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10 Revenue Cycle Mistakes Surgery Centers Make -- and How to Fix Them

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If your ASC is making mistakes in coding, collecting and billing, you probably aren't receiving as much money as you could be. Here, John Bartos of Collect Rx and Adriaan Epps of abeo discuss 10 mistakes surgery centers make in the revenue cycle process, as well as solutions for ASC leadership to implement in the coming year.

1. Failing to get proper authorization for performing services and procedures. Mr. Epps says many surgery centers make the mistake of not getting proper authorization for the procedures they perform. "When they receive referrals from physicians not tied to the ASC, they're not getting authorization for the services rendered," he says.

This means contacting the payor about the member’s benefit plan and going over financial obligations, including co-payment, deductibles, which services are covered and how the surgery center will receive payment. The surgery center also needs to notify the patient about payment options, including what payment is expected from the health insurance company and how the patient’s deductible factors in.

Mr. Epps says it should be relatively easy to find this information online. "Most of the top health insurance companies give you the ability to go online, check member benefits and plug in procedure codes to find out what the insurance plan covers," he says. It's important that your staff members understand how to use these systems; if you plug in the incorrect parameters, the information will be useless and even damaging.

2. Failing to staff a certified coder and qualified business office staff.
A certified coder is critical to making sure you send out the right codes and receive the right reimbursement, Mr. Epps says. He says the other areas of the business office are just as critical -– without the right people to manage medical records, transcribe, understand the billing and collections process and collect payment up-front, your AC could lose money.

"I often see staff members either without healthcare experience or without training," Mr. Epps says. “Many ASCs don’t have the management team in place to hire and train these individuals, let alone hold organizational meetings to discuss performance, perform audits and implement quality initiatives."

He says in some cases, surgery center leaders or physicians hire their friends or family members to run the business office, assuming it's not a critical task. He says this is a huge mistake, and the business office should in fact be audited regularly to ensure top performance. The medical record manager should regularly check to make sure coders are accurately coding procedures, and leadership should track the collection of co-insurance and co-payments upfront.

3. Failing to proactively manage commercial payor contracts.
Make sure to start re-negotiating payor contracts six to nine months prior to the auto-renew date, Mr. Epps says. If you let the deadline lapse, you will receive the same rates for another year, regardless of changes to your business.

Look at the contract as a whole and compare reimbursement and costs for your top 30 procedure codes. Also look at the payor's multiple procedure discount policy – you may be getting a 150-25-25 rate when you could be receiving substantially more. "If you do implants, carve out your implants and make sure that’s addressed in the contract," Mr. Epps says.

4. Failing to effectively work A/R. Mr. Epps says it's common for A/R to fall by the wayside in a business office. "You need to have a system," he says. "Without oversight, A/R can escalate beyond a level that’s financially sustainable. You’ve got to know how many days out you are – 45, 90, 120."

He says the ASC should know where it stands with all unpaid bills, and should have a system for contacting patients when bills have not been paid. For example, does the surgery center write off collections that are under $100, or does it go after every single penny? Are you sending out multiple letters and emails to increase the probability of payment?

Mr. Epps says it can help to send out a letter before surgery, explaining your expectation for collecting as much up-front as possible, as well as the potential cost of the service. You can also call the patient prior to the procedure to discuss his or her financial responsibility and talk about setting up a payment plan, if necessary.

If a patient is not keeping up with payments after the procedure, send out four or five letters with increasingly aggressive language, Mr. Epps says. Make sure to follow up with phone calls, especially during the evening when patients are more likely to be home. When you send a fifth letter, he recommends changing the layout and typeface and mentioning that the patient's credit could be hurt. If the patient sees a new format, they may be jarred into paying the bill.

5. "Defaulting" to a strategy of 100 percent in-network participation. Mr. Bartos says he commonly sees providers "defaulting" to a strategy of 100 percent in-network participation, and thus failing to take advantage of the opportunities to obtain higher out-of-network reimbursements. True, out-of-network does not work in every market — but Mr. Bartos says "the reality is that in most geographies, providers can increase revenue by having a portion of their revenue come from out-of-network patients."

He says this requires an analysis of each of the surgery center's payors. Compare in-network and out-of-network reimbursement levels for your most common procedures on a payor-by-payor basis, and determine which contracts should be cancelled to reap a higher return.

"In addition, providers need to understand both the local payor and employer mix, as well as their relative market share compared to other providers." He says if providers are prudent in picking the payors with which they pursue out-of-network, they should be able to maximize total revenue and profits.

6. Failing to follow payor claims submission policies. The parameters for submitting a "clean claim" to a commercial payor should be clearly spelled out in the contract, Mr. Epps says. If you receive a denial, you need to call the payor and follow the appeals process as outlined in the agreement or the provider reference manual. You should also look into what caused the denial in the first place and keep a spreadsheet of common reasons for denial at your ASC.

