Puzzled about why your surgery center doesn't seem to have enough cash at the end of the month? If you're having trouble covering costs and making distributions, it's time to take another look at revenue cycle management. You might not be maximizing your collections.
"Simply put, without charges, there is no collections; without collections there is no money," says Sandy Berreth, RN, BS, MS CASC, former administrator at Brainerd Lakes Surgery Center in Baxter, Minn. "Without money you cannot pay for fixed or variable costs. If you don't pay the bills, you don't have a surgery center."
And there are several challenges to the medical billing cycle today, including:
• Higher-deductible health plans
• Patients not understanding their coverage
• Inability to pay because of economic constraints
• Medicare replacement plans with narrow networks and separate credentialing
The transition between insurance companies can also cause issues. "We have seen a number of claims denied due to lapse in coverage which can be attributed to patients insured on the marketplace and not making their premiums," says Kris Sabo, RN, executive director of Pend Oreille Surgery Center in Ponderay, Idaho. "This is something I expect to get worse before it gets better."
And not all the payment defaulters are those you'd expect.
"Medical costs are usually unexpected, and often can force otherwise financially savvy consumers into collections and credit problems; in the worst-case scenario, bankruptcy," says Ms. Berreth. If patients are unable to pay their bills, the loss goes directly to the ASC's bottom line. "We must learn to work with our patients. If we do that, they will be more likely to pay their bills."
Go electronic all the way
Electronic systems and software designed for the revenue cycle process will make the process easier and more accurate.
"Having electronic systems is the number one thing you can do to shorten the steps of the revenue cycle," says Joseph G. Ollayos, administrator at Tri-Cities Surgery Center in the greater Chicago area. "ASCs need a system that allows them to track the important metrics, such as when claims are paid and whether refunds are sent appropriately. They really help the centers keep track of the revenue cycle."
There is software available to help streamline the billing process and create efficiencies for staff members.
"Integrated software systems for scheduling, billing and inventory assistance in managing demand and cost [help ASCs run more smoothly]," says Janie Kinsey, RN, CASC, administrator at Saint Luke's Surgicenter-Lee's Summit (Mo.), who uses the in2itive Business Solutions, which works with the center to use integrated software to provide targeted and timely service solutions. "Providing adequate time for planning and implementation of these systems will increase the long-term success and benefits."
For example, an electronic health record system or an automated patient estimator can shave hours from the financial counselors' workload.
"Normally the co-pay is around $150 to $250 and we call patients before their day of surgery to make sure they are able to pay the day of surgery," says Mr. Ollayos. "We also try to determine the patient's coverage and set expectations by looking up what part of their deductible has or has not been met and figure out what we can collect from them at the front desk. We ask them to bring their copay and insurance card with a photo ID to make sure there isn't any identity theft."
Outsourcing claims
Outsourcing these services could also have a positive impact on the independent ASC's bottom line. Ms. Sabo's surgery center began working with in2itive to manage the revenue cycle in October 2014 and has already seen great benefit.
"At that time, we had average days in A/R greater than 45 and working a large book of collections cases," she says. "We were literally living payday-to-payday and had no profit to distribute to our investors. Recently, we distributed a sizeable amount to our investors! Enough said."
She attributes this to improvements in technology and electronic funds transfer. "The result is that the total reimbursement in the current 60-day buckets is up with claims going to secondary and patient responsibility much more quickly," she says.
Encouraging cash payment for patients without insurance also makes a difference. Cash payment is efficient for the revenue cycle because the surgery center receives the full payment without needing to bill the insurance company separately from the patient.
"We are geographically situated between Washington, Montana and Canada and as a result see a fair number of patients from those areas with either high deductible plans or uninsured," says Ms. Sabo. "For these patients and any others for whom we will not be billing insurance we have begun offering a cash-pay package and plan. We are very excited about the potential for this program and the possibilities for this to be utilized for local businesses that self-insure."
Key benchmarks
It's important to assess revenue cycle benchmarks fairly and work with revenue cycle staff to correct any errors.
"We use the information purely for learning purposes and in no way is it used punitively," says Ms. Sabo. "Mistakes may occur in any step in the process, from data entry at scheduling/reception to items missed by the clearinghouse, to billing errors r/t electronic submission. All are opportunities to learn and perform better."
A few of the key revenue cycle benchmarks to watch include:
1. Days in accounts receivable — close to 30 days
2. Denials upon first submission
3. Comparison between contracted amount and actual payment
4. Days from the date of service to receive an operative report from the physician
5. Days from the date of service to file a claim
6. Number or percentage of appeals required
7. Bad-debt percentage
8. Number and size of RAC audits
"If the days in AR step out of line, I want to know what has changed," says Ms. Sabo. "Regarding denials, if we know where the ball was dropped, we are able to learn from the experience and prevent a similar occurrence in the future."
Tips for revenue cycle optimization
A smoother revenue cycle is ideal for the center's health as well as ownership distributions. ASCs with positive cash flow can make a determination to investor distributions on a regular schedule.
"We have a system where our money comes in and after we meet payroll and vendor obligations, we reserve the rest for quarterly distributions," says Mr. Ollayos. "We put that money aside starting the first week of the quarter so we can budget and then make the distribution payments at the end of the quarter."
Here are 11 tips to keep your accounts receivable on track:
1. Verify insurance benefits on every patient and all cases scheduled.
2. Double-check the demographic information for the patient.
3. Contact patients to inform them about financial responsibility.
4. Inform patients you collect their payment before or on the day of service.
5. Discuss payment forms and third-party financing options before surgery.
6. Postpone a procedure when able to improve the patient's financial situation.
7. Have physicians dictate as soon as the surgery is done and then transcribe the report.
8. Obtain pre-certification and referrals when required.
9. Make insurance claims submission, remittance and remittance advice electronic
10. Establish and maintain a patient balance statement cycle.
11. Write-off bad debt in a timely manner.
This article is sponsored by in2itive.