The Role of a Collection Specialist in Medical Billing

A collection specialist is responsible for collecting payments and overdue bills. The role of a collection specialist in medical billing is to resolve payment issues, outstanding accounts, and denied claims. They work with healthcare service providers, acting as the middlemen between insurers and patients.  

The key responsibility of a collection specialist is to convert unpaid claims into revenue.  As denial rates for claims are increasing, according to the update by the Medical Group Management Association (MGMA), a specialist prevents practices from losing revenue due to the complexities of payer rules, primarily by reducing maturing accounts receivable (AR).  

In the healthcare field, collection specialists help providers by ensuring that reimbursements are claimed in a timely manner. In this blog, we will explain the importance of a collection specialist in healthcare and in medical billing, their responsibilities, the medical billing collections process, and how they help improve cash flow.   

What is a Collection Specialist in Medical Billing

A collection specialist in medical billing reviews outstanding claims, contacts the payers and patients involved, and resolves any claim disputes that may arise, which could ultimately lead to reimbursement.   

While a medical biller is responsible for coding and submitting an initial claim to the payer, the collection specialist or collector is responsible for the post-submission recovery of the claim. This includes reviewing denied claims and appealing them as necessary, and establishing a payment plan with the patient or payer when necessary.  

A collection specialist is part of the Revenue Cycle Management (RCM) cycle after the initial claims have been submitted by tracking all follow-up activities related to Accounts Receivable (AR) to ensure potential bad debt is avoided.   

In addition to tracking the accounts receivable follow-ups: 

• The collection specialist also tracks any issues related to the patient’s or the payer’s ability to receive insurance coverage, whether through Medicaid, Medicare, private insurance, etc. 

• They check the patient’s obligation to pay based on the insurance coverage received. 

• The collection specialist ensures that proper documentation is available should the practice need to provide the information during an audit. 

• They also act as the primary contact between the billing and financial department of the practice to prevent any loss of revenue due to denied claims. 

Key Responsibilities of a Healthcare Collections Specialist 

A healthcare collections specialist is responsible for collecting overdue patient accounts and outstanding insurance claims. These specialists act as liaisons between their provider clients and patients and help resolve issues that may prevent payment from being made. Here are the responsibilities of a healthcare collections specialist: 

• Insurance claim follow-ups: The specialist will contact the medical insurance company or payer through telephone, online platform, or clearinghouse to determine the status of a claim and then verify the eligibility of the patient for benefits. If the claim was denied, the specialist will resubmit the claim as required by the payer. In the medical billing collections process, the specialist documents each interaction with the payer and submits the claim prior to the deadline specified by the payer for processing.    

• Denial management: The specialist will examine the reason for the denial of a claim, which typically results from either coding errors or missing authorization. The specialist then categorizes the denials and if necessary, prepares corrections, often based on the specific payer requirements. If a provider experiences high denial rates, the specialist will employ measures to avoid additional losses to the provider, per the American Medical Association guidelines.  

• Appeals processing: If a claim is denied by Medicare, the specialist will file a redetermination within 120 days of the denial using the appropriate CMS form and can escalate the appeal through five levels. For commercial claims, the specialist reviews the Explanation of Benefits (EOB) to ensure it has a list of all services provided to the patient. The specialist must also obtain the necessary supporting documentation for the appeal and submit it to the payer as part of the appeal process. 

• Patient balance collections: Collection specialists will notify patients of their outstanding balances, develop a collection plan according to the policies, escalate accounts that are past due, and document all contact.  

• Payment posting verification: Specialists will verify payment postings, apply the required changes, and ensure that all refunds are posted correctly as compared to the remittance received from the payer. If any errors occur during the process, it can cause delays in receiving payment for services rendered. 

• AR reporting and analysis: The specialist will do regular follow ups, examine the aging accounts receivable, and include an analysis of the same.  

How Do Collection Specialists Improve Cash Flow? 

