DeKaye Consulting, Inc. Volume III Number 3

July 1997

The Newsletter of

DEKAYE Consulting, Inc.

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

On Target

In The Good
Ole Summertime

Vital Signs

Do You Have Accounts Deceivable?

Accounts Deceivable. Every healthcare provider has them, and they come in various shapes and sizes. Not everyone recognizes them, and what to do about them. In this issue of Vital Signs we’ll take a look at the characteristics of Accounts Deceivable, and what can be done to reduce their impact and prevent their recurrence.

Examine Payer Concentrations and Amounts and Take Corrective Action

One of the telling signs that a problem exists is the concentration of similarly open-balanced accounts on a trial balance. Spotting problems with unpaid deductibles or co-payments is easy to detect, especially when either an alpha or numeric sequenced payer trial balance shows amounts like, $10, $15, $25 (for HMOs or Managed Care Plans) or $100 or $736 (Medicare Part B and Part A deductibles, respectively).

Patient accounts managers need to recognize build-ups in any aging category. This may indicate that either electronic claims are not reaching their destination, or that payers have slowed their adjudication process. Depending on where unbilled accounts are categorized, they too need to be addressed, especially if they result from pre- and post-bill errors or edit rejections.

When identifying these conditions on the trial balance, the accounts receivable (A/R) manager needs to determine if the provider’s policy supports and encourages an up-front payment policy. To make these point-of-service (POS) programs more effective, providers need to offer alternative payment mechanisms. Credit cards are an effective, but often under-utilized, mechanism for increasing up-front collections.

Additionally, electronic eligibility verification systems can help providers determine the extent of coverage and deductible and co-payment requirements. Attention to managed care pre-certification requirements is also important. Many managed care accounts begin to age without the patient accounts’ staff determining that the prior authorization is not on file with the payer.

While electronic billing is a must, care must be taken to ensure that electronic transmissions are received. Sometimes these electronic transmissions make two stops: once at a claims clearinghouse vendor, or value-added network (VAN), before reaching its final destination at the payer. In addition to using electronic transmission receipts or acknowledgment reports, providers should consider contacting payers soon after they should have received your claim. Remember, that even with electronic billing, a claim may go through some internal routing before it is on an active claim file. You’ll need to determine the "reasonable" wait time to confirm receipt (of at least one claim per payer). Staying on top of your open accounts is the number one defense against Accounts Deceivable!


Emphasis on Education

How Managed Care Has Changed Practice Management's Vital Signs

Part One in a Two Part Series by Allan P. DeKaye, MBA, FHMA, President, DEKAYE Consulting, Inc.

Patient no longer enrolled in the HMO! Claims rejected for missing information! Co-pays remain uncollected!

Sound familiar? All too often hospital patient financial services professionals could easily identify with these type conditions. Now their cousins in physician practice management roles are also experiencing these same occurrences. Physicians and hospitals are now faced with the question of aligning or allying themselves with new partners in order to survive in a managed care environment. With so much attention focused on whether to become part of an integrated delivery system, a hospital network, or similar alliance, there seems to be less energy devoted to ensuring the operational success of the new entity. Physicians, in particular, seem to be most vulnerable when it comes to measuring their own office’s financial and operational Vital Signs. This article will focus on helping physician practices identify their "Ten (10)Vital Signs" to promoting effective practice management.

Answering the Age Old Questions

Regardless of its affiliation, a physician or group must answer these managed care prompted questions:

-Am I seeing more patients?

-Am I managing their care effectively?

-Has my net revenue increased?

-Am I collecting more than before?

-Am I making more money?

These are not only questions to be asked when new alliances are being considered, but they need to be in the forefront of daily practice management routines. The most effective way for practices to formulate measures is to identify its Vital Signs. The following indicators should form the basis of the practice’s operational effectiveness :

Identifying Practice Management Vital Signs

  1. Appointment Scheduling
  2. Patient Registration/Eligibility Verification
  3. Referrals and Authorizations
  4. Up-front Payment
  5. Charge Collection
  6. Medical Record Coding
  7. Billing and Claims
  8. Collections
  9. Accounts Receivable Management
  10. Revenue Reporting and Analysis

Each of these factors can have a positive impact on practice performance. However, when either neglected or ineffective, a negative result can occur.

