Updated: Apr 7, 2021
One of the most important, if unsung, aspects of the healthcare system is the medical billing and coding process. This process ensures that healthcare providers are paid for the services they deliver.
To ensure claims are issued and payments are processed quickly, the medical billing process requires a high degree of accuracy. Errors or out of date information can create serious problems for a healthcare practice. For instance, failing to enter patient demographic information correctly or failing to check and verify patient eligibility can lead to costly denied claims. Any changes to patient information must be carefully reviewed and entered, all transmissions confirmed, payments posted, and accounts receivable worked in a timely fashion.
Since all of this must be done in addition to servicing patient calls and other day-to-day demands of a busy office, taking the time to put the best practices in coding and billing in place from the beginning can greatly reduce the risk of confusion or error. Here are some best practices in coding and billing to help your practice create the most efficient system possible and reach your revenue potential.
What is Medical Billing?
When an insured patient comes to your medical practice to receive care, they only interact with you and not the payer, the insurance company. However, the insurance company is an integral component of the complex system of medical reimbursement.
Medical billing is the process of submitting claims with health insurance companies so healthcare providers can be paid for their services to the patient. Providers can range from private medical practices to hospitals, emergency rooms, outpatient facilities, or any other place where medical services are performed. Medical billing ensures that the healthcare provider is being paid for their services by billing both patients and insurance companies so providers can receive their due compensation. Since medical billing is the process in which medical providers are paid, ensuring timely, accurate, and full reimbursement is critical for your medical practice’s success.
What is Medical Coding?
Medical coding is the process of translating a patient’s medical history of diagnoses and treatments received into a universal, alphanumeric shorthand used by healthcare providers and insurance companies. Each diagnosis and medical procedure has a unique code that will later be used to determine medical charges. After a patient’s chart has been translated into the correct code, the medical biller takes this information and files a billing claim in order to request payment from the patient’s insurance company. Once the claim has been evaluated, the biller determines how much the patient owes after insurance is taken out.
Accurate medical coding is essential for efficient reimbursement. The financial health of a medical practice can be generally determined by how accurate its medical billing and coding is since mistakes can be costly.
Medical Billing and Coding Tips to Implement in Your Medical Practice
Of course, actually putting those medical billing process steps into place can be daunting. It’s especially difficult if you don’t know what an acceptable collection ratio looks like or how often you should even be billing patients in the first place. Uses these medical coding tips and best billing practices to help guide your operations!
1. Make Your Medical Billing Statements Patient-Friendly
Although medical practices and hospitals understand the complexity of the medical billing process, patients are likely to find it confusing. Industry expectations have shifted in a way that requires providers to have a patient-friendly approach to this process, so it’s becoming more important that you educate yourself on how to stay accessible.
2. Keep Your Clean Claim Rate Above 95%
Your medical practice’s clean claim ratio is the average number of claims paid on the first submission. In a perfect world, every provider would love to reach a percentage above 95% but the meaning behind the number is what really matters. The higher your clean claim rate, the less valuable time your personnel will spend trying to identify denial reasons, coordinate payments, and re-submit claims.
3. Don’t Skip Analyzing Your Payer Reimbursements
Many medical practices put too much faith in payers to reimburse in full on every claim they complete. Unfortunately, that’s not always the case. Underpayments are more common than you might think. Dedicating resources to analyzing your payment accuracy will minimize your revenue loss and give you valuable insight into your practice’s revenue management cycle data.
4. Get a Grip on Your Accounts Receivable
How often do you track your receivables? Do you find yourself having to scramble for time to respond to a denied claim? Maybe you should reconsider how you manage your contracts and receivables. Coding changes happen quickly in the healthcare industry and there’s no better time to get ahead of foreseeable issues.
5. Get Back to the Basics of Revenue Cycle Management
New to revenue cycle management? The first step is having a predictable cash flow. Even if you’re experienced in the complexities of medical billing and coding, it’s always helpful to brush up on your basic best practices to make sure you haven’t strayed from the path.
6. Properly Submit Accurate Claims
Ensuring your medical billing is accurate the first time submitting can avoid the wasted effort involved in editing and resubmitting incorrect claims. It’s estimated that up to 80% of medical bills contain errors, resulting in weeks of editing, resubmission, and providers not receiving their reimbursement. Properly filling out claims and avoiding common errors, such as incorrect patient or insurance information and duplicate claims, can provide an efficient medical billing process for your medical practice.
7. Stay Up to Date on Medical Billing Rules and Regulations
To ensure best practices in medical billing and coding, it’s essential to be aware of the current medical bill rules. Since the regulations are always changing, staying informed can create a streamlined process that avoids rejections and medical billing edits. Failure to stay up-to-date on medical billing rules can have a direct effect on your medical practice’s cash flow.
8. Always Look For Areas to Improve
Finding opportunities to improve will continue to help your healthcare practice expand. Since the healthcare industry is constantly changing, looking for ways to consistently optimize the medical billing process will help to maximize revenue. Besides staying aware of current medical billing regulations, tracking performances is a key area to see areas of inefficiencies and optimize efficiency. Performance tracking through measure key performance indicators (KPIs) can help measure the accuracy and efficiency of past performances and identify areas of improvement.
