With the rise of high-deductible health plans and pressure on reimbursement rates, many hospitals and health systems are trying to improve collection rates to maintain or boost their financial performance.
Here, revenue cycle experts share their advice on how organizations can improve collections, both from payers and patients.
Note: Responses have been lightly edited for flow and clarity.
Sondra Akrin, Vice President of Revenue Cycle Transformation at Hayes Management Consulting. "Focus on revenue loss/leakage. Start by looking at write-offs for denials that you couldn't appeal because a process failed (i.e. timely filing) or you were missing critical data (i.e. authorization). These write-offs are essentially lost revenue and drive down your collection efficiency. By focusing on refining processes and ensuring appropriate upfront data collection can prevent or minimize the loss of revenue.
Also, focus on patient collections. There has been a significant shift to higher deductible/cost sharing plans that place a lot of responsibility on patients for payment. There is a lot of competition for patient dollars, making it challenging to collect those dollars. Focusing efforts to improve upfront patient collections can improve collection rates for 'after insurance' balances."
Tom Furr, CEO of PatientPay. "Evaluating methods used by other industries can yield meaningful results for healthcare providers of all types. Unlike most other business sectors, electronic billing and payments have historically been underutilized as a form of payment in consumer healthcare transactions. Ample evidence can be found. One study determined nearly nine out of 10 healthcare bills are sent to patients in paper form via the U.S. Postal Service. Remarkably, Deloitte's annual survey of U.S. healthcare consumers found 70 percent of respondents would prefer to get their bills electronically.
Billing patients in ways they prefer cannot be understated. Changes in healthcare have made patients the third largest payer behind Medicare and Medicaid. Unlike the other two, the patient is much harder to collect from and takes more time and money to secure payment. Electronic bills and payment capabilities will improve collection rates, especially when they are readily understood. A survey conducted for Citibank found 71 percent of respondents would promptly pay their bills if they were understandable and, more importantly, matched a payer's explanation of benefits.
Without delving into the why's and how's, healthcare bills to patients have been getting bigger. Instead of swallowing hard as write-offs grow, build in automated payment plans into your process for those people who want to pay but need assistance to accommodate their income. People, for the most part, are not deadbeats. They'll pay proper and correct bills and will be more willing to do so if it can be done in bite sized pieces.
Patients will balk at paying a bill if it does not make sense or match their EOB. A too frequent situation is a statement showing a payment unexpectedly applied to a 'different' balance otherwise known in healthcare as posting a payment to the oldest balance due. The way to avoid this slowdown in payment is to utilize automatic reconciliation so the right payment amount is assigned to the right balance of the right patient.
If hospitals move to multiple forms of billing including email, text, interactive voice recognition and, as a last resort, paper they will be able to enjoy the sort of financial performance and efficiency seen in other industries. If there is still a question as to whether there is a better way, I suggest you look at PayPal, an organization that employs technology to let people and businesses better move and manage money and, in the process, be its industry leader."
Bruce Haupt, President and CEO of ClearBalance. "Traditionally it's been difficult for financial counselors to have the 'money conversation' with patients and collect an up-front payment — no matter how small. Now health systems are empowering front-line staff with estimation tools and zero-interest payment plan options that make a difference. The key is to balance collection funnels from the front- to back-end of the revenue cycle. Our health system partners have increased point-of-service collections dramatically while significantly reducing bad debt. For example, [Winston-Salem, N.C.-based] Novant Health increased patient collections more than $41 million from 2015 to 2016 and with its extended payment plan from ClearBalance, reduced patient pay bad debt by $15 million."
Bill Knox, Vice President of Product Management at nThrive. "Improving denials management will significantly improve collection rates. The first step to tackling denials is accurately identifying their root cause which can be difficult for many hospitals to do, and is best done using a powerful analytics platform to surface trends in the data. Causes can change over time, so a tool that allows hospital leadership to keep their finger on the pulse of shifting trends — a regularly reviewed dashboard — is ideal. The next step is defining best-fit workflows that route those denials to the appropriate team, at the appropriate time, for resolution. Workflow automation increases collector efficiency and allow more accounts to be worked per collector, and integrating claims and contract management unifies the data and streamlines further."
Jim Lazarus, Managing Director of Strategy and Innovation with The Advisory Board Company's revenue cycle division. "I see organizations increasingly working to grow point-of-service collections from patients given the rise in deductibles. What organizations need to be doing is to work to automate as much of the patient access workflow as possible to let their staff focus on working with patients to help them understand and pay their out-of-pocket obligation. We see organizations increasingly getting much smarter and much more rapid in their follow up with back-end collections, especially with insurance companies. So we see organizations using workflow automation to follow-up with insurance companies within days of sending a bill rather than waiting one, two or three months. There's really powerful data called claims status data that organizations can automate into their collections process where they can know within two to three days, without anybody taking action, whether the insurance company is planning to pay and therefore focus their staff on cases where the insurance company is not planning to pay in full to accelerate collections and improve their overall cash and bottom line performance. Additionally, I see a lot of organizations now increasingly meeting patients where they are. A lot of organizations are giving patients ways to get an estimate of their obligation off of their organization's website well in advance of receiving care or even to get that without having any care scheduled. The patients know what they're going to owe even before they are presenting for care or before somebody from the hospital calls them.
