DeKaye Consulting, Inc. Volume IV Number 3

July 1998

The Newsletter of

DEKAYE Consulting, Inc.

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

On Target


Vital Signs

Mid-Year Check-up!

For calendar year end providers, "its the end of the first half." While there is only a precious little timeout (usually associated with vacations), the following checklist may be useful to stay ahead of the curve, and avoid year end surprises. For those with other fiscal year end calendars, while the quarter may be different--the goals are still the same:

Check the gas gauge!

  1. Did you meet your cash collection goals?

  2. Did A/R go down?

  3. Have the number of open accounts decreased?

  4. Have days to bill been reduced?

  5. Have the days to collect also gone down?

Change the Oil and Filter!

  1. Have any regulatory changes gone into effect?

  2. Were any new policies and procedures introduced?

  3. Did staff undergo any refresher training?

  4. Have you implemented your compliance education programs?

  5. Have all master files been updated?


  1. Have new goals been set?

  2. Were there any Personnel/Supervisory changes announced?

  3. Are there any mergers or acquisitions planned?

  4. Is a systems conversion/upgrade occurring soon?

  5. Is a CBO (central business office) in the offing?

Use this timeout wisely. Before you know it, Labor Day will be here. Remember there are only 80 calendar days (with only about 58 working days) between Labor Day and Thanksgiving--and then only about an additional 15 working days until actual calendar year end. This checklist will help you identify objectives and needs. These planning tools and techniques are always in order year round. However, as a reminder, we’ll see you again in three months or 3,000 miles to remind you to "check your oil!"

Emphasis on Education

Successful Integration of Merged Organizations

by William G. Bliss, Bliss & Associates Inc.

In today’s fast paced business environment, there have been a large number of mergers, acquisitions and other forms of major organizational change. Lately, hardly a day goes by that yet another merger or acquisition has been announced in the news. These happen to large companies as well as small companies. The initial reasons for these mergers are generally to accomplish one or more of the following:

BULLET010.GIF (995 bytes) increase productivity
BULLET010.GIF (995 bytes) take advantage of the strengths of each company
BULLET010.GIF (995 bytes) be stronger and more competitive
BULLET010.GIF (995 bytes) or, gain synergy not otherwise available had both companies remained independent.

It has been estimated that over 50% of these mergers do not achieve the benefits and goals that were initially planned! That is quite a statistic. Yet, organizations continue to jump on the merger bandwagon fully believing that they will achieve the stated goals. The same can be said for the combining of departments within an organization or the centralizing of like functions (such as billing, accounts receivable, purchasing, etc.) of commonly owned companies. These changes are designed to create or improve efficiency, save costs and take advantage of well designed processes, yet unforeseen circumstances and events cause disappointing results.

What then can be done to increase the chances of success of such an organizational change as described above? The following ten steps will help ensure the successful integration of merged organizations:

  1. Develop a crystal clear mission and purpose of the new organization. Develop 3 month, 6 month and one year goals of the new organization. These mission statements and goals should be so clear that it is virtually impossible for employees, management and customers to misunderstand the purpose. Define the expected culture and operating style of the new organization. Gain senior management commitment as to how they will evaluate the success of the new organization.

  2. Establish an integration team who is charged with developing plans, projects and tasks to ensure the successful completion of the integration. This team should be given the financial and time resources to accomplish this critical step in the process. Depending on the size and complexity of the integration, this could be a full time assignment to some or all members of the team.

  3. Develop a communication process that will keep employees, management and customers informed of the progress of the integration. Accept the notion that there is no such thing as over communication.

  4. Identify obstacles to success. Gather the implementation team for a brainstorming session that will flush out all the possible obstacles and issues. Then, with each obstacle clearly identified, develop action plans that will prevent the obstacle from even developing in the first place.

  5. Identify and define the processes of each of the merging units. Resolve to utilize the process which is truly the best without regard to where it comes from. Sometimes the best process actually comes from combining ideas from multiple sources.

  6. Make it a standard operating procedure to evaluate each decision against the stated mission of the newly merged organization as a test of the correctness of the decision. Evaluate the decision making process against the desired culture the new organization has decided to create.

  7. Allow the staff to express their worries, fears and anxieties about the merger. Also allow them to express their ideas, suggestions and possible roles that they may be interested in assuming. People will be more committed and motivated to work harder if they feel as though they have been part of the solution.

