Revenue Cycle Management

Getting Paid Quickly is the Key to a consistent, healthy cash flow in any dialysis clinic. Otherwise, you’re incurring costs that aren’t covered until months later. Healthcare providers across the country are scrambling for answers to make positive cash flow a reality.

Far too often medical claim disputes create controversy and distrust between providers and their patients, while those who are truly accountable and financially responsible remain contentedly out of the picture. In order to maximize profits and cut costs insurance companies have learned to thrive on a “divide and conquer” approach assigning blame to the provider, patient or both when a problem with the claim arises. They have learned how to avoid their financial obligation and responsibility to all parties involved.

Insurance companies have made a living off the notion that “every action has an opposite and equal reaction.” By delaying or denying payment to the provider, insurance companies are essentially taking cash out of the provider’s bank account and depositing it into their own. In addition, the efforts involved in reworking each claim generates an increased demand in resources applied to obtain payment prolonging the goal of getting paid. The effect of such behavior essentially means a decrease in provider profits with every touch of the claim. Unfortunately, things can gets worse for healthcare providers. Many of the denied claims or “claims that never reach the carrier” will never get resubmitted due to poor follow up, lack of staff, etc. Ultimately delays and/or denials in payment set off a fiscal chain reaction that cripples a health care provider’s ability to provide high quality standards of care expected by patients and their families as well as state and federal regulatory agencies.

Numerous studies have revealed the millions of dollars a day that insurance companies profit in cash by simply delaying claim payment (this does not include outright denial of payment). Unfortunately for healthcare providers insurance companies have now made this process an art form. It seems that on a daily basis insurance companies require additional “hoops to jump through” in order to receive payment on a clean claim. It does not matter anymore if the claim is denied correctly by the carrier, if you don’t respond to their mistake within a specific timeframe they will deny you payment. It’s hard to believe that we have come to this point in patient care, where battle lines have been drawn between insurance carriers and healthcare providers and only the fittest will survive let alone be profitable. While providers are concerned with patient care they must somehow find a way to forge ahead in this battle in order to continue to provide the highest quality care possible to their patients.

So how can healthcare providers ensure quick and consistent payment from insurance companies in today’s ever changing environment? The answer you might find is not as difficult as it seems, although it might not be what you want to hear. Here it goes: Healthcare providers today can be their own worst enemy.

We continue to sit around and complain about reduced reimbursements, stricter regulations, privacy requirements, etc. with no or little control. We manage to lose focus on the key components that we can actually control therefore, losing collectable revenue on a daily basis.

In order to know where you want to go you first must know how to get there. I’m amazed how many times I speak with office managers who, on the surface, know the many issues holding up revenue but have no plan on how to fix the problems. Think of it this way, if you’re about to take a road trip across the country what is one of the first things you’ll need to do? In most cases, you’ll need to plan your trip. You do this in order to map out the most efficient travel route, plan your rest stops or breaks, and find hotels for overnight stays.

You continually refer to your map while you are on the road until you reach your destination. You do this in order to make sure you don’t get lost along the way and ensure you will arrive at your destination on time. Why should business be any different? In order to be successful you must map out the most effective and efficient business process possible to make sure that you can reach your desired goal. More importantly, DO NOT put the map away. You should continue to refer back to this map to make sure that you have not veered off course. I have worked with a number of administrators, directors and billing operations managers on their road maps, which have led them to great success. We’ve seen groups reduce their DSO (Days Sales Outstanding) by 60 days within six months (all through cash collections). I’d like to share with you several of the key components of these road maps. Hopefully this information will allow you to evaluate your current processes and make changes that can have long lasting effects on your practice or group.

First things first, a philosophical change must be made prior to anything else. Gone are the days where we submit a claim and wait for 45 days to receive payment. In today’s world we can no longer sit back, wait and then react to what happens. A proactive approach must be implemented in the business office in order to achieve maximum results. This begins by understanding your revenue. Before you say, “I already know what my payer mix is,” ask yourself the following questions.

