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How Optimizing Accounts Receivable
Processes Helped Promise Healthcare
Collect $13.9 Million
Richard Gold Executive Vice President – Hospital Operations Promise Healthcare David Hammer Senior Vice President – Advisory Solutions MedAssets
tue 17 june 2013
7:00 am - 7:50 am
session er6
• Background
• Historical Situation
• Current Situation
• Desired Outcomes
– Identify sustainable A/R business processes
– Reinforce capabilities to convert receivables to revenue
– Identify processes to improve net cash collections
– Meet cash goals by augmenting A/R resources
– Discuss methods to improve initial billing efforts and
account prioritization, to improve collections
Agenda + Promise Healthcare’s Goals
1
2
The Promise Approach…
Louisiana Promise Hospital Baton Rouge Promise Hospital of Baton Rouge (Baton Rouge General [Mid-City] Campus) Promise Hospital of Baton Rouge Promise Hospital of Louisiana (Bossier City Campus) Promise Hospital of Louisiana (Shreveport Campus) Promise Hospital of Miss Lou Mississippi Promise Hospital of Vicksburg Utah Promise Hospital of Salt Lake
• One of the largest Long-Term Acute Care (LTAC)
networks in the country
• Headquartered in Boca Raton, Fla.
• Serving 13 hospitals in six states
Promise Healthcare
3
Arizona Promise Hospital of Phoenix California Promise Hospital of East Los Angeles Promise Hospital of East Los Angeles (East Los Angeles Campus) Promise Hospital of San Diego Florida Promise Hospital of Florida at The Villages
• Promise offers comprehensive LTAC services in six different states
• Our specialized services include – Vent weaning – Pre-surgical optimization – Post-surgical after care – Intensive complications / infections care – Long-term IV antibiotics – Aggressive wound care
• We treat the most medically-complex patients
• We admit patients from most healthcare settings
Promise Healthcare Organizational Snapshot
4
Statistical Overview
Employees 1,900
Admissions 7,988
Patient Days 198,595
Net Revenue $360M
Promise Health
5
• Promise grew by acquisition
• Struggled with decentralized revenue cycle processes
• Resulted in sub-optimal A/R management
• By mid-2011, A/R > 90 totaled + $97.6 million
• Promise lacked the technology, policies, and necessary labor force to handle A/R backlog
• Goal was to centralize / standardize A/R processes
• Objectives were to increase cash collections and reduce cost-to-collect
• Sought help from a specialized A/R business partner
Historical Situation
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• Business Partner’s executives engaged with Promise’s leadership team
• Initial discussions focused on
– Analysis of the patient populations causing A/R backlog
– Solution methodologies
• Analytical discussion determined the overall potential A/R liquidation opportunity
• Solution methodology discussion identified the accounts best suited for assignment to business partner
Business Partner Historical Situation (cont’d)
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Account Sampling – Patient Accounts
8
• Significant underperformance
– Lack of follow-up timeliness and escalation contributed to
Bad Debt write-offs
– Little effect of balance stratification in timeliness of follow-
up (too much time between touches)
• Many accounts where follow-up activities lacked
thoroughness and proper escalation
– Process repetition rather than resolution
– “Hot Potato” effect
• Target = 95%
Registration Review Analysis
(Additional 50 Accounts)
Timely Billing
Timely follow
up
Proper Escalation
Notes Self Pay
Coll Effort
Totals 217 152 69 208 43
Highest Possible Score 250 250 250 250 60
Accuracy % 87% 61% 28% 83% 72%
Note: Additional random 50 accounts Reviewed Benefit Impact Area:
Increased Collections
Patient Accounts – Billing Office
9
Benefit Impact Areas:
Cash Acceleration; Bad Debt Reduction; A/R Days Reduction
Registration Review Analysis
(Additional 50 Accounts)
Timely Billing
Timely follow
up
Proper Escalation
Notes Self Pay
Coll Effort
Totals 217 152 69 208 43
Highest Possible Score 250 250 250 250 60
Accuracy % 87% 61% 28% 83% 72%
Note: Additional random 50 accounts Reviewed
