Best Practices for Boosting Clean Claim Ratios

March 5, 2020 by Antonio Arias, MBA, CHBME

Topics: Practice Management, Medical Billing Company

Your practice’s clean claim ratio is the average number of claims paid upon the first submission. Every provider would love to reach a percentage above 95, but it’s not really the number that matters. 

Practice budgets are tight and your staff’s time is the most precious resource you have. So if your clean claims rate is less than 85 percent, it means your staff is likely spending lots of time on identifying denial reasons, coordinating with payers, and re-submitting claims.

That’s far from ideal. To make smarter use of resources around your practice, embrace a few best practices that can help you get paid on first-submit more frequently.

5 Best Practices for Boosting Your Clean Claims

1. Update Information Often

Inaccurate patient data leads to denials. But practices can’t know if their existing information is off-base when they don’t ask patients to confirm it. How often are you prompting patients to revisit and update demographic information, policy details, and medical histories? Don’t wait for patients to tell you—make sure to ask patients to confirm forms on every visit (and send electronic or mail reminders if needed).

2. Focus On Timelines

Submitting accurate claims within each payer’s expected filing window is the ultimate key to soaring clean claim ratios. But you need to have a mind for timeliness before claims submittal, too. Finding and resolving any issues with patient coverage demands concerted effort upfront. Across all payers, try to verify patient eligibility at least two days prior to the date of service. For important procedures, aim for authorization within five days of the date of service.

3. Make Common-Sense Corrections

Are you using software to scrub claims prior to submission or, at the very minimum, reviewing for incorrectly-entered fields, missing data, and other obvious mistakes? Quality checks keep denials from occurring. Implement clear steps in your process where both technology and personnel are deployed to ensure the right details are occupying every required field, in every submitted form.

4. Re-check Your Modifiers

When it comes to coding, misuse of modifiers is something payers are always on the lookout for since providers sometimes use them incorrectly in order to earn a higher reimbursement. That shouldn’t scare you away from using them when appropriate, but it should encourage you to always give them an extra look. Have your coders flag modifiers they’re unused to using for specific payers and communicate with colleagues to ensure proper documentation.

5. Monitor, Improve, Repeat

Watch your claims data for trends. Is one payer giving you extra trouble, or one staffer consistently miscoding procedures within a certain specialty? With ongoing assessments, you can identify the problems faster. If embracing best practices in your processes doesn’t boost clean claim submissions, explore other options. Working with a medical billing firm helps many practices reach 95% or higher reimbursement rates – allowing them to put practice resources to use in more impactful, patient-centered ways.

3 Things to Remember About High-Deductible Plans

As regulators and industry overseers deploy new mandates and guidelines to make sure providers don’t get set in their ways, many back-office aspects of the healthcare business remain stuck in the past.

Take patient collections, for example. Given that even the most efficient medical practices often put unpaid balances on the back burner, collections is an area where providers rarely invest much effort adapting to changing patient expectations or embracing new ‘best practices.’

But that shouldn’t be the case. High-deductible health plans (plans with a $1,350 deductible for single coverage and $2,700 for family coverage) continue to rise in prominence, making patients responsible for far more out-of-pocket costs than they used to be. According to the Kaiser Family Foundation, the number of people with employer-sponsored insurance featuring deductibles has increased from 63 percent to 82 percent over the last decade. What’s more, the percentage of workers with high-deductible single-coverage plans has grown from 18 percent to 28 percent in just the last five years. 

In order to manage your medical practice’s collections process effectively, it’s important to understand why high-deductible plans have had such an impact on the healthcare landscape:

1. They Change Patients’ Choices

Knowing that they’re on the hook for the bulk of the cost, patients with high deductible plans often delay recommended treatments or skip care altogether. Studies have shown that a patient’s health care spending goes down 14 percent, on average, when he or she shifts into a high deductible plan. In 2014, 30% of Americans whose deductibles represented 5% or more of their annual income chose not to visit a doctor when they had a medical problem.

Beyond preventive care, patients can have a hard time understanding the importance or value of a procedure or test. Ultimately, it is always the patient’s decision to opt for or against a treatment plan or course of care. But the doctors who will succeed best in the new health care landscape will be those that can be direct and straightforward, with themselves and with patients, about what care is truly important. Communicate the “why” behind your medical decisions and follow up with patients who skip critical visits.

