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Fall 2008

Working with Your Billing Service—A Practice Administrators View

Paul Kennelly
Regional Director, Practice Services, Anesthesiologists Associated Inc.

As a practice administrator I had a narrow view of the internal working of our billing service. Like many, my focus was on monthly collections and the standard benchmarks. Some Groups operate with an understanding that billing boils down to a charge entry and collections. It was not until I joined a billing company as Director of Practice Services did I begin to appreciate that the billing and collection function is not that simple. To maximize revenue, and enjoy consistent / stable collections, both the group and billing company must work closely together.

Technology left its mark on anesthesia billing with electronic scanning of charge data and correspondence and the development of sophisticated billing software that can monitor multiple aspects of the practice. But at the end of the day, billing and collection is a people intensive business with technology providing advanced tools to make the process more efficient and cost effective. Medical practice billing is like few other industries dealing with multiple payers, complex rules, and a lack of standardized payment methodologies among Health Plans make successful billing and collection a never-ending marathon. What other industry allows payers to deeply discount or unilaterally deny services simply because they do not think the procedure was necessary? Where else would you find rules allowing payers to send your professional services payment directly to the customer (patient) while at the same time lowering your fee just because you do not have contract with them? All this leads to what might seem like an obvious point… anesthesia groups need to have a close working relationship with their billing agent.

Expectations. The word conjures all manner of images, but establishing and managing expectations is the cornerstone to long-term success. If the group is switching billing services, establishing clear expectations for both parties is critical. Too frequently a lack of understanding of the goals and objectives lead to misunderstandings and dissatisfaction. If the relationship is new, this frank and candid conversation should happen before the deal is finalized and if the relationship is seasoned, practices and billing companies should annually revisit the scope of services, performance, and measures of success.

The reality of today’s anesthesia reimbursement environment illustrates another critical component of a successful relationship…contracting. Whether the group does its own health plan contracting or has the billing service do it, there must be a close partnership between the parties. Too many practices focus on the conversion rate and while it is true the bulk of their revenue comes from anesthesia services it is important to establish strategies for non-timed procedures (flat fees), physical status modifiers, qualifying circumstances, and OB epidurals. A billing service that can help a practice assess these areas, incorporate them into the contract’s reimbursement schedule, and track them for proper payment provides an invaluable service to the practice. Clarity of purpose and agreement on these important issues helps develop a contract portfolio designed to maximize all sources for payer reimbursement.

As noted earlier, the most sophisticated billing software is no substitute for hands-on account receivable management. Here too the interdependence between practice and billing company is vital. For anesthesia billing, the old adage, “Garbage in – garbage out” is not a cliché, but a reality. Some group responsibilities include:

  • Notifying the billing service of new hire well in advance of their arrival provides ample time to meet the myriad of credentialing requirements for commercial and government carriers. Credentialing can take 4-6 months and waiting to the last minute only means delay in payment or possible outright denial of services.
  • Notification of a change in the group’s billing rate. Failure to tell the billing agent of a rate increase means charges are understated resulting in rebilling and delay in payment.
  • Changes in contract rates. Without telling your billing company of a rate change from a health plan, they will have no way to accurately monitor over/under payments.
  • New payer contracts. Failure to notify the billing company of a new contractual relationship results in false-positive underpayments and could distort the group’s payer mix numbers, because the payer is now in another payer category. Billing services use contracted and non-contracted payer information to help determine the groups expected payments. Incorrectly classified payers alter payer mix information.

The need for communication is not limited to the physician group. Billing services have a role to play as well such as:

  • Notifying the practice of new programs such as the Physician Quality Reporting Initiative (“PQRI”). The billing company should help explain such programs and assist the physicians in reporting and tracking their performance.
  • Ensuring groups know about changes in health plan reimbursement strategies. The fervor over the medical necessity of GI anesthesia is a good case in point.
  • Providing an impact analysis of reimbursement changes in government programs such as Medicare and Medicaid.
  • Notification of health plans that consistently pay claims incorrectly. This includes chronic overpayments which represent a potential liability to the practice. Its one thing to recover a large underpayment from a Plan, but an entirely different matter to refund a large overpayment without knowing it was lurking in the mist.

Lastly there is the matter of day-to-day practice management issues. Whether the practice employs an administrator or not, life can be far more enjoyable if you share the load. Over the years, national firms such as Anesthesia Business Consultants (“ABC”) recognized the need to help physicians manage their practices. It is an unfortunate fact of life for anesthesia practices that the day-to-day aspects of group practice are increasingly demanding and complex. Issues such as the demand for more OR coverage without commensurate compensation, governance issues, shareholder/partnership track, retiring group members, compensation plans, call coverage, and downward pressure on hospital stipends are no fun to address after a long day in the operating room. A billing service with seasoned practice administrators provides an invaluable asset to the practice. What is truly unique about this model is that practice management departments operate inside the billing company, and as such have an opportunity to help resolve issues and recognize trends early. Cynics will say that billing company practice managers do not have the best interest of the physicians at heart, but reputable billing companies realize that strong practice management departments can strengthen the relationship with the physicians. It is this ombudsman approach that helps the practice manager ensure the billing service stays focused on their core competency and also ensures that the practice provides critical information to the billing company allowing both parties to meet expectations.