What are the biggest threats to effective ambulatory surgery center revenue cycle management?
Three industry experts dissect nine of the biggest perils — external and internal — standing in the way of solid revenue cycle management.
1. Uncertainty in healthcare. "One of the first and foremost threats is all of the uncertainty that accompanies the Affordable Care Act," says Michael Orseno, revenue cycle director at Regent Surgical Health. Ambulatory surgery center leaders, amongst nearly all providers, do not have a clear vision of the industry's future. Newly-insured patients may provide an influx of volume, but they may also represent a financial challenge because many plans on the exchange have high deductibles and ASCs will be responsible for collecting a larger portion of the bill from patients. It remains to be seen how patients unfamiliar with high deductibles and accompanying financial responsibility will impact the ASC industry.
2. Increased patient financial responsibility. Insurance companies are offering an increasing number of high deductible plans to offset rising monthly premiums. "Increasing patient financial responsibility has the potential to lead to increased bad debt and more days in accounts receivable," says Rich Searles, a partner with Merritt Healthcare. To combat this risk, create policies and procedures that:
• Accurately calculate estimated patient financial obligation
• Clearly explain financial responsibility prior to the date of service
• Collect the entire patient responsibility, or minimum threshold, before the date of service
• Define post-date of service balance collection efforts
3. Declining reimbursement. Ambulatory surgery center reimbursement as a percentage of hospital outpatient department reimbursement has been on the decline for years. Procedure bundling and payment cuts continue to put financial pressure on the industry. For example, payers are beginning to scrutinize payment of high-cost implant procedures and in some cases changing their policies. "Being denied payment on a $20,000 implant is a difficult and sometimes fatal lesson to learn," says Mr. Orseno. "You need to be diligent – check your contracts and perform insurance verification on all procedures."
Cutting costs is one mainstay strategy for combating declining reimbursement, but it cannot be the only plan. "Eventually an ASC will run out of areas to reduce cost, and the only offset will be to add surgical cases in order to benefit from the economies of scale," Mr. Searles.
3. Staff complacency. Business office staff in successful ASCs will aggressively pursue revenue, rather than remain content with the status quo. "If an ASC's staff is accepting only what the insurer pays and not fighting for what the center is contractually entitled to or higher than 'usual and customary', that particular facility may be leaving a lot of money on the table," says Mr. Orseno.
Here are four ways that ASC management can avoid revenue cycle woes due to staff issues, according to Mr. Searles.
• Assess the quality of production
• Share productivity expectations
• Provide positive feedback
• Offer incentive bonuses, if warranted
5. Uncooperative out-of-network payers. ASCs dependent on out-of-network revenue are facing increasing difficulties. Reimbursement is declining, while denials are not uncommon. "One prominent payer tactic has been to send the facility reimbursement check directly to the patient," says Mr. Searles. The patient is then responsible for paying the bill in full, but sometimes patients don't realize what it's for. "The longer a patient is in possession of a facility fee reimbursement check, the less likely the ASC will collect the revenue." ASCs could face mounting bad debt and more days in AR. OON ASCs can work with uncooperative payers to gain appropriate payment by:
• Explaining to patients before their surgery that the facility reimbursement check may come to them and provide instructions on how to submit payment
• Proactively contacting OON payers after the date of service to adjudicate the claim and issue payment as quickly as possible
6. Coding complexity. ICD-10 may have been delayed by a year, but it will still have a negative impact if ASCs do not use the extra time to prepare. "Inaccurate or noncompliant coding leads to denied or underpaid claims," says Mr. Searles. "ASCs must keep the billing office updated with all coding changes and the potential effects to internal processes."
Continuing education and active staff members are key to avoiding revenue cycle pitfalls. "Correct and compliant coding begins and ends with the operative note," says Mr. Searles. "Staff cannot be afraid to raise a red flag if they feel the operative note lacks case detail." Lack of documentation leads to incorrect coding and will negatively impact reimbursement. Billers and coders have the responsibility of verifying all medical record documents to ensure operative notes are complete from a coding perspective.
7. Bundled payments. Bundled payments, while not yet a dominant model, loom on the horizon. "Currently, no standards exist when it comes to bundles, so it is important to have people on your team who are capable of working through the complexities of correctly adjudicating these bundles," says Ken Bulow, group vice president of revenue cycle with Surgical Care Affiliates. Failure to navigate and understand the landscape of bundled payments may lead to lost revenue.
8. Technology. Technology is racing alongside of and driving the changes occurring in healthcare. Outdated technology can be a hindrance to day-to-day operations and efficient revenue cycle management. "Most of the IT systems in use in the ASC setting today were developed more than a decade ago," says Mr. Bulow. "These systems cost a fraction of comparable hospital systems, but in exchange are very limited in scope."
As ASCs work to expand and keep their competitive edge in the market, technology will only grow more important. ASC leaders may decide to replace existing practice management systems and technology platforms, or they may decide to develop new capabilities based on a center's existing IT infrastructure.
9. Case complexity. "As more cases shift from acute settings to ASCs, we may see additional payer denials for medical records and medical necessity challenges," says Mr. Bulow. The migration of higher acuity cases to the outpatient setting can be a major win for the ASC industry, but only with proper preparation. Create a cross-functional team to handle all payment mechanisms and eliminate any problems. The entire ASC team should understand coding requirements, document challenges and payer expectations before taking on new cases.
"Overall, the best thing one can do to address these threats is to partner with experts to help prepare," says Mr. Bulow.
More Articles ASC Revenue Cycle:
4 of the Most Common ASC Billing Questions Answered
7 Financial Warnings Signs: How to Know if Your ASCs is in Trouble
10 Strategies to Improve Revenue Cycle Management
Three industry experts dissect nine of the biggest perils — external and internal — standing in the way of solid revenue cycle management.
