A Bank Sales Guide to BusinessManager for Healthcare

Transcription

1 A Bank Sales Guide to BusinessManager for Healthcare 1

2 BUSINESSMANAGER HEALTHCARE OPPORTUNITIES Increasing fee income while mitigating risk in the healthcare sector This guide will help to prepare your organization for success in the healthcare sector of the economy. The guide contains information describing our approach to healthcare as well as a plan of action for initiating a relationship with ProfitStars Lending Solutions. During recent years, financial institutions all over the country have utilized BusinessManager as a tool to meet the short-term working capital of small businesses, to increase fee income, and to effectively manage risk. As you address these business needs, we hope that you will find this guide beneficial and we look forward to continuing our discussion with your management team in the days to come. Index 1. Industry overview healthcare in the U.S BusinessManager as a cash flow solution Selling BusinessManager in the healthcare industry Documentation of your BusinessManager healthcare relationships HIPAA compliance Government insurance programs Working with Tetris Consulting ProfitStars processing services ProfitStars account verification services Tracking the performance of your healthcare related business clients Beginning a relationship with ProfitStars to deploy BusinessManager Next steps

3 Industry Overview Healthcare In the U.S. Healthcare in the U.S. is currently a $2.3 trillion dollar industry. Per data from First Research (a D&B Company), the sector includes about 6,500 general hospitals; 75,000 nursing homes and residential care facilities; 13,000 diagnostic labs; 30,000 outpatient clinics; 220,000 doctor offices; and 150,000 family and social services providers. While many aspects of the U.S. Healthcare sector are in transition, including regulatory and insurance reforms, one thing is certain. Healthcare is expanding in this country, and it is likely to continue that expansion at a rate of 6 7 percent per year from now through Private healthcare costs, the per-person per year expenditures, are also growing. One dynamic driving this growth is the aging U.S. population. The baby boomer generation has affected every segment of the U.S. economy as it has grown, and healthcare is no different. The first baby boomers officially started reaching retirement age back in 2011, and that long term trend will drive healthcare expenditures for the next 20 years. What does this mean for your organization? Chances are it means that you will see increasing demand for financial services relating to this sector of our economy. From financing medical providers and related services to helping individual consumers manage their own healthcare spending, your organization will see new opportunities for years to come. Through the use of the BusinessManager system, you will be able to meet at least one of these market needs, by providing accounts receivable solutions to medical providers and medical service facilities that depend on third party payers to drive their cash flow. While AR turn rates in the healthcare sector average around days, they can be as long as 150 days. Payments coming from both private insurance carriers and from government programs can be delayed, causing the need for short term working capital financing just as with other industries you have seen with BusinessManager. The remainder of this booklet will guide you toward success in using BusinessManager to fund medical providers in your market. While this benefits both the provider and your organization, it can also lead to meaningful and measurable cross selling opportunities from equipment financing and leasing, to cash management services for the practitioners and their families. BusinessManager as a Cash Flow Solution Since 1990, banks nationwide have used the BusinessManager system to fund more than $70 billion in accounts receivable in a wide variety of industry sectors, from transportation, manufacturing, wholesale and staffing to business services and the energy sector. The program has successfully grown to the point where over $400 million dollars is outstanding on any given day of the year. Now BusinessManager, with some process and documentation modifications, can be used to fund businesses in the healthcare sector, specifically businesses that rely on payments from private insurance carriers or government payers such as Medicare. In order to accommodate funding in this sector, we have partnered with Tetris Consulting, Inc. ( Tetris Consulting ) to help with development of interfaces into your client s patient accounting system, to help analyze data as you fund newly generated claims and to provide ad hoc reporting capability at the claim level. We have also modified our internal processes as well as the samples of documentation you would use with your client. Through these changes, the door has been opened to funding healthcare relationships with BusinessManager. After all, these businesses need cash just as much as those in any other industry. In order to facilitate growth, you can now offer the program to your clients and to prospects in your market. Some examples of healthcare businesses you may encounter include: Home healthcare agencies Durable medical and home medical equipment suppliers Ambulance and air ambulance services Surgery centers and hospitals Medical staffing services that bill third party insurance Physical therapy services IV infusion clinics Pharmacy services 3

