Revenue cycle leaders share top 3 ways to reduce days in accounts receivable

Revenue cycle operations are the heartbeat of a hospital's financial health, and the faster they get paid, the healthier the operations. Debts languishing in accounts receivable can bog down an institution and negatively impact the bottom line due to the lack of money coming in, the effort expended to collect and, ultimately, bad debt mounting up. Luckily, healthcare finance executives are taking the issue seriously.

"We have developed reporting and tracking tools that allow us to proactively identify opportunities and accurately track our success," said Richard Rhine, senior vice president of revenue cycle at the Grady Health System. "We [also] aggressively utilize technology that helps us assure touches first-time quality, promotes standardization and electronically corrects AR issues."

[Also: ICD-10 gets down to specifics, and attention to detail directly affects finances]

We spoke with several healthcare executives from top health systems across the country, and they each shared their top three ways to reduce or minimize accounts' days in A/R.

Tim Panks, senior vice president of finance for Dignity Health; Doug Hires, senior vice President for Optum360

"There are several levers available to target AR reduction in the revenue cycle. Significant reduction will often require collaboration with leadership from other areas of the revenue cycle, or even from the groups outside the system, such as contract payers," Panks and Hires said,

1. A/R reduction efforts with targeted payers

To speed the process of cutting down on aged revenue, Panks and Hires said they chose the the top 11 contracted payers with the largest amount of billed A/R over 90 days from date of service. Using a collaborative approach with managed care leadership from the hospitals, the business office secured contacts at the payer who could then help escalate and resolve "problematic claims."

Before details were sent to payers, a team reviews and identifies accounts looking for root cause and current status. If an account iss deemed pending an appeal or other requested information, it is excluded from the final escalated submission and fast-tracked internally for resolution. The remaining accounts are submitted to the contact at the associated payer for resolution. 

Weekly, or daily as needed, meetings are held with the payer and the business office to review the accounts, providing additional information as soon as it is requested.

"Within the first quarter, A/R over 90 days had reduced by $100 million for these 11 payers. By the second quarter the A/R had reduced by a total of $200 million from the project start. In addition to the reduction of the aged A/R, our review team was able to identify and develop mitigation strategies in collaboration with the payers for many of the root causes that led to the aged claims," Panks and Hires said.

2. Improved financial clearance rate

The system's patient access group launched an initiative to target some of the drivers of denials or rebills in the business office, including the development of an automated workflow solution, dashboards and extensive training to capitalize on real-time reporting and operational opportunities. The improvements included financial clearance, defined as the percentage of accounts with authorization, verification and notification completed by date of service, and an increase in point-of-service collections from the patient.

The facilities quickly saw improvement in the financial clearance rates.  When the project launched, financial clearance rates ranged from 25 to 75 percent, Panks and Hires said. Now, 70 percent of the facilities are over the goal of 95 percent, with all over 80 percent. The improved financial clearance rate yielded fewer denials for authorization and eligibility and decreasing A/R.

Point-of-sales cash collections also saw a 30 percent increase year over year.

"By having this cash collected up front, the collection cycle was reduced significantly when compared to pursuing the patient after final adjudication by the payer," they said.

3. Cross-functional collaboration

Billing staff often needs information from other areas prior to submitting claims, and delays in getting that information leads to more AR days and risk of untimely filing denials. A "cross-functional revenue cycle review team" with key leaders from across the system monitored current trends against goal, developed ways to reduce backlogs and discussed opportunities to refine the process.

Daily and weekly reports are sent out to these leaders to track performance against goal. The review team meets weekly for an in-depth review of the trends, successes, barriers and projections for the following week. As an example, when the billing team planned an overtime project to reduce unbilled accounts, they included coders in the project so any coding edits could be answered real time, instead of pended for the next business day. Attention was also paid to opportunities to prevent claim edits. For example, CCI edits were applied during the coding process to avoid edits in the billing office.

"In the first three months following the collaboration, we were able to reduce and maintain outstanding requests by $200 million across the system."

