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Revenue Cycle Management

Feb 02
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Benefits Approval

Benefits Approval in ASCs: Pre-Authorization & Pre-Determination Vastly Differ

By Revenue Cycle Management No Comments

Understanding the difference between pre-authorization and pre-determination of patient benefits is valuable knowledge for ASC front office personnel to possess.  These distinct approval processes are easy to confuse, leading to improper documentation prior to patients receiving health care services.  As a result, claims for services performed get delayed or, worse, outright denied.  Understanding the definitions of these approval processes allows ASC personnel to accurately determine the proper course of action prior to commencing patient care. 

Pre-Authorization

Pre-authorization is a required process.  It determines a patient’s benefits coverage and secures authorization and/or approval from a payor for a proposed procedure before the patient receives the desired care.  

Pre-authorization does not guarantee reimbursement of the services that will be performed.  However, it provides important information regarding a patient’s unique benefits including their eligibility status and potential out-of-pocket expenses.  Not obtaining authorization prior to rendering treatment could result in non-reimbursement by the payor.  

Once authorization is complete, an authorization number is issued.  Adding the authorization number to the claim upon submission is a vital step to avoid unnecessary denials.  In circumstances where a claim is denied based upon lack of medical necessity, having an authorization number bolsters the contents of a provider’s appeal letter.

Pre-Determination

Pre-determination is a process that allows a provider to seek approval from the insurer for proposed services or treatment based upon medical necessity.  It is recommended when the planned procedure is considered experimental, investigational, or cosmetic.  Consult your carrier’s medical policies to identify services that fall into these categories.  It is also wise to obtain pre-determination forms (or letter requirements) from specific carriers to ensure you properly submit the information required to conduct their review. 

The insurer’s medical staff evaluate the pre-determination request against the carrier’s medical policies to determine whether the proposed procedure should be approved or denied.  Approvals and denials, in the form of a letter, are sent to the patient and health care provider(s).  This letter should be on hand prior to rendering services to the patient.  The process can take several weeks to complete.  Pre-determination approvals are not a substitute for the eligibility and verification of benefits process. 

Conclusion

Each payor’s prior approval process is different.  It is important to know the managed care provider’s policies as well as the medical procedures which require prior action.  Understanding the subtle differences in these approval processes helps your facility avoid costly errors on front-end documentation. Remember, it is never as simple as calling the insurer and being told, “no authorization is required.”  Conduct due diligence.  It is very likely the approval of a patient’s procedure falls under one of these two categories.    

Carol Ciluffo – Vice President of Revenue Cycle Management 

Dec 22
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Billing Solutions

Billing Solutions: Forensic Collections – Lost Revenue Found

By Revenue Cycle Management No Comments

If you suspect your existing billing solutions service or internal business office isn’t managing your accounts receivable well, you are likely concerned about uncollected revenue.  Perhaps you recognize that acting quickly may allow your facility to recover lost income.

To obtain the objective data you need to make an informed decision about next steps, enter forensic collections mode.  Your goal?  Leave no stone unturned.

During your search for this potential uncollected revenue, include these activities:

  • Analyze the A/R and payor mix. Look for sizable changes or significant swings in outstanding balances.  Ensure you thoroughly examine patient balances.
  • Investigate write-offs including bad debt adjustments. Are the write-offs consistent with the reimbursement terms outlined in your payor contracts?
  • Examine billed charges. Review payors being billed.  Are your secondary payors being billed after the primary payors have paid?
  • Inspect implant billing and reimbursement. Compare the results to your contracts.  If separate reimbursement is allowed for implants, are you billing them accurately and receiving full payment?
  • Determine when the last fee schedule increase occurred. Are your billed charges keeping pace with your contractual reimbursement?

Here are a few examples of what my team and I have discovered while in forensic collections mode.

