Focus on billing and claims crucial as you count down to the New Year
Don’t let Y2K wreck your cash flow
If your practice is usually a few weeks behind on billing its third-party payers, the experts have some advice for you: Don’t be behind when Jan. 1 rolls around.
"In the next three months, physicians have got to focus on making sure their claims go out. January 2000 is not the time to be behind," advises Tammy Tipton, chief executive officer of Appeal Solutions, a Lewisville, TX, health care consulting firm specializing in reimbursement.
Speed up your claims processing before the end of the year, even if it means hiring extra billing staff, adds Randall Killian, executive vice president of the National Association of Managed Care Physicians in Glen Allen, VA.
Look to receivables for needed cash
Most physician offices have a lot of money tied up in receivables, adds Michael Zimmerman of Zimmerman & Associates, a Hales Corners, WI, health care receivables consulting firm. Clearing up your outstanding receivables could give you the funds to continue operations if your reimbursement falls behind in the new year, he adds.
"HCFA reports that they are ready for Y2K, and they may be ready internally, but they interface with so many vendors that they may get behind in paying their claims," Killian says. Your payment will be tied to regional and local intermediaries who may fall behind, he adds.
Representatives of the private insurance industry report that their computer systems are ready for the year 2000, says Perry Baty, CEO of National EDI Systems, a Dallas-based electronic claims clearinghouse.
But most of the big insurers have local providers, and there’s a chance some of their computer systems may not be ready, points out Bruce Orgera, executive director of Superior Consultant Co. of Southfield, MI.
"Based on our own experience, we know that some physician practices are not Y2K-ready and are not moving in that direction. Come Jan. 1, they aren’t going to be able to send any claims," Baty warns. Physicians who are experiencing difficulties are those who are using older software that works well for them and who are not willing to switch to a new software system, he says.
However, he adds, when insurers mandate electronic payments, physician practices are going to have to update their software to be Y2K-compliant, or they won’t get paid.
Zimmerman advises his clients to set up a cash reserve equal to three or four months’ worth of operation expenses so they can pay their bills if their reimbursement falls behind.
But Vance Chunn, FACHE, executive director of Cardiology Associates in Mobile, AL, points out that this strategy could mean double taxation if your practice is a corporation that pays out its cash to the owners to reduce corporate taxes at the end of the year.
"If we held cash in reserve, the corporation would pay tax on the money in 1999, and the physicians who receive the money will pay tax on the money in 2000," Chunn says.
In that case, talk to your financial advisor to see if there is a way you can disburse corporate funds into some kind of cash asset to avoid taxes, advises Don Self of Don Self and Associates, a Whitehouse, TX, practice management firm.
"This is an area where physicians need to seek expert professional advice," he adds.
If your practice isn’t in the position to maintain a cash cushion at the first of the year, consider a line of credit at your local bank to tide you over until the insurance payments start coming in regularly.
But, Orgera warns, cut the deal for the line of credit long before you think you’ll need it and lock into an interest rate.
Exercise vigilance
Tipton advises physician practices to be more vigilant than usual when the New Year rolls around.
After Jan. 1, don’t depend on electronic data processing to find out if your claim is going to be paid, she advises. For the first few months of the new year, take the extra time to get the customer service representative on the phone and ask when the check is going out, she says.
Plan on your staff spending extra time on claims follow-up during the last part of December and the first part of January, she suggests. Tipton expects an increase in timely filing denials in early 2000 because some insurers’ computers may not be ready and may lose claims. In that case, she advises providers to make sure their computer system can generate the necessary reports and documentation to show the initial filing date of all claims.
"Providers should have their reports in order so they have proof of timely filing to back up their appeal," Tipton adds.
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