Identify uncollectible accounts early
Also examine your process for self-pay patients
Is a patient's account uncollectible? Is your self-pay patient eligible for financial assistance? Both of those scenarios are becoming more common due to the recession — and if the answer to either of those questions is "yes," you should know sooner rather than later.
Uncollectible accounts should be written off promptly so they won't adversely affect days in accounts receivable (A/R); but whether an account is uncollectible is "very difficult to determine promptly," says Adam Anolik, director of financial operations at Strong Memorial Hospital in Rochester, NY. Also, it may not be readily apparent that your self-pay patient is eligible for charity care.
These two processes are extremely important to patient access departments, since otherwise, the accounts will be considered "bad debt." Here are three strategies used by Strong Memorial's patient access department to quickly identify which accounts are eligible for financial assistance and which should be written off:
• The department focuses on self-pay balances of more than $10,000.
Anolik says his department is seeing more self-pay accounts. He says this is partially due to the fact that many patients with employer-sponsored health insurance have plans that carry high deductibles and coinsurance. "We are receiving more calls from patients questioning charges, balances, asking for estimates on services, and inquiring about our charity care program," he reports.
"We run reports of accounts with self-pay balances over $10,000 each month," says Anolik. "These are reviewed in a group setting to determine what we expect from a collectibility standpoint."
One example would be a large account where the patient has applied for Medicaid but has not yet been approved. "We typically will review those types of cases with the financial counseling department and determine what follow-up, if any, is needed," he explains.
Another example would be an account for a patient who was uncovered at the time of the service but was subsequently approved for Medicaid or some other type of insurance. "In those cases, we might have enough financial information about the patient to determine that the prior account should be treated as charity care even if the patient had not applied for financial assistance," says Anolik.
For instance, one patient had a $40,000 balance due for a self-pay visit and had applied for Medicaid with the hospital's internal case management team. In this case, the patient was denied Medicaid as the necessary documentation was not provided.
"In this case, our self-pay collector would review the completed Medicaid application, check to see if the patient has any type of Medicaid coverage currently, and attempt to contact the patient," says Anolik.
If the Medicaid application shows that the patient does not have resources above the hospital's financial assistance guidelines and the services are too late to obtain Medicaid coverage, the balance would be considered presumptive eligible for financial assistance. If a patient has current Medicaid coverage, he or she would be presumptively eligible for financial assistance.
"If we are unable to make any type of determination as to income/resources and the patient is unresponsive to our attempts to contact them, the account would be considered uncollectible," says Anolik. The department's collection agencies also are well versed in the hospital's financial assistance program and will forward financial assistance applications to patients.
• Selected outpatient accounts are outsourced to an external vendor.
Some insurance accounts aged 60 or 90 days from the date of service that are not yet paid are sent to an external vendor. "We receive routine reports back from the vendor that show success as defined by cash collections," says Anolik. "In terms of metrics, we tend to look at the percentage of outpatient accounts over 90 days to measure the effectiveness of this. We are running between 25% and 35% in this measure, with a goal of under 30%."
• The department has implemented a new billing system.
"There certainly is more functionality in our newer system that enables us to better estimate the ultimate amount we will be paid for the services provided," reports Anolik. "There are also more reporting capabilities that assist us in working accounts that have been denied, or where payment has been delayed by the insurance companies through the use of 'worklists' that our staff have access to."
Is the account uncollectible?
"Accounts are only written off when they are determined to be uncollectible," says Anolik. Typically, two statements are sent out to patients seeking payment up to a set dollar threshold. After that point, an "Early Out" vendor is used, which continues to attempt to collect the debt prior to it going to a collection agency.
"In total, this process can take six months or longer, depending on the nature of the case," says Anolik.
If a patient has elected to apply for Medicaid or charity care, the balance is often not written off as uncollectible until a decision on eligibility for Medicaid or charity care is determined.
