ROI Analysis for an ASP Practice Management System for the Medical Industry

By [http://ezinearticles.com/?expert=Trish_J_Jones]Trish J Jones

Billing errors can cost your organization thousands of dollars. This section analyzes manual billing pitfalls, costs to your organization, and proven ways to recover lost revenue.

Most billing errors can be eliminated prior to the submission of your claim. Managing these errors with little labor (i.e. people) intervention increases your overall profit. Relying on simple billing/claims software and/or personnel to remember specific billing requirements will result in an increase of denials and delayed cash. Instead, invest in billing software that has the capability of building your specific billing rules into the system. The system should allow for multiple claim forms. Your users should be able to view claim forms online, and reformat the claim online if necessary. The system should have the ability to automatically submit clean claims to the Payer, without human intervention. And most importantly, the system should contain your Payer specific rules for billing.

For example, some Payers have different billing requirements for the same procedure code. Your system should have the ability to generate a claim specific to the applicable Payer.. If your system does not have the capability of managing these types of rules, you are relying on personnel to catch the requirement up front and edit the claim prior to submission. Or, the claim will be submitted to the Payer and then denied for missing information.

Let’s examine the cost of both processes (manual versus system built rules). If you are relying on a manual or simple billing/claims system, your process will typically be as follows. A claim is generated and reviewed by your office staff. The Payer requirement states the specific procedure code must be submitted with a letter of medical necessity. Your office staff must remember this requirement (in addition to the other multitudes of billing requirements Payers create). The charge is $500. The claim is mailed to the Payer without the LMN. Twenty days later a denial is received from the Payer, stating the claim is not eligible for payment due to missing information. At this point, your staff will either remember what the missing information is, or more than likely contact the Payer for explanation. Your staff will then retrieve the LMN and resubmit the claim to the Payer with the LMN attached.

How does this cost your organization? Let’s assume the initial charge is $500. Begin subtracting the personnel cost to review the claim up front, review the denial, contact the Payer, correct the claim, resubmit to the Payer, and then follow-up with the Payer regarding payment. On average, this would entail approximately 2 hours of personnel costs. Plus, the $500 receivable has been delayed at least thirty days, resulting in a lower margin to your organization.

Investing in billing software that allows you to build in Payer specific rules will increase your margin almost immediately.

The software should provide flexible billing cycles, the capability to build in rules for Payer specific billing requirements, flexible claim formatting, missing element tracking, online reformatting, and a multitude of other user friendly functions to assist your personnel in billing.

How will this benefit your organization? In the above example, your $500 profit is reduced by 8-10% for personnel costs. That is then reduced by another 5% due to the delay in collection of the receivable. Conservatively, your margin is reduced by 15%. Multiply that by the number of instances this is currently occurring in your practice. You can see how quickly your margin erodes, and cash flow is delayed.

The cost of a Medical Billing System is usually dependent on the size of your practice and number of concurrent users. For a small practice, the cost could be less than $2,500 to install. Taking the above example into our analysis, your return on investment would be seen very quickly. Investing in a solution will be paramount in increasing your margin and cash flow.

In addition to the features mentioned above, your medical billing software should provide your organization with Revenue Management reporting, an on-line patient financial folder, automatic charge posting, and much more! http://www.pdmsoftware.com

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