Registration Review Analysis (Original 100 Accounts)
Timely Billing
Timely follow
up
Proper Escalation
Notes Self Pay
Collection Effort
Score 483 472 479 482 48
Highest Possible Score 500 500 500 500 55
Accuracy % 97% 94% 96% 96% 87%
Note: Original 100 Accounts Reviewed provided by Promise Healthcare
• Demographic and insurance info accurately captured
• But, breakdowns in verification and authorization
• Opportunities in POS collections and patient liability
• Opportunity for better documentation and account notes
• Target = 95%
Account Sampling – Patient Access
Benefit Impact Area:
POS Collection
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Patient Accounts – Billing Office
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• Numerous workarounds due to front-end errors
• Clean claim rate could not be calculated
• Patient access errors were largest contributor
• Quality scores inconsistent with best practices
• Workflow-technology gap
• Limited reporting
• Significant late charges
Benefit Impact Area: Cash Acceleration, Reduction in Bad Debt,
Reduction in Days in AR
Proposed Initiatives at Inception Short-Term Revenue Cycle Goals (April 2011)
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• Reduce A/R days to 49
• Develop detailed management-action plan
• Develop best-practice performance metrics
• Revise revenue cycle organizational structure
• Recruit and retain new revenue cycle leadership
• Begin comprehensive staff-training program
• Business Partner contributed to success and helped
improve and sustain Promise’s performance
– Analyzed root causes
– Developed solutions to reduce inappropriate account
aging and prevent future backlogs
– Transferred unique A/R process knowledge
– Identified key issues that caused reimbursement delays
• Promise and Business Partner achieved outstanding
results
– Resolved 49% of aged A/R, collecting $13.9M extra cash
– Cut day-90 referrals 43% in project’s first six months
– Significantly reduced on-going referral of accounts
Results Achieved
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• Process Improvement
– Aggregate account issues into trends
Secondary and primary authorizations on admission
Distribution of contract terms and LOAs to employees
Processing of split billing, exhausted, and cross-over claims
– Provide feedback to address improvement opportunities
– Reduce aged A/R and future business partner referrals
• Reporting to support visibility of key issues
– Inventory balances ($ and #)
– Account resolution
– Required escalation(s)
Current Promise + Business Partner Goals
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The Business Partner Approach…
Initial Referral Valuation / Expected Reimbursement
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Import Summary (Jun 11 – Jul 12)
Month Accounts Import Balance
Jun-11 1,870 $72,167,990.42
Jul-11 2,185 $25,515,771.22
Aug-11 192 $6,859,202.77
Sep-11 251 $3,767,010.53
Oct-11 444 $11,886,386.32
Nov-11 233 $3,900,711.94
Dec-11 259 $6,903,463.62
Jan-12 337 $4,383,433.52
Feb-12 347 $3,857,123.76
Mar-12 245 $5,353,611.49
Apr-12 444 $3,828,015.56
May-12 280 $3,894,675.32
Jun-12 225 $5,071,271.02
Jul-12 263 $9,242,747.37
TOTAL 8,565 $166,631,414.86
0
500
1,000
1,500
2,000
2,500
$0.00
$10,000,000.00
$20,000,000.00
$30,000,000.00
$40,000,000.00
$50,000,000.00
$60,000,000.00
$70,000,000.00
$80,000,000.00
Import Balance Accounts
After the initial import, the average monthly import was 293 accounts with a total balance of $5.7M. The balance of accounts imported in July was a
61% increase over the monthly average.
18
18
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
H - 361+
G - 181 to 360
F - 151 to 180
E - 121 to 150
D - 91 to 120
Average monthly collections = $2.1M with 45% coming from the 181-360 aging category; 18% from 121-150; 16% from 151-180; 15% from 361+ and only 7% from 91-120.
Collection Summary Jul 11 – Jul 12 (discharge date)
19
19
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
Total Collections Total Touches to Collection
Collecting on the large population of
aged accounts requires significant
work effort and multiple touches
per account to resolve. Average timeframe from
import to payment is 96 days.