2. They Involve HSAs

Many higher deductible plans are paired with health savings accounts – tax-free savings plans designed to encourage patients to save upfront for potential health care expenses. Others involve employer-sponsored health reimbursement arrangements or HRAs. (Some refer to HSA- and HRA-inclusive plans as “consumer-focused health care plans.) The problem is that many physician practices skimp on insurance checks or neglect to consider that a savings plan is involved in the patient’s financial situation and simply bill as usual, causing problems down the road.

HSAs are one aspect of the new high deductible reality that efficient revenue cycle management routines can’t ignore. Train your staff on how to verify if savings or reimbursement plans are part of a patient’s coverage and insist that they be diligent about eligibility checks. If patients don’t understand how their consumer-focused plans work, they should be able to learn from the staff at your practice. 

3. They Make it Harder to Collect

It’s only logical that patients who incur hefty medical expenses under higher deductible plans will have sticker shock when their medical bills arrive in the mail. Along with the shock often comes a resistance to pay: hospitals and medical practices alike are seeing an increase in “bad debt” (or unpaid bills) to the tune of $41 billion, 25 percent of which can be attributed to insured patients.

The key to avoiding sending your patients to collections is to be upfront and clear about pricing from the get-go. Consider creating a rate sheet with your self-pay pricing details and posting it in your office, or sharing it with every patient when they check-in or when they’re making decisions about their care. After the procedures are rendered, encourage patients to pay by being flexible about how and when they do: Offer payment plans right away if you notice patients postponing payment.

4 Best Collections Practices for High-Deductible Plans

The increase in high-deductible plans is changing the kind of healthcare expenses consumers may be avoiding their billing statements, and it’s making patient payments a larger aspect of accounts receivable than most medical billing departments are accustomed to. That’s creating a number of issues:

  • 65 percent of bad debt belongs to insured patients
  • Only 35 percent of copays and other out-of-pocket patient costs are collected upfront
  • It costs a practice twice as much to collect from patients as from insurers
  • 30 percent of A/R consists of outstanding patient balances

If all of that bad debt was ultimately collected, there wouldn’t be cause for concern. But the average recovery rate for a medical practice’s bad debt is just 21.8 percent – making it well past time for change in most medical offices across the country.

One key to collections success is time: The more days that pass between an encounter and a billing effort, the less likely it is that the practice will collect. Rates hover around 97 percent within 30 days and go down to 50 percent for 91-120 days. Improving collections operations will, in part, require instilling a sense of urgency into your staff. 

Here are a few suggestions that will boost your claim ratios:

1. Insist on Up-Front Copays

No exceptions! Copay collection is the easiest aspect of patient payment to take care of… making it the silliest one to let slip by. Train your front desk staff to be diligent about checking co-pay details at check-in and giving patients as little leeway about upfront payment as possible. (Update your office policies if necessary.)

2. Collect Unpaid Balances Before the Subsequent Service 

If a patient has ignored a billed statement for more than ten business days, insist on collecting for the prior service in-office, in advance of the next encounter. Set clear guidelines with the patient if he or she attempts to insist on paying by mail, making it clear the next visit will not be scheduled until the balance is paid in full.

3. Use the Phone

Get patients on the horn sooner than you’re used to, perhaps within just 30-60 days of the unpaid encounter. Keep in mind that many non-paying patients are insured and employed – they’re just not eager to pony up. Calling a time or two may provide just the nudge they need to get it over with. 

4. Accept Multiple Payment Types

The more payment options you provide, the more likely you are to get paid. Checks, cash, debit cards, and credit cards should all be welcome, and you should be open to accepting unpaid balances by mail, phone, or online (and to making it simple to set up payment plans instead of sending non-payers to a collections agency). 

3 Steps for Rethinking Your Collection Strategies

Unfortunately, the newly heavy-handed collections responsibility imposed by high-deductible plans requires a different skill set than many medical practice staffers possess. Even the most experienced administrative professionals can have a difficult time taking a hard line with patients who are struggling financially, and “firing” repeated non-payers is a hard decision for even the most rules-driven healthcare organizations.

As such, many medical practices need to re-assess their medical billing and front-desk operations to ensure patient collections stay top-of-mind. After all, 30+ percent of your revenue is no amount to neglect; no matter how insignificant a $20 co-pay may seem in the moment, repeatedly letting patients off the hook adds up quickly.

1. Revisit Your Strategies and Make the Right Tweaks

Look at your typical collections process, start to finish and note all the touch points where your staff interacts with patients without discussing costs. At each of those engagement points, ask yourself if your practice would be better served by bringing up the patient’s individual payment responsibility.

