Reports by experts in pediatric practice management show that most small businesses (less than 8 providers) should outsource their medical billing operation to a qualified Pediatric Medical Billing Company. Some founders and partners of independent pediatric practices want the medical billers on site due to wanting to oversee the billing process. Overseeing a pediatric medical billing process requires continued knowledge of pediatric medical billing, changing edits by payer, as well as the ability to develop and maintain process controls of the operation. It usually takes years to lean out and optimize a Pediatric Medical Billing Service, so make sure the vendor you are qualifying has the majority of their business based on medical billing for at least 8-10 years. While a front desk employee or medical assistant might be able to perform the mechanics of submitting claims to a clearing house, the expertise related to the follow-up and management of the revenue cycle usually takes years to obtain. The office manager needs to have updated and consistent skills in revenue cycle management and process control, and have the ability to coach and manage a team to this standard. Larger pediatric practices (at least 8 providers) can invest in the space, the routine training, and follow-up. There are a number of signs that show that an independent pediatric practice should call a qualified Pediatric Billing Company. Four common signs that it is time to outsource the Pediatric Medical Billing are:
Collection Rate is at or Below National Average:
The collection rate to the contract amount is an important metric to monitor. If a CPT code, like 99214, is billed by the practice at $145, the contract rate with the payer might be $110. This $110 is paid by the patient (e.g. co-pay or cost share) and the payer (insurance payment). A 100% collection rate on the patient and insurance side would mean the practice collected the $110 for this visit. When all the CPT codes that are aged more than 120 days are added together to calculate the payment received by the payer and patients divided by the contract rate for all these codes, the practice can calculate the collection rate. Generally, 95% or less is below average and many organizations provide a benchmark of 97% as ‘good’ (we believe 99% is considered ‘good’). The difference between a 95% collection rate and 99% collection rate is $40K per year per $1M in revenue.
Low Revenue Per Visit:
The revenue per visit is a good metric to identify the average revenue for a patient visit to the office. A good pediatric medical billing company can provide feedback and suggestions to a practice 1x per year on their performance versus national averages. Some factors that impact revenue per visit include contract rate with the payers, % of well visits vs. sick visits, coding and collection rate. A strong pediatric medical billing company can provide advice/feedback on a practice’s performance in all these areas. Ideally, pediatric practices should be completing an outbound call campaign to schedule well visits and fill in with sick visits. Monitor the practice revenue per visit at least 1x per year and identify areas to enhance the revenue cycle to improve practice performance.
Slow Average Payment
For pediatric practices, while most of the payments are from the insurance company the patient cost share increased over the last few years. This means that a pediatric medical billing company needs to collect both the insurance and payment side. The metric to monitor how fast the practice is paid is Accounts Receivable (AR) days. The lower the AR days the faster the practice is being paid. Ideally, the practice should have their AR days below 28. If your current billing operation does not monitor and manage the AR days for the practice, this might be a sign that it is time to call a pediatric billing company.
Lack of Pediatric Billing Expertise
Many small pediatric offices do not have enough work to support a full-time biller or have the depth of management knowledge of monitoring and managing a revenue cycle management operation. Many pediatric offices have gaps in their medical billing operation related to formal training protocols, processes, and monitoring the pediatric medical cycle. This work is both at the account manager and management level. As a practice increases in size to greater than 8 providers, there becomes enough volume where developing an entire team can be considered cost effective. Even though a larger practice might become cost effective to manage their own billing, they will need to have a qualified team with consistent training. So even with larger practices it makes sense to evaluate using a qualified outsourced medical billing company.
These four signs signify that the practice should be outsourcing their medical billing operation to a qualified pediatric medical billing vendor.