AR and Effective Cash Flow Management

Pt Access, AR and Effective
Flow Management
(aka Revenue Cycle 201)
Revenue Cycle Revolution
AR is defined in numerous ways
What will your staff understand that
will help with ownership?
Number of days from final billed to
payment in full (at all) = complete AR
Number of days from discharge to
PIF = shared ownership with HIM
Definition of Terms
Admitting-Central Registration-Patient Access
Scheduling – central scheduling- each dept does
their own
Charge capture – the process of the revenue
generating departments marking charge tickets or
order entry.
Health Information Management/HIM – medical
Business Office – Patient Financial Services-Pt
Hold days - # of days hold before dropping off
the computer (usually 3-5 after d/c. Need to wait 72
hours for all Medicare accounts for non-CAHs.)
More definition of terms
Lost charges –sent to the floor, never
charged for; charted, never charged
Late charges – claims dropped off IT, then
charges submitted.
Cost of both – if identified, adjusted bills
sent to the payers.
Patient receive 2 statements –from payers
and facility.
Understanding Reimbursement
Remittances –payment document from the payers
What type of payment arrangements are hospitals
experiencing thru contracting as well as federal
and state mandated:
Prospective payment systems – payment based on
something besides charges: Diagnosis, CPT codes, care
plans. (EX: Medicare PPS: Inpt/DRG; Outpt/APC)
Fee for service – payment based on charges
Per Diem – payment based on a per day rate
Capitation – payment based on covered lives, per member,
per month
Critical Access hospitals - %billed chrgs/out; per diem/in
Different types of Reimbrsmnt
Inpatient: Diagnostic Related Groups/DRG
Uses Dx, procedures where an end coder groups
into payment categories (1 payment/1 stay)
Outpatient: Ambulatory Payment
Classification/APC (Each CPT could be paid)
Uses CPT and HCPC codes to group clinically and
financially related codes into APC payment groups
Skilled Nursing facilities – Resource Related
Group (a # of days = 1 RUG payment)
Home Health – Home Health Related Groupers (1
HHRG $ for each 60 day care plan)
What are the Key elements that
create bad debt?
Internal silos –lack of information sharing, handoffs
not occurring, no cross training, lack of ownership with each
dept, poor internal systems, ltd ongoing training of error
education, more w/less, technology limitations, turnover..and
External demands –
changing market (less
liability/less travel), less elective procedures, gainfully
employed uninsured, poor economy/gas or pay unsecured
healthcare bills, new payer market (more Part C),
complicated contracts, repeat denials/appeals…and more
SO..always doing what we have always done = the
same old outcome. Time to start fresh.
What are some Key elements to
Reduce Bad Debt Exposure?
Identify our new self pay patient. With
insurance/large balance; Employed without
insurance; unemployed without insurance.
Create an environment of communication – early,
during and after the encounter
Create clarity on expectations
Create clarity in ownership of each step within the
revenue cycle –with accountability
Create tracking and trending/TNT throughout the
pre, during and after the visit—and ACT to change
when patterns are identified.
Defining Our New Patient in the
Revenue Cycle
Unemployed with no insurance
Employed with no insurance
Employed with high deductible and Employed with historical insurance
high coinsurance
Insert into each box:
1) How pre-admission will be
2) Pt portion assessment
3) Financial assistance options
4) Timely follow up
Key owners within the Revenue
Pre-admission – financial counseling,
scheduled admissions, verification
Admission – verify all information/update
Charge capture/entry – depts understand
chrgs are due day of or day after.
hold days are for coding-not charge
Billing –
submits a clean claim from HIS
More Key Indicators
Insurance follow up = insurance
resolution. Days to pay by payer, 30 days pay
Remittance monitoring – aggressively
pursue denials, develop tracking system/per payer
Patient Financial Counseling – prior to
scheduled procedure; verify benefits, financial
statements/planning; financing options; well
defined credit policy; charity policy understood
Redesign Revenue Cycle Opportunities - WIN
Better Practice Performance
(David Hammer, HFMA Revenue Cycle conference)
High inpt/outpt hold days
3-4 days hold
High unbilled > than hold
2 days of revenue > bill hold days
Excessive AR greater than No more than 15-20% in over 90
90 days
More than 6% bad debt
write offs as fraction of
gross revenue
BD write off less than 5.25% of
gross revenue; charity 2.3%
(HARA 2012)
Collection agency
recoveries >15%
Agency recoveries from 6-10%
Excessive denials-$,#
Denials less than 5% of net
Poor customer service
Few customer complaints
Elective surgeries-no
Pre-registered and financial
Focus on a few Key
Indicators-then drill down
(Day’s top 5)
Establish Ave daily cash –
compare to ave daily expenses,
difference = margin
Create internal tracking tool, post
$ against goal. Research special
cause variation.VISUAL
Denials –both turn around days
and % of net revenue
Define denial vs rejection;
research and resolve ‘root cause’;
track by payer/reason
Insurance days to pay, per payer
– threshold of 30 days + aging
analysis, per payer
Research all reasons for ‘more
than 30 days to pay”, resolveeither with payer or internal;
analyze ea aging cat, focus 30-60
Registration errors – focused
review with 100% accuracy on
Create training teams with BAR;
review key elements of focused
registrations; train and train more
AR Days – gross vs net, national
standard 60 gross days
Understand current AR counting
tool, explore coding impact; use
HIPAA to move money, reduce 14
Making the commitment to PRE
Establishing standards with multiple
processes-individual pt needs addressed
Eligibility verification with benefits understood (HIPAA 270)
Complete authorization (coordinate with physician’s office and
internal clinical staff)
Schedule pre-admission financial visit (coordinate with clinical
pre-admission visit. Handoffs!)
