPCC in its comment letter, involves the focus on physicians as primary care providers.  The PCPCC argues that practices could manipulate the total savings by shifting billings for costlier patients to mid-level providers instead of physicians – i.e., by explicitly excluding non-physician primary care providers, the ACO rule could open the door for patients to be creatively excluded from the comparison population to artificially ‘improve’ cost controls.

This is the second in a series of articles by Laurie Morgan on ACOs. Read the first article, ACO Incentives Around the Bend for Medical Practices: Plan Now or Wait and See?

Laurie Morgan is a management consultant with Capko & Company. She specializes in marketing, management and technology for medical practices and blogs about practice management issues at . Laurie has a BA in Economics from Brown University and an MBA from Stanford.

Read More

Strategies for Successful Denial Follow-up in Medical Billing

Sara M. Larch, MSHA, FACMPE June 13th, 2011

1 Comment Latest by COMMENTOR NAME

Expert Sara Larch looks at strategies to improve the success of your denial follow up processes in medical billing

In earlier Kareo newsletters, you have read about tracking your denials by major reason.  In early May, Elizabeth Woodcock presented a Kareo webinar on “Denial Management: Strategies to Improve Cash Flow in Medical Billing.”  She presented excellent information on denial prevention and denial management and included a sample appeal letter.  I hope you participated in her webinar as it was very worthwhile (view archived recording now).  Now, let’s spend some time looking at strategies to improve the success of your denial follow up processes.

Staff Follow-up

Before we talk about appeals, you need to make sure that denied claims are not being automatically written off – either by a staff person or your practice management system.  Remember, some claim denials are specifically annotated on your EOB (electronically or on paper) and some are line items with a zero payment with little information.  New staff members need to be adequately trained on payment posting to make sure that denied claims are not being written off in error as a contractual adjustment.  Your practice management system should have the ability to create electronic work files so the staff can organize and prioritize their work in a paperless environment. 

Before you assign staff to work on denied claims, think about the different types of denials you have and about which staff member has the right expertise to effectively get the claim paid.  You want to consider all of the practice staff and not just your billing team as individuals who can rework a denied claim.  For example, if you have certified coders in your practice, that person could review all claims denied as a result of a coding issue.  The coder can evaluate whether the claim just needs to be corrected and resubmitted or if additional documentation is required from the patient’s medical record or their physician.  Medical record staff or front desk staff can research referring physician names and correct denied claims where they were denied due to no referring physician.  With the efficient functionality of electronic work files, we can assign work files to different staff throughout our practices and monitor their progress day to day.

Since payers have different appeal processes, staff can become internal experts on certain payers.  Assigning denials by the reason created can often be effective but for some types of payers it is best to have one person handle all of their claim denials. That one staff member will be knowledgeable about the payer’s appeal deadlines, what forms to utilize and how to submit appeals

Payer Appeal Processes

Different payers have unique appeal processes.  Someone in your practice needs to compile the appeal processes for the major payers into one reference document available to all staff.  These processes might include all or some of the following:

  • Submit a corrected claim (this is less work than a full appeal)
  • Appeal via the website
  • Appeal via a telephone call
  • Appeal via fax
  • Appeal via letter

Please note that the expense of reworking a denied claim becomes more expensive as you work down the list.  In other words, do not send a letter if you can instead appeal via their website.

If your appeal is not successful, you need to consider the payer’s formal appeals process which can include several levels of appeal and reviews by an appeals committee or board.  Before going down this path, you need to confirm with the payer all of the appropriate steps and communication channels required by the payer.

Deconstruct Your Denials1

When you or your staff sit down to actually work claim denials, it is immediately a complex process that requires considerable knowledge.  Medical groups want experienced staff to work denied claims using established denial management strategies.  Due to payer denial deadlines, these strategies must consider speed and efficiency or you may find yourself appealing denials that have already passed the appeal deadline and thus you could be using expensive resources for no potential financial return.  Let’s discuss a few examples of reworking claim denials.

