Key Indicators

Knowing whether your practice is doing well financially is important for the successful running of any practice. Many practices flounder and go bankrupt because they were not monitored properly, leading to their financial ruin.

There are some key indicators which would guide us to make major course corrections where necessary, to bring the practice back on track. Monitoring these key indicators on a regular basis, will ensure that your practice remains financially healthy and continues to run smoothly.

Visits :
The number of Patient visits per month is a straightforward indicator, that is directly proportional to the monthly revenue.

New Patients :
Practices need to ensure that the percentage of New Patients to the total monthly visits is on the increase or steady, on a monthly basis, this would ensure that Old Patients dropping out are compensated by the New Patients, otherwise we would see a drop in the monthly revenue of the practice. When we see the percentage of New Patients decreasing on a monthly basis, this should serve as a warning for us to make course corrections in our practice.

Payor Mix :
An analysis of the Payorwise monthly collections will help us to identify which Payors contribute the most to the revenue of the practice and which payors will significantly impact the practice when their reimbursements change.

Days in AR :
Practices need to know how many days it takes, for them to collect one days charges. The days in AR reflect how quickly and efficiently the practice is able to work the AR and get paid. Higher the Days in AR could be due to a whole host of problems such as Charge / Demographic entry errors, Coding errors,  delayed claim submission, not working the clearing house reports, improper handling of denials and poor AR management. Practices should aim to keep the days in AR under 40.

AR aging :
The AR bucketwise aging is an indicator of how the AR is distributed across different buckets. We can have upto 70% AR (70% of Average monthly charges) in the 0-30 day bucket, upto 15% AR in 30-60 day bucket, upto 10% AR in the 60-90 day bucket, upto 5% AR in the 90-120 day bucket and upto 25% AR in the 120+ days bucket. High AR in the 0-30 day bucket could be due to Charge entry errors, Demographic entry errors, Coding errors or delays in claim submission, high AR in the later buckets could point to improper denial / AR management.

Gross Collection Rate :
The ratio of Actual Collections to Total Charges for a month would be a good indicator of how well we are collecting against the total charges billed. But this ratio needs to be reviewed based on your contractual adjustments. So if you are overbilling your allowed amount by 180 % then a Gross Collection Ratio of 45-50 % is fine.

Net Collection Rate :
The ratio of Actual Collections to Net Charges (Total Charges Less Adjustments) for a month would be a more accurate indicator, than the Gross Collection Rate, of how well the practice is collecting its receivables, since this ratio measures Actual Collections against Actual Collectables, practices should aim for a ratio of 95% or higher.

Preventive Services

Medicare has been reimbursing certain Preventive Services such as Annual Wellness Visits, Cardiovascular Disease Screenings, Diabetes Screening Tests, Screening Pelvic Exam, Glaucoma Screening, Smoking and Tobacco Cessation Counseling e.t.c for some time now.

Recently Medicare has started covering for Screening and Behavioral Counseling to reduce Alcohol misuse and Face-to-Face Behavioral Counseling for Obesity.

Alcohol misuse :

Effective for claims with dates of service October 14, 2011, and later, CMS shall cover annual alcohol screening, and for those that screen positive, up to four, brief, face-to-face behavioral counseling interventions per year for Medicare beneficiaries, including pregnant women.

Obesity Therapy :

Effective for claims with dates of service on or after November 29, 2011, CMS will allow coverage for Face-to-Face Behavioral Counseling for Obesity, 15 minutes, G0447, along with 1 of the ICD-9 codes for BMI 30.0-BMI 70 (V85.30- V85.39 and V85.41- V85.45), only when submitted with one of the following place of service (POS) codes: 11 – Physician’s Office, 22 – Outpatient Hospital, 49 – Independent Clinic or 71 - State or Local Public Health Clinic.

For more information on Medicare preventive services, visit http://www.cms.gov/PrevntionGenInfo on the CMS website.
For more information on Medicare Learning Network® (MLN) preventive services educational products, visit  http://www.cms.gov/MLNProducts/35_PreventiveServices.asp on the CMS website.

Source CMS

Referral vs Authorization

A Referral is not the same as an Authorization. 

In general a referral is required when a PCP refers a patient to a specialist in-network provider for consultation, while an Authorization also known as Prior Authorization, is approval from the Insurance plan for the performance of certain specific medical procedures and services, based on medical necessity.

A typical scenario would be a PCP referring a patient to a in-network Nephrologist. A referral would be required without which the Insurance plan will not pay. If the Nephrologist performs only an evaluation, the referral alone would suffice, but if the Nephrologist chooses to administer a Procrit injection, than this procedure ( which is on the Prior authorization list of the Insurance plan ) would require a Prior authorization for the Insurance plan to make payment.

Referral :

• A referral is required when a PCP refers a patient to a specialist
• HMO Plans in general require a referral while PPO plans do not require a referral
• A referral is valid for a certain period and for a certain number of visits
• A referral is not required for Emergency services
• A referral is not required for Routine / Preventive services
• Without a referral the insurance plan will not pay

Prior Authorization :

• A Prior authorization is required when a provider plans on performing a procedure which is on the Prior authorization list of the Insurance plan
• A Prior authorization needs to be obtained from the Insurance plan before the performance of the medical procedure
• A Prior authorization is provided by the Insurance plan when they are satisfied as to the medical necessity of the procedure
• A Prior authorization is not required for Emergency services
• Without a Prior authorization the Insurance plan will not pay for procedures that are on its Prior authorization list