You’ve probably made your resolutions for 2013 by now, but even so, there are some items you should make sure to include so that your practice is positioned to achieve maximum profitability in 2013 and beyond. Here are three things we recommend you do to protect and maximize your practice profitability:
1. Prepare for ICD-10
I know, you’ve been hearing about ICD-10 for a while now and you keep meaning to get to it. But this is the year when you need to get on it, truly. According to expert Betsy Nicoletti, among the steps that practices should take this year are:
A. Coders and billers who do not have a background in Anatomy and Physiology should take a course in A&P this year.
B. Review the use of ICD-9 codes in the practice.
C. Review the diagnosis coding in ICD-10 for those conditions.
D. Print out a list of the fifty most commonly used diagnosis codes and try to code those services in ICD-10.
E. Give feedback to providers now that will help them to increase the specificity of their documentation.
F. Set a training schedule, and plan to train more than one key staff member.
2. Evaluate your Financial Policy and Collection Policy
If you haven’t already reviewed these key policies, you should definitely review both your Financial Policy and Collection Policy to make sure they are meeting your practice’s medical billing needs, particularly with the changes in patient responsibility over the last few years.
Step one in establishing your Financial Policy is gaining a clear understanding of the terms of your managed care contracts (HMO and PPO), since certain contracts dictate how and what can be done with regard to amounts and approaches to collecting balances from patients.
The FP should inform the patient that the practice will process their insurance as a courtesy to relieve them of the burden. The FP should also inform the patient of the way statements are handled. This policy should be in writing and given to each new patient or existing patient when it is revised. This policy should be in writing and given to each new patient or existing patient when it is revised. The patient should sign and retain a copy, and the practice should retain a copy or scan the original into the patient’s record.
Your Collection Policy should spell out exactly how past due amounts will be handled, from both patients and payers. The Collection Policy should spell out the office procedure and time frame for submitting insurance claims. This includes the timely completion of the encounter form. With this information spelled out, both patients and staff understand what is expected from them.
3. Review your KPIs from 2012 and 2013
A key performance indicator (KPI) helps the physicians/owners understand how well the revenue cycle is being managed. There are many items necessary to report on, but there are three major KPIs that should be monitored on a monthly basis.
KPI #1: Days in Receivables Outstanding (DRO)
This statistic indicates how quickly the charges posted are paid by the various payers. The lower this number is the better.
KPI #2: Days in Accounts Receivable Over 120 Days
The second KPI is the days in accounts receivable over 120 days. This simply means to look at the aged trial balance and identify the dollars outstanding in the bucket 121+ days.
KPI #3: Net Collectable Percentage
The third KPI is the net collectable percentage. This statistic tracks the percentage of eligible dollars expected to be collected vs. the amount actually collected.
Review these KPIs for 2012 and set goals for each for 2013. This gives your medical billing staff feedback about how well the practice performed and what is expected for this year.
For more information on developing Financial Policies and Collection Policies, and how to calculate KPIs and use them to evaluate your practice performance, download our free white paper on How to Improve Your Medical Practice Bottom Line now.