"For those visits not being sent to our 'Early Out' vendor, we review internally and make recommendations for charity care, sending to our internal attorney or to our outside collection agencies," Anolik reports.
In the past year, the hospital's web site was updated to include information on its charity care program. "We also plan to begin accepting payments from patients on-line in the future, although that will be primarily after the services are provided and not up front," he says.
Are self-pay accounts eligible?
At Strong, a monthly report is run to identify very large self-pay accounts. These are reviewed for charity care eligibility and whether further follow-up is needed before a determination of uncollectability is made.
"There is also a self-pay team that meets monthly to review large-dollar inpatient accounts and make possible recommendations for collection," says Anolik. "Improvements to the self-pay collection process are discussed in this forum."
At University of California, Los Angeles (UCLA) Hospital System, self-pay collection representatives have a minimum daily production standard of 40 accounts per day. The quality standard is a minimum of 90% of accounts undergoing quality assurance review.
"It's important for these accounts to be worked effectively to assure timely receipt of payment for services rendered, to provide accurate information to the patient, to reduce bad debt, to reduce aged receivables, and to reduce A/R days," says Bernadette Lodge-Lemon, director of revenue cycle.
Lodge-Lemon notes that her department must comply with federal and state regulations regarding bad-debt assignments. "California Assembly Bill 774 regulates the process and manner in which patients may be assigned to a collection agency," she explains.
First, the patient must be provided with notice that if they do not have health insurance coverage they may be eligible for Medi-Cal, Healthy Families, California Children's Services, or charity care. If patients do not respond, they must be provided with a final notice and advised that nonprofit credit counseling may be available.
"We are required to assist patients in applying for possible governmental program coverage, offer no-interest payment plans and/or discounts for prompt payment," says Lodge-Lemon. After meeting these requirements, the account is eligible to be assigned to bad debt collection, which constitutes a write-off as uncollectible.
"Accounts qualify daily for this process. We employ dedicated self-pay collection representatives reporting to a designated supervisor and manager to actively monitor these accounts in efforts to assure that they are handled expeditiously," she explains.
If the patient's responsibility is identified up front by patient access staff and has not been collected, collection representatives have systematic work drivers that queue those cases by dollar value, date of service, broken payment promises, and insufficient funds checks.
"The collection representatives have daily, weekly, and monthly productivity and quality standards that are closely monitored to assure that the accounts are being worked timely and effectively," says Lodge-Lemon.
Technology determines eligibility
Strong Memorial's patient access department uses a variety of real-time applications to determine Medicare, Medicaid, and commercial insurance eligibility.
"In terms of financial assistance for charity care, the only upfront verification occurs when a patient has previously applied for and been approved for charity care prior to services being rendered or has existing services where they have been approved previously," says Anolik.
Also, Strong's case management team will review for Medicaid or charity care eligibility while the patient is receiving inpatient care.
Patient access staff use several systems
Patient access staff at UCLA use several automated eligibility systems, including Health Plan web sites, which offer batch eligibility, the Medicare direct data entry system, and point-of-service eligibility devices throughout the patient access departments for individual eligibility verification.
Initial training was provided by the vendors, and follow-up training was conducted by the managers and supervisors. According to Lodge-Lemon, the systems are fairly intuitive and easy to learn.
"The benefits include not having to place calls and navigate through myriad telephone prompts," says Lodge-Lemon. "There are flexibility advantages in verifying eligibility 24 hours per day, seven days a week for most payers, and realized cost benefits through automation rather than manual resources."
[For more information, contact: Adam Anolik, Director, Financial Operations, Strong Memorial Hospital, Rochester NY. E-mail: [email protected]; Bernadette Lodge-Lemon, Director, Revenue Cycle, University of California, Los Angeles Hospital System. Phone: (310) 794-8299. E-mail: [email protected].]
Is a patient's account uncollectible? Is your self-pay patient eligible for financial assistance? Both of those scenarios are becoming more common due to the recession and if the answer to either of those questions is "yes," you should know sooner rather than later.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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