How to Take Control of ASC A/R Days: Q&A With Jessica Nantz

Jessica NantzPresident of Outpatient Healthcare Strategies Jessica Nantz discusses how ambulatory surgery center administrators can identify issues within their revenue cycle process and take control of accounts receivable days.

Q: What action steps can centers with a large number of A/R days take?

Jessica Nantz: Review your processes and people. Ensure there are clear guidelines established on responsibilities for working government, third-party payers and patient accounts. Listen to and evaluate your collectors: Are they asking for the money? Do they have the personality to be courtesy and firm? Have you implemented a system of working the accounts based on dollar amount and date of service? How many accounts is each collector "touching" daily/monthly? Does each account have current notes on the account? Are collection goals posted in the business office? Are you benchmarking your A/R buckets against industry standards? Do you have 5 percent or less in the 120-day bucket? Is there a dedicated person working payment denials and communicating the issues to the coder or biller?

If your A/R days are over 45, one or more of these is an issue. With higher deductibles and a larger patient responsibility, there needs to be more attention on patient accounts. Do you have a firm policy backed by your board on when to send patients to collections? Have you interviewed and negotiated a reasonable percentage to pay the collection company? Are you evaluating the collection company to ensure they are performing the job well on your behalf?

The longer money sits on an ASC's balance sheet, unavailable, as A/R, the longer that money cannot be used — it cannot be used for distributions, to pay salaries, bills, make purchases, etc. With tightening reimbursement and rising costs, most ASCs cannot afford to have so much money uncollected. Cash reserves can only last so long, and it is best for an ASC not to rely on using reserves until it is absolutely necessary. It is much better for the business to operate on cash flow obtained through collections.

Q: How can ASC owners and administrators identify holes in their process and motivate staff to make a change?

JN: ASCs need to thoroughly assess their revenue cycle process and determine the reason(s) why its staff is failing to complete the collections process in a timely manner (if at all). There are many factors that can contribute to high A/R days. These include:

•    Failure to properly complete clean claims (which leads to denials and payment delays)
•    Failure to get claims out quickly
•    Failure to understand payer policies
•    Failure to have an effective claims follow-up process
•    Failure to have an effective denials management process
•    Failure to collect what patients owe prior to or on the day of the patient's procedure
•    Failure to educate patients on their financial responsibility prior to their procedure to ensure they are prepared to cover their portion of the bill
•    Failure for staff to be held accountable for their performance

There are many different ways to motivate staff. The first is to educate staff on what A/R is and why it's so important to the success and viability of the ASC, and therefore the staff's opportunity for salary increases and bonuses.

Following up on collections is an arduous and frustrating process, so simply explaining to staff members how they can make this an easier, more efficient process and therefore free up time to dedicate to other areas should serve as motivation.

Sharing A/R data with staff can serve as motivation. By putting A/R days data on display as a chart in an area business office staff will frequently see it — and including improvement goals with this data —will show staff how well (or poorly) they are performing.

Some ASCs tie performance bonuses to A/R days. If a bonus system doesn't work well for your ASC, consider having a party or rewarding staff in another way when an improvement objective is accomplished.

Q: Typically, where do you see the most opportunity for ASCs to improve and take control of their A/R days?

JN: As noted earlier, there are so many factors that can contribute to high days in A/R. To get A/R days under control requires ASCs to identify which of those factors are most common in their facility, and focus on bringing about improvements in those areas. An ASC with large days in A/R may have a major problem in one area or a number of small problems that contribute to the larger problem.

What's important is once an ASC identifies a problem(s) and starts to try to bring about improvements, it needs to closely monitor these efforts and measure their success month after month, sharing the results with the staff.

It's also important to never assume that just because a process is going smoothly, this doesn't mean there isn't an opportunity for problems to arise down the road. For example, if a payer changes its coding rules and a staff member fails to take this into account when coding a procedure frequently performed in the ASC, this can lead to an increase in denials. The cause may be glossed over since the ASC did not see any problems with coding prior to the rules change. Therefore, it is imperative for ASCs to keep a close eye on all of its revenue cycle processes and not just those with problems and clearly identifiable areas for improvement.

Q: What are the most important A/R benchmarks for ASCs and how can centers ensure they meet or exceed them?

JN: It's not uncommon to hear different numbers thrown around for what are considered "ideal" A/R day's benchmarks. Generally speaking, these figures are usually around 35 days or below for single-specialty ASCs and about 40 days for multispecialty ASCs.

But what I believe is more important than trying to hit an "industry benchmark" is for ASCs to simply keep working to improve their A/R days. Asking a single-specialty ASC with A/R days at 75 to get to 35 in a few months is unreasonable. It's better to set small goals that will, over time, add up to a big improvement rather than set a big goal that is likely unattainable (and therefore frustrating for staff to try to achieve).

It's also important to note that every ASC is different, and a benchmark that works well for one ASC may not work as well for another ASC, depending upon its specialty mix and payer mix (government, private, workers' compensation).

Finally, while it is worthwhile to focus on A/R days, ASCs must also focus on cash collections. Low A/R days but poor cash collections can have the same negative impact on a facility as high A/R days.

Q: How can ASCs ensure they receive payments from patients efficiently, especially with high-deductible plans on the rise?

JN: It is critical to educate patients on their financially responsibilities prior to their day of surgery. Once an ASC receives patient insurance information, it must work to determine what the patient's responsibility will be. While it sometimes can be difficult to pinpoint this exact figure until the procedure is completed, providing patients with a good estimate well in advance — preferably at least several days before their procedure — will give them ample time to ensure they have the funding to cover costs.

It is best to provide patients with as many payment options as possible, including cash, credit card or a payment plan. Payment — as much of it as possible — should be collected prior to surgery as the moment the patient leaves the ASC without paying, the likelihood of collecting decreases as the work needed to now collect payment increases.

ASCs should make sure staff is trained to explain how deductibles, co-pays and co-insurance works, why they're important for patients to pay, discuss payment options and know how to work with patients who are concerned about the cost of their procedure.

The more patients understand their responsibility and the more time they have to account for it, the more likely it is that they will show up on the day of surgery prepared to cover their portion. A friendly, compassionate staff that understands and strives to find a financial solution that works well for both the ASC and the patient can go a long way as well.

More Articles on Surgery Centers:
Spotlight on ASC Leaders: 6 Recent Leadership Moves & Honorable Recognitions

What's Next? 22 Observations on ASCs for 2014

Planning for the New Year: 3 Big Trends for ASC Leaders to Watch in 2014

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