Clarifying Medical Necessity Criteria

Our group is working with a number of clients currently and a key componenet wrking with both payers of healthcare as well as providers of healthcare is underrstanding and executing medical necesity criteria.  Care managers often struggle over how to intrepret the criteria fairly and povider struggle at how to express the criteria that an idividual patient is exhibiting. Medical Necessity Criteria (MNC), one of the most vital aspects of healthcare and treatment, is still very ambiguous.   Numerous definitions for MNC can be challenging for providers and practitioners to know just exactly how different interpretations can impact care.  Please see the article in its entirety by Robert Levine that  will outline what is essential to understand about Medical Necessity Criteria, and how personal interpretation maintains a role in treatment distinguishing between what is “beneficial” for consumer health and what is “essential.”  Please sign up for our newsletter.

In tomorrow blog I will review MNC exceptions.

Preparing for the changes in healthcare: Part 2 Operational Improvement

Both healthcare providers and payers are under a lot of pressure due to rising costs as well as governmental requirements and regulations. To better serve their customers and to stay ahead of the challenges, health care enterprises must improve their operational as well as financial performances. Many organizations will have their own in-house consultants or management team, but not all. Any health care organization will benefit from seeking healthcare management consulting to improve their strategies and achieve their goals.

Congress passed health “insurance reform” on Sunday night and the President will sign into law shortly, we as both consumers of healthcare as well as those who work in healthcare will see changes as costs go up and government increases its regulatory role. It is also likely that reimbursement will decrease. It will be interesting to see how it all unfolds over the next few years but preparing for the future is now even more important. Not only is the financial aspects critical but making sure your healthcare organization is running at peak efficiency is critical.

Improving Operational Performance
The operational aspect of a health care organization must also be strengthened through the help of healthcare management consulting. With a strong backbone, organizations can implement the right programs and services. The organization can set new goals in order to increase effectiveness, efficiency and productivity.

With these elements in the right place, the programs can better serve the customers and provide higher quality care. With a new focus, the organization will meet government regulations and have enhanced ways of communicating with physicians and other health care professionals.

Preparing for the changes in healthcare: Part 1 Financial Improvement

Health care organizations are under a lot of pressure due to rising costs of health insurance and governmental requirements and regulations. To better serve their customers and to stay ahead of the challenges, health care enterprises must improve their operational as well as financial performances. Many organizations will have their own in-house consultants or management team, but not all. Any health care organization will benefit from seeking healthcare management consulting to improve their strategies and achieve their goals.

Health care is a business and those running the show must understand how to manage the business. This means that administrative information, financial data and clinical data must be taken and analyzed in order to put the information obtained into new strategies and other actions. In other words, health care managers need access to this information in order to understand the nature of the business.

Improving Financial Performance
By working with healthcare management consultants, a health care organization will be able to better manage its operational costs, present new growth opportunities, and ultimately increase revenue. With better financial performance, an organization can provide better health care to patients and eliminate problems with cash flow.

Competition is high in the health care industry and optimized financial performance will put an organization above its competitors. With healthcare management consulting, an organization can have access to necessary tools and data analysis.

Essential Components of a Financial Analysis

In a recent newsletter we reviewed  the 5 key components of a successful financial analysis. Following these can create nearly overnight revenue increases with little to no additional expense.  In todays economic situation where we all have to do more with less I thought these ideas may be of interest.

Getting Paid For What You Do

It sounds simple but “revenue leaks” can cause an organization to lose valuable capital.  A thorough review of the organization’s service to payment operations can identify these leaks and ensure that they do not continue.

Cash Flow

The saying goes “cash is king” and cash is the life blood of any organization.  A solid financial review needs to include the identification of all revenue sources and the setting of benchmarks at all levels of the organization including service contracts, payers, and grants.

Expense Review

If your organization needs to “fund its mission” or “create shareholder value” a critical component of a financial review is to evaluate the expenses required to generate that revenue.  This review will allow organizations to identify programs, services, and offices that bring value to the organization.

Payer Aging

Do you know which payer pays within 30, 60, 90 days or hardly ever?  Do you know the total cost to your organization related to the submission of claims?  The answers to these questions are critical to all organizations.  Understanding your payer aging can stabilize cash flow and increase both the top and bottom line.

