Last month another insurance company said it is no longer accepting paper invoices.
For years, MHM has argued paper invoices should be avoided. We have instead used the option offered by the majority of medical insurance companies. We submit invoices electronically. It has saved a fortune in postage costs.
They are produced much quicker and cheaper than in paper.
The amazing thing is that some private medical insurance companies still allow paper invoices.
Invoices for self-funding patients should always be mailed to a patient.
It is bewildering that consideration should still be given to sending one to an insurance company. Regardless of whether it is allowed or not.
MHM supports those insurance companies who insist invoices are sent electronically.
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Failure to get paid is not an accident. Something has always caused it.
And the number one reason is that no invoice has been sent.
Take for example, the consultant surgeon I was working with recently. The issue as he saw it was that his cash flow seemed to be totally uneven and much less than he expected.
Something causes it to happen. There is ALWAYS A CAUSE.
If you leave invoicing until later (Friday for instance) its very easy not to invoice at all. It can happen also if, for whatsoever reason, you leave invoicing until “tomorrow”.
Tomorrow turns into never.
Many times, I’ve been called in to examine and review the billing process of a private medical practice and discovered an issue with invoicing frequency. So why are “tomorrow” “Friday” or “when I get chance” the worst possible words for me to hear? Nine out of ten times such an approach is a big clue as to the reason why the practice is not enjoying the level and frequency of cash it should be.
If you want to ensure your practice is paid promptly, the very first place to start is raising an invoice. It is crucial. And invoices should be raised DAILY!
Once a week is not helpful. In one extreme example a practice was invoicing at the end of each month. No wonder there was a problem.
The danger in invoicing on a Friday or a Monday or only on any set day a week is if something happens that day – for example, the consultant needs a clinic booking urgently or a patient needs a letter immediately, then the invoicing gets left behind. And that is normally the cause of the problems.
If invoices are raised daily should something happen to delay that ONE day’s invoicing, it is corrected the very next. There is no backlog.
Let me give you a real life example.
Wednesday September 30th a consultant ran an outpatient clinic and saw five patients. Three follow ups and two initial consultations. £850 worth of consultations. Yet invoices were not produced for this work until Tuesday October 13th – one day short of two weeks later!
Is it any wonder the consultant was extremely dis-satisfied with the practice cash flow?
BUT NOT INVOICED AT ALL?
It didn’t take long for me to identify that on twice previous occasions over the previous few months one entire clinic list had NOT been invoiced (worth £725) and three initial consultations (worth £600) had also not been invoiced. In the case of the initial consultations insufficient insurance details had been obtained at the point of registration and remedy had been left until “later”!
In all £1,325 worth of invoicing had been missed.
No wonder his cash flow was poor.
But before we go any further do NOT blame the medical secretary. She has enough to do. The phone rings. She has to meet and greet the patients. She has numerous letters to type. She has to book clinics. She has to book theatres. That is precisely what she should be doing. She is there to ensure the “front of house” runs smoothly.
The error, if you will, is then expecting her to fit invoicing in around all that or, as was suggested to me, in her “spare time” WHAT SPARE TIME? She hasn’t got any and nor should she.
In the above example, the solution was obvious. Either get someone in to process all the invoices and the cash receipts or outsource it.
A private medical practice is a business.
It must be managed as a business.
Without putting too fine a point on it, failure to ensure the invoicing and accounts process is not 100% efficient is pretty much guaranteed to lead to the business having cash flow issues.
DON’T LEAVE IT UNTIL FRIDAY – DO IT NOW!!
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All MHM clients are very dedicated individuals.
Having spent approximately 15 years of training and finally becoming medical professionals, they go on to work incredibly long hours.
They do so because they actually love what they do.
All at some point all have taken the decision to start a private practice.
It’s unlikely they would be my clients otherwise if you think about it.
They start a private practice because they wish to make more money doing what they love anyway.
To have any other objective is either (a) silly or (b) engaging in self-delusion.
There is no shame in admitting you start a private practice to make money.
As I’ve blogged many times previously a private practice must be run as a business – a business with more than a social conscience but nonetheless still a business.
Yet, sadly, many consultant surgeons make the mistake of believing their practice will grow and make them rich if they continue doing what they love to do.
Sadly that is not true for doing what you love seldom leads to long-term financial success.
And that means you must measure the performance of your practice.
This is the point at which the private consultant surgeon realises he/she must understand financial analysis i.e. the numbers.
It’s not all that complicated. Supplying data to your accountant every year isn’t the same as understanding the numbers behind your practice though.
Let me give you a real example.
I was contacted recently by an established medical professional. He claimed to be working all the hours God sends but said he was always broke.
