Volume VII Number 2
|The Newsletter of
D E K A Y E Consulting, Inc.
231 Oakview Avenue
Whose COB is it Anyway?
By Allan P. DeKaye, MBA, FHFMA, President and CEO, DEKAYE Consulting, Inc.
While a payerís response that "a claim was not on file" generally signaled a stalling technique, we have learned that it is quite possible that an electronic claim didnít make it to its final destination. As providers and claims clearinghouses have worked to improve their tracking and reporting of claim transmission and receipt, another element in the A/R challenge has emerged: the COB.
"Coordination of Benefits" or COB recognizes the order in which more than insurance carrier will be prioritized for purposes of billing and payment of an account. With a greater emphasis placed on Admitting, Registration and other "access" areas, more and more providers are beginning to capture secondary insurances more effectively. (Note: Yes there are even tertiary insurances, but most providers would be happy to get the second, instead of just one. In this article, secondary will mean secondary, tertiary, etc.)
Although, the front-end needs to continue to emphasize this process, the back-end is finding a new reason for carriers not paying claims. The payer is waiting for the patient to complete its COB questionnaire. We see this becoming an increasing trend. Now a claim may be pended for an action of the patient demanded by their carrier.
Payers are well within their rights to require its subscribers to complete a COB questionnaire. However, failure to do so should be acted upon independently by the payer with its subscriber, and not with the provider. In fact, the payer should consider the subscriberís failure to complete a COB questionnaire to be a reason to invalidate the insurance (bold step). Why? Auto insurance will be terminated or suspended when an insured fails to provide required information. COB questionnaires should be completed when the enrollment or renewal takes place. Not when a claim is submitted.
Subscribers should be required to complete their enrollment, otherwise they should be deemed to be ineligible. In that way, when the provider checks eligibility, they will know there is a problemĖpreferably before service is rendered not afterwards.
Payers who give an affirmative eligibility verification need to pay the claim, and not pend the claim while they await COB information. Itís been reported that when payers reverse a previously given eligibility determination, they may still be liable for the payment, since a late determination may preclude a provider from seeking reimbursement from other carriers because of what has become a "late filing."
If a payer is beginning to use the "Awaiting COB" tactic, several steps should be considered. First, if they are a contracted payer, review the contract to see if this condition is allowable, or if it is inconsistent with the eligibility determination and reporting clauses. If it is, you will have a more immediate contractual remedy. It is more likely that you will need to advise the payer of this problem. If the volume of unpaid claims is increasing, you can consider no longer accepting assignment for these patients. This is also a bold and perhaps costly move. If the payer accounts for a sizeable portion of your facilityís business, you may run some risks with this approach. But by the same reasoning, a large payerís failure to pay claims will render all of that business to be of less value.
While a providerís reaching out to its patient community is an option, some will argue that the provider is now being asked to take on enrollment administration for the payer. Rather than making the patient an adversary, try making them an ally. By alerting your patients that their carrier is presenting these problems (some of which are of the patientís making), the facility may have to require advance payment or pre-admission deposits. Suggest the patient contact their carrier to ensure that their enrollment status is in order. Again contractual considerations are needed. The argument should rest on whether the patient is "eligible" if they havenít completed their COB questionnaire. If they are, donít delay payment. If they arenít, then they canít be registered as covered by that payer.
When a payer holds the provider at bay for its payment under this condition, the burden is truly misplaced. Providers should take a more assertive position concerning the payerís report of eligibility. Various state legislatures have passed "prompt payment laws." In those jurisdictions, providers should be checking to see if this is a valid reason for payment delay. In most cases, the delay has to be for "lack of a clean claim," clinical reasons, or suspected fraud. Otherwise, this reason may be considered inappropriate.
Itís time for providers to "come on board" (COB) and take action to prevent these types of payment delays!
A Tale of Two Cities: Two Perspectives on Vendor Performance
By Allan P. DeKaye, MBA, FHFMA, President
and CEO, DEKAYE Consulting, Inc.
Setting the Stage
In a recent conversation with a client, I asked the CFO how an outsource project went with a particular vendor. The CFO expressed disappointment, citing collections at a level below expectation. When I queried the vendor as to the success of the project, the vendor held the belief that it was very successful. This same repetition of events occurred a few weeks later; different provider, different vendor, with much the same differing views of success. How was this possible?
