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Is Outsourcing Revenue Cycle Management the Right Decision for Your ASC?

In this challenging healthcare environment, several economics and regulatory driving forces are causing ASCs to more closely scrutinize their cash flow. Fortunately, if such analysis raises any red flags, there are measures ASCs can take to better protect their financial lifeline.

One option growing in popularity is the outsourcing of revenue cycle management (RCM) to experts. While this choice may not suit every facility, it is worth understanding why the current economic and regulatory environment makes it a worthwhile consideration.

  • Affordable Care Act (ACA) — As the new administration is developing a new healthcare plan, the ACA is still in force. In most cases, patients are responsible for a larger portion of their medical care, and ASCs must be diligent in collecting the patient's co-pay and deductibles.
  • Migration of device-intensive procedures to ASCs — As more complex procedures are performed in ASCs, there is an increased use of expensive implants. Surgery centers need to be aware that these procedures often include the implant in their reimbursement allowance. It is incumbent upon the ASC to thoroughly review their managed care contracts to determine adequate coverage for these increased costs.
  • Increase in regulations and compliance — Preventing fraud continues to be a high a priority for the government, which is why ASCs must ensure compliance with proper coding and billing requirements. If you choose to outsource your RCM, you will need to select a billing company with ASC-experienced and certified ASC billers and coders who use ASC-specific software and have a written and active compliance plan in place.
  • Managed care trends — Increased mergers between healthcare plans over the past several years is limiting the number of available managed care contracts available to ASCs. This reduced competition between payers has resulted in lower reimbursement schedules. Negotiating an agreement is now more difficult and takes longer to accomplish (consider allowing 3-6 months for completion). Because of the increasing strength and clever tactics of managed care organizations, delays in payment, denials and incorrect allowances are more prevalent. It is imperative that payment posters remain well-educated and alert for any changes and possible payment trends as they occur.

These economic factors will necessitate that ASCs reassess not only minimally profitable procedures but also specialties that continue to decrease in reimbursement. Optimal, compliant coding will become paramount in maintaining a positive cash flow.

The one quality each of these challenges share is their increased need for cohesive and up-to-date billing efforts. For coding, billing, payment posting and collections, each team member involved in these processes must remain aware of newly released information from the Centers for Medicare & Medicaid Services and managed care. Changes in coding and billing requirements are modified frequently, so ongoing education is critical.

When Outsourcing is a Good Fit

If you are struggling in any area related to your billing and collections process, outsourcing might be an option worth exploring. Here are some questions to ask yourself to help determine whether outsourcing would be beneficial for your center:

  • How much are you investing in your billing staff's salaries and benefits?
  • How do you handle staff turnover and absenteeism? Do you have staff members who cover the billing staff when they are absent? If so, you may want to factor in these staff members' salaries and benefits.
  • Is your coding optimized but compliant (e.g., not unbundled)?
  • How many days do you average between date of surgery and the claim dropping? Every day of delay is money not in the bank.
  • What are your days in accounts receivable (A/R)? Each day's delay in receiving your reimbursement makes that payment worth even less as every additional dollar earned by an increase in collections can produce additional interest revenue.
  • Do you understand the method being used to determine your days in A/R? Does it make sense and accurately reflect how long it takes your staff to collect monies owed to your center?
  • Are you able to prioritize your revenue cycle inside your center or do other business office tasks/special projects to reduce the amount of time your staff actually spends on billing and collecting?
  • Are your write-offs performed accurately? This may falsely affect your days in A/R.

Measuring your ASC's Billing Health

Questions to ask and answers you should be looking for (answers are based on industry benchmarks):

Q: What are your calendar days in A/R?

A: 45 days or fewer

Q: What percentage of the A/R is over 120 days old?

A: 15% or less

Q: What percentage of the A/R is patient payment plans (important in this era of high deductibles)?

A: Less than 5%

Q: Do you work every A/R account at least every 30 days (and are there are collector notes to verify this)?

A: Yes

Q: What is your process for incorrect or non-payment of claims?

A: Immediate resubmission

Q: What is your average length of time between claim submission to payment (if submitted electronically)?

A: 1-3 weeks

Q: What is your average success rate (claims paid on first submission)?

A: 95% or better

Q: What is your average net revenue to collection ratio?

A: 100%

All of your answers should match industry benchmarks. However, with managed care's increasing trends in denials and payment errors as well as the continuous changes in Medicare reimbursement and allowable procedures, it takes many man-hours to properly track these changes and respond to them. This is in addition to the time necessary for coding, billing, payment posting and collections.

These questions are meant to direct your attention to important aspects of your billing process and assist you in evaluating your billing needs. Depending on your responses to the questions above, you may want to consider outsourcing.

Benefits of Outsourcing

  • Outsourcing provides you with access to a full team of reimbursement specialists, including certified coders, experts in managed care and Medicare reimbursement, as well as experienced insurance and patient collectors. It is sometimes difficult for ASCs to find experienced personnel to provide the necessary services to keep coding and billing compliant, coding optimized and collections current.
  • Outsourcing can alleviate disturbances in your business office caused by vacations, illness and staff turnover and training of new personnel. Knowing that you're never without members of your billing team is an often-overlooked benefit.
  • Optimized coding by a knowledgeable certified coder can often increase revenue, possibly off-setting the full fee for outsourcing services.
  • Outsourcing can free up your staff members as they do not have to answer billing questions if patient calls are directed to the outsourced billing office.
  • As denials and incorrect payments increase, outsourcing allows for the uninterrupted time necessary for collectors to immediately respond to and reconcile appeal issues. This will allow more stability in your cash flow.
  • As ASC billing increases in complexity and regulatory changes are ever-changing, in order to remain compliant, it is necessary for your billing staff to monitor rules and regulations in addition to performing their other billing tasks. Outsourcing alleviates the need for these time-consuming processes and gives you piece of mind knowing that your billing company has a written compliance plan in place and your reimbursement team is closely watching for these changes and being audited regularly for compliance.
  • Outsourcing companies can often lower the days your money remains in A/R, catch incorrect payments and correct them promptly, optimize coding and perform immediate and thorough appeals. This, along with timely and effective collections follow-up, can convert your billing department to a profit center as opposed to a cost center.
  • An excellent RCM company can actually increase your revenue and provide your center with a dependable cash flow.

Want to learn more about the many ways outsourcing can benefit your ASC? Download the free white paper "The 'ABCs' of Outsourcing Your Revenue Cycle Management" found here and contact Serbin Medical Billing, an industry leading ASC revenue cycle management firm, by clicking here, emailing caryl@serbinmedicalbilling.com or calling (239) 208-4908.