Volume VII Number 3
|The Newsletter of
D E K A Y E Consulting, Inc.
231 Oakview Avenue
Summer in the City
FORECASTING CASH COLLECTIONS
By Allan P. DeKaye, MBA, FHFMA, President and CEO, DEKAYE Consulting, Inc.
Art or Science?
The crystal ball is often cloudy. The ability to predict "cash flow" from patient service revenue with certainty is often complicated. The ability to generate a timely and clean claim is a precursor to not only "when," but "if" payment will be received. Transmission and receipt is another story. The overnight package that went awry! The luggage that went to SEA (Seattle) instead of SFO (San Francisco)! These are everyday personal life stories that easily compare to the claim that left the hospital information system (HIS), and got to the "claims clearinghouse," only to be deposited with a payer who either can’t (or won’t) acknowledge its receipt. Or perhaps the claim found its way into the "dead letter file." Without billing there can be no payment.
On the other hand, a clean claim delivered timely should result in payment, and it does. But how many claims go in that direction as opposed to the more circuitous route, requiring seemingly endless follow-ups. A provider’s ability to track its claims (successfully) to their final destination is a must–especially given the volumes of accounts our facilities are producing each day.
Improving the Odds!
Just as games of chance have odds and payoffs that affect a casinos profit-margin, the ability to address the predictability of a facility’s payers is necessary to direct the A/R management effort.
Consider each payer a game of chance–some more manageable than others. For example, Medicare should have a payoff on a clean claim in 14 days. A claim not paid, either didn’t get there, was returned, rejected or suspended for more information. But if clean–14 days! Therefore the ability to direct follow-up of accounts submitted (with confirmation) in and around the 14 day time frame provides the best chance of catching a problem, if one exists, or confirming that payment has been approved, and that the payment is scheduled for 14 days later. Many Medicare FI’s (fiscal intermediaries) will have technology (although varying) that can help you obtain this information. And certainly with electronic remittance advices, the ability to have access to payments quickly greatly reduces the time lag associated with the mail.
Using this same model, Medicaid (which varies by State), can also be a predictable amount. Experience indicates that Blue Cross plans have generally been reliable payers over the years. This provides a "wild card" for the provider when one or more very prompt payers can be counted on–especially when they have substantial volumes of covered lives. Having this flexibility allows resources to be focused on payers whose volume and propensity to pay can help offset shortfalls in other areas should they occur. Otherwise, then can be an anchor in a plan to accelerate cash flow recoveries.
Contracted payers should be the easiest to predict. Perhaps because many are managed care payers, there are other factors such as utilization management requirements, or clean claim issues that make the "within 45 days," "at 30 days" or other time frame seem inextricably long, or simply not met.
If you’re familiar with the casino game Blackjack, or "21," you may know about "card-counters." Card-counters employ a variety of methods to keep track of the cards that have been used in each hand of Blackjack. The object of the game is to have two cards equal "21" (face or picture cards count as "10," and aces count as either "1" or "11"). Exceed "21" and lose; exceed the dealer’s hand and win (enough for the aspects of the game). The odds are said to improve as you become increasingly more aware of the "events" that immediately preceded (cards already dealt), such that future events (the remaining cards to be dealt) are more predicable as to value. Think about it.
If you loose every hand of Blackjack because you exceed "21," it may be analogous to all of your claims being rejected or pended because of an error (i.e., clean-claiming, transmission, etc.). However, on the other hand, claims that are always paid, are like being on a win streak. Enough said on the art of gaming. The odds of getting a clean claim paid seem better than a string of Blackjacks!
But by improving your game (e.g., billing, collection and reporting), you can increase the odds that your payments can be increased.
Playing the Game
Although not suggesting that we all run off to the gaming establishment, I do encourage you to take a step back and watch "how the game is played." The billing and collection game, that is. By tracking a payer from "billing to collection," you will be surprised at how many opportunities exist along the way to recover lost time that will speed the cash flow cycle.
Keep in mind that you can improve the outcome. To adapt the slogan: "Bill with your head, not without it!"
By Allan P. DeKaye, MBA, FHFMA, President
and CEO, DEKAYE Consulting, Inc.
In the July 1996 issue of this newsletter, the question of outsourcing was framed by asking, "when is it time to let go?" Today, some five years later, the answer for some is–"Still not yet!" While others have achieved the leverage that was sought, there will also be those whose experiences were neither successful nor amicable. Under the right set of circumstances, outsourcing can make a positive contribution to organizational effectiveness, as well as the bottom line. These three scenarios will be examined to identify their unique characteristics and circumstances.
Flood waters are rising! A/R is increasing, and every valiant effort to stem the tide has failed. Nonetheless, the thought of paying an outsider to do the work is not palatable. No other scientific objection is noted.
However, arguing that companies will "cream" the accounts–taking the lucrative, more collectible insurance accounts, but not the lower balanced or more difficult accounts is a fair concern. Similarly, the lack of on- and off-site support (real or perceived) is also arguably a "show stopper." Although with the reliance and capability to support these projects with electronic data transfers, some of the manual support efforts characteristic of the past are no longer needed.
There is also the sense of (false) bravado–"we can do it ourselves." In some cases that is a possibility. But with many geographic regions reporting that recruitment of qualified personnel is difficult, if not impossible, this approach may be wishful thinking.
The procrastination sets in when "no decision" is made, or the decision-making process becomes a "never-ending" process. In the past, fees had been very much an issue. Surprisingly, recent competitive selection processes indicated that the pricing submitted by vendors was much closer, almost rendering it a moot point in the decision-making process. While this phenomenon doesn’t and should not preclude negotiating more favorable terms and conditions, the adage, "you get what you pay for," should be remembered.
