The Circumstances and Challenges
Poor cash flow, uncollected funds, the revenue cycle did not work well, that’s the situation. A multi-physician orthopedic practice was very busy, but the accounts receivables were building up! It was the type of situation all physicians really dislike: “I am not seeing the financial results of my efforts to provide patient care.”
The practice was adding staff to the billing process, and had an advanced practice management system that supported the billing process with electronic work-lists and other follow-up systems, but they weren’t helping.
The Change and Selection of a Consulting Firm
A decision was made to bring in The Fox Group, LLC, Consultants to the Healthcare industry, to do a comprehensive assessment of all operations of the practice, including scheduling, authorizations, charge capture, claims submission, payment posting, and follow-up and collections, among many other areas. This 30-day evaluation of the operation of the medical group was then compared to benchmarks and best practices performance standards.
As part of the assessment, The Fox Group found that days in accounts receivable (“AR”) were approaching 260! In other words, it was an average of 260 days from when services were rendered to when the payment was received. Of the $3.5 Million in AR, over $1Million was money owed by Medicare, typically the most reliable and timely payor!
Moreover, the billing and collections staff were not utilizing the electronic resources available to them to track collections and re-bill, or otherwise follow up on unpaid accounts. Erratic collection of patient co-payments was common, resulting in additional large self-pay AR amount, not being collected.
The Solution, Outcome, and Sustainability
The Fox Group, LLC was engaged to assist the practice in improving its billing and collections performance. The result, a rather dramatic increase in cash flow! A few of over 140 actionable recommendations and implementation steps included:
- Redirected staff duties to free up specific staff to focus on following up on unpaid claims;
- Ensured that all employees involved in collections and AR management were trained;
- Directed staff to make full use of the electronic resources available;
- Verified use of available specific work-lists to follow up on unpaid claims;
- Followed-up on collection of co-payments at the time of service whenever possible;
- For sustainability policies & procedure, tasks, benchmarks, and success criteria were established.
A particular bottleneck was the electronic claims submission and electronic payment posting processes, especially for claims submitted to Medicare. Sometimes Medicare rejected the claims batch, but there was no consistent follow-up on rejected batches, and no other payors were making payments electronically.
The Fox Group assisted the practice with processes for verifying all batches rejected by Medicare were examined and errors corrected timely. The Fox Group also assisted the practice with applying for electronic payments from Medicare and several other large payors. Since the practice management system supported electronic posting, a great deal of time was saved in manual posting as well. After six months, an additional $2 Million was collected, and the days in AR were reduced to 50!