  8. Define the competencies needed of the management team in the merged organization and work to assess current management against those competencies as quickly and as objectively as possible. If there are to be any staff changes, decide and communicate those changes as quickly as possible, but not later than three weeks after the merger has been announced.

  9. Identify some quick wins early in the integration process. Celebrate and publicize those wins to everyone as a means of boosting morale and enhancing productivity.

  10. Utilize positive communication styles such as providing honest feedback whenever possible, addressing rumors as soon as possible and avoiding the secret meetings whenever possible.

Should you wish to discuss this topic further or need more information, please feel free to contact Bill Bliss at Bliss & Associates Inc. at 914-279-7300 or through E-mail at

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

Perspectives And Commentary

Effecting Compliance: Building the Data Defense

by Allan P. DeKaye, MBA, FHFMA, President & CEO of DEKAYE Consulting, Inc.

If you’ve been through any type of audit, you’ve probably remarked, "How did that account get selected?" When you think about it, it should not come as a total surprise. While sampling should give you the reasonable expectation that any account could be selected, most sampling is really a "targeted selection" process. After all, in the 72 hour rule audits, Medicare could select accounts that had conflicting services within a three-day window for review. Not too difficult to program a match and compare program, and then sort and report. And how did the pneumonia DRG stir occur anyway. All we have to do is look at our own data!

Too often, we don’t look at our data "defensively." We don’t look at it from the payer’s perspective. We don’t seem to ask, "What’s wrong with this picture?" If we did, we’d see the same aberration that Medicare or any other payer would detect. The difference--the payers are now looking to find what’s wrong with the picture. If we don’t ensure accurate and complete account information, someone else will.

When we prepare our budgets, we are asked to defend increases (and decreases, as well). In an era of scarce resources, you can be certain that other senior managers (including yourself) will not only be watching your own submission--but everyone else’s, too. Why? To make certain that every department is bearing its fair share, and that guidelines are being adhered to. Sound familiar?

While the process of Audit-Proofing will not eliminate risk or error, it requires a provider make a conscious effort to examine accounts for errors. In fact, most provider’s(Medicare 72 hour rule) settlement agreements call for either pre- or post-billing audit reviews. To the extent that this same diligence can be applied to all payers and all accounts, providers can limit future exposure. While compliance with Medicare agreements will likely require one degree of compliance effort, the concept behind the "data defense" is that through your own sampling, you create reviews to look for aberrant conditions. If patterns are found, more effort will be required to remedy problems.

Most recently, providers went through a period of re-engineering and CQI (continuous quality improvement). Compliance is a form of CQI--a special type--that aims at zero error rate! And while we can only measure a limited number of variables, we need to allow automation and computer capability and functionality to support the data defense strategy. If we view all data errors as a form of non-compliance, we can measure the extent of the exposure and recommend to senior management how to correct the problem(s).

Since most audits are on an exception basis, we often don’t hear about the things that were okay. This is a mistake. In this new era of compliance, we should be compiling a checklist of things that we did well. Hopefully, this list will outweigh the deficiencies, and at a minimum will help form the agenda of areas that need improvement to effect compliance.

: Ask The Expert

by Allan P. DeKaye, MBA, FHFMA

Q: With so many new mergers and acquisitions of Hospitals and Physician Practices in the healthcare industry, and how can these affect collection agency market share?

A: At a recent seminar that I addressed, many of the following concerns were discussed concerning the subject:

  1. Collection agencies should be watching the potential M&A's in their areas, and assessing how many of their products and services each of the potentially "merging" organizations have to determine if the agency will be in a dominant or weakened position post-merger.

  2. While acknowledgment reports are a "necessary evil" that seem to be always issued, there needs to be more "performance reports" issued by agencies to their clients.

  3. Agencies want to know why so many questions are asked in RFP's when it appears that the bottom line (and sole determinant) are fees?

  4. With agencies offering more "day one" / "early out" placement services, did providers find this to be helpful as they consider outsourcing alternatives?

These were just some of the concerns agencies and hospitals should be addressing during their merger and acquisition phases.

Q: What formula should I be using to calculate AR Days? We are using total revenue for the month divided by the number of days in the month. This gives an average of daily revenue. The average is then divided into the total outstanding. Doesn’t this seem to give HIM reimbursement undue responsibility?

