Commitment to collections increases revenue
Many hospitals aren’t as committed as they think they are when it comes to point-of-service (POS) cash collection, suggests Pat Wulf, MBA, one of the founding partners of IT Program Associates, an Atlanta-based company that specializes in executive advisory services around revenue cycle and information systems.
Although upfront collection is the access initiative his clients are most excited about — "not because they want to be, but because they have to be" — there tends to be a lack of clarity around the subject, he says. "Everyone I talk to says they have a POS collections program in place, but in so many of those facilities, the amounts collected are a very minor portion of the actual patient liabilities," Wulf notes.
Although most clients tell him they expect to obtain patient copays and deductibles at the time of service, "I walk through and don’t see any kind of signage" to that effect, he adds. "When have you gone to the dentist or to your family practitioner in the past 10 years and not seen a sign that says payment is expected at the time of service? But most hospitals won’t go that far," Wulf explains.
The majority of facilities also lack a protocol for credit card collection at most entry points, he notes. During a recent meeting with a client who had assured him the facility had an active cash collection program, Wulf says, "when we did an estimate of how much they were not collecting at the time of service, we were looking at $12 million annually that was ultimately going to bad debt."
That shortfall would have been even greater had it included the costs of billing and collecting of copays on the back end, he adds.
The facility already had a major collection initiative in place, Wulf says, with a system at each access point for querying insurance companies to determine each patient’s deductible that, in a 15-month period, had tripled the amount of cash collected. "They were collecting $50,000 a month, over several locations, and are now at $150,000. But when you compare that to $12 million annually, it’s a pittance," he points out.
In that facility’s case, Wulf notes, there is an added sense of urgency because Pennsylvania, the state in which it is located, is planning "draconian" cuts to its Medicaid program.
Recouping the $12 million collections shortfall, he says, would go a long way toward mitigating what is expected to be a $22 million hit. What’s puzzling, Wulf adds, is that even with that kind of financial scenario, the hospital’s leaders still are not clear on how aggressive they want to be in their collection efforts. "They did have signs [notifying patients that payment was expected at the time of service] in the emergency department at one point," he says, "but they were taken down."
One version of events was that the legal department had ordered the signs’ removal; another was that it was done at the direction of the compliance officer, Wulf continues. "Nobody is taking credit for it. "At the end of the day," he adds, "they’re asking [registrars], at $10 or $12 an hour, to [focus on cash collection], and the senior leadership and the hospital board are giving no visible support to that."
Provide incentives to increase collection
Another observation Wulf made is that once hospital leadership does set the expectation that payment will be collected at the time of service, registration staff need to be properly monitored and given incentive to perform that function. "If the hospital mandates that staff will take payment at the time of service from everyone who has Blue Cross/Blue Shield insurance," he points out, "it becomes easier for the registrar to let that person become self-pay."
The conversation, Wulf says, could go as follows: "You don’t think you have your card with you? That’s OK. I’ll put you down as self-pay, and they’ll bill you later."
Once a hospital begins to put a cash collection program together, he suggests, it should establish a dollar amount that can be expected from each encounter, depending on the service area, and measure the results, providing incentives for registrars who meet or exceed the goal. "The programs that work best are those that are simple enough that registrars know quickly how they’re doing," Wulf explains.
Incentive programs in which employees "don’t remember the last time and can’t see ahead to the next time" they will be rewarded are much less effective, he explains. On the other hand, that need for timely payout must be balanced with the task of administering the incentive program, Wulf adds. "Monthly incentives become too much of an administrative hassle. I usually suggest a quarterly program, which seems to be the right balance."
How much to ask for
One of the best tools registrars can have is the knowledge of how much they should collect from each patient, he advises. A deficiency in most collection initiatives, Wulf says, is that not enough thought has been given to what the patient’s true liability will be.
While registrars can use eligibility systems to determine that, for example, a patient has a $200 deductible that hasn’t been paid, they also should take into account that a 20% copay is required — and have a good idea what that amount will be, Wulf says.
If the average cost of a procedure in a particular service area is $800, the hospital may want to collect at least $125 — a bit less than what the actual 20% copay would be, he adds. "You don’t want to set the amount so high that you’ll get into having to go through a refunding process, but at the same time, you want to get a fair amount of what is owed."
While upfront collection has long been thought to be part of most hospital’s access protocols, Wulf says, the current health care environment calls for a renewed focus in that area. "Until we sat down and talked about it with the company in Pennsylvania, they had no idea how much money was involved," he notes. "These are serious dollars."
The recent rash of class-action suits has brought attention to the need for hospitals to address their charity policies, he says, and in many cases, to become more cautious in how they handle self-pay liabilities. Meanwhile, being assertive enough in the POS collections arena, particularly with insured patients, has taken a back seat, Wulf points out. "That needs to be the focus area. There is a lot more money out there than most people think," he adds.
[Editor’s note: Pat Wulf can be reached at (770) 232-8820 or by e-mail at [email protected].]
Many hospitals arent as committed as they think they are when it comes to point-of-service (POS) cash collection, suggests one of the founding partners of IT Program Associates, an Atlanta-based company that specializes in executive advisory services around revenue cycle and information systems.
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