I then recollected the wisdom of a former MIS colleague, who would often comment on two divergent opinions with: "Thereís your side, my side, and somewhere in between lies the truth." Truer thoughts could not have been spoken.
How Can this Happen? What Can be Done?
There are several contributing factors that I have found cause this condition. First, expectations are often unrealistic or only shared by one party. In the providerís caseĖitís wishful thinking; for the vendorĖthe overly optimistic viewpoint. All too often, the contract is signed, and the provider expectsĖalmost by osmosisĖthat the A/R will be reduced immediately. In reality, it can take as much as a month to get things started. This "zero" month, as I like to call it, should be calculated into any workplan. In the "old" days, physical patient account folders would simply be pulled from file and transferred to the vendor, with an account note entered into the file. The vendor then went through the process of manually loading the data into its system for processing. In some instances, "old" is still "new," and account transfers still occur that way.
However, with greater reliance on, and familiarity with, file transfer protocols, vendors and providers are able to send electronically account data that should facilitate the data exchange. Needless to say, it may take more than one pass of the data files until all of the vagaries of file layouts and data formats are fully achieved. As a result, projects are often believed to have started sooner than, in fact, they have. With start-up time frames often not calculated, initial results are often perceived as lagging from expectation. Recognizing this needed "ramp up" time will help alleviate this first perceptual lag.
Second, providers fail to take into account that merely outsourcing work doesnít relieve them from any account responsibility. In reality, it is quite the contrary. Simply controlling what the vendor has and the current status of payments, adjustments, transfer of new work, return of old work are but of few of the tasks that must be performed by the provider in order to have a successful outsource. Additionally, requests for medical records, clarification of policies, protocols to handle missing data, etc., will need to be discussed and responsibilities assignedĖideally before the project starts.
Finally, in order to answer the age old question, "How am I doing?" vendors need to report "status" not just "acknowledgment" of accounts. By issuing status reports that specifically address performance, "vendors can define their own success; otherwise, others will define their failure." Simply put, vendors need to state their pluses, as well as their minuses.
While this is not meant to suggest that vendors arenít without problems, they will oftentimes let operational problems go unresolved for long periods of time (e.g., overdue requests for medical records, failure to provide other requested information such as contract rates, fee schedules, etc.) The vendorís dilemma comes when their contact, often the Director of Patient Financial Services, is unable to provide needed information as timely as is required for improved performance. The dilemma occurs when the vendor feels they have no recourse for these delays. As a result, their performance may be hindered.
The use of formal reports, issued on a regular basis, can be a vehicle to report performance, as well as raise issues and impediments. The reporting serves to help both vendors and providers, and can be used to monitor and measure progress. Provider senior managers and vendor executives should be on the distribution list to ensure that the full message is being viewed by everyone.
Another area to examine is fee structure. Many vendors will tell that with competition fees have become less varied, and as a result, the need to negotiate from very disparate quotes has been minimized. However, it is important that negotiating a fee that is too low may cost less in outside expense, but more in the long run in actual cash recoveries. If the provider "forces" the vendor into too low a rate, the vendor will have little choice but to focus efforts on the more collectible accounts. Usually what is compromised in those instances is the thorough working of the more difficult (sometimes smaller amounts) in favor of the larger accounts (perceived as richer to collect on). This "creaming" process doesnít help either the provider or vendor in the long run, especially if the remaining number of open accounts is still a large number. This doesnít help improve on either perception or reality.
Making It Work
No one likes to report that things arenít going well or as planned. However, recognizing early on in a process that problems exist, provides a better opportunity to work on a solution. The alternative is allowing a bad situation to get worse. Vendors are in business to "sell services." Having good references is essential to maintaining and growing that business. Providers should carefully select vendors based on a demonstrable track record. But each new assignment should be carefully designed by the vendor and provider to ensure that mis-communications are kept to a minimum. Adequate project start-up time should be budgeted to recognize that unlike certain cars, you canít always go from "0 to 60" in 5 seconds.
