Keep your accounts receivable receiving

Here is how to stay solvent in an era of rising copays, co-insurances and deductibles.

By Candy Simerson, COE, CMPE, CAHCM

The current trend of escalating patient out-of-pocket costs for health-care expenses will continue regardless of whether patients have high deductibles or fully insured plans. Employers are sharing, or shifting, higher health insurance premium costs to employees and their families. Health insurers are increasing costs for patients who access services through higher deductibles, copays for medical services and prescription drugs and patient contributions when accessing out-of-network services. Patients accustomed to paying little from their own pockets for services are not happy about this transformation.

The result: Practices are experiencing an increase in self-pay accounts receivable. At the same time, it’s becoming more difficult to collect these funds for a variety of reasons:

• Patients don’t understand their benefits and ignore bills sent by the practice, believing that their health insurance “will take care of it”;

• Patients can’t or won’t pay;

• Patients are more likely to complain about owing a balance and are refusing to pay;

• Once they receive a bill, patients decide they they were not happy about their experience and refuse to pay;

• In some cases, patients send a letter of complaint to their health plan, state attorney general, department of health or board of medical practice claiming a poor outcome or not being advised of charges in advance; they request the charges be written off.

Historically, having a robust revenue cycle management system meant that the practice focused on obtaining timely third-party payer payments by submitting clean claims, managing insurance denials and following up on claims that hung up in the system. As long as third-party payers paid the practice appropriately, cash flow was generally sufficient even if the practice had to write off some patient payments along the way.

With fewer opportunities to increase practice revenues these days, the time is now to prioritize up-front payment collections. Here’s how.

Keep patients informed

It is imperative to educate patients about their health plan benefits coverage as one major component of improving the revenue cycle workflow.

As an example, consider a long-term patient who comes to the practice for eye exams every other year. Ms. Jones had no cost or paid a minimal copay for this service for the past 20 years. To save on premium costs, Ms. Jones’ employer elected to eliminate vision care benefits in 2016. Ms. Jones doesn’t read her new plan benefits summary. A month after her next eye exam, the practice sends a bill to Ms. Jones for the noncovered service at $250. She is not happy about the cost for one, and two, because the practice didn’t inform her —not only that the service was $250 but that it was a non-covered service. The practice now has a patient with an open balance and a negative experience. It’s easy to understand why the practice’s self-pay accounts receivable balances are escalating.

Now imagine a different experience. After checking Ms. Jones’ eligibility and benefits, the practice informs her via a personal phone call or an automated electronic message that her employer no longer provides vision-care benefits, so she will be responsible for paying the $250 fee. They also note that Ms. Jones can pay by cash or credit card for the service. The patient knows how her plan has changed and what is expected of her when she comes for her appointment. The practice collects Ms. Jones’ payment after her visit; no need to generate a bill; and no embarrassed or angry patient is calling the business office or posting nasty comments to social media sites.

Consider automated options

Practices can explore if software tools might expedite antiquated manual processes. New software can help reduce the increasing administrative costs associated with patient collections while making management of the practice’s revenue cycle more efficient. Examples include:

1. Automated insurance eligibility. Numerous software products can integrate with the practice management system to automate insurance eligibility verification, so staff can stop calling, faxing and checking websites. This feature ensures that the verification process occurs before the patient visits. The cost to automate the process is offset by — even with conservative estimates — reduced staffing costs and anticipated increases in upfront collections, thereby lowering associated collection expenses. This will ultimately lead to fewer days-out in accounts receivable at the back end. In the short-term, take the time to redesign the patient education process and ensure systems are in place to collect out-of-pocket costs on the day of service. Establish documented policies for the collection of copays, deductibles and fees for noncovered services as part of a new or existing checkout process. Monitor compliance and success at monthly intervals and report back to staff to reinforce the protocol, celebrate success and inspire new ideas for ongoing improvement.

2. Automated patient registration. Installing a patient kiosk (or kiosks) allows patients to check in independently. With most systems, patients can scan their driver’s license and insurance card, verify insurance benefits, sign necessary informed consents and complete custom registration forms. The system also will require entry of payment information in order to collect copays and outstanding balances. If programmed, it can also ask targeted questions to assist with marketing efforts and promote elective services.

