Best Practices for Optimizing Patient Payment Processes. April York, Novant Health Steve Millhouse, Experian Healthcare

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1 Best Practices for Optimizing Patient Payment Processes April York, Novant Health Steve Millhouse, Experian Healthcare

2 Best Practices for Optimizing Patient Payment Processes Challenges facing the healthcare industry Overview of Novant Health Challenges facing Novant Health Verifying a patient s identity Determining a patient s propensity to pay Screening for financial assistance Results Best practices and lessons learned

3 Challenges Facing the Healthcare Industry Challenge #1: Return Mail 40 Million 20% 10-15% $3.00 Number of Americans who move per year 1 Percentage of accounts on file with a bad address 2 Typical return mail rate 3 Average cost to fix a piece of returned mail 4 1 According to the United States Postal Service (USPS) 2 Brown, G., 5 Address Management Rules to Improve Your Bottom Line Today, Based on Experian Healthcare client feedback 4 Acts of Intelligence. Seven Practical Ways High-Volume Mailers Can Prepare for the Proposed Postal Rates and Save Millions, Pitney Bowes, 2007

4 Challenges Facing the Healthcare Industry Challenge #2: Denied insurance claims due to poor demographics 57,168,299 Number of claims per year that must be resubmitted due to payer denial due to incorrect patient demographics 1 857,524,484 Minutes per year to resubmit claims denied due to payer denial due to incorrect patient demographics 1 14,292,075 Hours per year to resubmit claims denied due to payer denial due to incorrect patient demographics 1 $289,762,993 Saved per year by not having to resubmit claims denied due to payer denial due to incorrect patient demographics 1 1 According to

5 Challenges Facing the Healthcare Industry Challenge #3 Patient identity theft and fraud 3-10% - Percent of health care spending fraud* $ Billion Dollars lost to healthcare fraud* As a result: Higher premiums and out-of-pocket expenses for consumers Increases employer s cost of providing benefits to employees Victims may find their health benefits have been exhausted Victims could become uninsurable for both life and health insurance Victims may receive wrong medical treatment *The National Health Care Anti-Fraud Association (NHCAA)

2005 2006 2007 2008 2009 2010e 2011e 2012e 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e Total out-of-pocket payments ($billions) Per-capita out-ofpocket ($) Percentage of allowed charges

6 e 2011e 2012e 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e Total out-of-pocket payments ($billions) Per-capita out-ofpocket ($) Percentage of allowed charges Challenges Facing the Healthcare Industry Challenge #4: Increasing patient responsibility Increased consumer burden Patient responsibility portion from private insurance increased 47% since % 30% 20% 10% 0% Patient responsibility as % of allowed charges Year 1 Source: Trends in Healthcare Payments - Annual Report 2010, InstaMed, March % growth in high deductible health plans 2 32% increase in percapita out-of-pocket expenses by Per-capita out-of-pocket expenditures 1,500 1, Year 2 Source: CMS, National Health Expenditures Projections Source: AAPPO 2011 Survey of Consumer-Directed Health Plans, AAPPO, April 2011

Hospitals with negative margins (%) Challenges Facing the Healthcare

financial distress 38% of all hospitals had negative operating margin

Medicare and Medicaid 2 20% projected cut in Medicare & Medicaid due

Percentage of hospitals with negative total margin Q2 2009 Q3 2009 Q4

Operating Trends Quarterly, December 2010 Commercial, 5% Blue Cross,

Other, 8% Medicare, 43% Medicaid, 11% 2 Source: Moody's, Hospital

7 Hospitals with negative margins (%) Challenges Facing the Healthcare Industry Challenge #5: Increasing hospital financial distress Hospital financial distress 38% of all hospitals had negative operating margin in The average hospital receives 54% of its revenue from Medicare and Medicaid 2 20% projected cut in Medicare & Medicaid due to the Federal Deficit Reduction Program 3 40% 30% 20% 10% 0% Percentage of hospitals with negative total margin Q Q Q Q Q Year 1 Source: Thomson Reuters, Hospital Operating Trends Quarterly, December 2010 Commercial, 5% Blue Cross, 16% Hospital revenue by payer type* Managed Care, 22% Self Pay & Other, 8% Medicare, 43% Medicaid, 11% 2 Source: Moody's, Hospital Revenues in Critical Condition, August 10, Source: Trends in Healthcare Payments Annual Report, 2010

minimize return mail and expedite payment. Registrar requests identity verification How does it work?

