After many years of working in healthcare IT services, we have seen many clinics, IPs and practices only look at the obvious surface requirements when evaluating their Practice Management (PM) software application. We encourage these same parties to dig a bit deeper and evaluate some of the greater issues that lie underneath the decision on what practice management system to use. Listed below are our findings and scenarios to consider.

Did I pick that insurance? – We have entered our encounter and sent the claim out the door. We get a call form the patient after the fact telling us they have just changed jobs and wanted to use the new insurance because the co-pay is smaller. Do you have the ability to go back into the PM and change the insurance and create a new claim? Let's add onto this – what if the first payor went ahead and paid the claim not catching that they should not have. We can expect the payor to correct it later. If they do, we do not want to have to loose that money six months from now. What options do you have to correct the primary insurance at different stages in the claim life cycle?

The secondary payor wants it like this – We have created an encounter and everything appears to be correct. We create the primary claim and the primary payor even pays what they should. We send a claim to the secondary and they reject it because they need a modifier on the procedure code. Can you change it? We can ask the question another way – can you make changes to the encounter without affecting the primary claim? If the primary claim is sent and paid for, we probably want to leave it alone, but not always. What options do you have on your encounters to edit the encounter and have it affect the primary payor or not affect the primary payor?

Oops, I did it again – We have a good primary claim again and they pay as expected. The payment happens to be 80% of the contracted fee. We go ahead and transfer the rest of the balance to the patient and send them a statement. As soon as the patient gets the bill, you get a call telling you you have a secondary payor. The payor they give you is actually their spouses and you do not find this out until a month later. The question then becomes – can you change who is responsible for the secondary position of the claim? This means you need to be able to change insurance-to-insurance, patient-to-insurance and insurance-to-patient and then later on to something else.

All those claims – All of the mentioned items so far have a common theme – the now invalid claim has been created. What options do we have to deal with all these claims? Some of them may have been paid. Most will just be denied by the payor. Others were created but never physically filed and never show up on the radar again. What options does the practice management system give you to deal with these claims and move them out of the PM application and how does that compare to your clinics policy on what to do with them?

Dual Primaries – A common scenario in Federally Qualified Health Centers (FQHCs) is that for a single visit with multiple procedures may have more than one Primary Insurance liable. Some procedures may be covered by Medicare NGS (National Government Services) and others by a Medicare Part B payor. For starters the practice management system should create two primary claims for this. It gets tricky when we start to transfer funds to secondary payors. Do we create two secondary claims? Do we combine the transfers from both primaries onto a single claim? When one of the primary payors tells us to transfer, how do we know if the other will or will not?

This payment is for whom? – We receive our remittance advice (RA) and it has a payment for someone not even registered in our PM application. There is also the scenario where we have the patient, but not the encounter specified on the RA. We may also receive a payment for a correct patient and the encounter, but this payment is from the secondary and we have not even received payment on the primary yet. The question becomes – can you take the payments and hold them to be sorted out later when you get more information? These payments need to be recorded, you did receive the money after all. Either you or the payor will figure out what happened later and the balances will need to shift accordingly.

The payor wants the claim like this – Regardless of what national standards documentation states, payors will interpret them as they wish and deny any claim that does not follow their interpretation. Whether you use a clearinghouse to send your claims out, or your PM sends the claim out, it needs to be configurable to accommodate payors often conflicating interpretations.

Operations vs. Accounting The PM is often the initial point of capture of many revenue and cost transactions. Entering procedures in an encounter creates a payable with the payor. Posting the remittance advice results in a payment to that charge. Since the PM is where these transactions are captured, it is often where we look to report daily charges and receipts, provider productivity reports and outstanding claim balance reports. These are fine for an operational perspective, but should your PM be giving you aging reports, profit and loss reports or financial standing reports? It is easy to ask the PM to provide these, but should these be coming from your accounting application instead? This brings up the inevitable question – what options does your PM give you to interface to your accounting system?

Fat Rate Co-Insurance – For the most part, clinicians workers identify co-pay as a flat rate paid for by the patient and that rate is paid in addition to the charges billed on a claim. Co-insurance is a percentage of the charge to be paid by either a secondary payor or the patient. There are times, however where the co-insurance amount is a flat rate and not a percentage of the charges. The vast majority of people will still call this a co-pay because it is a flat rate. The question for the PM application is – can it handle both flat rate and percentage co-insurance?

Slide on down – Federally Qualified Health Centers (FQHCs) are required to provide free or discounted services to patients based upon certain criteria such as income level, number of dependents, student status or homeless status. These discounts are calculated using sliding fee schedules. While the previously mentioned criteria are part of the equation "how much to slide (aka discount)", there are many other questions to take into consideration. Does this department or procedure have a minimum or maximum fee? Does this location have different rules from another location? The question to think about with your PM application is whether it has enough configurability on sliding fee scales.

Effective Dating – Insurance coverage has a life span. There is date the coverage starts and a date where the coverage ends. Within this time frame there are co-pays, deductibles and co-insurances that are in effect. Contracts with your payors have life spans. Sliding fee scales have life spans. Many other entities in your PM have a life span. Does your PM consider and provide effective and termination dates on all items that have a life span?

Billing Order – Every claim can be evaluated and assigned a billing path; the list of payors and the order of payer responsibility. Does the PM application use this billing order and automatically default the responsibility as payments and transfers are made or is it left up to the users? Having a pre-assigned billing order creates a more effective workflow and results in less claim denials.

Who is going to pay for this – Whether it is an adult paying for themselves, a parent paying for a child or a legal guardian paying for someone, your PM needs to address the concept of a guarantor. A guarantor is the person with the legal responsibility to pay. There are multiple ways to establish this relationship and it is important that your PM will be able to handle this in an easy and efficient manner. Generating a correct patient statement, that is sent to the correct person, will eliminate unnecessary patient inquiries and expedite payments.

One still needs to evaluate all the obvious criteria (eg what electronic claim support the PM provides). These items are intended to give a defect analysis into selecting a PM application. Many applications will handle 80% – 90% of the business scenarios are very similar to its competitors. It is often how they handle the last 20% – 10% that affects whether a good decision was made to purchase the application. Regardless of any industry, managers and executives typically do not consider the last 20% – 10% in the purchase decision. We discover these items after the fact. The company that thinks of these items soon gives them a competitive advantage.

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