3. Automated patient messaging services. This type of software system integrates with the practice management and EHR system to:

• Provide automated patient reminder messages via either text or landline (system can automatically detect difference)

• Provide immediate notification of cancellations so that the practice can reschedule appointments in real-time

• Deliver messages to patients who fail to keep an appointment, asking them to reschedule

• Notify patients who owe money prior to appointment date

• Send patients an e-mail or text invitation to a patient survey, patient portal or provider-rating websites as determined by practice

• Notify patients if the practice needs to cancel an appointment due to a doctor’s schedule change

• Provide patient reactivation capabilities for patients who have been lost to follow-up.

4. Online payments. Patients can easily pay their outstanding bill by having an online payment system. Online bill payments expedite the billing and payment process for everyone.

5. Electronic funds transfer (EFT) and electronic remittance advice systems (ERA). Enroll in EFT and take advantage of all available systems. The Affordable Care Act includes new federal standards allowing health plans to offer practices simplified ways of receiving patient payments via EFT systems, besides ERA systems already available. These systems allow practices to avoid mail delivery or depositing delays and ease data entry demands.

6. Remote or e-deposit. This timesaver allows the practice to deposit a check into a bank account from remote locations, typically a practice’s business office. After specialized scanners capture the check’s front and back, the figures are totaled and the information is reviewed, and all is transferred to the bank. The need for lockboxes and courier systems for managing checkbook deposits is no more.

Know your payer mix

It is imperative to know and understand the practice’s payer mix and to routinely monitor the change in trends over time. A three-year review will most likely show the shift to increasing patient self-pay accounts. Knowing this information aids with identifying payers who are primary sources of revenue and when/if things change. For example, this analysis would highlight whether the expansion of Medicaid has had an impact for the practice and to what degree. The lower-cost plans are usually associated with high deductibles and are likely to have a substantial impact on your patient self-pay accounts.

Closely monitor accounts receivable

The term “days sales outstanding” also means the average number of days it takes to collect a charge. Accounts receivable aging analysis should be performed weekly (at a minimum) and reviewed carefully. Breaking down the dollars in accounts receivable into aging buckets by dollars and percentage of total accounts receivable helps to compare against industry benchmarks. Ideally, the practice should collect most revenue within 30 days and strive continually to reduce its collections period (see page 77). Practices with averages higher than 40 days should address internal systems, such as turnaround times for data entry and submitting claims, as well as external factors, such as payer slowdowns.

Also, drilling down and performing the same metrics within each payer type could reveal the overall metrics that fall within healthy ranges even though certain payer issues exist. Refining reports with granular detail will highlight potential payment or timing issues within specific payers or certain plans. During the start of a new contract year, these details also help. The longer it takes to identify a problem, the more difficult it is to find then resolve. If possible, assigning business office staff members to specific payers helps them become familiar with the processing cycle of their assigned payer and to nurture strong relationships with the goal of fostering prompt reconciliation of any payment issues.

Timely filing is another factor to keep in mind when reviewing aging reports by payer type. Create and maintain a reference sheet documenting the timely filing limits for each insurance carrier. This should include the number of days the practice has to file a claim after providing the services. The provider contract states the timely filing limits for each payer. These limits vary by payer generally from 90 days to one year. This is another reason why it is critical to follow up on any claims not paid within 30 days.

If the claim is rejected or not billed to the proper payer, any delay in follow-up increases the likelihood of having to write off the charges. In addition, the longer it takes to process the payment from the payer, the longer it will take to allocate any patient responsibility portion to the patient account. If the practice is not diligent with following up on rejected or pending claims, often patients do not receive bills for their amounts due until several months after the service. They do not understand the delay in billing when it takes longer than 30 days and are also more likely to have personal circumstances change.

Conclusion

Future health-care models will continue to foster and escalate out-of-pocket costs for patients. As such, it underscores the need for more focus on and attention to billing and collections processes. Now is the time to restructure your revenue cycle management. OM

REFERENCES

About the Author
	Ms. Simerson, COE, CMPE, CAHCM, is president of Minnesota Eye Consultants, P.A. and Minnesota Eye Laser & Surgery Centers based in Minneapolis, Minn. E-mail her at cssimerson@mneye.com.