Why to consider medical claims software for your new practice

You’re deciding whether to invest in billing software but aren’t sure it’s worth the expense. Still, you loathe spending valuable time submitting and monitoring claims. And you need to get paid in order to keep your new medical practice operational and in growth mode.

Sure, you’ve hired staff to manually process claims, but a constant stack still requires your review. These are the rejected or denied claims your staff could not clearly identify — and even some initial charges that never posted due to errors.

Can billing software do what your current staff can’t?

Let’s start with some scope. According to the National Association of Insurance Commissioners, 16% of claims are denied by health insurers. These numbers are consistent with the denial rates that practices across the country report, although the specifics vary by insurer. Of all in-network claims submitted during the 2021 plan year for commercial marketplace plans (291.6 million), for example, 17% (48.3 million) were denied. 

The average hourly rate for a medical collections specialist is about $19, according to the Bureau of Labor Statistics. Adding benefits, the real cost to your practice is upwards of $24 per hour of staff time. If working the denial takes 30 minutes, that’s $12 down the drain — plus opportunity costs. Although the time may be well spent, payers often uphold denials. The outcome would have been different if the claim had been correct in the first place; time is not on your side. 

As a result of the high cost to rework many practices don’t bother to appeal and resubmit the claim. Even worse, most often the provider isn’t even aware of these claim write-offs.

Statistically, of the approximately 48.3 million claims that internal insurance issuers denied in 2021:

It generally takes 30 to 60 days for an insurance company to review an appeal, which takes multiple steps (and forms). It’s such a complicated process that many providers simply accept the denial decision.

The practice articulates responses to questions insurers ask and explains why the appeal should be granted. Billing software allows for clear and complete claims process documentation, helping administrative staff track where claims are in the appeal cycle. Even better, the software can boost the chances of a successful appeal by providing templates for appeals. The real boost, however, is the opportunity to prevent the claim being denied in the first place. Billing software can provide scrubbing tools to ensure you transmit claims correctly in the first place.

It seems like there are a plethora of hoops to jump through to get an insurance claim processed and paid. Why?

Insurance companies initially reject medical claims for several reasons. According to open data compiled by the Centers for Medicare and Medicaid Services (CMS), along with data from the Kaiser Family Foundation, the following reasons were the most prevalent for commercial marketplace plans sold primarily to individuals:

Other studies offer similar findings. Medicare contractor CGS reports top denials to be non-covered, duplicate, medically unnecessary, and bundled services. 

Using billing software can help you avoid these issues. There will undoubtedly still be instances where you need to educate insurance companies about why a particular procedure was medically necessary, for example. However, when given a logical, documented rationale, many insurers will acquiesce and support the physician.

Just as some patients are easier to work with than others, the same is true of insurers. So what can you do to increase the chances that the claim you submit for payment will be approved?

Billing software eliminates most guesswork about which codes apply to what procedure. Additionally, as insurance companies change, add, or delete codes, the software receives automatic updates, which reduces the risk of errors.

Billing software allows you to create timely billing statements so patients have a reasonable idea about the details of their coverage and financial responsibility. The system also provides an organized means of tracking the receipt of patient payments and provides alerts, based on rules you create for your practice, as to when patients’ payments are due.

Using this type of system provides the means for your staff to electronically submit insurance claims, thus meeting the standards they require. This provides the means for faster processing and, therefore, payment for services.

The electronic processing also means you will have an easier method to track claim approvals and denials, ensuring you stay within the various insurance companies’ appeal processing standards and timeframes. 

Billing software provides an easy and convenient method to manage patient information. No longer will office staff need to keep a physical tickler or reminder file folder. The system will provide automated reminders via calendar entries and email. 

Imagine having all patient information at the click of a button without having to manage unwieldy spreadsheets. 

Because billing software typically complements and integrates with your electronic health record (EHR), your practice is able to keep patient information intact and secure.

Billing software won’t wholly eliminate errors but it will significantly reduce them. 

Armed with software connected to insurers, your practice can have real-time conversations with patients about their coverage and eligibility. Automating this so-called financial clearance process, particularly on a pre-visit basis, enables your staff to be more efficient and patient-focused. It also puts patients in a position to know precisely what portion of their procedure or visit they will be responsible for out of pocket.

This type of software facilitates a proactive approach to patient communication and engagement.

Because billing software is automatically and routinely updated, office staff can quickly determine coverage or any preapproval needs. They can also inform patients about whether your services are in or out of network. This gives patients critical information to make treatment and financial decisions.

Converting your existing practice to billing software is possible, though depending on your solutions, it might require manual input. 

However, if you have the option, implementing it as you launch your medical practice will save time and conversion challenges. Staff can create new patient profiles in real-time. When integrated with your EHR, all the pertinent patient information need only be entered once to give you insight into:

Tying the claims processing software to the EHR increases the chances of linking the correct patient information to the associated insurance billing information.

The ease, or lack thereof, of transitioning from a manual process to an automated billing system begins with selecting a reputable vendor. Keep these questions in mind as you conduct your research:

Once you have satisfying answers to these questions, you can identify a vendor with which to partner.

In the event that your new practice has accumulated paper records, it’s critical that you know what has to happen with those file cabinets that are stuffed with charts (or other paperwork). 

Even though you are transitioning to an electronic process and will capture historical data in the new system, federal requirements state you need to securely retain all medical records information (paper-based or electronic) in a secure location for at least 6 years. Some states have even more stringent requirements (Massachusetts has a 30-year requirement, for example), so check local regulations.

There are also specific record destruction standards. These may include:

When transitioning your records, store them in boxes clearly marked with the date the file can be destroyed and the type of media on which they’re recorded so you can plan to eliminate them.

Implementing medical billing software in your practice may seem daunting. Still, it will save significant time and money once it is running as intended.

You will experience a return on your investment not only financially but also in terms of efficiency and staff work satisfaction. Further, clean claims may less hassle for you — and your patients.