MPM Publications
Data Drilling Features of Receivable Systems
As a consultant in the industry for more than 25 years, medical practices hire me to confirm that their receivable systems are both efficient and cost effective. This process requires analysis of information from the system, either by standard monthly reports or specific file extraction. All systems create multiple files of information organized by account characteristics. A system user will see screens or hard-copy reports that organize information in a certain logical way. They are not aware, nor should they be, of the process by which the system captures this information and portrays it. All files have common fields that enable the operating system to locate specific records in each file that belong to each patient account. The program that performs the organization of records is some form of relational database, and its sophistication and speed distinguishes one system from another.
If the client wants a clear answer to questions about performance, systems with weak database features require a good deal of manual extraction to retrieve trend information. Systems with powerful database programs and fast computers can make the process easy. Speed does play a part in the equation because the number of files can be very large. Some specialty practices produce more new accounts per year than perhaps the entire referring physician population to that practice, combined! In the "old days," special data extractions had to be run during off-peak hours because compilation could degrade operational performance. That is not as much an issue today for the newer systems.
The basis for determining efficiency starts with understanding the payers who compensate healthcare providers. They all negotiate payment either on a per procedure or capitation basis. This article will ignore capitation, a payment mechanism that can be complex to explain and understand. Payers will seek to compensate providers a fee that is materially below the provider charge. Their success in doing this depends on their relative strength in the market, usually the number of patient lives they insure.
The test an auditor should perform, within a contract budget, begins with the major payers to the practice. Most practices deal with hundreds and only a small number make a difference in total annual revenues. The test must consider how much time it realistically takes to capture and bill a charge, and expect responses from the payer.
This is the data extraction I ask the billing vendor to do for me: the month of service from five months ago; the primary payers, including Medicare, etc.; each record with the following fields included:
- patient account number
- CPT-4 code
- ICD-9 code
- practice fee
- primary payer payment
- primary payer disallowance
- patient payment(s), if any
- secondary/tertiary payments(s)
- secondary/tertiary disallowance
- bad debt write-off, if any.
The file is e-mailed to me for downloading to a PC-based database program. Below is an example of what the table might look like:
Space limitations prevent listing all fields previously described. An auditor will match the published fee schedule of the payer against payments in the universe. The listing will isolate exceptions-in terms of both payments at variance with published fees or a failure to receive payment. The example above shows three Medicare records for three patients who had the same procedure in the sampling month. The first shows the payment from Medicare and the 20 percent co-payment from the patient. The second is a patient who owns a Medicare-extension policy that makes the co-pay. The third is a patient who has not met the annual deductible; all payments are from the Medicare-extension payer.
This database extraction is an excellent foundation for a standard monthly report that essentially creates a separate receivable system by month of service. A well-informed client would then be able to determine how much cash income his or her clinical practice receives for work done in any month. The better receivable systems today are capable of organizing the charges, receipts and non-cash credits by month of service, month of charge posting or both. This reporting does help a practice more accurately understand the collection performance of the vendor. However, it does not reveal the answer to the question: Is this the best I can do? That requires getting down to the procedure level in a cost-effective manner.
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