Critical Revenue Cycle Success Strategies In An Era Of Integrations Thursday, February 16, 2012 presented by: Susan E. Ziel, Partner Krieg DeVault P: 317.238.6244 Email: sziel@kdlegal.com Catherine M. Weaver Somerset, CPAs P: 317.472.2230 Email: cweaver@somersetcpas.com Phil Roberts Senex Services Corp. PH: 317.613.1002 Email: robertspt@senexco.com
Revenue Cycle and Payer Contracts t CATHERINE M. WEAVER CMPE, CASC, CHFA SOMERSET CPAS, P.C.
Today s Discussion Overview Revenue Cycle Collections Legal Considerations of Collections Bad Debt Now What?
Revenue Cycle Shdli Scheduling Registration Time of Service Payments Charge Capture Coding Charge Entry Claims Processing Payment Posting A/R Follow Up Pti Patient t Collection Patient Billed and Patient Pays Insurance Payment Posting Appointment Scheduled Charge Entry and Claim Filed Patient Registration Charge Capture
Monitor Revenue Cycle Internal Standards Income statements Balance sheets Productivity and accounts receivable information Prior operating performance and measures (front Prior operating performance and measures (front office task work ranges)
Monitor Revenue Cycle External Standards American Medical Association Medical Economics Medical Group Management Association Specialty Specific Resources Market Specific Resources Peer Generated Resources
Payor Contracts Basics Contracts Edit Reports Denials by type Denials by amount Charges, Receipts, Adjustments Days in A/R by Payor
Payor Contracts Essentials Copy of Contract Copy of all Exhibits and Addendums Access to Provider Manual List of the Payors Associated with the Network Payment Files and Crosswalks Your Own Fee Analysis
Contracts Watch Out For The Provider shall not increase its Charges for any Covered Service more than three percent (3%) each contract year. Usual and Customary Whose Usual and Customary? Change to "Provider s Usual and Customary Charges Term and Termination - Long period, only at anniversary, only with cause Try for: With or without cause in 60-90 days
Contracts Watch Out For Practices being purchased by a Hospital System New Tax ID means new contract and reimbursement. Carefully analyze the current contract reimbursement to the new entity contract reimbursement We have seen examples of the Independent Practices having negotiated a better paying contract than the Health System s s contract.
Consume Driven Health Care I R C l d R i Impacts Revenue Cycle and Requires Change
HDHPs & HSAs What are they? A Health Savings Account (HSA) is a Special Account Owned by an Individual Used to Pay for Current & Future Medical Expenses HSAs are Typically Used in Conjunction with a High Deductible Health Plan (HDHP) It is Insurance that Does Not Cover First Dollar Medical Expenses (Except for Preventive Care) Can be an HMO PPO or Indemnity Plan as Long Can be an HMO, PPO or Indemnity Plan, as Long as it Meets the Requirements
HDHPs/HSAs How do patients manage? Worst Case: Patients Chose for the Low Premium Option They Do Not Fully Fund Their HSA They Avoid Health Care to Avoid Extra Cost They Do Not Actively Participate in Healthcare Choices & Healthy Lifestyle Choices They Do Not Understand Their Plan
HDHPs & HSAs How How You Manage Recognize When a Patient t has a HDHP Identify HDHP Names with Your Payors Look for Zero co pay on Cards Look for High Deductibles on Cards Ask the Patient When in Doubt, Call the Insurance Company
HDHPs & HSAs How How to Manage Collect at or Prior to the Time Of Service Staff Should be Pre certifying Everything to Determine if Deductible Has Been Met If the Deductible Has Been Met, Nothing is Due If the Deductible Has Not Been Met, the Contracted Amount is Payable by the Patient
Your Role with Insurance Carriers Patients may not understand their plan Educate yourself and your staff on the plans Certain Plans may require differing i Dx Codes Ask Payors to attend monthly staff meetings to educate staff Make it your mission to help the patient understand their responsibility
Tools AMA Model Managed Care Contract MGMA Practice Perspectives on Payor Performance
Legal Considerations in the Collection Process SUSAN E. ZIEL NURSE ATTORNEY AND PARTNER KRIEG DEVAULT LLP
Bad Debt Requirements 42 CFR 413.80. Bad debt reimbursed by Medicare but only if: Db Debt relates to covered services, derived d from deductible/coinsurance amounts Reasonable collection efforts were made Debt uncollectible when claimed as worthless No likelihood of recovery in future
Covered Services Covered services Medically necessary Prior authorization/certification Fee schedule Exceptions to fee schedule
Reasonable Collection Efforts Comparable efforts for Medicare and all non Medicare patients Issuance of bill post discharge/death to patient or third party responsible for financial obligations Subsequent billings, collection letters, telephone calls May include collection agency and court action, as necessary Documentation required
Collection Efforts (cont.) Social Security Act 1128A: illegal remuneration to Medicare patients includes waiver of coinsurance/deductible amounts, subject to certain exceptions 1128B(b): illegal remuneration to Medicare patients OIG Fraud Alert (1991) (99) Routine waiver of coinsurance and deductible amounts after billing Medicare for full charge represents a false claim
Collections Db Debt deemed d uncollectible without ih applying li Medicare reasonable collection efforts if indigence confirmed and no evidence of improvement in patient s financial condition
Indigence/Financial Need Establish before discharge or within reasonable time before current admission Determined by provider, not patient Take into account patient s total resources Determine no other source legally responsible for bill File documentation : policy, application, supporting documentation Sliding scale, extended payment, or both Update at least every four (4) months
Patient Agreement to Pay for Services Wii Writing to confirm patient/guarantor payment obligations beyond those made in admission paperwork Scope of services Anticipated fee(s) Anticipated third party payer payments, if any Patient/guarantor obligations Enforceability
Bad Debt Now What? PHIL ROBERTS PRESIDENT & CEO SENEX SERVICES CORP.
