Medical practices have been leaking money for some time now – increasing expenses, shrinking insurance reimbursements, and increased compliance parameters means more paperwork than ‘actual’ work. Relying on practice managers to help cut down your expenses could prove tricky if not done right, then there are efficiency and technology challenges that have been plaguing a number of practices. All of this could lead to loss of thousands of dollars a year for your practice.
As a result, more and more doctors are complaining that they are working longer hours but their practice is not making that much money. Here we will take a look at some of the areas where your practice may be losing money.
Collecting patient payments
One of the biggest obstacles practices face is lack of discipline while collecting patient payments. Every year, practices lose thousands of dollars for failing to track patient payments, to collect outstanding payments or to bill for all the services that they provide. Additionally, it could cause a number of legal headaches related to poor accounting practices or could lead to rejection by insurers. These problems often stem from not having adequate billing procedures in place or due to insufficiently trained staff members. Another problem is inability to communicate to patients how much they owe.
Human error and staffing
It has become increasing common for insurance companies to reject claims due to the tiniest of errors. Therefore, any medical practice is only as good as its supporting staff, the ones responsible for record keeping, patient tracking and overall management of the practice. It is therefore crucial that you do the due diligence in order to hire the right staff members and ensure that they are well-trained. Even the best practices bleed money if their front-desk managers or clinical assistants are incompetent.
Often, practices tend to hire more people than they need due to a lack of well-trained, efficient staff. This significantly drives up the expenses.
Everyone loves a dedicated employee who is willing to put in an overtime shift for the greater good of the practice. But make sure that staff is not abusing the overtime, or if there is an alternative to avoid the overtime altogether. Practices tend to lose thousands of dollars because of unproductive man hours.
Improper CPT Codes and Downcoding
Practices lose a significant amount of money due to improper selection of Current Procedural Terminology (CPT) codes. CPT code sets describe medical, surgical, and diagnostic services and are designed to communicate uniform information about medical services and procedures among physicians, coders, patients, accreditation organizations, and payers for administrative, financial, and analytical purposes.
Therefore, selecting the correct code is important for accurate record of the patient and treatment. However, incorrect codes is one of the most common problem plaguing medical practices. The causes range from human error to downcoding. Downcoding is a practice to deliberately select a billing code lower than the services rendered. A number of practices downcode in order to avoid scrutiny by auditors or insurance companies. As a result, they are willing to charge their patient less than the amount for services rendered. Downcoding can not only cost your practice thousands of dollars, it could also attract scrutiny, and subsequent penalties, to your medical practice.
Insurance denials are increasing. In fact, an article in the Healthcare Billing and Management Association (HBMA) states, that the Centers for Medicare and Medicaid Services (CMS), denies or ignores 30% of claims on the first submission. The cause of the denial could be a anything, even a minor clerical error which can be addressed by a resubmission. According to CMS, 60% of rejected claims are not resubmitted which means that you will not be paid for those services.
Electronic Health Record (EHR)
In a recent study, nearly 65% of respondents blamed their electronic health record (EHR) system for the losses. However, the problem might run a lot deeper, and basic, than EHR. In 2013, Researchers at the University of Michigan, estimated that the average physician practice will lose nearly $44,000 over five years due to failure to leverage the benefits of its EHR systems.
The vast majority of practices lost money because they failed to make operational changes, such as ditching paper medical records after adoption,” wrote lead researcher Julia Adler-Milstein, Ph.D., Assistant Professor in the School of Public Health at the University of Michigan.
The largest difference between practices with a positive return on investment and those with a negative return was the extent to which they used their EHRs to increase revenue, primarily by seeing more patients per day or by improved billing that resulted in fewer rejected claims and more accurate coding,” she added.