3 Reasons Why Medical Billing Software is Leading the Way
Since technology changes so quickly, it is hard to begin by saying “in the old days . . . ,” but that seems to fit the best. In the old days, medical companies, service providers, and almost any other business which used automated billing enjoyed the convenience of logging on to a database (or several, they the company had multiple offices) and processing their billing statements. This “old way” required IT and servers, and is actually still the current way for most businesses. Somewhere along the way, medical billing software was developed to process billing without logging on to multiple databases, without having IT, and without crowding the server. This medical billing software is not only cutting edge, but it is also a miracle because it comes without a large set-up and usage expense. Soon, all companies will be marching to the beat of the new medical billing software drummer. Let’s explore the differences between the “old way” and the new by looking at the 3 reasons why medical billing software is leading the way in corporate software. Connection The “old way” was convenient for its time, but that time may soon be gone. It consisted of a different database for each office, which meant that if your business had 3 offices, you would have had to log on to 3 different databases to process your billing statements and close at the end of each day. Using only a broadband connection, “the new” way connects you to an unlimited number of databases at once, allowing you to manage all of your accounts with clients, providers, etc., all in one connection. In addition, with the same technology now available with medical billing software, you can connect to a secure server from anywhere with a broadband internet connection. You can work from home, the hotel, or anywhere else on a secure account that can only be accessed by those whom you authorize. Capacity The “old way” was to have separate applications for every function your business needed to perform. For example, records of clients, customers, providers, or patients, would each be kept in separate files in multiple databases. Then, to track appointments and schedules, your business would probably have had to open a whole new application. Now medical billing software has one system for all of the functions your business needs to perform, not just to process medical billing statements. Log on; track your provider records and schedules, your client records and schedules, and your own financial records and schedules, all in one place. Security The question that runs through the minds of every thoughtful business when a new technology that claims to guard so many important and sensitive documents is, “Is this secure software?” The answer is “yes,” because this advanced medical billing software backs-up, protects, and secures all data on HIPAA-compliant servers, which are accessible only to those whom you authorize. New medical billing software is also a pioneer in financial security because the software does not require large start-up costs; it is billed the same way it is used: month to month. Businesses can benefit from the technology medical billing software now has to offer. It has been said that the greatest breakthroughs come at the intersection of two different disciplines. Medical billing software has made a breakthrough in combining business skills with medical practice and providing medical billing software that not only meets medical billing needs but also provides a template for software that any business could benefit from Joe Miller is specialist in online advertising. For more information on medical billing software, please visit AdvancedMD.com.
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Electronic Medical Billing Software and Service Performance Metrics
Billing performance measurement is an integral part of medical practice billing process and a prerequisite to effective practice management. Systematic measurement becomes mission-critical with growth of billing complexity or outsourcing of the billing function. Traditional billing metrics are limited in scope and focus on claim submission process, ignoring process imperfections on the insurance (payer) side. Modern computer technologies allow both productive measurement and effective action by the disciplined billing office to improve claim submission and payment processes. Using appropriate metrics helps improve policies and procedures, shorten revenue cycle, reduce patient complaints, improve financial performance and compliance, increase cash flow, reduce bad debt, identify areas of potential growth, improve employee morale, increase productivity, and reduce costs. Useful metrics must be comprehensive and simple. They must combine both complete end-to-end processes and their individual components. Metrics must be used consistently over time and compared to standards. Obviously, different standards apply to different medical specialties, patient demographics, payers, and samples of CPT codes. Medical billing metrics typically include compliance, cash balances, charges, accounts receivable, and collection ratios to help monitor cash flow. This article focuses on performance metrics. For discussion of compliance program, see companion article on Medical Billing Compliance. Collection Ratios Traditional metrics include gross and net collection ratios. Both metrics are