Capturing Patient Related Data

Under this heading, we can address the first three Vital Signs. Many patients worry about their access to medical care under a managed care program. A provider’s ability to make appointments in a reasonable time frame, and assisting the patient with options as to date and time of appointment are good ways to promote an efficient operating environment.

Less Waiting Improves Customer Satisfaction

Physician interest in customer satisfaction is increasing. At the same time that joining many managed care panels helps to ensure a steadier stream of patients and revenue, the presence of other practitioners on these panels will promote a market-driven competition that may come down to how fast you can get an appointment, and how courteous the office staff is.

Electronic Transactions Promote Efficiencies

With participation on many panels or plans, the pressure is on the office staff to maintain its familiarity with each plan’s procedures and policies. One area that can have both a significant operational and financial impact is the patient registration and eligibility verification process. While some managed care plans send its providers hardcopy member rosters, only a few have been able to support electronic transactions. The ANSI (American National Standards Institute) 270, Eligibility Benefit Inquiry (EBI), and its companion, ANSI 271, Eligibility Benefit Reply, can be more effective tools to confirm eligibility, the extent of coverage, coordination of benefits, deductible and co-payment and utilization management requirements than relying on telephone contacts.

The use of electronic eligibility systems can also help realize the following savings:

-Identify patient’s secondary and tertiary insurance coverage

-Obtain spousal insurance information

-Determine coordination of benefits with other insurances, and

-Initiate "intelligent search" capabilities to uncover other benefit coverages.

Another area where the physician’s office is vulnerable is in its adherence to the rules and requirements of various plans. In primary care practices (e.g., family practice, internal medicine, pediatrics and obstetrics and gynecology--in some plans), the "primary care physician" or PCP is responsible for managing the care of the patient. When the PCP refers the patient to a specialist or for admission to a hospital, the PCP needs to follow certain practice guidelines as a condition of participation in the plan.

Similarly, specialists need to be certain that when they identify managed care patients, they have received proper authorization to treat the patient. This ensures that they will receive their contractual amount for the service rendered, and the patient’s responsibility will be limited either the co-payment and/or deductible amounts, and not any penalties or loss of benefits for administrative oversights.

Capturing Clinical Data

The charge collection process for the physician practice is a crucial element. In addition to providing a direct correlation to its revenue base--especially for indemnity patients, it has taken on new significance in the managed care environment. With greater emphasis on clinical pathways and treatment plans, the review of medical resource consumption will be particularly important to both the physician practice and the managed care company.

If operational integrity prevails, then the charges on the bill can be easily documented in the chart. The only concern there after is that the visit, diagnosis and procedures have been coded properly. With more sophisticated computer programs and the resulting improvement in reporting capabilities, there is a greater reliance to "data enter" codes--not commentary! Code it wrong and you can lose revenue, raise concerns about practice patterns--and even incur closer scrutiny for claims review.

Although we seem to have taken advantage of order entry automation and results reporting, many practices have weaknesses in demographic data capture, and internal controls that make tracking and reconciling "electronic transaction reports" more difficult. Misstatements about revenue and charge capture not only affect practice operations, but most likely will adversely impact on the bottom line. Even more important is the prospect that errors in coding may result in audits of claims, claims review, delay of future payments and possible exposure and liability issues, too. These types of errors have a way of winding back in the patient’s possession which tends to have a major negative in the area of customer satisfaction and patient retention. Taken together, these problems have the potential to adversely effect cash flow.

Next Issue: Managing Accounts Receivable

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

: Ask The Expert

by Allan P. DeKaye, MBA, FHFMA

Q: We have encountered Insurance carriers consistently paying the wrong amount for a procedure. Each time we send it in, we have to call and tell them. Is there anything else we can do to "red-flag" this so it doesn’t take 6 months to receive the correct payment?

A: You may also want to consider how to assign open/problem account follow-up to staff. While problem accounts will generally come to a supervisor/office manager's attention possibly via a patient's complaint, routine accounts may also be held open for various obvious and not so obvious reasons.

