#202 $144,000 a Year and Nobody Ever Escalates It

The most expensive billing relationship is not the one that is clearly failing. It is the one that is quietly not delivering. On a practice doing $400,000 a month, three points of net collection rate is $12,000 a month. Nobody escalates $12,000. It does not trigger a phone call. It just leaves, month after month, until somebody adds up a year of it and finds $144,000 that nobody ever fought for. This is Part 2 of a two-part series and it builds the operating model that catches it. 

System 1: the day-to-day operating model. Every good billing partnership has a weekly rhythm and a monthly rhythm, both defined before the relationship starts rather than improvised after something goes wrong. The weekly rhythm is operational on the practice side and communicative on the billing side. The practices that feel most confident are almost always the ones with a short, consistent weekly touchpoint. Not because anything is wrong. Because nothing has had time to go quietly wrong. 

The five-number report. Most monthly billing reports show collections by payer, claims submitted, and a denial percentage. That is activity data, not performance data. The report that tells you whether the value equation is moving has five numbers: net collection rate, denial rate by payer and reason code, AR days trending over three months, clean claim rate, and patient AR aging by segment. 

System 2: how to know it is working. Three green flags. Denial root causes are getting identified and closed, not just worked. The practice side is getting easier over time rather than harder. And the leading indicators are moving before the headline numbers do. Three warning signals. The monthly report is not readable or not specific. Problems get explained after they compound instead of flagged before. And the same denial patterns appear month after month without root cause resolution. 

System 3: what to do when something feels off. The right first move is almost never to start looking for a replacement. Most billing relationships that ended badly were relationships where the right conversation happened six months too late. There is exactly one situation where replacement is the right call: specific commitments were made by both sides with dates attached, and they were not kept after a fair period. 

THE SHARED OPERATING MODEL 

Chart Closure. Practice: providers sign charts within 24 to 48 hours of the encounter. Billing partner: tracks chart closure rate weekly and flags delays before they hit the claim cycle. 

Front Desk Accuracy. Practice: verifies eligibility before every visit, collects copay at check-in, captures authorizations before the patient is seen. Billing partner: trains the front desk on what billing needs and provides feedback loops when errors surface in claims. 

Denial Management. Practice: backs the billing partner on policy enforcement with payers when escalation requires physician involvement. Billing partner: owns denial follow-up completely, trends by payer and code, reports root causes monthly. 

Patient Balances. Practice: communicates financial expectations at scheduling and check-in and supports the collections policy. Billing partner: provides a structured patient AR workflow and reports aging by segment. 

Performance Visibility. Practice: reviews the monthly report and asks questions when numbers move. Billing partner: delivers a clear payer-level report monthly with denial rate, AR days, net collection rate, and trend direction. 

Communication Rhythm. Practice: shows up to the weekly or bi-weekly review. Billing partner: runs the meeting with an agenda, flags problems before they compound, and proposes solutions rather than summaries. 

THREE ACTIONS THIS WEEK 

1. Ask your billing partner for the five-number report this week, not at the next scheduled review. How fast it arrives tells you as much as what is in it. 

2. Check your own weekly rhythm: chart closure rate over the last seven days, eligibility verification rate at the front desk, copay collection rate at check-in. 

3. If your billing relationship has been running more than 90 days and you have never run the four-variable review, schedule it this week and frame it as a calibration, not a performance review. 

EPISODE BREAKDOWN 

The $144,000 nobody escalates | Bridge from EP200 | Where quiet underperformance lives | The weekly and monthly rhythm | The five-number report | Three green flags | Three warning signals | What to do when something feels off | Three things to do this week 

Resources block

1. FREE: Practice Financial Health Dashboard, https://eligibility.natrevmd.com/free-practice-financial-health-dashboard-for-physicians-natrevmd 

2. FREE: EMR / PM Evaluation Framework, https://eligibility.natrevmd.com/emp/pm-evaluation-framework 

3. Part 1 of this series, EP200 Know Your Side of the Equation: https://podcasts.apple.com/us/podcast/200-your-performance-reviews-are-making-your-billing/id1624182351?i=1000779256351