Duplicate Claims

  • The EOB remark indicates payer has received another claim for the same service and the denial reads “duplicate claim” or “previously paid”.  However, the claim may not be a true duplicate for the following reasons:
    • Same CPT code/procedure was performed more than once on same date of service (two chest x-rays)
    • Same CPT code/procedure was performed more than once by a physician in the same medical group (same tax identification number) on the same date of service (two specialists in the same multispecialty group)
    • Payer’s computer system does not read your modifiers as submitted on your claim in their adjudication system

For these reasons, staff cannot just adjust off claims as duplicates because the denial may not be accurate.  The staff member needs to review the patient’s account to identify the potential reason for the duplicate denial and then take action based on that.  Consider developing a decision tree tool for staff to refer to when working duplicates.  For example, if they find that there were two chest x-rays on the same day; then they review the claim submitted to see if it was coded appropriately and if not, they will correct it and resubmit it.  If it was coded correctly, they will follow the payer’s appeal process to communicate to the payer that the claim is payable for the following reasons.

Referrals and Authorizations

Not all payers require referrals or authorizations.  Thus, your denial rate for these reasons will vary by payer, causing some payers to have a higher total denial rate due to this type of denial.  Medical practices must stay current with a payer’s policies on referral and authorizations.  In recent years, payers are reducing or eliminating the requirements for a referral or a pre-authorization.  One thing for sure is that payers handle them differently.  Some payers require a referral or authorization number on the claim and some require a referral attached to a paper claim.  Others require that a practice submit a referral online prior to the service being provided and/or it has to be signed by the referring physician.

If you receive a denial due to no referral or authorization, your staff should first review the account to see if the referral/auth was obtained and if it is present, and then resubmit the claim.  If it is not present on the account, contact the practice’s referral coordinator to obtain it and resubmit the claim.  If the referral/auth was never obtained, then the claim will not be paid and the account should be written off with a non-contractual adjustment code that indicates “denied due to no referral/auth.”  Clearly tracking why claims are written off will provide information for future staff meetings and training to improve your medical practice’s performance. 

Following some of these strategies will hopefully increase the success of your denial follow up.  But continue to ask yourself if you are following the basics of denial prevention.  Every time you reduce your denial rate you bring more money to the bottom line of your medical practice – not only do you get paid correctly the first time, but you have eliminated all the rework required when a claim is denied.  

1 Keegan DW, Woodcock EW, Larch SM. “The Physician Billing Process: 12 Potholes to Avoid in the Road to Getting Paid” (2nd ed). Medical Group Management Association, 2008.

Sara Larch, MSHA, FACMPE, is a speaker and consultant in practice operations and revenue cycle management and co-author of “The Physician Billing Process: 12 Potholes to Avoid in the Road to Getting Paid.” She contributed an article on “Denial Management 101: Remember the Basics” in our March Getting Paid newsletter.

Read More

Benchmarks for Your Medical Practice: A Vital Part of Critical Practice Analysis

Bhagwan Satiani, MD, MBA, FACS, FACHE June 13th, 2011

Leave a Comment Latest by COMMENTOR NAME

Even with great effort, none of the commonly utilized financial tools necessary for critical practice analysis, including charges or cost per relative value unit (RVU) or work RVU (wRVU), revenue per RVU, break-even fees, practice expense RVU (peRVU) and profitability, may be in line with national benchmarks. There is always room to improve. Most trade associations or specialty organizations publish industry standards that can be used to compare your results with your peers. You have to be careful that you are comparing groups that are identical to yours before concluding that your practice is better or worse than your peers in any one of the benchmarks listed below.

Here are the most common indicators of value to any practice that need to be monitored and compared to benchmarks.

Standard report

 A standard report should consist of total charges, dollar amount submitted for payment, amounts paid/adjusted/written off with a breakdown by physician, facility, CPT code, and payer.

Aging report

An aging report with accounts receivables at 30, 60, and 120 days and beyond should be required. Aging by the most recent activity on the account is helpful. If the software allows, a variance report of agreed-upon payment rates and actual insurance payment is also most useful to allow comparison with a previous month or year.

Overhead costs

Overhead costs should be reviewed on at least a quarterly basis, keeping in mind that overzealously trying to reduce overhead may sometimes produce negative results. Investing a little extra expense in staffing to obtain better information or that extra call to a third party payer may be worth a great deal more than saving a few staffing dollars.