Wesley Smith, vice president of finance, revenue cycle operations at NYU Langone Health

"At NYU Langone Health, the revenue cycle operations team relies on efficient communication and joint accountability within the organization and with insurance companies. We have been able to reduce our accounts' days in AR using many methods, but the following three are instrumental and distinctive to NYU Langone," said Smith.

1. Communicating out-of-pocket responsibility

NYU Langone said they use a charge estimator tool in order to provide patients with pre-service estimates for scheduled visits so they know their approximate obligation before services are rendered. Patients also have the option to pay over the phone prior to their service or at time of service. The upfront communication increased the pre-service, time-of-service collection rates and self-pay collections throughout the billing process. 

"Patients are informed of their pocket costs and this decreases confusion and increases their likelihood to pay. Approximately 30 percent of self-pay collections happen at the time of service," Smith said.

2. Fight unbilled A/R  through automation, interdisciplinary meetings, reporting:

In 2013, NYU Langone launched an initiative to reduce its number of unbilled accounts, aiming to keep the number of unbilled accounts aged greater than 30 days as close to zero as possible. An NYU Langone team with representation from departments including billing, chargemaster, and medical records departments and others met weekly until it became possible to consistently maintain unbilled accounts at target levels. They also developed a series of reports and dashboards to show several different unbilled account data sets like unbilled reason, by payer, by clinical department, allowing the team to spot trends, draw insights, and hold responsible areas accountable.

"The reports have become part of the organization's daily routine to access them and take action on any new issues that appear. We receive 86 percent of our payments within 60 days," Smith said.

3. Denials management and payer-escalated issues:

Each follow-up representative is payer specific, able to understand the managed care contracts for their payer, verify payments and escalate if an account is underpaid or denied erroneously, Smith said. If escalated, the account is worked by a joint operating committee and analytics team tasked with analyzing, validating, reporting and resolving escalated commercial insurance denials, underpayments and contractual errors, hopefully building strong collaborative relationships and open communication with payers and other departments throughout the hospital.

"In short, this group of analysts works as a SWAT team to address problematic accounts that cannot be resolved through normal follow-up activities," Smith said.

If one account is identified with an underpayment or denial issue, analysts utilize a database to pinpoint other accounts with that issue. The accounts are tagged with specific codes in order to report issues out to leadership, managed care and the insurance companies as well as the number of accounts impacted. In regular meetings with payers, summary dashboards are presented to hold all parties accountable to addressing issues.

"Notably, NYU Langone has recovered more than $30 million on an annual basis through the JOC processes," he said.

Plachikkat Anantharam, senior vice president and chief financial officer, NYC Health+Hospitals

1. "In a larger system like ours, information is powerful."

Historically, each facility has monitored its own data independently, which is limiting, Anantharam said. By aggregating it into a system-wide dashboard, patient account directors see how they are doing and how they are doing in comparison to the other 10 hospitals, making overall trends and gaps easy to identify. Lessons from better performers are readily shared, and "healthy competition" motivates each hospital to try to outperform the others within our system, spawning attention to detail and creative thinking. This dashboard so far exists just at the acute care level, with additional opportunity at the ambulatory care level down the road.

2. Focus on staff capacity

"By recognizing that capacity is not always consistent, we have been able to supplement the work of staff. High turnover of coders creates fluctuations in capacity, and we've engaged temporary remote coders as we backfill, who can step in as directed to address changing needs. By implementing this capacity-sensitive model, accounts receivable bottlenecks are eliminated, and the work environment is less stressful for staff," Anantharam said.

3. Be strategic in appealing denials

The system reviews administrative denials to look for patterns that conflict with payer contracts or state or federal regulation. They engage with payers as a system, as opposed to individual hospitals, to address the denials and structure accounts receivable staff to specialize by payer, so that they become the experts in dealing with the specifics of that payer.

"We recognize that sometimes, outside expertise may be better, so it may make sense to engage a secondary business office, for, say, no fault accounts," they said.

Twitter: @BethJSanborn
Email the writer: beth.sandborn@himssmedia.com