Two Steps Forward, One Step Back

Claim rejections have multiple, negative impacts on the cash flow cycle. First, they delay receipt of cash; to the extent that these delays are widespread, they can significantly impact the bottom line.

Second, the research-review-reclaim process can be time consuming, and diverts staff away from other follow-up activities. While some claim rejections are unavoidable, most are preventable when procedures and systems are working to:

1. Require all insurances to be verified (or at a minimum those where electronic eligibility verification technology is available)
2. Check insurances for selected payers where claims rejection has been high, or the payer is a predominant payer in your facility’s financial case mix
3. All inpatient stays should have insurances verified
4. Pre-admissions or electives should also be pre-registered and verified
5. Primary and secondary insurances should be obtained (or requested--especially secondary coverages) for all patients (notably children)
6. For high volume outpatient areas, consider screening and verifying if not for every visit, at least on a periodic basis, and annually at a minimum (although this is probably too infrequent)
7. Post all claims denials and reasons to the account, and include an account note to alert other staff who may handle the account
8. Post return mail messages to the account and account notes so that you'll have a chance to flag the account and send the patient to a financial counselor for re-registration
9. When making new appointments, check open A/R balances, and account notes to see if you need to cover open account balances with the patient
10. If you have verified insurances, you can improve customer service by instituting "express admission" and "courtesy discharges"; if not, you should require patients to be seen at discharge.

Claim Rejections Are Preventable!

Insurance verification and clean claim generating capabilities are a must. But in addition, the thorough and accurate front-end data collection and entry by the admitting and registration staff is necessary to ensure claims acceptance. Pre-admission programs are essential to staying on top of inpatient admissions. Working with the top admitting physicians’ office staff to improve the data exchange between physician and hospital can make a big difference in reducing claim rejections.

Similarly, having an appointment system that works is important for reducing outpatient claim rejections. If patient arrivals can be staggered to match the appointment slots, then the registrar staff can have an opportunity to do basic insurance checks of the arriving patients. Having updated information systems and account notes easily available to identify previous claim rejections or denials, or a bad address, can help you identify those patients that should be seen by a financial counselor.

It is very important for the registration staff to be well advised about new HMO and managed care contracts--particularly when it comes to obtaining prior approval or pre-certification to ensure compliance, and ensure payment. It certainly helps to collect any deductibles and co-payments at the time of service. It not only serves to improve cash flow, but tends to act as an additional step in the verification process.

When conducting the patient interview, it is important for all front-end staff to confirm the patient’s identity, be certain to obtain essential demographics and financial information, and be careful with accurate data entry.

"A Hard-to-get Ahead Year"

By most A/R accounts, 1997 will likely go down as a mixed results year. Some of the gains expected by increasing electronic billing and remittance processing were offset due to increases in managed care penetration, and the trademark rise in "days to pay" that seem to be accompanying this payer. With the growth in managed care in both Medicare and Medicaid, many providers found these new insurer groups unable to support electronic billing formats, and the return to computer generated UB92's and the manual effort that is required offset some of the manpower savings built on the re-engineering process.

Many A/R departments spent more time with corporate compliance planning, as well as in actual audit preparation, review and reporting. Outsourcing continued to receive attention, as outstanding days in A/R was more likely to rise in the larger volume outpatient arena. With mergers and acquisitions among providers still the rage, a wave of uncertainty in the supervisory and management ranks raised consciousness awareness levels (read: "job security") to high alert.

"1998: Promise or Pain"

In 1998, the compliance picture will continue to be present, and with the government’s issuance of a model compliance plan expected, those providers who have not yet embraced the concept will find themselves with no excuses, and a late start into focusing in on "things that will hurt them" in billing basics.

While outsourcing continues to fill in the gaps in lean business office staffs, the mergers and acquisitions are giving rise to a new look at consolidating systems and business office staff. As providers join forces, mergers among the systems vendors is also occurring. This new look for 1998 will have many noting, "You can’t tell the players without a scorecard!"

