The doctor's biggest challenge used to be caring for patients. Today the biggest challenge is simply getting paid. And when you look closely at the sophisticated systems the insurance companies have put in place to do that job, there’s nothing simple about it at all.
Getting paid these days is challenging because of the inherent conflict between healthcare providers and the insurance companies. Payers (the insurance companies) have a fiduciary responsibility to their shareholders and their customers, rather than to the doctors who treat those customers. Because of this, frustration with insurance payment processes has reached unprecedented levels among doctors, in some cases triggering the transition to cash-only practice management, and for some, a career change.
Over the years, Payers have developed comprehensive methodologies and applied powerful technology to systematically and proactively reduce provider compensation. If Providers wish to deliver healthcare productively and profitably – in other words, if a doctor wants to get paid in full and on time by the insurance companies – they must develop an equally powerful billing infrastructure.
The first step in developing any methodology is performance evaluation and standardization of performance benchmarking methods. The payment performance index is a benchmarking technique inspired by prominent Wall Street firms with little tolerance for walking away from money. When evaluating trader performance, Wall Street uses the context of the entire market to give a more accurate picture. The profit or loss for a given company may or may not mean success or failure of that company’s market-traded securities, depending on the direction and movement of the markets in which those instruments trade. It’s all about context, because in financial trading, markets are every bit as influential on stock price in the short-term as are profits.
Most large sell-side brokerage firms on Wall Street compute various indices on a daily basis. By comparing the performance of a trader's investment portfolio to that of an entire index, one can immediately determine if the trader has been successful or is failing relative to the entire market, not necessarily in terms of less meaningful absolute numbers for a given security or portfolio.
A similar indexing approach promises to redefine the Payer-Provider standoff in healthcare, as well. For example, in June 2007, Billing Precision's Chiropractic Billing Performance Index (BPI) stood at 14.8, almost 3% below the national average of 17.7% (“BPI = 14.8” means that the average of the ten top performing payers working with Billing Precision clients have 14.8% of Accounts Receivable beyond 120 days). BPI is a key billing performance characteristic, as it is an indicator of claims that are never paid. Obviously, the lower the index, the better the billing performance, but this statistic is only really meaningful when considered in context of the relative performance of other payers.
In summary, a simple comparison of a Payer’s performance metric to a national benchmark determines if that Payer performs well, or not. In the above example, Billing Precision’s performance looks good, better than the national average by three percentage points. This approach to benchmarking also allows ranking within an entire set of Payers by sorting them according to the same performance metric. Benchmarking also allows identification of elite Payers, those that perform best in comparison to every payer in the country, as shown by the index-driven ranking. Finally, since the billing index stands for the entire set participants selected for their performance, the number of times a given Payer has been selected determines its historic performance. United Healthcare, for example, led chiropractic billing performance in 2006 by being included in Billing Precision's chiropractic billing performance index (BPI) seven times, and maintaining its value between 5 and 12.
The good old days of simply submitting the claims and receiving payments in full and on time are gone, but with the adoption of technologies and methodologies that put providers and payers on the same playing field, doctors stand a chance of turning their attention back to where it belongs, their patients.
