Health Care Group Newsletter – Summer 2014
Jason Flahive, Danielle M. Gilbert
Re-engineering Your Practice’s Revenue Cycle
JASON FLAHIVE, CPA
Your financial success depends on how well you manage the revenue cycle. Real-world efficacy points to a few fundamental strategies for re-engineering the ways that your medical practice generates revenues. This article discusses analyzing payer contracts, establishing each patient’s financial responsibility using EHR systems, and managing and preventing denials.
Analyze Payer Contracts
Most revenues originate from payers, so first analyze your practice’s contracts with them. Learn each payer’s allowable reimbursement by procedure code; then calculate the practice’s cost for administrative headaches that the payer may cause through required preauthorizations and excessive denials.
Next, make one of three choices about the payer:
- Accept the payer relationship as is;
- Terminate the contract on grounds of irreconcilable incompatibility; or
- Meet with the payer to renegotiate the relationship. If you choose to negotiate with the payer, bring data to support the added value that the practice provides – such as prevention services and extended office hours.
Medicare denial rates are typically two to three times that of private carriers, so if your private insurance carriers are denying on the same level as Medicare, you may want to take a closer look at your contracts with them and renegotiate.
Encourage Patient Responsibility
Introduce procedures to establish each patient’s financial responsibility (verification of insurance coverage, copays and so forth) before the delivery of medical services. Also, be sure to explain the practice’s financial assistance policy to the patient (i.e., payment at the time of service, etc.).
Procedures should lead to collections before or at the time of service. Staff in contact with patients must know how to ask for money and what to do if it is not forthcoming. At the time of a visit, collect from insured patients all copayments, due balances, coinsurance amounts and deductibles. For uninsured patients, collect a predetermined minimum down payment. This is especially important for small offices where the receptionist also handles collections. It is vital that you have the right person for the job.
Automate the Process
With the advent of EHR systems, it is much easier to automate much of the revenue cycle. These systems are initially acquired to serve clinical purposes, but they can be interfaced with a practice management system to perform fiscal functions.
EHR systems can, for instance, be used to verify a patient’s insurance coverage and benefits eligibility in advance of a visit. They can also automatically collect codes for services delivered to capture the related charges. Moreover, you might use your EHR system to improve the accuracy of payments received, speed provider enrollment and credentialing, enhance charge scrubbing and conduct electronic remittance and fund transfers.
Manage and Prevent Denials
Even if you undertake the efforts noted above, your practice will still likely encounter some claim denials. The good news is denials can be managed and prevented.
First, identify the types of denials and their causes within the practice or the payer. The most common categories will be registration, medical necessity, timely filing, preauthorization, duplication, insufficient support information and coding. Try to act within 24 hours of receiving each denial. If the payer seems to be at fault, use prepared appeal form letters. Then track each denial by payer and provider until it is resolved.
The patient equivalent of payer denials is delayed payment of amounts owed. The best way to handle this is by following a strict collection style – typically completing the process within 90 days. Within that period, send two or three paper statements, culminating in a collection notice. Stick to the deadlines that are set. If necessary, use a collection agency. But develop a financial hardship policy for patients genuinely incapable of making the required payments. Communication of payment requirements and collection terms before delivery of services is key to managing patient responsibility receivables.
Know Where to Turn
Maximizing your practice’s revenue cycle can be challenging, but it is an exercise that must be done continuously. For more information or assistance, contact Jason Flahive at [email protected] or call him at 312.670.7444.
Best Practices to Maximize Patient Self-Payment
Physician practices must now worry about steadily increasing patient deductibles, along with collecting traditional copayments. Deductibles as a percentage of the contracted rate increased by at least 20% across the country from 2009 to 2011, according to athenahealth. Any increase in self-pay is bad news for the physician because self-pay takes more than four times as long to collect, with a whopping 18% ultimately getting written off. Here are some best practices for making that task a little easier:
- Design a Formal Self-Pay Policy
Present the policy when patients arrive at the office for their first visit. The title should be clear as to the policy’s purpose (such as “Patient Responsibility for Fees”). The policy should be straightforward and simple, broad enough to apply to virtually every patient. The policy must state unequivocally that patients are responsible for fees they legitimately owe, and when those payments are expected. Explain any late payment charges or discount plan that is offered, as well as the consequence of nonpayment. You may also choose to ask patients to sign the policy as an agreement.