While we’ll see too many A/R departments playing to the national averages, we continue to recommend that your battle cry be, "A/R: How Low Can You Go!" Getting there, of course, is a different story, but staying in the middle is mediocre--and not a way to win.

Stay Simple, Stay Focused, Stay On Top

If you’re like most A/R departments, you’re running lean on staff, and have little room for system or operational glitches that so often plague the cash flow cycle. Here are our New Year’s resolutions for 1998 that we hope will help:

1. Loose no ground! Establish baselines in "days to bill," "average daily cash," "claim denial rates," and "days to pay" measures.
2. Identify strengths. Rank you key measures and determine departmental best and worst areas. Try to concentrate resources on things your department does well, and focus on the most "liquid payers (i.e., those that pay promptly)."
3. Isolate problems. If you can quantify and determine causes of problems determine if they can be fixed at the departmental level. If beyond your ability or purview, bring the matter to the next level of management. Follow the same advice if external causes are negatively impacting the department. Of course offer solutions, but put the "monkey on the right back!" You can’t solve everyone’s problems, and need to focus on strengthening patient accounts.
4. Raise the bar: Each month, you should strive to be better than the month before, especially on your key indicator measures (see #1, above). Make sure both staff and superiors are aware of your goals and performance. In this case, strategy is not a secret, it should be a rallying point for all concerned parties in the cash flow cycle (including other related departments).
5. Report, Reward and Re-start: Each month’s performance needs to be reported and analyzed. Determine what strategies worked, didn’t work or need improvement. Acknowledge staff’s contributions, and what is expected next. Keep everybody ready. While months end, efforts need to be continuous, and adjustments to strategy, process or procedure must often be given on an ongoing basis.

Time is of the essence! Outpatient registration is toughest with increasing volume, and even with a true appointment system (not just block appointments), you will be hard pressed to complete even a cursory follow-up registration check-in (including re-verifying eligibility, --e.g., Medicaid--and checking for managed care approval, etc.--in under 5 minutes per patient; new patients will be longer.

You might try looking at your area logistics: are you using single feeding lines to hopefully several staff processing just follow-up check-ins; consider having one or more staff (or Supervisor) walking the line to determine if you can bypass some of the registrants--insurance card ok--. This form of "express admission" can help you limit interview follow-ups to all but necessary patients.

Depending on your payer mix, staff competencies, and logistics, you might consider de-centralizing and distributing responsibilities to the actual clinics. I favor centralized, but sometimes you have to consider other options especially when patient satisfaction is at stake in a very competitive environment.

You should check to see if this is a one time occurrence, or if it is happening with frequency. If your clinic is part of a larger facility or enterprise network, or if there has been a recent systems conversion or update, you may need to examine recent remittance vouchers.

Perhaps another important consideration is vendor selection for outsourcing. The RFP (Request for Proposal) process may be a helpful tool to differentiate vendors, both in terms of functionality and capability, as well as price.

While hospitals are more apt to use this process whether outsourcing the voluminous outpatient A/R that they have (and even inpatient operations), physician groups are likely to be approached by MSOs for both billing and collection services, negotiating managed care contracts and merger and acquisition services.

I'm sure many of us have experienced meeting the anesthesiologist shortly before the procedure. By providing this introduction, you can probably reduce patient anxiety, and perform your own (brief) registration and insurance confirmation. Having the hospital set the stage for your introduction makes sense as it portrays total team care.

If the hospital doesn't have a formal pre-admission program, they too, are probably not collecting sufficient up-front collections (and insurance information). Now would be a good opportunity to explore starting the process.

This same problem affects laboratories that must often process "specimen only" without the benefit of a face-to-face patient encounter. While maternity pre-admissions have similar considerations, there is usually a policy letter in the Ob/Gyn offices instructing patients on how their reservation is made, as well as their financial responsibility. Usually the hospital does okay in getting its up-front deposits (another anesthesiologist opportunity).

Both my hospital and physician practice clients have seen increases in their accounts receivable. This becomes increasingly the case when new contracts are entered into, and the front end registration/reception staff have no idea.

