DeKaye Consulting, Inc. Volume II Number 3

October 1996

The Newsletter of

DEKAYE Consulting, Inc.

231 Oakview Avenue
Oceanside, New York 11572
Phone / Fax: (516) 678-2754

On Target

Autumn Leaves

Vital Signs

The Aging of Your Accounts Receivable

Over the years, it seems we have had a fascination, if not an historical link with the aging of A/R, and a focus on accounts that reach a 90-day threshold. We tend to use this "marker" as the division between what is collectible and what should be relegated or turned-over to an outside collection agency. However, with our continued reliance and measurement about this point, we find a significant contributing factor that may be artificially impeding the lowering of our collective investment in A/R.

Data Mailers, Statements and Pre-lists

To a large extent, we rely on (a rightfully so) a variety of automated collection tools to help us liquidate a patient’s outstanding self-pay balance. No one will dispute the effectiveness of "dunning" letters, often in the form of data mailers and statements that are sent at pre-determined frequencies, and with increasing degrees of message severity. Although used for both self-pay balances, and a reminder to patients of what balances are still pending with payors, this tool still provides a relatively inexpensive media to reach the large number of patients with balances. But when was the last time your facility updated the messages, changed the frequency or measured the effectiveness of this tool?

Chances are the messages and frequency are geared to coincide with a Bad Debt "pre-list" being generated about 90 days from the discharge date (for inpatients) or service date (for outpatients). Once verification of the pre-list occurs, accounts are transferred to collection. With the continued emphasis on not only reducing A/R, but achieving greater efficiencies in the patient accounting office, reliance on the "90" day time frame needs to be re-examined. Healthcare Chief Financial Officers and Patient Account Managers are striving to get their days in accounts receivable under the "60" day level. This requires the formation of a new strategy.

Adopting the "30 Day" Plan

With the growth of managed care and HMO contracting in many markets throughout the country, we are seeing a preponderance of agreements that call for payment within thirty days (from submission of a "clean claim"--of course). Similarly, with Medicare continuing with its 14-day payment lag hold, and many states having instituted a variety of budget inspired payment delays, healthcare providers need to adopt a more aggressive "pursuit strategy."

Simply stated, 90 days is too late to be following-up on open accounts! In order to achieve days outstanding at or below 60 days, the magic number becomes 30 days from discharge or service date to initiate aggressive follow-up. Here is how a more aggressive follow-up plan might be formulated.

With improvements in feature functionality, most HIS or A/R systems can produce ad hoc reports or selected A/R reports called "Targeted Trial Balances." We suggest these parameters:

In reviewing the volume of accounts and dollar amounts per payor under these criteria, the provider will identify "targets of opportunity."

Pursuing New "Targets of Opportunity"

We think you’ll be surprised at how many accounts you’ll find that you might have otherwise expected would have been paid already. The managed care, HMO and indemnity payor will surface who owes the facility significant sums. By producing reports by payor, you can more easily mount a follow-up strategy for each payor. By examining a sample of accounts within each category you’ll be better able to identify operational problems associated with the registration, charge collection or billing process. Even self-pay collection effectiveness--i.e., data mailers and statements--can be measured by reviewing these reports.

Improving Operations

No doubt there will be a variety of reasons why these accounts are still open. Some will offer that those accounts that are 40 days old shouldn’t be worked on--to the contrary, if they are an HMO or managed care plan with a 30 day payment provision, then they represent a must opportunity to capitalize on. After all, the CEO and CFO will be under the impression that you are in fact collecting on those accounts--and you need to make the point of payor non-compliance if this is the case.

Not all problems will be the payor’s. You are likely to find eligibility, bill or utilization related issues standing in the way of collecting on an open account. The only difference is that you will have identified these problems about sixty days sooner than in the past. There will likely be revisions to policies and procedures, and improvements in productivity that you can effect to further improve you A/R strategies.

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Improving the overall aging of your A/R can be facilitated through a targeted approach and a basic re-thinking of some of the benchmarks values we tend to take for granted and overlook when formulating our A/R management plan. Adopting a "30 day" A/R strategy will help you to lower your overall investment in aged accounts, and help you more aggressively pursue an even more current open accounts position.

