Many Pediatricians look at their deposits in the practice bank account as well as track the increase/decrease in revenue. The practice has to provide optimal Pediatric care and achieve >99% collection rate to optimize the revenue collection process. Given that Pediatrics are the lowest paid specialty (per the 2011 Medscape Salary Survey – see link at http://www.medscape.com/features/slideshow/compensation/2012/public?src=ptalk&firstbullet), insuring that the practice achieves the revenue due per the contract is a necessity.
Increasing revenue year on year is important but an increase in revenue might not mean increased income/profit for the practice. For instance, if the practice has a 10% increase in visits that is due primarily to higher rates of vaccine visits, and the practice has vaccine leakage (loss of vaccines) as well as sub-optimal coding and billing follow-up, the overall practice profit might decrease. How could this happen and how could I prevent this from happening?
How a lower profit margin could happen? According to the Medical Group Management Association (MGMA) via benchmarking of collection rate, the average practice collects 95% of their contract amount. If a practice has ‘average’ billing systems and processes in place, per the MGMA benchmark of 95%, the practice would not see 5% of their revenue. If the practice had revenue of $1,000,000, they did not collect $50,000 of the contract amount (either the insurance or the patient did not pay). In addition to this, some practices lose entire visits because of the disconnect between the biller and the clinical (common when the practice fills out paper charts and paper billing sheets for a biller to complete). Some other ways that a practice has reduced revenue is improper coding. For example, if a child has a well visit and receives a MMR Vaccine, some billers miss the 90461 CPT code with 2 units. Some billers might send this CPT code but miss that the EOB only paid one of the units and they need to re-file the claim (e.g. 99391, 90707, 90460, 90461 (2 units)).
How could I prevent this from happening?
#1 insure that your Pediatric Practice leverages a medical billing system that is designed, developed and utilized only for Pediatrics.
#2 The Pediatric Medical Billing team needs to be trained and re-trained (at least 1x per quarter) in Pediatrics. The Pediatric E.H.R. should be integrated with this Pediatric Practice Management. The office needs to have audit systems in place to verify that co-pays are collected and match the insurance card as well as a monthly audit of the Pediatric Medical Biller.
#3 There also needs to be redundancies in the Medical Billers to manage the claims while a Pediatric Medical Biller is out sick or on vacation. I have seen both large (>8 providers) and small pediatric practices for which the entire revenue cycle was outdated and disconnected. Unfortunately, I have even seen a large Pediatric Group where the entire team had a significant gap in their knowledge and skills.
This will never be perfect BUT every practice should achieve >99% collection rate and strive for 99.8% (we have a few practices at 99.7%). At least each quarter and preferably once/month the practice should measure and monitor the collection rate.