• Who are my top four payers outside of Medicare (can you name them in order)?
• What percentage of my revenue does each payer make up?
• What percentage of this revenue have I collected the past three months?
• What is the average length of time for my claims to get paid by each payer (from date of service until time payment is received)?
• What is my current DSO (Day’s Sales Outstanding)?

Over the past several years I can honestly say that no one has been able to answer all of these basic questions. Many people just don’t have the answers or even the correct answer. I ask this not to make anyone feel uneasy but to point out that fundamentally we do not really understand what our revenue is made up of or how it is impacting our cash flow. Without this knowledge you cannot correct the problem. Two simple reporting mechanisms that can assist you in this area are payer trending and a monthly payer analysis.

Payer trending takes your detailed age trial balance by payer and trends the data by month. This is done by entering the information into a computer spreadsheet on a monthly basis. This will allow you to trend data from month to month and find out if the revenue is getting paid or continuing to age. Monthly ATB’s are a good tool to work off of because trending this data opens you up to a new world of information that might have otherwise gone unnoticed (i.e., if you have $10,000 dollars in your 30-60 day bucket for Blue Cross the next month you will see how much money was collected and how much has now fallen into the 60-90 day bucket and so on in subsequent months). This tool allows you to track the history of your billed receivables.

The monthly payer analysis process is very simple. Each month you should do a detailed analysis of your top four payers (the payers who owe you the most money). A detailed aging report should be run and an action plan implemented with the intent to recover that revenue the next month. Trends you should review include claims with zero payments, claims with partial payments, secondary claims. Following these will allow you see where the issues lie and assist you in your action plan.

In today’s world of technology there is no reason for any provider to manually submit claims to an insurance carrier. Let me be very clear on this point, we understand that all dialysis providers are submitting their Medicare claims electronically but, you must submit commercial claims electronically as well if you want to have any chance of getting ahead. Now, I’ve got good news and bad news. The good news is Medicare generally makes up approximately 50 percent to 55 percent of dialysis providers revenue with most claims paid in a timely manner. The bad news is that the remaining commercial revenue is still being billed out via paper on a monthly basis. What’s interesting to me is that most people I talk to don’t realize that they’re able to submit their commercial claims electronically and more frequently than once a month. You would be absolutely amazed at the benefits of billing out all of your commercial revenue electronically on a weekly basis.

The difference is remarkable. In addition, consider that submitting claims electronically also eliminates the manual errors involved with paper submissions, such as claims never leaving the office, claims lost in the mail, claims being sent to the wrong address, and insurance carriers “conveniently” not receiving the claims.

Studies show the industry average of electronic claims received on the first submission is 94 percent. In addition, if claims are denied when submitting electronically you will receive a report back within 24 hours notifying you of a claim rejection or error then the provider can resubmit the claim within days rather than waiting 30 day for a paper rejection. Another benefit is reducing the amount of claims being submitted. This is extremely important because the insurance carrier is more likely to pend claims for higher dollar amounts prolonging payment and reducing your overall profit margin on these particular claims. Let’s face it, if you’re billing the insurance company for 13-15 dialysis treatments (including ancillary charges) the dollar amount on that claim will be significant. You can eliminate these tactics used by insurance companies to pend high dollar claims simply by moving to a weekly electronic billing cycle.

Healthcare today presents many changing and complex challenges. What we must learn to do is focus on the elements we have control over. By doing this, we can eliminate a large number of the obstacles that we currently face. I was told a long time ago by an individual that I respect tremendously in this business that, “The best way to win a fight is to avoid it all together.” This conversation revolved around several payer issues that we were dealing with at the time. It was at that point that I knew that the best way to resolve a payer issue was to not let one happen. RBT

Jamie Constein is vice president of operations with Brandywine Medical Management Services Inc. He can be reached via email at jamie.constein@bmmsi.com.