AR backlogs in the long run have the potential to spell doom for any organization, be it a healthcare organization or a business enterprise
With just a couple of months left to ring in the new year, Hospitals must be working hard to plan out a strategy for 2020.
If you are busy creating objectives and setting revenue goals for your healthcare organization, The 15 Most Important Hospital Account Receivable KRAs will immensely help you chart out a plan to achieve your AR objectives.
No matter how big or small your organization is, this well-researched study will better equip your organization to structure decisions that will enhance levels of efficiency in AR management.
The media has been reporting many stories about several hospitals closing down, because they had huge AR backlogs, with the cash flow parched, running day-today operations or paying salaries to staff becoming arduous, eventually these organizations pull their curtains down.
‘Backlog’ of Collections Leaves Hospital Unable to Pay Employees’ screamed the headline of an online post featured by ‘accountsrecovery.net’. It reported that a small hospital outside of Pittsburg, Ellwood City Hospital has not paid its employees in more than two weeks, because of a ‘significant backlog in accounts receivable collections”. Being the only hospital in a 30-mile radius, nobody in the community wanted to see it closed, but with ‘upset’ staff who had not received their salaries, the operations would be too difficult for them to run.
- Knowledgeable AR Management Team
- Accelerating the AR process Through Automation
- Setting Up Benchmarks as per HBMA Standards
- AR Workflow & Reporting Platform
- Accomplished Handling a Variety of Specialties
- Firm Understanding of Payer Knowledge & Policies
- Provider Credentialing
- AR Regulations & Rudimentary Basics
- Healthcare Legalities
- Understanding Contracts
- Patient Rights
- Patient Access
- Charge Capture
- Patient Financial Services
When it comes to managing a huge AR backlog, the first step always begins with analyzing. Ever since the proportion of patient-paid AR progressed, running reports is an important element towards resolving the backlog. The next step obviously would be to split patient AR from the insurance AR.
Managing a huge AR backlog is a collective process needing optimised speed, setting up dedicated teams of claim processors, claim auditors, and claim adjustment analyst. A comprehensive strategy has to be established, with a step-by-step approach to gradually clear the backlogs.
1. Knowledgeable AR Management Team
Importantly, a team with a comprehensive AR knowledge is the key to the efficacy of AR management. The roles and responsibilities of an AR management team includes calling insurance companies, and following-up on claims, checking and updating claim status.
What does the Knowledgeable AR team need to concentrate?
A Knowledgeable AR team will concentrate on all areas of claim management. According to colburnhill.com dynamics is particularly obvious in the area of low balance claims, which have been generally viewed as worth only a cursory squeeze, and not given the full refolding treatment. Some organizations have consciously de-emphasized claims with payer balances as large as $5,000. Compared to the larger and fresher claims available in a brand new tube, individual low balance claims are small and costly to work. However, when taken collectively, they add up and likely hold as much as 1% of a hospital’s net revenue, yet often don’t receive the attention they deserve. To squeeze the maximum amount out of AR, it is vital to first understand the barriers to collecting these claims, then offer some suggestions about how to assess the scale of this problem in your organization, and finally review solutions to the problem.
2. Accelerating the AR process Through Automation
Another important aspect of AR management is having the most efficient software. An AR Analyzer that easily integrates with the hospital’s EHR, with data storage capabilities within the application, and without having to shuffle from one system to another to access AR data.
The application must also have analysis features to segment receivable accounts, especially the high risk receivables. It should make it easier for the AR team to run and review multiple reports and AR summaries in a single window.
The reports generated by the application should enable the AR team to manage AR days and AR relationship with payers. Above all, the security of the stored data must be well secured, with multiple layers of security, and in absolute compliance with HIPAA.
What Becker’s Hospital Review talks about accelerating the AR process through automation?
According to Becker’s Hospital Review, with more than 90 percent of claims deemed preventable by the Advisory Board, introducing automation and updating technology systems for claims processing will help decrease denial write-offs and cut administrative costs. Accounts receivable for payment delay and denial classification mapping as a prime starting point for intelligent automation. The first step is to request or locate any open or closed denial information, then the organization can use historical and current claims data to categorize inventory. Robotic processing automation technology can also be especially helpful for grabbing information the organization may not have access to through its own system.
Once the payment delay and denial classification mapping data is categorized, the organization can move forward with implementing the intelligent automation and triage process. This ultimately allows claims to be classified and distributed to the organization’s remediation team based on denial category, and the automation tool can develop a summary of all relevant claim information and compile a list of action items for staff.