4. Practice Revenue Leak Scorecard, https://eligibility.natrevmd.com/nrm-revenue-scorecard-v3 

5. Referenced in this series: $100M Offers by Alex Hormozi

Transcript

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Last week, we said every vendor relationship has two sides: your dream outcome and then what it takes to get there. This week, we're going to talk about the operational process to make sure that you catch any sort of issues you may be having with a vendor and what to do about it. Welcome to Nat RevMD, a podcast where we share tips on optimizing medical billing and improving practice efficiency so you can have the business of your dreams. I'm your host, Dr. Heather Signorelli, founder of Nat RevMD. Let's get started. Today we're going to talk about building the operating system that catches any issues with a vendor relationship where they may not be delivering the services you need and therefore impacting revenue. So just to recap, last week when we talked about that value equation, what that looked like is on one side is your dream outcome and really defining what a dream outcome looks like. Then on the other side of the equation is the likelihood of that happening, the time delay, how much time does it take before you start seeing that dream outcome? Obviously, the effort by which you have to put into place or your vendor is putting into place. And that is what allows you to whether or not you get your dream outcome. So today is going to be about what happens after the relationship starts, how it runs, how you know if it's working or not, and what to do when something feels off specifically. So that value equation really tells you ways for you to evaluate and define what goods look like before the billing relationship starts. Now, we're going to talk about those same variables. So again, dream outcome, perceived likelihood of results, time delay, and effort and sacrifice so that you can evaluate those within your current vendor situation. Again, this could be applied to a marketing vendor or an IT vendor. This isn't just for billing. Obviously, the goal here is to build a lasting relationship with any vendor you have to understand what you need from a vendor and to make sure that everybody's on the same page so that you walk away with the business, the revenue, all the things that you need in order to be successful. All right. So most billing relationships do not necessarily have a roles and responsibilities laid out. We like to lay that out in a lot of our policies and procedures that recreate. But I want to encourage that beyond a contract, beyond a monthly report, is to have a clear expectation around who's going to do what and how long it's going to take to get the dream outcome that you're expecting. So obviously, contracts define what the billing company is paid. Monthly report shows your progress in certain kinds of KPIs, but having shared discussion around who's responsible for what, how problems get solved. That's why we have our issue tracker, for example, who's responsible for making those decisions is really critical. I think it's also really important for you to understand are you asking for the name and Marcus in terms of services or that premium level services? Or are you okay with the Honda and pricing to associate that? And again, the value is in the eye of the beholder. So you have to define what value you need from a vendor, what your metrics need to look like, what services or additional things you need, and then how to get there is then a partnership between you and the vendor. So why this matters, just think about this. So a practice making $400,000 a month and say they are running three percentage points below where its net collection rate should be, then that could be up to $12,000 a month that you may be losing, which is over $140,000 a year. So this adds up quickly. And I want you to think about that if you're looking for the least expensive vendor and you're trying to really just focus on price, you have to understand how that's going to impact your accounts receivable, your net collection rate, et cetera, because you may be chasing after the lowest possible percentage to pay somebody, but then not having the results that you need, or that you're having to then spend all of the time in the account in order to keep the net collection rate where it needs to be. So again, this is why it's so critical to have this discussion around defining that dream outcome so that you can understand what you truly need to get from a partner and then what your current state is and what your future state is in terms of perform performance so that the math can make sense and it's not just a pricing discussion. And I think you've just got to figure out how to work the conversation around net collection rate and your current budget. So today we're gonna talk about three systems. Both have bi-directional discussion points on your side, on the vendor side, so that both sides of the relationship can bring the right information so that you can understand where you want to go. So, first we're gonna talk about the day-to-day operating model. So this has to do with a billing partnership in terms of what everybody is doing on a daily, weekly, and monthly rhythm. If you have other things you want to do on a quarterly or annual perspective, certainly can build that in as well. But really wanna make sure that everybody's on the same page around expectations around that. So for example, the daily rhythm is daily claims submission, daily payment posting, accounts receivable working, et cetera. So you've got to define what that looks like. Now, if you're a smaller practice, maybe a single practice and single physician, you know, that may be, you know, three times a week. Now, if you're a huge practice, obviously it's every claim needs to be submitted, every payment posted at the end of every single day, bank deposits reconciled, reconciled, et cetera. Then the weekly rhythm is really about, okay, on the practice side, it's making sure that, you know, charts are closed every 48, 72 hours, whatever you've defined for your practice. On the billing side, it's what metrics are they pulling? How are they meeting within their own team? And then how are they working within the practice in terms of escalating issues around denials or missing EOBs, missing checks, all of that stuff in order for the billing operations to be steady? And so the other thing from a weekly perspective is who's auditing the accounts, who's doing the account work and then who's auditing that? And so, how do you layer that, especially with a bigger team or bigger practice? You may have five different billing members who are working in your account. So, how do we ensure that what they're doing is accurate? How do you ensure, or how does the billing team ensure that those individuals are trained and competent to do the task that is in their purview? Another thing that we look at is with new employees, how are we auditing their specific work because they're new, right? And you want to make sure whether it's new to the practice or new to the to the company, that they have they're meeting the level of standards that the company expects. And so on when thinking about a billing team, you want to make sure how are they doing this today? And then how are you guys integrating? Is the practice okay with meeting once a week? In the beginning, especially with a transition, you may be meeting three times a week. It just depends on the size of the practice and the complexity of things that are going on. And then there may be requests for the billing team. For example, we really request on a weekly basis that charts are closed, that we have EOBs that are paper scanned to us, payments sent over to us that we need to post, bank reconciliation, we we typically like to do on a daily basis. So these are some of the things that you really want to make sure, okay, who's doing what and at what cadence so that you understand what you are getting and what you're being asked. Chart closure for us is a really, really big thing. And same with EOBs. We also have an issue tracker that we like the practice to work on a weekly basis, whether that's operationalized through tasks or through a tracker, which is what for most of our practices we do. It just depends on the EMR system. But really important that you have this information and you're clear about that, not only before you start the relationship, but then just checking in, are you getting what you need? And if you're not, it shouldn't be a difficult conversation to say, hey, I need a little bit more information or I need to sit down and talk to you about these three things, or how can we, you know, come up with a cadence that works for both folks when, especially if you're learning metrics or you're learning the billing process and you're trying to figure out how to train your front desk staff. And so that may be weekly for a long time. And then that may go to less frequent as things stabilize. Then on the monthly cadence perspective, that's where are you getting a monthly dashboard that you understand? If you don't understand it, can you sit down with them and have that conversation and go through those metrics? All of those things I think are really important for you to understand, for you to be a part of, and also for the billing team to agree to. So the next system that we're going to talk about is really how to evaluate if a partnership is working or not. And this can also be on both sides. So knowing whether or not a billing partnership is working is going to require both leading indicators, not just lagging indicators. So to me, leading indicators are things like whether or not you're having those regular meetings. How are you tracking denials and issues? Are they getting to the practice? Lagging ones are things like net collection rate, right? That's the last lagging indicator. I would say accounts receivable, in my opinion, is also on the lagging indicator. Another leading indicator is are they touching the claims every 21 to 30 days? And is your billing team tracking that? What happens when they get behind in that? Who's making sure that that is getting dealt with? Because again, depending on the size of your practice, you may have five different billing members and you want to make sure that somebody has seniority to be able to manage the strategic direction of that billing operations. Maybe that's you and you're having to do that over your billers, but somebody needs to make sure that it's being done. For us, it's our account managers. They have been doing RCM for 15, 20 plus years. They know how to strategically manage a team who is having to get this work done on us every single day. So we monitor both leading and lagging indicators. So the question you're going to want to ask to your billing vendor is talk to me about those leading and lagging indicators so that I know that things are getting done correctly. And again, you could apply this to a marketing or an IT vendor. How do we measure what success looks like from a marketing perspective? Well, that's new patients coming into your office. So then how do we think through the leading indicators in order to get the patients into the room? And so again, defining what that looks like, what good looks like is really critical for any vendor relationship. So we'll talk about some green flags, right? Things that are going well and signals that things are moving in the right direction, and some red flags. So some green flags are things like you're getting an issue tracker or some sort of information that has to do with the issues that are occurring with denials or rejections. And every practice has them. They can become more stable or decrease in frequency, but you never have zero denials. So the question is, are those root causes getting addressed? So if it's eligibility, how are those getting put into a tracker or some sort of communication mechanism? Are those getting back through a task or an email? And are those then getting addressed and closed? So the worst case scenario with accounts receivable is somebody will touch the claim, but then nothing happens. Somebody will touch the claim again, the same claim, nothing happens. Or something happens, they just resubmit it, but they've not really changed anything in order to truly address the root cause of the denial. Or say you've got a hundred eligibility denials, nobody's bringing it up to the front desk that, hey, we need to retrain on eligibility. So what good looks like is identifying those issues, making sure that their shared accountability and making sure that they're managed, and not just ignoring it because, well, eligibility is not my job. And so very big reason for billing companies to fail when they don't have that shared accountability loop settled. And again, just really critical against that person who has strategic oversight to make sure that these things are getting done. So another green flag is that things are getting easier on the practice side, not harder. So are you spending less time in RCM? Is your office manager spending less time in RCM? Are is the front desk having an easier time, you know, managing the accuracy of patient statements, for example, meaning you're not seeing a whole bunch of errors that you're then having to correct. So really important, obviously, if you see issues, bring them up to the billing team. And I my assumption is that they would fix those things. But if it's been a year into a relationship and it's getting worse, then that's time for you to consider, okay, is this going right? And then you sit down with that billing team and you say, here's my dream outcome. Here's my expectations on a weekly, you know, daily, weekly, monthly perspective. And can we get there yes or no? And if they answer yes and you get there, great. If they answer yes and you still don't get there months later, then it's time to rethink things. Another thing on our end is chart closure. We really, really need the charts closed on time or as close to on time as possible because it impacts our ability to catch eligibility issues because sometimes those aren't caught until the rejection or the denial, especially if, you know, there's COB issues, et cetera. And so we just we we crunch time, we crunch the time to then address those before timely filing hits. So really important on our side to have those sort of things or EOBs or missing checks, all the things that we need to do to manage the AR or to keep the account clean, we are trying to do that as close to real time as possible. So really important to have an assessment of are things getting easier in your practice? And if the answer is yes, the billing team is doing a great job and you've got less on your plate, then you know things are moving in the right direction. So the next green flag is really then looking at the leading and lagging indicators in terms of metrics. So, how does your AR look look? How does your denials look? How do your clean cleanse rates look? How then does net collection rate look? And so managing to those numbers allows you to assess the full process, right? People can say that they're doing all these great things, but the metrics are going to be that lagging indicator to make sure that everything you're doing up to the point of those metrics getting reported is actually working. All right, so let's talk about some red flags. And again, this is not proof that something has completely failed. It just means that you are getting a signal that you need to sit down with your billing vendor and go through again the operating model, understanding dream outcome, and then creating a gap analysis so that you can get where you need to be. So, warning signal number one, um, monthly report, either you're not getting at all, uh, you don't understand it, it's not readable, nobody is able to answer questions about it. And if you do ask questions about it, nobody answers them. So obviously a red flag, you want somebody who is willing to share metrics with you, go over those, somebody who understands them, and that the report format makes sense. Warning signal number two, problems compound over and over again before there's ever any explanation, or worse, you're finding issues over and over again that then you're having to bring to them and they're not able to explain it or talk about it, or they ignore it, or there is a delay in communication or a delay in resolution. And that is something that's not going to work long time, long term. Billing is a is still a very manual process. Um, you can try and automate and use AI in different functions, but I have yet to see it completely remove the human aspect. And so because of that, there are going to be times when an error happens. The the key thing is do you have a process to catch them? Does the billing team have a senior person who helps audit and make sure that the quality is good? If they catch something, are they addressing it quickly? And if you catch something, are they then putting in a system to make sure that they catch it first next time? So key things here that I think are really important for you when you are evaluating the success of a partner is just making sure that, you know, everybody cares about the results. Um I think that that's what it really comes down to is that you care about the results. The vendor cares about the results. And again, this could be the IT vendor, the marketing vendor, the billing vendor, whoever it is. I think that that's what makes a good partnership. And then if there is an issue on either end, that then you work together on getting a solution dealt with. So the other warning signal that I will share is that you have the same denial patterns month after month after month after month without ever getting anybody to sit down and discuss it with you. Really important that you recognize that obviously denials are going to happen. There's going to be recurring denials, but it should be minimal. It should be, you know, if you've got repeating eligibility issues, that somebody's catching those and you're talking about it and we're re-educating the front desk or coming up with a different checklist together to give the front desk, that those things are worked out together with your partnership. And really critical that if you don't understand a way for something to get resolved, that they probably should have somebody who can help resolve those complex issues. Maybe it's not your account manager you deal with every single day, but they should have a senior individual in the company who then is able to sit down and go, okay, we can fix this. Again, there are issues that come up with billing, with claims, with payer rules that changes, with credentialing issues that are complicated. And you don't want to be looking at a denial pattern six months after it started without an ability to manage and treat the root cause. So if you have a denial pattern that's six months overdue in discussion, but you could have stopped seeing those patients, or you could have changed, you know, the mechanism by which you give an allergy shot, for example, then you don't, then it's lost revenue. And so it's really important that you're having these conversations on a regular and frequent basis. Now, I will mention that all of this stuff I've talked about today is not going to all happen miraculously on day one. You do have to work together to set this as a precedence and put these things into place. And hopefully, you know, whatever vendor you're choosing in what in any space is coming to you with, here's my recommendations of what good looks like and how we've done this before. Do you have recommendations? Should we change anything? Do you have questions if you catch something, especially in a new vendor relationship where you're still learning each other, if either of you are catching issues that