1. Uncertainty in healthcare. "One of the first and foremost threats is all of the uncertainty that accompanies the Affordable Care Act," says Michael Orseno, revenue cycle director at Regent Surgical Health. Ambulatory surgery center leaders, amongst nearly all providers, do not have a clear vision of the industry's future. Newly-insured patients may provide an influx of volume, but they may also represent a financial challenge because many plans on the exchange have high deductibles and ASCs will be responsible for collecting a larger portion of the bill from patients. It remains to be seen how patients unfamiliar with high deductibles and accompanying financial responsibility will impact the ASC industry. 2. Increased patient financial responsibility. Insurance companies are offering an increasing number of high deductible plans to offset rising monthly premiums. "Increasing patient financial responsibility has the potential to lead to increased bad debt and more days in accounts receivable," says Rich Searles, a partner with Merritt Healthcare. To combat this risk, create policies and procedures that:
• Accurately calculate estimated patient financial obligation
• Clearly explain financial responsibility prior to the date of service
• Collect the entire patient responsibility, or minimum threshold, before the date of service
• Define post-date of service balance collection efforts
3. Declining reimbursement. Ambulatory surgery center reimbursement as a percentage of hospital outpatient department reimbursement has been on the decline for years. Procedure bundling and payment cuts continue to put financial pressure on the industry. For example, payers are beginning to scrutinize payment of high-cost implant procedures and in some cases changing their policies. "Being denied payment on a $20,000 implant is a difficult and sometimes fatal lesson to learn," says Mr. Orseno. "You need to be diligent – check your contracts and perform insurance verification on all procedures."
Cutting costs is one mainstay strategy for combating declining reimbursement, but it cannot be the only plan. "Eventually an ASC will run out of areas to reduce cost, and the only offset will be to add surgical cases in order to benefit from the economies of scale," Mr. Searles.
3. Staff complacency. Business office staff in successful ASCs will aggressively pursue revenue, rather than remain content with the status quo. "If an ASC's staff is accepting only what the insurer pays and not fighting for what the center is contractually entitled to or higher than 'usual and customary', that particular facility may be leaving a lot of money on the table," says Mr. Orseno.
Here are four ways that ASC management can avoid revenue cycle woes due to staff issues, according to Mr. Searles.
• Assess the quality of production
• Share productivity expectations
• Provide positive feedback
• Offer incentive bonuses, if warranted
5. Uncooperative out-of-network payers. ASCs dependent on out-of-network revenue are facing increasing difficulties. Reimbursement is declining, while denials are not uncommon. "One prominent payer tactic has been to send the facility reimbursement check directly to the patient," says Mr. Searles. The patient is then responsible for paying the bill in full, but sometimes patients don't realize what it's for. "The longer a patient is in possession of a facility fee reimbursement check, the less likely the ASC will collect the revenue." ASCs could face mounting bad debt and more days in AR. OON ASCs can work with uncooperative payers to gain appropriate payment by:
• Explaining to patients before their surgery that the facility reimbursement check may come to them and provide instructions on how to submit payment
• Proactively contacting OON payers after the date of service to adjudicate the claim and issue payment as quickly as possible
6. Coding complexity. ICD-10 may have been delayed by a year, but it will still have a negative impact if ASCs do not use the extra time to prepare. "Inaccurate or noncompliant coding leads to denied or underpaid claims," says Mr. Searles. "ASCs must keep the billing office updated with all coding changes and the potential effects to internal processes."
Continuing education and active staff members are key to avoiding revenue cycle pitfalls. "Correct and compliant coding begins and ends with the operative note," says Mr. Searles. "Staff cannot be afraid to raise a red flag if they feel the operative note lacks case detail." Lack of documentation leads to incorrect coding and will negatively impact reimbursement. Billers and coders have the responsibility of verifying all medical record documents to ensure operative notes are complete from a coding perspective.
7. Bundled payments. Bundled payments, while not yet a dominant model, loom on the horizon. "Currently, no standards exist when it comes to bundles, so it is important to have people on your team who are capable of working through the complexities of correctly adjudicating these bundles," says Ken Bulow, group vice president of revenue cycle with Surgical Care Affiliates. Failure to navigate and understand the landscape of bundled payments may lead to lost revenue. 8. Technology. Technology is racing alongside of and driving the changes occurring in healthcare. Outdated technology can be a hindrance to day-to-day operations and efficient revenue cycle management. "Most of the IT systems in use in the ASC setting today were developed more than a decade ago," says Mr. Bulow. "These systems cost a fraction of comparable hospital systems, but in exchange are very limited in scope."
As ASCs work to expand and keep their competitive edge in the market, technology will only grow more important. ASC leaders may decide to replace existing practice management systems and technology platforms, or they may decide to develop new capabilities based on a center's existing IT infrastructure.
9. Case complexity. "As more cases shift from acute settings to ASCs, we may see additional payer denials for medical records and medical necessity challenges," says Mr. Bulow. The migration of higher acuity cases to the outpatient setting can be a major win for the ASC industry, but only with proper preparation. Create a cross-functional team to handle all payment mechanisms and eliminate any problems. The entire ASC team should understand coding requirements, document challenges and payer expectations before taking on new cases.
"Overall, the best thing one can do to address these threats is to partner with experts to help prepare," says Mr. Bulow.
More Articles ASC Revenue Cycle:
4 of the Most Common ASC Billing Questions Answered
7 Financial Warnings Signs: How to Know if Your ASCs is in Trouble
10 Strategies to Improve Revenue Cycle Management