Managing Your Accounts Receivable
Larry Todd, CPA
Director Revenue Cycle Management (RCM)
Netsmart
Managing Your Accounts Receivable
As organizations continue to manage the changes
associated with Medicaid and utilization of the new
healthcare exchanges, it will be imperative that each
organization have the necessary tools to manage their
receivables.
This session will outline tools needed and their value.
Today’s Topic – Accounts Receivable Tools
• Tools
•
•
•
•
•
•
•
Self-Pay – Obamacare
Third Party Follow Up
Payment Posting
Claims Statistics
Denial Management
Contract Management
Key Performance Indicators
It’s critical to effectively manage your Revenue Cycle processes
from Registration to Clinical to a Zero Balance Account
The collaboration and cooperation of all areas is an integral component
to the success of accounts receivable management. Although, there are
unexpected barriers that can impact the AR collection period, it is the
role of leadership to identify and adjust for these barriers for the success
of the organization.
Accounts Receivable
Schedule/Registration
Billing and Collection
Clinical/Charging/Coding
CHARGE
CAPTURE
CHARGE
DESCRIPTION
MASTER
EHR
CHARGE
ENTRY
CLINICAL
CARE
CODING
CLAIMS
SUBMISSION
SELF PAY
THIRD PARTY
FOLLOW-UP
POS CASH
COLLECTIONS
BILLING AND COLLECTIONS
REGISTRATION
FINANCIAL
COUNSELING
INSURANCE
VERIFICATION
&
AUTHORIZATION
SCHEDULING
&
PRE-REGISTRATION
Accounts Receivable
PAYMENT
POSTING
DENIAL
MANAGEMENT
CONTRACT
MANAGEMENT
Self Pay – with Obamacare
Eligibility
True
Upfront
Collections
Self-Pay
Obamacare
Balance
after
Insurance
Financial
Counseling
Statements
Claims Statistics
Only 70% of claims are
paid the first time
they’re submitted,
according to research
by the Centers for
Medicare and Medicaid
Services (CMS).
The other 30% of claims
are either denied (20%)
or lost or ignored
(10%). And of those
claims, 60% of them are
never resubmitted to
payers. That means
facilities/practices
never collect on a full
18% of claims.
So if you add a 7%
underpayment to the
18% of claims that
aren’t paid at all, that
means facilities/
practices are failing to
collect, on average, at
least 25% of the money
they’ve deserve.
The Medical Group
Management
Association (MGMA)
estimates that payers
underpay practices in
the U.S. by an average
of 7% - 11%.
Third Party Follow Up
TRAINED STAFF
TOOLS
FOLLOW UP
Payment Posting
Payment Timeline for Electronic Clean Claims
Provider
0 (In-house) 5
6
7
Discharge
to Bill
Transmission
Days to
Adjudicate
Days in
Adjudication
Payer
Payment
Processing
EOB
Transmission
0
1
3
6
Clearinghouse(s)
Edits &
Transmission
Payer
Payer
Receives
Claim
9
Payer
Authorizes
Payment
12
Provider
Receives
Payment
14
17-23 Days
Provider
Payment
Posting
Days
• It is currently estimated that only 15-25% of all claims are electronically submitted and autoadjudicated without manual intervention by either providers or payers
• The best case claim includes all of the information necessary for the payer to finalize the
claim the first time it is processed (Clean Claim)
• Transactions often go between paper to electronic and back to paper depending on variables
in the process
• The technology exists to process all claims electronically
• Variables in payer and provider processes greatly influence these turnaround times
Denial Management
• Catch potential denials before the claims are
submitted to payers so that more claims are paid on
first submission
• Standardized denial types – Develop a system that
categorize denials based on their types:
o
o
o
o
o
o
Justification of services
Enrollment
Authorization
Credentialing
Coverage
Others
Denial Crosswalk
Eligibility
Electronic
Postings
Manual Cash
Postings
Payer
Correspondence
D
e
n
i
a
l
C
r
o
s
s
w
a
l
k
D
e
n
i
a
l
D
a
t
a
b
a
s
e
Claims Submission
Status
Referrals/Authorization
&
Miscellaneous
Denial Management – Example
Eligibility related:
30-40%
Claim Submission/Status related: 25-35%
Referrals/Authorizations related:
Miscellaneous:
20-30%
5-15%
Miscellaneous
Eligibility
Referrals/Authorizations
• Authorization conflict
Claims Submission/Status
•
•
•
•
Duplicate claim filing
Passed timely filing deadline
Incomplete billing attachments
Coding Error
• Invalid payer address/name
• Other insurance is primary
• Subscriber not on file/
invalid member #
• Information needed from
Patient
• Insurance not in effect at
time of service
Reason Code by Payers – Eligibility
ZERO PAY DENIALS - STATUS 4, NO PAY 835 EFT
INSURANCE
VOLUME
835 CODE
Plan A
104
Plan B
9
Plan C
57
Plan D
30
PR 32-Our Records indicate
dependent not eligible
Plan E
3
PR 179-Payment adjusted
Plan F
5
Plan G
1
835 TABLE TRANSLATION
CODE V.1
PR 27-Expenses incurred after Expenses incurred after coverage
Mem Cov Term
coverage
terminated
OA 26-Expense incurred prior to
Mem Cov Term
coverage
Expenses incurred prior to coverage
Patient has not met the required eligibliliy
PR 177-Payment denied
Mem Cov Term
requirements
PR 26- Expense incurred prior
to coverage
CR 27- Expense incurred after
Termination of coverage
Our records indicate that this dependent Mem Cov Term
is not an eligiblie dependent as defined
Patient has not met the required waiting
Mem Cov Term
requirements
Expenses incurred prior to coverage
Expense incurred after coverage
terminated
Mem Cov Term
Mem Cov Term
Contract Management
• Collecting the full amount per contract
• Complexity of all the contracts signed
• Organization is reimbursed different amounts due to the individual
contracts with each payer - For example:
o Three different patients could come in for same service
o Different contracts from: Blue Cross, Aetna, & United
• Key element to look at is contractual adjustment
Contract Management
How do you manage this process?
