POS Collections

Evaluate & Improve

Your Skills

December 2, 2010Jennifer Powers-JohnsonRegional DirectorRecondo Technology

Overview >>

Industry Statistics

Compliance Issues

Success Factors

Collection Technology Enablers

Opportunity Areas

Scripting

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The Problem >>

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• The losses for many hospitals’ investment income has caused their executives to look for additional ways to increase revenue, reduce bad debt and lower cost.

• “Hospitals are 60% less likely to receive payment once the patient leaves the hospital.” –Wall Street Journal 

• In 2009, Americans spent $2.5 trillion dollars on healthcare, and the industry spent $375 billion to process and collect payments – Wall Street Journal

• “Administrative complexity is a major reason U.S. Healthcare costs are high. Potential savings are $100 billion a year.” –Three Imperatives for Improving U.S. Healthcare, McKinsey, 12/08

Result: rising bad debt and less cash on hand; especially with the continued growth of HSA & High Deductible Health Plans (more financial responsibility put

on the patient).

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Healthcare Financial Climate>>

Hospitals are experiencing;

Lower Revenue

Greater patient responsibility

Lower return from investments

Tougher credit markets

Mounting expense pressure

Underfunded capital budgets

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Current Trends

Self Pay is the fastest growing payer class

52 million Adult Americans are uninsured (18.7% )

25 million Adult Americans are underinsured

75 million working-age adults uninsured or underinsured

Fastest growing group of uninsured aged 25 – 34 with income > $70K

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Current Trends (continued)

% OF US DOLLAR SPENT BY CONSUMER 2008

RENT/MORTGAGE16%

OTHER**14%

UTILITY BILLS15%

FOOD14%

CLOTHING4% MEDICAL

CARE*17%

CAR4%

HOUSEHOLD/FURNITURE4%

RECREATION4%

TRANSPORTATION4%CAR FUEL

4%

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• Bureau of Economic Analysis - Personal Consumption Expenditures by Major Type of Product and Expenditure

• www.bea.gov/national/nipaweb/nipa_underlying/TableView.asp?SelectedTable=19&FirstYear=2007&LastYear=2008&Freq=Qtr

Trends suggest that rising self pay revenue will cut average hospital profits by as much as 50% by 2012. The McKinsey Quarterly, Web exclusiveJune 2007

Percent of hospital net revenue collected

Source: Standard & Poor’s Industry SurveysMarch 27, 2008

Insurance

90%+

Balance afterInsurance

50-60%

Uninsured

8-10%

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Current Trends (continued)

Commercially insured patients often have high deductible, out-of-pockets, and coinsurance percentages. Presenting patient financial responsibility at point-of-service, can increase hospital revenue and reduce costs.

Uninsured Population (Gallup Jan – June, 2009)

State % Uninsured State % Uninsured

Massachusetts 5.5% Texas 26.9%

Vermont 8.4% New Mexico 25.6%

Minnesota 8.7% Mississippi 24.0%

Hawaii 8.8% Louisiana 22.4%

Delaware 9.5% Nevada 22.2%

Connecticut 9.7% Oklahoma 22.2%

Pennsylvania 10.0% California 21.0%

New Jersey 11.8% Wyoming 20.7%

New York 11.9% Florida 20.7%

Rhode Island 12.2% Georgia 20.7%

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Wall Street Journal, May 2009

• “Across the industry, hospitals have been reporting no difficulty charging commercial insurance companies the 6% - 9% price increases they’ve become accustomed to in recent years, including into the current year.”

• “Price increases may be short lived, however, the chatter that some employers – having already raised employees premiums, deductibles and co pays – are considered leaving hospitals out of networks in 2010 if they continue to demand big price increases.”

• Rising healthcare costs – “These kinds of price increases are way out of line with what's being experienced in the rest of the economy.”

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Growth of HSA/HDHP Enrollment

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*Treasury Department projects by 2010 will cover 35 to 40 million people -- based on current law.

Increasing PO$ Collections; Why the Focus?

Significantly improve the bottom line of your organization through: Reduce cost to collect

Reduce uncompensated care

Reduce self-pay receivables

Reduce bad debt

Increase overall cash flow

Improve patient satisfaction

Reduce call volumes and complaints

Reduce patient confusion about their bills

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PO$ Collection Facts

• The overall cost to collect is typically reported between 2 and 3 percent of revenue

• Front-end processes are important … especially in this era of increasingly high deductible health plans

• The more time that passes following the patient’s discharge, the cost to collect on that account continues to go up while the chance of actually collecting payment goes down

Educating the patient of their financial obligation in advance improves patient satisfaction

Consider a single department, outpatient radiology, in a medium-size hospital. With a typical monthly volume of 5,000 visits and an average patient obligation of $389, the hospital has the potential to collect $1,945,000. But without collecting at POS, the hospital typically loses 60% of the potential amount, or $1,167,000

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PO$ Collections – Best Practices, is this possible?

