Session 115
October 19, 2014
How to Manage Accounts Receivable & Cash Flow
Session 115
How to Manage Accounts
Receivable & Cash Flow
Melinda A. Gaboury, COS-C
& ADVISORS
HealthcareCPAs
Provider
Solutions, Inc.
Chief Executive Officer
mgaboury@healthcareprovidersolutions.com
2
M. Aaron Little, CPA
BKD, LLP
Managing Director
mlittle@bkd.com
OBJECTIVES
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Session 115
How to Manage Accounts Receivable & Cash Flow
October 19, 2014
OBJECTIVES
Introduce Home Care & Hospice Financial
Managers Association (HHFMA) revenue cycle
survey
Examine industry benchmarks & performance
dashboards
Examine effective billing operations
performance & cash flow management
strategies
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WE NEED YOUR HELP!!
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Session 115
How to Manage Accounts Receivable & Cash Flow
October 19, 2014
A/R – REVENUE CYCLE SURVEY
NAHC/HHFMA – A/R Sub-Committee
ONLY 30 Responses
The two primary objectives are:
Establish standard national averages for Average Days in
A/R/days sales outstanding; and
Find some consistent ways of dealing with NonMedicare/Commercial Payers.
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REVENUE CYCLE BENCHMARKS
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Session 115
October 19, 2014
How to Manage Accounts Receivable & Cash Flow
Intake
Eligibility &
authorization
Service delivery
Documentation
& orders
Pre-billing audit
Claims
submission
Claims tracking
& collecting
Payment
posting &
reconciling
Reporting
REVENUE CYCLE
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RAP billing requirements
• Verbal order
• First billable visit
• OASIS completed
• Plan of care completed
PPS claim billing requirements
• OASIS transmitted
• Episode ended
• Signed & dated face-to-face encounter
• Signed & dated order for every visit
• Visit accounted for every order
• Therapy reassessment requirements met
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REVENUE CYCLE CHALLENGES
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Session 115
October 19, 2014
How to Manage Accounts Receivable & Cash Flow
Notice of election billing requirements
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•
•
•
Patient election
Physician certification, verbal
FTF encounter, if applicable
Initial plan of care
5 days
Claim billing requirements
•
•
•
•
•
•
•
Patient status
Month ended
Signed & dated physician certification
Pharmacy & infusion pump invoices
Levels of care confirmed
Services documented
Nursing facility room & board
PROCESS
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Suggested Home Health Revenue Cycle Performance
Metric
Poor
Average
Best
Medicare days in AR
45 days or more
35 days
25 days or less
Non-Medicare days in AR
75 days or more
60 to 75 days
60 days or less
Total days in AR
60 days or more
50 days
40 days or less
Medicare AR older
than 120 days
10% or more
7%
3% or less
Total AR older than
120 days
15% or more
10%
7% or less
Less than 100%
100%
More than 100%
Medicare write-offs
2% or more
1%
0%
Total write-offs
3% or more
2%
1% or less
Days to bill RAPs
More than 10 days
7 to 10 days
Less than 7 days
Days to bill claims
More than 10 days
7 to 10 days
Less than 7 days
Collections
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HOME HEALTH METRICS
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Session 115
How to Manage Accounts Receivable & Cash Flow
October 19, 2014
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Session 115
October 19, 2014
How to Manage Accounts Receivable & Cash Flow
Medicare RAP Payment Analysis
31 Days in August
8 Average number of days to pay RAPs
23 Day by which all RAPs would have needed billed to pay during month
-
101 Number of episodes beginning in August
30 Number of episodes beginning after August 23
-
71 Total episodes beginning by August 23
23 August RAPs paid in August
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48 Unpaid RAPs
x $ 1,900 Average RAP payment
$ 91,200 Estimated missed RAP payment opportunity
8 Net days of revenue
2 Number of RAP auto-cancellations during month
7 Fewest days to bill
15 Average days to bill
108 Most days to bill
42 Paid RAPs billed within 12 days or less
