Low collection rates in a pulmonology practice are rarely the result of one major issue. More often, they stem from the accumulation of small process failures—a missing prior authorization, an undercoded visit, a denied claim left unresolved for weeks, or a payment posted below contracted rates that goes unnoticed. These seemingly minor issues can collectively result in 10–20% of revenue that the practice earned but never collected. Partnering with experienced pulmonary & critical care billing services providers can help identify these revenue leaks, improve claim accuracy, and strengthen the overall revenue cycle.
This guide explores the most common causes of low collections in pulmonology practices and provides a structured approach to improving collection rates without adding significant overhead or administrative burden. By leveraging specialized pulmonary rehab billing services and comprehensive pulmonary billing services, practices can streamline coding, reduce claim denials, accelerate reimbursements, and maximize revenue while allowing physicians and staff to focus on delivering quality patient care.
Understanding Your Current Collection Rate
Before making any changes, you need to know where you actually stand. The two collection metrics that matter most are:
Gross collection rate: Total payments received divided by total charges submitted. This number is less meaningful than it sounds because charges are often set artificially high relative to contracted rates. A 40% gross collection rate may be entirely normal in a practice with high chargemaster rates.
Net collection rate: Total payments received divided by net collectible charges (charges adjusted for contractual allowances). This is the number that tells you how much of what you are actually owed you are collecting. A healthy pulmonology practice should have a net collection rate of 95% or above. Below 92% indicates a significant process problem.
Days in A/R: The average number of days between when a service is rendered and when it is paid. Target is 35–40 days for a pulmonology practice. Above 50 days indicates cash flow problems and likely reflects slow claim submission, high denial rates, or slow denial resolution.
Pull these three numbers before doing anything else. They will tell you where to focus first.
Improvement Area 1: Front-End Revenue Cycle
More collections are lost at the front end of the revenue cycle than most practice managers realize. Insurance verification errors, missing authorizations, and incorrect patient information at registration all create claims that cannot be paid — no matter how good your coding and billing are.
Insurance Eligibility Verification
Verify insurance eligibility for every patient before every encounter — not just new patients. Use an automated eligibility tool that connects directly to your practice management system. Manual eligibility checks are time-consuming and error-prone.
For pulmonology specifically, eligibility verification should confirm:
- Active coverage on the date of service
- Whether the pulmonologist is in-network with the patient’s specific plan (Medicare Advantage and commercial plan networks change annually)
- Deductible and copay status (for patient collections)
- Referral requirements for specialist visits
An eligibility error caught before the appointment costs five minutes to fix. The same error caught after the claim is denied costs 30–60 minutes of staff time and delays payment by 30–90 days.
Prior Authorization
Prior authorization is a disproportionately large source of revenue loss in pulmonology because the specialty performs many services that payers routinely require authorization for.
High-authorization services in pulmonology include:
- Pulmonary function testing (some payers require auth for full panels)
- Bronchoscopy with advanced guidance (EBUS, navigational)
- High-cost biologic therapies for severe asthma and other conditions
- Pulmonary rehabilitation (Medicare has specific enrollment criteria; commercial payers require authorization)
- CPAP/BiPAP equipment and supplies
- Positional therapy for sleep apnea
Build a prior authorization tracking system that records the authorization number, the approved CPT codes, the number of approved visits or units, and the expiration date for every authorization obtained. An authorization that expires before the patient’s follow-up visit — and is not renewed — results in a denied claim for a service your physician already provided.
Collecting Patient Responsibility at Time of Service
Patient responsibility — copays, deductibles, coinsurance — is significantly harder to collect after a visit than at the point of service. Collection rates for patient balances drop sharply once the patient leaves the office.
Train front desk staff to collect copays at check-in and to discuss estimated patient responsibility for upcoming procedures before they are performed. A patient who is surprised by a $400 deductible balance after their bronchoscopy is much harder to collect from than one who understood the cost before scheduling.
Improvement Area 2: Coding Accuracy and Completeness
Undercoding is as much a collections problem as denied claims — it just doesn’t show up in denial reports. If your physicians are consistently coding at 99213 when the documentation supports 99214, or billing 99291 when the documented time supports 99291 + 99292, you are collecting less than you earned on every one of those encounters.
E/M Coding Optimization
Under the 2021 AMA guidelines, office E/M coding is driven by MDM or time. Pulmonology patients are often highly complex — multiple chronic conditions, medication adjustments, specialist coordination, high risk of complications from conditions like COPD, pulmonary hypertension, and ILD. Many of these patients legitimately qualify for level 4 (99214) or level 5 (99215) visits but are habitually coded at level 3.
Conduct a coding benchmark analysis: compare your E/M distribution (the percentage of visits coded at each level) to national benchmark data for pulmonology. If your level 4 and 5 utilization is significantly below the benchmark, you are likely undercoding.
Address undercoding through physician education rather than pressure to upcode. Show physicians what the documentation they are already producing actually supports — in most cases, they are documenting high-complexity care and simply not capturing the appropriate code.