  • Our analysis of workers’ compensation claims revealed payments equaled 100% of billed charges. This rarely happens which lead us to dig deeper.  We compared the state’s work comp fee schedule to the facility’s charge master.  The state’s fee schedule was much higher than the facility’s charge master which hadn’t been updated since 2006.  We promptly notified the payors (per their contract requirements) that an increase to the facility’s fee schedule was scheduled to take place in 30 days.  Consequently, the facility realized an immediate increase in work comp revenue.
  • A review of Medicare claims revealed when a secondary insurance was active but not being billed. We queued up all claims within timely filing and billed them to the secondary payors.  The results were an increase in payments to the facility, a decrease in bad debt, and correction of balances erroneously being transferred to patient responsibility.
  • We reviewed ortho cases where implants were being used. Our analysis revealed the facility never billed for implants.  We discovered facility personnel knew their contracts allowed for implant reimbursement when claims were filed with supporting documentation.  However, they were unable to obtain implant invoices from their hospital partner thwarting their efforts to pursue payments on implants.
  • A review of patient balances revealed patients had not received statements in more than seven months.
  • In our review of claims denials, we discovered claims were never appealed. Payor payments were merely accepted.  The balances between the billed charges and the allowed charges were written off without first confirming their accuracy with the contract terms.
  • When changing patient accounting systems, a facility turned their entire A/R over to a collection agency. If they had opted to work that A/R themselves, hundreds of thousands of dollars could have been easily collected.
  • Facility contracts were not loaded into the patient accounting system. With each passing year, contracts and fee schedules changed but the cash poster’s memory did not.  Explanation of benefits (EOBs) were not compared to contracts.  Amounts received were accepted, correct or not.  Remaining balances were written off.  Credit balances were never refunded.

The examples go on and on.  It doesn’t have to be this way.  Audit early and often.  Be willing to dig a little to uncover potential problems and fix them.  When you do, your reward is a nice increase in your net revenue per case and happier investors!

Carol Ciluffo – Vice President of Revenue Cycle Management

Nov 29
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ASC Revenue Sources

Put the “Revenue” in Revenue Cycle Management from Your Most Important Source: Your Patients

By Revenue Cycle Management No Comments

Patients are quickly becoming the top revenue source in ASCs which presents unique challenges.  The days of “send me a bill” or “let’s bill your insurance and see what they pay” are long gone – at least they should be if you expect a steady flow on your revenue stream.

With the growth in high deductible health plans, your facility needs to develop and maintain a strong up-front collections strategy.   A patient’s out-of-pocket costs for their portion of a health care procedure can easily exceed their monthly mortgage payment.  An unforeseen medical procedure can place a significant burden on them.    

Although the situation can seem dire, all hope is not lost!  There are several things ASC personnel can do to proactively position your facility to collect the allowed reimbursement – from insurance carriers and patients.

Let’s start with insurance reimbursement.  When scheduling a patient for a procedure, ideally ASCs should:

  • Be in-network with the insurance carrier. If operating in an out-of-network situation, confirm out-of-network benefits are available to cover the planned procedure(s).
  • Confirm the scheduled procedure is allowed by the patient’s plan.
  • Verify the patient’s plan eligibility and benefits.
  • Obtain prior authorization, if required, for the procedure and implants.

Tools available to assist you with gathering patient specific information include payor web portals and eligibility information through EDI clearinghouses or patient accounting software. 

Using these invaluable tools enhances efficiency in the authorization process.  Take the information you confidently rely on and create your own tools to summarize your unique insurance contract details to serve as easy references for ASC personnel.

Employ features in your patient accounting system to alert facility personnel to nuances that are likely to be encountered.  For example:

  • Enter your fee schedules or grouper rates. Ensure this information is updated when your contracts change or renew.
  • Create reminder pop-up notes to alert schedulers to the need to secure authorizations for specific CPT procedure codes. If this feature is not a component of your current software system, establish your own list of CPT codes requiring authorization and sort it by payor.

