The following article is written by Rebecca Overton, director of revenue cycle management for Surgical Management Professionals.
Developing successful revenue strategies in your facility is the key to unlocking your profit potential. Taking a proactive approach to developing and maintaining your revenue cycle processes always proves to be the most effective measure you can take to ensure appropriate, consistent and timely collections. Here are four strategies to help evaluate your current systems.
1. Focus on front office operations. Front-end verification of patient benefits and collection of all estimated patient liability prior to the date of service can make or break your collection goals. Develop staff training and necessary tools to enable your staff to make "best practice" decisions. Development of deductible/coinsurance calculators, pre-registration collection scripts and financial counseling policies are just some of the tools that will empower your staff to be successful. Evaluate the need for healthcare credit at your facility as an option for patients with high up-front cost.
2. Exhibit confidence in negotiating per case settlement agreements. When billing as an out-of-network provider with no contracted reimbursement or with certain workers' compensation carriers, many payors will hire outside companies to negotiate a discount on claims. Displaying confidence in negotiation of third-party settlement requests can get you the negotiated discount your facility deserves. Go into all negotiations knowing that your facility is the best, offering excellent staff, the newest equipment and wonderful patient outcomes, and you deserve to be paid accordingly. Also know that the outside agencies hired to get a reduction on your claim are in business to get you to reduce your bill. Their inability to reach an agreement with your facility is NOT good for their business. They only make money when they get providers to agree the reductions.
3. Aggressively appeal unreasonably low usual and customary allowables and contracted rates. Tracking payment trends and evaluating allowables for out-of-network claims is a must to ensure cases maintain profitability in the ever changing world of out-of-network billing. Understanding how each payor determines U&C as well as development of effective appeal letters are keys to success and ensuring you are maximizing revenue potential with the payor. The appeal must be precise, well organized and offer a valid argument for requesting additional money. Setting a realistic threshold for staff determination of need for appeal is important (for example, all out-of-network claims that allow less than 60 percent of charge should be appealed for U&C clarification). This takes the guess work out of the scenario for your A/R team.
In addition, it is essential that your entire revenue team understand contracted reimbursement methodology for contracted payors. Creating contract summaries for staff reference or loading contracts into your patient accounting system is time well vested. The largest revenue losses typically come from inappropriate adjustments being made to accounts simply because the staff doesn't understand the contract terms and/or reimbursement methods, and without this basic understanding, it is very difficult to form a persuasive appeal to get more difficult claims paid.
4. Continuous service line reimbursement and supply cost analyses. Performing periodic analysis of procedure cost as compared to reimbursement on regular intervals can prove to be very valuable in many areas of revenue cycle optimization. Compiling this information aids in projecting profit margins and losses on proposed service lines or added procedures. It also provides the knowledge necessary to obtain reimbursement rates that make the added service profitable for your center. Sometimes this data is just the offense needed to ensure reasonable contract rates or carve-outs from the payor.
Understanding payor reimbursement and costs for specific procedures and supplies and then applying that to billing processes is essential in maximizing reimbursement. Many facilities misunderstand billing requirements and bill all payors the same regardless of contract provisions. This can lead to revenue pitfalls and substantial revenue loss.
For instance, if you have established a standard markup of 200 percent of implant cost for implants dispensed in a case, your reimbursement could be negatively impacted by percent-of-charge based contract rates.
Below is an example of how supply and implant mar-up errors can lead to large revenue losses:
- Implant cost: $220.00
- Implant charge with markup: $440.00
- Payor A reimbursement — Cost plus 10 percent: $484.00
- Payor B reimbursement — Cost plus 20 percent: $528.00
- Payor C reimbursement — 50 percent of charge: $220.00
As you can see, Payor C reimbursement is equal to cost with no allowance for profit. Performing an analysis and building scenarios around various payor reimbursements will allow you to make sound decisions for billing according to payor guidelines but maximizing reimbursement at the same time. Since every contract is different, every contract and associated billing practice should be reviewed to ensure revenue capture is optimal yet within the constraints of your contract.
Learn more about Surgical Management Professionals, which provides full service management and consulting services for ASCs included but not limited to full service revenue cycle management and billing office services including coding audits, revenue cycle process audits, overall business office function review, and managed care contracting, at www.smpsd.com or call (605) 444-8297.
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