Getting the Most from Your Interim Revenue Cycle Leader

Some people view an interim leader as a stop gap between an outgoing revenue cycle leader and the next leader to fill the permanent role; someone to manage the day-to-day and maintain performance. We would contend that, in the Revenue Cycle space, interim leaders should also have the experience and skillsets needed to rapidly identify and execute changes to improve performance.  Despite the need for interims to drive value, many times interim revenue cycle leaders maintain performance at best. 

Below are a few ideas to get the most out of your choice for interim revenue cycle leadership:

Before bringing in an interim leader, ask the team:

  • What expertise would benefit the team?
  • What must be maintained or fixed to keep forward momentum?

Ask the right questions when talking with a potential interim leader:

  • What is their leadership style?
  • How do they engage staff to support initiatives?
  • Discuss their experience working with other departments to support revenue cycle initiatives
  • What does success look like in an interim leadership role?
  • Do they have experience transitioning initiatives to new leader mid-stream?

Outline an initiative-based work plan the interim leader is expected to manage forward throughout the contract:

  • Identify quick wins to demonstrate progress and gain buy-in
  • If an established initiative work plan is not available, set the expectation that a rapid assessment be completed in the area(s) they are over and tie progress to milestones in their contract

Set up a structure for success:

  • Note the metrics when the interim begins to monitor progress
  • Ensure metric monitoring is in place so you can course correct as necessary
  • Identify the executive who will regularly check in to ensure the interim’s progress

If you are in need of an interim revenue cycle leader or would like to discuss the approach outlined above, please contact Andrew Jacobsen at ajacobsen@pinnaclehca.com to discuss further.

3 Factors that Reduce the Accuracy of Your Hospital’s Cost Estimation

hospital cost estimations

Over the past several years, price transparency has become a hot topic in healthcare.  Providing an accurate estimate of patient liability prior to service is one area many organizations are focusing on to address price transparency.  With that in mind, there are a variety of products in the revenue cycle space that providers can use to automatically calculate an estimate of a patient’s out of pocket liability.  Armed with a cost estimate, revenue cycle staff are equipped to have a meaningful conversation about the patient’s cost for the service. This conversation with the patient increases transparency and drives cash collections.  The time savings that comes with automation is a hard benefit to dismiss, but what about the accuracy? Like most products with numerous inputs and data sources, the initial configuration and the ongoing maintenance is critical to ensuring an accurate tool.  

First let’s take a look at the 4 main data elements that go into a cost estimation:

  1. Hospital Charge Description Master (CDM) – Your organization’s specific charges for services provided.  Utilized to estimate the gross charges associated with straightforward services (e.g., CTs, MRIs, etc.)
  2. 837 Claims Data – Actual claims history your organization has submitted electronically to payers that is aggregated to estimate gross charges associated with more complex services (e.g., surgeries)
  3. Payer Contracts – Your organization’s contractual terms with each contracted payer.  Utilized to estimate the allowed reimbursement for that payer. The allowed amount can be equated to what the insurance company will pay the hospital for that service.  This value is critical in the calculation of a patient’s coinsurance (% of the contracted amount the patient has to pay). Contracts can range from straightforward “% of charge” to significantly more complex reimbursement methodologies.
  4. Electronic Eligibility and Benefit Inquiry Responses (EDI 271) – Electronic benefit information directly from the payer via 271 response that outlines patient cost expectations (copay, deductible, coinsurance, and max out of pocket information)

Utilizing the above data, the tool estimates the gross charges associated with the service, the payer specific allowed amount for that payer based on the contract, and finally the patient’s copay, coinsurance, and deductible, if applicable.  Sounds pretty straight forward right? To have the best probability of an accurate cost estimation tool, each of the above items needs to not only be accurate, but refreshed periodically with the most current updates. Now let’s take a closer look at the 4 benefit components that go into the calculation:

  1. Copay – What is the copay associated with that specific service?  This comes directly from the benefit information received in the 271 response
  2. Deductible – What is the patient’s yearly deductible?  This also comes directly from the benefit information received in the 271 response.  For this to be an accurate part of the calculation, you need to know what portion of the deductible is remaining.
  3. Coinsurance -What is the patient’s cost share % of the contracted allowed amount?  This is where the 837 claims data and contracts come into play. For this to be accurate, you need to know the coinsurance for that specific type of service AND the contracted allowed amount for that particular payer.  
  4. Max out of pocket – What is the maximum yearly amount the patient can pay in a given year?  You need to know what portion is remaining.

