Revenue Cycle Performance: Optimizing Effectiveness June 17, 2014

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1 Revenue Cycle Performance: Optimizing Effectiveness June 17, 2014 CPAs & ADVISORS M. Aaron Little, CPA Managing Director

2 2 OBJECTIVES

3 OBJECTIVES Review key influences on revenue cycle performance Analyze key revenue cycle performance management metrics Assess revenue cycle performance management strategies 3

4 4 REVENUE CYCLE INFLUENCES

5 Payers Technology Process People 5 KEY INFLUENCES

6 Medicare Commercial & other Medicare Advantage Other managed care Medicaid Medicaid managed care 6 PAYERS

7 Intake Eligibility & authorization Service delivery Documentation & orders Pre-billing audit Claims submission Claims tracking & collecting Payment posting & reconciling Reporting 7 PROCESS

Eligibility & authorization Initial & reauthorizations Claims submissions Claim capture Clearinghouse services Documentation & orders Face-to-face Orders Tracking Claims tracking &

8 Eligibility & authorization Initial & reauthorizations Claims submissions Claim capture Clearinghouse services Documentation & orders Face-to-face Orders Tracking Claims tracking & collecting Timely followup Aging management Pre-billing audit Tracking Automation, too much, too little Payment posting & reconciling Timely followup Adjustment & write-off management 8 PROCESS

collecting Timely followup Aging management Pre-billing audit Tracking Automation, too much,

9 RAP billing requirements Verbal order First billable visit OASIS completed Plan of care completed PPS claim billing requirements OASIS transmitted Episode ended Signed & dated face-to-face encounter Signed & dated order for every visit Visit accounted for every order Therapy reassessment requirements met 9 PROCESS

Episode ended Signed & dated face-to-face encounter Signed & dated order for

Notice of election billing requirements Patient election Physician certification, verbal FTF encounter, if applicable Initial plan of care Claim billing requirements Patient

10 Notice of election billing requirements Patient election Physician certification, verbal FTF encounter, if applicable Initial plan of care Claim billing requirements Patient status Month ended Signed & dated physician certification Pharmacy & infusion pump invoices Levels of care confirmed Services documented Nursing facility room & board 10 PROCESS

Patient status Month ended Signed & dated physician certification Pharmacy & infusion

11 Clearinghouse vendor MAC systems Medicare specialized vendor Payer portals EDI vendor Data analysis tools Billing/EMR vendor General ledger 11 TECHNOLOGY

12 Intake personnel Prior authorization personnel Coding personnel Clinical personnel Medical records personnel Billing personnel Who are? Problem solvers vs. complainers? Idea generators vs. habit formers? Influencers vs. followers? Accountable vs. unstable? Risk aware vs. risk taker? Compliance & quality personnel Technology personnel Management & leadership personnel 12 PEOPLE

Idea generators vs. habit formers? Influencers vs. followers? Accountable vs. unstable?

13 Senior financial leader Accountability void Medicare billing specialist(s) Medicaid billing specialist(s) Insurance billing specialist(s) Payment posting specialist(s) Insurance authorization specialist(s) 13 PEOPLE

Insurance billing specialist(s) Payment posting

14 Senior financial leader Billing supervisor Data specialist(s) Medicare billing specialist(s) Medicaid billing specialist(s) Insurance billing specialist(s) Payment posting specialist(s) Insurance authorization specialist(s) 14 PEOPLE

billing specialist(s) Insurance billing specialist(s)

15 Key attributes Responsibility & accountability Problem solving Self motivated Timely Organized Strong communicators Detail oriented Embracing of technology Adaptable Warning signs Undependable Problem complainers Comfortable Un-present Disorganized Poor communicators Casual & inattentive to details Technologically uncomfortable Rigid & unwilling to change 15 PEOPLE

signs Undependable Problem complainers Comfortable Un-present Disorganized Poor

16 16 PERFORMANCE METRICS

17 Suggested Home Health Revenue Cycle Performance Metric Poor Average Best Medicare days in AR 45 days or more 35 days 25 days or less Non-Medicare days in AR 75 days or more 60 to 75 days 60 days or less Total days in AR 60 days or more 50 days 40 days or less Medicare AR older than 120 days Total AR older than 120 days 10% or more 7% 3% or less 15% or more 10% 7% or less Collections Less than 100% 100% More than 100% Medicare write-offs 2% or more 1% 0% Total write-offs 3% or more 2% 1% or less Days to bill RAPs More than 10 days 7 to 10 days Less than 7 days Days to bill claims More than 10 days 7 to 10 days Less than 7 days 17 HOME HEALTH METRICS

