Medical Model

Medical Model: Managing the Revenue Cycle

By Jerry Godwin, MBA, CEO, Optometric Medical Solutions

March 18, 2015

Cash flow is the lifeblood of a healthy practice. Track it, spot problems, then work a plan to improve it.

Article 3 in Getting On Track with the Medical Model

Click HERE to read Article 1, Getting on Track with the Medical Model: It Begins with Benchmarking

Click HERE to read Article 2, Getting on Track with the Medical Model: Logistics

The most relevant issue in the financial wellness of an optometric practice is cash flow. Learning to measure, track and project cash flow is called business intelligence analytics, and it’s something ODs must master in their practice, just as a manager of any business must do. Understanding cash flow is especially critical as practices embrace the medical model.

In practices we consult to, we hear a common refrain: “I am having difficulty getting paid for the care that I provided, and I don’t know what to do.” Rather than answer that directly, I ask: “Can you please explain your process for managing your accounts receivable (AR)?”

The answer to this question provides the framework for the solutions needed to get your money flowing.

Unpaid claims are a symptom of a greater problem somewhere in your overall Revenue Cycle process. Whether it is a rejection at the payer or a denial from the payer, it shows that something is not correct in your workflow. Identifying the issue determines the solution.

We define the Revenue Cycle as any touch point where a patient can be impacted by your services. The following diagram describes it:

ACTION STEP: Evaluate Your AR Process

• Does the receipt of payment for a medical claim mean that the process was done correctly?
• Do you have a system for verifying a patient’s medical insurance benefits before they are seen in the exam lane? We advise that you verify coverage before the patient comes in for their appointment.
o Do you know the patient’s co-pays and deductibles?
o Do you know if the procedures you want to perform are covered?
o Do you know if you need a referral from their primary care physician? If so, this is a red flag! The patient has an HMO.
o Do you know if you are on the insurance panel and can be paid? Are you aware that you can be a participating provider with a Commercial plan, but not be a participating (PAR) provider withthe HMO plan offered by the same carrier?
• Do you know what you are being paid and if your staff is writing off balances that should be collected? What is the oversight process for your AR? Does your staff exhaust all avenues for collection from the carrier and patient before adjusting the balance? You are obligated by your contract to collect the amount due.

Each of these questions, if unanswered, reflects a gap in your Revenue Cycle processes that will lead to unpaid claims. The Aged Insurance AR report tells the story of repeated denied claims. Identify coding issues or data input of patient demographics that may be causing denials, and train doctors and staff prior to creating claims. Denials should be the exception, not the rule.

What is AR management? It is the nitty gritty of working the process to make sure something doesn’t fall through the cracks. It means conducting a monthly review of your Insurance Aging Report, which shows how long claims have been outstanding, to determine the progress that is being made in collecting your money.

Optometric Medical Solutions partners with optometric practices to deliver solutions that match the specific needs of the practice. OMS services range from credentialing, compliance, insurance verification services, Revenue Cycle Management (medical claims management), practice consulting and training. OMS was founded in 2004.

For more information: Visit OMS online at www.optmedsol.com or call (210) 249 0234, ext. 4

ACTION STEP: Refine Your AR Process

• Set your fees by procedure (CPT) code
• Insurance verification should be a standard requirement
• Proper coding of exams and procedures
• Patient collections at check out
• Claim scrubbing
• Payment reconciliation back to claim filed
• Patient statement mailed monthly for balances due
• Denials management process

Identifying Red Flags: What This Means

The “Red Flag” terminology for the Office of the Inspector General means not complying with federal laws by identifying “red flags” that could lead to potential liability in law enforcement and administrative actions. A red flag is a warning sign that something is not correct, and should be identified and corrected. Identifying these red flags helps you realize there are gaps in the revenue cycle process that need to be addressed. The financial impact of these red flags can be very costly both financially and for your licensure. Violating the laws can result in both criminal and civil penalties that will, in turn, result in financial and professional loss.

ACTION STEP: Spot AR Red Flags

• High volume of patient complaints and calls
• Low collection percentage: co-pays and total collections
• Days in AR > 50 days
• Aged AR > 90 Days > 30 percent
• High number of claims rejected: >10 percent calls for improvement
• Bad debt as a percent of billed charges > 4.5 percent
• Excessive credit balances and/or unapplied payments
• Processing claims and posting backlog
• Delay in processing claims
• Compliance Issues
-Coding
-Collections

Denied Claims: What This Means

The Denied Claims are claims that have been denied by payers during a specific time period. You should examine these as a percentage of total claims filed.

In a typical medical practice, denied claims are between 5-10 percent of claims submitted. In a healthy practice, it is less than 5 percent.

Data can be analyzed by payer, procedure code, or reason code, to help identify payment problems. You may choose to group by payer to identify payers causing the largest financial impact in denied claims. Grouping by denial reason code helps you understand why claims are being denied, while grouping by procedure code helps identify the specific procedures that are most highly scrutinized and denied by payers.

This report is also useful for tracking the impact of ICD-10. Track denial trends by payer both pre- and post-ICD-10 implementation to easily spot increases or changes due to ICD-10, and address them as quickly as possible.

Implementing the Medical Model is not a destination to be reached; it is a road that is always under construction. As you work with your team to set in place systems and processes, you will need to consistently reevaluate your performance to gain improvements. Seek education and support to grow. You have a CPA file your taxes and an attorney handle your legal needs. Why not seek professional support for administrating the medical model?

If this seems a daunting task, there are companies in the market that will assist in this process of setting up your platform and managing your claims filing. More than just billing support, they should provide education and support for the changing landscape of medical insurance rules and regulations.

Jerry Godwin, MBA, is CEO of Optometric Medical Solutions, based in San Antonio, Texas. OMS is a leader in providing comprehensive management services and systems to optometric practices and a “change agent” in helping practices to embrace the medical model. To reach him: jgodwin@optmedsol.com

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