September 2002

The Well-Run Insurance Department
Good for Your Patients, Good for Your Bottom Line
By Mark Sanna, DC

Effective insurance collection procedures are the lifeblood of your practice, and an important aspect of patient management. A well-run insurance department will support your cash flow and ensure your profitability. When in a growth phase, a well-managed practice can generate two to three times the revenue that the typical chiropractic practice’s insurance staff must manage.

For example, a chiropractic practice that in the past collected $30,000 a month may generate over $90,000 of claims by implementing sound practice management principles. When this occurs, practice team members are required to take on the responsibility of managing a greater number of claims - along with the revenue that these claims represent. While important at all levels of practice, having effective insurance collections procedures in place is vital to the long-term success of a growing practice.

When your practice is growing, your insurance staff will be called upon to process a much greater volume of claims, and as the practice leader, you must be sure that your staff members know you are in tune with their needs. If you had a one-person insurance department, as your practice grows, it may become necessary for you to bring on an additional staff member, or half-time staff member, to help handle the necessary follow-up.

A practice generating more than $50,000 per month in collections should divide the labor of the insurance department into two positions. In practices generating less than this amount, one team member may perform both roles.

The Rainmaker
Let’s discuss the two roles of the well-run insurance department. The first position is called the “Rainmaker.” This team member’s job description is to perform the pro-active, follow-up calls to insurance carriers. Unfortunately, this is a step that many practices do not have in place, resulting in tremendous inefficiency.

The most ineffective way to run an insurance department is to only respond to those requests for information generated by the explanations of benefits (EOBs) sent by insurance carriers. Without making pro-active calls to insurance carriers, you are assuming that when you send an insurance claim form into an insurance company that they are anxious to pay your claims. The fact is, many insurance claims reviewers are motivated to find a reason not to pay your claims. Once you understand this phenomenon, you will know why you must be proactive with your insurance collections calls.

Have your Rainmaker phone the insurance carriers using the following script, “Hi. This is Sally calling from Dr. (Name)’s office. I am calling to check on the status of the claim and to find out when the payment check will be issued.”

The Paper Pusher
The second position in the well-run insurance department is called the “Paper Pusher.” The Paper Pusher is the person who gathers the information, office notes, treatment plans, etc., that the Rainmaker requests. The Rainmaker makes pro-active phone calls to the insurance carriers, and this generates requests for information that the Paper Pusher must fulfill.

For example, a carrier may deny ever having received a claim when the Rainmaker calls to check on its status. The Rainmaker will then generate a request to resubmit the claim and the Paper Pusher will fulfill the request. Oftentimes a carrier will request office notes or a treatment plan. The Rainmaker will ask the Paper Pusher to collect the requested information and send it on to the carrier. When your practice is generating $1 million worth of claims a year, you must make sure you operate like a million-dollar business, not like a mom-and-pop enterprise. Proper procedures must be in place.

The Seven Steps
The seven steps of the insurance collections procedure should include:
1. Break down the accounts receivable by payor class. You should print out your accounts receivable (AR) on a monthly basis. Have your computer break down the various cases by payor class. In other words, print out all your Medicare patients together on the same sheet; print all your workers’ compensation claims on another; print another with all of your personal injury cases; another with all of the major med insurance; one with HMOs, and another with all the cash accounts receivable.

2. List the payor classes in descending dollar order. Have each payor class on the list sorted in ascending order, with the largest dollar amount at the top of that list and the smallest dollar amount at the bottom of the list. You would rather not have your insurance staff pursue a $200 claim when there is a $2,000 claim waiting to be collected. It is also helpful to sort the AR list by insurance carrier. This way, when your Rainmaker contacts an insurance carrier, he or she can address all the outstanding claims to that carrier at the same time.

3. Invest in three-ring, color-coded binders. Purchase a series of three-ring binders at your local office-supply store. Color-code the three-ring binders so each payor class has its own colored binder. For example: you can use green for cash, blue for Medicare, orange for health insurance, red for workers’ comp, and black for personal injury. There is no secret to the colors selected, simply choose a variety of colors based on what is available from your supplier.

Purchase small, colored stickers that correspond to the three-ring binders and stick them on the outside of the patients’ file folders or travel cards to indicate the type of payor. For example, place a green sticker on the file of a cash patient, and use a green three-ring binder to hold the cash accounts receivable run at the end of the month. This is a helpful step that will assist the Paper Pusher when he or she must access patient information to fulfill a request made by the Rainmaker.

4. Assemble a “Trouble-Shooting Log.” The Trouble-Shooting Log is a form that enables you and your Insurance Department to track the action steps that are being taken in the collections process. On a monthly basis, have the Rainmaker print the accounts receivable sorted by payor class, dollar amount, and insurance carrier. The Rainmaker then files the AR print-outs in the corresponding colored three-ring binders. A Trouble-Shooting Log is three-hole punched and placed inside the three-ring binder on top of the monthly insurance print-out. This procedure is repeated for each payor class.

