Analyze Your Revenue
March 2008
Do you know where your revenue comes from? Well, some obvious answers would be the billing company, insurance companies, patients, and your hard work in the ED. While all of the obvious answers are correct to some degree, it is important to thoroughly analyze and track trends for relevant sources of revenues. These should be analyzed at least quarterly; however, monthly would be better if reasonable. Why is this important? The short answer is that nobody will care more about your business your revenue sources more than you; therefore, you must review the “lifeline' of your business on a regular basis.
What to Analyze
Some of the sources of revenue to analyze are fairly obvious. First, you should be reviewing a trend analysis on all major payers and/or financial classes. For most ED groups, these generally include Medicare, Medicaid, BC/BS, W/C, and prominent commercial insurance plans. If you don't receive this information today, you must request this immediately from your billing vendor as this is critical. Beyond the trend analysis of your major payers, I would also recommend that you review the payments from all of your contracted managed care plans. We all know that insurance plans have a long history of paying less than contracted as evidenced by the large number of class action lawsuits lost in the last decade. Beyond verifying the correct payment for evaluation and management codes (99281-99291), make certain these plans as well as prominent insurance plans are not bundling reimbursable charges into the level of service. Examples of codes commonly bundled inappropriately include EKG interpretations, x-ray interpretations, pulse ox, etc. Insurance companies can save millions by bundling or paying slightly less than contracted rates. In my view, they must be saving far more than they are losing in the lawsuits because they continue to repeat the actions previously deemed inappropriate by the courts.
Why Analyze
The need to identify mistakes timely is clearly the main reason to analyze the returns on a regular basis. Time is money. The quicker you identify mistakes and demand that they be fixed, the less likely they are to continue with the same insurance company. As the old saying goes, “the squeaky wheel gets the grease”. Within our company, identifying and fixing these types of problems is something we really focus on for our clients. Rarely do we see the same insurance company pay inappropriately after being confronted. If you don't have or want to take the time to do the analysis, ask that your billing company provide you these results on a regular basis.
Sample Scenario
The following is a real life example. One of our physician group clients had opted not to contract with a major insurance plan as they were not offered reimbursement deemed appropriate by their management team. The insurance plan then went and contracted with a small “network” which gave them access to the network rates. The group had originally contracted with the small “network” due to pressure from the hospital. The small network which had represented less than 1% of their volume quickly became 6% of their volume due to this large insurance. Had the change not been spotted during the first sixty days, the group could have hundreds of thousands of dollars annually as the small “network” reimbursed 125% o Medicare rather than the 80% or so of billed charges previously collected from the large insurance company patients. Fortunately for the group, they had worked with us and other advisors to place contractual language that protected them from this type of activity. I have many other types of scenarios where not tracking revenue trends would have been detrimental if not monitored.
The lesson here is simple. Monitor your revenue sources to make certain you are getting paid what you owed, by whom you are owed, and when due. Time is money; however, spending a little time doing analysis will save you money down the road.