Revenue Cycle Performance Measures

Patient access metrics

          Metric: % of patients with complete and accurate pre-registration information

          Formula: Complete pre-registrations/ total registrations

Compliance with physician authorization requirement

          Benchmark: 96-98% compliance

Billing metrics


               Charge lag time

                    Formula: Average number of days from date of service to posting date.

                    Benchmark: < 7 days

               Clean claims submitted

                    Formula: % clean claims/total # claims

                    Benchmark: >95%

               Overturn of denials

                    Benchmark: 95%

               Paper remittances

                    Formula: Paper remittances/all posted charges

Cash Management Metrics

               Gross collection ratio

                    Formula:              Cash received from payers and customers (from cash-flow statement)


                                                                   Gross fees (from income statement)

               Month’s revenue in accounts receivable

                    Formula:                         Accounts receivable (from balance sheet)


                                                                Average monthly gross revenues

               Net collection ratio

                    Formula:              Cash received from payers and customers (cash-flow statement)


                                                               Net fees (from income statement)

Accounts receivable/collection

               Posting of cash & contractual allowance

                    Benchmark: <24 hours

               Average payment period

                    Formula:                                            Current liabilities


                                                              (Total expenses – Depreciation)/365

               Average collection period or Days in patients accounts receivable

                    Formula:                Net patient Accounts Receivable (from balance sheet)


                                                               Net patient service revenue/365

                    Benchmark: Median 47.1days

               Accounts receivables

                    Formula: > 90days

                    Benchmark: median 22.3%

Expenses metrics

               Cost to collect

                    Formula:                        Total cost of all business related functions


                                                                            Total collections

               Bad debt expense

                    Formula: as % of gross or net revenue

                    Benchmark: <5%

               Overhead %

                    Formula: Total non-physician expenses as % of total       =      Total non-physician expense

                                       —————————————————————-                   ——————————————————-

                                        Cash collections or net revenue                          Total net revenue

               % of patients with complete and accurate pre-registration information

If your practice lags behind standard benchmarks, the billing manager must be able to come up with a performance improvement plan. The plan must be presented to the physician group and approved. Some warnings signs include:

  • Claims payment first pass rate <85%
  • Paper remittances are >30% of all posted charges
  • Charge master has not been updated in more than 2 years
  • A compliance plan that has not been reviewed or updated in 2 years
  • Insurance contracts have not been reviewed in 12 months
  • Cash collections are lower than the previous year
  • 35-40% or more of the A/R is 90 days old and 75- 80% of that is either self-pay or patient copay

Bhagwan Satiani, MD, MBA, FACS, FACHE, is President of Savvy-Medicine (, a business education consulting organization and Professor of Clinical Surgery, Division of Vascular Diseases & Surgery, Department of Surgery, The Ohio State University College of Medicine, Columbus. He is the author of the 3-volume set “The Smarter Physician” published by MGMA and co-author of “The Coming Shortage of Surgeons: Why They Are Disappearing and What We Can Do About It.”

You can read another article by Dr. Satiani, “Understanding the RVU in Practice Management: Getting the Most Out of Using It in Your Practice” now.

Read More

Best Practices: 12 Steps to Avoid Embezzlement in Your Medical Practice

Judy Capko June 13th, 2011

1 Comment Latest by COMMENTOR NAME

Prevent embezzlement in your medical practice by following these 12 stepsMedical practice embezzlement war stories confirm the existence of clever thieves that steal from the medical practice they work for.  It is devastating at both an emotional and financial level to discover a trusted employee has betrayed you.  Don’t be the victim of an embezzlement scheme that has your practice financing someone else’s lifestyle.  Here are some tips on how to protect your practice from an embezzlement scheme.

Eliminate casual handling of cash

I have observed a number of practices where finances are handled casually and create temptation for future embezzlement opportunities. For example; cash is loosely kept in drawers and not reconciled to practice records before it hits the bank deposit – in fact some physicians have made a habit of taking funds from the cash drawer when it is convenient. This is a sure fire way to compromise the ability to reconcile the money.