Front desk personnel need to be able to calculate a logical estimate of patient financial responsibility and convey that information in understandable terms to their customers.  Information obtained during verification and authorization is necessary to accurately calculate patient estimates.  Identify the following patient specific details:

  • Their annual deductible and how much is remaining to be paid,
  • Their co-payment and/or co-insurance responsibility,
  • Their out-of-pocket maximums, if those limits have been met, and
  • Their in- and out-of-network benefits.

After you’ve collected patient specific details, determine what coverage is available based on your facility’s contract with the payor.  Begin by determining if the procedure scheduled to be performed is allowed in the ASC setting.  Then document the following:

  • Allowable amounts for each procedure code,
  • Multiple procedure limits and/or reimbursement reduction parameters,
  • Case rate caps,
  • Methodology for pricing and reimbursement of implants,
  • Carve-out rates, and
  • Other pertinent contract details.

Don’t overlook the information contained in payors’ newsletters.  This is where they outline policy and reimbursement changes, pre-certification requirements, packaged coding lists, annual fee schedule and grouper updates, etc. 

You should now have the information required to create a useful financial responsibility estimate for the patient.  Review your estimate in detail with the patient prior to the procedure.  Avoid assuming your patient knows the amount of their outstanding deductible or how much they will owe.  Be sure to reinforce that, although you have provided them with the most accurate estimate possible, they are responsible for any amount their insurance doesn’t cover.  Make sure to answer all their questions to the best of your ability and obtain their signature on your financial responsibility policy.

Once the financial responsibility estimate has been reviewed with your patient, it’s time to collect their payment.  Patients are more likely to remit payment at the time of service.  Once they’ve left your ASC, the chances of collecting from them are significantly reduced.  Try to avoid asking, “How much can you pay?”  Instead inquire, “How will you pay for your portion today?”  Improve your ability to collect payment by offering a variety of payment options – cash, HSA or FSA debit cards, credit cards, or automatic bank transfers.  If the patient is unable to submit payment at time of service, consider offering them a low interest health care loan or short-term payment plan.  It is in your ASC’s best interest to only do so, however, if upfront collection options have been exhausted.

If you must offer a payment plan option, have a solid policy in place and adhere to the defined parameters.  Your payment plans should be straightforward and manageable.  Remember to obtain the patient’s signature on the payment plan agreement, then follow the outlined terms.

Review your facility’s upfront collections processes, tighten them up, coach your staff, and work with your patients to create clarity regarding their financial obligations.  Doing this will ensure you maximize collections from your ASC’s top revenue source – your patients.

Carol Ciluffo – Vice President of Revenue Cycle Management

Oct 28
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Audit

To Audit or Not to Audit – That is the Question

By Revenue Cycle Management No Comments

Uncover the black holes in your revenue cycle management processes that impact your ASC’s bottom line.

Do you know what you don’t know?  Many revenue cycle management companies assess their services based on key performance indicators (KPIs).  Accounts receivable (AR) days, collections, bad debt, net revenue per case, days to bill, and days to pay are usually at the top of the KPI list.  While KPIs can provide you with a high level view of what is happening with your business, other seemingly minor items can result in uncollected revenue that may go undetected.  This is why auditing is crucial.

Auditing is a time consuming, daunting task.  Those being audited may feel it is punitive.  However, this necessary evil reveals a lot about the efficiency of your revenue cycle management processes.  Let’s look at the bright side of what you can discover while auditing and how your findings can result in process improvement that typically increases your bottom line.

There are many areas to audit – patient registration, coding, charge entry, denied claims, AR follow-up, and collections to name a few.  Routinely and randomly auditing your internal processes allows you to identify gaps that need to be closed, provide additional employee education when needed, ensure your payors correctly load your contracts in their systems, tighten your patient collections process, and so many more.  Let’s look at some of these in more detail.

