The current economic climate is having a negative effect on physician practices. Flat or declining reimbursement, more regulatory paperwork, health reform, and IT implementation have but pressure on small practices. The good news is that there are ways to tighten up your belt and tune-up your practice going forward.

Improving the revenue cycle starts with some simple changes to effectively manage your physician practice. The following are some things to consider:

The billing manager does not have an active performance improvement plan to achieve industry standard metrics such as days in A/R (less than 90 days), Net collection rate, and write offs as a percent of total A/R.

• Electronic remits are less than 70% of total payments posted.

• Claims payments first pass rate is less than 85%

Keep billing office tasks to these:

Charge management and Edit Resolution

Claim production and payor claims filing

Payment posting and credit balances

Self-pay follow up (collect on front end if possible)

Here are a few more tips to fine tune your practice:

• Keep your IT infrastructure updated

• Review your compliance plan annually

With the current economic climate, your physician staff should make a concerted effort to generate more revenue with the same level of physician productivity.

Another question facing physicians is trying to decide if they should outsource their billing to a professional service. Factors that will affect the decision include your practice’s current situation. If your billing department is behind in accounts receivable and claims are not being processed in a timely manner, it might be wise to consider handing off this important task to a qualified company. Doing this can significantly reduce office expenses and insure that your business is receiving collections in a timely manner. Comparative staff productivity is hard to measure because each practice has its unique mix of payer, office personnel and business functions. However, MGMA surveys has some surveys that measure staff and expenses, gross charges, and accounts receivable data that reveals that outsourcing is a viable option for 3 out of 4 practices.

The data has baseline studies that measured whether billing staff workload is below or above the average. They found that staff members in a medical office rarely receive adequate training and are not using the practice management system to the maximum effectiveness.

Correct coding and complete documentation is the basis to ensure that the practice rece3ives reimbursement from services performed. It can reduce the number of denied claims as it protects the practice against malpractice suits and investigations for fraud and abuse. A chart audit should be conducted to identify problems within a practice. This will insure that the office is following best practices which are so important nowadays as the industry moves from quantity to quality reimbursement. If the coding in your office has never been audited, you may want to hire an experienced coding professional to conduct an audit.

You will have to gather a representative sample of charts for different procedures, diagnoses, and physicians to start. Then you can review the documentation and check for correct application of E & M level use of procedure codes, modifiers, and diagnosis codes. You can also benchmark the coding levels with your doctors or use the CMS data. MGMA has an online tool with E & M coding data by specialty. You can find this under member benefits at

Sometimes physicians tend to under code (safe-coding) especially when it involves E&M codes. Even though this might lessen the worry about being investigated, it also cuts the practice revenue and physician income. Keeping up with proper use of E&M codes is a must for all biller/coders. Remember that the physician is the one held responsible for setting CPT and diagnosis codes. Some coders simply do not have the expertise to set the codes and physicians should supervise and give direction for this important task.


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