The threat of rising interest rates in the banking industry came to fruition in November 2016. If your ASC has not taken advantage of refinancing its debt at a lower rate, your days to do so may be numbered. Unfortunately, if the refinancing of your outstanding notes also includes a change in bank relationships, significant forethought is required to ensure the process does not negatively impact your business operations.
It is best to use a team approach to manage this process. Team members could include administration, revenue cycle management, managed care, accounting, accounts payable, materials management, and human resources. The process may take several months to manage safely and effectively, so plan accordingly.
First, have your team identify all aspects of your business that changing banks will impact. Here are some areas to consider:
Accounting, Accounts Payable, & Materials Management
- Transfer of deposits between accounts and/or lockbox
- Current bank credit card
- New bank credit card
- Automatic lease payments
- Online banking fees
- Automatic vendor payments
Human Resources
- Payroll
- 401(k) withdrawals
- HSA withdrawals
- Automatic employee benefit provider payments
Revenue Cycle & Managed Care
- Electronic fund transfer (EFT) payments
- Lockbox
- Online bill pay
- Merchant services accounts
Next, delegate responsibilities to team members for each aspect of your business. Responsibility and delineation of duties may look something like this:
Administration
Administration may be the best department in your organization to oversee the process. Arrange bi-weekly calls with all stakeholders to enhance communication. Have an agenda with specific items to accomplish before the next meeting to maintain project organization and oversight. Prepare owners for potential disruption in cash flow. Discuss precautions, such as keeping extra cash on hand, to proactively manage worst case scenarios.
Managed Care
Coordinate a strategy with revenue cycle management to communicate with payers about the change in payment remittance. It may not be in your best interest to notify all payers at once that you have changed banks. Stagger payer notifications. When funds begin to flow through the new account from a given payer, proceed with notifying the next payer.
In advance of changing banks, and based on the schedule developed in conjunction with revenue cycle management, begin notifying key commercial payers via email the ASC’s plan to change the lockbox or EFT address. Provide the following information based on the contract requirements:
- The old remittance address
- The new remittance address
- The effective date of change – build in a 10-14 day delay between the notice and effective date
- An updated W-9
- Submit all information on your ASC’s letterhead as an attachment to your email notification
After you have received confirmation from each commercial payer that the new lockbox or EFT address has been loaded into their system, ask your revenue cycle management team to recommence billing. At that time, you can begin dropping claims reflecting the new remittance address.
Revenue Cycle Management
Work with your managed care representative to develop a schedule for notifying payers of the change in bank. Once you gain user access to the new bank account, confirm it meets your needs to perform associated collections activities.
If using a lockbox, determine the size required. Obtain the new lockbox address. Complete the lockbox application form, selecting documentation delivery and storage options that meet your needs. Then, complete the automated clearing house (ACH) transfer form with your facility’s online payment vendor.
Once you receive the new lockbox address:
- Update the lockbox address in your patient accounting system.
- Change the lockbox address on your electronic and/or paper statements.
- Complete a forwarding order with the US Postal Service to the new lockbox address.
- Obtain a copy of a voided check required to complete many EFT change forms.
- Review current EFT payers and timing (effective date) of EFT changes.
- Complete third-party payer applications online and via paper.
- Monitor both accounts to confirm when EFT changes become active in the new account.
- For payers who are not delivering payments via EFT direct deposit, complete a W-9 form and send to them with a request to correct your remittance address in their system.
- Monitor both accounts to confirm EFTs, credit card deposits, and all other payments are moving from the old account into the new account.
- Ensure lockbox activity at the previous bank ceases.
- Apply for a merchant account with your new bank. Review your merchant account contract to determine how to terminate merchant services at your old bank. Then, terminate services with the old bank to ensure credit card payments are deposited in your new account.
Human Resources
Have human resources determine which employee benefits are directly linked to your current bank account. Armed with this information, schedule transfer of funds to your new account. The list may include, but not be limited to, payroll disbursements, 401(k) contributions, medical/dental/vision insurance premiums, health savings and flexible spending account transactions.
Accounting, Accounts Payable & Materials Management
Accounts payable and materials management must collaborate with accounting and administration to verify bills are paid from the proper account and the account has sufficient funds. Ensure autopay accounts are updated to reflect the new bank account information. If a bank credit card is in use at the facility, coordinate a schedule for terminating the old card and activating the new card.
Keep in mind your old bank account will likely remain open for six months or longer while all required transfers take place. Bank fees will continue to be charged until the account is closed. However, following the process outlined above will assist you in timely closure of the old account and reduction in associated bank fees.
There are many reasons your ASC may find itself in a position to change bank accounts. Managing the process for your center with forethought will not only reduce disruption to stakeholders but ensure the advantages of doing so are clear to everyone.
Pinnacle III Leadership Team
