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    Cristy Good
    Cristy Good, MPH, MBA, CPC, CMPE

    While there are signs that decades’-high growth of inflation might be slowing, higher consumer prices have many patients facing financial struggles, including paying their medical bills. A recent West Health/Gallup study found that one in four adults are skipping care or medicine due to rising costs.

    MGMA Stat: 56%25 of medical groups report that their days in A/R increased since 2021.That pinch on patients’ personal finances translates directly into how well some medical practices’ collections perform. An Aug. 9, 2022, MGMA Stat poll asked medical practices how their collections — as measured in days in A/R — have changed in 2022. The majority (56%) said days in A/R have increased, while 31% said days in A/R have stayed the same, and 14% report days in A/R have decreased thus far in 2022.

    The poll had 403 applicable responses.

    The top challenges in handling collections and days in A/R among those who responded included:

    • Continuing challenges for medical groups in staffing for billing and collections, often resulting in time and energy to select a vendor for outsourcing the work
    • Increasing prior authorizations and claim denials disrupting the practice
    • Increased requests for documentation and increased time to code and review notes prior to submission
    • Newly hired providers needing more time to get acquainted with the EHR to get claims sent out
    • Issues with credentialing.

    Among practice leaders who shared their successes thus far in 2022, the top responses included:

    • Improved operations from hiring new billing managers or outsourcing billing functions
    • Emphasizing efficiencies across the revenue cycle management (RCM) team to include working denial trends more timely with all parties involved (e.g., in-house, clearinghouse, payers)
    • Getting notes out in three days or less and improving accuracy of claims — As one practice leader said, this approach “is paying off by most payments coming in 30 days or less.”
    • Using new strategies to identify patient coverage earlier.

    These challenges aren’t new, as a similar MGMA Stat poll from Nov. 9, 2021, found that almost half (49%) of medical practices saw time in A/R increase through that point last year, which preceded some of the biggest changes in consumer prices from rising inflation throughout 2022. Other polling data give a broader view of the changes in patient payments:

    • A Feb 4. 2021, MGMA Stat poll found that 27% of healthcare leaders changed patient payment plan policies, reflecting the then-slow recovery of the economy from the first year of the COVID-19 pandemic.
    • A July 14, 2020, MGMA Stat poll found more than one in four (26%) medical groups reported a shift in their practices’ payer mixes amid the pandemic, with increasing shares of Medicaid and self-pay patients.
    • A March 29, 2022, MGMA Stat poll revealed almost half (47%) of medical groups reported an increase in self-pay or uninsured patients in their payer mix in the previous year.

    As these challenges continue, medical practices may need to change how they handle bad debt and days in A/R.

    How practices can support patients

    It is important that your practice’s front office and billing staff have the tools they need to confirm insurance and eligibility as well as collect copays, coinsurance, and outstanding debt. The practice should have clear policies on how to handle hardship cases, self-pay discounts and financial assistance options.

    Best practices include:

    • Confirm insurance and eligibility within the week of the visit, or no more than seven days prior to a visit. Best practice is confirming eligibility no more than three days prior to a visit. Many insurances change on the month, so this will assure the practice that the patient’s insurance is current.
    •  Call patients ahead of visit if there is an outstanding balance so that you can arrange payment either prior to or day of service.
    • Educate patients on their financial responsibility and help them navigate the system with a financial counselor, if possible.
    • Provide patients with cost estimates prior to service, especially for those surgeries and procedures that are planned out in advance.
    • Provide for alternative payment options such as Credit Card on File, Venmo, PayPal, etc.
    • Make sure staff understand the HHS poverty guidelines and how federal poverty levels are used to determine eligibility for reduced-cost health coverage.

    How to improve your practice’s days in A/R

    • Use a “claim scrubbing” tool to catch clerical and simple coding errors.
    • Code all outpatient accounts within the bill hold time frame, usually about three days.
    • Run your A/R reports monthly at minimum, separating out insurance and patient balances due using service date instead of billing date to identify billing schedule issues.
    • Work all denials immediately and determine if there are reasons for denial and correct processes.
    • Communicate frequently with patients who have outstanding balances.
    • Benchmark with industry-best practice standards
      • Days in A/R at 30, 60, 90, 120 days and those over 120 days
      • Total A/R per FTE physician
      • Adjusted FFS charges
      • Percentage of copayments collected at time of service
      • Percentage of patient-due balances collected at time of service
      • Percentage of claims denied on first submission
      • Charge-posting lag time between date of service and claim drop date to payer
      • Cash collected as a percentage of net revenue

    How practices may “write off” bad debt

    The criteria for writing off debt varies by practice and should be addressed in clear and consistent policies and procedures. The type of write-off will also determine how the practice deals with the situation.

    Necessary or approved write-offs are ones in which the practice has agreed to, either in the context of a contract or in terms of the practice’s agreed philosophy. These include:

    • Contractual write-offs — the difference between the practice fee schedule and the allowable fee agreed on via contracts
    • Charity write-offs — Consult HHS poverty guidelines to help with these balances
    • Small balance write-offs — usually those balances less than $15 but will be determined by the practice based on the cost to collect such balances
    • Self-pay (uninsured) and prompt payment discounts — usually a percentage determined by the practice, but the practice cannot charge less than the Medicare Physician Fee Schedule.

    Unnecessary write-offs are ones in which the practice has not agreed to but must respond to in some way. These include:

    • Uncredentialed provider write-offs — caused by filing a claim before provider is credentialed
    • Timely filing write-offs — caused by filing claims past the date required, so know your timely filing limits for each payer.
    • Bad debt write-offs — the practice should have a clear policy on when a balance will be written off and forgiven
    • Administrative write-offs — approved by the practice administration based on several reasons. Make sure to document.
    • Collection agency write-offs — those balances written off the main A/R and transferred to a third-party collection agency to collect on behalf of the practice.

    Seven tips to manage write-offs

    1. Educate staff on the policies and procedures around what constitutes a “write-off,” when and how to complete one, and when they need managerial approval.
    2. Review all write-off categories monthly and pay attention to trends.
    3. Remember that if a practice raises its fees and doesn’t renegotiate its contracts, the practice’s contractual write-offs are going to escalate, and you’ll need to account for that difference in your evaluation.
    4. Review all payer contracts annually.
    5. Audit write-offs periodically to make sure that they are being done correctly. Staff may not be aware of such things as noncovered services, ABNs, copays, deductibles, etc. and may write off charges that they should not.
    6. Best practices for unnecessary write-offs are no more than 5% of your total expected collections. The formula for expected collections is gross charges minus necessary/approved write-offs.
    7. When possible, coordinate with the patient on a payment plan before an account goes into “bad debt” or requires a “write-off.”

    Do you have any best practices or success stories to share on this topic? Please let us know by emailing us at connection@mgma.com.

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