Serbin Special Report:
Ultimate Guide to ASC Revenue Leaks and Best Practices to Plug Them
If you are noticing a decrease in cash flow and profitability, your ambulatory surgery center (ASC) may be the victim of "revenue leaks." There are several areas in the revenue cycle where such leaks may occur. With each revenue leak "drip," your ASC loses money. As drips grow, so do losses. If leaks aren't detected and sealed fast, such losses can have a significant impact on your ASC's profitability and solvency.
The following pinpoints some common and not-so-common places where money may disappear and provides guidance on how to plug these leaks and better ensure optimal payment capture.
1. Up-Front Financial Counseling and Collections
If your business office staff is not contacting patients prior to the date of surgery to inform them of their financial responsibility, chances are that your patients will not be prepared to pay that amount when they arrive for their procedure.
At the time of the pre-procedure phone call, patients should be informed of all payment types available (e.g., cash, debit, credit card, medical credit company). This enables patients to have sufficient warning of monies owed prior to surgery and provides them the time necessary to plan for meeting these obligations. A promissory note or payment plan should be offered as a last resort.
All applicable forms to be signed and monies to be collected should be communicated to the registration clerk prior to procedure date. Follow through with collection of agreed-upon funds on the day of the procedure.
It is easier for the patient to know the amount of their financial responsibility ahead of time and make plans to pay it prior to surgery than it is for them to be blindsided by an unexpected bill. Collecting monies after service has been tendered is much more difficult.
Coding errors can impact your ASC financially and put you at risk for non-compliance. It's not only about coding the wrong procedure and/or diagnosis code, thus requesting inappropriate reimbursement, but it's also about missing revenue by not using appropriate modifiers and/or not billing for implants or allowed supplies.
By employing certified experienced coders and providing them with necessary reference materials (e.g., coding editing software, current CPT, ICD-10 and HCPCS books), you can help ensure your coding results in optimum, accurate reimbursement. Always provide coders with direct access to procedure note transcription and necessary implant information/invoices.
Furthermore, check all coders' accuracy with regular internal audits. If you have more than one experienced coder, have them audit each other's work. Establish a regular, internal coding audit at least quarterly and schedule an annual coding audit by an independent company. Check accuracy of procedure code optimization, modifiers, implant billing and compliance.
3. Payment Posting and Bank Deposits
Unaudited payment posting and improper handling of payments, such as unsecured bank deposits, can lead to a loss of income. It's important to implement systems to safeguard the receiving and depositing of all monies received by the ASC.
Monies received from payers and patients should be posted to appropriate patient accounts on the day received. Itemize all monies received on a bank deposit form (cash, patient and payer checks, credit cards). Generate posting batch reports daily. Batch report and daily deposit must balance, and a deposit should not be made to the bank until balanced.
Complete official bank deposit slips and include them with collected monies to be taken to the bank. Ensure someone other than the payment poster — preferably a member of management — makes bank deposits to reduce the likelihood of theft. If available, use lockbox deposits as funds are automatically deposited in the bank, thus eliminating handling of money.
4. Denial Management
Failure to address denials or incorrect reimbursement from third-party payers can result in dramatic loss of income. Policies and procedures should be instituted to effectively address denials and initiate appeals. Create a denial log to track the causes of claim denials. By categorizing the types of errors causing denials (e.g. registration, clearinghouse, form, payer, coding), you will be able to assign the necessary follow-up to the appropriate staff member. Other errors include no pre-authorization, non-ASC procedure, no coverage at date of service and insufficient information provided to payer.
Create an effective appeals process that addresses all denial types. Understanding each payer's requirements for submitting an appeal is paramount to securing positive results and prompt payment. Initiate the appeal promptly for non-payment or erroneous payment of claim. Try to resolve issues through online or telephone inquiries. If these attempts fail, file an immediate appeal by following these steps: 1) verify proper address to send appeal, 2) write an appeal letter that includes information required to support claims, 3) take appeal to highest level of adjudication available, 4) request interest where applicable and 5) document all processes undertaken with their associated dates.