4 In general, the program is not recommended for individual physician practices, chiropractors or start-up practices. This is due to the size of the receivable base and the types of patient accounting systems you are likely to encounter with these businesses. Additionally, it is not recommended for use with dental practices due to the nature of insurance use in that industry and the fact that so much of the service involves elective procedure. Selling BusinessManager in the Healthcare Industry When marketing to this industry sector, you can expect a high level of support from your assigned ProfitStars Business Development Manager. ProfitStars will also be communicating regularly with our sales representatives to let them know what is going on in this market through our own research. Through list management processes, mailing campaigns and direct calling efforts, our goal is to help you market BusinessManager to providers in your area and to facilitate the same discussions and sales presentations we do with more traditional businesses. The BusinessManager sales process for the healthcare sector will be very similar to the process we use in broader industry segments. The key players in the business will vary, however, depending on whether you are calling on a medical clinic, a facility such as a community hospital, or other types of healthcare businesses such as pharmacies, home healthcare agencies or EMT services. Bottom line: It will be a process of identifying any business needs and then finding a way to meet those needs. Healthcare providers often need enhanced cash flow to accommodate growth. They may need to add staff and also may face increasing variable expenses as growth rates increase. In addition, they may be looking to you to help them outside of BusinessManager with equipment financing, owner occupied real estate, cash management and other bank services. Our hope is that BusinessManager can serve as the catalyst for opening those discussions. Documentation of Your BusinessManager Healthcare Relationships While the sales process for healthcare is similar to other industries, the process of documentation is different. ProfitStars offers a sample BusinessManager Agreement specifically for the healthcare market, and it addresses the issue of HIPAA and government program receivables; both items that are different than the standard BusinessManager Agreement we provide. As in the case of the standard BusinessManager Agreement, your local counsel should review this document once you have executed a license to utilize the program and make any changes they see fit for your specific circumstances. The BusinessManager Agreement with Healthcare Providers also contains a Business Associate Agreement, which is required by HIPAA. The other key difference is the language that you will use in your UCC Financing Statement. In addition to your standard lien and proceeds interest in accounts receivable, your filing would typically reference a specific lien against Healthcare Insurance Receivables. This is due to the fact that this type of receivable was specifically defined in the most recent revisions to Article 9 of the Uniform Commercial Code. Your local counsel can guide you as to specific language for the filing, based on your State s variations. As with standard BusinessManager accounts, your counsel may also advise you to include your cash collateral reserve account in the UCC filing language, since it is serving as cash collateral. If the bank is taking a blanket lien or any other collateral to secure the provider s repurchase obligation, an appropriate additional security agreement and appropriate additional language on the financing statement would be necessary. Please seek local counsel to assist you with regard to additional financing documents or security agreements that you may need. HIPAA Compliance The primary purpose of HIPAA (Health Insurance Portability and Accountability Act of 1996) is to protect private healthcare data. This legislation calls for medical providers to take the necessary steps to protect data they maintain. It also calls for providers of medical services to assure the security of data that may be used by other associated businesses. With that goal in mind, the provider would execute a Business Associate Agreement with any companies that may need access to their private healthcare data for legitimate business purposes. In the case of BusinessManager, there are two specific times where a bank employee may have access to private healthcare data. The first comes during the receipt of EOBs (Explanation of Benefit Statements) that accompany payments by insurance companies into the lock box. These EOBs may contain patient names and other identifying information. The second time comes when your organization requests specific claim level reports from Tetris Consulting for monitoring purposes. These 4

5 are the reasons why we provide a sample Business Associate Agreement as part of the master BusinessManager Agreement. Please note: the BAA is provided to our client banks as a sample and should be approved by your local counsel. In addition, Tetris Consulting will execute a Business Associate Agreement with each medical provider. Government Insurance Programs In order to accommodate the financing of government insurance program receivables such as Medicare and Medicaid, your organization must modify its typical documentation. Some key issues to note are as follows: 1. The financing institution may not purchase the receivables from government programs such as Medicare. For this reason, the BusinessManager Agreement contains specific language defining the scope of the bank s involvement with government program receivables. The bank may, however, take a security interest in the proceeds from the government program receivables. 2. Each medical provider must have a P.O. Box and/or a specific ACH address to accommodate payments relating to their book of business. The proceeds from government program receivables and nongovernment program receivables may not be comingled by the bank. The payment must be directed to the named provider, then the provider may grant the bank a power of attorney to facilitate transfer of funds from that address, but the bank does not have ultimate control of the government program receivables deposit account. This is different than the typical approach of having one P.O. Box for all of your BusinessManager clients. 3. The Agreement between the bank and the provider should contain language that waives offset rights to the provider s accounts. Offset occurs when a payer effectively realizes a credit balance against claims that are currently submitted. In this case, Medicare or Medicaid exercises its right to offset payments due the provider against the credit balance. By waiving its rights to offset, the bank is acknowledging that it has no recourse against the payer for payment of claims that have been previously financed. Depending on your own specific circumstances, your local counsel can advise you as to any necessary steps you would take to assure your position in regards to government program receivables. Working with Tetris Consulting In order to facilitate the funding of healthcare claims in the most effective manner; ProfitStars has developed a relationship with Tetris Consulting, a third party contractor. Tetris will complete three primary tasks in the implementation and ongoing management of the BusinessManager healthcare relationship: 1. Tetris develops a custom interface that allows daily claim level detail to be extracted from the patient accounting system being used by the medical provider. This also includes information regarding the posting of payments to existing claims, as well as adjustments. 2. Tetris analyzes the medical claims and determines the historical reimbursement rates the provider has been experiencing for each individual insurance payer. That information is then used to determine the net value of claims from that payer so the bank has a strong indication of true account value and how much to fund on each claim. 3. Tetris pushes daily information to the BusinessManager system. This includes new claim totals as well as payment information. While BusinessManager stores this information only in a batch format and the bank funds using a daily batch method, the provider and the bank are able to request claim level detail from Tetris as needed for the purposes of account monitoring. Tetris will also be providing your organization with monthly information as to the average rolling four month reimbursements rates by payer class, so you will have a strong idea as to the performance of each payer as well as any contractual adjustments made over time. 5

