Why Your Medical Practice Is Losing Revenue (And How to Fix It)

The main reasons medical practices lose income are due to billing/claims errors, reject all claims, wrong documentation, no insurance verification, incorrect coding, slow payment process and poor reporting. Each of these issues leads to decreased payments and payment delays. To address these problems requires a tighter workflow, correct use of codes, accurate checks at the front desk, fast submission of claims and proactive management of claim denials. 

The reasons medical practices lose revenue are: 

1. Billing and Coding Errors

Billing and/or coding errors will directly reduce the amount of income received for a service. For example, if an incorrect bill and/or code is used then the payment received will be different depending on the type of bill and/or code used. Some of the most common causes of billing/code errors are:

• Incorrect use of CPT/ICD codes
• Misuse of modifiers
• Upcoding/downcoding of services
• Duplicate and/or incomplete claims
• Use of outdated codes

Bill/code mistakes, both large and small, can lead to direct loss of revenue as demonstrated in the example below.

Example: 

A consultation is billed as a basic visit instead of a complex visit causing the practice to lose reimbursement differential.

Cause: 

Many times this will occur because staff lack knowledge regarding the most current bills/codes, or because of their workload (high volume) they do not have time to review before submitting, or because they don’t review before submitting.

Financial Impact: 

Each bill/code mistake will receive a marked decline in the dollar amount of the reimbursement. Over time the accumulation of lost/restricted cash flows has an overall cumulative effect on the gross revenue received for the practice.

Solution:

• Train all staff in the current code/bill rules at least annually
• Have certified coders on staff
• Conduct weekly coding audits
• Use billing software with error detection functionality
• Create standardized billing/coding templates for each type of office visit

2. Claim Denials and Rejections

Denied claims halt your revenue stream altogether. Many practices do not follow up on these denied claims.

Common Reasons For Denied Claims:

• Lack of Supporting Documentation
• Errors in Coding
• No Medical Necessity
• Insurance Company Exclusions
• Submitting The Claim Too Late

Many practices do not analyze their denial patterns, resulting in recurring issues.

Example

You receive 10 denied claims due to the same coding error. If you do nothing about the error, you will suffer monthly losses.

Why Does This Happen?

• Lack of Claim Denial Tracking System
• Lack of Root Cause Analysis
• Lack of Effective Follow-Up Process

Revenue Loss From Denied Claims

• Direct Revenue Loss
• Delayed Payments
• Increased Administrative Costs 

How To Fix Denied Claims

• Track Every Denied Claim
• Group Denials By Reason 
• Fix The Root Cause, Not Just The Symptom
• Resubmit Corrected Claims As Quickly As Possible
• Assign A Denial Management Team

3. Poor Insurance Verification

Your revenue loss can begin before the patient is treated.

Some Common Issues Are:

• Not Checking Eligibility Prior To The Visit
• Missing Coverage Information
• Ignoring Co-Pays And Deductibles
• Using Outdated Insurance Information

If A Patient’s Insurance Policy Is Invalid Or Has Lapsed, Claims Will Be Denied After Treatment.

Example

A Patient Receives Treatment Only To Find Out That Their Insurance Has Lapsed And That They Are Responsible For Paying The Denied Claim. 

Why Does This Happen?

• Verification Skipped By The Front Desk Staff
• No Automated Verification System
• Assuming Previous Visits Have Validated Eligibility 

Revenue Loss Associated With Poor Verification Of Insurance

• Total Claim Denial
• Patient Not Paying The Claim
• Loss Of Cash Flow 

How To Resolve Poor Verification Of Insurance

• Perform A Verification Of Insurance Prior To Every Visit
• Confirm Co-Pays/Co-Insurance/Deductibles For Each Visit
• Use automated verification tools
• Inform patients about expected costs upfront

4. Slow or Incomplete Claim Submission

Late submissions of claims result in diminished cash flow and a rise in the chance of claim denial.

Common Issues:

• Late submission past deadlines
• Missing fields from claim forms
• Submitting to the incorrect payer
• Delays in processing batches.

Insurance companies frequently reject claims that are filed late without fail.

Example:

 A claim that is filed over 45 days later will be denied for being out of the 30 day filing deadline.

How it Happens: 

• Manual billing processes
• Lack of tracking deadlines
• Staff overloaded
• Lost claims
• Delayed payments
• Increased rework.

Solutions: 

Submit all claims within 24-48 hours of the date of service. Put systems in place to automate the claims process. Keep track of all of your deadlines for submission. Use a tool to validate your claims prior to submission.

5. Weak Documentation Practices

All claims are supported by documentation. If you don’t have adequate documentation there is a possibility you will receive a decreased payment or a claim denial.

Common Issues: 

• Missing clinical details
• No rationale for procedures
• One page of notes for a procedure
• Missing details of amount of time 
• severity of an injury.

All insurance companies require proof of medical necessity.

Example: 

A physician sends his/her patient out for a high level consultation and has provided inadequate justification in his/her notes for the level of service provided to the patient. The insurance company will downgrade his payment based on the notes that were submitted.