           

Outpatient Inpatient OutpatientSurgery

ED(not

admitted)

TotalAnnual

Total Monthly

Total Annual Visits 52,200 4,500 13,800 27,000 97,500 % Commercial Visits 31% 31% 31% 31%Annual Commercial Visits 16,182 1,395 4,278 8,370 30,225Average Patient Responsibility $169.00 $1,225.00 $798.00 $122.00Total Collection Opportunity at POS $2,734,758 $1,708,875 3,413,844 $1,021,140 $8,878,617 $739,885

Annual Net Patient Revenue $57,015,738Current Annual Collections at POS $480,000

Current Monthly Collections at POS $40,000

Current Collections as % of Net Patient Revenue 0.84%

Current Collections as % of Total Collection Opportunity 5%

HFMA Best Practice 2-3% of Net Patient Revenue

Best Practice Monthly Collections

at POS

Current Monthly

Collections

Monthly Increase from Current

Annual Increase from

Current

% Total Opportunity

POS Collections at 1% 47,513 $40,000 7,513 $90,156 5%POS Collections at 2% $95,026 $40,000 55,026 $660,312 11%POS Collections at 3% $142,539 $40,000 102,539 $1,230,468 16%

Key Contributors to Success

• Senior Management buy in; CEO, CFO, CNO

• Physician communication

• Clearly defined policies and expectations

• Training program

• Consumer education and satisfaction

• Establish goals and measure performance

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Compliance Barriers

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EMTALA

ABNs

HIPAA

Medical Necessity

ComplianceBarriers

HIPAA

Health Insurance Portability and Accountability Act

Disclosure of information must be limited to the minimum necessary for the purpose of the disclosure

PO$ IMPACT

Potential compliance risks while engaging in financial activity

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EMTALA

Emergency Medical Treatment and Active Labor Act

The hospital cannot delay in providing a medical screening examination or stabilization services in order to inquire about the individual payment method or insurance status.

PO$ Impact

Collection activity ONLY AFTER medical screening

examination and stabilization

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Medical Necessity

Social Security Act 1862(a)(1) is defined as:

Consistent with symptoms or diagnosis of the illness of injury being treated and not for the convenience of the patient, attending physician, or supplier

Within generally accepted professional medical standards (not exploratory or investigational

PO$ Impact

Potential patient liability if not medically necessary

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ABN’s

Advance Beneficiary Notices

Before services are provided

Hospital believes Medicare will not pay for some or all of the services because they may not be reasonable and medically necessary

Patient must sign a form agreeing to be held personally responsible for payment of services in the event Medicare does not pay

PO$ Impact

Potential patient liability19

Success Factors

Hospital PO$ collections policy

Financially focused Patient Access Department

Financial Counseling best practices

Medicaid eligibility vendor

Physician and physician office manager education

Staff education and incentive program

Consistency in front end process

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Collection Technology Enablers

Detailed eligibility – 271 data is not enough

Pre-certification validation

Medical necessity verification

ABN notification

Financial responsibility estimator

On-line payments

Integrated credit card authorization system

ATM accessibility

Credit scoring (propensity to pay)

Scripting

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Collection Readiness

Scripting, scripting, scripting

Training

Policies and procedures

Set expectations and accountability

Communicate goals and expectations

Measure potential vs. actual cash

Develop incentive plan

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PO$ Collections Opportunity Areas

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Scheduling

Pre-Registration

Registration/ED

In-house/Discharge

Financial Counseling

Plays key role in protecting the hospital’s cash flow and exposure to bad debt and collection expense

Medical assistance screening

Alternative state funding application process

Charity care screening

Credit scoring (propensity to pay)

Establish financial arrangements

Ensure every account is financially secured prior to discharge

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Scheduling/Pre – Registration/ Registration

Potentially the first point of contact with the patient!