Month Total Collections Total Touches to Collection
Jul-11 3,825,468 2,671
Aug-11 2,530,775 3,064
Sep-11 1,356,020 2,024
Oct-11 1,929,914 4,000
Nov-11 1,422,411 2,762
Dec-11 1,311,465 1,950
Jan-12 2,067,536 1,752
Feb-12 1,243,383 1,385
Mar-12 4,005,182 2,467
Apr-12 2,998,931 3,576
May-12 1,159,316 2,222
Jun-12 1,986,451 1,465
Jul-12 1,730,489 3,689
Grand Total 27,567,341 33,027
Collection Summary Jul 11 – Jul 12 (# of touches)
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2011 2012 Grand Total
Row Labels Qtr3 Qtr4 Qtr1 Qtr2 Qtr3
Promise Hospital of East Los Angeles - Suburban Campus 4,139,699 917,166 2,813,569 947,251 249,806 9,067,491
Promise Hospital of San Diego 1,503,808 2,190,336 1,581,718 1,124,828 441,780 6,842,470
Promise Hospital of Phoenix 317,611 233,338 611,078 1,983,058 198,853 3,343,937
Promise Hospital of Louisiana- Shreveport 533,393 475,650 419,723 482,534 109,386 2,020,687
Promise Hospital of Salt Lake City 329,673 313,440 504,240 355,072 276,146 1,778,571
Promise Hospital of Baton Rouge- Main Campus 201,286 364,696 229,403 487,456 9,279 1,292,120
Promise Hospital of East Los Angeles - East Los Angeles Campus 154,392 409,286 232,226 328,283 1,124,188
Promise Hospital of Louisiana - Bossier City Campus 172,514 147,752 189,704 226,881 (13,913) 722,938
Promise Hospital of San Antonio 143,271 204,829 211,741 606 100 560,548
Promise Hospital of Baton Rouge - Ochsner Campus 80,202 41,613 179,439 89,674 46,096 437,024
Promise Specialty Hospital Of Baton Rouge- Baton Rouge General 29,548 99,257 127,578 93,356 70,240 419,979
Promise Hospital of Vicksburg 152,215 13,166 22,706 101,457 757 290,301
Promise Hospital of Miss Lou 109,043 58,524 8,527 20,298 13,675 210,067
Promise Hospital of Southeast Texas 7,389 7,389
Grand Total 7,712,263 5,214,159 7,316,101 6,144,698 1,730,489 28,117,710
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
Collections by Payer
Medicare
Medicaid
Commercial
Commercial = 47%, Medicare = 36%, Medicaid = 17% Commercial collections have come from 85 distinct payers
Collection Summary Jul 11 – Jul 12 (hospital + payer)
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Resolution Summary
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Years ImportDate
Patient
Number Import$
Charges
After Import Payments
Liquidation
% Allowances Resolution % Closed# Closed$
Balance
Resolution% Open# OpenBalance
2011 Jun 1,870 72,167,990 2,018,636 10,383,831 14.00% 46,593,699 76.80% 1,767 3,653,346 81.73% 103 13,555,751
Jul 2,185 25,515,771 2,884,623 3,103,922 10.93% 24,240,131 96.28% 2,148 456,814 97.89% 37 599,527
Aug 192 6,859,203 293,507 3,139,175 43.89% 728,868 54.08% 174 220,946 57.17% 18 3,063,720
Sep 251 3,767,011 268,840 1,495,778 37.06% 1,584,784 76.33% 233 566,396 90.36% 18 388,892
Oct 444 11,886,386 159,060 1,828,826 15.18% 7,013,062 73.40% 385 497,246 77.53% 59 2,706,312
Nov 233 3,900,712 102,526 847,498 21.17% (140,553) 17.66% 197 8,416 17.87% 36 3,287,876
Dec 259 6,903,464 46,297 904,922 13.02% 2,040,794 42.39% 201 133,831 44.31% 58 3,870,213
2012 Jan 337 4,383,434 44,032 2,211,466 49.95% 1,128,434 75.44% 297 211,301 80.21% 40 876,264
Feb 347 3,857,124 29,888 2,127,905 54.74% (334,854) 46.13% 295 238,517 52.27% 52 1,855,443
Mar 1,235 5,353,611 13,845 1,181,199 22.01% 1,496,377 49.89% 1,151 137,963 52.46% 84 2,551,917
Apr 444 3,828,016 2,456,115 1,300,741 20.70% 2,080,406 53.80% 357 1,765,734 81.90% 87 1,137,250
May 280 3,894,675 90,736 1,070,098 26.85% 1,406,738 62.15% 189 177,043 66.59% 91 1,331,531
Jun 225 5,071,271 41,938 413,672 8.09% 112,490 10.29% 122 859,964 27.11% 103 3,727,083
Grand Total 8,302 157,388,667 8,450,042 30,009,034 18.10% 87,950,378 71.13% 7,516 8,927,517 76.51% 786 38,951,781
Liquidation rate for the ongoing day-90 referral averages 30%. Significant effort was expended on resolving the aged initial referral, of which less than 10% remains.
