Revenue Recovery

The industry is in a huge state of flux, and we have our payer sources to thank for it. We now live in a world where we deal with competitive bidding and oxygen caps, and it seems like almost every day we are threatened with more. Medicare audits, further reduction in the cap months, accreditation requirements and other items that will either cut reimbursement or increase costs keep coming.

While all our eyes and attention are on Medicare, we also continue to get hammered by the other payer sources.

Medicaid cuts and changes are occurring across the country. In the quest to do more business with non-governmental payers, providers are tapping into commercial insurances. Along with the growing need for sleep therapy, for example, there is a growing patient base with commercial insurance. But this, too, is riddled with issues.

Many of these payers require providers to be contracted with them and limit how many they will allow in their networks. There is little or no negotiation power with their aggressively low reimbursement rates.

Then there is the final blow. What some may fail to realize is that commercial payers are further whittling away at providers’ bottom line through higher deductibles and copays. (HME providers who offer health care benefits to their employees understand this all too well.)

To keep insurance premiums down, cost-sharing is up for the patient. High-deductible health plans are a way of life for many, and as the burden shifts to patients, it also becomes a larger burden for their health care providers.

As a provider, you must now learn how to collect from the patient — and that is a whole different ball game.

The Devil Is in the Details

The time has come when you must pay attention to recovering all of your revenues, especially patient-owed receivables. Often, providers may ignore these for reasons like:

• “It’s just small dollar amounts.”
• “I don’t want to upset the referral source.”
• “I don’t have time to deal with it.”
• “I don’t have a problem. The elderly are conscientious about paying their bills.”

The fact is, most providers are shocked after taking an honest look when they realize how much money these receivables can represent.

The typical DME has at least 10 to 20 percent of its receivables tied up by patients, with over half of these amounts aged greater than 90 or 120 days. Frequently, the patient is the second- or third-largest payer category compared to all other payers. Yet many providers are only recovering 30 to 50 percent of this revenue, while others are collecting even less.

No provider can survive without taking this matter seriously since it is the difference between profits vs. loss.

Getting Started on the Fix

Now that the issue has been identified, how do you get started on correcting it? It is important to engage in an action plan that will prepare you for success.

The first step is to figure out how you are currently performing and what the impact of these results is. To do this, determine your patient revenue amount, patient payment/recovery amount, total patient accounts receivable and patient A/R greater than 90 days at the end of each month.

This can be a difficult task, since most software systems do not readily reflect how much revenue is generated each month through deductibles and copay amounts. Work with your software vendor and/or a consultant to determine what this amount is if you cannot determine the number.

Next, calculate your recovery percentages and days sales outstanding based on this information. Track and trend these figures each month to understand the impact.

Change your mindset about the mysterious world of patient revenue and accounts receivable. Do not treat patient A/R like insurance A/R. Although both require tenacious follow-through and negotiation skills, the processes are very different if you are going to be truly successful.

Your Credit and Collection Policy

Implement a thorough credit and collection policy that touches all stages of your standard processes in a way that will allow you to optimize your results and maintain quality in your other areas of service.

Your company’s credit and collection policy should guide everyone involved on what steps to take at all stages of the service cycle.

Improve the intake process by realizing what elements are important to gather. Much of the information you already obtain is necessary, like patient demographics, insurance information and alternate contacts, etc. The key is accuracy and verification of this information.

Without the correct insurance information, there is no possible way to determine patient responsibility. Implement or adjust insurance verification practices to assure all necessary information to make a valid determination. Also, make sure that proper communication to the patient takes place.

Although it is not always feasible, it is best to perform verification prior to the delivery of any services. If this cannot be done prior to delivery, do it immediately thereafter. The verification allows you to determine deductible amounts, copay percentages, whether the patient actually has the insurance, whether the insurance will cover the service and if there are in-/out-of-network ramifications.

All of this information allows you to give the patient an educated estimate of what he or she will owe you. Armed with this information, you must inform your patients of their financial responsibility. It is best to do this verbally and in writing prior to service or, if necessary, immediately after.

Many providers feel it is insensitive or awkward to discuss this payment at the beginning of the patient relationship. However, not addressing their responsibilities up front often leaves patients feeling like they have been duped or taken advantage of when slapped with a “surprise” bill months after the service.