Verify eligibility

Consistent pre registration process

Obtain benefits (coverage,

co-pay, co-insurance

and/or deductible, YTD accumulators)

Inform patient of liability in advance

Offer debit/credit card

payment option

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In House / Discharge

Make in-house visits to patient rooms for third party coverage, collect patient financial responsibility, and/or payment arrangements

Implement financially focused discharge control process for all point-of-service areas

Ensure every account is financially secured prior to discharge

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Tips to Motivate Payment

• Avoid

• I want you to…

• I need…

• We require…

• Our policy states…

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• Use

• Here are some options for you…

• Did you know you could

• May I suggest…

• We have always encouraged

Overcoming Excuses #1

Patient Excuse

“I’ve never been asked to pay before.”

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Registrar Response

“Depending on service you had last time, you

may not have had to pay a co-pay/co-insurance

at that time. If the service was in a previous

benefit year, maybe you had already met your

deductible and/or OOP max. Maybe you also

had a secondary policy that picked up where

the primary left off. As you can see, there

could be several reasons why you were not

asked to pay at that time of service. We offer

several payment options, will that be cash,

check or charge”?

Overcoming Excuses #2

Patient Excuse

“Why wasn’t I told in advance that I would have to pay today?”

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Registrar Response

“We do our best to try to inform patients prior

to their arrival of their portions due. However,

your Insurance handbook should detail for you

the portions you are responsible for when

receiving healthcare services. I apologize that

you were not notified before your date of

service. If you are not in a position to pay the

total amount in full today, we will set up a

payment arrangement for the remaining. How

much will you be paying today? Will that be

cash, check or charge”?

Overcoming Excuses #3

Patient Excuse

“I don’t have any money.”

“I can’t afford it right now.”

“I am not working. How can I pay if I don’t work?.”

“I’m going to file bankruptcy.”

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Registrar Response

“I understand. Why don’t I have you talk with our Financial Counselor and complete a Financial Analysis Statement. This will help us determine how we can assist you in resolving your account balance”

**Although we want to collect from this patient, it is equally important to financially secure the account, if they will not pay. Therefore, ensure that all critical data elements are verified and document your account. This will help the collectors in the back office understand the account better.

Overcoming Excuses #4

Patient Excuse

“I like to wait until my insurance pays, then I’ll pay.”

“My insurance pays first and then I pay when I receive the bill.”

“I don’t even have a Deductible/Co-Pay –my insurance is wrong.”

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Registrar Response

“As a service to you, we’ve contacted your

insurance company regarding your coverage

guidelines. We verified that your annual deductible

is $____ and you’ve already met $_____. Your co-

insurance percentage is ___% or $____, etc, etc.

The great news is, we have a contract with your

insurance company which means they receive a

discount. I’ll be glad to issue you a receipt today

and your payment will be reflected on your

itemized statement - which you should receive in

about 10 working days. We have several options

for payment, will that be cash, check or charge

Overcoming Excuses #5

Patient Excuse

“I don’t have my checkbook/cash/credit cards with me today.”

“They told me not to bring valuables with me so I left my purse/wallet at home.”

“I just wrote my last check.”

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Registrar Response

Ask if someone would be able to run home or to the bank and bring the payment back

Ask the patient, “when will you be able to

bring the payment back?” and/or “how will

you be taking care of this obligation today?”

This puts the responsibility back to the

patient to tell us how they plan to take care

of their bill.

Overcoming Excuses #6

Patient Excuse

“It’s not right to pay for a service before you have it done!”

“I’ll stop back at discharge.”

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Registrar Response

“I understand this may be something new for

you. We have, however, found that it is best

to talk about it up front so that there are no

surprises for anyone later on. Also, once

you’re finished with your test/procedure,

you’ll be ready to go home and you won’t

have to worry about stopping back here. We

have several payment options available, will

that be cash, check or charge”?

Overcoming Excuses #7

Patient Excuse

“My ex-spouse is responsible for paying these bills.”

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Registrar Response

“I understand. Unfortunately we cannot

become involved in divorce decrees. As the

presenting parent you are the responsible

party for this account. You, in turn, can seek

reimbursement from your ex-spouse. We do

have several payment options available, will

that be cash, check or charge”?

Overcoming Excuses #8

Patient Excuse

“I’m always overcharged and it takes forever to get your money back.”

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Registrar Response

“I understand how frustrating that can be.

We’ve done our very best to make sure we’ve

verified and estimated correctly. If you find

that you are due a refund, please call me

directly and I will follow up and ensure your

credit balance is promptly refunded. My

name is ______ and my direct line is _____.

Please call me if you have any problems at all.

Now….how would you like to take care of

this today? Will that be cash, check or

charge?

PO$ Collections – Evaluate & Improve Your Skills

Jennifer Powers-JohnsonRegional Director

Recondo Technology

435 659.9166

jpj@recondotech.com

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