With all the moving parts above, 3 specific items stand out as the top culprits for an inaccurate estimate:

  1. Payer contracts are not built correctly into the tool resulting in an inaccurate allowable amount/contracted rate and therefore an inaccurate coinsurance amount
  2. 837 data and/or CDM data is not refreshed frequently enough (or at all), resulting in an inaccurate coinsurance amount
  3. Specific benefits from the 271 response are either not available in the 271 response provided by the payer, or are not mapped correctly in the tool to tie the right benefit components to that particular type of service.  For example, a patient may have specific copay/coinsurance benefits for diagnostic imaging services, but the payer either doesn’t provide those in the 271 response, or the mapping in the tool is pulling more generic outpatient benefits instead.

While cost estimates are a great tool that allow for increased transparency, improved cash collections, and reduced bad debt, inaccurate estimates can lead to undesirable outcomes such as excessive patient credits and patient billing complaints.  For more information on improving the accuracy of your cost estimates, please contact Andrew at Ajacobsen@PinnacleHCA.com

Addressing the Hidden Issues of Automated Cash Posting

15-20 years ago, the cash posting unit of a hospital was one of the larger units within the business office.  Lots of man hours were needed each day to organize and manually post paper checks/remits from the wide variety of payers in the marketplace.  Staff in these positions had to understand how the keystrokes they completed impacted the remaining accounts receivable after a payment was posted, along with the many differences in how each payer processed (and paid) on claims.  Is this a full payment? Partial Payment? Denial? Does the remaining balance need to move to the next payer or to the patient? While the process was 100% manual, with the right team in place you could ensure the remaining accounts receivable was clean, allowing follow-up staff to focus their attention on accounts that truly needed follow-up.  The key challenge was ensuring staff had adequate training and controls were in place to minimize human error.

Fast forward to today and most organizations are operating with a fraction of the staff, relying on enhancements in technology and automation to complete the daily cash posting process.  Many hospitals are utilizing 3rd party tools/vendors to organize incoming electronic remits from payers that can be posted through an automated process into the Electronic Health Record (EHR).  The promise of eliminating human error through automation has always been a key selling point to moving away from manual cash posting. Do the same job with less staff at a higher level of quality; sounds great!  In a perfect world, a cash poster would simply import the electronic remit into the EHR and payments/adjustments would post automatically and accurately with little to no intervention. While this process can (and does) work very well for some organizations, the simplicity promised is not reality.  There is now a new set of critical points in the process/configuration that can lead to less than optimal results:

  1. ANSI/CAS code usage by payer varies – While there are standards in place, there are numerous inconsistencies in the codes used across payers that indicate denials, contractual adjustments, etc.  Usage for an individual can also change suddenly without warning. Cash posters need to be aware of the differences AND be on the lookout for changes so that configuration downstream can be adjusted.
  2. Paper EOB Interpretation – For payers that still provide paper EOBs, many hospitals use conversion tools that convert the paper EOB to the 835 format – but is the interpretation correct?  While there are fewer and fewer payers out there that still provide paper EOBs, they do exist. Converting what is on the EOB has to not only be accurate, but also has to be evaluated periodically to ensure the payer hasn’t changed their format or usage of codes.
  3. EHR Configuration – One of the most important pieces of the process is the configuration within the EHR on how the electronic remits are interpreted and automated actions are performed on the account.  Should certain ANSI/CAS codes be interpreted as contractual adjustment? Should certain codes hold the remaining balance with that payer because it is likely a denial? Should certain codes automate a non-contractual adjustment?  When should the balance move to the next payer or to the patient?
  4. Process Monitoring and Adaptation – Lastly (and equally as important as the technical configuration), cash posters need to be able to identify and resolve errors in the automated process on an exception basis.  The idea of simply hitting a button and everything working is unfortunately not the reality. Cash posters also need to be able to spot and escalate key themes/issues in #1-3 so that they can be addressed in the configuration and/or how they are “fixed” on an exception basis.

Missing the mark with any of the items above can lead to numerous issues and rework:

  1. Erroneous credits
  2. Inaccurate patient balances/statements
  3. Adjustments on denials that still have cash opportunity
  4. Inflated accounts receivable from inaccurate insurance balances requiring additional clean-up, but no additional cash value
  5. Staffing constraints leading to unposted cash or cash research backlogs

Are you experiencing any of the issues above with your cash posting process?  

For more information related to the cash posting process or revenue cycle management, please contact Andrew at Ajacobsen@PinnacleHCA.com.