Registration Audits

Accurate patient registration is the first step to a clean claim.  Routine auditing of registration errors will shed light on struggles being faced at your front desk.  Medicare Advantage Plans routinely trip up front desk personnel who may register the insurance carrier as Aetna rather than Aetna Medicare.  A key point to share with your front desk team is to consider the age of the patient to determine if he or she is a candidate for Medicare coverage.  Also, spend some time looking at copies of insurance cards with your front desk.  Create a notebook of insurance card samples and review them routinely, highlighting areas on the cards that will lead to proper insurance registration.

Another common registration error is registering a young child as the policy holder.  If the patient is not the policy holder, the date of birth of the policy holder will be required to file a clean claim.

Finally, ensure your front desk is taking advantage of online payor tools to verify eligibility and benefits, file requests for authorization, and determine the remaining deductible on each patient’s plan.

Coding Audits

Internal and external coding audits are an essential undertaking.  External audits supply an additional level of compliance and accountability for your coding services.  The external audit results can support internal audit findings or identify areas needing focus that your internal audits may have overlooked.  An external auditor can provide a non-biased, objective audit for you.  Internal audits provide a benchmark to compare to your external audits.  They also help you recognize when additional coder and/or physician education is needed to maintain compliance or secure proper reimbursement.

In your endeavor to obtain maximum allowed reimbursement, ask yourself the following questions.  Are you capturing all available procedures and billing them properly?  Are special modifiers required by individual payors recorded accurately?  Do your diagnosis codes reflect the greatest level of specificity?

Cash Posting Audits

Cash posting audits serve many purposes.  The accuracy of cash posting determines the need for the following:

  • Appeals on underpaid claims
  • Fee schedule increases
  • Payor contract updates in your patient accounting system
  • Additional education to employees on payor contracts and terms
  • Patient statement accuracy
  • Proper journal coding of adjustments
  • Timely credit balance reconciliation
  • Additional education to employees based on your audit findings

Denial Audits

Auditing your denials can be telling.  Are your employees filing timely appeals?  Timely filing requirements, similar to those applied to claims submission, also come into play with appeals.  Do your employees know what they are appealing and why?  If they don’t, unnecessary time is spent appealing denials that will not be successfully overturned.  Some examples are:

  • Filing an appeal on a code bundled into another procedure
  • Filing an appeal on a code that required a pre-authorization which was not obtained
  • Filing an appeal for medical necessity without reviewing the payor’s coverage policy of the procedure
  • Filing an appeal outside the timely filing limits set on the appeal
  • Filing an appeal of an implant payment when separate payment for implants is not allowed per the payor contract

Final Notes

Getting everyone involved in process improvement fosters buy-in and improves your chances of successfully tackling specific issues; but you can’t stop there.  You have to conduct routine audits to make sure old processes or bad habits don’t resurface.

Your time is valuable – make it count!  Determine where your pain points are and begin auditing there.  Share audit results with your employees.  Resolve the issues.  Celebrate the successes and the failures.  Those “failures” lead to correction of issues and improved processes.  Your efforts will pay off in reduced errors and, ultimately, enhance your bottom line.

By Carol Ciluffo – Vice President of Revenue Cycle Management

Oct 04
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Implant and Supply Reimbursement

Implant and Supply Reimbursement Blunders Nearly Every ASC Commits

By Revenue Cycle Management No Comments

Obtaining reimbursement for implants and supplies represents something akin to successfully navigating a minefield.  You know the lay of the land and presume the payors you hold insurance contracts with do too.  After all, you both possess the same road map – your ASC contract which clearly (ahem!) outlines the reimbursement you’ll receive.  However, when you receive a denial from the carrier for the billable implant or supply, you quickly recognize your interpretations of the contractual terms differ.

While there are distinct differences between an implant and a supply, these terms are often used interchangeably which can lead to significant confusion – even within your ASC.   So, let’s start with some definitions.

Medical supplies refer to the non-durable disposable materials necessary to perform or deliver a health care service in a single episode of care.  These supplies can also be referred to as consumable medical supplies.