57 Paid RAPs billed within 13-19 days
5 Paid RAPs billed within 20 days or more
+
• 31 days in Medicare
receivables
• Could have been
further reduced by
up to 8 days
• Potential
improvement
represents more than
$91,000 in one
month’s cash
104 Total Paid RAPs
REVENUE CYCLE
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Medicare Final Claim (FC) Payment Analysis
-
31 Days in August
15 Average number of days to pay FCs
16 Day by which all FCs would have needed billed to pay during month
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93 Number of episodes ended in August
34 Number of episodes ended prior August 16
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59 Total episodes ended by August 16
7 August FCs paid in August
52 Unpaid FCs
x $ 1,142 Average FC payment, net of RAP recoupment
$ 59,384 Estimated missed FC payment opportunity
5 Net days of revenue
10 Fewest days to bill
24 Average days to bill
135 Most days to bill
+
• 31 days in Medicare
receivables
• Could have been
further reduced by up
to 5 days
• Potential improvement
represents
approximately $60,000
in one month’s cash
13 Paid FCs billed within 12 days or less
63 Paid FCs billed within 13-19 days
52 Paid FCs billed within 20 days or more
128 Total Paid FCs
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REVENUE CYCLE
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Session 115
October 19, 2014
How to Manage Accounts Receivable & Cash Flow
Suggested Hospice Performance Guidelines
Metric
Poor
Average
Best
Medicare days in AR
45 days or more
35 days
25 days or less
Total days in AR
55 days or more
45 days
40 days or less
Medicare AR older
than 120 days
10% or more
7%
3% or less
Total AR older than
120 days
10% or more
8%
5% or less
Less than 100%
100%
More than 100%
Medicare write-offs
1% or more
0%
0%
Total write-offs
3% or more
2%
1% or less
More than 5 days
5 days
Less than 5 days
Collections
Days to bill claims
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HOSPICE METRICS
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Session 115
October 19, 2014
How to Manage Accounts Receivable & Cash Flow
Medicare Payment Analysis
26 Number of patients with services in July
15 July claims paid in August
-
11 Missed claim payments
$ 96,625 Estimated net revenues from July claims
- $ 62,908 Total payments from July claims paid in August
$ 33,717 Estimated missed payment opportunity
10 Net days of revenue
65% Percent of prior month revenues collected in current month
6 Fewest days to bill
30 Average days to bill
97 Most days to bill
2 Claims billed in 12 days or less
18 Claims billed in 13-19 days
28 Claims billed in 20 days or more
• 57 days in Medicare
receivables
• Could have been
further reduced by
up to 10 days
• Potential
improvement
represents
approximately
$34,000 in one
month’s cash
48 Total Paid Claims
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REVENUE CYCLE
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Session 115
October 19, 2014
How to Manage Accounts Receivable & Cash Flow
Payers
Technology
Process
People
KEY INFLUENCES
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Senior financial leader
Accountability void
Medicare billing
specialist(s)
Medicaid billing
specialist(s)
Payment posting
specialist(s)
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Insurance billing
specialist(s)
Insurance
authorization
specialist(s)
PEOPLE
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Session 115
October 19, 2014
How to Manage Accounts Receivable & Cash Flow
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MANAGING DATA
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KEY PROCESS ISSUES
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Session 115
How to Manage Accounts Receivable & Cash Flow
October 19, 2014
KEY BILLING & COLLECTION PROCESS ISSUES
Lack of Pre-Billing Audits
Inaccuracy of Cash Posting
Lack of Cash Reconciliation
Collection Issues
Lack of Time to Collect
No Authorization
Timely Filing
Unsigned orders
F2F Issues
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PREBILLING AUDIT
 When do we conduct these audits?
End of episode – no need to audit prior
 to end of episode or discharge
 What do you need for audit?
