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.
“Denial prevention is important,” she added.
Aegerter stressed the importance of due diligence when seeking to upgrade an AR system. “You really have to understand how your process works, how you want it to change and how you’re going to use your new tool to make it so,” she said.
Once organizations have a strong hold on revenue cycle management through technology and processes, they should focus on revenue collection as quickly as possible. The next bastion is managing cost to collect. “Are you utilizing technology and staff that allows you to be most efficient?” Aegerter asked.
David Hammer, vice president of revenue cycle for McKesson Information Systems, believes a fully integrated clinical and financial information system is the Holy Grail that would, among many things, manage AR effectively.
“An integrated system with a single database, all features incorporated and an automated workflow rules engine can capture errors as they occur or provide exception reporting downstream,” he said. “The value of such a system promises accuracy and speed, and the potential to reduce staffing and accelerate collection.”
Hammer also stressed focusing on upstream activities: “Accurately capturing service charges electronically will get the bill out the door faster. The goal is to submit to the right person at the right place a clean claim for 100 percent of the charges shortly after the service has been rendered.”
THE ACCOUNTS RECEIVABLE MANAGEMENT MARKET is fragmented. Service and application solutions are broken down into three groups: Consultants, outsourcing and IT applications. Many firms, however, offer solutions in more than one group, often across all three.
The global management consulting and technology services company provides revenue transformational services and transformational outsourcing to optimize technology to enable streamlined and automated business processes.
Accretive Health provides revenue cycle management services, including pre-registration, scheduling and admissions, and billing, collections and contractual compliance.
A.R. Systems Inc.
A.R. Systems Inc. is an outsourcing revenue recovery firm that collects revenue from specified aging accounts.
athenaCollector is athenahealth’s revenue cycle and practice management solution. It can help improve cash flow and reduce days in accounts receivables through athenahealth denial management, in which specialists perform claim-by-claim denial review, pursue payment and execute appeals on an organization’s behalf.
A provider of management and technology consulting services, BearingPoint provides strategic consulting, application services, technology solutions and managed services to companies and government organizations. It helps customers achieve results by identifying mission-critical issues and implementing innovative and customized solutions designed to generate revenue, reduce costs and access the right information at the right time.
Bridgefront provides consulting and education services in, among other areas, revenue cycle management.
Cerner combines its Clinically Driven Revenue Cycle with its Cerner Millennium health information technology computing platform for claims submission. Cerner also provides professional services as well as support and hosting services.
Deloitte & Touche USA LLP
Deloitte’s Center for Health Solutions provides research on and develops solutions for some of the country’s pressing healthcare and public health-related issues.
Eclipsys’ Sunrise Access Manager/Patient Financial Manager is a revenue cycle management solution that includes master patient index, combined business office and a single entry point for corporate and hospital-level information. This solution helps reduce days in accounts receivable. Eclipsys services methodology provides technical personnel and expertise.
Epic Systems offers a Resolute Hospital Billing system that coordinates inpatient and outpatient billing for hospitals. It provides front- and back-office tools for streamlining billing and collection processes, reducing payer denials and minimizing AR days. Drawing information directly from the EpicCare clinical system, Resolute Professional Billing provides comprehensive billing and accounts receivable tools for ambulatory care environments and hospital professional fees. It helps organizations streamline charge entry, payment posting and follow-up activities while supporting paperless collection processes.
Ernst & Young
The professional services organization’s Health Sciences Advisory Services focuses on helping healthcare providers achieve and maintain economic strength while managing risks. Its services address revenue management, financial performance, regulatory reporting and compliance and managed care.
GE Healthcare provides health information technology, outsourcing and consulting services. GE offers cost-effective outsourcing to access its GE Centricity software. GE Centricity provides financial and administrative capabilities for the revenue cycle. The Centricity Services team helps organizations implement processes that qualitatively and quantitatively deliver results for quality patient care while meeting business goals and objectives.
Greenway Medical Technologies
Greenway Medical Technologies, provider of integrated electronic health record and practice management software for physician practices, provides PrimeARM to handle all aspects of the physician practice billing cycle for practices that are clients of its PrimeSuite ambulatory software suite.
IBM provides strategic outsourcing solutions for healthcare providers that combine information technology, tools and consulting services in a flexible, customized, healthcare provider-specific format. IBM provides applications development and management. It facilitates e-commerce and business-to-business capabilities by integrating business databases, applications and Web site infrastructure.
KPMG helps healthcare organizations protect their assets by helping them measure, monitor and manage risks to their organizations. Its risk advisory services focus on helping clients improve their key business function processes and controls – finance, operations, information, internal audit, regulatory compliance and investigation, treasury and reporting.
McKesson Provider Technologies
McKesson Provider Technologies provides healthcare IT and automation solutions such as revenue cycle management and full services solutions such as consulting and outsourcing.
Meditech’s Revenue Cycle product helps organizations with patient billing management, from the issuing of referrals to bill and collection generation for timely reimbursement for services rendered.
Per-Se’s Technologies’ Connective Healthcare solutions help reduce administrative expenses, increase revenue and accelerate the movement of funds to benefit providers, payers and patients.
Presidential Financial Corp.
The healthcare claims management division of Presidential Financial Corp., a national asset-based finance company, focuses on accounts receivable and collections to support and enhance internal reporting and cash flow management.
The accounting and consulting firm offers a global network of healthcare industry professionals to provide assurance, tax and business advisory services.
Siemens Medical Sol. Health Services
Siemens Medical Solutions Health Services provides consulting and IT services and revenue cycle management solutions.
Skoda, Minotti & Co.
Skoda, Minotti & Co. provides accounts receivable management services for the healthcare industry.
Stockamp & Associates
Stockamp & Associates is a national provider of healthcare performance improvement solutions including revenue cycle management. Stockamp earned the 2006 Best in KLAS Award for Revenue Cycle Consulting – Transformation. KLAS also ranked Stockamp as the number 1 Overall Professional Services Firm in their 2006 Top 20: Best in KLAS report. n