Electronic Claims Medical SoftwareElectronic Claims Can Save You $15,000 



By Marilyn Gard, MBA, President, Clinic Pro Software, (517) 351-1021



Unless you operate a cash practice, you cannot collect 100% of your fees. That is a fact of 
life. Unfortunately, most physicians cannot afford to operate a cash practice so they are 
forced by economic reality to submit insurance claims. To survive as a businessperson, 
you must maximize your insurance reimbursement while minimizing the costs of collecting 
that same reimbursement. Filing insurance claims electronically can substantially reduce the 
collection costs and create a healthier bottom line. There are three major cost advantages of 
electronic claim submission: 



  a.. Less cost per claim. There is an automatic "fixed cost" per claim when filing 
hardcopy claims. Even if the computer prints your hardcopy claims so that they are not 
being typed individually, the costs add up quickly. Each hardcopy claim requires computer 
time, printer supplies and paper or the HCFA form itself. These supplies are relatively 
inexpensive, about .07/claim. However, when you add the labor costs required getting 
HCFA forms ready for mailing (preparing the printer, folding, stuffing envelopes, filing), 
the costs accumulate quickly to an estimate of 65/claim. Once you add postage at.33/claim, 
the average hardcopy claim costs to $1.00- $1.50 to send. If you get reimbursed $50.00 on 
your $80.00 claim, it has cost 3% to 4% of your reimbursement to collect your money. Of 
course, this scenario assumes that there were no errors and that the insurance company 
pays your original claim. If the original claim gets rejected, the cost of collecting your 
money escalates. Let's assume that your office is very efficient and that it only costs 
.60/claim to file hardcopy. Using this conservative estimate: 500 claims/month x .60 = 
$300/month. Obviously, the monthly cost increases with each claim because it is a fixed 
cost. By comparison, unlimited electronic claims can be sent free with the right software or 
at minimal charge of approximately $25/month. There is no fixed cost per claim when filing 
electronically - that creates a huge cost differential even for small practices. 

  a.. Faster turnaround. Hardcopy Medicare claims are held for 27 days from the day they 
were received; electronic Medicare claims are processed in 14 days. Likewise, there is a 
similar difference in turnaround time for commercial carriers. A quicker turnaround means 
that the money received could be invested; money that is invested draws dividends or 
interest. In simple economic terms, that is the "time value" of money. By allowing 
insurance carriers to hold your money for two to four weeks longer, they earn the interest 
-- not you. Because this cost is intangible, it is more difficult to calculate. On a monthly 
income of $20,000, the cost of lost interest income could range between $100 - 
$300/month. 

  a.. Immediate feedback on edit/rejections. There is nothing more frustrating than waiting 
six weeks for payment of a hardcopy claim only to find that it was rejected due to a clerical 
error. Then, the process begins again. You have to create a corrected paper claim (incurring 
the same fixed costs as the original) and wait another six weeks (allowing the insurance 
company to earn more interest on your money.) With electronic claims, you can usually 
receive feedback on the status of the claims within 24 hours. If a claim contains errors that 
will cause rejections, it can be immediately corrected and re-submitted. No wasted time, no 
duplication of effort. The cost of rejections fits into the intangible category since it 
incorporates both of the costs above. 

Most physicians accept the premise that filing for insurance reimbursement is an economic 
reality; the method of claim submission becomes the question. Take a moment to crunch 
through the numbers for your office. We have prepared two very conservative estimates of 
cost depending on the volume of monthly claims. If you actually calculated the cost of 
filing hardcopy claims, it would probably be much higher than the following figures.



      500 Claims per Month Month

     Annual

     1000 Claims per Month Month Annual 

      Per-claim Cost       300     3,600 Per-claim Cost 600 7,200 

      Time value of held funds       150     1,800 Time value of held funds 300 3,600 

      Avoidance of rejections       100     1,200 Avoidance of rejections 200 2,400 

      Total cost    $ 550 $ 6,600 Total cost $1,100 $13,200 



Compare the above costs to a maximum of $25/month for electronic claims. Is there any 
reason that you don't want to save money? Electronic claim submission is very efficient - it 
is the "bottom line" answer for most offices. 



Marilyn K. Gard, MBA, President

Clinic Pro Software, guru@clinicpro.com

http://www.clinicpro.com   (800) 351-2776

Affiliated services:  http://www.doctorstore.com; 

http://www.chirostore.com