Medical billing metrics to watch during the COVID-19 emergency

April 1, 2020

Your practice does not have to lose substantial amounts of money during the COVID-19 outbreak.  Although many practices will see a decrease in gross charges from the temporary hold on elective surgeries, this does not mean you should lose revenue to your practice at a larger percentage than the corresponding decrease in volume. 

For example, if your gross charges are down 25% in March and 40% in April, it is imperative your collections be down no less than this percentage. If you have a decrease of 25% in gross charges in March and find in July that your collections tied back to April are down 45%, then you have a billing issue. 

Here are some of the factors you must consider when reviewing this change. 

First, there is some good news! The 2% Medicare sequestration cut which has been in place since 2013 is now going to be suspended, which means your Medicare and Medicare HMO payments should be up 2%.  This  sequestration cessation will be in effect for payments received from May 1st  through December 31st of 2020. 

Second, Clinical Lab Fee Schedule (CLFS) rates for 2021 are now frozen, so there will be no 15% cut as scheduled on Jan 1, 2021. As part of this move, the next round of PAMA data reporting will also be pushed back an additional year to 2022. Additionally, it would not surprise us if some anticipated reductions in the 2021 Medicare Physician Fee Schedule (MPFS), such as the estimated 8% radiology cut due to E/M changes, are announced to be delayed or reduced in the near future.

Third, there will be a decline in some areas of charge entry due to state lockdown rules.  Therefore, you could have a decreased volume due to a lack of elective surgeries or procedures.  This could be further complicated by the fact that your biller may not be able to enter charges and get claims out the door in a timely fashion due to local lockdown rules. 

Finally, the last factor is this is a worldwide issue.  India, where many billers and payers are located, is locked down for 21 days. No one can leave their house.  Many billers and payers in the US utilize companies in India for charge entry, payment posting and claims adjudication.  This means the huge cubicle farms where billers process billing and payors process payments are going to see a huge decrease in efficiencies. 

All these factors will lead to what we call the COVID CURVE in medical billing.  This curve will show where your charges are down and then correspondingly allow you to track if your payments are down. This should follow with an added decrease in payments for a period of time as billers and payers work to catch up. Overall, your payments for the year should only decrease at a corresponding percentage to your actual decrease in workload and not one percent more. 

The detailed signs of this curve in your billing will show the following factors: 

  1. A decrease in work volume while elective surgeries are stopped.
  2. A decease in corresponding payments in the proceeding 30-60 days.  (Depending on your bill cycle and days in AR.)
  3. A prolonged dip in payments in May and June as billers and payers work to catch up on their efforts.
  4. An increase in payment later in the summer, which will echo an increase in volume and an increase in billers’ attention to denials and an increase in payors paying claims.

There are several areas where a practice can lose revenue in this scenario.  These are the areas where you should monitor your billing most directly. 

First, ensure you are billing out 100% of the work you perform.  With all this change and work-from- home issues, it would be easy for some of your work not to be billed.  Follow charge logs or accession tracking very closely at this time.  Billing should be cleaning up hold files, missing demo files, etc.  This is imperative.   

Second, as this moves forward it will be very easy for payers to deny more claims in a struggle to keep up.  This puts the onus on your billing company or staff to work these denied claims.  Review your denial reports very carefully and look for a sudden increase in claims being denied.  This may require special attention by your billing staff or company to resolve these issues. 

Third, track your payments closely for the self-pay category.  The collection percentage should not drastically change — with the government payments to individuals and companies most people should still have money to pay their co-pays or deductibles.  The hardest month will be March, but by the end of April everyone should have enough cash to pay their medical bills.  It should be noted there are some payors who are turning off their co-pays for COVID testing and waiving out-of-pocket expenses, but this is a minimal factor in the universe of providers.   

Fourth, watch your bad debt.  If you see an uptick in bad debt, it will mean claims are being written off that should have been collectable.  If you hear your billing company or staff say “we have to do a cleanup of old accounts receivables,” be very leery of this action.  Bad debt numbers should be about the same as they were over the previous twelve months, meaning there should not be a sudden increase.   Look for this comment around the middle of the summer as billers recoil and seek to make the numbers look better. 

In summary, the COVID 19 issue will cause billing issues and cause issues with your practice in general.  The overall revenue issue can be addressed with the government’s stimulus plan for small business and the Small Business Disaster Loan funds.  These will help practices keep people employed and keep revenue flowing.  The big issue will be the revenue management and auditing of your billing to make sure your practice is collecting everything they should during these trying times.  If you have questions or comments, please contact us at Stark Medical Auditing or Vachette Pathology by calling 517-486-4262. We will do our best to help.

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