Medical supplies:

  • are disposable in nature
  • cannot be used by more than one individual
  • are primarily and customarily used to serve a medical purpose
  • are generally not useful to a person in the absence of an illness or injury
  • are items such as gloves, gauze, dressings, needles, syringes, saline, surgical trays, bandages, skin preps, and other supplies needed during the course of a procedure
  • are typically inclusive to procedure reimbursement and are not separately payable

Most health insurance plans contain exclusions for consumable medical supplies.  Typically, you will not be reimbursed for these products because they are considered integral to the procedure itself.  They are an assumed cost of the surgery.

A medical implant on the other hand, is classified as a medical device manufactured to replace a missing biological structure, support a damaged biological structure, or enhance an existing biological structure. Examples of implants are pins, rods, screws, plates, surgical mesh, ocular lenses, prosthesis, etc.  Many payors define a medical implant as a device or item that remains in the body for six months or more.

Medical implants differ from medical transplants in that they are man-made devices.  Transplants are composed of biomedical tissue. Examples of transplants are allografts, autografts, tendons (musculoskeletal grafts), or corneas.

These differences in definitions may affect your ASC billing reimbursements.

As you know, implants and supplies are expensive and the cost can vary widely from vendor to vendor.  If your employees do not understand which category these items (i.e., implant or supply) fall into, your facility could leave a significant amount of money on the table.

How do you know if you should be billing for an implant or a supply? Start with understanding what each payor contract considers allowable. Most plans contain exclusions for consumable medical supplies although there are some cases where a supply is allowable. A temporary pain pump – a short term drug delivery system for post-operative pain relief – is a great example. 

The Healthcare Common Procedure Coding System (HCPCS) classifies a post-operative pain pump under the “medical and surgical supplies” category. However, because this “supply” delivers an enhancement above and beyond the normal scope of the standard procedure – it may be considered billable by some payors. To secure reimbursement, the item should be mentioned separately in the surgeon’s operative (op) report. 

The op report can also provide clues to other items used in a procedure that might be eligible for billing and reimbursement.  For example, some medications purchased by the facility, such as Botox which is used in occipital injections for migraine headaches, may be reimbursed separately from the procedure when billed properly.  Your coders should be looking for these items in op report narratives and billing for them when applicable.

In large part due to technological advances, implant intensive procedures which were historically confined to inpatient settings are now being allowed in the outpatient ASC setting.  This means outpatient facilities should know when and how to bill for them.  Implants are not cheap and, if left unbilled, could result in a significant amount of lost revenue to the facility.

To ensure you are billing appropriately for implants and supplies that are atypical to a standard procedure:

  1. Audit preference cards to identify supplies normally used in different types of procedures.
  2. Determine which supplies and implants used during a procedure could be viewed as atypical.
  3. Involve your materials management staff in the process – they have specific knowledge of items being ordered for your center. Research these items and assess if they might be billable.  If so, ensure the supply is added to the case implant log and inform your coding and billing team so the proper HCPCS code can be assigned and billed.
  4. If all goes well, you efforts will be rewarded with money in the bank!

To illustrate, let’s say your ASC used temporary pain pumps (a supply) 25 times in the first quarter of the year to provide non-narcotic post-operative pain relief to patients reducing their use of opioids during their recovery process.  The invoice cost of this supply, ordered in a pack of five, is $275 per pump.  If your contracts allow cost plus 10% reimbursement on implants and supplies, your reimbursement would be $302.50 per case.  If reimbursement was allowed on every case, your facility would receive $7,562.50 in reimbursement for those temporary pain pumps alone!

Is this a time consuming project? Yes. However, the rewards far outweigh the initial time investment.  Make sure your ASC is getting the money it deserves for its procedures. Your hard work will pay off in the end.

By Carol Ciluffo – Vice President of Revenue Cycle Management

Aug 29
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Authorization Requirements

If I Obtained Authorization for the Surgical Procedure per Payor Requirements, Why Aren’t They Covering the Implant Costs?