A: The question of organizing a follow-up unit often entails deciding whether to organize account representatives on either an alpha or payer based distribution. It is important to consider the following factors:

1. How large is your hospital or practice?
2. Do you have a large open A/R file?
3. What is your payer mix?
4. Hospitals need to consider composition of the A/R: inpatient vs. outpatient
5. Practices should consider if they have predominant contracts that comprise a significant portion of their A/R

While I generally favor an organization by payer, I do believe that any system can work as long as the following ingredients are present: well trained staff and effective front-line supervision. Failing those factors: any approach is subject to inefficiency and ineffectiveness.

Payer directed follow-up can be especially effective when:

1. There are sizeable number or dollar amounts of open A/R in specific financial classes and plans
2. The ability to system generate selected trial balances by payer (or plan type) lend themselves to better work distribution, including using this targeted trial balance as an attachment to a payer liaison or executive to demonstrate that a large payment liability exists. (When all normal follow-up efforts fail--use these reports and go high up in the payer chain of command!)
3. The availability of electronic transactions for eligibility and claims (usually from a dedicated computer device--or directly integrated into your HIS--hospital information system--or practice management system) may facilitate the ease of inquiry, follow-up and re-billing.

Finally, some of my clients have had success implementing a "product line" approach. This methodology involves an inter-departmental approach and might be organized either by payer (all Medicare, Medicaid, etc.) or by provider type (e.g., inpatients, ambulatory surgery, ER, etc.). It does require an organization that is committed to this process, and staff that can transcend many departmental processes.

Efficient home health providers stand to benefit from the prospective payment system for home health agencies that Congress has mandated. The real question and problem is how long it will take for PPS to arrive. The Balanced Budget Act signed in September targets October 1, 1999.

In the meanwhile, the controversial topic of Interim Payment System for home health agencies, which went into effect for cost reporting periods effect October 1, 1997, continues to threaten the economic viability of many home health agencies. Providers throughout the nation, assessing the impact of the Interim Payment System have expressed grave concern of the potential reduction in revenue from the per beneficiary caps.

Guidelines will soon be released for obtaining surety bonds for all home health agencies, effective and in place by January 1, 1999. The bonds must have a minimum value of $50,000 and can go up to approximately $ 2 million, depending on the relative size of the agency.

HCFA is still on track for lifting the moratorium of new certifications for home health agencies. President Clinton announced this proposed six month moratorium on the approval of the new Medicare home health agencies in mid-September. Speculation has it of an early end to the moratorium but uncertainties over regulations governing the every three years enrollment of Medicare home health agencies still exists.

This past year has seen home health care agencies of all sizes -- ranging from national publicly-traded companies to "Mom & Pop" operations serving only one county become the favorite target of both federal and state prosecutors. The reason is simple: the current audits/investigations are yielding significant civil recoveries and/or criminal prosecutions. On the federal level, FBI and OIG agents are investigating how Agencies get cases to ascertain if the federal anti-kickback law (a felony) has been violated; the accuracy of cost reports (the ABC case being a prime example); and cost shifting by hospital-based agencies. On the state side, the Medicaid Fraud Control Unit has been conducting "Special Project" audits of the Medicaid cost reports. Taking a different tactic to undercover fraud, the Attorney General is not auditing costs but the total PCA hours that are divided into the costs to calculate a rate. This trend will continue in 1998 because the Attorney General has been hitting "pay dirt" as the total hours on the PCA cost report have, in the vast majority of cases, been reported incorrectly. Interestingly, the error has mostly been in understating hours, hence, giving the provider an inflated rate. The Attorney General's audits will continue and I predict they will yield significant civil recoveries and prosecutions as a warning to the industry (Prospective Payment may not be such a bad thing after all).

To guard against the possibility of occupying a jail cell in 1998 or drawing into your checking plus, home equity loan and all your charge cards to pay restitution plus a fine, Agencies must develop Corporate Compliance Programs. These programs are designed to detect and prevent criminal conduct from occurring and serves as an Agency' s best defense against the attacks yet to come in 1998.

Have a Happy and Healthy New Year!