#198 $300,000 in Old AR Is at Risk During Your Next Billing Transition

There is a revenue cliff hiding inside the billing transition most independent practices are planning right now. Not from the change itself. From the order of it. In this episode we walk through why the money in your bank account during month one of a new billing arrangement is almost entirely old AR, why simultaneous service and software change is the fastest way to lose that money, and the three questions you have to answer before any sequencing decision makes sense. 

Three questions before you sequence anything: Are you replacing an in-house team or an outsourced vendor? Who owns the software? Is the software working, or is it part of the problem? Skipping these is where the error gets made. 

System 1: The revenue ramp. Month one is 80 to 90 percent old AR. Month four is 95 to 100 percent new team. Every sequencing decision has to protect that ramp. 

System 2: In-house vs outsourced risk profiles. In-house transitions risk institutional knowledge walking out. Outsourced-to-outsourced transitions risk data access and credentialing. Different risks, different sequences. 

System 3: Three software paths. Keep functional software and transition service only. Replace failing software after service stabilizes. Or defer the outdated-but-functional software conversation until months four through six. 

Three actions this week 

• Answer the three questions in writing before any vendor conversation. 
• Pull your AR aging report. If more than one month of gross charges sits past 45 days, plan an AR cleanup sprint before the new team starts. 
• Read your current vendor or software contract for data provisions, notice terms, and auto-renewal windows. 

Episode breakdown 

• 00:00  Hook and big idea 
• 02:30  The three questions 
• 13:00  System 1: the revenue ramp 
• 16:00  System 2: in-house vs outsourced 
• 20:00  System 3: three software paths 
• 24:00  Summary and action plan 
• 26:00  CTA and cliffhanger 

Resources 

• EMR / PM Software Assessment Form (primary): https://eligibility.natrevmd.com/emp/pm-evaluation-framework
• Book a Revenue Audit: natrevmd.com/schedule-a-call 
• Payment Posting Audit Checklist: eligibility.natrevmd.com/payment-posting-checklist 
• Practice Revenue Leak Scorecard: eligibility.natrevmd.com/nrm-revenue-scorecard-v3 
• 30-Day Revenue Recovery Plan: eligibility.natrevmd.com/nrc/-30day-revenue-recovery-plan 

