Ask MGMA: Optimizing accounts receivable with an effective central billing office

As the most important link in a healthcare practice’s bottom line, the complexities of accounts receivable often call for some additional help. Many practices have benefited from establishing a properly-staffed central billing office (CBO), either internally or outsourced, with technology, training and regular audits all helping to better avoid denied insurance claims. 

In a recent episode of the Ask MGMA podcast, Daniel Williams and MGMA expert Cristy Good discussed strategies for sizing a central billing office to ensure efficient accounts receivable management and claims processing.  

Assessing Volume and Leveraging Technology 

The first step, as Good explains, is to assess the current volume and complexity of claims, to provide a better picture of the staffing resources needed for a CBO. Examining historical data can help better benchmark staffing, including billing specialists, coders and AR analysts. 

“It’s really important to understand the number of claims being processed and then the intricacies of those billing procedures, including your coding requirements,” she notes. Some specialties require more complexity than primary care, so there’s not necessarily a single one-size-fits-all solution for all practices. 

Dialing in the appropriate technology to help equip a CBO is also important. Good says recent MGMA conferences have showcased software vendors who offer billing and coding options that fully integrate into a practice’s EHR. Administrators should be looking for solutions that streamline claims processing to help reduce errors and improve overall turnround time.  

Training and Pre-Submission Scrubbing 

Up-to-date and ongoing training for all CBO staff is also critical to success, especially for those responsible for billing and coding. Good says her own staff communicates expected coding updates from the CMS with an Outlook update, and then another staff expert hosts webinars on those changes, as well as creating cheat sheets and a fully updated billing and coding toolkit for the new year.  

Good also recommends a robust pre-submission scrubbing process to help find errors early and help avoid denials, with strict attention to correct patient information. “Again, that’s where your EHR or your software is important, because it can help those coders and billers catch some of those issues, red flag them and send them back to be looked at, before they’re ever sent off to your payers for processing,” she explains. 

Regular Audits Can Help Reduce Denials 

As well, regular audits are necessary to make sure that your CBO’s coding standards and payer requirements are kept up to date, including a yearly internal audit and an external audit every couple of years. Good says MGMA can help with those audits or offer information on other organizations that will also do the work. 

“Audits are really important, especially if you’re seeing an increase in denials,” she says. “You need to get on it right away, because you only have a certain amount of time to send those back for reprocessing, and that’s just money left on the table. And we know how important every little penny is, especially in private.” 

Clear Communication with Patients 

Getting patients to understand their role in the billing cycle can also be a delicate balancing act, especially with a lack of clarity in insurance policies. Good says up-front communication and flexible payment policies can help in avoiding unpleasant conversations on outstanding balances. Having a good script for your staff and offering full disclosure of financial payment policies, including policies against surprise billing, can help make sure that patients aren’t caught off guard and collections aren’t necessary. 

Flexible Staffing and Outsourcing Can Also Help 

Maintaining a reasonable workload for your CBO staff can also help reduce burnout and help prevent claim denials. Flu season and end-of-year always place extra stress on staff, so Good suggests optimizing vacation time during the slower summer months and then bringing on more staff when patients are trying to hit their deductibles. Flexible PRN scheduling with a pool of coders and billers can help make the difference during high-volume periods. 

Some smaller offices who do not have a coder or biller on staff can also benefit from outsourcing, with professionals who have training and a full endorsement for specialties such as spine, neuro, heart or OBGYN. A combination of in-house and outsourced billing can also help provide the right mix, allowing more internal resources to be focused on specialties where there may be issues with providers, and more education needed.  

MGMA Suggests the following Key Performance Indicators (KPIs) to monitor: 

• Days Sales Outstanding (DSO): This metric measures the average number of days it takes to collect payment after a sale. A lower DSO indicates more efficient collections and effective staffing in the AR process. 
• Average Days Delinquent (ADD): This metric indicates how many days, on average, payments are overdue. A high ADD may suggest that the staffing levels are insufficient to manage collections effectively, prompting a review of staffing needs.  
• Accounts Receivable Turnover Ratio (ART): This ratio measures how often the company collects its average accounts receivable over a specific period. A higher ratio indicates that the AR team is effective in converting receivables into cash, reflecting positively on staffing effectiveness. 
• Collection Effectiveness Index (CEI): This metric assesses the effectiveness of the collections process by comparing the amount collected to the amount owed over a given period. A high CEI suggests that the staffing and processes in place are working well. 
• Number of Revised Invoices: Tracking the number of invoices that need to be revised can indicate the efficiency of the billing process. A high number of revisions may suggest that staff are not adequately trained or that processes need improvement.  
• Staff Productivity: Measure the number of claims processed per staff member over a specific period. This can help identify whether staffing levels are appropriate for the volume of work.  
• Initial Denial Rate: This metric tracks the percentage of claims denied upon first submission. A high initial denial rate may indicate issues with staffing, such as insufficient training or inadequate staffing levels to handle the volume of claims. 

Resources: 

For more information and support on effective KPI tracking and optimization, visit MGMA.com and explore our wide range of resources, including these resources: