At a Glance
- Investing in medical claims software offers financial returns and boosts efficiency.
- Implementing billing software can also improve staff satisfaction.
- The system simplifies claims, reducing burdens for both practices and patients.
You’re deciding whether to invest in billing software but aren’t sure it’s worth the expense. Still, you loathe spending valuable time submitting and monitoring claims. And you need to get paid in order to keep your new medical practice operational and in growth mode.
Sure, you’ve hired staff to manually process claims, but a constant stack still requires your review. These are the rejected or denied claims your staff could not clearly identify — and even some initial charges that never posted due to errors.
Can billing software do what your current staff can’t?
Why investing in billing software is a good business decision
Let’s start with some scope. According to the National Association of Insurance Commissioners, 16% of claims are denied by health insurers. These numbers are consistent with the denial rates that practices across the country report, although the specifics vary by insurer. Of all in-network claims submitted during the 2021 plan year for commercial marketplace plans (291.6 million), for example, 17% (48.3 million) were denied.
The average hourly rate for a medical collections specialist is about $19, according to the Bureau of Labor Statistics. Adding benefits, the real cost to your practice is upwards of $24 per hour of staff time. If working the denial takes 30 minutes, that’s $12 down the drain — plus opportunity costs. Although the time may be well spent, payers often uphold denials. The outcome would have been different if the claim had been correct in the first place; time is not on your side.
As a result of the high cost to rework many practices don’t bother to appeal and resubmit the claim. Even worse, most often the provider isn’t even aware of these claim write-offs.
How do denied insurance claims get resubmitted?
Statistically, of the approximately 48.3 million claims that internal insurance issuers denied in 2021:
- 48.249,698, or 99.8%, went unappealed
- 90,684, or a mere 0.2%, went through the first-level issuer appeal process
It generally takes 30 to 60 days for an insurance company to review an appeal, which takes multiple steps (and forms). It’s such a complicated process that many providers simply accept the denial decision.
The practice articulates responses to questions insurers ask and explains why the appeal should be granted. Billing software allows for clear and complete claims process documentation, helping administrative staff track where claims are in the appeal cycle. Even better, the software can boost the chances of a successful appeal by providing templates for appeals. The real boost, however, is the opportunity to prevent the claim being denied in the first place. Billing software can provide scrubbing tools to ensure you transmit claims correctly in the first place.
Why do insurance companies reject claims?
It seems like there are a plethora of hoops to jump through to get an insurance claim processed and paid. Why?
Insurance companies initially reject medical claims for several reasons. According to open data compiled by the Centers for Medicare and Medicaid Services (CMS), along with data from the Kaiser Family Foundation, the following reasons were the most prevalent for commercial marketplace plans sold primarily to individuals:
- The practice or patient did not obtain prior authorization or a valid referral
- The provider was not in-network
- The patient’s plan did not include the specific service performed
- The payer decided that the service wasn’t medically necessary
- The payer indicated “all other reasons” without specifying the reason for the denial
Other studies offer similar findings. Medicare contractor CGS reports top denials to be non-covered, duplicate, medically unnecessary, and bundled services.
Using billing software can help you avoid these issues. There will undoubtedly still be instances where you need to educate insurance companies about why a particular procedure was medically necessary, for example. However, when given a logical, documented rationale, many insurers will acquiesce and support the physician.
How you can beat the odds of claim denial
- Ensure your patient is correctly registered with the insurer.
- Verify insurer coordination of benefit priority.
- Use a billing software that receives consistent updates with current procedure and diagnoses codes. Submitting a claim with an inaccurate code is a guarantee it will be denied.
- Capture the correct authorization number for the service provided, if required.
- Provide the correct diagnosis code(s) to justify the services provided.
- Submit the claim within the insurer’s defined time limit.
- Submit the claim once. Duplicate submissions result in denials.
What can billing software do?
Billing software eliminates most guesswork about which codes apply to what procedure. Additionally, as insurance companies change, add, or delete codes, the software receives automatic updates, which reduces the risk of errors.
Clean patient billing processes
Billing software allows you to create timely billing statements so patients have a reasonable idea about the details of their coverage and financial responsibility. The system also provides an organized means of tracking the receipt of patient payments and provides alerts, based on rules you create for your practice, as to when patients’ payments are due.