Transcript

SPEAKER_00 0:04

So, if you've ever been through a billing transition, you know that the number one fear that anybody has is that they're going to lose revenue, that revenue is going to drop. So, today we're going to talk about in a billing transition what goes first, billing service changes, billing software changes, and then how you protect the revenue during that type of change. And you want to make sure that everybody recognizes that when you are going through a transition, one, so that you can protect that revenue. And two, so that you can understand what measures you need to put in place in managing those transitions so that your old billing team is managed, that you understand what accounts receivable is there, so that you can be successful in any transition. A claim obviously goes out today, but oftentimes isn't paying until 20, 30 days later, right? Medicare is typically paying, you know, 14 to 20 days, but most of our commercial payers are paying closer to that 30-day mark. Depends on the payer, depends on the type of system. So when a new billing team comes in and say they're submitting claims on June 1st and they're submitting that, you know, date of service or June second, you know, July 2nd for claims or patients seen July 1st, those claims are not going to typically generate cash flow into the practice for a couple of additional weeks. So whatever you're getting paid in July is typically coming from claims and patients that were seen in June. And that's again at the earliest. And when I'm going through a billing transition and we're we're onboarding a new billing team, that first month is really going to be managing the work that happened from the old team. And typically, when an old team is being transitioned out, they're typically working those claims for 30, 60, 90 days. And so making sure that we have our hands wrapped around that is really important to protect revenue. The other piece and question that we often get is I need to change my billing team, but I also need to change my billing software. And which do I change first? Do I change both at the same time or do I change one at a time? How do I go about framing that decision? Obviously, I can't tell you which decision is best for your practice, but we'll go through some of the pros and cons around changing both at the same time, changing one at a time, or how you protect revenue in either of those circumstances. And how do you weigh that decision according to if you have an in-house team, a current outsource team, who owns the software? All of those things are really important for us to think through prior to making any decisions about changing. Like I said, month one of a billing transition is 80 to 90% the old AR, and really only 10 to 20% at most, the new claims that are starting to move through the pipeline. Now, by month four, that flips completely. So the new team is really generating nearly all of the revenue. And the old AR typically has already been either fully worked or typically, you know, that 90-day transition period is over. And so the old team is no longer working in the account. It's really important when you are going through these transitions that you do have a defined rant period. You do have a defined transition plan that the old team recognizes what they're working on and that you have a clearer picture of where they started the old team in terms of their accounts receivable and the work effort needed to bring to close that off. Most billing teams will offer to take on old AR that is left over from a prior billing team. Typically, that's done on an hourly basis, typically because the new team doesn't know what they're getting into in terms of what the old team left, right? Was it eligibility issues that were never fixed? Was it timely filing issues that are never going to get paid? Was it claims that were paid already but never posted? Was there a posting error issue? And so always I would say that old AR can be addressed, but it depends on the amount of FTEs that you want to assign to that old accounts receivable once that rant period or that transition period is gone. There are key areas or ways that you can manage that transition and manage those, that old AR on a weekly basis. That's really important to plan out with your new billing team so that they can make sure that, you know, those things are happening according to plan and the office or somebody in the practice can can micromanage to a degree the old billing team so that those things get completed on a timely manner. Now, when practices change their billing service and their billing software at the same time, they are not just creating two learning curves, right? They are creating really two potential threats to the revenue in the practice. And so you have to really plan these out together so that there's not a revenue drop and that you are protecting each process and the frustration that may ensue if things aren't planned out appropriately ahead of time. Now, I have done this multiple ways. We have worked with new practices where we've done both transitions at the same time for good reasons. And we've worked with practices where we took on the billing first and then we did the EMR transition second. And we'll go through some of the pros and cons of each of those. As I know many of you may be thinking about this, and maybe this is something that you are wanting to make a change, but you are terrified to make a change because you don't know how to make these decisions, and therefore you let the billing continue to struggle, or accounts receivable to continue to build up, or the communication gaps to continue to widen. Before any practice can make a decision around how to sequence changing your billing service or andor changing your software, we're going to go through some specific questions that is important for you to understand and the pros and cons of making different decisions based on how you answer these questions. So the first question is are you replacing an in-house team or an outsourced team? So we often have practices come to us and they have an in-house team that is already in place. And that in-house team is working in their current software and they do want to change their software, but they also need to change their in-house team and move them to an outsourced vendor. And so when those circumstances come up, when those circumstances come up, it's important to recognize that oftentimes your in-house billing team, maybe you have some individuals who are really strong and some individuals who aren't as strong. And you're trying to retain the strong individuals within your billing team and maybe they're moving to a different role. Maybe they're going to be moving it as more of an office manager, and they can help support the vendor relationship with your billing team, or maybe you're getting rid of everybody all at the same time. But oftentimes they're going to be carrying institutional knowledge that lives in people's heads. And so we have seen examples where folks are on Athena, for example, and um they have maybe a small in-house team that's been managing on Athena, but maybe their team has outgrown or they've outgrown their in-house team. And so they need additional support and they need to get off Athena. As you guys have probably heard me talk about, we do not work in Athena. I think their their process with working with another outsourced billing team isn't sufficient. And you lose a lot of the features within Athena when you do let go of their RCM team. And there's a lot of nuances with hold buckets and so forth that is very hard for a lot of practices to manage. And oftentimes they don't have the structure to do that. And the outsourced team that Athena uses isn't always able to cover that gap. So we have had practices where they've had that in-house team who needed, they needed to transition. They kept one or two, or even there have been times where we've actually taken over employment for some of those individuals, meaning those