the other one's not aware of, we've got to have that communication so that you generally solve the problem long term and that it generally gets easier to manage billing in your practice. And really want to make sure that again, you are focusing on what your dream outcome is, what your expectations are. You know, again, if you're looking for premium service and you're looking for the Neiman Marcus, great, go for it. Get that Neiman Marcus, you know, item. But just make sure that, you know, the vendor has the capability of doing that. It's at a price that the vendor can truly provide that level of expertise. And again, have that strategic oversight, especially if you're a larger group, you really got to make sure that you have that level of depth on your team in order to have really good success and really good outcomes. Medical billing is not easy. This is not an easy area. Everybody thinks it is. And yes, you've got CPTs and ICD 10 codes and you've got certain metrics that are not that hard. But when it comes down to dealing with the day-to-day issues that come up, it takes a lot of experience to manage some of these issues. So again, you just want to make sure that depth is there for folks on your team. So last, I'll talk about what to do when something feels off. So obviously, this is an important thing for any vendor relationship or really any even employee or somebody that you work with, is that if someone is underperforming, the first right move is to sit down and have a conversation of here's my expectations, here's what I'm seeing. And that way you're you stay very objective to I'm seeing these denials increase or I'm seeing my AR increase, or I'm seeing my net collections decrease. Can we sit down together and figure this out? That way you can sit down and have that clear discussion of what you're seeing, give them an opportunity to have the discussion back of what they're seeing, and then come up with a solution and a path forward. And hopefully they're coming up with the solutions. You're going to be the partner for them and you work together on making sure that you have exactly what you need. And I will say, most billing relationships, when we've taken on from practices, typically when we're looking at the accounts receivable, a lot of it has to do with a lack of a few things. So either the lack of the right level of staffing, the number of people to do the work that needs to get done, a lack of clarity around expectations of services, what level of service do you really need? And then the last one is a lack of accountability loop. The billing team may see the issues, they may see the uh credentialing issue or the eligibility issue or the COB issue. They may see them. Maybe they send an email, maybe they don't, but there isn't a great way to track have those things been resolved. One other thing that we see is that accounts receivable, the claims will be touched, but they're not truly getting them to completion. They're not truly solving the problem. And sometimes it's because they're hard denials, and sometimes it's because they just have very frontline people who are just statusing the calls, but no one who is truly trained to actually manage the denial itself. And so really important that you have that structure in place. Again, you you can structure your team to where you have those frontline staff and they're doing, you know, the easy work. But then you've got to have somebody a level ahead of them that are able to deal with the complex stuff because the complex stuff is gonna happen. And that's where you can see denial uh issues come up over and over again. Your ability to really write down all the things that you need in a partnership. And then when you go and define, okay, what's the perceived likelihood that you're gonna get that? So that has to do with defining these operational models so that you can know what they're doing daily, weekly, monthly, that you know how to spot, you know, green and red flags. If you have red flags, that you have a place to bring to them to have some resolution and have some solution created so that then again, you're moving it towards that dream outcome. You're talking together about the time at which you expect those things to happen. And then the company can say, okay, that's gonna take this amount of resources in order to do that. And can we agree on a price? And then the last, of course, is the effort by which you have to put in and they have to put in in order to make these things happen. So when these things are agreed upon and you have regular meetings, vendor relationships can be in a much better spot. And really, that's what we always want. We want great partnerships, people who care about the dream outcome together, that everybody's aligned, that they're both, you're both ready to bring the right resources that make sense for both companies and that you're all moving in the right direction. So, what to do this week? First, I've making sure that you are reviewing those metrics. If your billing team is providing them to you, great. If they're not, ask for them. And if they are providing them to you, take a look at them, ask to set up time if those meetings have fallen off your calendar. It's okay. Sometimes that happens. Everybody gets busy. But I think it's important to spend a few minutes going over those metrics, understanding what they look like. And then, second is really looking and understanding, okay, what is my dream outcome? Am I getting that today? If not, what is missing? And can you sit down and have that discussion of what you're missing? And then what is that rhythm, both weekly and monthly, that you need for that shared operating model? And so, are do you need to pick up back those weekly meetings? Is there an issue you're trying to resolve and really looking and finding a few specific things, both on your side or their side, that you may want to work on together? And if things are working smoothly, great. We always hope that that's the case. And then next, it's then you can focus and have that time back to continue to build your practice. So if you are looking for some resources, we have a couple cool things down in the show notes. So we have a, if you are looking for a new practice management software or EHR, we have a guide to talk through that. And then we also have some discussions around um financial metrics and dashboards and so forth. So check those out in the show notes. And hopefully, this was helpful to you guys, really, just in defining what good can look like and how you can get there. Hopefully, you guys have a good rest of your day. All right, talk to you soon.