Improving the dermatology practice’s revenue cycle

By Tiffany E. McFarland, RHIT, Coding Analyst, Coding & Reimbursement, February 1, 2023

Academy coding staff address important coding topics each month in DermWorld Coding Consult. Read more Derm Coding Consult articles.

The COVID-19 Public Health Emergency (PHE) has challenged the health care industry to reevaluate operations and find innovative, economic, and safe ways to provide optimal patient care. Dermatology practices were no different — some having to shut down completely and others scrambling to remain open safely while struggling to keep patients engaged and practice revenue steady. As more of the U.S. population gets fully vaccinated against the COVID-19 virus, health care providers are slowly shifting back into pre-pandemic office operations while maintaining safety and continuing to offer expanded telemedicine services permanently to their patients. With these increased measures — innovative offerings and efforts to recoup financial losses — it is important that practices reexamine and optimize revenue cycle practices.

Below are four ways to improve your practice’s revenue cycle.

1. Complete front office and check-out activities before patient arrival.

Data capture is the critical first element in claim submission. A complete patient registration includes correct patient demographics, accurate and up-to-date insurance coverage information, and retrieving the specialist copayment requirements (if any). The front office staff can do this before the patient shows up for their appointment.

Next, insurance and eligibility verification. This process is tedious and can involve a lot of staff time on the phone obtaining patient coverage information. Dermatology practices can automate the pre-visit work by utilizing the payer online eligibility/verification tool. If this is not possible, this activity would be best assigned to an individual within the check-out staff team who is specifically assigned to do insurance verifications. Albeit tiresome, there is a direct correlation between verification of active insurance coverage and denied claims.

Then, check the policy benefits for scheduled patient visits and procedures. Staff should contact patients to discuss their out-of-pocket responsibilities, such as copayments, coinsurance, and deductible amounts that may be due at time of service, as well as direct patient costs for services with little to no coverage. Doing so will increase patient satisfaction, reduce outstanding patient accounts and write-offs, and avoid sending patients to collections, which can be costly to the practice.

2. Maintain clear and succinct medical record documentation.

The driver of the revenue cycle stems from the dermatologist or non-physician clinician’s (NPC) ability to communicate the details of the patient’s encounter through clear and succinct medical record documentation. The documentation for the encounter must be detailed and represent an accurate account of the service(s) rendered to establish medical necessity. It should also address the following six components about the service:

• What service was performed?

• Why the service was performed.

• Where the service was performed.

• Who performed (did) the service?

• When the service was performed.

• How the service was performed.

The coding and billing staff will extract the necessary information from the medical record to report the encounter to the insurance carrier using the appropriate International Classification of Disease, Tenth Revision, (ICD-10-CM) (diagnosis) and Current Procedural Terminology (CPT) code(s). Best practices for avoiding denied or delayed claims payment include ensuring that all medical record documentation is complete and accurate.

3. Understand coding and charge capture.

Understanding coding guidelines and their impact on code selection to report the services provided is essential to maintaining and improving the revenue cycle. In most dermatology practices, coding and billing staff review the physician/NPC’s code selection for coding accuracy. To that end, staff must know and understand each payer’s coding and reimbursement policies for common services provided in your dermatology practice.

In its continued effort to guide providers on billing services rendered to Medicare beneficiaries properly, CMS offers Local and National Coverage Determinations (LCD/NCD) that define coverage guidelines. Each LCD has an associated Local Coverage Article (LCA) that contains a list of CPT and diagnosis codes for which a given dermatology service or procedure is considered reasonable and necessary. Dermatologists/NPCs and their coding and billing staff should review the LCD/NCDs and associated LCAs frequently to stay current with coverage updates.

Private payers also share coverage policies specific to dermatology services that provide guidance on approved services and how to bill for them. These should also be reviewed regularly from the payer website.

Reporting unspecified diagnoses codes will typically result in a denied claim because coding guidelines require coding to the highest level of specificity. For example, C43.9 Malignant melanoma of skin, unspecified, indicates that the location of the lesion is unknown. Under these circumstances, it is best to report a diagnosis code that specifies the anatomic location of the lesion (e.g., C43. 111 - Malignant melanoma of right upper eyelid, including canthus).

Take time to review claims before they go out the door:

• Make sure all codes are reported to the highest level of specificity.

• Verify that all the services provided are captured and charged.

• Confirm the correct modifier is appended, where necessary.

Avoid reporting incompatible diagnoses codes with procedures (e.g., pairing female gender-specific diagnoses codes with male gender-specific procedure code(s) or vice versa). For example, a code from C51- Malignant neoplasm of vulva series cannot be reported with a code from 5405X - Destruction of lesion(s), penis (e.g., condyloma, papilloma, molluscum contagiosum, herpetic vesicle).

Remember, a clean claim is one that meets the submission timeline, is error-free when received, and is processed by the payer on first review. This will result in prompt payment. Take note that the submission timeline for Medicare and private payers must be within 90 days to 12 months from the service date, respectively.

4. Pay attention to the accounts receivable (A/R) system.

The accounts receivable (A/R) system provides you with a snapshot of the financial health of a dermatology practice. If you identify an increase in unpaid claims and outstanding balances, use your system’s data matrix to follow up on those unpaid claims with the insurer or patient, depending on who is responsible for the outstanding balance. Do not allow the outstanding claims to exceed 30 days. Contact the claim’s responsible party, determine if additional action is required, document the response, and schedule another follow-up within 14 business days to ensure the claim is processed and paid in full.

Denial management requires understanding the meaning of and appropriate action for each claim adjustment reason code listed on the claim explanation of benefits (EOB). The remark codes provide additional explanation on how the claim was adjudicated. It is important to understand these codes and how to respond to them accurately and in a timely manner.

Outstanding patient debt collection must be a concerted effort between the billing staff and the front office staff. While the patient receives billing statements, the front office staff must also ask for full or partial payments upon check in.

Below are some additional resources to help your practice streamline and improve the revenue cycle as well as improve overall financial health and optimize dermatology practices.

• Streamlining claim denial process

• Help for minor claim denials via CMS Telephone Reopening Unit (TRU)

• 8 tips to optimize financial efficiency in your practice

• Office optimization

Additional DermWorld Resources