5. A black checkmark means status quo. The Rainmaker works through the list, from the largest claims to the smallest claims. If everything is status quo on a particular claim (the payment is pending and has been confirmed with the insurance carrier), the Rainmaker makes a black checkmark in the right-hand margin of the insurance print-out. A black checkmark indicates to the Paper Pusher that everything is status quo with the claim and that no further action is required.

If everything is not status quo with the claim, then the Rainmaker should record the comments on the Trouble-Shooting Log. For example: “Date, Mary Smith, Case No. 202, outstanding balance $2,000, request resubmission with office notes.” The Paper Pusher reviews the Trouble-Shooting Log and takes the action steps that have been requested - for example, go to the patient’s file, photocopy the office notes, reprint the claim forms, and resubmit.

Once the request has been fulfilled, the Rainmaker records the date that it was completed, and any follow-up action steps that need to be done by the Paper Pusher. A typical follow-up action step would be to check in two weeks to make sure the carrier has received the claim and that payment is pending. Each entry on the Trouble-Shooting Log must be accompanied by the initials of the person who made the entry.

6. The doctor should review all the reports once a month. At the end of each month, without exception, the doctor should receive all of the color-coded, three-ring binders, with the Trouble-Shooting Logs completed for that month.

A canvas tote bag is a handy way to collect and transport the binders. Hang it on the back of a doorknob in your private office and have your insurance staff tuck the colored binders in it at the end of the month. Take the bag home with you to review at the end of the month. This is a procedure that you should not delegate! It should take you no more than an hour to review all the binders at home. As the doctor, you will be able to recognize patterns of reimbursement or denial, which may be difficult for your insurance staff to pick up.

For example, you might realize that all of a sudden a certain insurance carrier has stopped accepting a particular code. Now you can be proactive in your insurance collections. You should make any notations or comments on the Trouble-Shooting Logs and the insurance print-outs in red pen, to easily catch the attention of the insurance department team members.

Insurance reimbursement is essentially a game of chess, and staying several moves ahead in the game is essential. The only difference between insurance reimbursement and chess is that the rules of chess don’t change, and that the rules of reimbursement change every time you master them. These procedures enable you to see reimbursement patterns develop so you can stay a step ahead in the game.

7. Do a monthly baseline comparison. At the end of the next month, the Paper Pusher prints the accounts receivable by payor class and places them in the color-coded insurance binders on top of the previous month’s print-out and Trouble-Shooting Log. By comparing this print-out to the baseline established by the previous month’s print-out, you can readily determine if the accounts receivable for a particular payor class have gone up or down.

If all of a sudden you see that last month you had $28,000 outstanding in Medicare, and this month you have $35,000, it alerts you to look at Medicare. A noticeable difference doesn’t necessarily mean your insurance procedure has broken down. In this case, you may all of a sudden have had a large influx of Medicare patients that has temporarily inflated your Medicare accounts receivable. However, the difference might also mean there was a breakdown in your in-office insurance procedures, or a breakdown on the part of the insurance carrier.

By monitoring the fluctuation of the accounts receivable by payor class on a monthly basis, you will know where to focus your energy and efforts. What you desire to see is that the accounts receivable for a particular payor class are stable or trending downward. You normally don’t want to have your accounts receivable sharply trending up. This will occur only when your practice is experiencing rapid growth, because you are rendering a quantity of services that is greater than you have in the past, and it takes time for those claims to be processed. Once you reach a consistent level of growth, your accounts receivable should shadow your level of production.

Quality Control
This procedure provides you with a quality control feedback mechanisms for the performance of your insurance department. If your review of the Trouble-Shooting Logs reveals requests that were not fulfilled, or you see a patient’s account consistently appearing on the insurance print-outs without change, you will know that someone has dropped the ball. You can instantly go to that team member and correct the situation.

Uninterrupted Time
It is important to schedule uninterrupted time for your Rainmaker to make the proactive insurance calls. It cannot be, “I’ll make the calls when I have the time, after I catch-up with all the work that needs to get out now.” Your insurance department will not run effectively in this manner.

Set a specific time schedule for when these procedures will be performed. First thing in the morning is an excellent time to make these calls - the best time to reach Blue Cross/Blue Shield is at 8 a.m. Anyone who has ever phoned an insurance carrier knows you don’t simply call up an insurance company and they say, “Hello.” First you’ll get 14 voice prompts - press this button, press that one, and then hold, hold, hold - it is a time consuming process. Be sure your Rainmaker has work to do while waiting for the carriers to answer. When making calls, the Rainmaker must have access to a computer, so when information is requested by the claims reviewer at the other end, she or he is able to respond rather than having to make a second call.

By implementing these simple procedures, you will remove stress not only from yourself, but also from your office staff. A well-run insurance department is good for your patients - and good for your bottom-line!

Dr. Sanna is the CEO of Breakthrough Coaching and the president of Corporate Health of America. He can be contacted at 800-723-8423, info@mybreakthrough.com, or via Breakthrough Coaching’s website at www.mybreakthrough.com