Medical Billing - DME Software Updates

In this installment of DME software for medical billing, we're going to cover one of the most important parts of the system, updates.

As much as medical billers would like the DME and medical billing industry to be stagnant, that is just not the case. Regulations are constantly changing as well as prices, diagnosis codes, procedure codes, electronic billing specifications and on and on. So what does one do when they just got the latest software and one week later Medicare pricing for wheelchairs has just changed? That's where updates are so important.

In the DME system, there are a number of updates and not all of them are done at the same time. Some are done monthly, some quarterly and some are done whenever needed. For example, diagnosis codes and procedure codes are usually updated on a quarterly basis. These updates, however, are not automatically done by the system. Each DME system is different. Some have updates that you get via the mail in the form of a CD and have to install yourself. Other systems have updates that you can get via the Internet. In most cases, these updates are not included with the software package and not free. You need to subscribe to the service in order to get them. This is particularly true with diagnosis codes and procedure codes.

In the matter of electronic billing module updates, these usually are included with the purchase of the electronic billing package for each carrier. Part of the contract that comes with these modules includes updates for life. Usually there is a small yearly fee to get them. Some companies actually provide free updates because the software itself is so expensive.

In the matter of price changes, these work a little differently. Prices for Medicare and Medicaid allowables usually don't change often. Usually, they only change once a year. Sometimes they may not change for a couple of years. These updates, because they are so seldom, usually are included with the software at no extra charge, though you can bet that the actual cost of the software has these updates factored into the price at the time of purchase.

And then there are odds and ends updates for things such forms. Medical billing forms are always changing because the carriers are always trying to find better ways to do things. One of the most nerve wracking jobs of the biller is to keep up with all the forms changes. Because these changes occur so often, the actual changes to the software are done on an as needed basis and the charges are per form. This is where the software makers usually make a good deal of their money. Some do offer contracts where the biller pays a yearly fee, usually quite high and the software maker will take care of all forms changes free of charge.

Software updates are more common than the common cold. That's why you'll see version numbers of the medical billing software going into double digits. And don't ever expect the updates to stop. As long as the medical billing industry is always changing, the updates will keep coming.

Your Independent guide to Medical Billing

Top 5 Metrics For Chiropractic Office Billing Software and Service Performance

Effective practice management depends on solid billing performance. Its measurement is an integral part of practice management process and its importance grows in step with growth of patient volume. Traditional billing metrics are limited in scope and focus on claim submission process, ignoring process imperfections on the insurance (payer) side. Modern computer technologies allow both measurement and action to improve revenue cycle efficacy and efficiency.

Useful metrics must be comprehensive and simple. They must combine both complete end-to-end processes and their individual components. Metrics must be used consistently over time and compared to standards.

 

1. Days in Accounts Receivable (DAR)

    

   A growing number of days in accounts receivable are symptomatic of a faulty billing process. One way to determine DAR is to count days from the date of service to the date of payment for every claim and then average across all claims. A simpler way to compute average number of days in accounts receivable by taking a ratio of accounts receivable to average daily charges, or

   DAR = (Accounts Receivable / Average Charge) x 365

   The main downside is this metric is its sensitivity to provider as it counts the lag time of unsubmitted claims for services already delivered.

   One obvious advantage of DAR metric is its independence of charges. The averaging feature of this metric eliminates sensitivity to specific day or CPT code but also hides the behavior shape of the accounts receivable curve.

   Note that national average of DAR hovers around 73 days. Advanced billing service providers leveraging powerful Vericle technologies often drive average DAR as low as 15 days.

    

2. Percent of Accounts Receivable Beyond 60, 90, and 120 Days (PARB60, PARB90, and PARB120)

    

   PARBX resolves the sensitivity issue of DAR metric and offers simple and charge-invariant metric of billing process. Its graphic representation has a skewed bell shape. Its steepness represents billing process quality: a steep curve and thin tail means healthy billing process, while a flat bell and a fat tail means billing problems.

   According to the MGMA survey, 25.35 percent of the average family practice's accounts receivables were more than 120 days old in 1997. This number has improved down to 17.7% in 2004.

   PARBX metric is especially helpful to identify patterns of problem claims containing specific payer or CPT code. Advanced billing service providers leveraging powerful Vericle technologies often drive average PARB120 as low as 5%, significantly below the national average of 17.7%.

   Further, PARB120 has been used to develop rule-based Billing Performance Index, which helps the development of billing industry standards. Chiropractors can use the index to benchmark their billing performance and to guide its improvement over time. Rule-based index definition allows for automated inclusion and exclusion of payers in the index based on payer attributes, such as numbers of processed claims, accounts receivable distribution, certain mix of CPT codes, or patient demographics.

    

3. First-Pass Pay (FPP Rate) and Denial Rate

    

   FPP is the percentage of claims paid in full the first time upon submission (subject to federal or state timely payment regulations: 15 days for electronic submission and 30 days - for paper).

   Denial rate is the complementary metric to FPP rate. It counts the percent of claims that require followup and therefore cost more to process. Followup may take the form of a phone call to payer to discover a lost claim or to receive interpretation of denial message, correction of earlier submitted data, resubmission of the original claim, consultation with the provider and medical notes, or denial appeal.

   Both FPP and Denial rates are very important metrics often used for billing process improvement. The upside of FPP/Denial metric is that it is charge-invariant but its downside is that it hides the differences between process imperfections on the claim submission and claim payment sides. To identify patterns of problem CPT codes or payers, FPP/Denial metric needs to be computed and compared across all pairs of payer-CPT code, which is a standard feature for modern billing technologies.

    

4. Patient Liability Rate

    

   Percent of Patient Liability is the ratio of patient responsibility to total billed charges and it roughly reflects patient deductibles. This measure is important in measuring front office function as it has little to do with clean claim submission or effective followup.

