How To Improve Billing And Collections

1 2 Case Study reflects financial findings/recommendations only – additional clinical findings/ recommendations are not presented 3 • 14 month old ambulatory surgery center evaluated because not meeting projected revenue • Semi-rural area • Joint-venture – physicians/ local hospital • Average case volume - 350 month ABC Surgery Center • Specialties - ENT - GI - Ophthalmology - Orthopedics - Podiatry - Pain Management • Payor Mix - Medicare - Medicaid - BCBS - W/C - PPOs - HMOs - Indemnity ABC Surgery Center •Number of reasons for negative cash flow: - Fee schedule far lower than normally seen in an ASC - Managed care contracts low with unfavorable terms - Improper billing/coding practices - Managers with no ASC experience - Inefficient use of staff - Appropriate structure and policies and procedures not in place ABC Surgery Center Findings • Evaluation of the fee schedule revealed that most fees were exceptionally low low compared to Medicare/BCBS ASC fees for this geographic locality • Many fees were actually less than Medicare allowable • Fee schedule had been based on physician DRGs • No consistency in fees – similar procedures had wide variances ABC Surgery Center Recommendations • Develop fee schedule based on percentage of Medicare group rates • Carve-outs for higher ticket procedures • Decide on additional procedure discount • Sample fee schedule given to Board -recommended 500% of current Medicare rates ABC Surgery Center Findings • Low rates for an area with little managed care penetration • Some reimbursement methodologies varied from market standard • Unfavorable terms in contracts • Most carriers require accreditation • Some contracts were invalid as not voted on by Board ABC Surgery Center Recommendations • Join local PHO and have them assist in recontracting for ASC • Cancel five major contracts whose reimbursement is based on Medicare rate • Great managed care market – suggest renegotiate for reimbursement based on percentage of billed charges • Move toward becoming accredited – mark applications as “Accreditation Pending” 10 ABC Surgery Center Recommendations • Provide payment poster with copy of all managed care contracts and/or contract matrix • Payments should be posted daily • Bank deposits should be made daily • Keep necessary back-up of all payments received 54 XYZ Surgery Center 54 Recommendations (continued) • Review EOBs and promptly start denial process for erroneous payment or no payment • When posting, compare payment to original claim to determine accuracy • Credit balances to be reviewed and promptly refunded, where applicable 55 XYZ Surgery Center 55 Findings • Collections not being done regularly due to lack of business office staff • No upfront collections • No brochure for patients to outline financial policy • No policies/procedures on billing or related issues • No accounts have been placed with collection as no follow-ups 56 done yet XYZ Surgery Center 56 Findings (continued) • No training in Fair Debt Collection standards • Medicare claims not crossing over to secondaries • 30 day prompt payment law • Days in A/R 79 • Over 120 – 22% (mostly insurance) 57 XYZ Surgery Center 57 Recommendations • Review accounts that were denied or paid in error and rebill where applicable– timely filing may become an issue • Follow up on OON claims – determine which paid to patient and send statements • Need to audit Medicare and insurance payments to detect overpayments – correct and issue refunds where 58 XYZ Surgery necessary Center 58 Recommendations • Use aging reports to aid in collections • Use tickler files • Evaluate/correct problem with Medicare secondaries • Enforce prompt payment rule • Institute upfront collection of deductible and copays • Establish financial policies/procedures 59 XYZ Surgery Center 59 Findings • Administrator has no previous ASC experience • No business office manager • Only two FT business office employees • Billing staff leased part time from clinic • Few business office policies/procedures • Vague job descriptions – no real accountability 60 XYZ Surgery Center 60 Recommendations • Separate clinic and ASC staff if possible • If billing remains in-house, recommend hiring full time experienced coder/biller for ASC • Suggested some changes in positions to cover all tasks • When caseload increases, recommend hiring working business office coordinator who can fill any position as needed 61 XYZ Surgery Center 61 Findings and Recommendations STAFFING • Information flow is fragmented between clinic and ASC – recommend evaluation and change • Need specific business office policies and procedures and job descriptions 62 XYZ Surgery Center 62 Findings/Recommendations – COMPLIANCE • Not enough separation between Clinic & ASC • Billing and payment posting should be separate and done by different employees • Three members of business office staff should review deposits • No Business Associate or confidentiality agreements • No financial policy information available to patients 63 XYZ Surgery Center 63 Findings and Recommendations – 2008 MEDICARE CHANGES • Administrator attended educational seminar on 2008 Medicare changes • Suggest share information with key personnel and billing staff • Evaluation team provided copy of proposed reimbursement to ASC 64 XYZ Surgery Center 64 • Governing body approved and adopted recommendations • Outsourced coding and billing functions • Made other clinical changes not discussed in this report 65 XYZ Surgery Center 65 • Outsource date - January 1, 2008 • Average caseload 100/month • Accounts receivable decreased 25% • Over 120 decreased from 22% to 8% • Average Collections increased from $160,000 to $250,000 per month • Average Gross Charges increased from $353,860 to $584,055 • Days in A/R decreased from 79 to 44 66 XYZ Surgery Center 66 • Inadequate fee schedule • Poor managed care contracts • No copies of managed care contracts • Insufficient staff • Wrong staff • No good policies/procedures in place • Compliance issues • No consistency in billing practices • Not billing for implants regularly 67 67 Caryl Serbin 239-482-1777 cas@surgecon.com 68 68