All three of those are driving meaningful improvements in overall collections. Two of them more patient focused and one of them is much more about holding the payers accountable. Organizations have to be working on workflow automation. They actually have to have their staff do less of the manual tasks and activities that exist in the revenue cycle process, whether it's payer or patient, so the staff spends their time focusing on accounts that were never gotten to or helping payers and patients make that payment earlier. Organizations also have to break out of kind of this manual, siloed process of collecting and they have to pursue automation to let them actually have a more in-kind performance. That's how they break the cycle. That's how they improve performance."
Frank Moreno, Vice President of Product Marketing at Datawatch. "Effective revenue cycle management is only attainable when healthcare organizations have a full view into all of their patient and operational data. Finance cannot wait for IT to provide detailed reports, or spend countless hours manually pulling data from EMRs, 835 and 837 remittance and other files, yet that's what is happening at organizations across the country every day. Instead, by using self-service data preparation and analytics solutions, finance teams can easily unlock hidden data to better manage cash flow, see revenue across service lines, drill down into claims, review aging claims and identify gaps in the revenue cycle process. In minutes rather than hours or days, individuals can determine where corrections need to be made to recapture potential lost revenue."
Ashley Scott, Client Services Manager at MediRevv. "Focusing on process improvements in small steps will make a big, positive impact on collection success.
Look at timeliness first. On the insurance side, are clean claims going out in a timely way? If not, determine whether providers are documenting daily/weekly/monthly, evaluate whether coders are keeping up, and identify any issues prohibiting claim edits from being resolved in a timely manner. Similarly, on the patient pay side, what is holding patient statements from being sent in a timely manner? Look for unnecessary patient statement holds or delays, check the volume of mail returns on patient statements, determine if registration issues exist and ensure patient disputes are processed in a timely fashion.
Second, scrutinize both payers and patients. Why aren't they paying? Identify denial trends, determine if payments are being posted correctly and in a timely way and take every opportunity to switch away from paper claim submissions. Keep in mind that claim/appeal submission processes vary by payer, and sometimes payment is interrupted simply because a lockbox isn't properly set, or W-9s are not current with all payers. Similarly, on the patient pay side, ensure that patient statements are accurate and easy to understand and that patients have easy access to payment options — 24 hours a day, seven days a week and 365 days a year. And, don't wait for the phone to ring. A well-planned, strategic outbound calling campaign to engage patients, answer questions and ask for payment will improve collection outcomes.
Finally, take a hard look at why aged accounts receivable is so high. Determine whether the current strategy is actually focused on the right accounts receivable and scan for any payers with short timely filing guidelines requiring special attention. With patients, hum "Frozen" character Elsa's tune "Let it go, let it go!" when assessing whether accounts processing to collections are timely. Make sure payment plan guidelines still make sense and identify unnecessary patient statement holds or delays.
Perhaps most imperative, understand the intrinsic value of the insurance and patient pay accounts receivable follow-up teams. Communicate expectations clearly and invest the time it takes to ensure they truly understand the overarching accounts receivable follow-up strategy. (And ask regularly, are they following it?)"
Leonard Wenyon, Vice President of Solutions at IKS Health. "A simple start to improving your collection rates is to look at your first pass payment ratio. If you can ensure most of your bills are paid the first time you submit, you save a lot of man hours and drastically improve your cash on hand.
The first thing you want to do is understand your denials. Consider the following: What is controllable? What can be solved by training? What enterprise performance management system edits can you make? Can you get edits from your clearinghouse? Is it possible to do online eligibility verification?
I also recommend that people look at what claims are not on file with the payer when you check on line/call to follow up? Sometimes the claims never make it to the payer and you can identify and address these patterns. For instance, if you have a typo in the address of a payer, you might be sending all of your claims to the wrong location.
We also find that you can send primary or secondary claims electronically, and in some cases you may get paid on the secondary claim before the primary.
Finally, we suggest you confirm you were paid correctly. Where contracts require you to bill the fee schedule, a best practice is to bill 20 to 30 percent higher than you contract. This minimizes the chance you have not picked up changes in the fee schedule. If the payer pays your billed amount you may be billing under your contracted rate. If you are billing under the contracted rate the payer will only pay the billed amount on the claim and not the total contracted amount. This means you have left the balance on the table for the insurance company."
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