subjective to individual practice because they compare (often arbitrary) charges to (allowed) payments. (Net collection rate is defined as a ratio of Total Collections and Total Charges less Adjustments. Gross collection rate is defined as a ratio of Total Collections to Total Charges only.) According to Medical Group Management Association (MGMA) 1998 Cost Survey, adjusted fee-for-service collections (net collections) for family practices in 1997 averaged 98.65 percent. A declining net collection ratio may be symptomatic of increased contractual write-offs or insufficient number of denial appeals. This metric is especially useful in the absence of modern computer technology, when comparison of every payment to allowed amount is impossible, or when appeal process of denials is too expensive. Otherwise, the use of charges in defining gross and net collection metrics precludes them from productive discovery of process improvement opportunities. Days in Accounts Receivable (DAR) A growing number of days in accounts receivable are symptomatic of a faulty billing process. One way to determine DAR is to count days from the date of service to the date of payment for every claim and then average across all claims. A simpler way to compute average number of days in accounts receivable by taking a ratio of accounts receivable to average daily charges, or Number of days in accounts receivable = (Accounts Receivable / Average Charge) x 365 This metric too depends on medical specialty, patient demographics, payer mix, and CPT sample. Another downside is that this metric is sensitive to provider as it counts the lag time of unsubmitted claims for services already delivered. This lag time roughly averages across all payers making DAR an effective comparison metric between payers for individual provider but invalidating it across multiple providers. One obvious advantage of DAR metric is its independence of charges. The averaging feature of this metric eliminates sensitivity to specific day or CPT but also hides the behavior shape of the accounts receivable curve. First-Pass Pay (FPP Rate) and Denial Rate FPP is the percentage of claims paid in full the first time upon submission (subject to federal or state timely payment regulations: 15 days for electronic submission and 30 days - for paper). Denial rate is the complementary metric to FPP rate. It counts the percent of claims that require followup and therefore cost more to process. Followup may take the form of a phone call to payer to discover a lost claim or to receive interpretation of denial message, correction of earlier submitted data, resubmission of the original claim, consultation with the provider and medical notes, or denial appeal. Both FPP and Denial rates are very important metrics often used for billing process improvement. The upside of FPP/Denial metric is that it is charge-invariant but its downside is that it hides the differences between process imperfections on the claim submission and claim payment sides. To identify patterns of problem CPT codes or payers, FPP/Denial metric needs to be computed and compared across all pairs of payer-CPT code, which is a standard feature for modern billing technologies. Patient Liability Percent of Patient Liability is the ratio of patient responsibility to total billed charges and it roughly reflects patient deductibles. This measure is important in measuring front office function as it has little to do with clean claim submission or effective followup. Percent of Accounts Receivable Beyond 60, 90, and 120 Days (PARB60, PARB90, and PARB120) PARBX resolves the sensitivity issue of DAR metric and offers simple and charge-invariant metric of billing process. Its graphic representation has a skewed bell shape. Its steepness represents billing process quality: a steep curve and thin tail means healthy billing process, while a flat bell and a fat tail means billing problems. According to the MGMA survey, 25.35 percent of the average family practice's accounts receivables were more than 120 days old in 1997. This number has improved down to 17.7% in 2004. In summary, comprehensive and charge-invariant metrics, such as PARBX, are more informative and objective than collection ratios. However, these metrics alone fall short from identifying specific areas for billing process improvement. Modern technology helps identifying billing bottlenecks as it allows interactive review of multiple metrics along different aggregation dimensions. For instance, PARBX metric is especially helpful to identify patterns of problem claims containing specific payer or CPT code. Further, modern Vericle-like technologies enable comparison of every payment to allowed amount and subsequent appeal on every denial, effectively reducing the average percent of accounts receivable to low single digits. Yuval Lirov, PhD, author of Practicing Profitability - Network Effect for Revenue Cycle Control in Healthcare Clinic and Chiropractic Office: Scheduling, SOAP Notes, Care Plans, Coding, Billing, Collections, and Audit Risk (Affinity Billing) and Mission Critical Systems Management (Prentice Hall), inventor of patents in Artificial Intelligence and Computer Security, and CEO of Vericle.net - Distributed Billing and Practice Management Technologies. Yuval invites you to register to the next webinar on audit risk at BillingPrecision.com
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