| As an owner and operator of two outpatient | | | | and our client's clinics is to get the RPI 1.0 or |
| physical therapy practices I have found that | | | | below. Basically achieving full reimbursement for |
| determining the effectiveness of a billing and | | | | services rendered within a 30 day cycle or |
| reimbursement process can be challenging but | | | | sooner. Certainly the payer mix can influence this |
| vital to your clinic's long term success. When I | | | | metric- such as having a small practice that has a |
| started my practice in 2001 I initially utilized a | | | | high percentage of motor vehicle claims or |
| medical billing company for my third party and | | | | workers compensation claims that may be in |
| patient balance billing. One of my major questions | | | | litigation or controverted. So if your practices' RPI |
| to them was, "How do I know you are doing a | | | | for cash and health insurance claims is around 1.0 |
| good job for me?" They didn't have any pat | | | | or less- you are doing a stellar job! If it is |
| answers other than just directing me to look at | | | | significantly higher then you need to take a |
| my accounts receivables (AR). When the | | | | serious look at your procedures, processes and |
| receivables were growing over time and | | | | entire system whether or not you bill in house or |
| eventually became out of control I had the same | | | | outsource it. We encourage the practice to |
| question. Was $30,000, $50,000 or $100,000 of | | | | continue to look for ways to improve their billing |
| AR too much for the size practice that I had? | | | | and reimbursement process if the RPI(TM) grows |
| Having enough money to pay the bills is one thing, | | | | much above 1.2 |
| but having too much outstanding money and | | | | Certainly other metrics can be helpful in providing |
| eventually never being able to collect those older | | | | insight into your system's effectiveness such as |
| claims was another. | | | | percentage of AR at 30, 60 and 90 days and |
| After going through another 'medical billing' | | | | beyond, but like anything you can get |
| company, with even worse performance, I | | | | overwhelmed with the complexities of the |
| decided to take control of the situation and bring | | | | accounting that goes into looking at your cash |
| the process in house. I could no longer afford | | | | flow. However, keeping things simple by having an |
| giving away services especially as my practice | | | | RPI(TM) score can quickly give you a good idea |
| grew and volumes and overhead increased. The | | | | of how things are working for your clinic. I value |
| success we found in solving our own issues | | | | concepts that can be tested and reproduced and |
| resulted in creating a physical therapy specialty | | | | more importantly utilized in guiding changes that |
| billing service, assisting other practices who were | | | | can be used to make the practice more |
| also faced with sub optimal reimbursement. One | | | | successful. I believe the RPI (TM) is an ideal tool |
| of our goals was to develop a way in which we | | | | that clinic managers and owners can use in |
| could track our performance in helping them. A | | | | addition to their current metrics in managing their |
| metric owners / managers could use to monitor | | | | practices. |
| their clinic's reimbursement performance on a day | | | | Finally, we try to stress to colleagues two |
| to day basis and our effectiveness in keeping | | | | important concepts that are often overlooked. |
| their cash flow consistent. We believe in giving | | | | The clinic manager / owner must understand that |
| practice owners the power to quickly evaluate | | | | the entire billing process is complex as well as |
| how well their billing service or in house staff | | | | dynamic and that cash flow is king!o |
| performs. After all cash flow and ultimately their | | | | Understanding the entire (big picture) billing process |
| livelihoods are at stake. The measurement tool | | | | is key. Anyone can bill with any software. More |
| we developed to do this- the Reimbursement | | | | importantly is the process that you develop to |
| Performance Index(TM) (RPI) was the result. The | | | | set yourself up for success. Having competent |
| RPI(TM) is the ratio of your outstanding AR | | | | staff and efficient resources or a billing partner |
| divided by your average monthly charges. | | | | who understands third party reimbursement, can |
| The ratio highlights the percentage of outstanding | | | | keep up to date on healthcare policy changes as |
| charges that are collected, and the amount of | | | | well as dedicate many hours to fight your |
| time it takes to collect an average month's | | | | reimbursement battles is vital to your success.o |
| charges. The higher the ratio, the longer it's taking | | | | Cash flow is king. Cash flow - the effective |
| for an average month's charges to be collected; | | | | turnaround time from the moment a service is |
| the lower the ratio, the quicker an average | | | | provided to when you have accurate |
| month's charges are being collected. So for | | | | reimbursement for that service. Everyone is well |
| instance back during the early days of my | | | | aware of the dynamics of weekly or monthly |
| practice, our RPI would have been calculated as | | | | accounts payable. What needs to be stressed is |
| the following: | | | | the goal to maintain a high level of steady income |
| $115,000 (outstanding AR) / $55,000 (average | | | | based upon an effective reimbursement process. |
| monthly charges) = 2.09 | | | | If this is not optimized you will find major |
| An RPI(TM) of 2.09 was no way to run a | | | | problems in having enough money to pay those |
| successful business. The goal for our two clinics | | | | bills when they come in. |