Outsourcing your billing is one option for simplifying your accounts receivable.

One of the biggest struggles in this industry is managing accounts receivable (AR). Are you keeping your billing in-house, or are you considering outsourcing?

There are many reasons why businesses outsource billing, such as:

• you are a start-up without much billing experience;
• you want to avoid a pricey investment in software and/or hardware;
• you find an inability to account for how AR is being worked;
• high turnover;
• loss of experienced staff;
• inability to find experienced staff;
• difficulty staying current on policy and coverage changes;
• persistent increase in AR and days sales outstanding (DSO) that cannot be managed effectively by the number of staff currently in place; and
• you would rather focus your resources on launching a new product line, increasing sales, and/or improving customer service/intake.

On the flip side, you may be better off keeping it in-house if:

• you have a small volume of claims and a limited number of products;
• you believe you have good, dedicated, capable staff;
• you have plenty of resources available to your staff;
• you don't feel comfortable relinquishing control of details entered in your system; and
• you have a large practice with high volumes/multiple branches.

Historically, companies have made this decision with an all-or-nothing approach. With technology advances and specialty services emerging, you can often take a tiered approach to outsourcing.

If you desire to keep your current staff, but just want to supplement capacity, consider outsourcing one or more of the following tasks: CMN collection, data entry, payment posting, patient collections, denial management, and claims follow-up. Some companies have even gone so far as to use offshore resources to delegate tasks related to billing and reimbursement. A tiered approach does offer the advantage of allowing suppliers to get comfortable outsourcing a few tasks at a time.

The best advantage to outsourcing is that you have access to additional, skilled personnel, which can allow your company to grow quickly without your having to worry about staffing. Regardless of which options you choose, seek companies with a good understanding of the DME business, a reasonable history, and solid references from other users.

Many companies just need some assistance evaluating business operations to make their venture successful. Too many DME offices become lopsided with one key employee who is the "go-to" person. This individual often becomes the jack of all trades, master of none. The employee is expected to handle customers, answer staff questions, report to management, follow up on denials, and monitor claims transmissions, to name a few daily tasks. If you are lucky enough to find a person this talented, be careful how you use them.

If AR truly is a problem, it needs to be a priority. That means making sure that individuals working the AR are focused on it directly and not caught up with other distractions of day-to-day operations. There needs to be dedicated time, without interruption, to work the AR effectively. To make any progress, the person assigned to the AR will need to study the details of the case history, make notes, initiate phone calls, and gather momentum to make the slightest dent in collections. You should find that by clarifying (and following) the job description/expectations, you will produce better results.

In allocating time toward effectively working the AR, ensure that you have enough personnel to work it properly. A fluid rule of thumb is to have one or two people for every 100K to 150K in AR. This will vary greatly based on the complexity of your payors and your products, and external factors such as run-ins with audits.

DELEGATION OF DUTIES

There are several standard approaches to divvying up the work once you have staff dedicated to the AR. The A to Z method delegates accounts based on patient last name or account number, and this is often the least effective strategy. A better method is to delegate accounts based on product specialty, payor, or branch. Working accounts by product or by insurance payor allows AR employees to become specialized, and thus more efficient at working the various trends that surface in these groups.

An individual working the AR should have certain qualities to ensure good results. Ideal candidates would be aggressive, not timid or meek. They should be willing to fight for the money they are after, and be able to question authority in a professional manner. They also should be able to work independently and use their research skills on the Internet and in provider manuals, and by seeking help from supervisors or special contacts in the organizations they are working with.

To boost chances of success, establish realistic goals. To start, you may want to prioritize special projects based on dollar amounts, age of a claim, claims waiting appeals/ audit responses, or high-balance payors. Data analysis plays an important role in effectively setting these goals. To set goals, you need to know where you are and where you want to go. You should be able to answer questions such as:

• What is your overall denial rate?
• How much can this be decreased within the next 60 days?
• What is your denial rate by product?
• How much can these percentages be reduced in the next 30 days?
• Should you consider dropping a product line?
• What types of denials do you receive most often?
• How many denials can you prevent over the next 30 days?
• How much are you writing off? What is causing the write-offs? How much can you expect this to decrease in the next 90 days?
• How much is on hold? How many claims will be released in the next 30 days?
• What are the top five reasons claims are held? How do you prevent these holds over the next 30 days?
• What is your current AR by payor?
• How much/what percentage can be reduced over the next 30 days?
• What is your current DSO? What do you want it to be in 60 days?

RESOURCES

Andrea Stark

Use the 837. It is important that your staff work with as few paper claims as possible. Revisit electronic arrangements with your major payors. With the standard 837 transactions accepted by more and more payors, you can generate an electronic file from your software program and upload that file without any further keystrokes or printing.

Even if you are transmitting electronically using a payor's Web site, continue to ask if there is a way to transmit the 837 file. Because keying your claims into your software and then again onto a Web site is not the most effective means of electronic transmission, do it once and be done with it!

Find a good clearinghouse: Consider the use of a reputable clearinghouse where you can upload electronic 837 claims for multiple payors on one site. Some clearinghouses charge minimal fees while others are free of charge. You can do an Internet search and find statistics on which clearinghouses have the best reputations.

USE THE FAX

Payors will often accept faxed claims, although they do not publish this service. This will help get problem claims on file quicker and yield faster payment.

Go electronic. Spend some time creating electronically fillable forms and spreadsheets using readily available programs like Word, Excel, and Acrobat. This can help you with legibility and automation of certain repetitive tasks.

There are reimbursement tools that automate many of the forms used in denial management, such as appeal requests. Some third-party services allow you to import EOBs and provide trend/data analysis. Some even allow you to work all the denials at one time and effectively group them together so they can be worked faster.

Remember, when it comes to software, you don't have to pay an arm and a leg, but expect to pay a few thousand dollars for high-quality programs with enhanced features. Believe me, when you have limited resources as most companies do, you will need good features to make life easier.

When possible, automate follow-up and claim resubmissions. A successful AR manager looks for errors at multiple levels: in data entry, at batch processing, upon claim printing/EMC preparation, upon acceptance/rejection by the payor, at the EOB level, and finally in the success rates at the appeals levels. When errors can be attributable to individual employees, it provides added accountability.

Andrea Stark is a Medicare consultant and reimbursement specialist for medical equipment suppliers and pharmacies. She founded MiraVista LLC after working for the Region C DMERC, and now provides consulting and education services throughout the country. Stark can be reached via e-mail: .