10 Areas of Focus for ASC Facility Reviews
"We conduct a review of the business office, managed care contracts, and overall facility operations to determine if the center is doing everything necessary to perform at the highest level," says Robert J. Carrera, president and CEO of Pinnacle III. "The reviews can be global or specific, depending on what the ASC wants. Some centers choose to have an accounting firm perform a formal financial audit as well."
Here are 10 areas they focus on during their performance reviews:
1. Patient information gathering. One of the primary business office aspects reviewed is how the front desk handles patient information intake. "Having the most accurate patient demographics makes for clean claims and timely reimbursement," notes Carol Ciluffo, vice president of revenue cycle management. "When demographic information is inaccurate, significant challenges are created. Pre-authorizations, verifications and eligibility are also key aspects of properly collecting patient information."
2. Billing compliance. The reviewers look for a formal billing compliance program that addresses components recommended by the OIG. They also look for evidence of best practices for collections. "We review the components of the program and staff adherence," says Kim Woodruff, vice president of corporate finance and compliance at Pinnacle III. "It's important to ascertain whether the center's policies and procedures are carried out in practice or if they are just documents in a binder sitting on the shelf."
3. Separation of duties. ASCs — especially smaller facilities — may not have appropriate separation of duties, which is especially important when dealing with cash or financial transactions. "We try to help people identify how they can implement checks and balances in their processes that will reassure the administrator and board members the facility hasn't been left open to fraud or embezzlement," says Ms. Woodruff.
4. Payer contract review. Doing the cross walk from the clinical reimbursement perspective to see whether payer contracts meet reimbursement standards and cover costs is crucial to financial success. "There are some facilities that haven't renegotiated their contracts for three or four years," says Mr. Carrera. "We typically review the top five payer contracts to determine when the last negotiation occurred, identify the average reimbursement per case for each contract and ascertain whether there are any opportunities for improvement. Even in the best run centers, we often find that at least one or two of their contracts yield some potential for greater returns."
5. Fee schedule reviews. Centers that don't regularly review their fee schedule will miss out on opportunities to ensure their pricing remains current with the market and they are capturing the full reimbursement afforded by their payer contracts. "If the fee schedule doesn't remain current with payer reimbursement, it's possible to leave a significant amount of money on the table," says Ms. Woodruff. "With reimbursement continuing to decline, every dollar counts and sometimes an outside reviewer picks up on things the facility has unintentionally overlooked."
6. Key benchmarks. The ASC's financial reports provide an overview of the center's margins so owners and operators can see where they are and whether key benchmarks are met. Important benchmarks to consider include:
• Net revenue per case
• Salaries, wages and benefits per case and as a percentage of revenue
• Supplies per case and as a percentage of revenue
• Revenue cycle benchmarks including AR days, days over 120, patient balances as a percentage of total AR, non-contractual write-offs, and up front collections
"Digging into the details of an ASCs financial reports tells us whether the center is in line with what we would expect for the types of services they provide in the area of the country they operate in," notes Ms. Woodruff. If not, the center can make changes.
7. Facility policies and procedures. Reviewing facility policies and procedures for content and adherence to CMS and/or accreditation standards provides an excellent facility overview. "More importantly, confirmation that facility personnel are actually following these policies via direct observation is key," says Shelley Longgood, director of operations at Pinnacle III,
8. Quality assessment and performance improvement. The reviewers look for documentation of quality assessment activities and outcomes including, but not limited to, infection rates, hospital transfer rates, case cancellations, safety checklists, peer review and risk management. "This information needs to be actively measured and analyzed, communicated through appropriate committees to the board and detailed in meeting minutes," states Ms. Longgood. "Likewise, there should be evidence of communication from the top down regarding these measures which provide for a culture of patient, physician and staff satisfaction."
9. Physician credentialing. Adherence to physician credentialing requirements and maintaining updated files is important for ASCs. "We want to make sure all physician credentialing information is up-to-date," says Ms. Longgood. Without the appropriate credentials, the ASC is at risk of violating state and federal laws.
10. Handling protected information. The digital age has opened up opportunities to mishandle patient information and violate HIPAA. Staff members are often aware of how to handle patient information correctly, but don't always translate those concepts into every day practice. "Are all staff aware of the minimum necessary requirement? Do they know how to avoid unnecessarily exposing PHI and creating a breach? Although HIPAA was enacted in 1996, education must be ongoing and training conducted at least annually. Every year there are 'new' scenarios added to the treasure trove of danger zones," notes Ms. Woodruff.
In summary, Mr. Carrera notes that often the difference between an ASC performing adequately and achieving their full potential is attention to these kinds of details. "Not every facility we review requires vast improvement. Sometimes there are no glaring problems, just minor tweaks that can yield improvement. Our reviews often facilitate communication. Physician investors, hospital partners, board members and staff appreciate having an objective assessment of their operations."
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Medical Facilities Corporation Q1 2014 Financial Results: 5 Key Insights
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