The Value of Correspondence Imaging

Transcription

1 January 2008 President and Chief Executive Officer

2 The healthcare industry remains the last bastion of paper. Paper correspondence is the critical portion of the revenue cycle process after the receipt of the claim by the payer. Imagine all the paper... HCFAs post-op notes UB-92s patient statements secondary claims patient disclosure HIPAA consent ABNs Explanation of Benefits insurance cards patient registration... and all are typical of paper that a practice must manage in some way. Based upon the continued fragmentation of payers, providers and consumer directed healthcare models, paper is not only a crucial component of future healthcare delivery but a growing one. Regardless of the specific form of consumer directed healthcare, deductibles and coinsurance are rising while covered services are declining. Imagine, the second largest payer today in every practice or medical provider s business is the patient! As patients, we will be paying more of our healthcare costs and we will slow the payment cycle down as more of the payments are coming from our own bank accounts. The copier salesmen are lined up at the door as healthcare is a paper-based business and change will be incremental and slow. Regardless of its technological sophistication, a practice may choose not to pursue a paperless strategy in the near future. It might not be effective or efficient to be paperless. However, a practice needs to assess various strategies to effectively manage the various paper processes. The revenue cycle provides a real opportunity to manage the paper chase in terms of cost reduction and higher collection results. The Cost of Not Imaging in Revenue Cycle Management (RCM) The typical billing office or practice will post payments on either a bundled basis with other tasks or via a plethora of rulers, highlighters and mountains of paper. In either case, the lack of a consistent and dedicated payment posting function will create downstream costs and inefficiencies within the revenue cycle. The issues listed below are some of the by-products of an ineffective paper-based payment posting function. Payment posting is greater than two days from the date of deposit. The bank deposit and system posting reports cannot be balanced. The electronic remits, paper payments and bank deposit do not match on a daily basis. Patients are called for collections when their checks are in the stack of payments to be posted to their accounts. Claims or statements are sent out that have payments paid in full but are not posted. The A/R follow-up process is hampered by calling payers on claims that have been paid or appealing claims where the check is already in hand. Secondary payments are delayed or occur via crossover prior to the primary being posted to the account. In all of these situations, the integrity of the RCM process breaks down within the practice or billing office with a loss of trust among various functions including over-the-counter collections, A/R management, and self-pay customer service. Projects, overtime, angry patient calls, more A/R staff and tension from the front desk to the billing office are the results of the breakdown in the payment posting process. Furthermore, a paper-based posting function will make the reconciliation of the daily bank deposit to the payments posted and in process virtually impossible. 1

3 With the increasing lag of ACH credit deposits and paper or delayed EOBs, electronic 835 payments only account for 50 percent of the payment process and require some technology to reconcile and balance these payments, batches and deposits. While improving slowly, the 835 process can be ineffective due to the re-association of payments and correspondence in order to post to the line item. Obviously, line item posting is a critical element in the current healthcare RCM process. It allows for visibility into payment quality and quantity from a payer and provides supporting detail for patients when paying their ever-increasing portion of the bills. Downstream Costs of a Paper-Based Posting Process Posting with partial electronic methods and paper-based methods creates increasing costs downstream as A/R management and self-pay customer service will require additional head count to manage this inefficiency. Each additional FTE in A/R management or self-pay customer service will cost approximately $50,000 per year and be able to work accounts using a traditional task or account based methodology. On a traditional task management basis, the cost of A/R follow-up per account is approximately $8.00. An effective EOB imaging process can reduce this downstream cost substantially by consistent, accurate and timely posting of all paper and electronic payments to the line item within a patient visit. A/R staff can work more efficiently regardless of the methodology when they can trust the payment posting function and have digital access to EOBs versus having to sort through the stack in the particular day s manila envelope. In most cases, an EOB imaging system with a consistent payment processing function will reduce or eliminate many unnecessary telephone calls to the payer whose operator will tell you only what they have already sent via the EOB you cannot find. Four telephone calls per hour will provide a real cost savings incentive to find a way to convert all paper and digital correspondence into an effective EOB imaging and payment processing function. Call a payer on a few accounts to understand first hand the hard costs of a paper-based process. If you would like to assess these costs, try the following analysis. A/R Management Cost Analysis o Call four different payers on an account and record the time from the first ring to receipt of the payer information. o Extrapolate the annual cost of these calls per account and per FTE. We have assumed you received the necessary information from the payer or its representative during the call. o Compare the information from the EOB and call to determine if any new information is provided by the payer. o Multiply the charge per account by the number of accounts where the information provided by the call matched the EOB. This cost is a real one and an unnecessary one in the RCM process. Another benefit of having a reconciled, digital image of all RCM correspondence is associated with an ever-increasing frequency of secondary insurance coverage and other coordination of benefits issues. An effective EOB imaging and payment processing function can eliminate the manual copying and collating of secondary claims on a daily basis, not to mention the savings on copiers and EOB carts! 2

