With consultants’ fee levels very much in the news now that they are being published by the Private Healthcare Information Network, it is the perfect time to take stock of the way your practice’s medical billin and collection is working. He identifies 11 billing issues to address in private practices. Last month, he dealt with the first five and here tackles the remaining six
The issues addressed in my points to five last month revolved around setting up the practice in order to carry out the process smoothly and efficiently.
Now it is time to attack the operational aspects of the medical billing and collection process.
My last article covered the reasons why you need to bill promptly. But I am constantly surprised to see that this golden rule is not always followed and it is not uncommon to find a practice running many weeks or months behind in raising the invoices.Before sending the invoice out to the relevant payee company/ patient, there should be a checking process to make sure the invoice contains all the relevant information and is correctly priced.
Once the invoice is sent, it is too late to change anything and this can either lead to losing money by undercharging or delays in payment if the invoice does not contain all the correct information, which can cause cash-flow issues.
Raising invoices to the private medical insurance companies still needs to be done quickly so that there is the best chance of it being settled in full.
If there is a delay in sending the invoice, you run the risk of the policy benefit limits being exceeded by other consultants’ claims, which means that the amount becomes the liability of the patient, which creates more administration work and is harder to collect.
On top of this, some insurers have time constraints on when you can send the invoice.
Over the past few years, there has been a major push by insurers to send invoices electronically. This is a major benefit to them, but there is also a huge benefit to the practice, as it means that the invoice should be assessed and paid quicker due to less human involvement. This should lead to much better cash flow. And if there is a shortfall, it can be sent to the patient for payment much quicker.
As Independent Practitioner Today has reported, this area has grown considerably over the past few years and is now either the biggest or second biggest area of revenue and it continues to grow.
So raising the invoice directly to the patient should be the priority of the practice, as this area is the biggest risk of bad debts.
Under this heading, I also include invoices raised for shortfalls caused by the terms of the insurance policy, such as patient excesses, benefit limits or coshares.
There are times when a practice should also consider requesting payment in advance, particularly when seeing patients who do not reside in the UK or where there is a very large element of self-pay.
This is another area which we continually see causes problems within a practice; often the practice is way behind with the reconciliation process or the remittances are not reconciled correctly against the invoices raised.
Each insurer should send a remittance to the practice when it sends the money, which is typically done electronically direct to the practice bank account.
But, in practice, the remittance does not always arrive at the practice, so unless the practice is chasing the insurer or reconciling the bank account on a regular basis, the invoices remain outstanding.
When this happens, it can then lead to further problems. The remittance which has been missed and not reconciled can have shortfalls identified on it which should have been sent to the patient. If it is not sent, you have got more bad debts.
Trying to send invoices to patients months after the event is never a good thing, as it can lead to complaints from unhappy patients or bad debts; either way is not good.
At Medical Billing and Collection, we know about the above problems because, when we chase a backlog of outstanding invoices for a practice, we encounter these issues all the time.
The way to rectify this is to make sure that remittances are reconciled the same day that they are received and then to regularly chase the missing ones from the insurers.
This will ensure you keep on top of outstanding invoices and know at the earliest opportunity if you must invoice a shortfall to the patient.
This is the area we find to be the one that gives most practices the biggest operational problem.
Few practices find it easy to deal with the patient on both a medical and financial level, as it can lead to many issues on both sides.
In our experience, every invoice potentially needs chasing, including invoices sent to the insurers.
Reasons for a delay in processing the invoice can be the:
- Invoice does not reach them if it is posted;
- Patient has not got the treatment pre-authorised;
- Patient has given you the wrong membership number.
The practice must decide what process it is going to introduce and who is going to be responsible for carrying that out.
Once the chasing process has begun, it needs to be followed otherwise the patient will think that you are not being serious – and that will just lead to even more bad debt.
The process should consist of contacting the patient as well as sending letters and all of this should be recorded so that you keep a log of any action taken.
5. DEBT DECISIONS
Once all the avenues in the chasing process have been exhausted, the practice then needs to decide to either send the patient to debt collectors for them to continue chasing with the potential of eventually taking legal action to collect the debt.
What you do will typically depend upon the patient, the circumstances involved in the treatment and the associated costs.
If you decide not to send the patient to the debt collectors, then the practice should consider writing the amount off as bad debt. It is unlikely that the patient will choose to pay the outstanding amount for some random reason in the future.
Before taking this final action, the accountant should be consulted, as they would know the individual circumstance of the practice and be in the best position to offer the correct advice.
6. TAX REPORTS
Once all the above has been addressed, the practice then needs to be able to raise financial reports from both a business and tax perspective. This is even more important with the start this month of Making Tax Digital for VAT registered practices.
HM Revenue and Customs (HMRC) takes the view that you are responsible for your own tax affairs and it does not consider ignorance or negligence as any reasonable defence.
You should be running reports on invoices raised, payments received and outstanding invoices on a monthly basis to ensure that all financial aspects of your practice are in order.
If not, then you have the information in a timely manner in order to take any action needed to keep your practice on track and avoid any cash-flow issues and to minimise bad debts.
Unfortunately, the HMRC looks upon the medical arena as being a prime area where the financial affairs are not as robust as they should be.
This leads to a higher percentage of investigations compared to other areas of business.
Most people underestimate the important area of medical billing and collection. I can assure you that it is not easy and it is getting harder and harder to do it internally.
If you decide to continue to carry out this process internally, then I urge you to act to ensure it is done correctly, otherwise it is something that you may regret later.
If you do not want to invest the time and effort to do this internally, then you should consider outsourcing this crucial area to a medical billing and collection company and let the professionals do this for you.