Finally, regularly issued progress reporting should state the good with the bad. Including senior level representatives from the vendor and provider on the report distribution list will help prevent "unawareness" from setting in. With projects of somewhat longer duration (e.g., 6-12+ months), consideration should be given to senior level meetings at least quarterly (more frequently if indicated) to assess progress and problem resolution.
If taken together we should avoid reporting, "it was the best of times, it was the worst of times." Perhaps we can simply say, "it was a better time."
The Contributor's Corner
Home Health Care Update 2001
by Andrew B. Shulman, Manager, Holtz
Rubenstein & Co., LLP
Since the passage of the Balanced Budget Act of 1997, the Medicare home health benefit has been seriously eroded. Access to care has become a major problem, in part, because over 3,300 fewer certified home health agencies are available to serve Medicare beneficiaries nationwide (approximately 1/3 reduction in the total number).
On October 1, 2000, HCFA instituted a new episode-based prospective payment system (PPS) for home health payments. While PPS has, according to many industry officials, the potential to help stabilize the program, many agencies throughout the country are reeling from the financial constraints imposed by the BBA/IPS as well as the administrative adjustments required for the adaptation to the PPS. Many agencies are experiencing difficulty in recruiting and retraining staff needed to adequately serve the growing population of disabled and elderly patients.
With little fanfare or publicity, HCFA announced revised Advanced Beneficiary Forms in use starting March 1, 2001. These revised forms are proclaimed to be onerous and more user-friendly. However, the burden is again on the HHA's back to prepare the document and inform the patient of the opportunity to demand bill the claim, which means agencies must provide services without reimbursement pending receipt of coverage decision.
One of the more controversial elements of PPS is the requirement that home health agencies provide all medical supplies required by the patient during the Medicare-reimbursed episode of care, regardless of whether the supplies are directly utilized by the home health staff. Since the initiation of PPS, some HHA's have expressed a continued desire to return to the pre-PPS era and to eliminate bundling of supplies from PPS payment. That would essentially then allow the patient to obtain medical supplies from either the HHA or an outside medical supplier.
Another controversial issue continues to be Congress safeguarding the viability of the PPS system by avoiding the 15% cut in Medicare home health agency rates, now scheduled for October 1, 2002. Patient with care-intensive needs have suffered a direct result of access of care and are at risk. A top legislative priority throughout the rest of 2001 should have Congress working with the Bush Administration to avoid any future cuts to maintain quality care for patients whose care is more extensive and expensive that the typical Medicare patient.
by Bill Pogson, AAI, ARM, Senior Account Executive at Charles F. Hahn, Inc.
If you are like most patient-centered healthcare organizations, such as hospitals and ambulatory care facilities, you're engaged in a constant battle to maximize revenue and minimize costs. One budget-cutting option that is frequently overlooked is Equipment Maintenance Insurance (EMI).
What is EMI? EMI is more like a financial guarantee than an insurance product. It replaces the budget for most of your annual equipment maintenance agreements with a guaranteed premium that is about 15% to 30% lower.
Hereís an example of how it works. Letís say that AmbulatoryCare, Inc. has annual equipment maintenance agreements totaling $1,000,000 covering all their diagnostic imaging machines, OR equipment, copiers, telephones, EDP equipment, and security system. An EMI carrier reviews all of the annual service agreements then prepares a proposal offering savings of $250,000. In addition, the policy terms enhance the scope of covered service events. You send your vendors a letter that, while assuring them of your satisfaction with their current service, converts annual service agreement to a time and material (T&M) basis. (People in the health care field like to think of this as "fee for service" as opposed to a "capitated rate".) You retain total control of future preventative maintenance and service calls. These are performed by your vendor of choice when you require the service. The paperwork is forwarded to the EMI carrier, which then pays your vendor within 30 days.
Most people with an once of skepticism will ask: "Okay, where did the savings come from?" Most service agreement pricing has a "cushion" built in above the profit margin. This "cushion" is a mini-insurance policy. The service vendor must do this to insure that an unexpected frequency of repair does not put them out of business. Yet, the expertise of the service vendor is in equipment maintenance. The expertise of the insurance carrier is insurance. The ability to minimize the "cushion" is better accomplished by the EMI carrier. EMI spreads the risk over many more pieces of equipment than any one service vendor could hope to. With far greater actuarial certainty and greater financial resources, the EMI carrier is able to safely minimize this "cushion." Think of the whole process as three entities partnering to optimize their respective areas of expertise C health care, equipment maintenance and insurance.