3. Setting Up Benchmarks as per HBMA Standards
Having basic benchmarks setup for billing as per HBMA standards is a judicious exercise, one which facilitates the efficacy of workflow, especially relating to AR.
As an example, aging categories for account receivables must be setup for benchmarking days in A/R as per MGMA benchmarking standards, so that the AR team can improve collections in a particular aging category, while comparing them to the benchmarked standards.
Listen to Kristina B. Ziehler, MPH about setting up benchmarks as per HBMA standards
According to Kristina B. Ziehler, MPH, is assistant director, data solutions, for the Medical Group Management Association (MGMA). AR aging is one of the key components of HBMA Standards. Kristina says “Let’s start with the percentage of accounts receivable (A/R) in each aging category. When reviewing this particular benchmark, your company wants the majority to be in the 0- 30 days in A/R category. After that, the percentage should be lower as the receivable ages. When benchmarking days in A/R, you want to compare yourself to the mean (or average). Based on this, your billing office would want to look at ways to improve their 0-30 days in A/R benchmark since it is lower than the MGMA benchmark. Other opportunities for improvement exist in the 120-plus day’s category. Often, these receivables are never collected. As such, efforts and improvements must be made to collect earlier in the process.
4.AR Workflow & Reporting Platform
Another ‘plus’ to have for the efficacy of AR collections is a workflow and reporting platform.
It leverages the account receivable team to access detailed revenue cycle reports, which can amalgamate AR and denial management reports, claim management reports, medical billing and coding reports, top paying insurer reports, trend analysis reports, and MGMA benchmark reports. These reports are useful for setting up department specific goals, and viewing individual level productivity data.
Five recommendations from RevCycleIntelligence
Workflow and Data Analytics platform is one of the top five ways to optimize hospital revenue cycle management according to article in RevCycle Intelligence. The five recommendations include:
- Updating patients on medical billing is key, where a focus on managing bad debt avoidance is critical.
- Greater staff investment and Internet-based medical billing involves “education on the patient-payer communications”, and setting up online patient payment opportunities.
- “Revenue cycle analytics and utilizing financial data is key to make the revenue cycle more visible through charts or graphs.”
- Focus on patients that pay bills — “leverage credit scores and leverage our experience so that we identify upfront where the hiccups and troubles will be.”
- Regularly “revisit daily processes to ensure everything is working smoothly”.
5. Accomplished Handling a Variety of Specialties
An AR management team must be accomplished handling wide variety of specialties, with capabilities of identifying issues related to outstanding insurance and patient balances. Their capabilities must extend to independently format strategies and implement them, so that organizations are able to get paid in a timely manner.
Administrative costs associated at an Health Care System-Casestudy
A case study published in NCBI.com states that Most of the administrative costs in the US health care system (at least 62% based on prior studies) has been attributed to billing and insurance-related activities (described as billing hereafter), because each specialty billing was handed to each in house billing experts rather than choosing multi-specialty AR and Billing specialists. In a time-driven activity-based costing study in a large academic health care system with a certified electronic health record system, the estimated costs of billing and insurance-related activities ranged from $20 for a primary care visit to $215 for an inpatient surgical procedure. Knowledge of how specific billing and insurance-related activities contribute to administrative costs may help inform policy solutions to reduce these expenses.
6. Firm Understanding of Payer Knowledge & Policies
The complexity of healthcare reimbursement system makes it imperative that AR management team are familiar with payer knowledge, and all aspects of the health plans that patients have negotiated.
Health insurance plans are far too varied, they are regulated with contracts that payers sign with individual practices and health systems, and which periodically are renegotiated.
Different fees for services may be applicable within a healthcare system that’s been contracted with a payer, while another price for a similar service can apply if it is not within the system.
Payer rules are complex and difficult to understand, the AR team has to be alert and keep itself updated with frequent changes to those rules in the fast-paced healthcare reimbursement process.
Does insurance change the way Doctors in Treating their Patients?
An article published in forbes.com says each insurance company has a list of “covered procedures” and if the patient needs something that’s not on the list, it is denied. If they need a study, procedure, or medication refill more often than the standard interval, it’s denied. About 15–20% of my time dealing with insurance companies – advocating for patients whose carriers deny coverage for the treatment they need. After the first denial, the AR should set up a “peer-to-peer” call. They quote the coverage policy and emphasize that they can’t make the decision. So it is wise to have an AR process team to have clear knowledge on changing covered procedures and reimbursement policies in order to ensure maximum reimbursement to doctors.