Brian Johnson BHM’s SVP of Finanace and Claims Operations stated “Few things are more vital to the success of an organization than a financial analysis”

Importance of Financial Analysis

Does your organization use financial benchmarks and evaluations for future planning?  Do you have a clear indication on how your business is performing and where it could improve?  If you answered no to either question then your organization could benefit from a financial analysis.  A financial analysis is a comprehensive tool which is essential to understanding how your business is currently performing, and how you can allocate resources for improvement in the future.  Financial analysis can help you evaluate your return on investment and also give you an edge over the competition in a down market. “Few things are more vital to the success of an organization than a comprehensive financial analysis. It takes the guesswork out of success and can greatly help your organization from a strategic standpoint” said Brian Johnson BHM’s SVP of Fianciacial and Claims Operations.  In fact now when many organizations are experiencing lower profit margins and wide cutbacks a financial analysis can be an important tool in getting the most bang out of your buck.  It can really help you pinpoint your strengths and weaknesses and adjust your planning strategy accordingly.  Analysis can improve profitability, allow you to set benchmarks, assist your organization in optimizing productivity, and allow you to get a thorough look at your finances situation now and into the future.  Tomorrow I will review the essential components of a financial analysis.

Improving Healthcare Profitability for Providers Part 5: Putting It All Together

I hope the past week’s postings on ways to improve healthcare profitability was useful. If you have questions we do offer free consultations. The areas covered include a number of  tips that if implemented can improve your companies bottom line fairly quickly.  These include reducing no shows, collecting at time of service, improved coding and ways to optimize collections for third-party payers. We have found that by utilizing even a few of these techniques that practices can increase revenue  by at least 10 to 25% with little to no increased expense. It is important to utilize technology as much as possible. For example the importance of submitting claims electronically not only decreases time from submission to payment but allows claims to be pre reviewed ( scrubbed) for errors both on the practice end as well as the payers end.  Thus errors are found in hours or days as opposed to weeks. An efficient claim shop can have the errors corrected and resubmitted before the next claims submission cycle.

Please email or write comments about this series or future blog post that could be helpful.

Improving Healthcare Profitability for Providers Part 4: Improving Collections

I hope the past three posts have helped healthcare practices begin to think about all the important ways that they can improve profitability without working harder, seeing more patients or laying off staff. This post will focus on methods to improve collecting what you bill.  I have seen many practices increase production as a solution to increase profits.  Typically that is done without an eye towards collections.  When this happens everyone works harder, gets burnt out and administrative cost rise but total revenue barely goes up.  We at BHM Healthcare Solutions recommend to first improve the collection process.  We also have a saying that what is measured is managed so our first step is setting up metrics and benchmarks.

Here are three ways to measure performance in collections:

1. Months in gross fee-for-service AR – this benchmark tells you how many months it takes to get paid –Divide total AR by 1/12 annual gross fee-for-service charges.

2. Percent of total AR over 120 days –Top performing organizations will see less than 10% of AR more than 120 days old

3.Adjusted fee-for-service collection percentage – focuses on the money you expect to collect. Take 12 months of collections, subtract refunds to insurers and patient, and multiply the difference by 100.  Divide this figure by gross charges for the same period minus contractual discounts set by insurers.

The above three simple measures are a good place to start tracking monthly. The next step is to set organizational goals. Because collecting balances is numbers oriented, it is important to set quantifiable work goals which helps produce results. Set both organization wide, and individual collector goals. Develop standard processes for collection of account receivables. Finally award employees for meeting collection goals.

Finally it is critical to utilize collection technology. Some examples would include:

1. Utilize Electronic Claims –Will enable you to receive payment much more quickly –Send claims directly to the payer, rather than going through a clearinghouse whenever possible

2. Utilize Electronic Remittance and Fund Transfer –Automatically post payments and capture information eliminating hours of manual data entry

3. Scan documents instead of making copies

4. Utilize online statements and payments

5.Utilize PDAsUtilize charge-capture software and take it to the hospital where doctors often forget to document services rendered

Improving Healthcare Profitability for Providers Part 3: Optimizing Coding

The first two blog posts on improving profitability were about reducing no shows and collection at point of service.  Today’s post will be on the importance of corect coding.  We will use the example of outpatient psychiatric services but the concept holds true for any situation.  You as providers need to make sure the services that are being delivered are coded accurately and correctly thus maximizing reimbursement for services rendered.

All E/M and psychiatry codes are currently included in Category I. Nearly 1/3 of all services reported by physicians are E/M services. The CPT codes reported on the health insurance claim form or billing statement should be supported by the documentation in the medical record.  Three similar CPT codes:  90862, 90805, 99214. All three have different requirements and significantly different reimbursement rates.  In fact if your practices is billing $100,000 per year in  90862 but are actually delivering a more comprehensive service ( as most of our clients do) than by correctly coding the practice can bill an addition $67,000 by correctly coding and documenting services delivered.  That is a 67 percent increase.

The exact codes are determined by the combination of different levels of history taking, examination, and medical decision-making performed by a physician or certain face to face time.The following components are used to determine the level of E/M service: History, Examination, Medical decision making, Counseling, Coordination of care, Nature of presenting problem, Time.

