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Industry Insights

The Warning Signs of a Failing Billing Company or Revenue Cycle Management Firm

By: Mick Raich, former President, RCM Solutions

We have worked with 86 different revenue cycle entities over the past 12 years.  From hospital CBO’s to large national firms to small firms with only two clients.  There are certain trends we see whenever a billing firm is in trouble.  In my opinion here is our list of symptoms that maybe something is wrong.

1. Increasing account receivables (AR) is often the first sign of trouble.  Commonly we see the AR over 120 edging upward slowly and then settling.  We have seen this move from single digits to double digits with several failing firms.  Often we hear numerous excuses for this change.  Usually this increase is caused by a lack of effort on refiling denied claims.  Remember, 16% of all claims are denied and 50% of those are not appealed.  Recently a national insurance plan noted they deny 10% of all their claims.

We often see an issue when billing companies are purchased or transitioned.  Often when you sell a firm you release staff ahead of the purchase to make your bottom line look good. Usually the staff members released are the higher paid claims management staff; these are the people who work claims.  The thinking is that the rise in AR will not take place until after the purchase.2

2. Poor management reports.  We have seen great reports and numerous Crystal Reports but a common symptom of a biller failing is a biller that cannot produce the basic reporting.  We have seen billers that can only produce gross charge and payment reports.  This was great in 1990 but the environment is so different now that data is king.  Failure to track RVU’s and managed care rates are common symptoms of a biller that is behind the curve.

3. Asking the group for money.  If your biller comes to you and requests money to upgrade their billing software or hardware or to help them pay for interfaces, this is a sign of someone who does not keep ahead of the business.  This is their responsibility not yours. Also, if your biller asks you to pay for extras such as credentialing, monitoring, or pay a percentage of collection accounts or asks you to pay more if they have to follow up on a claim, be wary. These arrangements are outside the norm and may indicate a firm that is having a cash flow issue.

Also be wary of situations where the biller asks you to invest in the billing firm and become part owner.  This causes unique stressed on the practice and the billing firm.

4. Delaying the money put in your bank account.  If you find that somehow the biller is holding your cash a bit longer before making a deposit, this not a good sign.   This causes delays in rebilling and makes collections harder.

5. Not being ICD-10 ready.  Like various other changes going back to the millennial issue, government requirements seem to cleave the good businesses from the bad.

The next big delineator will be ICD-10.  This is coming and already has been delayed.  Some billing companies will not be ready and will have issues.

6. Failed charge capture processes.  It is important to audit your billing.  The first thing to look at is the charge capture process.  If you find that you are doing work and it is not being billed you have to take notice.  First, this is a major compliance issue; second, you are losing money; and third, you are paying for malpractice insurance for this work. If you end up in court and the case was not billed this will look bad.

7. Not using denial reports.  Your denial reports tell you what you need to fix in your billing process. Failing to work back upstream and fix the issues noted is a sign of a weak process.  Failing to have any denial reports is a sign of complacency.

8. Not being on top of industry changes. If your biller is not attending your industry specific workshops then you may be missing some very important pieces of the puzzle.  Heck, I know so called “experts” that don’t even attend these workshops. I would question their expertise.

9. Failing to upgrade their billing software and maintain billing standards. If your biller is not upgrading their software what does this tell you?  To me it says they are myopic in their business approach and sooner or later this will cost you money.  There are some fantastic software firms out there producing quality products, the failure to upgrade your infrastructure will cost you in the long run.  It is 2014, most billing firms have scanning software, programmers, and electronic work flow software.  Most coders are coding off of an electronic screen, and everyone has strong batch totals as part of their billing software.  If you biller is using a total paper environment most likely not up to industry standards.

10. Bad outsourcing.  Most billing firms are outsourcing their data entry, interface management, and call centers.  Some do it well and some not so well. Bad outsourcing is always found when you audit your billing.  You find keying errors, claim errors, bad credentialing, accounts being adjusted incorrectly, the wrong allowed amounts being applied, and incorrect secondary billing.  In the best case this will cost you some revenue.

In summary, if you see some of these things in your billing or revenue cycle management then take note.  Billing is incredibility hard, there are numerous front end and back end variables that must be handled correctly.  Add to this the industry consolidation, CPT changes and the fact that many firms are publicly traded and need to make money to make their shareholders happy and you have the perfect storm for lost revenue.

Interested in learning more about the benefits of auditing or overall revenue cycle management? Contact us today for a free consultation.


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