7. Provider Credentialing
Provider credentialing is of great importance in the matter of relevance to provider reimbursements. Any lacunae in the enrollment process can adversely affect the revenue cycle of an organization. Therefore credentialing experience is vital for the AR team to have, because each insurance company or payer have their own criteria.
The volume of documentation are enormous, missing supportive documents or incomplete enrollment applications or any lapses in non-compliant management of re-credentialing can severely impact the organization’s revenue cycle.
In a nutshell, credentialing corresponds to a process of verifying the capabilities, training and education of healthcare providers. The providers credentials are verified by contacting the primary source which licensed the provider, and imparted training and education. As part of their hiring process, health organizations need credentialed physicians to facilitate their participation in the healthcare network of insurance companies. Credentialing also validates the provider to join private health plan networks.
Credentialing can pose major operational challenges for hospital systems
According to beckershospitalreview.com Credentialing and enrollment can pose major operational challenges for hospital systems and their affiliates. The disparate requirements of payers, duplicative processes and applications and inefficient, paper-based communication can cause significant delays in getting new clinical staff on board and reimbursed for patient care. When this happens, hospitals’ revenue cycle performance can suffer from delayed payments, greater days in accounts receivable and even increased write-offs. Hospital systems are also missing out on potential revenue due to practitioners’ inability to see patients. The cost of one month’s delay in credentialing for the average primary care physician can amount to more than $30,000 in lost revenue. The amount increases substantially for higher-billing specialties, like orthopedics and cardiothoracic surgery.
Consulting experts have the benefit of years of experience improving MSSD functions at a range of organizations, and can help hospital systems avoid pitfalls in the transition between systems. While outside consultants manage the assessment, planning, implementation and training; internal stakeholders can retain focus on their day-to-day responsibilities and increase the speed to value for their organization.
8. AR Regulations & Rudimentary Basics
The efficacy of an accounts receivable management team can be ascertained on the basis of the volume of collections processed in the shortest period of time. It encompasses every section of the medical office, requiring a deep understanding of every segment associated with revenue cycle, including AR collection period.
The sooner the collection follow-up of claims begins, the faster they’ll be resolved. Allowing a grace period of 7 to 10 days after the claims have been submitted to the payers, should be the standard practice. Expediting the process of getting the claims paid shortens the account receivable days, and increases cash flow.
Best practices of healthcare accounts receivable management
According to clientsarm account receivable management is the process of what happens in your billing and what happens to the money that you receive. It all starts with your billing guidelines and eventually ends, if necessary, with how you will handle collecting on past-due accounts. So, it’s important to note that when you’re working on your accounts receivable management guidelines. Some of them are:
- Analyze Your Accounts Receivable
- Insurance Verification
- The Importance of Proper Coding
You need to also work on procedures on how you or your accounting department should work with the insurance.
9. Healthcare Legalities
An understanding of state and federal regulations with regard to Medicare, Medicaid, and federally-funded programs is a rudimentary basic every member of the AR management team should be familiar with.
Health Insurance Portability and Accountability Act
According to a research conducted by medicaleconomics.com 40% of all healthcares non-covered charges impact doctors and healthcare organizations. CMS legal obligations are followed by all federal payers which is a national guidelines and it is easy to be obtained by viewing the CMS website, national or local coverage determination can be easily found out buy simply accessing the CMS NCD/LCD database, upon viewing the article number and its contents we can able to find the exact reason why that particular services is non covered nationwide or locally. Other legal rules apply in workers compensation and auto claims payers. Most auto claims have no fault states which are needed to know by AR experts to resolve those claims. Workers compensation claims are payable only when the injury is severe or life threatening. Other long term care availed using workers compensation are denied stating that “extent of injury exceeded”, in these cases we can file a BRC (Benefit Review Conference) or a MDR (Medical Dispute Resolution) when the BRC decision is not favorable to the patient.
10. Understanding Contracts
Another aspect of an efficient AR management team is understanding contracts that regulate providers financial relationships with managed care organizations.
Through knowledge of the contracting process will result in better negotiations of managed care contracts. It entails knowing reimbursement rates, effective and termination dates, claim filing guidelines, payment terms, and other contract provisions. Despite the fact that every health organization’ s contract negotiation strategy is unique and based on multiple factors, the fundamentals should always be borne in mind.
