September/October 2000

Independent’s Day
an Iga viewpoint

 

Steps to Take When Beginning
a
Direct Billing
Program

by Donovan Trana

 

Thousands of glass shops are now re-discovering direct billing as a way to regain control of their businesses.

Direct billing describes the way many glass shops used to operate, with bills directly sent to the insurance company claims department, which in turn paid the shop, not a third party. Because I started out small and built a track record of success with smaller companies, no insurance company has ever turned down my direct billing programs, thus, helping me convince the larger companies that I am a legitimate partner. With the advent of software, shops can offer insurance companies direct billing, and the Independent Glass Association’s (IGA) billing service committee is dedicated to bringing a more efficient, lower cost Internet-based system to the market within the next six months.

Tim Smale, IGA’s chief executive officer, has been helping many glass shops set up this type of program. “There are no hard and fast rules for direct billing, but the general guidelines shown below can assist you in setting up programs,” he explained. “By having an assignment of rights drawn up by an attorney, you can go after the short pays if they don’t send you the amount you billed them,”
Smale said.

Many companies opt to put together an information package for insurance companies to introduce itself and explain why it prefers to direct bill. I provide the insurance companies with a list of documents, such as our written warranty procedures as well as a list of laws that apply to our industry. I also include a statement that explains why I don’t want to deal with third-party
networks.

Next, consider who you want to approach first and whether direct billing is an appropriate choice for that insurance company. Contact the claims manager and explain that your company would like to set up a direct billing program. Be persistent and remember that direct billing goes back to the way glass shops did business a few years ago.

Whether or not you are successful from the start, it may be an effective way to reduce your reliance on the networks, especially until we have a better system set up with insurance companies. It’s like Dorothy in the Wizard of Oz—We’ve never lost our right to run our businesses, but we’ve been led to believe that we had to be part of the networks.

 

Starting Direct Billing

This information was submitted by an IGA member to assist you in developing a direct billing program. Our intent is to share information that may be helpful to you. This is not a request for IGA members to stop doing business with networks.

 

What is Direct Billing?

Billing direct is the simple process of sending invoices directly to the insurance claims department, thereby eliminating the dependency on billing programs that do not always meet a company’s needs.

Why should I start a direct billing program for each of the insurance companies I do business with?

You only need to establish programs with those insurance companies whose claims programs are not satisfactory to you. Second, direct billing puts you in control of your pricing and billing procedures, and it also puts the responsibility on the insurer to pay the claim in full (when following proper procedure).

Who establishes the pricing levels?

You do! Simply establish a price for your product and service that allows you to be profitable and offer a safe, quality installation. Be sure to back up your prices with market surveys and a good recordkeeping of typical sales prices in your market.

How do I accomplish this?

It’s surprising how simple it is to set up, if you follow the steps and guidelines below. Most insurance claims departments are just like you, they want to be treated fairly.

Step 1. If you do not already have an “assignment of rights and proceeds,” it is a good idea to have one drawn up by a competent attorney. Have the customer sign this form so your company can collect from the insurance company should it become necessary.

Step 2. Put together written documentation, such as flyers, printed material or information typed on your letterhead, that describes how your company is unique in the way that it does business. Be honest and pleasant, but firm, in your stance. They will test your resolve in some cases, so you need to be prepared for what you will and won’t agree to.

Step 3. Choose an insurance company that you think will be easy to approach on this issue. It is better to get your feet wet with a friendly company first and obtain the name of the claims manager for the insurance company.

Step 4. Make a voice contact with the claims manager and tell him or her that you would like to establish a direct billing program with his or her company. If you are told it is not possible, this is where step two comes into play. Be courteous, but explain to him or her that you are going to fax him or her some information for his or her review and you will follow up in a couple of days. Keep in mind that he or she may have others in the company with whom they have to confer or they might just need a little time to think. Do not let them tell you that it is too expensive to cut an individual check for each job; they do it everyday with all kinds of claims and they can do it for you.

Step 5. Now it’s time to advertise your agreement with agents in your area. Let them know that they can now call your shop directly and you will handle everything and let consumers know when you are selling a job that you can bill directly to the company.

Donovan Trana owns Express! Auto Glass and Express Auto Wash and Detail in Muscatine, Iowa.

AGRR

Copyright Key Communications Inc. All rights reserved. No reproduction of any type without expressed written permission.