    

5. Collection Ratios

    

   Gross and net collection ratios metrics used to be popular metrics in the early day of digital computing. They compare (often arbitrary) charges to (allowed) payments. Net collection rate is defined as a ratio of Total Collections and Total Charges less Adjustments. Gross collection rate is defined as a ratio of Total Collections to Total Charges only. The main drawback of Collection Ratios metrics is the use of charges in defining gross and net collections, which precludes productive discovery of process improvement opportunities.

    

 

In summary, comprehensive and charge-invariant billing metrics, such as PARBX, are more informative and objective than collection ratios. Modern Vericle-like technology using such metrics helps identifying billing bottlenecks as it allows interactive review of multiple metrics along different aggregation dimensions.

Yuval Lirov, PhD, author of "Practicing Profitability - Network Effect for Revenue Cycle Control in Healthcare Clinic and Chiropractic Office: Scheduling, SOAP Notes, Care Plans, Coding, Billing, Collections, and Audit Risk" (Affinity Billing) and "Mission Critical Systems Management" (Prentice Hall), inventor of patents in Artificial Intelligence and Computer Security, and CEO of Vericle.net - Distributed Billing and Practice Management Technologies. Yuval invites you to register to the next webinar on audit risk at BillingPrecision.com.

Electronic Medical Billing OLAP Software for Lost Revenue Discovery

Average medical practice may lose as much as 11% of its revenue due to underpayments. But underpayment recovery potential averages only 5% of revenue and involves costly appeal process. To avoid unrecoverable losses, some providers discontinue servicing patients insured by the worst performing payers. Unfortunately, such a drastic loss reduction measure may boomerang and increase losses depending on complexity of referral relationships. This article outlines limitations of traditional database queries used to identify payer candidates for contract termination and demonstrates alternative decision choices with superior performance in terms of revenue and risk management, facilitated with On Line Analytical Processing (OLAP) technology.

First Order SQL Queries for Accounts Receivable Analysis

Traditional accounts receivable analysis includes identification of payers that systematically underpay and refuse denial appeals. Such analysis is based on simple queries, designed to identify the best CPT code or the worst payer in absolute terms:

• Comparison of revenue for various CPT codes for a given time-period
• Comparison of underpayments for various payers for a given time-period
• Comparison of denials for various payers for a given time-period

 

A single key database indexing is a standard measure to improve time performance of such queries. It builds an ordered relationship within the data elements based on the value of the selected metric. But single key indexing precludes implementation of more complex queries like "who is the payer that underpays the most for the best CPT code," or "who is the worst referring physician for my worst payer?" and require complex SQL programming skills because of the need to store and process intermediate results. Therefore, ranking the data elements along a single attribute, forces a limited choice for management decision:

• Ignore the problem,
• Renegotiate the contract with the payer, or
• Stop serving patients insured by the worst payer.

 

But to find more subtle solutions the office manager requires the ability to aggregate and drill into data and formulate queries in real time, in response to observed results to the previous queries. Specifically, a low frequency under performing payer with a high degree of underpayment may not be as detrimental to the office as a high frequency under performing payer with a low degree of underpayment. Contract termination with a wrong payer may accomplish the opposite result to practice goals in terms of revenue maximization and workload reduction. Additionally, a decision to stop serving patients insured by any one payer may cause reduction of referral volume of other patients across all payers for a particular referring physician.

Combinatorial (Second Order SQL) Queries for Accounts Receivable Analysis

Fortunately, modern database query technology can address both limitations by enabling "second order SQL" queries, which allow data manipulation based on multiple criteria and using functions of combinations of such criteria.

In our case, second-degree SQL queries allow finding the worst payer for best revenue generating code. Such a discriminating approach allows focusing on higher priority items first, resulting in more effective management. In general, the manager performs a custom comparison of payers according to the following four-step sequence:

 

• Select metrics (e.g., % paid, % accounts receivable beyond 120 days, % denials)
• Select dimensions (providers, payers, CPT codes, ICD-9 codes, referring physicians)
• Partition
• Aggregate, drill-down, pivot

 

Worst Payer Query

To find a payer with highest amount of underpayments for the most-frequent CPT code, a second order SQL query can be written along the following lines:

For a given time-interval,

Select payers

Where sum of underpayments over

(all CPT codes Where Revenue > Revenue Threshold) > Underpayment Threshold

Worst Referring Physician Query

To avoid the risk of losing referrals from better-performing payers, the manager may consider severing referral relationship with some referring physicians instead of payers. In such a case, distribution of patients across various payers plays an important role for each referring physician. A single combinatorial query may fetch the Worst Referring Physician as follows:

For a given time-interval,

Select referring physicians Where Revenue for the Worst Payer > Threshold

Summary

Underpayment management involves all phases of claims processing and requires powerful Vericle-like computing platforms for exhaustive comparisons of payments versus allowed amounts and subsequent appeal management. OLAP allows better analysis of accounts receivable and more effective management because of the ability to handle queries with functions of multiple attributes and dimensions. Note that in the absence of native OLAP mechanism, effective Vericle-like billing platforms allow similarly powerful analysis by introducing intermediary steps. Such steps may add insight to analysis and improve decision quality.

Yuval Lirov, PhD, author of "Practicing Profitability - Network Effect for Revenue Cycle Control in Healthcare Clinic and Chiropractic Office: Scheduling, SOAP Care Plans, Coding, Billing, Collections, and Audit Risk" (Affinity Billing) and "Mission Critical Systems Management" (Prentice Hall), inventor of patents in Artificial Intelligence and Computer Security, and CEO of Vericle.net - Distributed Billing and Practice Management Technologies. Yuval invites you to register to the next webinar on audit risk at BillingPrecision.com