Follow the money yourself

Sure, you have other people handling financial transactions in most areas of the practice, but it’s important for you to read those bank statements each month. This can be done on-line (or the old-fashioned paper copies) and should take less than one hour per month.  Banking records reveal the truth about how the money is being spent and are a trigger-point for identifying irregularities in expenditures.  I’ve seen reports pulled from accounting systems where payment for an expense looks legitimate, but the bank statement reveals that the large tax contribution you made was actually a check or on-line payment directed to an employee’s personal bank account.   You might even discover your star office manager issued herself an unauthorized bonus check or an unearned vacation check.

Secure system-wide audit trails

Next, make sure the computer system has a proper audit trail and that the financial procedures in the practice provide sufficient oversight for financial transactions including charges, adjustments and payment on patient accounts.  Your practice management system, accounting system, banking system and payroll records must provide the ability to track all transactions and identify which employee completed the transactions.   It’s not a matter of being suspicious; it’s a matter of being smart with money. 

Embezzlement can occur at many locations throughout the office. It can be at the front desk, the billing department, the payroll system, or the accounts payable. But it almost always starts small!  It can begin by borrowing $10 from the cash drawer for lunch, but if it doesn’t get repaid and goes unnoticed the waters have been tested. The thief now has permission to take the next step. Assuming things are being done the right way and having too much trust provides an opportunity for embezzlement and may, in fact, encourage it.  It’s time to take notice – to get and keep your practice in protective financial order. 

Divide duties and ensure accountability

Efficiency of a medical office depends on streamlining procedures and avoiding duplication of tasks.  At the same time it is important that multiple people be involved in finances, creating a separation of duties. You don’t want the person to audit the cash drawer, post the charge and payment, and take the money to the bank. Nor do you want the person who prepares the checks to be the one that reconciles the bank statement.   

Create essential financial role diversity by requiring anyone handling finances to rotate out of their position for a period of at least two weeks each year.  If someone has something to hide, they sure don’t want someone else doing their job for two weeks. This discourages the thief, but it is not foolproof. Clever employees can sometimes find ways to outsmart the system or clean up their act during the weeks preceding their time off.  Nonetheless, they know there is a chance of discovery.

Beyond having multiple people involved in financial transactions, it is equally important to have processes that ensure there is clear and appropriate documentation to support all financial transactions: money in and money out. This documentation is your audit trail.  It allows the practice to spot check to ensure the financial processes are being adhered to.  This is one case where duplicate efforts are a powerful financial tool. 

Looking over someone’s shoulder occasionally helps keep him or her stay honest. In a small practice, the doctor or an independent source such as the accountant or consultant can be the point person for accountability.  A larger practice may use an independent source or have an audit committee composed of employees from various departments.  Either way, a Protective Financial Review should be conducted periodically. 

It is easy to understand how physicians, struggling with the decline in reimbursement, government regulations and the cost to stay afloat, fail to take the time to take a hard look at your internal financial operations. But it is an area of the practice that must not be neglected.  Here are some simple rules you can put in place that will go a long way in protecting practice finances.

Apply these twelve steps to prevent embezzlement:

  1. Pay bills on-line or use an automated check-writing system that prints checks that leave no room for alteration;
  2. Use electronic remittance for payment from third party insurance companies where the service is available and have a bank drop box for receiving payments on patient accounts and insurance payments where electronic funds transfers (EFTs) are not available;
  3. Audit the cash drawer daily;
  4. Never borrow from the cash box (or others will);
  5. Get rid of signature stamps with the same names as the signers on bank accounts;
  6. Review bank statements on line or have bank statements come to the home of one of the physicians and have someone that neither writes the checks nor makes the bank deposits complete the reconciliation;
  7. If a non-owner of the practice is permitted to be a signer on the bank account, limit the dollar amount approved;
  8. Audit payroll records quarterly or at a minimum semi-annually to prevent potential unauthorized raises, bonuses or overtime pay;
  9. Conduct past references on all employees before you hire them;
  10. Obtain an insurance bond for the bookkeeper and the office manager, but keep in mind that does not cover financial neglect by the practice owners;
  11. Conduct occasional Protective Financial Reviews of each aspect of practice finances;
  12. Listen to your instincts.  If you become suspicious, start digging. If the person handling the money seems territorial and protective of his position or begins living a more extravagant lifestyle or avoids going on vacation, something is wrong and it’s important to dig deeper to make sure finances are in proper order.