It didn’t take long to work out why.
The first good indicator was a complete lack of financial analysis other than a tax report a little over one-year-old. No debtors ledger was available.
He didn’t have any real idea how much he was owed.
Indeed it transpired both patients and insurance companies were only invoiced monthly.
So I took the last six months worth of clinic lists and checked how many had or had not been invoiced.
Quite a lot had not.
I did the same with surgical episodes with the same result. This was followed by an investigation into how much had not been paid even if invoiced.
But it was also a case of adding up the total revenue generated for each month, calculating the total costs (room rental, monthly indemnity insurance premiums, secretarial costs, etc). Then one was subtracted from the other.
Even if any type of provision was made for tax liability was ignored the results were not encouraging.
The really bad news is that the consultant looked very blank when I asked which percentage of patients were referred to him from which source.
It was clear this particular consultant had no real idea of how his practice or business was performing.
And that was and still is a very dangerous place for any business to be.
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A question we were asked very recently. One in fact we are asked frequently!
There are a few very simple reasons why on-line invoices are not being accepted – the details being submitted are incomplete and/or the details being submitted are wrong.
MHM is a big fan of electronic invoicing and uses it wherever and whenever possible. But it does depend totally on one item – absolute correct data. For example: if you try and invoice electronically you will almost certainly be asked to state the patient’s date of birth and the patient’s postcode. If either is incorrect or is missing then you will NOT be able to invoice. This in fact goes back to a consistent requirement of making sure you or your secretary obtains the correct details. Let’s put this in perspective. In 2014, MHM was asked to review the billing of a large private medical practice. The issue was the practice was owed significant amounts of money and could not get paid by one specific insurance company who insisted invoices should be sent electronically. MHM reviewed 100 invoices all of which had failed to be accepted electronically. In well over 60% of the cases either the patient’s policy number was missing or date of birth was missing or the patient’s post code was missing / wrong. The practice manager responsible for this had, to resolve the problem, decreed the invoices should be sent in paper form instead. A clear case of mistaking movement for action! The insurance company concerned, remember, had stated invoices should be sent electronically and ONLY electronically.
There is no such thing as a quick fix to this. Indeed a quick fix – such as sending invoices in paper form instead – often leads to even more problems as it does not resolve the cause of the issue.
MHM suggested going forward ALL patient details were captured correctly and the data verified with NO exceptions. We then took the “old” invoices and corrected / completed the data.
Within 4 months the average monthly cash flow into the practice had increased from around £120k a month to £260k a month.
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Some consultant surgeons aren’t fully familiar with the fees paid by different medical insurance companies for the same surgical episode. Consequently, they actually undercharge without even realising it.
Surgeon A is an ENT consultant surgeon. He performs an E1910 on two different patients. He bills both the patient’s insurance company £1,600 each. No problem except Patient ONE’s insurance company fee structure is £1,600 for an E1910.
Patient TWO’s insurance company fee structure is £1,945 for the same E1910 episode.
Surgeon A has therefore by invoicing Patient TWO’s insurance company £1,600 i.e. the fee he gets from Patient ONE’s insurance company undercharged by £345
Surgeon B is a gynaecologist but has the same issue.
He performs a Q0800 on two different patients who are insured by separate insurance companies. He invoices both insurance companies at £636 each. Save Patient ONE’s insurance company’s fee structure is £636 whereas Patient TWO’s insurance company’s fee structure is £800.
Surgeon B, by using the fee structure for Patient ONE only, has undercharged by £164
Both carry on billing not realising that the fee depends on whom the patient is insured with. And different private medical insurance companies publish different fees for the same surgical procedure.
To illustrate we checked four different medical insurance companies this afternoon in order to confirm the fees for an E1910. The fee were £636, £676, £775 and £800. We then turned to Surgeon B and the medical code of Q0800 and found the fees were, dependant on which medical insurance companies we checked, £636, £676, £775 and £800.
Don’t set fees at the level published by a single insurance company.
Check which fee is paid by which insurance company for the same procedure. Don’t assume they are the same because they may not be. A published medical fee for the consultant surgeon can and does alter not only between private medical insurance companies but can also alter over time. In every single case, it’s always worth checking the fee structure paid and not assuming it is the same across all private medical insurance companies.
Normally, of course, the medical secretary is assumed to know who pays what. But to expect an already overworked medical secretary to check each time before she bills is, in plain English, not really an option.
Invoice for two different codes in the same surgical episode incorrectly and it’s easy to get into even more trouble. For example Insurance Company X may allow 100% of the higher value code and 50% of the second but Insurance company Y may allow 100% of the first but only 33% of the second. Imagine what happens if all episodes are billed at 100% and 33%. Immediately you’ve lost 17% of your second fee.