Components of Payer Contracts Providers Should Know the Key Terms
Jacqueline LaPointe of revcycleintelligence.com says understanding complex payer contracts is key to ensuring timely, correct reimbursement and keeping a practice’s doors open. Knowing the ins-and-outs of each contract is also crucial to avoiding claim denials, drawing patients to the practice, and offering comprehensive (and reimbursable) services to patients. Despite the importance of payer contract knowledge, providers, and even their practice administrators and revenue cycle leaders, may feel less than confident when up against payer organizations with legal departments, financial analysts, and advanced software systems.
However, knowledge is power, and the more providers and their practice administrators know about the terms used in payer contracts, the more they can take control of the contracting and renegotiation process to maximize reimbursement. Some of the terms are:
- Allowed Amount
- Clean Claim
- Dispute Resolution
- Fee Schedule
- Medical Necessity
- Network Requirements
- Unilateral Amendment
An effective compliance program entails drafting a written handbook that describes the compliance policy and the Medical Office Code of Conduct.
Ethical and legal concepts are drafted in most of the policies. There are seven norms suggested by the OIG (Office of Inspector General). These more or less form the basis for a medical office compliance program.
- Conducting internal monitoring and auditing;
- Implementing compliance and practice standards;
- Designating a compliance officer or contact;
- Conducting appropriate training and education;
- Responding appropriately to detected offenses and developing corrective action;
- Developing open lines of communication; and
- Enforcing disciplinary standards through well-publicized guidelines.
Healthcare breaches cost $6.2B annually
According to beckershospitalreview.com healthcare compliance breaches cost $6.2B annually. The average cost of a single data breach across all industries is $4 million, according to a 2016 study from IBM and Ponemon Institute. Approximately 90 percent of hospitals have reported a breach in the past two years. Data breaches often result in a loss of patient trust, which can spiral into millions of dollars in lost potential revenue. A report from the Ponemon Institute estimates healthcare organizations average $3.7 million in lost revenue per data breach, but a report from Accenture estimates the cost could be as high as $113 million.
HIPAA compliance is essential to know in order to safeguard the patient’s ePHI . Misuse of patient health information can be subjected to severe legal consequences. It is important that the AR process heads to inform their experts to strictly follow these guidelines. Apart from national HIPAA compliance, there is also insurance compliance which every AR expert needs to follow for clearing much of AR backlogs. For Example: never send other patient information along the primary explanation of benefits to secondary payers, it is violation of ePHI.
12. Patient Rights
The American Medical Association in its document AMA Principles of Medical Ethics: I,IV,V,VIII,IX has listed the patient rights as under:
Code of Medical Ethics Opinion 1.1.3
The health and well-being of patients depends on a collaborative effort between patient and physician in a mutually respectful alliance. Patients contribute to this alliance when they fulfill responsibilities they have, to seek care and to be candid with their physicians, for example.
Physicians can best contribute to a mutually respectful alliance with patients by serving as their patients’ advocates and by respecting patients’ rights. These include the right:
(a) To courtesy, respect, dignity, and timely, responsive attention to his or her needs.
(b) To receive information from their physicians and to have the opportunity to discuss the benefits, risks, and costs of appropriate treatment alternatives, including the risks, benefits and costs of forgoing treatment. Patients should be able to expect that their physicians will provide guidance about what they consider the optimal course of action for the patient based on the physician’s objective professional judgment.
(c) To ask questions about their health status or recommended treatment when they do not fully understand what has been described and to have their questions answered.
(d) To make decisions about the care the physician recommends and to have those decisions respected. A patient who has decision-making capacity may accept or refuse any recommended medical intervention.
(e) To have the physician and other staff respect the patient’s privacy and confidentiality.
(f) To obtain copies or summaries of their medical records.
(g) To obtain a second opinion.
(h) To be advised of any conflicts of interest their physician may have in respect to their care.
(i) To continuity of care. Patients should be able to expect that their physician will cooperate in coordinating medically indicated care with other health care professionals, and that the physician will not discontinue treating them when further treatment is medically indicated, without giving them sufficient notice and reasonable assistance in making alternative arrangements for care.
Understanding the development and utilization of Patient Rights.
As per verywellhealth.com The US Office of Personnel Management identifies three major objectives for the development and utilization of Patient Rights.