Collection specialists in medical billing can help speed up revenue flow for providers and help hospitals improve their cash flow. They do this with quicker processing of the revenue cycle by proactively verifying patient insurance, collecting copays as soon as possible, and consistently contacting patients with past due or delinquent accounts. Specialists for collections in the U.S. can help reduce bad debt by offering patients options for making timely payments or creating flexible payment plans, reducing the number of denied claims, and using automated patient billing to increase the speed and consistency of payments.  

Here are a few ways how collection specialists improve cash flow: 

• Reducing aging AR: Collection specialists can help reduce aged accounts receivable (AR) by placing claims into categories such as 0-30, 31-60, and 61-90+ days past due and contacting payers every week for overdue claims.  

• Faster reimbursements: They can fast-track payments by making sure that the payer receives the claim immediately after submission and then resubmitting the clean claims within 7-14 days of identifying the issues. The normal time frame for receiving an EOB can be reduced from 60 days to 30 days by implementing automatic tracking systems and persistent follow-ups with the payer, thereby enabling the collections specialist to convert AR into revenue more quickly.   

• Lower write-offs: By looking into the root cause of denials, such as missing authorization and appealing approximately 80% of the possible appeals, they can help providers recover 50-70% of the disputed amount. When practices understand and fix the root cause of problems like coding errors, they can see a decrease in bad debt.  

• Tracking KPIs: They monitor net collection ratio, denial ratio, cost-to-collect ratio, and average age of AR. Monthly dashboards are used to monitor patterns, like high Medicare denials, and to provide guidance to the staff.

Common Challenges Faced by Medical Billing Collection Specialists 

Medical billing collection specialists face several challenges, primary ones include complex payer policies, denials and modifier issues, high denial rates, and others. Here are the most common challenges faced by medical billing collection specialists:  

• Complex payer rules: Different payers have different requirements for collection specialists; for example, Medicare has certain modifier requirements, while commercial payers require their own format for prior authorization. Even a minor error can lead to an automatic denial and, therefore, require the collection specialist to constantly update the guidelines for all the payers.   

• High denial rates: The rate of claim denials is generally high, around 10-20%. These claims are denied due to coding errors, non-payment because the patient does not meet the eligibility criteria, or due to a late filing. The dates for filing can be different in each state, adding to the challenge. Collection specialists spend a large portion of their time reworking hundreds of these claims.    

• Regulatory compliance: According to the HIPAA regulations, there are limitations to what can be discussed with a patient in terms of their financial liabilities. Additionally, CMS and the Office for Civil Rights (OCR) conduct audits of healthcare practices for regulatory compliance. Not adhering to the regulations may lead to huge fines.    

• Patient financial sensitivity: When collecting from a patient, there are two sides to consider: the patient’s financial situation and the sensitivity to help the patient through a difficult time. Therefore, using aggressive tactics when collecting from patients will ultimately backfire against the hospital or physician practice, resulting in complaints, so the collection specialist must be sensitive and provide options to patients without driving them away. 

Skills Required for a Successful Collection Specialist 

Healthcare collection specialists must have a strong knowledge of technical billing and interpersonal skills to convert AR challenges into recoverable revenue.  

• Knowledge of CPT/ICD coding: The ability to identify coding issues in a denial is important for resolving them quickly. With the right knowledge, the collection specialist can quickly resolve the issue with no extensions, thus eliminating rework.  

• Communication skills: Clear communication is important in all interactions, whether a call to a payer or a patient. The collection specialist needs to clearly explain the EOB and document each and every interaction. If the patient understands what happened, they will be able to resolve the issue much quicker than if they do not understand the explanation provided.  

• Negotiation: Another important key skill required for a collection specialist. Instead of using aggressive tactics or threats, negotiation can help drive revenue creation and offer flexibility for difficult cases.   

• Software proficiency: Knowledge of how to use the software required for medical billing can reduce time spent manually entering data and enable the collection specialist to spend more time on high-value follow-up activities.  

