Substance abuse billing vs. SUD providers addresses one of the biggest misconceptions in our industry. This is part of the revenue cycle management and utilization review issues many drug and alcohol addiction treatment centers are facing. The myth is commercial payers (insurance companies) are solely responsible for their decrease in revenues over the past few years. This is simply not true.
Substance Abuse Billing Cashflow, It’s Not the Commercial Payers
Commercial payers play a part in the substance abuse billing decrease, but not enough to be blamed solely for it. Any RCM specialist will tell you that insurance payers have always operated in the same manner. They use cost containment by reducing pricing and increasing reimbursement requirements. This has always been the same throughout time. Therefore, what has changed recently to cause SUD providers to be closing their doors or downsizing significantly due to lower substance abuse treatment revenues? The answer is that the RCM industry, catering to SUD providers have deteriorated significantly over the past 5 years.
The deterioration is mainly due to the over saturation of substance abuse billing companies competing for business. In order to compete, these behavioral health companies have engaged in an aggressive rate war. Prior to 2012, usual and customary billing rates for SUD treatment centers ranged between 8% to 10% of monthly reimbursement amounts. During 2012 and beyond we have seen medical billing rates rapidly decrease to 5% or less. Here lies the answer to who is truly responsible for decreased revenues.
Billing companies have diminished their profit margins in hopes of signing a high volume of clients. However, there are now too many billing and utilization review companies. They rarely can sign enough treatment centers to offset the reduction in profit margins from the “rate war.” Therefore, just like the insurance companies now billing companies are engaging in cost containment practices. This has a way greater negative impact on SUD treatment centers revenues when compared to cost containment done by the commercial payers.
Understanding Substance Abuse Billing and Utilization Review Cashflow Issue
How does cost containment by a substance abuse billing company negatively affect a SUD provider’s cash flow? It reduces their cash flow by diminishing the following 3 critical components in the RCM process:
Substance Abuse Billing Timeliness
The timeliness of substance abuse billing is the most critical component. The average days to pay in the revenue cycle management process should be 45 days or less. The only way to achieve this is to submit claims, troubleshoot denials and submit information promptly. This requires a fully staffed team in order to accomplish this. behavioral health billing companies are always understaffed as a part of their cost containment plan. Therefore, timeliness is not something that can be adhered to. Some addiction treatment centers across the nation are bringing their substance abuse billing in-house. However, without experienced guidance centers can lose a tremendous amount of revenue and not even know it.
The Importance of Quality in Revenue Cycle Management
The revenue cycle management process is another important component that is adversely affected by the billing companies rate war. Quality is derived from the interview process and enhanced throughout the training process. Due to low-profit margins, billing companies tend to hire the cheapest staff in order to fulfill job tasks needed. From entry level to senior management, the competency levels needed to drive superior operation and problem-solving technics is severely lacking. This causes, at a minimum, a 20%+ decrease in monthly cash flow that should have been recognized by the SUD provider.
Understanding Revenue Cycle Management Reporting
Financial reporting is the most tedious and complex component of the entire RCM process. If not done correctly the information presented by a report is meaningless because it is inaccurate. This is scary, as all executive members should be relying on reporting from their billing company to make operational decisions. There are many common mistakes of substance abuse billing and utilization review made in the behavioral health industry. This has caused additional problems for the addiction treatment centers, physicians, and detox owners. As part of the substance abuse billing companies cost containment plan, they have all started to push this do it yourself reporting tool/dashboard.
This benefits the behavioral health billing companies only and causes more harm for their clients. By offering these dashboards or reporting tools, billing companies are now able to save significantly by not having to hire staff to prepare and analyze financial data. Extensive financial and KPI Reporting is something the billing companies should be engaged in to effectively provide direction to their team, if cash flow is low or not performing as expected.
Substance Abuse Billing and Revenue Cycle Management Problems with Dashboards
Understanding the “do it yourself” dashboards is paramount for substance abuse billing and utilization review management. Major issues with SUD providers using dashboards are that most times they do not understand the RCM process well enough. They do not know what kind of performance indices to look for.
- SUD treatment providers that are using billing companies should be monitoring their cashflow closely by looking at the following monthly:
Days to Pay
- How many calendar days on average is it taking to get claims paid from submission date? Anything over 45 days should be a red flag!
- Collection % of billed Charges
How much is being reimbursed on average per claim billed?
- 121+ Analysis
Why are claims being aged over 120 days?
What is the expected payment date for each claim over 120 days old?
- Claim Write-Offs
Why are claims being written off?
Why are claims payments being recouped?
Get Control of Your Substance Abuse Billing
Understanding that it is not the commercial payers causing cash flow issues are paramount. The above 5 areas of concern are critical in maximizing substance abuse billing and revenue cycle management cash flow. Many drug and alcohol addiction treatment centers and behavioral health organizations are losing big chunks of revenue.
We will be happy to walk you through more in-depth ways to make sure your substance abuse billing company or internal team is collecting the amount they ought to be. Contact us at 844-320-1236, or at firstname.lastname@example.org, for a no-obligation consultation and get control of your revenue.