Performance Analytics: What Billing Can Tell You

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Medical billing is the process of translating a physician’s work into reimbursable language understood by governmental and private third-party payors. The billing process must start with the physician’s documentation of patient encounters, which forms the basis for billing. The physician’s documentation is then translated into a CPT® code (representing the type of work done) and an ICD-9 code (indicating the reason for that work).

In some practices, physicians use encounter forms with preprinted CPT and ICD-9 codes, while other practices derive the billing language (codes) directly from physicians’ documentation. Medical billing can provide important intelligence on the state of a practice based on charge capture, reconciliation, and lag time; net (or adjusted) collection ratio; days in accounts receivable; and charge/payor mixes.

C harge Capture and Reconciliation

The charge-capture and -reconciliation matrix is used to assess the efficacy of a billing operation. Charge capture refers to the process of ensuring that all billable services are captured and billed to third-party insurance carriers. To be certain that all charges are captured, a physician practice must implement a robust system of reconciling services performed by its physicians with charges billed to insurance carriers.

A radiology practice that bills payors based on exam orders must take care to ensure that billed exams accurately reflect exams performed. Billing based on ordered exams could be fraught with potential undercoding (resulting in revenue losses) or overcoding (with the potential for compliance problems). For example, a referring physician might order a CT exam of the abdomen, but the radiology department might determine that a CT exam of the abdomen and pelvis is more appropriate because of the patient’s signs and symptoms.

Under normal circumstances, the radiology department would then contact the referring physician to request a new order for a CT exam of the abdomen and pelvis. In some cases, the radiologist and referring physician might verbally agree that a new order for both areas should be procured—without communicating the information to the administrative staff.

In those cases, a practice that bills payors based on referring physicians’ orders might bill only for the CT exam of the abdomen, while neglecting to bill for the additional CT exam of the pelvis (because the original order was not changed to reflect the agreement between the radiologist and the referring physician). A practice with this type of pattern could be losing a substantial amount of revenue because additional exams, when performed, are not reflected by orders.

The reverse potential (for overcoding) also exists if the practice in question receives an order for a CT exam of the abdomen and pelvis, but decides that only an abdominal CT exam is necessary. If the order is not changed to reflect that only an abdominal CT exam was performed, the practice could bill for a CT exam of the abdomen and pelvis, resulting in overcoding and a potential compliance problem. A practice that bills payors based on radiologists’ documentation—not referrers’ orders—should be able catch such discrepancies and bill appropriately.

This is an area that requires clearly defined processes for dealing with changes in ordered exams to make sure that the appropriate exams are billed accurately. The problem of exam changes affects a broad range of studies; for example, a referring physician might order an MRI exam of the cervical, thoracic, or lumbar spine, but the radiologist might determine that an MRI exam of the total spine is more appropriate for the indication presented by the patient. Unless the order is changed, a practice that bills based on exams ordered might be likely to bill for one CPT code, as opposed to the three CPT codes that apply to a total-spine MRI exam.

Two of the more common areas where some practices might be leaving money on the table involve changing a noncontrast exam to a contrast exam and changing a contrast exam to a precontrast–postcontrast exam. Since radiology departments can determine when an exam requires contrast administration, a practice that bills based on orders might be likely to bill for an exam ordered without contrast—even when contrast media are actually administered, based on the clinical judgment of the radiologist.

An effective way to mitigate such billing errors is to set up a process for communicating exam changes to the