Procedure Code Completeness
Pulmonology procedures often involve multiple components that must each be captured to maximize reimbursement. A bronchoscopy with BAL, transbronchial biopsy, and fluoroscopy guidance involves a primary code and multiple add-on codes. Missing even one add-on code on each bronchoscopy case represents meaningful lost revenue over a year.
Review your procedure charge capture process and confirm that physicians are prompted to select all add-on codes appropriate to each procedure performed. EHR-based procedure order sets that surface all relevant add-on options are more reliable than manual selection.
Chronic Care Management and Transitional Care Management
Two billing opportunities that most pulmonology practices leave entirely on the table:
Transitional care management (TCM): When a pulmonology patient is discharged from the hospital, TCM codes (99495 for contact within 3–7 business days, 99496 for contact within 2 business days) allow the practice to bill for post-discharge coordination. COPD exacerbations, pneumonia, PE, and ARDS patients are frequently discharged to pulmonology follow-up — every one of them is potentially a TCM billing opportunity.
Chronic care management (CCM): Patients with two or more chronic conditions expected to last at least 12 months who receive at least 20 minutes of non-face-to-face care coordination per month qualify for CCM billing (CPT 99490 and escalating codes). A significant portion of a pulmonology practice’s COPD, ILD, and pulmonary hypertension patient panel qualifies. Very few practices capture this revenue.
Improvement Area 3: Claims Submission
Clean claims — claims that are submitted accurately and completely on the first attempt — are paid faster and at higher rates than claims that require correction or resubmission. Every claim that bounces back as a rejection adds days to your A/R cycle and increases the likelihood that it will be written off rather than corrected and resubmitted.
Submission Timeline
Claims should be submitted within 3–5 business days of the date of service. Delayed submission increases the risk of timely filing denials and creates unnecessary cash flow gaps. If your practice is submitting claims more than a week after service, identify the bottleneck — whether it is slow physician documentation, batch submission processes, or charge entry delays.
Claims Scrubbing
Use a claims scrubber — either built into your practice management system or through your clearinghouse — that validates claims before submission. Effective scrubbing for a pulmonology practice should catch:
- Missing or invalid diagnosis codes
- Invalid CPT code combinations (e.g., bundled services billed separately)
- Incorrect modifier usage
- Missing prior authorization numbers
- Place of service errors
- NPI mismatches
A 1–2% improvement in clean claim rate translates directly into faster payments and reduced denial management costs.
Improvement Area 4: Denial Management
Denials that are not worked promptly are the most direct source of revenue loss in any medical practice. A denied claim that is not appealed within the payer’s timely appeal window — typically 60–180 days depending on the payer — becomes an uncollectable write-off.
Build a Denial Prioritization System
Not all denials are equal. Prioritize your denial work queue by:
- Dollar amount (highest value claims worked first)
- Appeal deadline proximity (claims approaching the appeal deadline worked urgently)
- Denial reason (medical necessity and authorization denials require clinical documentation; they should go to clinical staff, not just billing staff)
Track Denial Root Causes
Every denial should be categorized by root cause — not just by the payer’s denial reason code. Root cause categories that matter for collection improvement include:
- Authorization failure (service performed without required auth)
- Medical necessity (documentation insufficient)
- Coding error (wrong code, wrong modifier, bundled service)
- Eligibility issue (patient not covered)
- Timely filing (claim submitted too late)
- Duplicate claim (same service billed twice)
Tracking root causes monthly allows the practice to address the upstream process failure. If 30% of your denials are authorization failures, the solution is fixing the authorization workflow — not just reworking the individual denied claims.
First-Level Appeal Success Rate
Measure what percentage of first-level appeals result in payment. A well-prepared appeal — one that provides the specific documentation the payer cited as missing, or that clearly challenges an incorrect bundling edit with reference to CPT guidelines — should succeed at a rate of 60–75% or higher for medical necessity and coding-based denials.
If your first-level appeal success rate is below 50%, the problem is likely appeal quality — appeals that are generic, incomplete, or not tailored to the specific denial reason.
Improvement Area 5: Payment Reconciliation
Many practices focus intensively on denials but pay little attention to claims that were paid — but paid incorrectly. Underpayments are a silent revenue leak that does not appear in denial reports.
Identify Underpayments
Compare every payment against your contracted fee schedule for the specific payer. Claims paid below the contracted rate should be flagged for follow-up. This is particularly important for:
- Medicare Advantage plans (which may use different fee schedules than traditional Medicare)
- Commercial plans with complex tiered fee schedules
- Out-of-network payments (where the basis of payment may be disputed)
Automated contract management software can perform this comparison at scale. Without it, you are relying on manual spot checks — which typically catch only a fraction of underpayments.
Coordinate Benefits Denials
When a patient has secondary insurance, coordination of benefits (COB) denials can result in the secondary claim being denied while the primary payment is less than the patient’s cost-sharing obligation. Ensure that your billing process systematically submits secondary claims after primary payment is received and posted.
Improvement Area 6: Patient Collections
Patient financial responsibility has increased significantly as high-deductible health plans have become more common. In many pulmonology practices, patient responsibility balances — deductibles, coinsurance, copays — now represent 15–25% of net revenue. Collecting those balances requires intentional process.