Bad Debt Now What? Best Practices You Should Expect FICO Scores for Bad Debt Patients Patient t Satsacto Satisfaction + Maximized Bottom Line You Can Have Both!
Best Practices Expect Patient Stewardship Good dcollections = Patient Retention Tool Selecting a Good Collection Partner: Healthcare exclusive/focused Compliance Fair Debt Collection Practices Act, the Fair Credit Reporting Act (and the FACT Act), the Telephone Consumer Protection Act, the Health Insurance Portability and Accountability Act (and the HITECH Act), the Graham Leach Bliley Act, and the IRS Dash 2 regulations (for buyers only to comply with issuance of 1099 C) Industry ACA, DBA, HFMA, MGMA Patient Centric training, principles, pledges, etc.
Bad Debt in Perspective ACA: Fastest growing segment of bad debt in economy Trending toward 7 % of hospital revenue MGMA: Patient responsible heading for 30% ACA: < 10% recovery average for health care bad debt Most providers po desdon t have aegood insight sg into their own performance measures, benchmarks, data
Bad Debt in Perspective 35.00% 30.00% 00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% FICO Scores 326 351 376 401 426 451 476 501 526 551 576 601 626 651 676 701 726 751 776 801 No Hits 350 375 400 425 450 475 500 525 550 575 600 625 650 675 700 725 750 775 800 825 In today s economy, at 365 Days 99% of Bad Debt Patients will NOT qualify for mortgage
Today, Bad Debt Really Matters Avg. hospital net profit: 1 3 % Low margin, high volume business We re not utility companies no cancels $100 K in new recovery = $5 M in revenue @ 2 % margin Today, CFO measured on bottom line Increased recovery = increased profit!
Drivers Mergers, integration Revenue enhancement and/or cost reduction Create working capital/boost cash on hand Create more predictable cash flow Bank or bond refinancing Streamline vendors and collection process Quick recapture for merging physicians
Understanding Bad Debt Sale Recover A/R sooner, simpler, and more Same file format as collection firm Same ability to recall, manage accounts, control Provider is paid when file is placed, plus gain share Buyer takes risk: non recourse Boost collections or replace traditional collections Enhance overall recovery One time transaction to boost days cash on cash Industry estimates of 750 1,000 hospitals selling
Program: 2 ndary Sweep Up Sell old, inactive balances #365 days to 5.5 yr old 5yr accounts $10,000,000 annual bad debt placement X.90 percent unrecovered = $9 M X 5 years = $45 million X.0075 = $337,500 Equivalent to hospital revenue $17 M in revenue @ 2 % margin
Program: 2 ndary Booster Call back placements @ 365 days Sell monthly Boost net recovery by 1 3 percent (12 13% ++) Paid at placement and/or gain share $10 M placement over 12 months X.0075 = $75,000 Equivalent to hospital revenue $3.75 M in revenue @ 2 % margin Most don t have a 2 ndary program you should!
Understanding Bad Debt Sale CMS 2008 Joint Signature Memorandum Clarification of Medicare Bad Debt Policy/Bad Debt Policy Related to Accounts at a Collection Agency Subsequent Recovery Reconcile on following report Top hospitals sell regularly without affecting Cost Reporting
Questions for the Panel Catherine M. Weaver, Somerset CPA PH: 317. 472 2230 Email: cweaver@somersetcpas.com Susan E. Ziel, Krieg DeVault Law PH: 317.566.1110 Email: sziel@kdlegal.com l Phil Roberts, Senex Services Corp. PH: 317.613.1002 Email: robertspt@senexco.comcom