- Incorporate Self-Pay Collection into the Workflow
Convey the importance of collecting self-pay amounts with your staff. Scripts should be provided to the front desk staff for use in asking for copays and deductibles. Identify employees who are effective in obtaining payments from patients, and look for these skills when recruiting new staff. Explore incentives or recognition opportunities to reward your staff’s self-pay achievements.
- Deploy Available Technology
Accept all forms of payment, such as credit or debit cards, cash, checks and HSA/FSA cards. Your patient portal should be configured to accept online payments, and contract with a live operating service to accept payments outside of business hours by telephone. Accommodate installment payment plans and automatic credit card payments. In addition, use real-time adjudication. With this technology, you can bill for service and receive a fully adjudicated response from the health plan at the time of service before the patient leaves the office. You can print out the response, displaying total and allowable charges, as well as the patient’s responsibility.
- Obtain Information on Patient Responsibility Amounts
Prior to the appointment, obtain up-to-date information about the patient’s insurance and their share of the deductible that has been met to date. At check in, ask the patient to pay the estimated cost of services if the patient has not met his or her deductible for the plan year. Additional procedures and lab tests may incur additional charges once the patient is seen, or insurance may ultimately pay some of the costs already remitted by the patient. However, additional billing or refunding of overpayments is far less costly than attempting to bill and collect after the patient leaves the office.
- Use Both a Carrot and a Stick
Offer discounts for payments made at the time of service or in cash. Impose a service charge on the bill amount if it is not paid by a certain deadline.
- Make Automated Calls
Use an automated phone system to call patients before their appointments to confirm their insurance coverage and remind them that copays, deductibles and past balances are due at the time of service. Alternatively, e-mail patients before their appointments. Patients are more likely to make payments at the time of service if they know they are expected.
- Remind Patients of Overdue Obligations
Call the day after the appointment if the copay or deductible was not collected. Make two reminder calls and send two reminder e-mails during each statement cycle. Configure your patient portal to show up-to-date balances and provide electronic statements and EOB summaries. Send hard copy statements once a month for at least four months.
- Use a Collection Agency
Bring in a collection agency only when all collection attempts have been exhausted because the agency will keep a portion of any amount it collects. Patient accounts that are older than 120 days since the date of service should be reviewed monthly. Unless there are extenuating circumstances, pass them on to a contracted collection agency. Monitor the agency’s recovery rate and customer service performance to make sure that it is getting the job done in a courteous, professional and effective manner.
Shedding Light on Patient Attitudes About Self-Payments
InstaMed (a health care payments network connecting providers, payers and patients) published the results of a nationwide survey on health care payment trends in March 2013. The data on patient attitudes toward their payment obligations is revealing:
- Patients were responsible for an average of 20% of allowed charges in 2010. This increased to 23% in 2012.
- 22% of patients said they did not know their payment responsibility when they left the physician’s office in 2012.
- Only 4% of patients said they received their health care bills via e-mail in 2012, with the other 96% receiving theirs via postal mail.
- 55% of patients said they normally used online electronic means to pay a variety of monthly bills, such as utility and cable bills in 2011. This increased to 62% in 2012.
- Online patient payments represented 8% of the gross dollar volume of all patient payments in 2010. This increased to 13% in 2012.
- 72% of patients said they would be interested in paying their health care bills online in 2012.
- 63% of patients said that, if they had the option of paying their health care bills via a monthly payment plan, they would use this option in 2011. This proportion increased to 71% in 2012.
For more information on how to maximize patient self-payment, contact Danielle Gilbert at [email protected] or call her at 312.670.7444.
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