It's no secret that, by many measures, physician incomes are shrinking. And a staggering, recession-y economy that's making collections more difficult isn't helping things. Medical expenses are a leading cause of bankruptcy, more and more people are losing individual coverage because of insurer rescissions and medical inflation keeps outpacing overall cost increases. And that doesn't even take into account ongoing structural changes to healthcare financing. Here are seven tips from the pros for smoothing out your collections processes.

1 Brace for coming changes.
"Consumer-directed healthcare is still a small enough segment of the market that its impact is small as well," says Bernard. "But it's growing, and that has the potential to devastate physician offices that cannot tolerate high A/R rates." The rise of consumer-directed plans has the potential to devastate consumers, too, if they don't really understand what CDHC is all about. "There's talk that real-time claims adjudication is the answer to the A/R rate brought on by CDHC," she comments, "but that seems several years out, and may be achievable only for a fraction of practices."

2 Give patients options.
Emergency physicians face collections hurdles as high as anyone's. Brian Bearie, MD, FACEP, medical director and chair of the Emergency Department at San Bernardino's St. Bernardine Medical Center, advises telling patients that "if they cannot pay the professional fees for emergency room visits--an average charge of $300 each--they should write letters of financial hardship to their practices requesting discounts. Letters should acknowledge care received versus complaining about 'high bills'. Most ER physicians would rather accept a discount from a gracious patient than take that patient through collections."

3 Prevent collections problems before they happen.
Can better coding have an effect downstream when it comes to collections? "Absolutely!" says Sheri Poe Bernard CPC CPC-H CPC-P, vice president of member relations at the Salt Lake City-based American Academy of Professional Coders. "The sequencing of codes can have a tremendous impact on payer response," she says. "Sequence a lesser procedure first, and you've reduced reimbursement. Sequence the manifestation before the underlying illness, and you've created an error that delays payment while you refile the claim. Get it right the first time, and your accounts receivable will drop considerably."

4 Automate!
"Providers who routinely verify patient insurance eligibility and benefits through electronic or other means experience higher rates of paid accounts." That's the key finding from a newly released study conducted by the Washington, DC-based Council for Affordable Quality Healthcare (CAQH) a not-for-profit alliance of health plans and trade associations. Supported by a grant from the California HealthCare Foundation, CAQH's CORE Phase II Patient Identification Study was conducted as part of its Committee on Operating Rules for Information Exchange initiative. CAQH launched CORE to develop a set of universal operating rules aimed at simplifying communication and administrative processes between providers and plans.

5 Invest in validation technology.
"There are continued challenges with lower validation rates in HIPAA 270/271 transactions compared to other methods," CAQH says in a statement. That "encourages use of higher-cost verification methods that have higher validation rates--such as the Internet and the telephone--and more flexible search options." Such options, including members' names and dates of birth, thus reduce the amount of additional labor physicians encounter when patient identification numbers are missing. "One large health plan achieved successful HIPAA 270/271 eligibility matches without a member ID for 500,000 transactions in one month, thus eliminating a significant number of unnecessary provider phone inquiries. Its provider call volume was potentially reduced by up to 38% as a result," says CAQH. A relatively high percentage of patient accounts are in flux while missing or invalid member ID numbers are researched, the group explains. And "while validation rates are lower for 270 transactions when a member ID is not available, a match is made almost half the time," it says.

6 But don't rely on alternatives that are going out of style.
"Social security numbers are often used as alternatives to member IDs and result in high validation rates," the CAQH document notes. But "reliance on social security numbers as an alternative to member IDs is expected to decrease over time as fewer providers and plans collect and store that information." The CAQH study, which included inpatient facilities and ambulatory physician practices in both California and New York, will be used to help create CORE Phase III operating rules aimed at improving patient identification. The goal is to develop rules for more flexible matching criteria, which will enhance automated, real-time processing of eligibility inquiries and responses. CORE Phase III activities are scheduled to begin this year.

7 Be meticulous.
That's the single best piece of advice Bernard says she can offer. "Have your business office estimate what the patient's financial responsibility will be, and communicate that number early, so the patient can begin making preparations," she advises. "From getting the patient's insurance data right to double checking codes for NCCI edits and medical necessity, ensure that everything about the claim is correct the first time." But don't stop there, she stresses. Be meticulous, too, when the explanation of benefits arrives: "Reconcile the EOB against contracted rates and services to ensure you've gotten what you have coming."

--Russell A. Jackson