"The more you understand about what the payor requires, the more you can prevent having to appeal," Mr. Epps says. "If you do your due diligence on the front end, you’ll likely have fewer issues." He says payors often update their provider reference manuals on an annual basis, so it’s important to stay on top of any changes in submission policies.

7. Failing to maximize reimbursement with an out-of-network strategy. Mr. Bartos says when providers do decide to pursue an out-of-network strategy, they often fail to take the necessary steps to maximize their out-of-network reimbursement. "We see providers accept reimbursement levels that are perhaps only slightly above their in-network or Medicare or Medicaid rates," he says. "The payors, knowing that providers won't push for more, will often under-pay those claims."

He says this strategy requires staff members who are dedicated to negotiating out-of-network settlements on individual bills and effectively appealing claims. If your surgery center does not have staff members experienced with out-of-network bills, you might consider hiring a third party to handle this side of your reimbursement. "The provider [also] needs to have supporting data to be effective in negotiating individual bills," Mr. Bartos says. "For example, the provider must have the ability to identify the inconsistencies between the EOB and the remittance advice and be able to decipher the actual language."

Providers must also follow a rigorous appeals process if reimbursement is unsatisfactory. The process includes, for example, elements like:

• Creating a well-drafted assignment of benefits that – (1) assigns the surgery center all rights under the insurance policy (including the right to appeal and the right to receive relevant documentation); (2) refers to the provider as the patient's authorized representative, and (3) references ERISA and a full and fair review of claims.

• Documenting all calls with the payor (benefits, pre-authorization, etc.). "Make sure that both parties understand what was said and that the surgery center has a record of what was said," Mr. Bartos says. He says in many cases, surgery centers never call the payor to inquire about insufficient reimbursement.

•  Recording the reference numbers of all payor calls. Mr. Bartos says when a surgery center calls a payor, the payor assigns a reference number to that call. The staff member should document the reference number, in case there is a dispute later over what was said. "If the provider can't give the reference number, the payor can say, 'We never had that call,'" he says.

8. Failing to meet regularly as a practice or surgery center.
Mr. Epps says when he managed a practice, he met with the business office staff every two weeks or every month to discuss any problems in the department. He went over what the staff was doing on a daily basis, and how effective they were being. "I asked what we could do to improve the process, based on patient and physician feedback surveys," he says. "How could we improve those relationships?"

For example, the practice made a note when a patient went back to the primary care physician and asked to go to a different surgery center next time. “The patient might say, ‘They were more interested in playing [computer games] than talking to me about my insurance benefits,’” Mr. Epps says.

9. Failing to listen to business office staff and disseminate goals. Mr. Epps says many surgery centers assume that business office staff don’t need to be part of center-wide discussions and growth. “You need to explain the doctors’ goals and the center’s plan for future growth, so that everyone can have a voice in the planning process,” Mr. Epps says.

He says leadership should hold regular meetings to discuss what’s working and what isn’t. How many hours are dedicated to each activity, and which are taking too long? If the center recognizes inefficiencies, what’s the plan to fix those issues? Business office leaders will understand where the ASC is losing money and may be able to recommend solutions.

10. Failing to plan for narrow and tiered networks.
Starting in Jan. 2014, the federal government will mandate the implementation of "health insurance exchanges," or online marketplaces where consumers can comparison-shop for health insurance. Many states have already made moves to set up their own state-run exchanges; those that have not made progress by 2013 will have exchanges set up for them by the federal government. The exchanges are designed in part to increase competition among health insurers and prevent large payors from increasing rates without experiencing a drop in business. This means that as payors prepare for 2014, providers can expect to see their reimbursement rates drop, so that payors can offer discounts to patients and hold onto their market share.

Mr. Epps says many large insurance companies are creating 'narrow networks' that exclude certain providers. By creating narrow networks, the payors can ensure a steady stream of patients to their in-network providers and, in return, ask that those providers accept discounted rates for their procedures. The benefit is a smaller network of providers with reduced rates resulting in greater cost savings to the health plan and Employer groups.

He says another approach is to create "tiered networks," which include a variety of different plans with various discounts. "For example, there may be a PPO 1, 2 and 3, and those would correspond to a 10 percent, 15 percent and 40 percent discount," he says. This means that ASCs must be very careful when signing contracts with payors who are using tiered networks, since a 40 percent discount could cut into profits significantly. He says the upside of opting into every single plan/product with a payor — regardless of discount — is that you provide accessibility to as many members as possible which may lead to increased case volume. The concern is that a 10-40 percent discount — on top of the discount you're already offering the payor by joining the network — may not be financially sustainable for an ASC or physician practice. Mr. Epps says surgery centers need to be fully aware of their financials before signing this kind of contract.

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