10% or more 7% 3% or less 15% or more 10% 7% or less Collections Less than 100% 100% More than 100% Medicare write-offs 2% or more 1% 0% Total write-offs 3% or

18 Suggested Hospice Performance Guidelines Metric Poor Average Best Medicare days in AR 45 days or more 35 days 25 days or less Total days in AR 55 days or more 45 days 40 days or less Medicare AR older than 120 days Total AR older than 120 days 10% or more 7% 3% or less 10% or more 8% 5% or less Collections Less than 100% 100% More than 100% Medicare write-offs 1% or more 0% 0% Total write-offs 3% or more 2% 1% or less Days to bill claims More than 5 days 5 days Less than 5 days 18 HOSPICE METRICS

more 7% 3% or less 10% or more 8% 5% or less Collections Less than 100% 100% More than 100% Medicare write-offs 1% or more 0%

19 19 PERFORMANCE MANAGEMENT STRATEGIES

AGED RECEIVABLES $100,000 >120 $75,000, Traditional Medicare $5,000, Medicaid $20,000, 10 other payers 58 episodes ~ 15 hours 20 claims ~ 4 hours 25 claims ~ 25 hours

20 AGED RECEIVABLES $100,000 >120 $75,000, Traditional Medicare $5,000, Medicaid $20,000, 10 other payers 58 episodes ~ 15 hours 20 claims ~ 4 hours 25 claims ~ 25 hours $100,000 >120 $10,000, Traditional Medicare $5,000, Medicaid $85,000, 25 other payers 8 episodes ~ 2 hours 20 claims ~ 4 hours 106 claims ~ 80 hours 20 PERFORMANCE ANALYSIS

hours $100,000 >120 $10,000, Traditional Medicare $5,000, Medicaid $85,000, 25 other

21 Example RAP Billing Analysis Example A Example B Example C Days in month 30 days 30 days 30 days Days before RAPs are billed 8 days 10 days 12 days Days to pay once RAPs are billed 10 days 10 days 10 days Episode beginning deadline Day 12 Day 10 Day 8 RAP billing deadline Day 20 Day 20 Day 20 Payment eligible RAPs 75 RAPs 75 RAPs 75 RAPs RAPs paid during month 50 RAPs 35 RAPs 20 RAPs Missed RAP payments 25 RAPs 40 RAPs 55 RAPs Average RAP payment $ 1,300 $ 1,300 $ 1,300 Lost RAP payment opportunity $ 32,500 $ 52,000 $ 71, PERFORMANCE ANALYSIS

22 Example FTE Analysis Medicare Specialist(s) Medicaid Specialist(s) Insurance Specialist(s) Full time equivalents (FTEs) 1 FTE 1 FTE 1 FTE Annual revenues $ 5,000,000 $ 1,000,000 $ 3,000,000 Average annual transactions 3,700 2,000 3,750 Average revenues per transaction $ 2,700 $ 500 $ 800 Average monthly transactions Average rebill percentage 10% 20% 40% Estimated monthly transactions Average work days per month 20 days 20 days 20 days Average work hours per month 160 hours 160 hours 160 hours Average monthly time available per transaction 28 minutes 48 minutes 22 minutes 22 PERFORMANCE ANALYSIS

23 PERFORMANCE ANALYSIS Identify problem causers Clinical vs. quality vs. billing vs. financial personnel Identify problem payers Evaluate contract stipulations, if applicable Identify technology constraints Assess technology contributions to claim generation & follow-up collections management Assess cost/benefit to filling accountability void Assess potential performance incentives 23

24 24 ACCOUNTABILITY ANALYSIS

25 25 SUMMARY

26 Payers Technology Process People 26 SUMMARY

27 27 QUESTIONS?

28 Revenue Cycle Performance: Optimizing Effectiveness June 17, 2014 CPAs & ADVISORS M. Aaron Little, CPA Managing Director

OBJECTIVES. Session 115 How to Manage Accounts Receivable & Cash Flow. M. Aaron Little, CPA. Melinda A. Gaboury, COS-C.

OBJECTIVES. Session 115 How to Manage Accounts Receivable & Cash Flow. M. Aaron Little, CPA. Melinda A. Gaboury, COS-C. Session 115 How to Manage Accounts Receivable & Cash Flow Melinda A. Gaboury, COS-C Healthcare CPAs Provider & ADVISORS Solutions, Inc. Chief Executive Officer mgaboury@healthcareprovidersolutions.com