It’s even more fun when careful attention is not being paid and 100% of the LOWER value fee is claimed and 50% of the HIGHER value fee, as well as both fees, being lower due to the insurance company the patient is with.
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Take for example, a patient who requires an injection which may be performed by a private orthopaedic surgeon at an outpatient consultation.
Thus you raise an invoice for, as an example, £185 [£90 for the consultation and £95 for the injection] Please be aware for the purposes of this article the values are fictitious!
Upon receipt of the invoice by the patient’s insurance company, the value is rejected; as you CAN’T charge both for a consultation and an injection on the same invoice on the same day. You can charge for one or the other but not both. So you are paid £90 for the injection only. What is interesting is that the immediate reaction from some consultants could well be to charge just for the injection and argue that is the right thing to do. That said, its already been suggested that the alternative and better way would be to have the patient attend an outpatient consultation on, for example, March 10th and then attend for the injection on March 25th. See the patient twice in other words. In such case the consultant CAN charge for both.
Not sure that’s in the patient’s best interests though but if the aim is to max revenue its certainly in the best interests of the consultant. I’m certainly not saying its right or wrong. I am saying it’s an option.
Where it gets really tricky, is that some insurance companies WILL let you charge for a consultation and an injection at the same time. Others will let you charge for some injections at a consultation but not all injections. Some, as mentioned, will not allow a charge for consultation and injection regardless if they happen at the same event.
And don’t forget not only do different insurance providers pay different rates for consultations; they also pay different rates for the injection too.
Gets a whole lot worse when the injection is pre-authorised as the fee for a consultation is higher than that for the injection, the orthopaedic surgeon charges for the consultation only yet the insurance company is expecting an invoice for the injection.
Unless you check each consultation and injection episode with the insurance company concerned, you will be! More likely you will actually undercharge at some point in time. For example: if the insurance company DOES allow a fee for consultation and injection, if you charge only for one sooner or later?
You’ll be out of pocket.
Feel free to drop me (Pete) an email if you’d like to learn how to avoid the perils of unbundling.
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It’s amazing how many people don’t back their IT systems up. When they have an accident, they have a serious accident.
One guy kept all his correspondence and notes on his laptop and only on his laptop. No problem at all until the day his laptop died on him. This specific problem was not resolved of course by him immediately going out and buying new equipment.
All the data was on his now-defunct laptop. Luckily a computer specialist was able to extract the hard drive and more importantly the data on the hard drive. It only then did he consider the implications of the accident that would have followed if the computer specialist had not been able to do that!
One of the first things MHM suggest to new clients is if they don’t have backups to go out buy an external drive and back everything up. MHM equipment is backed up every 15 minutes onto an encrypted offline storage device. Every night the external drive is placed in a fireproof safe. At the weekend the exercise is repeated. MHM clients don’t have to back up any of their invoices and billing correspondence anyway.
Have you considered how you back paper invoices up?
The first thing to ask is why do paper invoices exist in the first place? With the exception of self-funders or an invoice for an excess or shortfall, they shouldn’t. But you’d be surprised at how many consultants still send paper invoices unless the insurance company concerned specifically dictates on-line invoicing only.
A simple solution is available within MHM. All invoices etc are saved as a PDF document and stored in an encrypted format offline.
It’s always better to back up before or in case you have an accident
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A couple of examples recently where consultants who have tried to base their fees on the best rate available. Take the consultant who realises that PMI company Num 1 pay £300 for a procedure whereas PMI company 2 pay £400. He decrees he will charge PMI Company 1 the PMI Company 2 rate.
Great idea. Right up to the point PMI company 1 receives the invoice for the higher amount. They will decline to pay that fee. Most likely they will shortfall it. But, replies the Consultant, no problem. The patient is ultimately liable for any shortfall. I know of one consultant who even puts on his website “we use PMI Company 2 rates to calculate our fees and therefore there may be a shortfall which you will have to pay”
Yes, the patient is liable for a shortfall BUT not when the consultant is fee assured he isn’t.
Most likely a letter addressed to the Consultant will arrive sooner or later from PMI Company 1 pointing out that such “inappropriate billing” is not acceptable; carry on doing it and recognition is at risk.
It’s incredibly similar to unbundling. Continue doing it over a number of months and for sure eyebrows will be raised. Even if there is no “fee assured” status PMI Company 1 will be well aware of regular and consistent charges that are in excess of their published fee schedule.
Notwithstanding the above, of course, consultants want the best possible fee for a procedure but attempting to obtain the same by “inappropriate billing” is not the smartest way to go about it.
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