Review the denial log at the end of each month. Ask your payment poster to review the previous month's log and prepare a report on the dispensation of the denials. If claims are in the appeals process, request an update when the appeal is completed.
5. Unbilled Revenue
Surprisingly, there are often claims (both payer and patient) that slip through the cracks and are never billed. These can easily be uncovered through auditing. Auditing is not just about the accuracy and timeliness of revenue cycle tasks. It is also about finding and plugging uncommon areas where revenue leaks can occur.
Unbilled insurance may result from an initial delay in coding a scheduled procedure because of delayed provider dictation or tardy transcription and then a lack of follow-up to ensure the claim is submitted later. Other ways to miss submitting claims include 1) coder does not tally the amount of procedures with scheduled procedures, 2) charge poster does not match number of claims dropped with number of cases scheduled and 3) claims submitted to the clearinghouse but not accepted by payer are not corrected and resubmitted.
To solve these problems, generate a report tracking unbilled insurance. Evaluate these unbilled claims to determine the reasons they were unbilled. Ask questions and involve applicable staff members. If all necessary information is available, submit unbilled claims immediately.
For unbilled patients, examine whether your payment poster failed to switch guarantor to the patient when third-party payer responsibility is complete. Failure to make such a switch will likely cause you to miss generating a patient statement. Another possible cause of unbilled patients is a failure to properly assign a specific staff member the responsibility for generating and mailing patient statements monthly.
To determine if all patients have been billed appropriately, generate a report tracking unbilled patients, including self-pay, promissory notes and patient balances after third-party payer responsibility is met. Compare this report data to patient account information in your computer. Follow up on unbilled patients with your appropriate revenue cycle staff member and discuss how to avoid this problem in the future. After reconciliation of the problem, send patient statements immediately.
6. Third-Party Payer Reimbursement
Another common area where revenue leaks occur is when payment posters fail to identify incorrect third-party payer reimbursement. We touched on this when discussing denial management. It's important to audit the accuracy of these payments on a regular basis as inaccurate reimbursement is becoming more commonplace. Auditing can also alert you to unwelcome trends by specific payers.
First, ensure that your third-party payer contracts are loaded in your revenue cycle software and are updated with changes as they are received from payers. This is paramount in detecting erroneous payments when they are posted as the payment poster has the contracted amount for comparison. To audit for posting errors, run a "contract compliance report" (or corresponding report in your software). This report compares payments to contracted reimbursement rates for each procedure by payer. It also shows the write-off amount for each payment. Reviewing this information allows you to determine the accuracy of the reimbursement and if the payment poster is catching errors and initiating necessary follow-up with payers.
The report should also display contractual adjustments (write-offs) made for each payment. Checking adjustment data can alert you to incorrect adjustments or adjustments that have not been made and are inflating your accounts receivable (A/R).
If your contracts are not loaded in the software or your software does not have the capability to run a similar report, create an insurance matrix (cheat sheet) showing your insurance contracts and their reimbursement rates for common procedure codes. Spot check each payer for reimbursement accuracy.
If errors are found, share the findings with your payment poster and discuss corrective actions to take. If necessary, contact your payer(s) to address negative reimbursement trends.
7. Third-Party Payer Collections
A/R is an asset for ASCs, meaning it is money that is owed to centers that they anticipate collecting. When A/R is not managed properly, it changes from an asset to bad debt. In collections, time is your enemy: The longer money remains in A/R, the less likely you are to successfully collect it. Experienced personnel are the key for good collections.
When measuring A/R, the goal is usually to pinpoint how long it takes third-party payers to reimburse the center. This information assists collectors in detecting non-payment trends and which payers are not abiding by prompt-payment rules. Some payer types affect the age and size of A/R adversely (e.g., workers' compensation, automobile accident, personal injury litigation). High patient balances can also negatively affect A/R. Note: The following information discusses only the effects that commercial (managed care) and government insurers have on a center's A/R.
