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The role of cash flow in your practice’s success

Dollar bills walking down a line

Imagine that your ability to reinvest in your practice or put aside retirement funds was hampered by lack of cash flow.

I once evaluated two practices to identify weaknesses in their revenue cycle. Both offices had decreased cash flow, and team members told their doctors that 
“dental benefits providers were being difficult” and that “patients just don’t have money right now.” Although both statements may have played a factor in practice revenue, they didn’t fully explain the bigger issue of decreased cash flow.  

What was happening? There were myriad causes. Dental benefits claims were not being filed in a timely manner. Information requests from the provider were not answered and in some places were used as reason to close out claims completely. Inaccurate patient data were causing claims to come back rejected. 

In both cases the administrative team members said that they were doing the best that they could and both complained of time constraints preventing them from doing their jobs effectively. Unfortunately, their performance was keeping claims from being paid, which greatly impacted the practices’ bottom lines. 

How do you keep this from happening in your practice? Let’s evaluate three basic necessities for proper dental benefits revenue management: time, tools and tracking. 

Time is money

The days of one person handling the claims system in a busy solo or group practice are over. In a busy setting there is a need for dedicated phone lines and team members who understand dental benefits. Throwing a new person into the mix without training will cost you in the long run. Your dental benefits team may be juggling too much as it is.

Instead of one or two employees trying to do everything, the duties should be split up. Eligibility checks should be one responsibility while benefit gathering is another. Many services exist that allow you to do the bulk of this automatically. Even better! Follow-up on claims is a separate position. These areas will surely overlap but separation of the duties is necessary to ensure accountability. In a single doctor office claims management can easily take up six hours per day. Why so much time? Verification of benefits and eligibility, gathering supporting claims data (such as radiographs and periodontal charting) and benefit payment entries can easily fill this period. A solo doctor with one or two hygienists on staff can generate enough claims to maintain a full-time person. Imagine the resources that a 20-provider system needs!

Heavy duty tools

Have you provided the tools for this position to be as effective as possible? Claims and supporting documentation should be sent electronically.* The learning curve for these programs is relatively small, and the payoff is huge. Claims turnaround time is greatly reduced, and the team member knows immediately if a claim is rejected because of lack of correct data or missing information. Offices still submitting paper claims are delaying payment by three weeks or more. Make the switch to electronic claims and attachments and make sure that the team member receives training from the companies. The movement of these software systems toward enterprise management is positive for groups. A manager can now check claim payment and denial rates for several different locations. This helps identify weaknesses in training and revenue.

Tracking for clues

Finally, it’s imperative for managers to keep up receivables in your practice — both dental benefits and patient receipts. Ask your team to run an accounts aging report on a biweekly basis and present it to you for evaluation. You’ll want to make sure that delinquent accounts are being actively “worked” to obtain payment. For an owner/administrator, this is as simple as asking for the results of this report. If it’s being worked efficiently, you should see the progress in the numbers. The claims aging report should be run weekly (at a minimum) to identify which claims are overdue. 

Also, review the claims submissions report to quickly identify glitches in clearinghouse submission or employee data entry errors. This is probably the most overlooked report in the office, as it usually comes from the clearinghouse not the practice management software. It will tell you if attachments are required or if claims are sent back as denied. Finding out this information sooner rather than waiting on the paper explanation of benefits will save your cash flow.

Good managers are often vigilant with practice metrics and so should you be, dear owner and administrator. Track your dental benefits and receivables balances to avoid reduced cash flow surprises and be able to reinvest in yourself and your practice.

* In many instances, a dental practice that did not file a claim electronically was not considered a “HIPAA covered entity.” Therefore, changing to electronic claims submission may result in becoming a HIPAA covered entity. Dentists should always check on this and comply appropriately. Learn more in the Centers for Medicare & Medicaid Services publication “Are You a Covered Entity?

Teresa Duncan of Odyssey Management Inc. is a speaker and writer with more than 20 years’ experience in health care. If you appreciate the advice in this article more can be found in her book Moving Your Patients to Yes: Easy Insurance Conversations, available through her website at Teresa also provided assistance in the development of several publications for the American Dental Association’s Guidelines for Practice Success™.