22
Impact on Aged AR (>90 days)
22
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
# of Accounts Total Balance (,000)
Jun-11
Jul-12
Month End # of Accounts Total Balance (,000)
Jun-11 4,055 97,684
Jul-12 965 46,352
Improvement -76% -53%
AR >90 (as measured by MedAssets' Inventory)
23
Total A/R – Client Status (discharge date)
23
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• Focus on high-dollar accounts (“leverage effect”)
• Research payer websites to status each account
• Identify payment-variance root cause(s) w/ forensic audit
• Identify actual expected-payment amounts
• Conduct diligent follow-up
A/R Liquidation Strategy
Total A/R (by payer)
25
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Medicare
Medicaid
Commercial
Project Accomplishments
26
Medi-Cal Project Start: • Inconsistent follow-up processes contributed to lost Medi-Cal revenue
• Accounts being billed and/or appealed to Medi-Cal without required
supporting documentation
Project Today: Improved follow-up and TAR-request processes
Medicare Project Start: • Many claims in “suspense” status with main edit of “no provider
action necessary”
• Claims delayed in RTP status for a long time without correction
Project Today: • Review remaining accounts for secondary edits and have Medicare
transfer claim to RTP
• Monitor RTP status to prevent build-ups
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Project Accomplishments (cont’d)
• Most referrals are COB-2 / secondary-payer accounts
– These accounts may “get lost in the shuffle”
– CBO employees focus on primary payers, to limit referrals
to business partner
• Open communication between CBO and LTACs
– Moved from limited information on LOAs and contracts to
full visibility
– Involved managed-care representative to help business
partner team “work smarter” on commercial inventory
• Improved relationships with Promise’s key payers
27
Questions, Answers, Rants, and Raves
28
Panelist’s Bio Richard Gold, EVP – Hospital Operations, Promise Health
Richard A. Gold has been an Executive Vice President and Director of Hospital
Operations of Promise Healthcare Inc. since May 2005. Mr. Gold directs all aspects
of hospital operations for Promise Healthcare's 12 facilities in six states, and assists
in developing the Promise’s national strategic expansion plans. He is responsible
for the administration, financial stability, and marketing of each Promise hospital,
with all facility CEOs and COOs reporting to him. Mr. Gold served 10 years in an
executive capacity with Tenet South Florida Health System as Chief Executive
Officer of West Boca Medical Center for eight years, and most recently as Chief
Executive Officer of North Ridge Medical Center for two years.
Background and Affiliations
Mr. Gold holds a Master in Public Administration from the University of Southern
California and a Bachelor of Arts Degree in Economics from the University of
California-Irvine. He is a member of the JCAHO Task Force for Quality. Mr. Gold
was recognized by South Florida Business Journal as a "Heavy Hitter in
Healthcare" in 2004 and as "Best Hospital Administrator" by Medical Business
Review in 1999.
Contact Information
Mr. Gold can be reached by telephone at (561) 869-3100 and/or by e-mail at
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Panelist’s Bio David Hammer, SVP – Revenue Cycle Advisory Solutions, MedAssets
Mr. Hammer is Senior Vice President of MedAssets’ Revenue Cycle Advisory Solutions Practice, specializing in revenue cycle performance improvement, revenue integrity, and health reform. He serves many of the largest health systems, MD-led clinics, and academic medical centers in the US. Prior to joining MedAssets, David was a Senior Executive with Accenture. He has also served as VP of enterprise revenue management at McKesson, the nation's largest healthcare IT firm, and was previously the chief revenue officer for Charter Behavioral Health, a +100-facility health system.
Background and Affiliations
Mr. Hammer received an MBA in Management and an MHS in Health Care Administration from the University of Florida. He also received a BBA in Accounting with a minor in Information Systems (Magna cum Laude) from the University of North Florida. Mr. Hammer is certified by HFMA as a Fellow (FHFMA) and as a Certified Healthcare Finance Professional (CHFP). He has been named an HFMA Distinguished Speaker for seven consecutive years, and is a 2007 recipient of HFMA’s Medal of Honor service award.
Recent Publications Mr. Hammer’s most recent publication is “Health Reform: Intended and Unintended Consequences,” which appeared in the October 2010 issue of HFMA’s healthcare financial management journal (hfm). “Don’t Panic: CFOs React to the New Economic Reality,” appeared in hfm’s March 2009 issue. Mr. Hammer authored the February 2008 cover story in hfm, entitled “Beyond Bolt-Ons – Breakthroughs in Revenue Cycle Information Systems.” He also wrote the July 2007 cover story, called “The Next Generation of Revenue Cycle Management,” as well as the July 2005 hfm cover story, entitled “Performance is Reality: Is Your Revenue Cycle Holding Up?”
Contact Information
Mr. Hammer can be reached by telephone at (954) 648-4764 and/or by e-mail at [email protected] or at [email protected]
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