Emphasis on Education

If we look around the hospital business office or physician practice management setting, we are bound to find some new technologies to help us bill and collect our open accounts faster from patients and insurance companies. So why then do we find both hospitals and physicians still wrestling with their investment in Accounts Receivable (A/R)?

Defining a Need

Despite the efficiencies we have attained, we tend to often overlook a basic building block in our organizational structures. Supervisors and Staff. These two important ingredients in our resource pool, while very capable, may be missing important ingredients in the A/R equation.


We tend to have a class of individuals upon whose shoulders we rest the burden for increasing productivity and achieving operational improvement. Upon closer examination, we find that these individuals are more, "working supervisors" than "supervising supervisors." The differences are most notable in their maintaining both a workload, as well as some administrative functions such as time and attendance monitoring. In pulling their own workload, they are often compromised by being able to assign work to others, review other’s output for quality, and measure productivity both on an individual and group or departmental basis.

While many supervisors rise through the ranks by demonstrating proficiency in various tasks, they are not given some of the supervisory training that equates to measuring performance and improving productivity, but rather on how to comply with institutional regulation. We don’t wish to minimize the latter, but rather to make a stronger case for the former.

One area that a supervisory course could begin to focus should be on numerical relationships. As managers, we tend to think that concepts like mean, median and mode are easily understood by all. We need to re-emphasize these concepts as the basic building block for analytic study.

There are very practical applications. A review of a trial balance identifies a preponderance of $100 outpatient Medicare balances. This "modal" value represents the Part B deductible. Now we didn’t need to identify it as the mode, but when we also see the increase in $25 (deductible) balances in HMO or managed care plans, we see the similarities in not collecting up-front payments from patients. Again failing to understand how to calculate averages will prevent a supervisor from comparing worker productivity, let alone determining if a department is meeting its goals for the month.

Similarly, even the best of us may have forgotten how to calculate a percentage change from the current to a prior period. With the greater reliance on spreadsheets, we should ensure that our supervisors are well versed in both arithmetical relationships and in computer applications--not just information or billing systems. As we introduce more graphic tools, we find new dimensions for presenting our findings and making our recommendations for change.


In many cases both our front and back office staff need to speak to patients. When was the last time you (as a manager) sat in on a patient interview? Did your staff ask all of the right questions? Were they able to demonstrate to the patient an understanding of the facility’s policies and procedures?

There has been an increasing emphasis placed on customer service, especially as competition for patients increases among hospitals and physicians. Our staff in the Admitting and Registration areas are our ambassadors of patient relations. To the extent they are viewed favorably, we benefit; however, a negative opinion can have quite the opposite impact.

We need to be sure our front end staff are fully versed in all aspects of managed care contract requirements, especially regarding pre-certification and other utilization requirements. Our ability to appropriately collect deductibles and co-payments at the time of service is also important. When asking for money, our staffs need to be particularly sensitive to patient concerns. However, by collecting at or before the time of service, the provider benefits by reducing and prolonging the collection of modest sums of money after the fact. Patients also benefit by avoiding these contacts during the recuperative period. But it is management’s responsibility to ensure that staff is fully trained on policy and procedure, and employs a sensitive and caring demeanor to serve both patient and hospital interests.

While the nature of collections staff indicates effort after the fact, they must still conduct themselves in a very professional manner. Although often placed in an adversarial role, their ability to help the patient overcome their objection to payment is essential. In the same way that we sought to have our supervisors receive training on a variety of subjects, we must do the same for those on our staff.

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Meeting The Need

These objectives can be satisfied through a comprehensive and ongoing educational program. Whether arranged as part of a formal in-service program, or contracted for as part of an outside professional service, these types of programs can help make the difference in attitude and performance. Making sure our supervisors and staff are trained and proficient in their skill sets is important for attaining long term department goals and objectives.

Please click here for more information about the DEKAYE Consulting Inc.
Emphasis on Education Course Curriculum.

The Contributor's Corner

Home Health Care Update

by Andrew Schulman
Carpenter & Onorato, P.C.

Effective for cost reporting periods on or after July 1, 1996, the Health Care Financing Administration (HCFA) posted new Medicare home health agency cost limitations which impacted all disciplines. The methodology used to develop the schedule of limits set forth is the same as was used in setting the limits effective July 1, 1993, basically utilizing the latest settled cost report data from freestanding HHAs. However, the budget neutrality adjustment factor applied to the labor portion and the changes in the wage index led to the following results:

Per-Visit limits have increased for physical therapy, speech pathology, and occupational therapy in metropolitan areas, and for speech pathology and occupational therapy in rural areas.