Vendors who understand the marketplace should submit pricing that is competitive. Where norms are exceeded or deemed to be at the high end, the vendor should be able to demonstrate the value-added service to be rendered or performance levels to be achieved to justify the pricing differential. That said, it is still up to the customer to ask the question, and discern the value of the increment.
Forcing vendors to lower pricing below what they deem to be acceptable levels may result in their inability to devote the resources needed to provide the expected level of return. Faced with that situation, vendors should "walk away" (easier said than done), because a bad business deal has two victims, not just one.
At this end of the spectrum, we have "procrastination," or the inability to come to closure. At the middle of the spectrum, we have "partnership."
"It takes two to Tango!" Why do some relationships work so well? Vendors should tout their "showcase clients," if for no other reason than to demonstrate that "it can happen." But making it happen often involves several key ingredients not always found in all situations.
"Communication" and "cooperation" are two elements that are necessary–not only between vendor and client, but especially within the client (provider) environment. Setting realistic expectations, and providing for clear delineation of tasks, time frames and responsible parties can facilitate a successful implementation of many of the products, services or systems typically associated with the cash flow cycle.
If either of these variables is missing, the other can also be compromised which further reduces the effectiveness of the overall project. Project management and leadership from the both vendor and client perspective help keep the process and participants on track.
The "partnership" concept is one that brings a vendor closer to the client. Not uncommon in the cash flow cycle is for a director of patient financial services to be asked to report on progress towards goal attainment. This may also include a discussion of problems and impediments, and actions taken to overcome these obstacles. If outsourcing is part of a strategic A/R initiative, then the vendor(s) should also be a part of that process. Vendors who can present and discuss "performance" reports rather than simply "acknowledgment" reports can usually be counted on to provide feedback. They can also discuss the things they have been able to contribute, as well as areas causing problems to the billing and collection process.
This scenario is attainable, but it does take commitment and dedication to a process. While this portrait may seem idyllic, it should not be construed as a "panacea," and it is quite possible that Paradise Found could become Paradise Lost!
How do they happen? Missteps, mis-communication, mis-interpretation. Intentional. Unintentional. Often hard to pinpoint causes, and all too often difficult to "undo" the damage. The damage comes in many forms. As a result, it is not uncommon for there to be strained relationships, finger-pointing and loss of control of the process. The result will be "performance below expectation."
While prevention can help, outsourcing projects often require a blending of both technical, operational, and (yes) political resources and skills (for both the vendor and client). The following is a listing (not meant to be exhaustive, nor in priority order) of those items most likely to cause problems:
Vendor boasts unrealistic expectation (usually in percentage or amount of anticipated collections)
Client’s technical capabilities overstated
Extent of "data integrity" issues greater than anyone expected or would acknowledge
Responsibility for support functions (e.g., medical record requests, payment and adjustment data, etc.) not clearly delineated or coordinated
Failure to adhere to deliverable time tables, and
Reporting to senior management not done on a regular basis.
While other events may be causal factors, any one or more of the above listed factors can have a crippling effect on an outsourcing project.
Choosing Wisely: "Don’t Let This Happen To You!"
Avoiding the pitfalls of outsourcing aren’t very different from preventing daily or recurring internal problems. Although good management skills and techniques may not be enough to fully insulate a provider from a bad outsourcing experience, they can help a project from veering off course, and more desirably meeting and exceeding expectations.
Outsourcing can be a powerful stabilizing and equalizing force in the quest to conquer an out-of-control A/R file. Given the "three roads to choose from," the partnership route is the one best traveled.
The Contributor's Corner
Home Health Care Update 2001
by Andrew B. Shulman, Manager, Holtz
Rubenstein & Co., LLP
HCFA's reorganization, under the new name Centers for Medicare and Medicaid Services (CMS), should mean closer attention to Home Health Agency concerns by Medicare management staffers. Health and Human Services Secretary Tommy Thompson announced that, in an effort to modernize, change the image and better reflect the mission of the agency, CMS will be split in three divisions to better reflect those major components each will handle. The three divisions include a focus on the traditional fee-for-service Medicare programs, including home care, a Center for Beneficiary Choices and a focus on programs administered by states, including Medicare.
The industry has had frequent discussions with the old HCFA about its PPS problems. the need for a policy preventing reconstructive application of new regulations remains critical, especially when recent Congress Budget Office findings have concluded the expenditures for the home health industry have declined. While fiscal year 2002 Medicare home health prospective payment system rates are now published and reflect a 3.6% market basket index increase, the industry, as a whole, cannot underscore the excessive reimbursement reactions the industry has sustained since the BBA of 1997. Support for and passage of legislation to eliminate the additional 15% Medicare reduction scheduled to go into effect October 1, 2002 becomes increasingly critical.
In addition, accounting and financial reporting problems are still common among home health agencies as a result of the implementation of PPS reimbursement. I would surmise that CPA's across the country are wondering whether their home health clients are the only ones having problems. Of course, the answer is no. In particular, the problems have developed principally as a result of:
co-mingling of IPS and PPS bills by patients
inadequate attention to receivable details by the agency
continuously changing rules relating to PPS implementation and cost reporting deadlines
the 107th Congress has budgeted some 300 billion dollars for a Medicare and prescription drug relief program. members of the Congressional staff must hear directly from their constituents about their hopes for, and challenges within, the home care industry. Fortunately, many agencies are doing well, financially, under PPS reimbursement. Unfortunately, most are not certain how well they are doing. Now is the time to get PPS financial management under control and they must be made aware of the importance to the patients. This message must get to the Washington to avoid a repeat performance of these past four years.
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