Most of what is done in patient accounting (aka patient financial services) is fairly simple and routine. The days of only paper claims are gone (but not totally eliminated). These days, if registration has done its job, and the departments have done their jobs, and your charge master is up to date, most of the time your billing personnel will never even see an account, let alone touch a bill.

NikolayFrolochkin / Pixabay

This doesn’t mean there aren’t complications, otherwise every single claim would be paid and there wouldn’t be a need for receivables personnel; that’s a nice pipe dream. There’s always something getting in the way of trying to bring in the money you’re owed, but for the most part you’re okay with it because it’s consistent with your norm.

And yet, a big question I have for you is this: if your CFO came to you today and asked why cash was low, how would you answer the question? Would you have an answer as to why the balance for your accounts over 90 days is too high? Would you have an answer as to what the biggest issues are in your department? Would you immediately blame the staff for not doing their job all that well?

Preparation is always key to having a handle on what’s going on with your receivables. Having reports at your beck and call don’t do you any good if you’re not sure what you’re looking for in the first place. Let’s highlight some quick hitting issues that patient financial service directors should be looking at which could be affecting your receivables and your cash. Luckily for you it’s not all your fault, but you need to consider everything.

1. New Code Changes.

The big question to ask is if your facility has updated its charge master with the latest CPT and HCPCS changes. Every year, there are additions, deletions, and changes of description to each of these, as well as other rules. In 2018 there were almost 300 CPT changes, deletions, or new codes added, along with over 230 HCPCS codes with the same occurrence.

Some of these are significant, with a few areas totally deleted and others added. Not only will that hurt cash but Medicare could charge your facility with fraudulent billing practices.

2. Days in unbilled receivables.

If your days in unbilled receivables is more than 5, your cash collections will be in trouble. The longer it takes to get a bill out, the longer it takes for the facility to get its money. Many CFOs don’t understand the importance of this; actually, many PFS directors don’t either.

The problem here belongs to medical records, but it’s not always their fault either. If they’re behind in coding, it could be that they’re overworked, or that they’re waiting on physicians to finish their charts. Accounts can’t be fully coded until physicians have completed their part, and I’ve been in hospital where some physicians are allowed to hold onto a chart for more than 30 days.

3. Denial tracking.

geralt / Pixabay

My hope is that everyone understands why looking at denials is critical to bringing in cash. Some denials indicate problems up front; incorrect dates of birth, SSI numbers, or insurance contract numbers, as well as lack of or improper authorizations. Many hospitals still haven’t quite figured out how to handle all those lab denials by Medicare for charges that don’t match up to diagnosis codes; some PFS employees don’t even know what the denial codes mean.

What I’ve found is that if you can fix or address your top 10 denials your cash collection efforts drastically increase. It’s better to fix the issue so you don’t have to keep revisiting it. This is an area that has to be watched closely, not only because it involves cash, but because I’ve seen where PFS employees sometimes take it upon themselves to come up with a solution that might not be ethical or illegal without knowing it.

4. Percentage of claims over 90 days.

We know that self pay claims can easily be higher than 90 days; no one has a real problem with this. However, in today’s world, most insurance companies pay fairly quickly if everything is clean, and they even deny relatively quickly. This means that when you have a lot of older claims on the books, and they’re not secondary claims, you have a major issue.

The problems here are exhaustive. The PFS department might not have enough people working on the right type of claims. For instance, I was at one large hospital where they only had 2 people working all Medicare claims. Since Medicare pays the fastest and also is the most important, that situation didn’t make any sense.

At another hospital, not only had the PFS department been gutted because of budgeting issues, but it turns out half the employees hadn’t been trained on how to do their job properly, so they just kept re-sending bills instead of fixing anything.

A PFS director has to know how to separate the workable claims from those that are harder to deal with. For instance, compensation claims can take years to adjudicate. They still need to be worked but there’s little that can be done with a lot of them. The same goes for self pay. Whereas Medicare claims should be relatively easy to take care of if there are enough people working on them.

5. Monthly tracking of total revenue and cash.

I’ve never been someone who tracked cash on a daily basis; there were way too many other things to take care of. Instead, I compiled statistics on a weekly basis so I could see if we were close to the dollars I expected to see.

I knew how much I expected because I also tracked revenue on a monthly basis. I knew that revenue from this month would affect cash overall within 30-90 days. Therefore, if revenue was low in February, which is traditional, then cash is going to be low in April, possibly May. Higher revenue works the same way. Nothing can be addressed without proper analytics.

It’s always better to be ahead of the above question when it comes to receivables. If a CFO has to send in a consultant, someone like me, to answer the questions, and you can’t supply some of those answers already… well, let’s just say it wouldn’t be a good sign for long term employment. Always be proactive; even if you’re unsure how to fix the problems, identifying them is important.

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