Per-Visit limits have decreased for skilled nursing, medical social worker and home health aide in metropolitan areas and for skilled nursing, physical therapy, medical social worker and home health aide in rural areas.

It is basically the combination of these per-visit limits with their regional wage indexes and an agency’s own volume of visits that determines whether a specific agency’s cost limits have increased or decreased.

It should also be noted that President Clinton has proposed a cost limit freeze in his budget proposal for fiscal year 1996-1997, similar to the OBRA 1993 budget legislation, not enacted in the fiscal Federal budget for this year.

Should you wish to discuss this topic further or need more information, please feel free to contact Andy Schulman at Carpenter & Onorato, P.C. at 516-745-0808 or through E-Mail at


Health Care and Legal Issues

by Scott Einiger, Esq.

[Editor note: This column previously appeared in MM News, the New York County Medical Society newsletter in the July/August 1996, Vol. 9 No.4 issue. Mr. Einiger is an experienced healthcare attorney associated with the law firm of Fager & Amsler, (212) 889-2498]

Q: I was recently contacted by a representative from the Department of Health concerning a patient who tested positive for syphilis. Don’t I need the patient’s authorization before I disclose medical information concerning my patient?

A: In limited instances, medical information obtained in the course of the doctor/patient relationship must be disclosed by a physician to the Department of Health, and a patient’s authorization is not required. Sexually-transmitted diseases such as syphilis and gonorrhea are included within the list of diseases that must be reported. Such reports are made in accordance with the New York State Sanitary Code/Public Health law to the Department of Health in order to control the spread of disease and must be made within 24 hours. Physicians can contact the New York City Department of Health, (212) 788-4204, for a complete list of reportable diseases/conditions and to receive report/filing forms.

Q: What decisions can a health care proxy agent make in the event that my patient loses decision-making capacity?

A: The general rule is the health care proxy agent stands in the shoes of the patient and may make any and all health care treatment decisions that the patient could have made subject to any limitations expressed in the proxy by the patient. However, the agent may only withdraw or remove life sustaining artificial/nutritional hydration, if he/she is aware of the patient’s wishes.

Q: What is considered confidential HIV information within a medical record?

A: Importantly, confidential HIV information is not limited to a positive HIV test result or the actual disease known as AIDS. It would include information about an individual who has been the subject of an HIV-related test (whether the results were positive or negative); an HIV infection; an HIV-related condition or AIDS. It is imperative that the physician be aware when medical records contain confidential HIV information as that they may be released in an appropriate fashion.
Determining whether a medical record contains confidential HIV information is critical as stricter standards must be met prior to disclosure and release of medical records containing HIV information. In order to release these records, a physician must receive either a specific authorization from a qualified person or court order. A subpoena would not be sufficient to release medical records containing confidential HIV information.

Please Note: The information represented in this column is intended for education purposes only and does not constitute legal advice. In case of a specific legal question, always consult an attorney.


The Internet possesses a gold mine of resource material on the healthcare industry; from medical, administration, technical systems, consumer information. In our travels, we have come across a variety of interesting and highly informative websites which provide free resource material. This is by no means the entire list, but a sampling of those who we feel provide factual / editorial / reporting / resource data of interest to our readers. The website addresses below are current (as far as we know) as of this publication date.

Agency for Healthcare Administration (AHCA) -

Agency for Health Care Policy and Research (AHCPR) -

American National Standards Institute (ANSI)-

Center for Health Research and Communication, Inc. (CHRC)-

Data Interchange Standards Association ( DISA) -

HCFA's Medicare - Medicaid HOME PAGE -

Health Administration Resources -

Healthcare Association of New York State (HANYS) -

Healthcare Financial Management Association (HFMA) -

Health Care Resources on the Internet -

Health Information Management Resource Sheet -

Health Industry Business Communications Council (HIBCC) -

Health Law Resource -

Hospital Web -

Managed Care Observer -

National Health Information Resource Center (NHIRC) -

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D E K A Y E Consulting, Inc.
231 Oakview Avenue, Oceanside, NY 11572  Phone: (516) 678-2754   Fax: (516) 825-4458
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