9 Patient Identity Verification Overview What is it? Patient Identity Verification provides an efficient and trusted means for validating and correcting demographic data during pre-registration or check-in, ultimately helping to prevent medical fraud, minimize return mail and expedite payment. Registrar requests identity verification How does it work? Registration / Pre-registration Results are reviewed and verified with patient Updates are automatically posted to HIS Why is it important? Ensures healthcare organizations have the correct patient details 10-15% returned mail rate Denied insurance claims due to inaccurate demographics Patient identity theft What is the value? Decreases returned mail Reduces the potential for medical identity theft and other downstream errors Expedites payment

to producing the necessary documentation and automating the enrollment process. Why is it important?

10 s Financial Assistance Screening Overview What is it? Financial Assistance Screening allows providers to properly identify patients who meet financial assistance qualifications for Medicaid, charity programs and other government assistance, in addition to producing the necessary documentation and automating the enrollment process. Why is it important? Finds financial assistance dollars for patients unable to pay their bill Focuses staff efforts on those patients most likely to qualify for financial assistance How does it work? Estimated FPL% Medicaid Charity Financial assistance Prepopulated application Electronic submission What is the value? Maximizes reimbursement dollars from Medicaid and other financial assistance programs Streamlines the financial assistance screening and enrollment process

evaluate payment risk, determine the most appropriate collection policy and initiate financial counseling discussions. How does it work?

Allows organizations to customize collection policies to reflect the unique financial situation of individual patients Provides custom

11 Propensity to Pay Overview What is it? Propensity to Pay provides a prediction of a patient s likelihood to fulfill out-of-pocket obligations so healthcare organizations can evaluate payment risk, determine the most appropriate collection policy and initiate financial counseling discussions. How does it work? Healthcare score High Medium Low POS workflow 1 POS workflow 2 POS workflow 3 Why is it important? Allows organizations to customize collection policies to reflect the unique financial situation of individual patients Provides custom scripts that guide financial counseling discussions based the unique financial situation of each individual patient What is the value? Increases point-of-service collections Drives financial clearance workflows based on payment likelihood, resulting in increased reimbursements

Overview of Novant Health Mission - Novant Health exists to improve the health of our communities, one person at a time Vision - We, the employees of Novant Health

12 Overview of Novant Health Mission - Novant Health exists to improve the health of our communities, one person at a time Vision - We, the employees of Novant Health and our physician partners, will deliver the most remarkable patient experience, in every dimension, every time Values Compassion Diversity Personal excellence Teamwork

13 Overview of Novant Health Greater Charlotte Facilities Beds Northern Virginia Facility Beds Presbyterian Hospital Presbyterian Hospital Matthews Presbyterian Orthopaedic Hospital Presbyterian Hospital Huntersville Prince William Hospital 170 Greater Winston-Salem Facilities Beds Novant Medical Group Physicians & Mid-levels Forsyth Medical Center 921 Medical Park Hospital 22 Thomasville Medical Center 146 Rowan Regional Medical Center 263 Kernersville Medical Center 50 1,421 Greater Winston-Salem Greater Charlotte Eastern (Coastal & Triangle areas) South Carolina Northern Virginia Eastern Facilities Beds MedQuest Centers Brunswick Novant Medical Center Franklin Regional Medical Center South Carolina Facility Beds 78 Upstate Carolina Medical Center 125

16 Challenges Facing Novant Health Patients are in distress when they come into our facility Forget to inform us of address changes Relied on patients to provide supporting documentation for charity care When patients failed to provide information, the account was placed in bad debt Many bad debt accounts did not have the capability to pay and were unaware of our charity program Without the means to properly and quickly assess the financial status and needs of each self-pay patient, we were not always able to advise them of all of their options

17 Challenges Facing Novant Health High return mail logs Unable to meet charity requirements Had no way to determine a patient s propensity to pay All collections were outsourced Bad debt was on the rise Staff s time was not being used efficiently

18 Our New Process To better serve our patient s financial needs, we decided to automate how we classify patient accounts We began a program to reclassify existing accounts and develop workflows to properly classify new patient accounts Started approximately seven years ago

19 Verifying a Patient s Identity We validate and correct our patients address information automatically Pre-registration process Patient accounts are sent nightly via electronic batch files Batch files verify demographic data and if any discrepancies, causes the account to qualify for a work list through our work list driver Data is verified and updated accordingly by the preregistration staff