By Revenue Cycle Management No Comments

Seems crazy that a payor would authorize a surgical procedure which included an implant then deny payment on the implant, doesn’t it?  Unfortunately, it happens more than you might think.  A payor’s pre-certification and authorization requirements often dictate that implants be pre-certified or authorized in addition to the procedures themselves.

If you feel like the pre-certification and authorization cards are stacked against you, you’re not alone.  The rules of the game can be difficult to follow especially when each payor has its own unique set of guidelines.

Here are some hints on how to play the game well.  The first step is to identify which procedures require implants.  Then research the following to secure maximum reimbursement:

  • Does your contractual agreement with the payor allow separate reimbursement for the implant or is it inclusive to the procedure?
  • If separate reimbursement is allowed, determine what Healthcare Common Procedure Coding System (HCPCS) code will be used on the claim that references the implant. Check the payor’s master pre-certification and authorization lists to see if the HCPCS code for the implant is present.
  • If the HCPCS code is listed, obtain pre-certification or authorization for both the HCPCS and CPT codes prior to performing the service.

For procedures involving implants – especially those requiring pre-certification or authorization – failure to do your research on the front end will likely result in non-payment of the implant.  Most payors do not provide retro authorizations (approval for the implant after the procedure has been performed).  And appealing the denial of payment will not change the outcome if you did not follow the payor’s authorization requirements.  Further, not adhering to requirements specified in the contract results in a write-off of the total charge – you are not allowed to balance bill the patient.

Winning the game is possible!  Identify the procedures your facility performs most often.  Know which procedures involve implants.  Be familiar with the pre-certification and authorization requirements outlined in your contracts.  Understand the reimbursement nuances of your top payors.  Being informed on the front end ensures the dollars you worked so hard to secure actually arrive on the back end.

By Carol Ciluffo – Vice President of Revenue Cycle Management

Aug 11
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Why Did My Accounts Receivable Days Go Up?

By Revenue Cycle Management No Comments

Accounts Receivable (A/R) days rise and fall for numerous reasons including:

  • An increase or decrease in case volume
  • An increase or decrease in net revenue
  • An increase or decrease in collections
  • An increase or decrease in write-offs to bad debt
  • An increase or decrease in types of cases performed (specialty) or payor mix
  • The number of refunds cleared and posted

For example, a rise in case volume resulting in an increase in net revenue of $100,000 along with a decrease in collections of $50,000 creates a $150,000 swing. This will greatly impact your A/R days. Another example is a decrease in collections of $50,000 due to lower case volume. This would cancel out the decrease in net revenue due to the lower case volume. The impact on A/R days would likely be minimal.

Below are three different explanations of causes for an increase in A/R days.

  • A/R days rose due to an increase in case volume of 20 additional cases – a good “problem” to have – producing additional net revenue of $98,000. There was an additional rise in A/R due to $17,000 in refunds clearing the bank. The resultant A/R swing of $115,000 resulted in a rise in A/R days.
  • There was a dramatic increase in A/R days from 30.34 to 39.56. An increased case volume of 10 cases resulted in a rise in net revenue of $80,000. Collections simultaneously decreased by $61,000. The combination of these two items – a swing of $141,000 – increased A/R days by 9.22.
  • A/R days rose slightly to 49.38. Case volume was down by six cases or 4%, but the net revenue rose by $126,000, an increase of 126%. The $90,000 increase in outstanding accounts receivable was not explained by either the case volume by specialty or by the payor mix. The next area to explore is the acuity of the cases performed to determine if that caused the rise in net revenue.

Combining one or more of the above scenarios can create more significant swings in your A/R and A/R days. A/R days are all about timing. While an important statistic to monitor, the statistic most investors focus on is cash receipts. After all, cash is king!

By Carol Ciluffo – Vice President of Revenue Cycle Management