Most ASCs gauge their financial performance by their days in accounts receivable (A/R).
A/R is the average number of days an ASC takes to collect payments on services performed. According to a Becker's ASC Review report, citing VMG Health data, the average days in A/R for ASCs is 32.
If your A/R average is above industry standards, this may indicate collection problems that can negatively affect your ASC's cash flow. Consider examining the following list of possible problem areas that can impact your A/R. This will assist you in determining where your center may need improvement.
Prior to day of surgery
Area #1 — Procedure scheduling
Problem: No procedure in place to determine if scheduled case (CPT) is covered by patient's carrier.
Solution: Schedulers should be well versed in terminology and CPT codes as they are your first point of contact in getting information. Make sure they have the necessary lists of covered procedures and an insurance matrix. Nothing increases A/R like performing a non-covered procedure.
Area #2 — Patient pre-registration
Problem: No patient contact prior to day of surgery resulting in incorrect demographic or insurance information. This may cause delays in third-party payer verification.
Solution: Since the provider's scheduler is often rushed and unable to provide detailed information, it is important to call the patient to verify demographics and insurance coverage. This first step in entering accurate information into your computer system is essential for insurance verification and patient financial counseling. Also, this direct communication establishes a good relationship with the patient, which also assists in collection of the ASC fee.
Area #3 — Third-party payer verification
Problem: The center is performing non-specific online verification of patient's insurance which does not require identification of CPT or diagnosis code to affirm coverage. This can result in a non-covered procedure.
Solution: Calling the insurance company may be the best way to discover necessary information to determine a patient's coverage. When contacting the insurance company directly, determine eligibility for:
a) the patient for the specific day of surgery;
b) the specific planned surgery (CPT) and diagnosis code;
c) limits of coverage;
d) non-covered pre-existing conditions; and
e) coverage of specific family member scheduled.
Area #4 — Patient financial counseling
Problem: No pre-procedure financial counseling often results in the patient being unprepared to pay copayment, deductible and/or co-insurance amounts, adding a large amount of unsecured debt to A/R.
Solution: A member of your business office staff should contact patients regarding their financial responsibility at least three days prior to the date of surgery so they have time to make arrangements to pay. If you wait to inform the patient of their financial responsibility on the day of surgery, the patient may be unprepared and unable to pay copayment, deductible and/or co-insurance amounts.
Areas #5 — Patient payment plans
Problem: In the event a patient is unable to pay on day of procedure, a signed promissory note for patient's financial responsibility is not obtained or is for an extended period of time.
Solution: One of the most challenging changes in recent times is the increased patient financial responsibility with the advent of the Affordable Care Act and higher deductibles. If all other payment options have been exhausted (cash, credit cards, healthcare financing companies) and a patient is unable to meet their financial responsibility, the next best option is a payment plan (promissory note). If a patient signs a document which is then witnessed and notarized by a member of the business office staff, this promotes the appearance of a binding contract. Preferably, payment plans should be no longer than 90 days as each day the ASC carries patient debt increases A/R. The collector should monitor for timely payments.
Area #6 — Patient registration day of surgery
Problem: Demographic and insurance information are not verified with the patient on day of procedure.
Solution: The registration desk performs an important function in the collection process. Confirmation of the accuracy of demographic and insurance information in the computer is paramount in prompt payment of the center's fee. Make sure to perform the following steps:
a) verify demographic information with the patient;
b) request additional phone numbers (e.g., mobile and business);
c) scan or copy the front and back of the patient's insurance card, and confirm that the scan or copy is legible; and
d) check the insurance information in the computer and correct it, if necessary.
After the procedure
Area #7 — Dictation of procedure note
Problem: Delayed or incomplete procedure notes.
Solution: Receipt of prompt dictation of procedure notes by providers is imperative in collecting the center's fee. Each day receipt of this information is delayed increases the days in A/R, decreases the projected revenue and often makes collection more difficult. The primary goal is to have the claim go out in 48 hours. It is also important that providers fully dictate all treatments provided. Your coder is dependent on the specificity of the body of the procedure note (not just the title) in order to ensure appropriate, full reimbursement.
Area # 8 — Coding the procedure
Problem: Non-certified or inexperienced coders may have difficulty in determining what procedure codes may be billed in addition to the primary code. This may result in loss of revenue.
Solution: It is important to have an ASC-experienced certified coder. Such coders understand the importance of reading the entire procedure note and are aware of what additional procedures/implants/supplies may legally be coded. Experienced certified coders can often enhance your revenue by 5%–50% while keeping the facility in compliance.