Contract
Management
System
• 837- Claims Files
• 835 – Payment Files & Manual Postings
• Variances Queues
Host System
Software
• Fee Schedule (Net Down AR)
• 835 Posting
• Variances Reports
Manual
Review
• Compare Payments to Contract Terms
• Historical Review
• Create manual variance list
Key Performance Indicators (KPI)
• First and foremost, make sure that you have accurate,
timely, and credible data
• Gathering data needs to be organized
• Benchmark key performance indicators and goals
• Use this information to improve processes
• When a negative or positive increase in key performance
indicators occurs, do a sampling and look for trends
Key Performance Indicators (KPI)
• Access
o Scheduling/Registration
o Eligibility
• Patient Financial Services
o Cash
o Bad Debt & Charity
o Denials & Underpayments
o Accounts Receivable
o Billing
Access – KPI
REVENUE CYCLE KEY PERFORMACE INDICATORS (KPI)
REVENUE CYCLE
INDICATORS
Desired Trend
Units
Pre-Metric/Date Annual Target
Current
Year To Date
Definitions/ Calculations
PATIENT ACCESS
Scheduling/Registration
% Registration
Accuracy
k
%
>98%
Number of Completely Accurate Registrations/Total
Number of Registrations
Pre-Registration % Prior
to Arrival
k
%
90%
Number of Pre-registrations Completed Prior to
Arrival/Total Number of Pre-Reg's that Should be
Completed
Point of Service (POS)
Collections Per Month
k
$
>250K
Point of Service (POS) Collections Per Month
Eligibility
% of Self Pay Account
that received Financial
Counseling
k
%
100%
Number of Patients Receiving Financial Counseling/Total
Number of Patients Presenting as Self Pay
% of Completed
Medicaid Applications
k
%
100%
Number of Patients with Completed Medicaid
Applications/Total Number of Patients Potentially
Meeting Eligibility
% of Medicaid Pending
Accounts Converted to
Medicaid
k
%
80%
Number of Medicaid Pending Accounts Converted to
Medicaid/Total Number of Medicaid Applications
% of Payment
Arrangements Made with
Patients Unable to Pay
Balance Owed in Full
k
%
100%
Number of Accounts with Payment Arrangements
Made/Total Number of Patients Unable to Pay Balance
Owed in Full at Time of Service
Patient Financial Services – KPI
REVENUE CYCLE KEY PERFORMACE INDICATORS (KPI)
REVENUE CYCLE
INDICATORS
Desired
Trend
Units
PreMetric/Date
Annual
Target
Current
Year To Date
Definitions/ Calculations
PATIENT FINANCIAL SERVICES
Cash
Cash as % of Prior 60
Days Adjusted Net
Patient Revenue
k
%
>98%
Current Month Cash Collections/Prior 60 Days
Adjusted Net Patient Revenue
Cash as % of Current
Month Adjusted Net
Patient Revenue
k
%
>98%
Current Month Cash Collections/Current Month
Adjusted Net Patient Revenue
Point of Service
(POS) Collections as
% of Current Month
Net Patient Revenue
k
%
>4%
Current Month POS Cash Collections/Current
Month Net Patient Revenue
Bad Debt & Charity
Bad Debt as % of
Gross Patient
Revenue
m
%
<2%
Bad Debt from Income Statement/Gross Patient
Revenue
Bad Debt as % of Net
Patient Revenue
m
%
<4%
Bad Debt from Income Statement/Net Patient
Revenue
Denials & Underpayments
Denials as % of Net
Patient Revenue
m
%
2%
Denial $ / Net Patient Revenue, where denials
include both technical and clinical
Denial Overturn Ratio
k
%
>95%
Denials Overturned/Total Denials Received
Underpayments
Overturn Ratio
k
%
>95%
Underpayments Overturned/Total Underpayments
Identified
Patient Financial Services – KPI
REVENUE CYCLE KEY PERFORMACE INDICATORS (KPI)
REVENUE CYCLE
INDICATORS
Desired
Trend
Units
PreMetric/Date
Annual
Target
Current
Year To Date
Definitions/ Calculations
PATIENT FINANCIAL SERVICES
Accounts Receivable
Gross A/R Days
m
Days
<50
Gross Patient A/R / Three Months' Average Daily
Gross Patient Revenue
m
Days
<55
Net Patient A/R / Three Months' Average Daily Net
Patient Revenue based on Financial Statements
m
%
<20%
Billed A/R > 90 days old/Total Billed A/R
m
%
<15%
Billed Medicare A/R > 90 days old/Total Billed
Medicare A/R
m
Days
<1
Credit Balances/Three Months' Average Daily
Gross Patient Revenue
Net A/R Days
% of Total Billed A/R
> 90 days
% of Total Medicaid
Billed A/R > 60 days
Credit Balance
Account days
Billing
Clean Claim
Validation % Rate
k
%
>80%
Claims Passing without Intervention/Total Number
of Claims
Days Claims on Hold
for Edits
m
Days
<1
Average Number of Days Edited Claims on Hold
for Corrections
Results from Managing Your Receivables
Pillars
Decrease of
in Opportunity
Decrease in AR
Denials
Days
Increase in
Cash
Collections
Improved Net
Revenue
Please share your questions now!
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