To keep a finger on the pulse of your A/R, run an aging A/R report at least monthly to determine that the total dollar amount is not increasing in your older A/R (over 60 days) and hopefully the days in A/R are decreasing. If either of these key metrics are not where you would like to see them, there are several actions you can take that may help improve your collections.
Collectors should contact the payer 15-21 days after submission of an electronic claim to determine the status of payment. At that time, collectors should request the date of expected payment/resolution and record it in your software notes. They should also add a follow-up date to check the account to ensure that the carrier followed through on its promise. If the payer fails to meet the time commitment and/or processes the claim incorrectly, identify whether an appeal is indicated. If so, immediately initiate the appeal, providing appropriate supporting documentation.
Management should run an aging A/R report filtered to include commercial and government insurers. Analyze this data to determine the average amount of days it takes to resolve these accounts. According to national benchmarks for ASCs, this should be approximately 30 days. Sort this analysis by payer and then have collectors concentrate on oldest accounts with highest balances first, continuing down the list until all payers with open accounts are contacted.
Set achievable goals for collectors and audit the following key factors: 1) contacted an average of 30 accounts per day, 2) 100% of assigned accounts worked monthly, 3) averaged 10% reduction in accounts over 90 days old and 4) quality of notes on accounts (progress notes, notification notes). Measure percentage of claims still unpaid after 90 days. The recommend figure is less than 15% (the national benchmark is 12%).
Review your denial log to identify the reasons for any denials. Certain types of denials affect reimbursement turnaround time. There are some errors that can be addressed and corrected before they reach collectors (e.g. registration errors, coding errors, claim submission errors, payment posting errors). Audit and address these types of denials with appropriate staff, stressing the need for accuracy. Advise staff how their roles affect reimbursement.
Since a high percentage of managed care claims are not paid in a timely manner or are paid incorrectly, collections are a critical albeit sometimes daunting task. Don't expect payments to arrive by themselves. It will require constant effort to receive the money you are owed.
Understanding the Value of Revenue Cycle Auditing
Money that remains outstanding in A/R is an asset but is not revenue. You can't spend it or pay bills with it until it's in the bank. As previously noted, the older A/R gets, the more difficult it is to collect. The key to avoiding high days in A/R and achieving a consistent revenue stream is to continuously audit your financial performance. Auditing, as we noted a few times earlier, is vital for detecting revenue leaks.
Run the following reports to keep your finger on the financial pulse of your ASC:
Aging A/R — This report checks to ensure that the total dollar amount is not increasing and days in A/R are decreasing.
Summary aging report — This shows volume by financial class. It will allow you to assess specific trends in workers' compensation, Medicare, Medicaid, private payers and other payer types.
Summary aging report for private payers — This will allow you to assess trends by payer.
Summary aging report by physician — This will reveal case mix trends.
Physician utilization report — This will reveal decreases in case volume by physician.
Running these reports will highlight areas that need immediate attention. Share the results with the appropriate revenue cycle staff member(s) while offering suggestions as to how to address any problems.
It is important to regularly audit each area of the revenue cycle (insurance verification, patient financial counseling, claim submission, payment posting, collections) for accuracy and timeliness of performance. Also, it is advisable to contract with an outside professional coding audit company to review coding accuracy, optimization and compliance at least annually. Successful and reliable cash flow is only accomplished by consistent auditing.
Avoid Complacency, Maintain Success
Revenue leaks can occur in most areas of the revenue management cycle. The financial health of your ASC depends on persistent and thorough oversight. Don't wait until your cash flow alerts you to a possible problem. Monitor your revenue cycle closely and act the moment your performance starts to slip. Stopping revenue leaks shortly after or even before they occur is the best policy and awareness is the best remedy.