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Is your Current Pathology Billing Collection Rate as Expected?

May 16, 2016

Is your Current Pathology Billing Collection Rate as Expected?

Due to different plans and reimbursement rates, most of the times pathology practices are paid lesser, or paid professionally instead of global. Hence, to obtain adequate reimbursements, monitoring of payments on a regular basis is essential. While evaluating where the current collections rates stand, a couple of other questions such as checking the current processes for improving the bottom line, getting the maximum out of the billing software, is the internal staff skilled (in billing and coding) and efficient or needs to be outsourced, are some common questions asked.

It should be noted that sometimes, the amount of contract reimbursements are quite high, and not understood and not taken care of as much as bad debts or accounts receivables. Therein lay the 'Black Hole' of pathology billing. As pathology billing is based more on contract reimbursements, there should exist a 'belt and suspenders' monitoring approach. Also, a month end report of your pathology collections states where your practice stands amongst the competition and if your current collection rate stands where it should be. These month-end reports also aid in taking decisions to manage the pathology practice effectively along with taking the right strategy building decisions. Hence, benchmarking and comparing ratios can aid in evaluating pathology billing practice and measuring the performance on a timely basis.

Various Measures for calculating the Current Collection Rates:

Net Charge to Gross Charge Ratio:
Divide the net charges by the gross charges. This also shows the extent of discounting from the standard price for all payers. It monitors the practice year by year. This should not be used to compare practices.

Net Collection Ratio:
Divide the net collections by net charges. Typical net collection ration should be 88-90%; rural areas 85-88%.

Bad Debt Ratio (opposite of net collection ratio):
Divide bad debts by net charges (benchmark - 10-15% or lesser).

Days in Accounts Receivable:
Divide ending A/R by average daily charges (divide gross charges by number of days in a period). Do it for each payer individually. Medicare benchmark - 30 days; others - 60 days or lesser.

Reimbursement Analysis:
An internal benchmark for examining insurance payments, is referred to as "Claim Paid %, can be computed as follows: Collections / (Collections + Adjustments)." Reimbursement analysis compares actual claims paid % to standard claims paid % for each CPT code for each insurance company, implying you can 'breakdown' the insurance activity and CPT code. The variation should be minimal. Analysis must be done at a regular basis to scrutinize payer reimbursements monthly. And continue till charge prices are adjusted or a change in contract fee schedules.

Demographic variations,bad debt policy and payer mix can create a difference in benchmarks and achieve success with a high collection rate. Understand pathology trends and reimbursements; match billing services with the needs and track your collection rate.


Category : Accounts Receivables / Claims Denials