Pre-Service Financial Counseling
For high-cost services (bronchoscopy, pulmonary function testing, pulmonary rehabilitation), offer patients an estimated out-of-pocket cost before scheduling. Patients who understand their financial responsibility in advance are far more likely to pay than those who receive an unexpected bill weeks later.
Payment Plans
Offer payment plan options for balances above a threshold (typically $200–$500). Many patients who cannot pay a $600 deductible balance in one payment can and will pay $100 per month. A formal payment plan with automatic payment processing has a much higher completion rate than sending paper statements.
Statement Cycle and Collections
Send patient statements promptly after the claim is adjudicated. A statement that arrives 90 days after the service date — because the claim was slow to process or the billing staff delayed statement generation — is harder to collect than one that arrives within 30 days.
Define a clear policy for when patient balances are sent to collections: typically after two or three statement cycles with no response or payment. Apply that policy consistently.
Setting a Collections Improvement Timeline
Improvements in collection rate take time to show up in financial results, because the revenue cycle spans weeks to months. A realistic improvement timeline looks like this:
Months 1–2: Address front-end processes (eligibility verification, authorization tracking, charge capture). These changes prevent future revenue loss but have limited immediate impact on current A/R.
Months 2–4: Work down old A/R. Focus denial management resources on claims approaching appeal deadlines and high-dollar underpayments. This generates the most immediate cash improvement.
Months 3–6: Coding optimization begins showing in monthly collections as higher-accuracy claims are submitted and paid.
Months 6–12: Net collection rate stabilizes at the new, higher baseline. Days in A/R trend down.
Summary
Improving pulmonology billing collections is a systematic process, not a single intervention. The practices that achieve and sustain net collection rates above 95% do so by addressing every stage of the revenue cycle — front-end eligibility and authorization, accurate charge capture, clean claims submission, aggressive denial management, contract compliance, and patient collections — as a connected system rather than a series of isolated tasks.
The financial return on investment is substantial. For a pulmonology practice generating $3 million in annual net revenue, moving from a 90% to a 96% net collection rate represents $180,000 in recovered revenue — real money that reflects work already done but not yet collected.
Frequently Asked Questions
What is the single most impactful change a pulmonology practice can make to improve collections?
Fixing front-end eligibility verification and prior authorization workflows typically delivers the fastest and largest improvement. Denials rooted in eligibility errors and missing authorizations are 100% preventable — and they cost far more to resolve on the back end than to prevent on the front end. A five-minute eligibility check before the appointment eliminates the 30–60 minutes of rework required after a denial.
What net collection rate should a pulmonology practice be targeting?
A well-run pulmonology practice should achieve a net collection rate of 95% or above. Practices consistently below 92% have a systematic revenue cycle problem — usually across multiple stages simultaneously. The gap between 90% and 95% net collections on a $2.5 million practice represents $125,000 in annual revenue that is earned but never collected.
How does undercoding affect a pulmonology practice’s collections?
Undercoding reduces collections just as surely as a denied claim — it just doesn’t appear in denial reports, so it often goes unnoticed for years. Common undercoding in pulmonology includes consistently using 99213 when 99214 is supported, not capturing the 99292 add-on unit when critical care time exceeds 74 minutes, and failing to bill ventilator management codes for ICU patients. A coding benchmark analysis comparing your E/M distribution to specialty norms will reveal whether systematic undercoding is occurring.
How long does it take to see improvement in collections after making revenue cycle changes?
Front-end changes (eligibility, authorization) prevent future denials but have limited immediate cash impact. Working down old A/R and resolving pending denials generates the most immediate cash improvement — typically within 60–90 days. Coding optimization improvements show up in monthly collections within 3–6 months as higher-accuracy claims are submitted and paid. A practice should expect to see meaningful improvement in net collection rate within 6 months of systematic intervention.
What is the best way to reduce patient balance write-offs in a pulmonology practice?
Collect copays at check-in without exception, and discuss estimated patient responsibility for procedures before scheduling them. Patients who are financially informed in advance have higher payment rates than those who receive unexpected bills weeks later. For high balances, offer structured payment plans with automatic processing. Send statements promptly after adjudication — collection rates drop significantly when statements are delayed more than 60 days.
How should a pulmonology practice handle denials for lack of medical necessity?
Medical necessity denials for pulmonology services — particularly critical care, bronchoscopy, and PFT testing — should be appealed with targeted, documentation-specific appeal letters rather than generic templates. The appeal should directly address what the payer cited as missing and provide the supporting clinical documentation. A physician addendum to the original note can be a powerful appeal tool when the clinical rationale was not fully captured in the original documentation.
What reports should a pulmonology practice review monthly to track collection performance?
Essential monthly reports include: net collection rate (compared to prior month and prior year), denial rate by service category and root cause, days in A/R trend, A/R aging buckets (current, 30, 60, 90, 120+ days), and first-pass claim acceptance rate. These five metrics together give a clear picture of where the revenue cycle is performing and where attention is needed.