Routine open account follow-up should be controlled using an aged trial balance. Where available, these reports should be generated by "payor" or financial class/plan code. Staff should be taught to examine the open accounts using both high dollar parameters, aging, and number of open accounts by patient/family member (the latter often facilitated by linking (companionating) family accounts either on the practice management system, or by cross-referencing an alpha trial balance.

For major payors or where you have contracts to serve large groups of patients, try to establish a payor contact or liaison who can help with claim disposition. When negotiating new contracts or renewals include provisions for prompt payment requirements and access to account representatives to handle open accounts.

Also try to include access to on-line eligibility files or obtain member rosters. Don't forget to check your practice management open account balances when making patient appointments to see if there are unpaid deductibles and co-payments that should be taken care of on or before the patient's next visit.

Comprehensive account follow-up programs should be routine in order to ensure adequate cash flow and a strengthened practice position and improved bottom line.

Q: Is there a distinction between provider (MCO) and payor organizations, and their preference to purchase vs. outsource billing systems?

A: I would expect an MCO to have either purchased or designed its system. They are purporting to providers their expertise and are usually offering a range of services, especially system functionality to support managed care transactions. However, that wouldn't preclude them from contracting with another company to provide that service. While that would have characteristics of an outsource, I'd view it as a strategic relationship or subcontract.

An individual provider might well follow your suggestion. A lot depends on their current financial situation and the immediacy of systems assistance they require. My experience with clients is that they underestimate the complexities of outsourcing. Depending on the provider's resources, they may be able to entertain and evaluate both outsourcing and turn-key alternatives simultaneously. When taken together, a provider could evaluate both options, as well as consider using an MCO or consider hiring a facility manager (f/m) to assist with the day-to-day activities.

My first suggestion to clients is to prepare a needs assessment: identifying functions that they must have and the degree to which this need remains unmet, there will be financial and/or operational consequences. There are of course other factors to consider, but a lot depends on the unique needs of each situation.

Q: There is a great deal of information regarding the possibility of problems with what is found as a result of an audit. Couldn’t this problem be reduced if a PRE-billing audit was done? (Pre-billing meaning an audit is performed on a claim and documentation for that claim BEFORE it is sent to the carrier). If problems are discovered, then the claim is fixed prior to it being sent. Does this reduce risk?

A: Pre-billing audits definitely have advantages. In addition to identifying problems before submitting the claim, the provider is able to prevent potential non-compliance issues. But there's the rub! Most providers either don't have the resources to conduct a 100% pre-bill audit; for those who can, the impact on cash flow can be significant.

In trying to find a happy medium, providers should consider doing periodic chart-to-bill audits. The first audit should establish a baseline, and the results will determine the level of problems and need for corrective action. Sample sizes can be drawn to ensure representation of different coders and physicians, or even by selecting certain procedures or conditions that may be presenting the provider with difficulties.

Typical problems include coder unfamiliarity with coding conventions (e.g., AHA Coding Clinic), chart documentation, physician understanding of E/M coding requirements and ICD rules for assignment.

Similarly, the business office's interaction with the MIS department is essential to identify problems related to the 72 hour rule and issues of bundled/unbundled procedures.

Readers are invited to read our article, "Medical Coding and Risk" which appears the January 1997 issue of this newsletter. The article has been reprinted in several other regional and national publications. You may also find our new course offering: "Safeguarding Healthcare's Cash Flow Cycle From Fraud and Abuse" to complement your corporate compliance activities. You'll find this course description also on our web site by selecting the "Emphasis on Education" icon.

Q: I am researching the market for companies that handle outsourcing of the accounts receivable business for physician groups and hospitals. Are there any articles on this topic that you are aware of?

A: Outsourcing has been around for quite a while; we just didn't call it that. Whether it was housekeeping, dietary or laundry services, or our referrals to collection agencies for the business office either in a hospital or physician setting. Billing and collection companies are becoming more aggressive in soliciting what they call "day one" billing (rather than referral at 90-120 days), as they continue to act as an extension of the business office. What we've not seen too much of is a true outsource, where the provider turns over its entire operation to an outside entity.