Area # 9 — Charge posting
Problem: Inexperienced charge posters may not realize that there is more to charge posting than just entering the numbers provided by the coder into the computer.
Solution: Accuracy at the beginning of the actual billing process can have a positive impact on your A/R. Experienced charge posters understand:
a) CPT codes;
b) when and what modifiers need to be used;
c) significance in designating correct place of service;
d) clearinghouse requirements;
e) importance of timely submission of claims; and
f) what necessary attachments to include, if required (e.g., invoices for implants, covered supplies, procedure note).
Area # 10 — Payment posting
Problem: Inexperienced payment posters may have a negative impact on your collections and A/R. Areas to check for errors include the following:
a) Errors in payment are often not caught by payment poster and amount sent by payer is posted to account without follow-up.
b) Response to outright denial of payment is delayed. No tracking of payment denials is performed and, therefore, trends are not identified.
c) Incorrect adjustments or write-offs.
Solution: Accurate posting of payments require that a payment poster understand whether payments are accurate and complete. Steps to take to do so can include the following:
a) It is important that payment posters have access to third-party payer contracts to determine if contractual obligations are being met. If software allows, load contract allowances so you are alerted to inaccurate payments. Otherwise, keep insurance contract rates in an accessible area.
b) Inaccurate or denied claims should be addressed immediately, either by the payment poster or a collector. Determine cause of denial (e.g., insurance error, non-covered procedure, non-covered patient, claim error, clearinghouse error).
c) Track the type of denials in a spreadsheet to determine trends. Non-tracked denials lead to repeated errors.
d) Payment posters are also responsible for adjusting off the difference between the fee that has been charged and the fee allowed by the patient's insurer. Accuracy in this area is key to collecting the full amount owed to your center.
e) After payments and adjustments are completed, payment posters are now responsible for determining if an account needs further collection measures with the patient's insurer or whether it is time for the patient to receive a statement of their remaining financial responsibility.
Area # 11 — Third-party payer collections
Problem: Inexperienced or busy collector does not start claim follow-up for 30–60 days after submission of claim. Also, claims which are returned for errors or additional information are not responded to in a timely manner.
Solution: Your center should have a set procedure for collectors. Steps to consider include the following:
a) Recommend starting follow-up on third-party payer claims 15 days after submission.
b) Ask payer for the anticipated payment send date (not issue date).
c) Remind payer of state's prompt payment rules.
d) Follow up again on send date to see if payment has been sent.
e) Work each claim at least every 30 days after initial contact.
f) When claims are returned, resubmit with corrections or requested information immediately.
g) Work all claims equally, not just high-dollar amount claims.
h) Overpayments and refunds should be dealt with immediately and approved by a member of management.
i) Write-offs should be approved by management.
Area # 12 — Patient collections
Problem: Patient statements not being sent in a timely fashion.
Solution: As soon as full third-party payer payment has been received and patient's financial responsibility is determined, do the following until payment is received:
a) Send patient statement immediately.
b) Send follow-up statements at least monthly with reminder messages.
c) Make follow-up phone call after third statement.
d) Determine whether and when to involve collection agency.
Area # 13 — Audits
Problem: No auditing of billing functions for accuracy, compliance and/or effectiveness performed.
Solution: Regular internal auditing of each area affecting the revenue cycle should be conducted on a regular basis. Things to consider:
a) Coding, billing and collections are the most likely problem areas for age or size of A/R.
b) You also should regularly check other areas listed above.
c) External audits by an outside entity are recommended at least annually and more frequently if your ASC is working to bring about significant improvements.
Area #14 — Staffing
Problem: Insufficient or inexperienced employees.
Solution: If your A/R continues to be above industry averages, you may also want to consider:
a) whether you have enough business office employees to efficiently manage your revenue cycle;
b) if you have employees who are sufficiently experienced; and
c) whether your billing staff has too many distractions or tasks unrelated to their primary responsibility (e.g., answering phones, covering absentee employees' tasks, lunch break coverage).
Conclusion
With higher patient deductibles and healthcare changes seemingly as unpredictable as ever, maintaining an acceptable A/R is often a difficult task given the many areas that affect it. If your center is struggling with managing its billing and collections, seeking outside help in revenue cycle management may be a worthwhile option to consider.
Caryl Serbin, RN, BSN, LHRM, is president and founder of Serbin Medical Billing (SMB), an ASC revenue cycle management company. SMB's primary objectives are to provide the best coding, billing and accounts receivable management services available to ambulatory surgery centers (hospital joint-venture, corporate-owned or independent) and anesthesia providers. Serbin has been a leader in the ASC industry for 30 years. She was the founder of the first ASC-specific billing company.
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