Identify potential for payment.
Use of a financial statement or similar tool. Use in conjunction
with a credit policy-that is the beginning, not the ending point
Create multiple time pay plans to meet individual pt needs.
W/insurance – estimate pt portion, monitor for insurance
payment, activate payment plan when insurance is received.
Attention to Preadmission
Why isn’t every hospital doing the basics of
pre-admission? Verify benefits, authorizations,
preparing estimates for procedures, discussing
payment plans for self pay portion including
potential charity, beginning the excellent patient
experience early in their healthcare encounter.
“No FTEs”; “Can’t do estimates”; “Administration
won’t support it “; “No space for a financial preadmission program.”
Idea: Service Line Deposits
Preadmission –
scheduled surgeries,
procedures, high dollar
outpt areas
Create a dollar threshold
that is tied to each type of
scheduled environment
EX) $400 Ortho outpt
$500 Cath lab; $150 Endo
• Incorporated into the preadmission dialogue –with or
without insurance.
If employed physicians,
coordinate the service line
deposit to include the
professional component.
Split the 1 payment
between both based on
average charges. (EX:
hospital 60%, physician
Staff must be trained as
financial counselors –even
if the registration staff is
completing the above work.
Idea: Train thru scripting –
Registrars must be trained
on a) how to ask for money,
ABNs, form completion,
etc, b) how to put the pt at
ease thru the process, c)
how to spot potential
problems and d) how to
communicate all the above.
Scripting- which is the
written dialogue of how to
do the above items – is the
key to long term success.
Practice, practice, practice
“Thank you for choosing ABC
hospital for your upcoming GI
procedure (or today.) To help
reduce financial surprises, we
have reviewed your BC benefits
and have found that there is an
unmet self pay portion due from
your deductible of $850 plus your
plan is a 70/30 plan which means
you will owe 30% after the
deductible is met. Outpt balances
are due in 90 days with a deposit
today of $150 but if you are going
to need assistance I would be
happy to schedule an appt with
the financial counselor of the
hospital.” Lots of variations
Hospital ideas
Paro scoring used extensively with
self pay patients. (Karla Carter, Dir PFS,
MVRMC/St Luke’s, TF, Id)
98% of all scheduled services will be fully
secured prior to the patient arrival.
(Providence Health System, ANI 2008, Teresa Spaulding,
Adm, Ore)
Research all denials for authorizations and
incorporate into PRE standards. (Judy Veazie,
More Pre-admission ideas
OB classes –
examples of pt claims (mom and
baby) with estimates (well baby, C/S, vaginal
delivery), information on financial assistance,
unique coverage issues for the area, payment plan
Surgery Scheduler – outline key elements
needed to begin the pre-authorization, eligibility
and pt contact steps. Eliminate rework of calling
the office, patient, etc to get the initial
Looking at Point of Service
With an aggressive Pre-admission program,
only direct admits, low dollar outpt and ER
will be ‘unknown’.
Set the expectation of Payment…
Dear Valued Patient letters
Posted signs on payment due at time of service
–with assistance if necessary
Train registration staff on standards, scripting
Create service line deposit. (EX $100 MRI)
More Point of Service Ideas
Are you ready to provide the pt a bill at
discharge? What needs changed to be able
to do this or an estimate?
How is late activity tracked and trended?
How are hold days in HIM evaluated and
Can you do an estimate of amt due with
insurance interface? (real time
Next Steps in the AR AdventureTRACK N TREND (TNT)
Review remittances
Track denials by
payer, by volume, by
Track delays – by
reason: records, etc.
