|Volume III Number 4
|The Newsletter of
DEKAYE Consulting, Inc.
231 Oakview Avenue
New York States Governor, George Pataki, has signed legislation requiring HMOs and other managed care plans to pay provider claims in 45 days, or risk penalties and be required to pay interest as well. Responding to the public outcry, that was punctuated by a few HMOs failure to pay claims for extensive periods of time, caused providers and patients to vigorously complain to the States Attorney General.
While managed care is credited with cutting the cost of healthcare, it is also responsible for the growth in A/R. Although the States intervention will help place payers on notice, it is still up to individual providers, notably those within the patient accounts/business office/practice management function who must ensure the timeliness and accuracy of patient registration, billing and follow-up effort. The Admitting, Medical Records and Utilization Management departments also complement the efforts to collect and transmit accurate data.
Taking Preventive Action
Providers need to start by including more specific operational requirements in the contracts they sign with payers. Contract clauses that address the following points will be useful to improve the operational aspects of billing and collection.
These three steps can help eliminate surprises. Since the need to sign these agreements is important as they have both market and revenue value, the inclusion of this clause and the raising of these issues should not delay contract signing. Although, it does place some real time constraints on those who must effect the operational aspects of the agreement--and rightfully so!
Ensuring Provider Readiness
Just as sure as there are new contracts signed, there are staff who are unaware that patients with new coverages will be calling for appointments, or who will appear in emergency situations. Here are just a few steps to ensure provider readiness:
The combination of effective pre-contract negotiation and inclusion of operational terms, and the internal readiness of a providers departments that comprise its cash flow cycle are important ingredients to ensure that managing your "Managed Care A/R" is not left to chance.
Emphasis on Education
Part Two of a Two-Part Series by Allan P. DeKaye, MBA, FHMA, President & CEO of DEKAYE Consulting, Inc.
Managing Accounts Receivable
Benefits of Electronic Transactions
With varying degrees of automation, physician practices may still be producing paper claim formats or computer generated paper. Although most larger practices and those with more advanced practice management systems have been taking advantage of electronic media claims submissions--both directly and via claims clearinghouses, smaller groups can also take advantage. With the growing emphasis by payers, especially government sponsored carriers, to require electronic claiming, many physicians have had to add system functionality to their current office system. Physicians should soon find that the conversion to electronic billing is an easily supported capability.
Claims that are filed are electronically should be paid as early as two weeks sooner than its paper claim counterpart. There are also editing capabilities built in to most electronic claims packages that enable providers to correct errors that would otherwise have gone undetected until initial claims processing--only to be returned and require manually correction at the providers site before being resubmitted. Several payers have now made electronic remittance posting available which relieves many practices of a time consuming task. Many providers have been able to further capitalize on their automatic remittance posting capability by being able to automatically bill a secondary payer for any remaining deductible and co-payment.
Improving Up-front Collections
No one should dispute the value of up-front collections. Aside from the obvious cash flow benefit, the positive operational impact on the collection follow-up effort can be significant. While historically, doctors offices have been more aggressive in this area, there are new challenges as the number of managed care participants increases. We can expect more deductibles and co-payments associated with the increase in managed care covered patients.
This may present some patients, especially those with recurring visit patterns to need to find a way to simplify payment methods. Providers also will want to be able to accommodate their patients in order to maintain these relationships. While credit cards are becoming more widely accepted as a form of payment, there have been advances in card processing technology to allow patients to not only charge their visit fees, but to pre-authorize payment amounts at fixed intervals or time frames with amounts charged to their credit cards. By establishing a way to facilitate and encourage patient payment, a practice can cause more accounts to close from the trial balance. This should directly reduce the number of open accounts on file, and allow better resource allocation within the account follow-up effort.
Another often overlooked method is to review patient open balances with patients at the time they make appointments (either on the phone or in person). Not only is the expectation of making payment emphasized, it can also serve as a reminder about an overdue or missed payment, and can be used as an opportunity to have the patient act as a catalyst with a slow paying insurance company. With the recent federal regulations to allow insurance transportability, patients are not shackled to insurance companies, and can change to better plans with less fear of losing or limiting coverage. This same market-driven consumerism can be used to hasten payments from slow or inefficient payors.
Analyzing A/R Components
The business objectives of improving a practice managements cash flow cycle need to focus on several factors. Many practice managers have more responsibility than just A/R management. One key factor is being in a position to better evaluate your current A/R position in terms of critical contributing factors. Sometimes looking at a trial balance is not enough--especially when comparing two periods.
While looking at two periods in order to see trends that may be developing, an examination of the changes by Financial Class for the same periods can also identify particular problems that may be payor or practice specific. In a more detailed account analysis, there are several "key indicators" that can pinpoint areas of operational weakness.
