Case 1: Declining Reimbursements

Dr. Michelson is an internist who has been in practice since 1988. His practice is well established in a medium sized city, and his patient population has aged with time. He sees a fair percentage of patients with Medicare, many of whom carry secondary insurance. As a single practitioner, he has noticed his reimbursements decrease over the last 6 years, with the biggest declines over the last 2 years.

Annual Reimbursement Rate

Reimbursement Rate by Year

Expenses :

Rent $ 16,800
Secretarial/Billing Staff $ 38,600
Nurse $ 34,800
Insurance $ 11,800
Supplies 8,400
Utilities 5,800
Misc 4,750
Total 120,950

Personal Income Breakdown:

Amount billed was: $389,929
Reimbursements totaled at 70% rate: $272,929
Overhead expenses for the practice: $120,950
Dr. Michelson’s “take-home” pre-tax income for 2004 was: $152,000

Analysis :

Root causes of Dr. Michelson’s declining reimbursements were identified. These included:



• Outdated practice management software
• High employee turnover, requiring training.
• High denial rate with inadequate follow-up and resubmissions.
• Inadequate attention to EOB’s.
• Low priority for resubmitting to secondary insurance, and direct patient billing.
• Unawareness of the changing payer mix, and insurance landscape.
• Outdated fee schedule.





Start Script Interventions:

Updated practice management software with a web-based system and trained staff on use of the system

Practice analysis performed, which identified problems, determined deficiencies, and established a recovery plan.

Fee schedule updated.

Credentialing updated to include the physician in new insurance plans.

Backlogged claims processed.

All subsequent billing functions taken over, including claims submissions, EOB analysis, updating patient data, patient eligibility verification, denial analysis with correction and resubmission to secondary insurance and telephone calls to insurance company for all pending issues.


Result:
Improvement of reimbursement rate to 98.4%

Amount Billed: $389,929
Amount Collected: $383,690

Reimbursement Rate by Year


With the reduction of workload on the office staff, significant cost reductions in staffing were obtained.

Benefits:

With the increase in reimbursements and reduction of overhead (after paying Start Script), Dr. Michelson’s pre-tax income rose from $152,000 to $252,045, resulting in an increase of personal income of 62%.

Decreased reliance on employees: Start Script Medical Billing Service eliminated fluctuations associated with backlogged claims and employee turnover.

Allowed the staff to concentrate on patient care, with the availability of more time, and a clutter-free office.

Improved customer relations, with decreased telephone hold times, and prompt responses to concerns.