20 Verifying a Patient s Identity Registration process IT staff built a program in which the registration staff is notified instantly at registration if the entered demographics do not match Used at Forsyth Medical Center, our largest facility with 921 licensed beds

21 Determining a Patient s Propensity to Pay After a patient account is determined to be self-pay or self-pay after insurance, the account is sent nightly via electronic batch files Federal Poverty Level (FPL) and likelihood to pay information is loaded into our system Patient accounts are divided into four payment categories: high, medium, medium-low, and low Account segmentation is used as a driver for our patient billing cycle

22 Determining a Patient s Propensity to Pay Payment category Patient Billing Cycle Days account stays in house Number of statements High* 75 3 Medium 60 3 Medium-low 45 2 Low 45 2 * For accounts in the high payment category that are greater than $3,000, we initiate collection calls from our in-house staff

23 Determining a Patient s Propensity to Pay Patient accounts that are still outstanding are then sent to an early out vendor for the duration of 120 days Patient accounts in: High payment category 45 days Medium payment category 60 days Medium-low payment category 75 days Low payment category 75 days

24 Determining a Patient s Propensity to Pay Accounts will be scored prior to the first patient statement, and grouped into 4 segments Focused collections efforts and subsequent outsourcing of the account to selected outsource vendors will be based on the segment assignment and account balance Likelihood to Pay Probability to Pay HIGH 91.1% MEDIUM 55.6% MED LOW 20.0% LOW 5.5% Account Age From Initial Self Pay Bill Balance >$3000 LTR Call LTR Call LTR Call LTR <$3000 LTR LTR LTR LTR >$3000 LTR LTR Call <$3000 LTR LTR >$3000 LTR <$3000 LTR >$3000 LTR <$3000 LTR Legend In-house effort Outsourced early-out vendor / ROI Outsourced primary bad debt vendor / RMB Outsourced secondary bad debt vendor / MDS Outsourced financing vendor / ClearBalance All accounts should be outsourced

25 Screening for Financial Assistance Upon return from the early out vendor, the patient s Federal Poverty Level (FPL) is reviewed Patient Account Under 300% of FPL (and straight self-pay) Over 300% of FPL (or self-pay after insurance) Adjust to charity Transfer to bad debt For account balances under $5,000, this is an automated process, for account balances over $5,000 this is a manual process

26 Screening for Financial Assistance We automatically run a credit and financial profile If the information indicates that the patient s income level matches the criteria of our charity care program, the patient account is automatically adjusted to charity Charity care process takes only minutes to complete Saves significant time for the financial counselors allowing them to concentrate on upfront collections and perform other duties Financial counselors are able to determine eligibility and review the patient s financial profile before their one-on-one meeting with the patient

27 Results Return mail rate dropped from 15% to 3% Reduction in bad debt placements by 60% Charity cases have tripled Reduced charity enrollment process time by 90% Enables us to follow through on our mission to serve our community, as we are ensuring that all individuals who truly need charity care are provided assistance

28 Results Staff is able to utilize their time more efficiently There is a greater expectancy for payment as we have validated all contact information and provided the initial income screening for determining a patient s ability to pay

29 Best Practices and Lessons Learned Segment patient accounts prior to sending them to early out vendors Automate your charity care process Have buy-in from all departments involved If users are not going to utilize the tool properly, then you aren t going to see the results you wish

30 Best Practices and Lessons Learned Working with state agencies and/or business partners may be necessary to ensure automated tools remain updated with the eligibility Implementing technology to verify patient information and screen for eligibility can reduce inefficiencies and inaccuracies resulting from a manual process This type of approach can ensure charity care is applied consistently and appropriately for patients based on their financial circumstances, creating a defensible, audit-proof process

31 Questions?

Contact Us April York Senior Director, Patient Finance Novant Health ayork@novanthealth.

32 Contact Us April York Senior Director, Patient Finance Novant Health (336) phone Steve Millhouse Product Management Director Experian Healthcare steve.millhouse@experian.com (763) phone

FINANCIAL AND STATISTICAL REPORT June 30, 2017 (UNAUDITED)

FINANCIAL AND STATISTICAL REPORT June 30, 2017 (UNAUDITED) PAGE 1. Combined Statements of Revenues and Expenses for the three months ended June 30, 2017 and 2016 2. Combined Statements of Revenues and