It is also worthy to report that many policies also expand the scope coverage beyond that of a normal service contract to include 24/7 coverage, damage caused by operator error, and power disturbances. It is estimated that about 5% of service call costs are not covered due to these situations. EMI has tendency to fill in some of the gaps between property insurance policies and service contracts.
Achieving cost savings with minimal disruption to the way you conduct business is the first benefit of EMI. The second benefit is a move from simply reacting to service events into proactive asset management. With service agreements you may pay $50,000 for an annual service agreement on an MRI machine but at the end of the year you may never know what it actually cost in terms of T&M. Even if you had the data, you may then not have the centralized data collection and processing functions to leverage the power within that knowledge. Many EMI policies come with a software function that does that for you over the Internet. The program collects all the asset management data for your covered equipment such as:
- Make, model, and serial number
- Physical location, your asset tracking number, and budgetary cost center
- Premium cost per item.
- Dates of service, T&M cost, and service event description
The software manipulates this data into almost any spreadsheet format that meets your individual reporting needs. Some of the functions include:
- Equipment Location Summary Report
- Equipment Schedule
- Preventative Maintenance Report
- Vendor Usage Report
- Poor Performing Equipment Types
- Poor Performing Equipment Models
- Poor Performing Equipment Items
Youíll also be able to manage your equipment maintenance program directly over the Internet. You can notify the carrier of changes to the equipment schedule and even track items that are currently on warranty. The software will then automatically add them to the coverage the day the warranty expires.
For many who adopt this program, it is the first time they gain a comprehensive listing and tracking function of covered assets. The first steps in effective asset management are the collection of data and establishment of the knowledge base required for making informed asset management decisions in the future. For very large organizations, this knowledge and data may be the foundation for self-insurance. Progressive EMI carriers recognize this and will continue to partner with the client in an administrative-services-only (ASO) capacity.
The scope of this article does not allow a complete explanation of the variations among different EMI policies. But here are a few points to consider when making your choices:
- Carriers vary in their financial ratings
- Carriers vary in types of equipment they will cover
- Some offer fixed dollar premiums v. sharing of cost savings
- Some have a service "pre-certification" v. total freedom of service management
- Some offer second sourcing of expensive parts to help minimize costs
Am I a candidate for this type of coverage?
You are if you have service agreements totaling between $15,000 and $15,000,000 and have an acceptable spread of risk (such as not having all photocopiers).
What industries use this coverage?
Users include health care, universities, banks, aircraft avionics, state and local governments, school boards, retailers, manufacturers, data processing, and broadcasting.
Where can you get the best guidance in selecting an EMI carrier?
Insurance agents that specialize in this market.
You may have concluded by now that EMI is not like most insurance policies. You are right. The main reasons are that it is more of a financial tool than a risk transfer mechanism. It also has a far greater affect on the day to day operations of your business. For these reasons the decision-makers that purchase EMI tend to be individuals who are interested in budgetary line items that are predictable and as low as possible. They are also concerned with the operational impacts of the decisions they make. Many in finance and operations have made a difference within their organizations by introducing the cost-saving benefits that EMI can bring to the bottom line
For more information about EMI, please refer your inquiries to DEKAYE Consulting, Inc., at email@example.com or call them at (516) 678-2754.
Health Care On The Web
Recent Health Care press releases:
HCFA : PAYMENT
RATES FOR 2002 ANNOUNCED
HCFA: HEALTH CARE SPENDING GROWTH RATE STAYS LOW IN 1999
HCFA: Program Memorandum A-01-41 for Fiscal Intermediaries - Categories for Use in Coding Devices Eligible for Transitional Pass-Through Payments Under the Hospital Outpatient Prospective Payment System
AUDIT SHOWS SUSTAINED DROP IN IMPROPER MEDICARE PAYMENTS
HHS: STATEMENT BY HHS SECRETARY TOMMY G. THOMPSON Regarding the Medicare Error Rate and CFO Audit Report
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