rock stars in the practice actually joined our team as employees. They're still with us today. And so they were trying to decide, okay, do I get rid of, do I, do I switch vendors first or do I switch softwares first or do I do them both at the same time? There's no right or wrong answer to this, but I will say oftentimes because that in-house team has so much institutional knowledge, it's often better to switch the billing team first with those in-house folks helping through that transition and moving over that institutional knowledge first, getting the billing team settled, and then moving the software second. And maybe you retain one or two of those people through that transition period, or maybe they transition to a different role, or maybe they those in-house people then help do the training and workflow on the clinical side for the billing software switch. And that enables you to have the institutional knowledge from the in-house team transition to the new billing team. And then you work through a transition plan to transition the software next. So I would say it is a very reasonable way to manage transitioning both your billing team and your software with a stepwise fashion when you're replacing an in-house team. Now, let's contrast that with say you have a software and you have an outsourced vendor. Maybe that outsourced vendor was uh had or owned the software that they did their services in. So for example, maybe you have an outsourced vendor where they required them, where they brought their own software relationship for the claims process. So maybe the clinical EMR you have is your own contract and you use, but the outsource team has their own billing software that they use. So it's not your software, it's their software. So in those circumstances, and again, we've we've gone through, I think, every transition scenario, known demand at this point. In those circumstances, you may need to get your own software, which is always what I recommend, that you have control over the software, that you have an integrated solution for your EMR and your PM software, and that you're now trying to replace with a new outsourced vendor to come in and work within your system. Again, what I recommend. But in this case, you are trying to transition out of the outsourced vendor relationship and out of their software. So in this circumstance, the knowledge around your workflow and your processes and so forth are held within that outsourced billing team. And so this is a little bit different of a situation where you may want to transition both at the same time and have a clean slate with the new PM software that you now control. So then if you ever have to change outsourced vendors again, hopefully never again, but if you do, you have control of being able to kick them out when the time is right. And so in that circumstance, I do highly recommend changing both at the same time. But again, back to that revenue protect protection, it comes down to how do you manage that outsourced vendor after, you know, you've obviously now given them notice. How do you manage them in terms of accounts receivable and follow-up and everything that they need to do in their software in order to protect revenue? And so things that we like to recommend is that we get raw reports of the accounts receivable right before you give uh notice, right? So when you are able to ask all the questions, you get all the reports, patient AR and insurance claims AR, you get all of those reports ahead of time. Then you give notice. And then you set up weekly calls with the accounts manager, the outgoing team to make sure that we've got status updates on all of the claims that they need to be working every single week and that the accounts receivable is moving off in the transition period, you know, time frame that you expect. So if you're giving them 90 days, you're meeting with them weekly to make sure that those claims are adjudicated, that if they have issues or denials, that you guys are working on them together and working through that transition period. Really, really important to do that. Now, recognizing that really old accounts receivable may not be able to get paid. So if AR over, you know, 100 or over 365 days is typically in that write-off range, right? You're gonna struggle to get that paid. And if you're sitting there going, well, that stresses me out. I don't want to make that change because I'm going to lose revenue. Well, you're already losing revenue if your accounts receivable is increasing to the point where you have claims that are in that bucket over 365 days or even over 90 days. If that over 90 day bucket is really, really large, really, really critical to get that addressed. And so if that's not being addressed now by the current team, even when they become the old team, you're probably still going to struggle with that same problem. So, really, really critical that if you're noticing an issue with accounts receivable, just get it addressed now. It will be way less painful the sooner you do it, then the longer you wait and the more money piles up. So, in those circumstances, I typically recommend switching both at the same time. Obviously, if you're keeping your current software and you're getting a new outsourced vendor and you control the contract, then oftentimes it's better to transition the new team, get all of that settled before moving to a new team. Some exceptions to that are if you have a really poorly functioning EMR or PM software. So if you own the contract and the software that you're using today is inadequate for operations. So we've taken on softwares before that don't have ICD 10 codes updated from a vendor, don't have the correct CPT codes in a software, don't allow integration to a clearinghouse, don't have visibility into the clearinghouse rejections, or have reporting gaps. I mean, there's many different reasons that you may be wanting off of software. And so once you've answered the question of who owns the software, right? So if the vendor owns the software, you know that you're gonna have to get off that when you get rid of the of the outsourced vendor. But if you own the software, then that's really about, okay, what functionality are you missing that is is a major gap? Because if you've had a software with a major gap, like I'm not a huge fan of Practice Fusion, Office Ally, Athena. They're they're just very basic when it comes to functionality. Athena is a little different. Practice fusion and office ally, I would consider in the basic, basic range. If they're not giving you the functionality that you need, then you may want to consider doing it both at the same time because the software version you're in is so bad and causing so many issues that it's easier to just start with a cling slate and move and have that moving forward. Some benefits to that is you can leave the old outsourced vendor staying in the old system for 90 days. It doesn't mess up the new software system or the new PM software. And so you can have a clean cut with the old team working in the old software. Again, your revenue, right? That first month is primarily coming from the outsource team in the that was the prior team. So you need to micromanage them, make sure the accounts receivables worked, make sure all the claims have been billed out for those dates of service that are in that software version while you get the new team set up in a new version. So again, can be a very positive way to do a billing transition. Just depends on, again, who owns that software is kind of the main crux around this. And then what functionality in the software are you trying to replace? If it's major, you know, malfunctions in the software you're currently on, it's probably best to just rip the band-aid, start the new team in the new software. One thing to make sure that everybody understands is you'll want to understand your contract period or your transition period obligations with your current vendor. And so you'll want to pull up their contract and understand