First, to strengthen consumer confidence by assuring the health care system is fair and responsive to consumers’ needs, provides consumers with credible and effective mechanisms to address their concerns, and encourages consumers to take an active role in improving and assuring their health.
Second, to reaffirm the importance of a strong relationship between patients and their healthcare professionals.
Third, to reaffirm the critical role consumers play in safeguarding their own health by establishing both rights and responsibilities for all participants in improving health status.
There are eight key areas related to patient rights within the medical office:
- Patient information
- Choice of providers
- Access to emergency services
- Informed consent
- Respect and non-discrimination
- Complaints and appeals
- Patient responsibilities
13. Patient Access
The journey of a patient for treatment of his illness begins at the front-end of a medical office, and how well the patient is able to access service, defines the efficacy of the medical office.
The initial entry of patient demographic information is vital, it has to be accurately gathered. Deploying an efficient patient access team is pivotal to the billing and collection efforts, it has a great impact on the revenue cycle of the organization. The low-performance rate associated with patient access services are a result of inadequate training and insufficient staffing levels.Maybe seeking vendor services for patient access could a better and least expensive option.
How to improve the patient access experience?
An article is sponsored by HEI Health in beckershospitalreview.com states Instead of viewing patient access services, including scheduling, pre-registration, authorization and time of service collections as an expense, providers should view them as resources that can be leveraged to help achieve organizational goals. Organizations often view patient access departments as transactional, high-cost centers that connect patients with providers while generating bad debt and claims denials. Physicians often grow frustrated by the administrative burden and delays in care that poor patient access creates. Most importantly, these interactions can sour patients’ opinions. Patients are often troubled by calls from different people to simply set one appointment and the repetitive questions asked on each call.
Unless every customer experience interaction is flawless, the negative experience will amplify and become the emotion patients immediately associate with an organization.
14. Charge Capture
The significance of charge capture is least understood by all departments of health organization, as a result valuable revenue is lost. It is imperative that all departments and clinical staff be made aware of their responsibility to accounts receivable, so that documentation and account receivable is not treated lightly.
During the visit of a patient, any services and procedures rendered have to be appropriately linked to relevant medical codes. The timeliness of coding and the accuracy of billing is largely dependent on how each clinical area communicates with the billing department. Charge capture is an importantly productive section of a health organization, areas such as ambulatory care, critical care, laboratory and medical- surgical unit are some of the areas that contribute to charge capture
Understand the importance of charge capture
Joy B. Hicks, MBA, CPM Member of the Grievances and Appeals team at Blue Cross and Blue Shield of North Carolina says Charge capture includes the appropriate linking of medical codes to services and procedures rendered during the patient visit. Each clinical area plays an important role in the timeliness of coding and the accuracy of billing. There are a large number of areas that contribute to charge capture, including, but not limited to:
- Ambulatory Care
- Case Management
- Critical Care
- Medical-Surgical Unit
- Mental Health
- Nuclear Medicine
- Pain Management
- Physical Therapy
- Wound Care
15. Patient Financial Services
The timeliness of billing and collection of account receivables in a medical organization is dependent on the responsibilities Patient Financial Services. Knowing the laws and regulations of the healthcare industry and insurance payers plays a significant role in the efficiency of the medical billing process.
The timeliness of submitting technical or professional medical claims to insurance companies is a primary responsibility of medical billers.The effectiveness of their coordination with physician offices, hospitals and nursing homes contributes to the efficiency of billing. Inadequate billing staff with insufficient training can be disastrous for the revenue cycle of a health organization.
Effective Collections Follow Up
According to verywellhealth.com medical office billers are responsible for the timely submission of technical or professional medical claims to insurance companies including physician offices, hospitals, nursing homes, or another healthcare facility. Effective collections follow-up results in the speedy resolution of your medical office claims. Claims follow up should begin as quickly as seven to 10 days after your claim has been submitted for payment. Immediate efforts to get claims paid will not only reduce your accounts receivable days but also increase cash flow.
Adequate staffing with proper collections training will provide the desired outcome in the collections phase of the revenue cycle. Medical office staff should be aware of the fundamental steps necessary for efficient follow-up of insurance claims. The collaboration and cooperation of all eight areas are integral components of the success of accounts receivable management. Although there are unexpected barriers that can impact the AR collection period, it is the role of leadership to identify and adjust for these barriers to the success of the organization.
In situations where the billing office of the health organization is not adequately staffed, it makes better sense to look for third party vendor support, so that the cash-flow is continual and ceaseless.