A: Many hospitals will use the average daily revenue based on either a 90 day period or a "rolling period" (of either 90 days or other value--perhaps as much as 6 months). This is done for very much the concern expressed by the inquirer not to have A/R Days unduly influenced by an aberrant month due to case mix or charge levels.

I'm not sure that the formula per se places an undue responsibility on HIM "reimbursement." However, HIM responsibility is paramount when it comes to timely coding for inpatient and outpatient accounts. Most hospitals will calculate and report the DNFB (Discharged Not Final Billed) amount. In most instances, this amount is directly related to the "uncoded" accounts pending action by medical records (HIM). While there is a normal bill "hold" that allows for medical records to code, insurance verification to confirm, and ancillary departments to ensure that all charges are posted, the DNFB usually is associated with the medical record amount, and is generally reported as "days" in excess of the "hold" period. "Hold" periods may vary for in- and out-patient accounts, be based on resource levels (# of coders), systems and physician compliance.

Hospitals with the lowest days in A/R generally have low "hold" days. Three days is very aggressive. In order to attain a zero backlog above 3 days, you have to be coding in 1-2 days after discharge. A tall order, but doable--and a very effective way to help lower days in A/R.

Q: What advice can you give me concerning De-Centralized Vs.Centralized Registration areas?

A: There are three "S's" to consider in the decentralized vs.. centralized debate. They are: Systems, Supervisors and Staff. While there are pros and cons to both approaches, these three factors can help ensure a more successful approach. Consider the following.

  1. Centralized registration will offer you the most control and uniformity to interviewing, data capture and entry. You can also supervise more easily and measure for compliance. The big drawback--you're probably not close to all service areas (although some newer ambulatory facilities have a common registration area truly centrally and conveniently located). Customer service is generally better at the center, and falls off proportionately to the distance from the main station.

  2. With decentralization, a lot depends on how many areas you are going to create, and how well you will staff each. With areas such as Radiology, Respiratory, Laboratory, where there is a large enough demand and patient flow, you can usually staff the area to support the volume of patients. Here your challenge is ensuring that the training is thorough and the work product consistent. This comes from strong supervision and feedback to these areas from areas like patient accounts if there are any data or system related problems (usually from claim denials--with managed care utilization management being a big item these days). If you are going to have many "outposts" that are poorly staffed, you are likely to invite problems of data quality and consistency.

If all departments are on the same systems' platforms there is less concern than if there are multiple systems in a hospital setting (inpatient and outpatient registration system) and a separate lab or radiology system that relies on interfaces. If system platforms are different, the degree of interface talent (system compatibility and technology talent) becomes an important factor.

Today, many facilities are placing the admitting functions right on the "patient floors." This empowering of staff is designed to increase the front-end staff's awareness and responsibility for the registration activity portion of the cash flow cycle.

There are a number of discussions of these and related points in my book, The Patient Accounts Management Handbook (Aspen, 1997). There are four chapters (5-8) in Part II, "Knowing Who the Customer Is: The Registration of the Patient," and in Chapter 9 (The Charge Collection Process) that detail these and other issues.

Q: What is a realistic error target rate for Registration Error Reporting?

A: In setting error rate targets, you should be striving for a ZERO ERROR rate. To the extent that you have appreciable error rates, you will need to pinpoint areas that cause and/or contribute to the problem. One approach is to use remittance vouchers to analyze denied or pended claims and catalogue the reasons and volume.

While many of us will want to measure every error, sometimes using a monthly or quarterly benchmark provides sufficient progress markers. Of course, the more errors, the more frequently you'll want to report. Feedback is essential to the contributing departments. Educational/procedural re-training is necessary to reduce many of the more typical errors (e.g., ineligible date of service, member not on file, no prior approval, etc.). Periodic measurement will help you monitor progress of problem resolution.

Unfortunately, there aren't any regional or national data repositories for how many claims are denied. Remember, we should differentiate between "hard" and "soft" denials. Soft denials are usually associated with an unclean claims (didn't dot your "I's" or cross your "T's"), while a hard denial is eligibility based or uncovered service type for which there is little or no recourse. Soft claim denials can generally be re-billed with payment forthcoming--albeit delayed.