what that notice period is and what that looks like in order to have a transition period for that accounts receivable. So, really, the three questions that we've talked through is do you have an in-house team or an outsource team? Do you have control of the software? Do you own the current software? And then the last that we talked about was really, is the software working or is it part of the problem? And I don't mean like, hey, I just don't love the software. I think I'm gonna move on to another software. I mean, is it does it have major gaps and functionality? If it has major gaps and functionality, like I said, that's a time where you may potentially want to move both at the same time. If it's, hey, I just don't really like it, and maybe you have a vendor that you're bringing on that refuses to work in that. Like, again, we have a very small number of softwares that we really don't want to work in. It's a very short list. I think the three, three or four that I've just mentioned today. But otherwise, we will work in almost any software. But if you are in a situation where your software is really part of the problem, then that's where I'm recommending, you know, move off with the new team. And if it's, hey, it works, it's not great, I don't love it, and the vendor you're choosing works in the old software, then you may want to keep that, go through the billing transition, get that settled, and then do the software next. Again, it just what is the problem you're trying to solve with the old software that's making you want to make a change and make a change? And again, any competent billing team should be able to sit with you and have this conversation based on your current scenario, based on your current billing metrics, based on your current contract terms with your prior vendor, and then match out or march out a transition plan that everybody is very comfortable with. So once you've addressed these three questions, then that sequencing decision really comes down on protecting the revenue, managing the old billing team, managing that transition so that you can ensure that the old team is focused on the old accounts receivable, that the new team is submitting claims from day one timely, and that they're getting used to whatever software that they're working in, and that they have the reporting structure and the feedback loops on a weekly basis, working with the office to ensure that workflow gaps are addressed quickly and that you have a solid transition plan that everybody feels comfortable with, so that you don't have a revenue gap. And if there is an accounts receivable issue that was in the old system, you're micromanaging that with the old team. Again, the new team, like when we come on, we are very much involved in making sure that you have the information you need and the questions to ask of the old team so that you're doing the best you can in order to recoup that AR. And again, if there is AR left over from the old team, the new team has an ability to take that over. Typically, again, we do that on an hourly basis because that helps us ensure that we get the right number of FTEs to address that in the budget that works for the client, but also because a lot of times we're walking into that accounts receivable. And a lot of time that old AR has a lot of issues that may be stuff that is not payable. And you can work through a transition by understanding what that looks like week after week, by looking at, okay, how many claims were actually worked? Was this actually paid, or was it stuff we had to write off? And typically that's uh, at least in our world, done by, you know, full review and approval prior to any of those decisions being made without the practices knowledge. So as you go through those transitions, typically month two, month three, those revenue shifts have then transitioned to the new team. Obviously, if you've selected the right new team and a trust that they are going to be the vendor that gives you what you need, then it's really about how to manage the old accounts receivable. And that's really what's going to impact from a revenue perspective. One other tip is just making sure that you have payer portal access before you make any of these decisions. You'll want to make sure that you or an office manager, somebody in your office has the admin rights. Sometimes that can take months if you don't have payer portal access as the administrator. Getting the access to that, especially for your government payers, can be a huge pain. So if you're thinking about doing a billing transition in the coming months, really working with your current billing team to get access to every single one of the lists of payer portals and then making sure that you, as the owner or office manager or leader in your team, has admin access to those payer portals. Another key thing is if you don't have admin access to your payer portals, does your front desk have payer portal access? Because if they don't have payer portal access, guess who's likely not doing eligibility appropriately? Your front desk. So this just all ties into when selecting a vendor, are you selecting a billing vendor who's just in there to submit claims, payment post, you know, status claims, and send out patient statements? Or are you looking for a vendor who is going to really understand the strategic direction of your RCM and understand how the front desk impacts the RCM, understand how eligibility or unsigned charts or patient collection processes, how all of that interacts, and that the right billing team really needs to be a partner to help address each of those because they see it, right? Your billing team knows where your weaknesses are. And if they aren't bringing up the weaknesses around eligibility or around front desk policies or around signing out your charts or coding denials, or nobody's, you know, talking about your patient AR that continues to balloon and because nobody's collecting on that AR, even though you're sending out patient statements, those are things that rec that make you recognize that I don't have a billing partner. I have somebody who is just getting the easy money and the clicks, but I'm missing out on 10, 20, 30% of revenue because I don't have a strategic partner who's looking at all of these things. So again, really important to make sure that you are getting that information back from your billing team, that you're looking at the metrics and that then if you are having to make a transition, that you're sequencing billing software changes, outsourced vendor or in-house, you know, vendor changes so that you can protect your revenue and then, you know, in six months from now or even 90 days from now, look at your bank account and feel relieved when it comes to the results that you're seeing. So hopefully this helps. This has been something that we've had some questions about recently and thought I would share just my thought process on this and how we've transitioned practice. Again, we've we've been through all the scenarios, and these are just some of the tips that I have. All right. All right. So if you are planning a billing transition and want to know whether your current software is an asset or a liability, we did create a short EMR PM software assessment for exactly that question. And it will walk you through some diagnostic checks that we use with practices when they are considering a service change. So go check it out. Link is down below in the show notes and it will walk you through some recommendations depending on how you answer the questions. So again, thanks for being here. If you are looking for a new RCM company, again, we really pride ourselves in being that strategic partner. And so if you are looking for a new billing team, uh, feel free to head on over to our website, natrevmd.com, and you can look at a free revenue audit with us up at the top right hand corner or natrevmd.com backslash schedule dash a dash call. And we would love to hear from you. Hopefully, you guys have a great rest of your week.