Beyond Money

• By Vaughan Harshman, Ronn Schuman
• Jul 01, 2001

It is a mistake to think of a billing department as the place where your company gets paid for its services. Reimbursement activities can produce much more value than is measured by what your company receives in payment. Billing should be thought of as the department that causes your company to get paid, as well as providing valuable information not available elsewhere.

I believe that the ideal billing department holds as its objective: to get paid for products and services quickly and completely, while providing valuable support to other team members as a company grows. Your billing department can be a great asset to your marketing department and to the sales department.

While we worked with one company CEO, he realized that the mail had a tremendous amount of value in the information that was being ignored. The company began to mine that information, most of which came from EOMBs. The following are some examples of how they made their reimbursement activities much more valuable.

They tracked the amount paid per HCPC per payer. Then, they sorted the list to identify which payers offered the highest rate, and which required the steepest discounts. When marketing got this information they began to ask, how can we do more business with the best of these payers?

There were at least two sources of information to collect at this juncture. Did these patients come from common geography? Did these patients come from common doctors? In this case, the answer to both was the same.

Your billing department can be a great asset to your marketing department and to the sales department.

Now we know that we can improve the profit margin by putting a greater emphasis on the sales effort in the more desirable geography, and by increasing the number of referrals that come from the physicians who are sending these referrals.

The next step was to look at the bottom of the list. The first step was to determine how far up from the bottom they should trim. They set a target minimum rate for key products and used that. Then they asked questions similar to the golden end of the list. How do we do less business at these rates?

Over about a six-month period, the company was able to increase its average charge by 10 percent on selected items. They used their reimbursement activity to increase their sales and as well as their gross profit.

Another company that we worked with decided that as bad as a denial is, they could give it some value--and they did. The billing manager prepared a log of denials by code. The list included the billing clerks who had worked the file. Then she sorted the list by denial code. It gave her the perfect needs-assessment for staff training and management.

She did not try to fix all of the common mistakes in all of the denials. She focused on the top 20 percent of the denial codes which made up the majority of the denials.

We can improve the profit margin by putting a greater emphasis on the sales effort in the more desirable geography.

She prepared her report each week. Then she asked the questions: why did it happen? How do we fix our process to keep it from happening in the future? This focus led to improving processes, training staff and making the staff more aware of the their work. After about nine months of this effort, this company's DSO had declined by about half and is still well below the industry average. Their DSO is in the 50's.

Some other bits of value that have been derived from mining EOMBs include, the average response time of each payer. If you want to reduce DSO, try to do business with payers that respond quickly. Compare the time to denial by the payer. Sure this is a denial, but the faster you learn of it, the faster you can fix it. Speed is what your DSO is measuring. Of course, you also should compare the average time to payment--measured in days--of each payer.

This information should be available when you negotiate new contracts. Why would you negotiate a contract to give a slow payer the same or better price as one that pays quickly?

Another provider developed a close relationship between sales and billing. The sales representative sometimes feels he needs an excuse to get into a physician's office. Billing is happy to be a part of the effort. They search their records to find a CMN the sales representative can take to the physician, they brief the sales representative on the situation, and let him use it as his excuse. It works well. Billing can be a part of the sales team just as they can the marketing team.

This article originally appeared in the July 2001 issue of HME Business.