Perhaps more valuable than normative data is how fast you can attain (and then maintain a ZERO error rate). Local hospital associations or organizations may compile data if members are willing to share such information.

Q: We’re having difficulty collecting at Time of Service in our outpatient areas and ER. What hints can you give me?

A: Since most providers will at a minimum bill the patient for these deductible and co-payment amounts, consider the following steps as a foundation for setting up a POS procedure.

  1. Re-state your financial policy to support asking for payment at time of service

  2. Review the logistics of your service area (centralized or decentralized cashiering, secure areas, access to cash registers or other device, electronic connectivity to support credit card payment processing, etc.)

  3. Patient awareness (brochures, signage, informational handouts, coordination with doctor offices)

  4. Ability to generate a final bill or estimated bill

  5. Education of staff and internal provider community (physicians, nurses, other departments)

  6. Ability to have systems support the posting of payments (especially in pre-admission situations)

  7. Policy on deferral of non-emergent care for non-payment at POS.

While not intended as an exhaustive list, the above should help you set the stage for implementing a POS payment plan. You'll find a more detailed discussion of these and related topics in The Patient Accounts Management Handbook, and in several articles that can be found in other issues of our On Target newsletter.

Q: How can one determine the correct number of FTE's for functions such as billing and follow-up?

A: I caution providers about using so-called "averages" or standards. While they should be used as part of the benchmarking process, I prefer to apply "tests of reasonableness" to each situation, and then compare them to a reported standard.

For example, in today's market you should have very few "billers," especially if you are billing electronically. Follow-up is a different story, and I prefer to see providers devote more resources to follow-up.

Actually staffing should consider how many open accounts there are by payer, and then weigh that against the total number of accounts in the aggregate (i.e., A/R effectiveness). If your "clean claiming" results in timely payment, assign fewer staff. More staffing for slow payers, or those who have placed more administrative burdens in your way, or if the payer has certain proscribed manual or electronic procedures to follow to secure payment.

Finally, be reasonable: 2,000 accounts per staff for follow-up may be okay if you don't expect them to work each account every month, if each follow-up tasks 10-15 minutes.

Q: We are in the process of reorganizing our Patient Financial Services Department. What are some things we should not overlook?

A: Here are several factors to consider when re-organizing your department that have worked well for my clients in similar situations.

  1. There are differences in hospital (and hospital-based clinic) vs.. physician A/R that suggest keeping the functions separated even if at the same location.

  2. Today, billing should have fewer staff if you have most billing done electronically. Given your high managed care financial class mix, be certain you have allocated sufficient staff if you have to issue paper UB-92's.

  3. I prefer follow-up based on financial class and insurance plan; however, co-mingling of inpatient and hospital-based clinic is okay especially if you are planning on working accounts from "high to low" balances--which is more effective than alpha splits--especially with large volumes of open accounts.

  4. Physician billing and follow-up should be separated when systems are different--but follow-up can follow the same guidelines as noted for hospitals.

  5. The "customer call center" makes for good customer service as they receive and handle incoming calls--but be certain you have some self-pay collection follow-up given the sizeable percentage of A/R in this category.

As you staff these areas, you should be investing in good front-line supervisors and managers who can ensure that workload is optimally assigned and completed.

The Contributor's Corner


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

0319004b.gif (1033 bytes) The surety bond requirement reflects HCFA’s attitude that all Medicare providers are suspect and does not consider the long-standing reputation of health agencies, their years of compliance with Medicare regulations or their history of managing and avoiding overpayments from the government.

In response to complaints from members of Congress, surety bond companies and the home health industry, HCFA revised its January 5, 1998 final rule on surety bond and capitalization requirements for home health agencies. The revision was published in the June 1, 1998 Federal Register with a 30-day comment period. In response to requests from surety bond companies, HCFA included a revision that gives home health agencies an option to either submit a new bond each year or a continuous bond that could be updated each year and remain in effect from year to year. The revised final rule allows surety bond companies the right to appeal overpayments, penalties and assessments as long as they meet all requirements that would otherwise have applied to the home health agency.

However, the amount of the bond was not revised, remaining the greater of $50,000 or 15 percent of the agency’s most recent annual Medicare revenues. The final rule is effective July 1, 1998. However, the surety bond still must have an effective date of January 1, 1998.

