How is Your Billing Department Doing?

by Manny Oliverez

Do you know how your billing department is doing? Most physicians would say “okay.” But how can you be sure? The only way is to receive insurance aging reports on a monthly basis from your billing department. These reports will show you how long it’s taking for your claims to be paid---30, 60, 90, 120, or more days. But are the reports you are getting accurate? Are you even getting reports? Just because you are getting paid does not mean you are not leaving lots of real money on the table. A good aging report will show you exactly how your billing staff is doing in regard to follow-up on patient accounts and insurance claims.

Table 1 shows a typical aging report for a primary care practice. The table includes both patient and insurance amounts due in the different aging buckets. The best way to gage the productivity of your billing staff is by checking to see what your accounts receivable is over 120 days. But what is a good percentage?

Why would you have problems if your number is better than the MGMA’s. Well, you have to be careful here because there are two ways your practice management system and staff can calculate your aging of accounts receivable. Some systems will calculate the aging based on when the insurance is billed. The problem here is that any time you re-bill insurance, the aging clock starts over again. A claim 160 days old can be reset to look as if it is current. Here is an example of what I mean: a patient comes in on June 1, insurance denies on July 1, insurance is then re-billed with an appeal on August 1 . In this case the aging will be based on the August 1 re-bill date, not on June 1. Not only does this method not produce accurate accounting, but it may be masking serious issues with your billing staff.

One thing you will have to watch for is whether your biller routinely mass re-bills insurance claims that have not been paid. Remember, the aging clock starts again. If you were to run an aging report right after those claims were re-billed, they would not show up as old but as current. Your report would look very good and it would seem as though your billing department was doing a fantastic job when in reality they may not be and you are losing money. 

The correct way to calculate the aging of insurance accounts is to run your accounts receivable reports based on the date of service. This will give you an accurate accounting of how old your claims really are and how well, and quickly, your billing staff is following up on unpaid and denied claims. If you are not sure which report you are currently running, contact software support for your practice management system. They will be able to help you determine how the report is running. 

By using the MGMA benchmark and calculating your aging correctly you now have a standard by which to hold your manager and billing department accountable. But now that you have an idea where you problem lies, what is your next step? In the next edition of this column, we will give you problem-solving ideas to make your practice run smoother and more profitably.

Manny Oliverez is the Director of Operations for Capture Billing and Consulting, Inc., in South Riding, Va., and a medical billing instructor at Northern Virginia Community College. If you would like more information about running aging reports or other practice management and billing issues, contact him at 703-327-2010.