It is not what you say, but how you say it, that will alleviate some of the tension associated with this communication. Create scripts for all staff who will discuss financial responsibility with your patients. Always document all conversations with patients and insurance companies as well.

Moving the Process Along

Development of payment terms and instituting progressive action procedures will allow you to predetermine how you will move the billing and collection cycle along.

Many software systems have limited options on how patient invoices and statements look. Typically such statements are not very easy for patients to understand. The education you provide to the patient up front will help, but it is also important to simplify the paper billing process.

Look for customization options with your software or create your own templates to convey important information, such as due dates and next steps.

Always provide the patient with a due date on all written correspondence. Avoid nebulous comments like “due upon receipt” or “due in 15 days” by including the actual date by which you need to receive payment. Fifteen-day terms are best.

Also include options that make it easy for the patient to pay you more quickly, such as advertising credit card options and providing a return envelope for payments.

You should determine when you will send past-due notices; what you will say on statements at the various aging brackets; at what age you will send these bills to collections; when and if you will consider suspending service; and, most important, at what stage you will pick up the phone and speak to the patient.

Talking to Your Patients

The most effective collection tool is the telephone. Not making phone calls is the provider’s greatest weakness. There are many reasons why this important step gets left out, but one of the most common is that appropriate focus and resources must be allocated.

Another pitfall is not knowing how to speak to patients about the payments you are due. Learning educative collection techniques is not only the key to success in recovering your revenues but also minimizes the risk of leaving your patients with a negative feeling.

Taking an educative approach in all communications with your patients allows them to understand how they became financially responsible: why they have a copay, how much their deductible is, why their insurance does not cover the item, what resources are available if they say they cannot afford to pay.

Treat patients with dignity and respect when speaking with them. Be careful of voice tones during these discussions. Ask a lot of open-ended questions in order to avoid “yes” or “no” responses. Learn to get to the root of why they are not paying.

Create a list of common patient rebuttals about why they are not paying, then devise sample scripts of how to address each of those situations. Identifying contradictions in what the patient is telling you can be an indication of which patients can or cannot afford to pay.

Alert patients to their options (payment plans, methods of payment, etc.) and what steps will occur — per your credit and collection policy — if resolution cannot be made. Remember that follow-up is critical. Lack of follow-through illustrates to the patient that you are not taking the matter seriously, so why should they? Consistent, persistent, courteous, helpful follow-up can be a big factor in your success.

Keep in mind that not just anyone can perform these steps in speaking to your patients effectively. Put the right people in place who can perform these functions. Sometimes employees who do a great job on insurance collections crumble when it comes to patient collections.

Look for individuals who are patient, not frustrated easily and tenacious. Provide tools and training that allow them to handle the variety of situations that may occur. These people must also be able to produce a high volume of calls.

If you do not have capable or enough staff, do not put a square peg in a round hole. Find the right individual(s) to do the job, or consider outsourcing options.

Pay Attention to All Receivables

Times have changed, and providers must evolve many processes for survival. Paying attention to all receivables is necessary. Simply ignoring patient revenues and receivables is a thing of the past.

Invest the time that is necessary to develop your polices and procedures in this area. Train your staff to bring those additional dollars to your bottom line while preserving your focus on customer service.

Specializing in HME and reimbursement solutions for companies nationwide, Lisa Bargmann is president and CEO of Bargmann Management LLC and Homecare Collection Service, a turnkey patient-owed receivable management service. She can be contacted by e-mail at [email protected], by phone at 330/645-8200 or through www.homecarecollection.com.

Lisa Cusick is corporate manager of training and education with Bargmann Management. She specializes in consulting services that revolve around reimbursement, system optimization and software conversion and training services. She can be contacted by e-mail at [email protected], by phone at 330/645-8200 or through www.homecarecollection.com.

Your Action Plan for Recovering Patient Receivables

• Determine your patient A/R results.
• Do not treat patient A/R like insurance A/R.
• Implement a credit and collection policy.
• Improve the intake process.
• Adjust insurance verification practices.
• Inform the patient of financial responsibility.
• Develop payment terms.
• Institute progressive action procedures.
• Learn educative collection techniques.
• Put the right people in place.