Review late
charges/lost charges
Track by dept
Educate and reduce
Review opportunities
from RAs, billing
rejections, manual
changes to UB/1500
All manual changes need
reduced=compliance and
labor intensive
Identify internal
‘next steps’ to attain
5 key indicators –
then keep going!
More Next Steps
Look at individual
areas: Admitting,
HIM, billing, ins
resolution and
Then create
measurements for
each area
Finally, roll out
HIPAA transaction
sets to find the
three wins
EX of area specific
# of days to code = 3-5
within the hold days. Track
by reason, by physician delays
beyond. Also # of days paper
records: floor to HIM, to
prep, to code.
# of days to submit a clean
claim= 0. Track all manual
interventions with delays.
# of days to submit to 2nd
payer after primary=1.
Determine manual vs
electronic, use HIPAA 837
And don’t forget the patient!
Not the biggest cash impact but biggest
staff time; biggest long term success
At point of initial service, establishPositive impression
Big White Hat –here to help!
Establish a communication channel
Set expectation of payment –with financing
Dear Valued Patient letter
Dear Valued Letter Sample
Every registration, every time
Dear Valued Pt- Thank you for allowing ABC hospital to serve your health care needs.
To eliminate financial surprises, below is pertinent information related to your visit.
If you provide current insurance, we will be happy to bill it on your behalf as there are specific
codes that are required for accurate and timely billing to your payer.
You will receive bills from other providers. (List them)
All balances are due within 90 days from date of service. If you will have problems meeting
that requirement, please call our financial counselors 1-800-333-3333 for financial assistance.
Are you a Medicare patient? Any oral medications given in an outpt setting are not billable to
Medicare as hospitals are not covered under the Part D benefit. Ask us if you have questions.
Again, thanks for allowing us to service you.
Signed: Director PFS or similar leader
Common questions in AR
Q: What % of the pt portion balance would you expect as a
standard payment?
A: Tough as each pt will need their financial ‘ability to pay’
reviewed thru the use of a financial statement.
Using credit policy as the guide, determine the pt’s ability to resolve the balance
within credit policy.
If they cannot, begin the process to determine what their ability is to pay the
Identify expenses vs disposable income left to pay the balance.
Identify expenses that could be reduced or that may be paid off soon – adjust
payment to reflect new disposable income as it becomes available.
Utilize the financial assistance policy to determine if additional reductions can be
made on the balance. Sliding scale, partial reductions, etc.
More fun questions
When does the value of the balance drop?
Historical information has shown that the balance looses
value after it is 90 days old. Usually drops to $.10 on the dollar.
Hey, why are some providers/facilities waiting until 90 days to
begin working on the acct? Huge opportunity to reduce bad debt
and improve patient satisfaction thru reducing their unplanned
financial surprises thru Pre-Admission, estimates, eligibility
verification, and financial discussions prior to any procedure or
immediately post ER visit.
Most patient’s pay because they feel we care…not because we have
a hammer
Post Encounter Ideas
Timeline for ongoing,
rapid insurance
Timeline for ongoing
follow up to
patient/family on the
outstanding balance.
Use skip
information on
Family billing for the
entire history vs pt
Use matrix concept:
will pay, could pay,
won’t pay= different
efforts, letters, etc.
Different efforts on
different balances.
(EX: $250 = 1 call, 1ltr;
$500 =2 calls, 2 ltrs)
What to Outsource?
Follow-up – Early out
Phone contact & payment arrangements
Overflow arrangements for phone answering
Charity screening
Applications for Public Assistance
Longer term financing
All self pay collection activities from Day 1
Revenue and Reimbursement
Boot Camp
How to Outsource?
Fee for service arrangement
Commission on collections as they are
Incentives for quicker collection or
improved collections
Get the cash now
Sell the Bad Debt
Sell all Self Pay A/R
Revenue and Reimbursement
Boot Camp
Bad debt ideas
Pre-collect letter –
from hospital’s legal
counsel or collection
agency. “One last
Paro/credit scoring
used in conjunction
with collection agency
Require skip tracing to
be done by agency
Develop a collection
agency report card
Includes % rate, with legal
Includes pt complaints
Includes onsite visits
Includes reports with
historical patterns
Includes any accounts that
were turned with
insurance pending
Includes required
incomplete information
Resources to ‘get it right’
(Providence Health Services) /property
County websites/property
• = free
• Online credit
bureau/financial eval=cost
• tracing
= free
Free address and phone #including reverse
directories (candian)
Admitting Quality Program
Do you audit for
What is the criteria to
know it is right or are
the blanks just filled
What type of error
education is
Evaluate the value
ofauditing all pt
types or audit
high risk areas.