I am assisting a community hospital complete such an outsource of their business office right now. In addition, my article, "Outsourcing: When is it Time to Let Go?" can be found in the July 1996 issue of this newsletter. The article was later reprinted in the Receivables Report newsletter, and has been the topic of my seminar presentations to regional and national audiences.

The Contributor's Corner


by Andrew Schulman, Carpenter & Onorato, P.C.

Home Care and Operation Restore Trust

Home health agencies that have grown unusually fast over the past few years, as well as HHAs that provide more visits per patient than the average in their area, might very well be visited by Operation Restore Trust surveyors. The latest ORT probe focuses on four states: California, New York, Texas and Illinois. Out of the four-state universe of $ 6.7 billion in Medicare payments, reports have it that nearly $ 2.6 billion in Medicare claims were fund to be unallowable. By that, findings include such violations as unnecessary services, individuals not being homebound, no signatures on plans of care or no specific doctor’s orders.

Keep in mind that it is very difficult to actually prepare for an ORT survey because they are likely to be different in every region as fiscal intermediaries and state officials tend to tailor their surveys to their particular areas. New targeted states in the future would be Arizona, Georgia, New Jersey, Pennsylvania, Tennessee and Louisiana. But ORT will continue in the states targeted during the initial two-year ORT demonstration project.

Proposal to Eliminate Medicare Home Health Co-Pays

Senator Ted Kennedy (MA) will offer an amendment to strike home health co-pays from the Medicare reconciliation bill. That would eliminate the $ 5.00 per visit charge Medicare home care recipients would incur. The consensus is co-pays will restrict access to needed home care and result in increased use of costly hospital and nursing home care.

Reimbursement Shift from Part A to Part B Contemplated

The other "hot" topic is a plan that would shift a portion of home care services from Medicare Part A, where there is currently no limit on number of visits and no premiums or co-payments to Part B. The plan states that in order to qualify for 100 visits under Part A, a recipient must have a 3 day prior nursing home or hospital stay. All other benefits, shifted to Part B, will be subject to increased premiums and the ever increased possibility of co-payments.

It is extremely important to approach legislative staff and members as federal budget proposals would limit access to service for people of limited income and dramatically affect the entire home care delivery system.

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



Marc V. Weiner, FACHE, Managing Director, The Consultants Gateway, LLC

In today's healthcare environment being a visionary alone is simply not enough. To meet the multitude of challenges facing the industry, the successful management team must be able to implement well-thought-out solutions. Such solutions must identify and address the various components that, when well planned, will use available resources in an effective and efficient manner.

When complete, a business plan should serve a variety of needs. It can be used as a presentation tool to a wide variety of audiences including, but not limited to, boards of trustees, administration, physicians, financial institutions, regulatory and licensing authorities, and investors. However, gaining approval and support is useless unless the written document ensures that the action team completely understands the various activities involved in implementation of the idea.

A complete business plan consists of sections, each fully addressing a specific major component of the plan. These sections must be coordinated and organized to achieve a thorough analysis and plan of action for the proposed project.

A complete business plan addresses a variety of important issues and functions. The business plan must detail the scope of the proposed project, identify all required resources, determine key time frames to be met, identify specific priorities, define goals and objectives, improve collaboration and team involvement, analyze and proactively manage risk, act as a catalyst for improved communication and provide a means for ongoing feedback during implementation.

The implementation or action plan section of the business plan takes all the sections of the business plan and converts them from philosophy to action. It serves as a map to take the proposed project to full implementation. Use of a tracking diagram such as a Gantt chart is an excellent method for outlining the specific steps required during implementation, detailing who is responsible for accomplishment for these steps and clearly stating the time frame in which each step must be accomplished.

Successful business plans anticipate roadblocks to success and identify key strategies to implement real solutions. Merely coping with complexity and change will not bring about favorable outcomes. Today's healthcare leaders must communicate a vision and have the means of translating this vision into reality. Managing the multitude of activities necessary to achieve this goal requires the use of a reliable methodology. Converting a business plan into an action plan is a means for accomplishing this. By utilizing this process, the team leader and the team itself, will be viewed and known as positive thinkers who can identify needs, coordinate resources, solve important problems and turn strategic thinking into realistic outcomes.

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