Establish strong financial practices in your office and adhere to them.  It’s a matter of sound business principles. Existing employees will appreciate a solid foundation and a clear understanding of how things need to be done. New hires will recognize how much you respect finances and know what is expected of them.  They will understand this is a practice that “minds the money.”

As a final note, during the employee orientation discuss the financial principles of the practice and let the new employee know you will not tolerate deceit, fraud or theft. Too many practices leave financial matters unspoken and too many physicians that who have been the victim of embezzlement fail to prosecute. Let your staff know you would!

Judy Capko, an expert in practice management, recommends dividing financial responsibilities to avoid embezzlement in your medical practiceJudy Capko is a healthcare consultant with more than 25 years’ experience. Her focus is practice operations and economics, staffing, practice development and strategic planning. She is the author of the popular books Secrets of the Best-Run Practice 1st and 2nd edition and Take Back Time – Bringing Time Management to Medicine.  Judy is a national lecturer for executive management and physician specialty conferences.  She is based in Thousand Oaks, CA,  or e mail:

Read More

ICD-10 Training Camp: Where Do You Begin with ICD-10 Preparation?

Nancy Maguire, ACS, PCS, FCS, HCS-D, CRT June 13th, 2011

Leave a Comment Latest by COMMENTOR NAME

The decisions on a course of action for transitioning to ICD-10 diagnosis codes must start now; not tomorrow, or the day after, but right now.  If you are the individual tasked with this responsibility, you must decide how training will be scheduled, who will receive training and to what extent, and how progress will be monitored. 

The first consideration is to train people (or the person) who are or will be responsible for training other coders and providers.  This training can never start too early, because to educate others the trainer must be well-versed in the complexities of ICD-10 before the actual classes start.  Education of coding staff and clinical staff should commence in early January 2013.  This hands-on training can be internal or external, but should be budgeted for time and resources.  Budget to cover:

  • One-time costs
    • Training, system modifications/upgrades, outsourced implementation
  • Recurring costs
    • Employee salaries, benefits, etc.

Being an effective trainer requires not only excellent technical skills, but also interpersonal and management skills to introduce participants to coding with the ICD-10 codes and official guidelines.  It is important to have a draft manual(s) of ICD-10 to assist with this goal.  The first step is familiarizing oneself with the Index and the tabular lists.  The index is referenced in the same manner as ICD-9 but is expanded to accommodate the detail required by ICD-10 alphanumeric codes. 

Offer classes during alternative times

To best serve the professional staff, the practice could offer these classes during alternative times such as evenings or weekends. In addition, consider offering different skill level programs (e.g., for beginning and advanced coders/clinical staff).  The clinical terms used in ICD-10 code descriptors require a greater understanding of medical terms and anatomy and may require even the advanced coder to upgrade their knowledge base in these areas.  Reconciling clinical terminology with coding and classification terminology will take significant effort for many coders.

The trainer must understand the attitudes and abilities of the participants, give proper feedback, and stimulate self-motivation and comprehension of this code classification.  ICD-10 coders require training in order to analyze the detailed documentation necessary to assign codes accurately, prepare the protocol and implement documentation guidelines for ICD-10.  Superbills will need an upgrade to ICD-10 codes and this may be difficult because many additional digits cannot be assigned until the patient is actually seen.  An example is the 7th character requirement for an initial, subsequent or sequel encounter.

All medical records will have to be dual coded on and after October 1, 2013.  If the date of service is before October 1, 2013, ICD-9 diagnosis codes will be assigned.  If the date of service is October 1, 2013 and after, ICD-10 diagnosis codes will be applied.   As you can see, it is important to understand the impact of ICD-10 and its challenges.

Concentrate on frequently submitted diagnosis codes

Provide and prepare solutions for improved physician documentation if a baseline audit reveals deficiencies.  Concentrate on the frequently submitted diagnosis codes for your physician/practice.  Focus on the changes and coding conventions that impact your practice.  Documentation will make or break accuracy in coding patient conditions using ICD-10 alphanumeric diagnosis codes.  A comprehensive review of documentation impact by physician is essential and planning the targeted training programs relevant to each functional area should be a priority early on.

