June 11, 2007

Getting on Track: Bringing Billing In-house
By Laura Gater
For The Record
Vol. 19 No. 12 P. 10

Potomac Physician Associates (PPA), a 17-doctor practice in Bethesda, Md., was unhappy with its medical claims processing provider. Practice administrators were experiencing a “ridiculous” amount of problems, including claims being lost or incorrectly submitted, according to Amanda Tomko, PPA’s executive director and chief operating officer.

PPA zeroed in on fixing the mess and worked closely with the provider to get back on track. A turnaround was achieved and claims improved, but only for a short time. Soon, payments once again experienced significant delays.

Tomko believed she had no control over the billing practice and began to look elsewhere for a solution to PPA’s claims processing problems. She says it was unfortunate that the practice had such a negative experience with a seemingly incompetent billing company.

“We had a large accounts receivable with a very large payer, and our billing company didn’t process those correctly, according to the insurance company. The appeals time had already elapsed by the time we learned all this, and we lost tens of thousands of dollars,” explains Tomko.

Tomko heard about PayerPath’s claims management software at a practice manager’s meeting and viewed the company’s presentation. She was impressed enough to invite PayerPath to a meeting at PPA, where company representatives continued to leave a mark because they “knew what they were talking about.” They understood the product and could explain its features with relative ease. PayerPath addresses all steps in the reimbursement cycle, from verifying patient eligibility and correcting inaccurate claims to managing payment and generating secondary billing.

“Physicians were frustrated because they weren’t making any money during the significant payment delays,” says Tomko. “When we asked them to take the risk of moving claims processing in-house, it was stressful for them. We were able to demonstrate to them that the outsourcing company was not functioning up to par and that it was not capable of expediting claim payments.”

Tomko realized that PPA’s solution lay in the combination of two powerful software programs: PayerPath and NextGen electronic medical records (EMRs). She decided to implement the EMRs at the same time as the billing software to lessen the impact of converting to an electronic office format by making all the changes at once.

PPA utilizes NextGen as its practice management software. Tomko’s staff inputs the charge entry, patient scheduling, and so on, while PayerPath gets the claims to payers. PPA exports the claims information from NextGen and loads/sends it to PayerPath, which then forwards the claims processing information to the various payers.

Tomko was impressed that PayerPath’s software developers had actually worked in billing and claims processing. She says the product’s applicability and ease of use reflects this knowledge of the industry. “Our policy at PPA is to utilize technology to solve problems. One of the biggest problems that private practices have is hiring extra help to solve problems,” she says. The implementation of in-house billing has enabled PPA to wash its claims before dispensing them to payers, again utilizing technology to screen claims for errors.

Forty-five days after the initial conversion to an in-house claims billing solution, the error rate dropped from nearly 40% (with the outsourced provider) to less than 2%.

PayerPath’s real value, according to Jeff Masters, the vendor’s national sales director, is that it is a revenue cycle management solution that provides real-time access and improved productivity tools to send clean claims to payers. While the industry’s first-pass claim rate averages 78%, PayerPath manages to boost that rate to 97%.

“PayerPath gives clients the tools to identify repetitive issues, to continue to get their clean-claim rate higher, and continue to improve their claims processing,” says Masters.

In addition to a huge drop in error rate, Tomko is proud that a staff of one manager, two full-time billers, and a full-time clerk handle all the billing for 17 physicians. She emphasizes that the billing staff is not stressed or burned out because it is able to easily process all the claims that come through the office. Tomko notes that the size of the billing staff is “under every national standard for the number needed to handle billing,” all because of the technology that PPA chose to implement.

Elsewhere in the office, accounts receivable days were reduced from approximately 60 to 34 days with the new in-house solution and technology, while clean-claim rates increased from 60% to 98%, and cash flow increased roughly $200,000 per month.

“I was looking for a 2% increase in revenue with in-house billing but saw closer to a 35% to 40% [increase] after streamlining the process,” says Tomko.

Physician office staff members noticed the changes almost immediately, not in daily workflow but in the increased rate of claims verification.

PPA no longer has to contend with lost claims. That’s an accomplishment, even with the wonders of Internet claims processing and speedy billing technology.

— Laura Gater’s medical and business trade articles have been published in Healthcare Traveler, Radiology Today, Corrections Forum, Credit Union BUSINESS, and other national and online publications.