Why Medical Billing Errors Are Costing Private Practices More Than They Think

It’s not just a claim denial that costs a practice money when it comes to medical billing mistakes – it’s a multitude of related expenses that practically no private practice ever adds up. It’s easy to realize the obvious costs – a claim denial equals staff work to resubmit, delayed payment a few weeks after the intended schedule. Yet the outlying expenses impact cash flow, productivity, and even patient relations, and they run deeper than anticipated.

Unfortunately, for most practices, their denial rate is the only metric they use to ensure they’re billing accurately. But even in situations where claims get paid, if it takes multiple touches or extended periods of collection or patients services calls to do so, then that money costs the practice just as much.

The Consequence of Denied Claims

When a claim gets denied, the typical response is a quick turnaround to correct the error and resubmit. Yet every denied claim has a multitude of downstream costs that practices fail to universally track. From staff proactively not getting new claims submitted to devoting time to delinquent resubmission efforts, all staff effort and hours put in add up. Money lost in the long run (or never gained). Subsequently, practices experience cash flow implications – they expect X amount of dollars within Y period from the insurance company, yet with no payment arriving, they’re left scrambling to pay their own overhead.

On the patient end, denying claims complicates accounts – for those few days (or longer), they think they owe X amount, yet when communication fails and they believe they’re all squared away with one payment, it’s bounced back through the insurance battle. Between incorrect explanation of benefits and corresponding statements received from the practice themselves, patient engagement suffers as they either call in to understand the billing mess or hold off on payment until it’s resolved first.

Then comes the added administrative burden – instead of one person voicing concern about a denied claim, the billing personnel needs to communicate with the provider for clinical input, address what potentially went wrong with the front desk about patient info, and seek managerial approval if write-offs or payment plans need additional input for threshold amounts before resubmitting to insurance.

Quality Control

Many practices lack proper quality control efforts for billing on their own merit. They only spot mistakes after submission. However, this proactive – preventative approach is much more costly than resolving mistakes on the backend. As a result, many practices are completely unaware of how much money they’re leaving on the table through mistakes that never should’ve happened in the first place.

Common quality control gaps include lack of patient information verification through improper means, insufficient documentation review before submissions, and inconsistent staff coding practices among providers or support personnel. Each gap presents an opportunity for costly mistakes which – had they been found within the confines of the practice – could’ve saved money before claims left.

For those practices consistently battling claims issues, using a specialized medical billing assistant for private practices can help implement what is needed for successful quality controls to decrease revenue cycle gaps for time/cost efficiency.

Yet quality control limits at the front make it challenging for busy practices to keep claims moving without skipping these proactive steps. But without them, – despite denials costing extra work hours and efforts for submission – it’s usually far less time than had these preventable measures helped catch them ahead of time.

Patient Payment Problems

Complications don’t occur solely in insurance payments due to billing mistakes; patient payments take a hit as well. When a patient receives a bill that should’ve been covered because insurance initially said so but then changes status down the line due to conflicting communications from their previously trusted practice and their seemingly scorned insurance company.

When patients think they were billed twice for one service due to an outstanding claim error – or worse – they become suspicious and reluctant to ever pay the practice again, no matter how much history there is past one claim down the line.

Administrative time rarely encompasses the true cost of these mistakes when staffers are on the phone explaining and/or writing letters seeking stable confidence from patients who are hesitant to trust the practice going forward.

Cash Flow Consequences

Cash flow is often tight surrounding private practice operations; it’s not just about how much they get owed in billing – it’s about when. When billing errors delay payment by even a week or two, it puts pressure on practices to charge credit lines or defer purchasing new equipment for ongoing updates, staff expansion decisions until payment is secured, and takes its toll.

These interest costs, while they add up slowly – each day costing one or two dollars – add up significantly over time – debt that many practitioners never want but end up with thousands – if not more – of financing error-related costs throughout these delays.

In addition, cash flow disruption impacts early buy opportunities that can only be taken advantage of with immediate cash flow as opposed to spending money from X company – and needing it back on time – before it can ever be regained again.

Staff Productivity & Morale

Finally, there’s no mistake costing money like a frustrated staffer who knows they’re better than these mistakes but are relegated to jumping through hoops because someone else didn’t catch theirs (or they made another mistake). Hours spent correcting errors mean staff members can’t submit new applications; instead of working with patients on relationship development or practice building efforts elsewhere around their skills – there’s now opportunity cost time lost related to salary dollars paid for easy mistakes.

Additionally, increases in error rates create a stress response which further lowers morale – including turnover – which adds up based on recruiting/training costs offset by another financial edge that’s lost due to declining productivity.

The intangible costs associated with making specialized staff work on something they shouldn’t be working on give rise even quicker than frequency of billed payments and no one truly factors those costs in excess.

Revenue Implications

Practices known for continual billing problems develop reputations among patients or referring physicians that they’re disorganized or more difficult than others; it’s not worth getting involved with down the line. Whether this is a positive or negative reputation remains to be seen – but it certainly takes revenue implications down an indirect path over time.

Insurance companies pick up on these patterns as well – and those practices that operate with consistent errors find themselves subjected to further regulations/audits or decreased payment processing timelines that others would never find necessary.

Prevention is Key

As a result, it becomes evident that instead of detecting and correcting issues after-the-fact – the key to reducing medical billing costs is prevention upfront through proper quality control measurements – which pay off sooner rather than later.

Investing in proper oversight for documentation efforts pays off quicker than anticipated as denials deter prevention quality control efforts emerge requesting help and processes established almost immediately make up for lost time/bad feelings generated before situations get too out of hand.

Reassessing where practices assume revenue cycles only account for expenses hones in more insight into where poorly handled medical billing problems leak revenue potential everywhere else – and why such opportunities should always be assessed down an extremely low percentage threshold for error.

It’s clear that it’s almost never visible costs that kill a practice; instead it’s implied expenses never accounted for consistently buried under effort hiding compounded problems that overwhelmingly reduce totals owed across the board. But by successfully addressing these situations instead of going with the flow – medical billing accuracy can change how much money a practice makes – and it’s almost overwhelming how much transformed better performance brings months/year’s down the line without question.