How to Monitor Your Billing Company?
Updated: Oct 25, 2019
The focus of last week's blog was 'Roles of a Billing Company'. We discussed tasks that we recommend be done regardless of whether the billing is done internally or externally. Our poll asked "Does Your Office Use an External Billing Company?" Seventy-five percent said "No" and 25% said "Yes". Since we recommend that the office or biller be involved from the time the appointment is made through the final bill collection, it is best that billing be done internally or there is very good communication with an external billing company. An on-site billing clerk will make it easier for patients to get clarification on their bills. It will allow for the biller to get an explanation from clinicians quicker, and it will generally provide a better environment for communication between office staff, doctors, mid-level providers, and assistants.
As promised in last week's article, this post will give our recommendations on how to monitor your billing company or internal billing clerk. To ensure the owner is not completely removed from the billing processes, we advise the following.
How to Monitor your Billing Company or Internal Billing Employee:
Monitor AR Days
Accounts Receivable should be kept to 20-30 business days (4-6 weeks).
This will increase the practice cash flow.
Watch for trends and address AR red flags immediately.
Monitor Collection Percentage
The benchmark for this should be 98%.
To calculate, divide 'Collections' by 'Billed Charges' excluding 'Contractual Adjustments' and 'Discounts'.
Collections / (Billed Charges - Contractual Adjustments - Discounts)
Contractual Adjustments and Discounts are excluded because they were either agreed adjustments or for a coupon, family discounts, charity or some other reason that the doctor approved.
The calculation does not exclude write offs because those should have been collected.
Approve All Write-Offs
Write-offs are not contractual adjustments or discounts (charity).
Write-offs include production that the office was expecting to collect but did not.
Write-offs include amounts for bad debt that often are sent to collection agencies.
Audit every large write-off and set a policy for the small ones.
Monitor Adjustment Percentage Consistency
The calculation is (Contractual Adjustments + Refunds + Discounts + Write-Offs) / Billed Charges.
This percentage should be fairly stable from month to month.
If your adjustment percentage was 30%, then a range of 20% to 40% would be acceptable. An adjustment % outside of this range may be triggering there is an operational billing problem.
Monitor Date of Service Collection
The employee in charge of billing should have an estimate of the patient portion due before treatment is started.
The front office staff should be trained to collect patient portion at time of service.
The calculation is Date of Service Collection / Total Collection.
Date of Service Collection should be at least 50%.
External CFO Analysis
Doctors CFO KPI tool can provide analysis with daily entry of basic numbers.
Usage and training on this software provides an easy and concise way to monitor billing.
Though we generally recommend medical and dental billing be done internally, it should never be hands off for the practice owner. If you use an outside billing service, we recommend one that specialized in your niche and one that will allow you to monitor them tightly. Above, we have provided key points on how to monitor your billing company or employee. The billing process is a vital piece of your practice so it should be supervised by the owner. If you need help validating your billing company or billing clerk, we offer a Doctors CFO billing certification and Doctors CFO KPI tracker.
The reason we are publishing these articles is so that your office can increase its success. We appreciate your feedback on how we can help you more and love it when you pass these articles along to other practice owners and office managers. If you have a question that you would like answers to in a blog post, please email it to email@example.com. If you have not signed up for our blog, please do, so you can continue to receive these important insights and participate in our weekly polls.
Doctors CFO has a CFO Management tool to help you track your KPIs. You might also be interested in our New Patient Tracking Solution and a Salary Planning Solution, to see these and other products please go to please go to https://www.drcfo.com/shop.
Developing a management report is not easy and Doctors CFO currently has a robust model for most practice types that is customized for our monthly and bi-monthly clients. If you have questions on how this model applies to your practice or you are interested in applying the Doctors CFO model in your practice, via one of our annual, bi-monthly or monthly assessments, please reach out to us as firstname.lastname@example.org. Doctors CFO provides financial analysis and valuations for doctors and dentists in the United States. We also offer programs for new patient marketing, revenue and collection management, medical practice consultant, dental consultant, and practice analysis.
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