Health Care Reform: Ready or Not, Here it Comes
Guest commentary by Nancy Nager, RN, BSN, MSN, president of Specialized Billing Services, Inc.
Medical billing is about to get a lot more complicated. If your medical practice hasn't kept pace with new billing requirements, or if you're bogged down by receivables, it may be time to take action.
As part of its health care reform plan, the Obama administration is calling for a standards- based electronic health information system and the widespread adoption of electronic medical records. The administration says that the expanded use of electronic medical records could save over $77 billion each year in improved efficiencies.
The call for a more robust health information system aligns with the government's plan to overhaul the aging coding system used by medical practitioners to bill insurers. The new coding system, ICD-10, expands on an older version developed in 1977 by the World Health Organization. ICD-10 increases the number of codes by almost ten-fold, from 17,000 to 155,000. The new system includes 68,000 diagnostic codes, up from 13,000, and 87,000 codes for medical procedures, up from 3,000. Practitioners are expected to switch over to the new system by 2013. (Source: Zhang, Jane, "Why We Need 1,170 Codes for Angioplasty" Wall Street Journal, Nov, 11, 2008)
Hospitals and medical practitioners have hailed the new coding system because it will allow them to more accurately describe -- and bill for -- diagnoses and complex medical procedures. But the new system is also expected to create havoc in their billing offices. According to the Centers for Medicare and Medicaid Services (CMS), it's expected that the new system will increase the number of claims returned because of coding errors by 10 percent. And, at least in the short term, health care providers can anticipate greater delays in getting paid.
Then there's the change from Unique Provider Identification Number (UPIN) to National Provider Identifier (NPI), the new numbering system used by CMS to identify providers of Medicare services. All individual HIPAA-covered health care providers (physicians, physician assistants, nurse practitioners, dentists, chiropractors, physical therapists, etc.) or organizations (hospitals, home health care agencies, nursing homes, residential treatment centers, group practices, laboratories, pharmacies, medical equipment companies, etc.) must obtain an NPI for use in all HIPAA standard transactions. Commercial insurance carriers will use NPIs, too. Some practitioners will be required to have two NPI numbers, (one for the individual practitioner and one for the group practice) and many private insurers will still require their own identification number. (Source: www.cms.hhs.gov)
Sound complicated? It is. Medical billing is considered one of the most complicated of all business revenue cycles, with an average of 14 steps compared to the six or eight that are common in other types of businesses. Pre registration, health insurer verification, documentation of services provided, assignment of codes, code verification and review, pre authorization, claim generation, claim review, claims processing, adjudication and payment, collection/claim follow-up and, when necessary, claims appeal are all part of the process.
To manage the complexities of medical billing -- and the sheer volume of claims filed -- many practitioners have moved away from paper claims to an automated system. Of the more than 6 billion insurance claims filed each year, about 60 percent are now filed electronically. Automated claims have helped reduce error rates, but even with an automated system, there's a lot for practitioners and their billing staffs to keep track of.
Billing codes change regularly. Insurers can implement new regulations or change their reimbursement payment policies, often without warning. Staffing and computer problems occur. Small mistakes, such as keying errors, can go unnoticed. The sheer volume of claims makes it hard to catch up, and huge workloads make it difficult to evaluate office procedures. It's hard enough keeping track of medical advances; the huge demands of health care reform and regular changes in claims adjudication can severely tax the resources of many health care providers. To stay in business, it's imperative that health care practitioners adopt more efficient business practices. Outstanding receivables and bad-debt write-offs should not be tolerated in today's modern medical office. Yet even with electronic billing, mistakes still occur that can cost the practitioner or group time, money or both. (Source: Reinke, Thomas W.; Hilbert, Timothy C, "Improving Physician Billing Departments" www.physiciannews.com)
It's understandable, then, that many doctors and other health care providers have outsourced their billing departments.
Outsourcing can help streamline the billing and collections process as most reputable billing companies have experience working with multiple carriers and providers. (In addition to Medicare and Medicaid, there are over 3,000 private insurers, each with its own policies and procedures.) Because billing companies handle more claims than most medical offices, they must stay current on federal and state CMS updates, as well as changes in payment policies for major payers. This expertise can increase revenue by reducing the number of delinquent and denied claims.
Outsourcing can also reduce overhead. Fewer personnel mean less cost in salaries, benefits and turnover. Outsourcing can also reduce the expense of hardware, software and training typically required by in-house billing departments. Billing companies can provide medical practices with a variety of standard and custom reports to make their operations run more smoothly. But above all, outsourcing makes it possible for medical practitioners to spend less time on office operations and more time on the health and well-being of their patients.
How to choose a billing company
Billing companies range in size from small, independent practitioners to larger firms, and can offer a variety of services. Choose wisely. Not all firms have the expertise to meet the needs of a modern, busy medical practice, or the skills and resources to provide secure, uninterrupted service. Your billing service should have the experience to handle a broad set of requirements, and be able to address the needs of solo practitioners, and small and large group practices. The more experience the company has, the more responsive the company can be to the needs of your practice.
What specifically should you look for when retaining the services of a billing company? Here are some practical considerations:
- Electronic claims submission and payment programs with all major carriers;
- Timely implementation of federal and state updates and changes;
- Denial follow-up and resolution;
- Patient statement preparation and the ability to respond to patient inquiries;
- Access to and experience in using of state-of-the-art billing software;
- Assigned staff and back-up for full-cycle claims submission through collection;
- Electronic claim status inquiries and eligibility capabilities;
- Compliance with HIPAA portability and privacy standards;
- Expertise in managed care rules, regulations and restrictions;
- Longstanding and established contacts in the insurance industry;
- State-of-the-art billing software;
- Standard and custom management reports, prepared in a timely manner;
- Clinical expertise and diversity of practice in a number of specialties;
- Education and training on documentation and billing compliance;
- Periodic internal audit and self-reviews;
- The ability to offer education and training on documentation and billing compliance;
- Banking services and an experienced and recognized management team; and
- Excellent collection rates and competitive pricing.
Ms. Nager is a health care expert with over 35 years of experience in inpatient and outpatient management, strategic planning, marketing, operations, budgeting, fiscal responsibility, medical and behavioral care, regulatory requirements and business development.