4 EOB imaging systems can have automatic search routines that build daily print routines for secondary HCFAs and primary EOBs to ease production internally or through a print and mail process. The cost of acquiring a primary EOB for secondary claims processing can run from $3.00 to $8.00 each. With increasing deductibles etc, medical providers cannot ignore the financial impact of investing in their secondary claims process. See below for recommendations in helping determine the cost of secondary claims processing without an EOB imaging solution. Secondary Claims Cost Analysis o Acquire the current secondary claims list from your billing office. o Take four employees and offer a $100 prize to the person who can find, copy and replace the most primary EOBs for the secondary process in a given time frame. We will ignore the cost of manually collating the HCFA and the EOB copy for this exercise. o For those EOBs with multiple patient names, the employee must black out the other patient names to remain HIPAA compliant. o Use an average hourly employee cost of $12.00 per hour to reflect the full cost of salary, benefits and facilities for this function. o After the competition, divide the highest number, mean and lowest number of EOBs found, copied and replaced by $12.00 to determine your effective cost of acquiring an EOB for secondary claims processing. o We are ignoring the high costs of hiring, training and turnover for this function. From the little contest we conducted at our company, the ROI for an EOB imaging system was immediate for secondary claims processing alone. Is 835 the Answer? If all payers could provide an 835 file on a consistent basis which eliminated the re-association lag between the receipt of the ACH deposit and the digital EOB required to post the deposit to the patient s charges, we would still need an EOB imaging solution to utilize and view the 835 correspondence file. Unfortunately, with increasing patient-owed portions of medical bills, it is anticipated that 835 transactions will account for 50 percent to 60 percent of all healthcare payments. However, 40 percent to 50 percent of the payments will be paper-based from the patient and smaller payers who cannot or will not provide a digital ACH or EOB payment file. While 835 formats are a start, we will have to possess an EOB imaging solution to view and store the information as well as manage through manual payments. Summary The cost of not having an effective EOB imaging system and payment processing system will accumulate increasing hard dollar costs due to the additional payroll associated with A/R management and self-pay customer service as well as the lost revenue from increasing A/R day turns. An effective EOB imaging system and payment processing system will generate a high ROI within the growing secondary claims process and will reduce the need for more A/R and customer service staff as there are fewer phone calls and unnecessary appeals to the payer and fewer patient statement mailings. An EOB imaging system and effective payment processing system is the easiest ROI found in healthcare today. 3

5 President and Chief Executive Officer John Thomas has been with MedSynergies since its inception in 1996, when he began as senior vice president and managing director of development. While at MedSynergies, Mr. Thomas has held positions such as senior vice president and chief financial officer, and has been a member of the board of directors since Prior to joining MedSynergies, Mr. Thomas was the vice president of the newly formed HealthCare Finance Group for Bank One. He was also the assistant vice president for Texas Commerce Bank, where he focused on hospitals and emerging healthcare markets. About Now serving 2,300 healthcare providers in 27 states, MedSynergies provides revenue cycle services and integrates leading software programs into the daily operations of healthcare organizations. Founded in 1996, MedSynergies serves physicians in hospitals, specialty medical groups, ambulatory surgical centers, rehabilitation centers, and independent practice associations (IPAs). Based in Irving, Texas, the company has regional offices across the United States. For more information on MedSynergies, please visit Mr. Thomas is a national speaker on topics such as revenue cycle management, billing and collections processes, capitalization, and turnarounds. Mr. Thomas received his Master of Business Administration, with honors, from the University of Texas Graduate School of Business. While at the University of Texas, he focused on finance and management and was selected as the Sword Scholar and received the Dean s Academic Award. Mr. Thomas received his Bachelor of Arts from the University of Arkansas Corporate Drive Third Floor Irving, Texas Copyright 2008 No reproduction, in whole or part, without written permission.