Under the Federal Balanced Budget program, Medicare still intends to roll back its payment for home health agencies to 1993-1994 levels. Restraints under the proposed Interim Payment System Model (IPS) will threaten and continue to threaten the sickest and most frail patients who need skilled nursing, acute care and personal care at home. Certified home health agencies will have to stop treating people who, in essence, will require more complex and multiple home care services which could force patients into more costly institutions as well as longer hospital stays.

Many of the country’s 9,000+ home health agencies are caught between a rock and a hard place. Even if they muster up the money for the surety bond now required under the Medicare law, they may end up out of business because they cannot make it under the program’s IPS.

At this point, the budget resolution approved by the House of Representatives includes an IPS provision - but much weaker than what had been proposed last month. Everyone’s consensus is that committee responsible for Medicare should undertake an IPS overhaul providing additional time for a home health agency to adjust to lower rates and reimbursements and that Congress should pass an equitable and fair revision of the IPS sometime in 1998.

Meanwhile, federal judges have delayed decisions on requested injunctions to block Medicare’s IPS for at least until July 1, 1998 so they could analyze what Congress really intended for the home health limits in last year’s Balanced Budget Act.

0319004b.gif (1033 bytes) Collection of OASIS data is expected to be a mandatory requirement as soon as September, 1998. OASIS is a data collection tool made up of 89 questions with 79 targeted toward patient assessment of health and functional status and 10 questions related to patient identification. So far, it has taken HCFA more than 5 years and about $7 million to develop. In essence, HHA’s would be required to collect OASIS items at the start of care, again every 57 to 62 days, and when a patient is discharged. It would seem likely that once agencies begin using OASIS, HCFA will probably propose another rule requiring an agency to electronically report the data into a national database. The toughest part adopting OASIS, in addition to the cost factor, would be figuring out how much of it fits into what your agency is already doing.

More to come this upcoming summer!

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

When to Use Teams to Solve Problems

by Paul Bednar, Principal, Quality and Productivity Resources LLC

The use of teams to solve healthcare problems has exploded over the last four years. Now, it seems every problem requires a team, regardless of merit. This widespread use compels one to ask, "Are all these teams necessary?" The answer is no. While the use of teams certainly has its advantages, it is not always the most effective method to solve a problem.

Teams should be utilized when an objective environment is essential to solve difficult and complex problems. A general rule of thumb is to form a team when

ballblue.gif (926 bytes) a desired solution requires the knowledge of several individuals

ballblue.gif (926 bytes) the problem involves multiple departments or areas

ballblue.gif (926 bytes) employee buy-in is critical to successful implementation

ballblue.gif (926 bytes) you want the employees to solve the problem.

A departmental reengineering of work practices and designing a new patient registration system are examples where teams can be utilized.

A team should not be created when consensus is not required, an obvious solution is apparent, and if the environment permits one person to objectively identify the problem's root and recommend potential solutions. An individual could effectively determine a clinic's patient wait times or how frequently medication is delivered to the hospital floors.

Once a decision has been made to use a team, its ultimate success or failure depends on how it handles the following issues.

ballblue.gif (926 bytes) Team size

Keep the size small. Discussions with 4-7 people are more manageable than 15. When teams are greater than 7, the entire process significantly slows down and reduces the possibility that a solution can be achieved.

ballblue.gif (926 bytes) Defined objective

The team must know what goals are to be achieved so their progress and solutions can be measured.

ballblue.gif (926 bytes) Management support

This is the most critical aspect. If management does not support the team every step of the way, incomplete and ineffective solutions occur. For example, team members need coverage so their team work is part of their job and not in addition to their duties. They also must know their solutions will be accepted by management. Members need to be shown appreciation because participating in teams can be mentally and emotionally exhausting.

ballblue.gif (926 bytes) Process agreement

The team needs to decide how they will work together, make decisions, and communicate. Team members must understand they are to be open-minded, respect the opinions and viewpoints of others, and are interdependent.

ballblue.gif (926 bytes) Independent facilitator

The team needs to be facilitated by someone who does not have a personal stake in the outcome or vocational power over the team members. When employees are facilitated by their supervisor, it impedes truly honest discussions and hence, real solutions.

Should you wish further information from the author, Mr. Bednar can be reach at his E-mail:   or by Phone: 804.985.4603/ Fax: 804.985.9848

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