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RCM/Financial Info Systems

Next-gen provider payment-processing solutions lower cost

Those paper-based lockbox solutions are a thing of the past. By Jim Lacy

There exist signifi cant op- portunities to improve upon lockbox services that intro- duce real automation into the process, so providers no

Jim Lacy is CFO and counsel for ZirMed. For more on ZirMed: www.rsleads. com/205ht-211


he costs of managing day-to-day payment collec- tion through a traditional lockbox service can take a signifi cant piece of the practice’s overall revenue. For many practices, it’s understood that these costs are substantial, but there is not very much transparency. Studies indicate the average cost of managing a single payment from a payer is nearly $3 for a paper check and $1.48 for an electronic payment. Processing explanation of benefi ts (EOBs) and reconciliation can result in costs of $6 to $8 dollars per payer payment, with similar costs coming during the collection of patient-owed balances. Even the smallest practice will likely bill thousands of annual encounters every year, so the payment process can add up very quickly. Traditional lockbox services utilize a post offi ce box for payment receipt, which is then deposited into an account owned by the provider. These services might scan some documents, but many of them send along the paper originals to the provider so they can be manually fi led. In either case, the provider still needs to post payments and perform the line-by-line reconciliation. Such services are a decent step toward a fully electronic system, but they do not provide enough effi ciency gains for the practice.

10 May 2012

longer face the costs of manually posting and reconciling payments. For payment processing, what are the key in- gredients of a “next-generation” solution? It begins with an accurate conversion engine that turns paper-based EOBs into an X12 835 format that is easily accepted by the provider’s practice-management and hospital information systems. Then comes the transmission, where the converted fi le is sent via a clearinghouse to the provider electronically, followed by fi le importation into the same system and automatic posting of deposits. Reconciliation in a next-gen environment occurs automatically and provides one of the greatest sources of time savings compared to traditional paper solutions. Electronic-based data does not hold value unless there is a reporting feature. Next-gen solutions should feature an online dashboard that provides real-time analysis to keep providers informed of any trends. Alerts should also be incorporated that fl ag over- or under-payment issues. Scan- ning in such a solution should not be relegated to just claims. Payer correspondence, notes and various inquiries should also be scanned, and all of these images should be batched together and electronically sent to the provider. Top-tier payment-management solutions will index all payments and correspondence for future reference. This capability allows the practice to complete many tasks. For example, they can quickly locate a past primary claim if a secondary claim is received. If patients call into the offi ce inquiring why more of their service was not covered, the staff can easily pull up the past EOB to provide answers. For management, indexing allows historical analysis of payer trends to encourage more refi nement of processes and to spot any outliers. Conversion of EOBs and other documentation to an X12 835 format is important because it provides the practice with a truly digital workfl ow where there are no longer disconnects in the data. In most instances, paper-based EOBs are still being


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