Is Your Medical Billing Company Doing a Good Job? Eight Monthly Reports, One Page, and the Contract Terms to Check

Eight reports to ask a medical billing company for every month

Each report answers one question, and together they cover the path from the visit to the deposit. Ask for them in a fixed format, on a fixed day, as exports the practice keeps:

• Unbilled visits and charge lag, by provider: encounters on the schedule with no charge entered, and days from date of service to claim submission. The question: what was seen and not billed, and how long does a finished visit wait to become a claim?
• Rejections by age: open clearinghouse and payer rejections, aged from the date of service, with the reason and the date each one was accepted after correction. The question: is any claim running out of filing time?
• Denials by reason code and payer: count and dollars by Claim Adjustment Reason Code (CARC), remark code and payer, with the action taken on each. The question: which denials repeat, and where do they start?
• Appeals and corrected claims: what was sent, when, and the outcome. The question: are denials worked, or written off?
• Accounts receivable by payer and age, aged from the date of service. The question: whose money is getting older?
• Allowed amount against the contract: for the top CPT codes by volume and the top payers, the median allowed amount on the electronic remittances set beside the contracted rate. The question: is each payer paying what it agreed to?
• Adjustments and write-offs by code and reason: contractual, timely filing, small balance, administrative and bad debt, each with the person who approved it. The question: what money left the books without being collected?
• Remittances against deposits: payment totals on the remittances matched to bank deposits by payer and date. The question: did every posted payment arrive, and was every deposit posted?

The remittance in reports six and eight is the X12 835, which 45 CFR 162.1602 adopts as the HIPAA standard for health care claim payment and remittance advice, so every payer that pays electronically sends the same structure. A billing company that cannot produce one of these reports has answered a question too, and the contract is the place to fix it.

Collections against allowed, not against charges

A practice’s charges come from its own fee schedule, which can sit well above what any payer pays, so a percentage of charges collected mostly measures how high the fee schedule is set. The number that measures billing work is collections against the allowed amount: what payers and patients paid, divided by what the payers’ adjudication allowed.

On the remittance, the contractual write-down shows as CARC 45, “Charge exceeds fee schedule/maximum allowable or contracted/legislated fee arrangement,” which X12 says to use with group code CO or PR depending on liability. That adjustment is expected. Two things around it are not: a write-down larger than the contract implies, which means the allowed amount came in below the contracted rate, and a patient share (group code PR) that was allowed but never collected.

Illustrative example: in a month, payers allow $200,000 on a practice’s claims. Payers pay $160,000, and $40,000 is assigned to patients as deductibles and coinsurance, of which $25,000 is collected. Collections against allowed are $185,000 of $200,000, and the gap is a front-desk and patient-statement question, not a payer one. The same month measured against $400,000 of charges would read as 46 percent and say nothing useful.

Problems that start before the billing company sees a claim

Some of what shows up in a billing company’s reports is the practice’s own work. The reason codes on the denial report say which:

• CARC 31, “Patient cannot be identified as our insured,” CARC 140, for an ID number and name that do not match, and CARC 27, “Expenses incurred after coverage terminated”: registration and eligibility at check-in.
• CARC 197, “Precertification/authorization/notification/pre-treatment absent”: the practice’s prior authorization tracker.
• CARC 29, “The time limit for filing has expired”: charge lag at the practice, or rejections nobody worked at either end.
• CARC 16, “Claim/service lacks information or has submission/billing error(s)”: whichever side left out the missing item, which the remark code names.
• CARC 4, “The procedure code is inconsistent with the modifier used,” and CARC 50, for medical necessity: documentation and coding decisions that belong to providers and certified coders, not to an operations review.

Sorting denials this way is not about blame. It tells the owner which fixes need a conversation with the billing company and which need a change at the front desk, in the authorization routine or in how quickly notes get signed.

Contract terms: data, access, fees and the way out

The contract decides whether the practice can see its own numbers, and what happens if it leaves. Terms worth reading with counsel before signing, or at renewal:

• Data: claims, remittances and reports belong to the practice and are returned in a usable format on request and at termination.
• Access: read-only logins to the PM and the clearinghouse for the practice, so reports can be pulled without asking.
• Reports: the eight above, named in writing, with a delivery day.
• Fee basis: what the fee is calculated on, what counts as a collection, and whether payments taken at the front desk are included.
• Termination: the notice period, and the practice’s data back on the way out. Running the switch itself without losing claims is covered in the guide to in-house or outsourced medical billing.

The Medicare rule on billing agents’ pay

Medicare limits who may receive its payments. For a physician practice, 42 CFR 424.80(b)(5) lets Medicare pay an agent that furnishes billing and collection services if the conditions of 42 CFR 424.73(b)(3) are met. Those conditions include: “The agent’s compensation is not related in any way to the dollar amounts billed or collected,” and “The agent’s compensation is not dependent upon the actual collection of payment.” The agent must also act under payment instructions the practice can change or revoke at any time, and payment is always made in the practice’s name.

The scope is the point. CMS’s claims manual says these conditions “do not apply if the agent merely prepares bills for the provider and does not receive and negotiate the checks payable to the provider/supplier.” It also describes Medicare payments sent to a bank account in the provider’s name only, where only the provider can give instructions. So the question to ask is where Medicare’s money lands and who controls that account. If it lands in an account only the practice controls and the billing company only prepares and follows up on claims, the manual says these conditions do not apply; if the billing company receives the payments, a fee tied to collections runs into them. State rules on fee-splitting can add their own limits. This is rule text, not legal advice, and the practice’s attorney should read the agreement against both.

When to keep the billing company, switch, or buy nothing

Switching billing companies resets a lot of work: system access, enrollment for electronic remittances and payments, open receivables, and a run-out period with two vendors at once. Before switching, ask the current company for the eight reports for three months. If they arrive, are read in a monthly meeting with one page of trends and named actions, and the numbers move, the practice has what it needs, and no outside help is worth paying for.

An outside look earns its fee when the reports cannot be produced, when they disagree with the bank deposits, or when nobody can say whether a problem starts in the practice or at the biller. The Revenue Review counts this under the claim-to-payment hand-off and takes two weeks; its first pass reads aggregate exports from the practice and, with the practice’s permission, from its billing company — not patient names — and it ends with a written report that prices each finding and a 90-day plan. It is not a coding or compliance audit, and because it sells no billing, it has no reason to recommend a switch. A free 20-minute call is enough to tell whether it fits.