Physicians, Heal Thy Billing Methods


Doctors need to do wellness checks of their own businesses. They’re likely missing out on money that health insurers owe them.

Medical billing has become so complicated that physicians are forgoing millions of dollars of earned payments. With some 70,000 ICD-10 codes used to identify patient illnesses and injuries, and another 7,000 or so CPT codes to cover medical services and procedures just for outpatient services, along with other requirements to process a bill, it’s increasingly difficult to ensure a bill is accepted and reimbursed in a timely manner. Those delays cost both doctors and their patients, in terms of dollars and health.

Private insurance companies, Medicare, and Medicaid generally use the same uniform coding language — and they regularly reject claims for reimbursement that they deem to be improperly coded. And then the claims must be reworked and resubmitted. At the same time, each insurer has its own set of rules and reimbursement rates. The paperwork to get it right, never mind to appeal, is staggering. (No wonder “medical records specialist” is considered a growing career field.) 

By some estimates, insurers deny almost 20% of in-network claims, with many providers experiencing a 30% rejection rate. The problem has reached such a crescendo that the news organization ProPublica is asking doctors, healthcare professionals, patients, and insurance company employees to share their stories of denied claims and unpaid bills for an investigation it is preparing.

I personally know of one medical practice that collected just $80 million of the approximate $100 million legitimately and fairly owed it by insurers. That’s 80 cents on the dollar. In fact, mid-80s isn’t uncommon among the doctors with whom I’ve worked. By way of contrast, many industries typically recover 97 to 98% of their bills.

No doctors I know went to medical school to become number crunchers, but billing and other administrative tasks increasingly eat into the time they have to practice medicine. And the time now spent on paperwork and other administrative matters is shocking.

I suspect it’s a key reason doctors are giving up solo or small practices and going to work for large healthcare organizations, hospitals, and other employers with the staff to oversee the mounds of non-medical minutiae. Many also are switching to concierge service and requiring cash upfront from patients, regardless of their insurance status.

As a business consultant who has spent more than two decades specializing in turnarounds, I’ve worked on some massive business restructurings, among the biggest in history. I’m no stranger to financial missteps and messes. But even I’m taken aback by medicine’s byzantine billing system, with medical codes that can only be described as bizarre: sucked into a jet engine, subsequent encounter (V97.33XD), or struck by macaw, initial encounter (W61.12XA). Don’t worry. Exploding bicycle tires, tidal waves due to landslide, and plain old walking into a wall are also among the more than 4,000 injuries available for doctors or their staffs to select from.

There are, not surprisingly, efforts under way to streamline this insanity, in part by moving from a fee-based structure to one more closely aligned with health outcomes. We have yet to see what that will bring though. In the interim, doctors must do something to smooth out their own billing systems. Technology helps (and has also hurt, in that it made all of those codes possible in the first place and is pricey for small practitioners).

Think data, workflow, and analysis. Eliminating bad debts down the line, like so much in life, is in the details.

  • Make sure to assign the proper code from the get-go.
  • Know the payer’s contractual rates.
  • Track each insurer’s payment history: on time, late, lots of extra paperwork, more denials than usual?
  • Compare collections to outstanding bills.
  • Hold insurers accountable; don’t accept less than owed.
  • Negotiate better rates with insurers rather than seeing more patients to make up for shortfalls.
  • Automate at every opportunity; a short-term investment in good software can save time, money and hassles in the long run.
  • Consider dedicating one staff person to these procedures.
  • Outsource when possible, if necessary, easier and affordable.

These steps can help return struggling and underpaid medical practices to financial health. It’s that proverbial tough pill to swallow, but medicine is also a business, and while the coding system and insurance practices might be incurable, they can be better managed.

Photo: JamesBrey, Getty Images



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