Patient Chart
Audit Tool
Trial Bill (Pre-bill)
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Session 115
How to Manage Accounts Receivable & Cash Flow
October 19, 2014
PREBILLING AUDIT
 Audit 100% of Charts
Catch Compliance Issues
Catch Issues Associated w/PPS
Avoid unnecessary denials
 Who should conduct these audits?
Billing or Clerical Staff are sufficient – it is not a
clinical audit
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PREBILLING AUDIT
 Quick Review of 485
All Blanks Completed, Signed & Dated by
Clinician
Signed & Dated by Physician
Supplies ordered on 485
 Supplemental Orders Signed & Dated by
Physician
Only exception is Discharge Orders
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Session 115
How to Manage Accounts Receivable & Cash Flow
October 19, 2014
PREBILLING AUDIT
Clinical Note for every visit
Frequency & Duration
 Map out visits and check against orders
Disallow visits and supplies as required
CASH POSTING IS CRITICAL?
 Cash Posters –
Posting payments to Patient Accounts
Transferring balances to secondary payers or
private pay
Medicare Patients – reconciling the type of
adjustment that was received and if you were
paid correctly
Reconciling amounts posted to amounts
deposited into bank
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Session 115
How to Manage Accounts Receivable & Cash Flow
October 19, 2014
CASH POSTING IS CRITICAL?
 Medicare Cash Receipts Should be Posted on a
Daily Basis:
If payments are less than the original HIPPS
recorded, research reason for difference in
DDE
Differentiate the various types of PPS
adjustments in your billing system to obtain
statistical data.
Make sure adjustments are appropriate.
Don’t assume anything!
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Session 115
How to Manage Accounts Receivable & Cash Flow
October 19, 2014
AUTHORIZATION QUESTIONS
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•
•
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Do Contracts Exist for all Payers?
Contracts Current?
Rates Negotiated Often?
Uncollectible Ones Terminated?
Intake Staff Aware of Contracts?
AUTHORIZATION QUESTIONS
When contacting insurance company –
Customer Service should be able to verify the patient
has coverage and the dates covered
Make sure to verify ID # - most likely no longer the
patient’s Social Security # due to security
Verify correct spelling of patient’s name per the
insurance company’s records
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Session 115
How to Manage Accounts Receivable & Cash Flow
October 19, 2014
AUTHORIZATION QUESTIONS
Does the company require 1500 or UB-04 forms?
A fax of the authorization from the insurance
company is ideal
What are timely filing requirements?
Confirm electronic transmission or paper claims
Confirm Address to send information if paper is
sent or copies of notes/authorizations, etc. must
be sent
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Session 115
October 19, 2014
How to Manage Accounts Receivable & Cash Flow
TOOLS FOR EFFECTIVE COLLECTIONS
 Accurate Receivable Reports
 Access to all Contracts w/rates
 Timely Copies of EOBs & Remit
 Accurate Recording of Authorizations and
Verifications in system
 Adequate time to perform duties – NOT
other assignments
 Effective tracking system for follow-up work
done
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SUMMARY
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Session 115
October 19, 2014
How to Manage Accounts Receivable & Cash Flow
SUMMARY
Submit HHFMA revenue cycle surveys to either
Melinda A. Gaboury
mgaboury@healthcareprovidersolutions.com
Fax 615.399.7790
M. Aaron Little
mlittle@bkd.com
Fax 417.865.0682
Evaluate your agency’s process & personnel
performance against suggested benchmarks
Examine your agency’s billing operations
performance & cash flow to evaluate effectiveness
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QUESTIONS
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Session 115
October 19, 2014
How to Manage Accounts Receivable & Cash Flow
Session 115
How to Manage Accounts
Receivable & Cash Flow
Melinda A. Gaboury, COS-C
& ADVISORS
HealthcareCPAs
Provider
Solutions, Inc.
Chief Executive Officer
mgaboury@healthcareprovidersolutions.com
M. Aaron Little, CPA
BKD, LLP
Managing Director
mlittle@bkd.com
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