- Days to Bill
- Days to Collect
- Numbers of Accounts to Zero on First Payment
- Number of Open Accounts
- Number of Claim Rejections
The key components of "days in accounts receivable" are the days to bill and collect. By examining the averages and variations for a sample of accounts, extreme values will provide areas where concentration of effort should lower the upper range of values, and contribute to a lower A/R. Similarly, by increasing the number of accounts that can be brought to zero on first payment indicates that up-front collection of deductibles and co-payment is being carried out. Also by watching the number of open accounts, management can gauge the productivity of staff in view of current patient visit activity levels. The number of claim rejections in total and by payor will be indicative of the accuracy of data collection and entry, and correctness of computer master file settings that guide the production of claims. Again, electronic claim formats do have the added advantage of providing more payor specific edits which give providers an early warning of claim deficiencies as discussed earlier.
Reducing Exposure and Risks
In todays environment there are many "minefields" in the path of successful practice management. If able to maintain the practices Vital Signs at acceptable levels, another area that requires attention is the area of "risk avoidance," most notably in the coding and documentation of the care rendered. With an increase in outside audit activity, whether from the fiscal intermediary, a managed care company or from the Department of Justice, practices need to exercise care and diligence in the completion of their routine tasks and operational workflow.
An internal program of quality assurance and control and monitoring is an important aspect of operations. In addition to a regular QA program, independent outside reviews are often a good way to assure compliance with policy and regulations. A regular "chart-to-bill" audit program can service to monitor for both chart completeness, billing integrity as well as conformance with clinical pathway guidelines. When coupled with a program of continuing physician awareness programs and staff education and training, a practice can identify problem areas with sufficient time to take corrective action.
While no practice or practitioner is immune from review, the larger groups and university and other teaching programs will have greater risks stemming from the recent fraud and abuse cases that have sent many facilities into a critical review process that will likely alter its financial, operational and even its clinical behavior for some time to come.
Summary and Conclusion
Physician practices are going through an identity transformation. With a movement to affiliate as a backdrop brought about by the growth in managed care, physicians will find that even after they agree on a "new corporate structures", they must still be attentive to the daily administrative rigors of practice management. Mastery of the basic components of a practice administration, such as patient registration, charge collection and coding, billing and collection and A/R management cannot be overlooked as a key ingredient in providing for revenue maximization. Avoidance of risk is a necessary goal of each practice--and one way to ensure that position is by attaining practice guidelines and conformance with regulatory policy through an aggressive education and training and quality assurance and control program.
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Emphasis on Education Course Curriculum.
: Ask The Expert
by Allan P. DeKaye, MBA, FHFMA
Q:We will be undergoing a reduction in staff in our hospital and expect some changes. How can we minimize the disruption and maintain cash flow?
A: There are many theories concerning the subject. The corrective process, even if based on budget and staffing reductions alone, needs to examine process. Even if reductions are mandated, department managers and supervisors must take a closer look at current operations to effect work improvements--otherwise they will not be able to do more with less.
All too often, we tend to become contented with the fact that the process now works. Over time, we don't revisit what tends to be, or seems to be, working. Look for simply creating worker productivity expectation as providing a often needed lift to areas such as those affecting the cash flow cycle departments (Admitting, Registration, Patient Accounts and Medical Records).
Once that is achieved, see if you can introduce technological savings. It doesn't have to be necessarily new systems--simple have MIS support program the department's "wish list items." Assuming they were requested, they should have a production impact (otherwise you wouldn't have requested them in the first place). If they are truly needed, pay for the MIS programming costs out of the savings (although that is usually a paper transfer of cost).
Elimination of wasteful usage of computer generated reports is also an important way to recover lost staff time, even if it is only to catalogue reports, and distribute them. Eliminating duplicate copies, and/or opting to produce "on screen" reports can limit the time lost unnecessarily on unproductive tasks.
Q:Dealing with insurers in our physician practice has become a full-time job. What can be done to streamline this?
A:It is important for all practice managers responsible for billing and collection to maintain controls on all "billed" and "to be billed" accounts. First, be certain that all activity (e.g., visits, consults, procedures, etc.) have been recorded in the chart, appear on either an encounter (or superbill form) or are directly entered on-line into a practice management system.
If billing electronically, be certain that transmission reports show confirmed delivery. Even checking one claim per payor to ensure receipt is a good idea (Note: you may need to perform this check after several days to allow the data to be uploaded to the payor's working file). If mailing claims (certainly those in bulk), consider sending them certified mail, return receipt required, or overnight mail, depending on the number of claims, dollar value, etc.
If using a billing company, service or MSO, review edit and acknowledgment reports when issued, check daily cash remittance, EOB statuses, etc.
For all practices: review and work your open trial balances by payor and by aging categories. If you don't get paid in the time frame you expect or that is contractually called for, start investigating. Fax new claims forms or re-transmit electronically, where possible.
Providers need to be pro-active and aggressive to prevent lost claims, or those that were never billed! This will avoid time limits being reached, especially when you can document your timely and proper actions.
Q: Our patients complain that they are receiving dunning notices from their managed care providers for unpaid bills. They say they are not responsible after they pay their co-payment. Who is right?