Accounts Receivable Outsourcing – 3 Keys to Making a Decision

Three Keys to Outsourcing Success

In our last newsletter, we introduced the blog series: Why AR Outsourcing Fails and How to Avoid Common Pitfalls. We introduced two primary dangers with outsourcing arrangements:

  1. Hospitals that outsource frequently relinquish full control to the vendor and end up in an “out of sight out of mind” situation
  2. Vendors many times interpret “silence” from the hospital as positive reinforcement for the program they have implemented

There are lots of opportunities to avoid these common pitfalls, most of which occur in the stages before a vendor has been selected and during the implementation.

In this article we will focus on the first step to improving accounts receivable (AR) performance:  Making the Decision to Outsource…or Not

In our experience, we have seen two common scenarios frequently occur when hospitals consider outsourcing their AR:

The first is the “shoot from the hip” or reactionary approach. 

  • Your AR continues to grow and/or age
  • You know you have accounts that your internal staff just can’t get to or doesn’t have the expertise to work
  • Outsourcing seems to make sense, and
  • The next thing you know you are placing accounts with a vendor

The second is the “apathy” approach.

  • You know about that you have a bucket of AR which continues to age, yet you haven’t addressed it
  • You suspect that you need to outsource, but simply haven’t taken the time to build a business case and act
  • The result: you continue to incur avoidable write-offs, bad debt, etc.

So let’s focus on the tricky scenarios where the outsourcing decision could go either way.  We’ll stay away from the obvious populations that make sense to outsource like early out self-pay and bad debt, and will instead focus on populations which require a little more analysis.  These can include:

  • Aged insurance AR
  • Low balance insurance AR
  • Specialized populations (such as Auto/WC)

Many organizations rush into outsourcing without a lot of thought, or conversely, do not act when the decision should be obvious.  Pinnacle Healthcare Advisers recommends a methodical approach to evaluating the outsourcing opportunity.  Some questions to consider include:

  • What problem are you trying to solve?
  • Do you have a clear method for calculating the ROI of an outsourcing approach?
  • What are the alternative solutions?
    • What it would take to do the work internally?
    • Do you have the expertise, capacity, and tools needed to effectively work the population internally?
    • What are the costs associated with building a team internally?
  • If the decision is made to outsource, what are the goals and how will you measure success?
    • What is the cost?
    • What is our expected ROI?
    • What are the expectations of the firm two which you would outsource?
    • Are they clear from the start and can they be measured?

Let’s look at an Example:

A small, rural hospital is struggling to keep up with their third party (auto insurance related) receivables.  While the hospital attempts to stay on top of this population, the general feeling is that there isn’t enough staff to do the work – and that the team doesn’t have the right expertise. The requirements of managing this population include keeping up with state and federal lien laws, case law, etc., and maintaining proactive follow-up with patients, insurance companies, and involved attorneys

A proposal was made to outsource this population to a vendor with specific expertise.  Pinnacle Healthcare Advisors recommends the following decision-making approach:

  1. Complete a staffing analysis to understand how many FTEs would be necessary to work this population internally
  2. Identify the tools, training, and resources necessary for an internal team to be successful
  3. Calculate the cost associated with outsourcing this population (assuming current performance is maintained)
  4. Compare the projected internal cost (fully staffed and trained) to the anticipated vendor cost
  5. Factor in expected improvement in performance based on each scenario

In our example, this hospital had a single FTE dedicated to working this specific AR population.  The staffing analysis showed that in fact, 3 FTEs would be required to adequately cover the volume of activity.  While hiring 2 additional FTEs might have been an option, the internal staff did not currently have the right tools or expertise to respond to attorneys’ inquiries which were occurring throughout the process.  This resulted in a significant amount of unrealized reimbursements.

Alternatively, when factoring in the expected improvement (which could be achieved by engaging a partner with the right expertise) it was determined there would be a measurable ROI associated with outsourcing this AR population.

While this example may seem obvious, hospitals often fail to methodically evaluate different populations when making outsourcing decisions.  We regularly find that hospitals either shoot from the hip or make no decision at all.

The hospital described above went through a simple evaluation exercise and has accomplished two things:

  1. They can clearly demonstrate why outsourcing this population makes sense
  2. They have a clearly defined outcome and ROI that can be measured once the program has been implemented

We’ve helped many hospitals just like yours assess their AR outsourcing opportunity.  Some have identified skilled partners, and some have bolstered their internal capabilities.   All have seen an improvement in their AR performance.