6 ProfitStars Processing Services ProfitStars provides batch posting and payment processing services for healthcare accounts. In general, to accommodate both processes, ProfitStars is receiving daily FTP Server files and entering the summary data into the BusinessManager system. With this in place, your organization knows what general ledger adjustments to make each business day. ProfitStars Account Verification Services ProfitStars also provides account verification services (AVS) services for healthcare accounts. By contacting payers directly, our team is often able to uncover potential delays in the claims resolution process such as errors in billing. This adds an additional layer of protection and monitoring capability to the process, benefiting both you and your client. In most cases, the sampling size for verification is the same as that of other industries, as is the cost. Tracking the Performance of Your Healthcare Related Business Clients The most difficult aspect of financing accounts receivable in the healthcare sector is the valuation of the claims themselves. Each insurance payer reimburses the provider at contracted rates, which change over time. ProfitStars has worked with Tetris Consulting to develop the funding processes described in this guide. By evaluating each payer s reimbursement history in advance of funding, and tracking changes over time, the goal is to provide your organization with as accurate a reflection of net claim value as possible. Once the relationship is funding, you will continue to monitor the account in a manner similar to standard BusinessManager clients. Reserve reconciliation, repurchases and report views will still be a part of your process. The key difference will be the level of reporting. Your BusinessManager reports will reflect the performance of individual payers at a daily batch level rather than at the level of individual claims. You will, however, be able to receive claim level detail from Tetris Consulting as needed for exception management of the account. Beginning a Relationship with ProfitStars to Deploy BusinessManager During the years, we have worked to assure that the BusinessManager program is as turn-key as possible. From our sales team, which helps you to market the program, to our risk management and account verification teams, we have learned how to effectively serve our client s needs and help them to drive significant income to their organizations. In addition to new revenue opportunity, our clients enjoy the following types of support from ProfitStars: Joint sales presentations with lending officers from your institution. Telemarketing and direct mail efforts. Complete training of your bank personnel managing the program at our headquarters in Brentwood, Tennessee. Ongoing technical support for you and your clients. Account verification services. Insurance services from Coface North America (Fraud Insurance). Risk management support from former commercial lenders employed at ProfitStars. Active development of our web solutions to continuously enhance the BusinessManager system. 6

7 Next Steps We look forward to meeting with you to discuss the next steps in developing a relationship. The basic process in deploying BusinessManager is as follows: 1. Meet with one of our financial institution sales professionals and schedule a demonstration of the system. 2. Meet with a member of our Risk Management team to answer any questions you have regarding credit implementation and workflow. 3. Work with our team to develop a strategic plan that can be shown to your senior management team and your board of directors. 4. Discuss licensing terms and initiate an agreement. 5. Attend one of our live training events. 6. Work with one of our Business Development Managers to implement your program. 7. Begin enjoying fee income. Thanks so much for the time you have spent reviewing this material. We look forward to our next meeting as you move forward with this process. Notices and Disclaimers The goal of Jack Henry & Associates, Inc., ProfitStars Division, ( ProfitStars ) is to help our client financial institutions build safe and profitable BusinessManager portfolios. If you have any questions regarding the information contained in this document or would like additional information, please contact the ProfitStars Training Department or the Risk Management Services group at the following location: Jack Henry & Associates, Inc. (ProfitStars Division) P.O. Box 1603 Brentwood, Tennessee The information contained or referenced in this document, including information provided by ProfitStars to you through any means including a URL link to a ProfitStars website, is subject to change from time to time without notice. When relying on this information, please check with ProfitStars to ensure that you are working with the most recent publication of the document based on the copyright and document revision dates listed. This document contains examples and scenarios concerning use of the BusinessManager program within a commercial funding environment. Descriptions are meant to address typical transactions and operations. The facts relating to your particular requirements and operations may vary from what is described in this document. This document includes some information about laws, regulations and industry rules which relate to commercial funding operations and practices. ProfitStars has applied reasonable efforts to ensure that this information is accurate and useful, you understand and acknowledge by your use of this document that: This information does not constitute legal, accounting or tax advice by ProfitStars in any manner. In order to apply this information to address your particular requirements and operations, you must seek and rely upon your own resources and help from legal, accounting and tax professionals who are knowledgeable and experienced in these matters and can guide you in interpreting and applying this information appropriately for your use and benefit. This information is based on general legal principles and tax and accounting considerations which may not apply to you or your particular location or the type of commercial funding operations you employ. In this document, ProfitStars has not adapted this information to apply to your specific needs instead, it reflects guidance and principles which broadly apply to financial institutions, commercial funding operations and the various governmental and regulatory jurisdictions across the U.S. as a whole. Additional information is available at or by calling Copyright Jack Henry & Associates, Inc. All rights reserved. ProfitStars is a registered trademark of Jack Henry & Associates, Inc.