A: There are several factors to consider regarding the problem outlined. First, the contract or provider agreement should spell out the conditions by which the patient is liable for deductible and co-pays, and how these amounts differ for in-and out-of network providers.
Similarly, other rules and penalties may apply when the patient fails to obtain the necessary prior approval or certification. Far too many contracts fail to identify an operational contact or liaison designated by both the provider and the payer who must work out the administrative details of insurance verification (whether electronically or by roster), billing (electronic or manual) and remittance parameters, preferably before, or within 30 days of contract signing.
Secondly, I suspect in many of the contract situations alluded to by the other respondents that you'd find a clause stating that "payment will be made in thirty days for a clean claim." This, too, is a contractual requirement, and is often not adhered to by payers, and yet providers seem to be able to either recognize the delinquency, or have been unable to marshall support to force changes in payer behavior.
Recently, in New York State, State Attorney General Dennis Vacco, in responding to complaints against Oxford Health Plans by both providers and patients about delinquent payments, required correction of Oxfords's problems or it would be subject to fines and penalties, as well as being responsible for paying interest on its delinquent claims. The company has begun to rectify the problem.
Finally, this leads to provider's taking better command of their automated systems and internal follow-up of open accounts receivable. Certainly in indemnity contracts, the party of the first part, the patient, agrees to be liable to the party of the second part, the provider. Even though the assignment to the third party, the payer, generally satisfies payment, along with the patient paying their deductible and co-payment, the provider still usually has recourse to the patient for non-payment. Very simply, if the insurance doesn't pay--the patient is liable. All too often, providers accept payers standard agreements which don't provide for these types of remedies.
Many billing systems have functionality to add messages to statements--showing the balance as due from the payer, but requesting the patient to contact their carrier. This can be very effective, since it is the patient or their employer who is paying premiums--and that will get the payer's attention.
There is no substitute for aggressive accounts receivable follow-up . Contact the payer liaison (if specified) often especially if the specified time period for payment has elapsed. Be certain your claims are clean (because a justifiable delay can be predicated on a non-clean claim), and that your pre-certs are in order.
The Contributor's Corner
by Andrew Schulman, Carpenter & Onorato, P.C.
President Clinton announced a new initiative that includes tighter regulations governing the creation of home care agencies. There will be a six month moratorium on the establishment of new agencies nationwide and a doubling of intermediary audits on home health agencies. The moratorium will allow HCFA time to write tougher qualifications for participation in the Medicare home health program and will also target existing agencies forcing them to enroll in Medicare every three years.
When Clinton and Congressional leaders announced a balanced-budget agreement in July, 1997 to balance the budget by the year 2002, cuts were made in the Medicare program totaling $115 billion over 5 years, including cuts to home care of $ 16.2 billion over the next five years. The key provision for home care is for the Secretary of HHS to establish and implement a Prospective Payment System beginning October, 1999. At the end of implementation or if implementation doesnt occur, payment amounts will reflect a %15 reduction on cost limits and per beneficiary limits. For cost reporting periods beginning on or after October 1, 1997, per visit limits will be reduced from 112% of the mean labor-related and non-labor per visit costs for freestanding agencies to 105% of the national median.
The National Association for Home Care and the World Home Care and Hospice Organization - these dynamic networks of global leaders and organizations dedicated to the interests of all patients, providers, home care and hospices will make up the Home Care Exhibition in Boston, Massachusetts, October 17-22, 1997.
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 CandOPC@aol.com.
SURFING THROUGH WEBLAND
Introduction of the PAMList (Patient Account Management) Mailing List
Joining forums and mailing lists through the Internet has been an eye-opening experience. There are thousands of us out there looking to communicate with each other on healthcare issues. There are billing lists, medical record lists, fraud & abuse lists, systems lists, etc. However, we felt the specific issues that may be on the minds of those healthcare professionals in the cash flow cycle might find a forum in a mailing list dedicated to Patient Accounts Management. So the PAMList was born!
The "Patient Accounts Management List" (a moderated mail list) has been created to provide a forum for healthcare professionals who are involved with, or interested in the issues surrounding the cash flow cycle. We expect that hospital Admitting and Patient Accounts Directors, Chief Financial Officers, and physician practice managers and their respective staffs will be particularly interested in the dialogue that will be supported by this list. In addition, long term and ambulatory care facilities and home care agencies will also find our discussions to be relevant to their billing and collection efforts, as well.
Further department heads who are in medical records (health information management) and Utilization Management will also find their participation and input to be both rewarding and informative.
We welcome your questions about topics such as (but not limited to):
Medical Records Coding
Bad Debt and Charity Care
Accounts Receivable Management
Fraud and Abuse
Training and Education
Instructions forSUBSCRIBING and POSTING can be found by visiting our PAMList Page. We welcome your active participation and look forward to seeing you in cyberspace.
DEKAYE Consulting, Inc.
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