EX) ER night shift, ER
weekends = high risk
areas. Rotate out of
these isolated shifts
Better practice ideas
Verify benefits/demographics = Pre and
again post 90 days, prior to turning to
collection (Providence, Ore)
Run all self pay thru Medicaid eligibility –
prior to charity, prior to turning to bad
Actively involve nursing/scheduling with
identifying potential problems – OB,
procedures, case mgt, etc.
More better practice ideas
Service line deposits in all areas: a)
pre/scheduled, b) point of service/outpt,
ER with consistent credit policy standards
but flexible as necessary.
Scoring on ‘collectability’ prior to
performing collection activities
Pre-collect letters prior to collection
agency full referrals (MVRMC)
Refer to Budget Counselors as an
alternative (Veazie)
Denial prevention- Tracking and
Using the Remittance Advice + input from
employees + patient concerns and
complaints = identify patterns.
Denial tracking and trending is about
preventing, not monitoring.
Change the process.
(Ex: Medicaid Name &
#. Aggressively audit all pre-registered plus day
of service registrations. Implement
270/automated eligibility for all registrations.)
Ideas to audit
Days to pay per payer, per type
Manual edits to claims from the main
frame-who and why
Charity policy implementation
Sign off authority for write offs
Reason for ‘hold’ in HIM beyond computer
generated/mandated hold days
Denial or partial payment patterns from
Focus on Patient Friendly
HFMA’s Project Recommendations
Customer Service Standard
Advance Information to Patients
Measure Success
Patient Friendly Billing Guidelines
Coordination Information Gathering
Simplify Contractual Relationships
Consolidate Billing
Standardize Written Communication
More Patient Friendly Ideas
Use Understandable Terminology
Rethink: ‘This is not a bill.’
Bill Patient After Insurance Has Paid
Concise Financial Communication
Understandable CDM
Provide On-Line Capabilities
Technology Ideas
Computer integrated/bolt on pt
and/or insurance payment ‘estimator.’
Excel with high volume procedure
priced and integrated into letter to
send to pts.
Review Agency reports for patterns
HIPAA standard transactions
Eliminate manual interventions –with
scrubber, main IT system fixes
Revenue Cycle Impact of HIPAA
HUGE WINS thru complete rollout
Eliminate/reduce denials
Move money more rapidly
Increase productivity of staff
Redesign business process
Now let’s discover how… baby steps…
HIPAA Tx & Code Sets impacts:
All health plans (Medicare, Medicaid, BC, BS,
employer-sponsored group health plans and other insurers
companies, and networks: except WC and liabilities)
All providers (physicians, hospitals, and others) who
conduct any of the HIPAA transactions electronically.
To create a single standard for claims,
eligibility verification, referral authorization, claims status,
remittance and other transactions.
HIPAA: The EDI Standards
Transaction Standards:
ASC X12N40101A 270/271
Referral & authorization:
ASC X12N40101A 278
Institutional (837I)
Professional (837P)
Dental (837D)
ASC X12N40101A 837
Claim Status:
ASC X12N40101A 276/277
Payment & remittance:
ASC X12N40101A 835
ASC X12N40101A 834
Premium payment:
ASC X12N40101A 820
First report of injury & Claims attachment - forthcoming
Effective Denial Management
Prevention is the key!
Starts in Preadmission
Prevent denied claims
Ok, we got the denial.
Now what?
Get other involved..
Beyond the back end
of the AR team!
Top Ten Reasons for Denial
Coordination of benefits
Patient not eligible
No authorization
Medical Record requested
Untimely filing
Additional info pending
Non-covered Service
Benefits expired
Billing Errors
Contract Review
SOURCE: Navigating Payment Pitfalls – Healthcare Financial Mgt.
Of the Top Ten – Eight Addressed
Type of Denial
Coordination of Benefits
Patient not Eligible
Non-covered service
Benefits Expired
No authorization
Medical Records requested 276
Additional Info Pending
Billing Errors
Impact to the AR
Pre-Admission – Move
it up front (278,270)
Eligibility- Prevent
Denials (278, 270)
Registration areas (“)
Billing (837)
Insurance follow up
Patient collections
(271, 276, 835)
Work team: Insurance Resolution
Objective: develop
276/277 process
Team: billing rep, IT analyst,
Sup/Mgr BO, PFS Director
What needs done:
How many days to pay
Establish threshold for f/up
Analyze days by payer
Payer history: high
maintenance vs easy/rapid
Develop plan for high
maintenance f/up
Develop Response Matrix
How are the payers
utilizing the response
Timeframe for responses?
Timelines to complete
each phase: Start / finish
Evolving process
AR Systems’ Contact Info
Day Egusquiza, President
AR Systems, Inc
Box 2521
Twin Falls, Id 83303
208 423 9036
[email protected]
Thanks for joining us!
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