Essential Metrics for Evaluating Your Medical Billing and Coding Processes
The best medical billing metrics give you an instant snapshot of your practice’s financial health across many interrelated areas. Identifying these KPIs is an important step in implementing medical billing best practices. Here’s a quick rundown of the eight most important metrics you should be keeping a close eye on across different areas of your practice and why they matter to your medical billing and collections.
1. Net Collection Rate When it comes to evaluating your medical billing process, few metrics are more important than your practice’s net collection rate. Since the net collection rate measures just how much money you receive against funds owed for services rendered, it speaks to the success of nearly every aspect of your practice.
With a keen understanding of your net collection rate, you can almost instantly understand and quantify your responses to answers such as:
Are you providing treatments and services that patients and payers deem valuable?
Are you managing your revenue cycle and medical billing operations effectively?
Are you following up on non-payment issues?
Do your patients understand their financial obligations?
Are you monitoring for (and spotting) problematic trends among your payers or patients?
2. Average Days in AR With knowledge of the typical number of days between the time you see a patient and the time you collect what you’re owed, you can spot whether your team is slow to submit claims to payers. Plus, you’ll understand just how much funding you need to keep in the bank (and for how long) in order to sustain your operating expenses prior to reimbursements.
Payers reimburse claims at their own pace, so a lag in accounts receivable isn’t necessarily the fault of your staff. Regardless, it’s important to make sure your claims aren’t sitting in AR for months on end. Keeping track of days in AR beyond the 60-day threshold is vital to ensuring no claims slip through the cracks.
3. Collections Per Visit Which procedures are most important to your overall income? Measuring your collections per visit on a month-by-month basis, then comparing the rates against which kinds of appointments you took during each period, can help you optimize scheduling around the areas that drive the highest revenue performance for practice.
4. First Pass Resolution Rate (FPRR) Your practice’s FPRR represents the percentage of claims that are paid after being submitted a single time. A high rate shows that denials and delayed payments aren’t a problem for your practice; aim for a rate higher than 95% to ensure your revenue stream isn’t moving unnecessarily slowly.
5. Contractual Variance If your payers aren’t reimbursing you according to contracted rates, you may be losing money without even realizing it. Keeping a close eye on contractual variance can help you determine if you’re being underpaid and provide insight into whether the issue stems from poorly-submitted claims or problem-ridden payer relationships.
6. Denial Management While a high rate of properly submitted claims is ideal, sometimes even a continually refined medical billing process will still produce billing errors. When bills are denied, a documented denial management process is crucial to ensuring full and timely reimbursement and one that identifies issues so they can be refined for the future. By evaluating denial trends by denial code or reasons, you can better track irregularities and better optimize your process.
7. Monthly Receipt Documentation Keeping monthly receipts allows your practice to track month to month progress and compare receipts to prior months, same month prior year, and year to date for both the current and previous years. Thoroughly documenting the past month will help better track performances and identify areas of improvement. This should give the visibility you need for delivering quality metrics every month and quarter.
8. Year-End Reviews Of All Reports Daily or even monthly metrics may not provide adequate visibility for making informed decisions. Running quarterly AR reports can provide the insight your practice needs to better implement medical billing practices. Besides quarterly reviews, conducting year-end reviews of all the above metrics can provide your practice the most thorough performance evaluation. A well-documented yearly review of all your reports can provide unprecedented clarity into your practices and identity areas to improve accuracy.
Proven Best Practices in Coding and Billing Checklist
To help provide some guidance, we recently analyzed several top-performing healthcare providers to identify their best practices in coding and billing. Armed with these insights, you can begin to optimize your medical billing process with greater confidence.
If your software has a month-end close process, you should be utilizing it. Your month-end closing/reporting process needs to happen on a monthly basis.
Patient billing should be done on a weekly basis.
Insurance billing should be done on a daily basis.
Use the lockbox service offered by your bank for accounts receivable deposits
Use web-based backups for your data if it is hosted on-premises.
Ensure you are using every payer remittance module available to you.
Complete eligibility verification at least 24 hours before the patient is scheduled to be seen.
Monitor your collection ratio and compare it to the prior two years to identify any unanticipated variances.
Your total aged accounts receivable should not exceed 40 days’ worth of charges.
Your AR over 90 days should be less than 10% of total AR.
Trust Your Medical Billing and Collections to the Experts at X-Factor Healthcare Solutions LLC.
By following these best practices in coding and billing, your medical practice can achieve maximum revenue and efficiency!
If you use a third-party vendor for your medical billing services and collections, remember that the rate they charge isn’t the only important thing to know about them. A good medical billing vendor has the experience and foresight to keep your revenue cycle management operating smoothly so you can focus on providing services and treatments to your patients. Screen your billing vendor carefully to ensure they have what it takes to be a trusted partner in the success of your practice.
At X-Factor, our mission is to provide expert medical billing services that integrate seamlessly into your current practice management software or EHR. That’s why our team of in-house experts have a wide range of knowledge and extensive experience working with common software to best serve you and your practice without having to uproot all your familiar processes and at X-Factor, our mission is to provide expert medical billing services that integrate seamlessly into your current practice management software or EHR. That’s why our team of in-house experts have a wide range of knowledge and extensive experience working with common software to best serve you and your practice without having to uproot all your familiar processes and resources.