Correct documentation is critical and cannot be addressed here.  For correct E&M coding either time or complexity of patient encounter is the critical factor.  Please contact us for more information on how your healthcare entity can improve it’s bottom line.

 different requirements and significantly different payments

Improving Healthcare Profitability for Providers Part 2: Point Of Service Payments

Yesterdays post focused on improving profitability by decreasing no shows.  We outline four main methods to reduced no shows immediately.  Today I will discuss the importance of point of service (POS) collections. For many practices the proportion of POS payments has grown from 15-75% . These systematic POS collections often yield double-digit billing performance improvements. Payment collection performance can vary greatly depending on elapsed time between service and payment. Payment collection  grows more difficult as perception of value decreases with service memory thus the importance of collecting at time of service.

Practices that do not employ a payment at time of service policy will spend many hours on unpaid invoices. When there is a POS policy that is working In-office collections reduce costs in the following ways: 

1.Mailing out statements

2. improved collection rate

3. Improved cash flow

A  successful POS collection policy includes the following:

1. Reminding patients about payment policies when they call to schedule helps them take financial responsibility

2. Be clear and strict about your policies – no co-pay, no visit

3. Allow hard-pressed patients to set up installment plans for more sizeable bills

Making Point of Service Payments Easy

1.Collect co-pay at check in. Make sure front office staff has any unpaid balance information so they can collect that amount as well.

2.More effective than sending statements. Sending statements actually cost $2 to 5 per statement. Thus if you have to send out two statements to collect at $10 to 20 co-payment it may cost the practice up to half of what it may ultimately collect.

3.Make sure office is able to accept all forms of payment –Check –Credit card –Cash

It is important to set organizational goals

1. Collecting balances is numbers oriented so setting quantifiable work goals helps produce results

2. Set both organization wide, and more specialized or individual staff goals

3. Set detailed goals for the process of collection

4. Award employees for meeting collection goals. Some companies give individual bonuses, and or practice wide bonuses.

A well done POS payment plan will lead to significant gains.  I was working with a practice and they were not collecting copayments well. After a careful review it was determined that each month this practice was not collecting at least $20,000 per month.  It was alarge high volume practice. The copayment for each patient was small, ” just a few dollars” so front office staff as well as management did not focus on the process.  It is important to make sure all key processes are at peak performance as each builds on the other and all are needed to run an efficient profitable health care practice.

Healthcare Insider Secrets for Healthcare Provider’s to Improve Profitability: Part One No Shows

This week our Healthcare Insider blog is going to post daily tips for providers to rapidly improve their bottom line.  In an era where revenue is decreasing but costs are increasing, staying in business ( making a profit) is even more difficult. Payors are increasing decreasing payments through reduced fee schedules or increased denials as well as increasing number of uninsured patients. Payors including governmental payors are at the same time requesting increased information from providers and increased rules which increase the cost to deliver the healthcare services.  We will address five areas that if addressed can rapidly improve your companies bottom line.

We will start with the big issue of No Show.  I recently met with a few clients and discussed their no-show rate.  They range from a low of 20% to a high of 45%.  Although the client with the no-show rate of 20% was very proud of their ”low ” no-show rate.  Even with this “low” no-show rate, the practice  was losing hundreds of thousands of dollars per year.

Missed Appointments

Interrupt the flow of patient care and impede clinic productivity 

A missed appointment amounts to reduced billing and missed revenue 

Four steps an organization can implement in order to decrease their no-show appointments

Charge for Missed Appointments

1.Strategy works well  for reduction of follow-up no-shows

2.Ineffective for missed intakes

3.Billing missed appointment fee not fee for scheduled service

4.Billing insurance companies for services not rendered is illegal

5.Helps track no-shows

Minimize No-Shows

1.Recognize that any activity that reduces the frequency of no-shows is a revenue-generating activity.

2.Make reminder calls for upcoming appointments

3.It works best when reminders reach the consumers one to three days ahead of their appointments

4.Follow up on recent no-shows

5.Call patients who failed to appear this week

6.Survey them as to the reason for their missed appointment

7.Reschedule next appointment

Track No-Shows

1.Since no-shows are now being charged even a minimum fee one can track this activity more easily

2.Analyze no-show statistics

3.Use this knowledge to target reminder efforts

4.Use this knowledge to change scheduling

Overbook:  This is an effective strategy to  protect revenue from no-shows

1.Overbooking requires a good understanding of your no-show statistics

2.Wave scheduling 

Using these four steps practices can reduce no shows and improve their bottom line.  Please contact us to sign up for a free practice evaluation.