It may seem like you have a world of time before you have to worry about ICD-10 implementation, but actually it’s closer than you think; you should get started now on this massive change from ICD-9′s 16,000 codes to the 68,000+ codes included in ICD-10. If you have not already developed awareness programs and assessed planning and implementation strategies, you are behind schedule to successfully transition to ICD-10. 

Planning should be a priority this year; form a leadership team to plan timelines and key milestones.  Communicate often to avoid last minute crisis situations—prevention, not damage control. Monitor your progress and demand accountability for tasks assigned to team members.

Training timelines will depend on the present skill levels of your coders and clinical staff: 

  • Coding staff: 2-4 days based on current skill level and number of specialties involved
  • Clinical staff: Up to 8 hours
  • Administrative staff: Up to 6-8 hours on need to know basis
  • Systems staff: Up to 8+ hours

Clinical documentation is right up there on your priority list.  Provider organizations will need to train clinicians to improve their documentation practices to provide the details needed to support the higher level of specificity in ICD-10 codes.  Physicians have been documenting in a certain way for over 30 years and change will not happen overnight.  Look out for “kill the messenger syndrome”!  Physicians will see a permanent increase of 3 percent to 4 percent of physician time spent on documentation for ICD-10-CM code compliance, this may ease with daily application.

The move to ICD-10-CM will affect both the practice management system and the electronic health record. In addition to billing, you have to consider patient problem lists, appointment scheduler, local coverage determinations, drop menus or preventive intervention alerts.  System interfaces and standard reports will be impacted and must be considered in the impact analysis. In your business process analysis, ask the following questions:

  • Where do you use diagnoses currently?
  • What are the interfaces that may need to be changed?
  • What databases need to be changed?

The government comes out almost daily with new initiatives and as part of these larger initiatives, complete and compliant codes are even more critical.  At the same time, federal programs such as the Medicare Recovery Audit Contractors (RACs) are making the documentation process even more complex. The tension headache (G44.209) may not go away but we can prevent a G43.111 (migraine with aura, with status migrainosus) by being proactive. 

Nancy Maguire, an expert in ICD-10 and practice management, teaches how to prepare for the ICD-10 transition in your medical billingNancy Maguire, ACS, PCS, FCS, HCS-D, CRT, author of The Nancy Maguire GPS to ICD-10-CM Planning and Implementation Guide, is a nationally-renowned procedural and diagnostic coding instructor, bootcamp trainer, and workshop leader. She has spent more than 30 years as a hands-on coder and has authored countless coding articles and presentations. In her expansive career, she has transitioned from nursing, to coding, to practice management, auditing and consulting. Nancy served as Director of Coding and Reimbursement at UTMB in Galveston Texas for four years. She served the first two terms as president of AAPC in the early 1990s.

Hear Nancy speak in a complimentary webinar presented by Kareo medical billing software on “Preparing for ICD-10-CM: The Nitty-Gritty of Diagnosis Coding” on June 16, 2011. Register now. (After June 16, the webinar will be available as an archived recording at the same link so you may watch it at your convenience.)

Read More

Welcome to Getting Paid, a weblog by Kareo offering ideas, news and opinions about medical billing and practice management with the goal of making medical billing easier and yes, getting you paid. Visit the Product Blog for more information on our products.

Subscribe to the Newsletter

Enter your email address to receive "Getting Paid" as a monthly email newsletter. Privacy Policy

Subscribe to RSS Feed

CDW 2015 TOP 50 Health IT Blog

Follow Kareo

Find Kareo on LinkedIn Find Kareo on Facebook Find Kareo on Twitter Find Kareo on YouTube Find Kareo on Flickr

Search the Blog


Monthly Archives

Web–Based Software by Kareo

Practice Management

Simplify the daily essential tasks of your medical office from patient records, to scheduling and more.

Electronic Medical Records

Improve patient care with electronic charting, electronic prescribing and medical labs interfaces.

Medical Billing & Collections

Streamline your entire medical billing and collections process from charge entry to reporting.

Clearinghouse Services

Integrated electronic claims, electronic remittance advice and insurance eligibility services.

Analytics & Data

Store and access data with insightful reports, document management and faxing, and an integration