In The News

From The O&P Edge - October 2002

Billing: Are Hidden Problems Lurking?
By Joe Sansone

I once hired a cocky young warehouseman at a pay rate of $11 per hour. He progressed through the ranks and, with a year's experience under his belt, asked to assist in the supervision of the Insurance Department. My obvious response was that cleaning rental equipment and shipping cast molds and braces hardly qualified as training to supervise a 20-person Insurance Department. A similar response to the third and fourth request sent him reeling, his tail tucked between his legs.

I should have known that this young warehouseman was destined for greatness in the corporate environment when he solicited the assistance of my wife. They asked to take me to lunch one Friday. We discussed the improvements the manager had made in warehouse operations, and after a few margaritas, they convinced me to at least allow the fledgling manager the opportunity to investigate the Insurance Department.

My years of experience in this industry told me that on his first glance into the intricacies of third-party billing, he probably would run away screaming in horror. I could then distribute a patronizing pat on the back, say "I told you so," and return to business as usual.

I was ready for my predictions to come true, when the next Monday this warehouse manager asked to meet with me to discuss what he had discovered in his eight hours of insurance management experience. While walking through the Insurance Department, he was asked by one of the billers for an additional four-drawer filing cabinet, since the old cabinet was full. Upon further inquiry, he discovered that the filing cabinet was used to store un-filed claims. Days later, we added up the claims in this filing cabinet, and they totaled $800,000. These claims were pending for various reasons, such as no diagnosis code, no patient's date of birth or Social Security number, etc. When reality set in, we realized that most of these claims were past the filing deadline, and that the possibility of collecting these billings was slim. I would be lucky to collect $100,000 of the $800,000 balance.

How Did This Happen?

Poor management - It is management's job to make sure that things like this do not occur. No excuses—the Insurance Department manager should be held accountable for the insurance billing. In the aforementioned situation, the Insurance Department manager had not taken the following steps to ensure that claims were being mailed out properly:

1. There were no policies and procedures in effect spelling out the specific duties of the employees.
2. There was no monitoring of the day-to-day activities of the employees.
3. There was no system of checks and balances to make sure that the work was being done correctly.
4. There was no system to quantify the day-to-day billings, so that management could verify that the Medicare claims were being mailed out and not just billed and filed away.

Irresponsible employees- Simply put, the employees were not adequately performing their daily job duties as expected by management. During this time period, if employees were in the process of submitting a claim for a $10,000 BK prosthesis and lacked a date of injury or the patient's Social Security number, they did not take the three minutes to place a phone call and obtain the information; they simply set the claim aside. After one year of this irresponsible behavior, we had a file cabinet full of $800,000 of un-filed claims.

Ownership - As discussed earlier, while it is management's responsibility to ensure that billing is being done correctly, it is the facility owner who suffers the most when these mistakes occur. Just as it is the Insurance Department manager's responsibility to ensure that the billing is being done properly, it is the facility owner's responsibility to ensure that the Insurance Department manager is doing his/her job and that the billing is being accomplished successfully.

Many facility owners coming from a clinical background often just bury their heads in the sand and hope that the billing and management personnel are performing their jobs adequately. This type of mentality will often doom the practitioner to disappointment. Facility owners or practitioners are often fighting like cats and dogs in a day-to-day struggle for referrals. These efforts are wasted if billing is done improperly, because the revenues may never be seen.

We have all heard similar nightmare stories from various practitioners and physicians. In fact, almost everyone has encountered billing difficulties at some point.

How to Prevent This

How do you know your claims are being mailed? Even more importantly, how do you know your claims are being sent out correctly? Do you have the mechanisms in place to assure that all your systems and processes are sound? And if they are sound, are these policies and procedures being followed?

In the next article, I will discuss exactly how we conducted the arduous process of righting the wrongs of our Insurance Department by:

Establishing new policies and procedures;
Ensuring that management was involved in the day-to-day functions of the Insurance Department;
Instituting a system of checks and balances; and
Determining a way to quantify billings.

We were able to increase our collection percentage by 24 percent in one year. What happened to the young warehouse manager? Four years later he is now the director of operations.

Joe Sansone is chief executive officer of TMC Orthopedic, Houston, Texas.

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