For example, many practices have long avoided discussing collections at any point in advance of the patient encounter – simply waiting until check-out to collect. Perhaps there’s a better way; consider whether your practice could send a copay or co-insurance reminder as part of the appointment reminder (after conducting the verification check, of course) or move the collection time from post-visit to check-in. Each injection of financial real-talk can help you increase your odds of getting paid.

2. Formalize a Policy (No Matter How Small Your Practice)

Every practice, large or small, should have a defined collections policy, separate from its broad financial policy. Given how sensitive the patient collections process can be for employees, simply putting collections rules down on paper and disseminating them to staff members serves to formalize the fact that such rules exist (and will be reinforced by management).

Your policy should outline firm instructions on how and when your staff should collect payment from patients. By leaving the decisions up to individual staff members themselves, you risk letting inconsistent collection practices waste your time and wreak havoc on your bottom line.

3. Train, Train, Train

Armed with a formal policy, you’ll have a much easier time educating new employees on how to handle the collections process. Set aside a clear amount of time to go over your document (and any other associated details, such as how to log payments in your medical billing system or record books) with each and every new hire, and encourage them to follow the policy to the letter.

And don’t let your existing hires off the hook. Many of your more seasoned staffers may be inclined to make collections decisions on a case-by-case basis or adhere to expectations from a more low-deductible era, where that 10-15 percent total wasn’t so crucial to your financial performance. Revisit company-wide collections policies in a staff-wide training session one to two times per year, at minimum.

3 Questions You Should Ask Before Using Sliding Fee Schedules

One approach seeing increased interest among providers is the idea of a sliding fee schedule, which allows you to provide discounted services based on a family’s income in comparison to the Federal Poverty Guidelines. By creating such a schedule, you can offer a financial break to both low income and self-pay patients – allowing you to minimize issues related to non-paying patients.

Before using the sliding-fee model, however, you need to consider how it will affect your practice financially and how to stay compliant with applicable regulatory guidelines. Here’s a (non-exhaustive) primer on the factors to keep in mind.

1. Can You Afford It?

Every medical practice has to walk a fine line between serving patients (even cash-strapped ones) and earning a sustainable income. Just as charging too much can turn patients away, offering your services at a discount can jeopardize your financial stability.

Perform extensive financial analysis to know how much profitability you can afford to risk. To create a fee schedule, you’ll need to determine a minimum price you can charge for your services and still pay all expenses associated with your practice, including salaries. Break things down to your per-month financial needs and associated per-patient minimums, then figure out if charging less would demand a higher patient load than your practice can support.

Taking billing off your administrative team’s plate frees your most experienced and talented people up to work more closely with patients. As the U.S. healthcare system evolves, deploying team members into care coordination and “patient ally” roles can help you comply with value based government programs and is a smart strategy for sustaining financial health. 

2. How Will Your Patients Perceive It?

Addressing patients experiencing hardship is a noble idea, but it can also get you into hot water. Some consider sliding fee schedules to be discriminatory toward people with larger incomes since it charges them more for the exact same services being provided to clients with lesser incomes.

Even with the best intentions, the idea of having a minimum-to-maximum price schedule can come across as gouging as if you’re looking to squeeze more money from patients you can charge while accepting less from others. Consider how your higher-income patients may feel about that as you make your practice’s decision.

3. Can You Stand By Your Choice?

Sliding fee-schedule programs succeed when practices embrace them with integrity. Taking the sliding-free approach makes the idea of paying less (due to poverty or other troubles) something patients don’t have to be ashamed of, but can instead feel honest and ok about.

But since higher-income patients may not like it, your practice should have a strategy in place to defend your sliding-fee schedule even before you even deploy it. Avoid the appearance that your scale is arbitrary by creating explanatory resources that detail your pricing methodology and make it clear to questioning patients why you took the approach. Without exception, transparency and straightforwardness can help patients understand your financial decisions.

Improve Your Clean Claims Ratios With a Medical Billing Service

Despite the difficulties posed by high-deductible plans, it is possible for practices to operate successfully amidst the new landscape, and it’s wise for them to try. The trend of increased patient responsibility isn’t going away any time soon. To effectively adapt their practice management techniques, doctors should know what to expect with the new plans and how to proactively mitigate the effects to streamline collections and boost their clean claims ratios.

For many healthcare practices, the best option may be partnering with an experienced medical billing service that will help them update their processes and free up valuable time and resources that can be dedicated to providing better care. NCG Medical has four decades of experience working with healthcare offices across a wide range of practice areas. To find out how we can help improve your billing and collections processes, contact us today for a consultation.

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