Manage insurance processing
Using this type of system provides the means for your staff to electronically submit insurance claims, thus meeting the standards they require. This provides the means for faster processing and, therefore, payment for services.
The electronic processing also means you will have an easier method to track claim approvals and denials, ensuring you stay within the various insurance companies’ appeal processing standards and timeframes.
Patient record management
Billing software provides an easy and convenient method to manage patient information. No longer will office staff need to keep a physical tickler or reminder file folder. The system will provide automated reminders via calendar entries and email.
Imagine having all patient information at the click of a button without having to manage unwieldy spreadsheets.
Because billing software typically complements and integrates with your electronic health record (EHR), your practice is able to keep patient information intact and secure.
Billing software won’t wholly eliminate errors but it will significantly reduce them.
What would billing software do to avoid claim denials?
Armed with software connected to insurers, your practice can have real-time conversations with patients about their coverage and eligibility. Automating this so-called financial clearance process, particularly on a pre-visit basis, enables your staff to be more efficient and patient-focused. It also puts patients in a position to know precisely what portion of their procedure or visit they will be responsible for out of pocket.
This type of software facilitates a proactive approach to patient communication and engagement.
Because billing software is automatically and routinely updated, office staff can quickly determine coverage or any preapproval needs. They can also inform patients about whether your services are in or out of network. This gives patients critical information to make treatment and financial decisions.
When is the best time to start using billing software?
Converting your existing practice to billing software is possible, though depending on your solutions, it might require manual input.
However, if you have the option, implementing it as you launch your medical practice will save time and conversion challenges. Staff can create new patient profiles in real-time. When integrated with your EHR, all the pertinent patient information need only be entered once to give you insight into:
- Patient demographics
- Patient history
- Family history
- Previous procedures
- Current medication care
- Future tests and results
- Active insurance
- Current medical concerns
Tying the claims processing software to the EHR increases the chances of linking the correct patient information to the associated insurance billing information.
How hard is it to transition to a new medical billing program?
The ease, or lack thereof, of transitioning from a manual process to an automated billing system begins with selecting a reputable vendor. Keep these questions in mind as you conduct your research:
- How long has the company been in business?
- What client rating has its product received?
- Is the company willing to provide a list of customers you can contact for testimonials about their conversion experience?
- Does the company have an established process that makes the software implementation, data conversion, and manual invoice migration understandable?
- Will the company assign you someone who will be accessible when you have questions?
- Does the software have automatic updates? How often do those updates occur — real-time, monthly, quarterly, semi-annually, or annually?
- Are any of the insurers with which you have existing contracts not included? If so, can those insurers be incorporated? What is the timeline around that addition?
- What type of training is provided for the new system? Is the training an online module, group training, or train-the-trainer training?
- Will the billing information integrate with the patient portal software you have or are working to implement?
- Will the various insurance categories easily integrate with your EHR?
Once you have satisfying answers to these questions, you can identify a vendor with which to partner.
Have a plan for your paper
In the event that your new practice has accumulated paper records, it’s critical that you know what has to happen with those file cabinets that are stuffed with charts (or other paperwork).
Even though you are transitioning to an electronic process and will capture historical data in the new system, federal requirements state you need to securely retain all medical records information (paper-based or electronic) in a secure location for at least 6 years. Some states have even more stringent requirements (Massachusetts has a 30-year requirement, for example), so check local regulations.
There are also specific record destruction standards. These may include:
- Computer medical records are usually destroyed by magnetic degaussing
- DVD medical records are typically destroyed by cutting or shredding
- Microfilm medical records are generally destroyed by burning, pulverizing, or recycling
- Paper medical records should be destroyed by burning, pulping, pulverizing, or shredding
When transitioning your records, store them in boxes clearly marked with the date the file can be destroyed and the type of media on which they’re recorded so you can plan to eliminate them.
Set up your practice for medical billing success
Implementing medical billing software in your practice may seem daunting. Still, it will save significant time and money once it is running as intended.
You will experience a return on your investment not only financially but also in terms of efficiency and staff work satisfaction. Further, clean claims may less hassle for you — and your patients.
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