If you’d like to have a more detailed conversation about outsourcing, give us a call or send us a note.

Our next topic will cover vendor selection – where we’ll discuss how to objectively choose the right vendor partner for your outsourcing program.

Why Accounts Receivable Outsourcing Fails & How to Avoid Common Pitfalls

Your internal self-pay team can’t handle the increasing volume of calls.  You’re aged insurance accounts receivable (AR) continues to increase.  Or maybe your internal resources just don’t have the necessary expertise (or time) to work a specialty population like out-of-state Medicaid or third-party liability.

Any of these scenarios can cause you to start down the path of outsourcing a revenue cycle function or segment of your AR.  This is a process that can deliver increased net revenue, but it can also be fraught with unmet expectations.

This blog series will address common challenges seen throughout the outsourcing process and provide strategies to create an effective partnership with your vendor – so that you achieve the outcomes you desire.  In this series, we will cover the following topics:

  • Part 1 – Determining the Need
  • Part 2 – Vendor Selection
  • Part 3 – Contracting
  • Part 4 – Vendor Implementation
  • Part 5 – Ongoing Vendor Management

 

But First – A $200,000 Overpayment Story

A few years back, I was working with a hospital that had a long-standing relationship with a vendor that had been contracted to work their early out self-pay population.  At first glance, the terms seemed ideal, the rate was competitive, and the performance shown by the vendor’s monthly reports looked solid.  But something did not feel quite right on the monthly invoice.  

When we decided to do an in-depth review, we discovered that there was a material portion of the vendor invoice that was not warranted – to the tune of almost $200,000 over a two-year period.

Here’s where the process broke down.  After many years of partnering with the vendor, the hospital had become lax on invoice reviews because the totals had stayed fairly consistent for quite some time.  Hospital management admittedly only spot checked the invoices occasionally.  

Due to the lack of invoice review, and in part to the way transaction files were set up, it turned out that the vendor was being compensated for insurance payments on accounts where the payer had simply taken back their money and repaid a slightly different amount based on post payment review.

Many were quick to blame the vendor for the oversight, but the reality is that there were numerous places this should have been caught, or prevented altogether, during the set-up.

 

Questions to Ask Yourself about Outsourcing

Outsourcing a revenue cycle function or segment of your AR to a vendor sounds simple, right?  You take a segment of AR your internal staff cannot work or don’t have the expertise for, give it to a vendor, and just like that you are generating cash for your organization you otherwise wouldn’t have.  While it sounds simple, for a variety of reasons that is not the experience many hospitals have when they engage an outsource vendor.  Outsource arrangements fail to meet expectations for many reasons, and candidly, most are not simply due to poor performance on the part of the vendor, but come down to the combination of two primary shortfalls:

  1. Hospitals tend to follow the “out of sight, out of mind” philosophy when it comes to outsourcing, effectively relinquishing control and responsibility to the vendor
  2. Vendors typically read the silence from the hospital as positive reinforcement that they are meeting expectations

Going back to the example at the beginning, this is all to say that establishing controls and having frequent and consistent communication is necessary in creating an atmosphere of transparency and preventing issues from going unnoticed until it may be too late to rectify.

If you have had challenges in the past, or are planning to outsource all or parts of your AR, you should first……

 

Ask yourself the following questions:

  1. How do I know if I need a vendor in the first place?
  2. What criteria should I be using to determine which populations should be worked by in-house staff vs. outsourcing?
  3. How do I assess the return on investment (ROI) associated with the outsource?
  4. How do I know if the rate is appropriate for the scope of work?
  5. When evaluating a specific vendor, what questions should I be asking?  
  6. What are the must haves in any outsource contract?
  7. How do I monitor performance post implementation?

 

If you answered “I’m not sure” or “I don’t know” to any of the questions above, you have come to the right place.  This blog series will help you to avoid the many potential missteps along the way that can lead to a less than desirable outcome.  

Our intent is not to place blame on outsource vendors, but rather establish what hospital revenue cycle management can do to best position the relationship for success and consequently the outcomes you are looking for.  

At the end of the day, you should be looking for a business partner when engaging an outsource vendor.  The more the relationship feels like a partnership, the higher likelihood of success – but hospital revenue cycle management should be in the driver seat.  

Our next topic will cover Determining the Need – where we’ll discuss how to objectively establish the need for and benefits of outsourcing.

If you’d like to have a more detailed conversation about outsourcing, give us a call or send us a note.