• Compliance awareness: A good understanding of HIPAA, CMS, and FDCPA laws and regulations can assist the specialist in dealing with patients and payers and ensuring compliance, which avoids costly penalties associated with compliance violations.  

Tools and Software Used in Medical Billing Collections  

Medical billing makes use of advanced tools that have streamlined the medical billing collections process for specialists.  

• Practice Management Systems (PMS) are automated systems that perform a variety of functions related to medical billing, including Advanced MD and Kareo, which track claims, post payments, and send statements to patients, helping reduce the time required for manual follow-up.    

• Clearinghouses such as Change Healthcare or Availity verify and validate claims before they are submitted to the payer, then forward those claims to the payers, thereby increasing the first-pass acceptance rate.    

• Electronic Health Record (EHR) systems such as Epic and Cerner have integrated billing modules that allow real-time eligibility checks and AR aging reports for collection, creating an efficient collection workflow for collection specialists.    

• AR dashboards in tools such as Waystar or AthenaHealth provide visual representations of aging buckets and denials that can help the collection specialist to prioritize high-value claims regularly. The HFMA has highlighted these tools for their ability to reduce days in accounts receivable. 

Collection Specialist vs Revenue Cycle Manager 

The primary difference between a collection specialist and a revenue cycle manager is that a specialist manages collections tasks, while the latter oversees the full RCM strategy. 

Why Outsourcing Medical Billing Collections Matters 

Outsourcing your medical billing collection can help you save on the cost of training your employees, as well as on software and other expenses related to employing a team to collect outstanding accounts receivable.  

Here are a few reasons why outsourcing medical billing collections matters:  

• Cost saving: While it is natural to think that outsourcing increases costs, providers actually save revenue. Professional medical billing agencies have expert teams trained in collecting outstanding accounts receivable and the necessary software to do so, and therefore can deliver exemplary results, enabling your practice to provide quality patient care.  

• Expertise: Specialized firms such as Credex Healthcare have teams of denial analysts and coders who are able to recover an additional 20-30% of revenue through the use of advanced payer negotiations and AR management.    

• Risk of non-compliance: Certified teams at Credex Healthcare make sure that compliance is maintained with HIPAA, CMS, and FDCPA regulations, so your practice does not incur fines for non-compliance with these regulations when your employees are not certified to comply.  

• Scalability: Credex Healthcare provides scalable collection capabilities based on the practice volume; therefore, there are no hiring delays associated with rapid growth spurts or seasonal increases in patient volume. 

FAQs 

What does a collection specialist do in medical billing? 

A collection specialist in medical billing resolves payment issues, outstanding accounts, and denied claims. They work with healthcare service providers, acting as the middlemen between insurers and patients, maintaining financial stability.   

How does a collection specialist reduce claim denials? 

A collection specialist reduces claim denials by examining and identifying the reasons for denials and correcting those errors to boost revenue.   

What is the difference between a medical biller and a collection specialist? 

A medical biller is responsible for creating and submitting insurance claims, codes, procedures and maintaining patient communication to ensure providers receive payments on time.   

How long should medical accounts receivable stay outstanding? 

Generally, medical accounts receivable should stay outstanding for 30-40 days. It can extend to 50 days, but more than that can become a revenue concern.   

Is outsourcing medical billing collection cost-effective? 

Yes. Outsourcing medical billing collections is cost-effective. It can help healthcare practices reduce billing costs by 30 percent.  

Conclusion 

Collection specialists in medical billing help providers protect their revenue by successfully managing the follow-up on insurance claims, denial management, and patient collection efforts that will help reduce the amount of ‘aging’ accounts receivable, improve the cash flow, and significantly decrease the number of denied claims and subsequently reduce write-offs as noted by MGMA. 

They are integral to both the collections process of medical billing collections and revenue cycle management collections. They also ensure that accounts receivable in the medical billing collections process are at an optimal level. They also manage insurance claims follow-ups and collections from patients within the healthcare industry.   

Partner with medical billing specialists like Credex Healthcare to outsource services, get your reimbursement faster, and enjoy long-term sustainable growth.