Front-end focus, staff education key to AR management

IN MID-JANUARY, Naples, Fla.-based Health Management Associates reported that it expects to record $200 million in bad debt expense in the fourth quarter due to an increase in self-paying patients.

Industry experts don’t believe this is an isolated event.

Competition, low operating margins and high deductibles in consumer-directed health plans are all putting pressure on healthcare providers to pay even greater attention to accounts receivable (AR) management.

While the market is fragmented among consultants, outsourcing firms and healthcare IT vendors, experts agree that focusing on front-end processes will help reduce time and money spent taking care of bad debt.

Taking care of billing on the front end includes collecting co-pays upfront, accepting credit cards, checking balances of accounts and precertifying during the scheduling of appointments.

Healthcare organizations are beginning to understand this process, said Jim Sacher, partner with Skoda, Minotti & Co.

Billing staffs need to understand the payer system and be well trained in order to submit clean claims, thereby leading to fewer denials, said Sacher. Written procedures should be developed for both nurses and receptionists.

Claudia Birkenshaw, executive vice president of Bridgefront, said the trend in AR management is educating staff on insurance, accounting, registration and billing. “These people are responsible for hundreds of thousands of dollars every day that results in claims. We really did a poor job with education,” she said. “I see a big focus on using consultants to educate staff.”

The primary reason for claim rejection is Coordination of Benefits (COB) issues, according to Birkenshaw. “When claims get rejected, AR rises,” she said. “If hospitals can decrease the number of COB rejections, for example [even by 5 to 10 percent through education of their staff], AR will decrease.”

Mike McGhees, director of extended business services for Deloitte Consulting, also advocates implementing upstream practices.

“We are watching with interest the shift of responsibility from employer to employee, who expect to get competitive prices from providers,” he said. As a result, providers will need to manage their AR at a time when upwards of 20 to 40 percent of healthcare costs will be the patient’s responsibility. Point of sale and financial counseling are preventive measures that providers need to implement.”

Tracey Aegerter, senior manager of Deloitte Consulting’s revenue cycle practice, agreed. Integrating the front end with the back-end patient accounting system will prevent the back end from remaining the traditional “dumping ground” for mistakes, she said.

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