Ideally, the billing encounter should be viewed as a win-win situation. But a practice owner or billing manager who has spent time "in the trenches" knows that this is simply not the case. "Increasing complexity of billing creates opportunities for the payers to benefit at the expense of the providers," says Dr. Sigmund Miller, executive director of the Association of New Jersey Chiropractors (ANJC). "Endless claim denials, payment delays, and post-payment audits are all too familiar symptoms of dilettante billing. Doctors require professional solutions."
Insurance companies adopted an adversarial approach to providers. Under the payer's "system," the goal is to keep as much as possible of the provider's money without violating the timely payment laws. Payers have developed five simple but effective strategies to seize control of and rapidly derail a significant portion of billing efforts:
- Increase billing costs with added complexity and new denial reasons. By complicating the process, payers increase the likelihood of failing the payment and winning the subsequent appeal process;
- Reduce allowed fees;
- Increase leverage over providers through consolidation. Consolidation in the insurance industry reduces competition among payers for physicians' services, allowing payers pay less to providers;
- Underpay claims;
- Return for post-payment audits, demand refunds, and impose penalties. The top two revenue-boosting wells for payers (higher premiums and larger insured pools) are drying up. To meet profit expectations and still play within the new rules, insurers must go after the reimbursements after they are paid. Providers need to understand that the payer's motive is money, the payer's means is a gargantuan statistical database, and every provider is an opportunity.
But traditional practice owners...
- lack consistent and integrated billing methodology,
- employ incompetent and/or lazy billing service that collects fees on easily paid claims and forfeits difficult claims without follow-up, and
- are unable to identify and discover specific reasons for specific underpayments.
Instead of catching up with payer's changes and depending on favors for mission-critical payment information, providers need an accountable mechanism for getting their claims paid. Modern billing systems must integrate and leverage information for four goals:
- Automate the payer's side of the claim flow.
- Reduce audit risk - Avoid audit threat by following compliance rules and preparing for an audit.
- Build patient relationships and actively maintain patient loyalty.
- Integrate the front and back office with a centralized practice workflow.
An Internet-based system can help make the payers pay - as it leverages the "network effect" to amplify its value. The network effect is the most revolutionary characteristic of Internet technology. In short, it's when the value of a networked service to a customer increases in step with the growing number of customers. One consequence of a network effect (also known as Metcalfe's law) is that the purchase of a networked service by one provider indirectly benefits others who also use the same service. The resulting bandwagon effect is an example of a positive feedback loop. It applies to services like Google AdSense, eBay, Wikipedia, Skype, Amazon, Flickr, and MySpace--and it can be used by healthcare practice owners and managers to "level the playing field" with insurance companies.
For billing networks, the network effect says that while their costs are proportional to the number of submitted claims, their value to individual provider is proportional to the square of the number of providers using it. For example, multiply the number of providers by 10 and the system-wide cost goes up by a factor of 10 but the value goes up a hundredfold. In other words, Metcalfe's law as applied to billing networks, says that the value of the billing network to the individual practice owner is proportional to the number, N, of other practice owners sharing the same billing knowledge base and processes. Now multiply this value by the number of practice owners, and you have a value for the whole operation that is roughly proportional to N squared (see also Metcalfe, Robert M. "It's All In Your Head," Forbes, 2007, May 7, pp. 52-56). The more providers who join the billing network, e.g., Vericle, the more value they receive from it.
For billing network users, value is defined in four ways: improved collections, lower audit risk, efficient practice management, and added revenue sources. And, according to Metcalfe's law, this value continues to grow, long after the provider started using the system, in step with each newly joining practice.