How it Happens:

 Physicians tend to focus on providing care for their patients, and not on billing their patients. They do not utilize structured templates when documenting their visits. The physician is under pressure to see a high number of patients each day, which negatively impacts their ability to document accurately.

Solutions: 

Use structured documentation templates. Document pertinent details while treating your patients. Information to include: Diagnosis, Treatment provided to the patient and justification for both the diagnosis and treatment provided. Review your documentation prior to submitting to the payor for billing purposes.

6. Poor Patient Payment Collection

Patient Payments are a Major Portion of Overall Revenue Today

Common issues with Patient Payments

• Not collecting Co-Pay’s at Time of Visit
• Limited Follow-Up on Unpaid Claims
• Not Sending Payment Reminders
• Limited Payment Options Available

Uncollected Patient Balances End Up as Bad Debt

Example of Problem

The patient skips out without making Co-Payment. Does not follow up on patients for payment. The patient will never pay.

Reasons for Problem

• There is no defined collections policy
• There is no electronic billing system
• No upfront communication about payment(s) due

Revenue Impact of Problem

• Increase in Bad Debt
• Increase in Cash Flow Gap
• Increase in Administrative Burden

Corrective Actions

• Collect Co-Payment @ check in
• Use Digital Payment Systems
• Send Automated Payment Reminders
• Educate Patients of Total Cost of Care Prior to Performing any Treatment

7. Inefficient Revenue Cycle Management

Revenue Cycle Management refers to how revenue flows from the time services are performed until payment is received for those services.

Weak Revenue Cycle Management Systems Produce:

• Delayed Billing
• Refused Claims
• Unmonitored Claims
• Ineffective Follow-up on Unpaid Claims

Many Practices have No Defined Work Flow.

Example of Problem

Practice Provides Services but Does Not Bill Out Services in a Timely Manner for Services Performed.

Reasons for Problem

• No Defined Billing Workflow
• No Accountability for What Has Happened & What Will Happen
• No Defined Claim Submission Process

Revenue Impact of Problems

• Lost Revenue
• Delayed Cash Flow
• Low Collection Rates

Corrective Actions

• Develop a Flow Chart of Complete Revenue Cycle Process
• Develop Job Description/Accountability for the Process
• Implement a Computerized System to Bill Out Claims
• Establish Performance Metrics to Monitor the Effectiveness of the Revenue Cycle Management Process

8. Technology Gaps

Outdated technology causes billing delays and inaccurate data.

Common issues:

• Manually entering data
• Not joining systems together
• Poor reporting
• Lack of automation

If there is no connection between systems, errors increase.

Example:

A patient has their information entered into the billing software incorrectly; therefore, the claim will be rejected.

Why does this happen?

• Outdated software systems
• Little investment in technology
• Not wanting to change how to do things

Revenue impact:

• Slow billing
• High error rate
• Low efficiency

Solutions:

• Upgrade billing system
• Integrate EHR with billing system
• Automate repetitive tasks
• Use dashboards for tracking

9. Lack of Financial Tracking

If you do not have data, you cannot see your revenue loss.

What are the common gaps?

• Not tracking denial rates
• Not analyzing collections
• Not tracking revenues trends
• Not reporting on performance

You cannot improve if you are not measuring.

Example:

Denial rates are increasing month-to-month without anyone noticing.

Why does this happen?

• Lack of reporting capabilities
• Focus only on daily operations
• Lack of financial oversight

Revenue impact:

• Hidden revenue loss
• Making poor decisions
• Slow to improve

Solutions:

• Track your KPIs on a regular basis
• Monitor denial and collection rates
• Use financial dashboards
• Review reports each month

10. Administrative Overload

Staff have so much to do incorrectly they make a lot of mistakes in the billing process.

Common tasks to complete the billing process:

• Register patient
• Verify insurance
• Code correctly
• Submit claims
• Follow up on claims

Too many things to do leads to making mistakes.

Example

A billing staff member is completing a high volume of billing tasks in a short period of time, resulting in increased errors leading to claims being denied.

Why it occurs

• Lack of staffing
• High volume of patients
• No automation of processes
• Financial impact
• Incorrectly billed claims
• Delay in submitting claims
• Employee frustration

Solution

• Automate billing process workflow
• Outsource billing
• Clearly define employee responsibilities and duties
• Monitor work distribution for all employees

How The Medicator’s Helps Protect Your Revenue

Medicator’s service reduces your revenue loss by providing structured billing solutions.

You will receive:

• Accurate claim submissions and coding
• Insurance verification
• Monitoring and recovery of claim denials
• Additional documentation assistance
• Streamlined billing workflow

By implementing Medicator’s service you will collect more money and decrease leaking of money.

 Practical Action Plan

• Implement the following steps to eliminate revenue loss.
• Verify insurance prior to each patient’s appointment
• Use accurate coding for each service
• Clearly document every aspect of patient care
• Submit all claims to payers within 48 hours 
• Track and resolve all denied claims 
• Collect all co-pays at the time of service
• Analyze financial performance on every month

Key Points

Revenue loss does not occur from one source; revenue loss results from multiple small failures in billing, documentation and tracking processes. 

Fix the process and revenue becomes stable. If you are looking for genital treatment book appointment now.