Without adequate controls to contain risk in central billing office (CBO) operations, a CBO could theoretically have low denial rates, high cash-posting rates, and low accounts receivable (A/R days), but still operate with a negative profit margin. Here are five ways to reduce CBO risk.

 

Know which payment rates are producing positive margins. Know the cost allocations for the most common procedures performed in your organization and use this information in negotiating contracts with payers. When current rates are determined to be below the cost of rendering the service and all efforts to increase payment rates have been exhausted, work with service line leaders in determining why your organization’s costs are exceeding payment rates. Does the problem result from poor contract negotiations—or inflated cost to render the service?

Develop clear routing pathways that show which departments and personnel are responsible for specific claims. Establish controls to monitor these pathways and to maintain the appropriate processes, and make adjustments as needed. The fewer people who touch a claim, the better. Ensure that those who take on the burden of claim resolution have the appropriate skill set to tackle this responsibility. Review reports related to A/R metrics (days in A/R, pre-denial/denial/ aging reports, write-off reports) to ensure that the right people have the right data to make the right decisions. Hint: Never examine the write-off report independently of your A/R aging. Write-off reports are a function of the A/R aging buckets your staff are working.

Examine pre-denial, open denial, and write-off reports to identify trends with the help of an A/R analyst. Each month, identify the top three reasons for pre-denials, denials, and/or write-offs. Filter the data by entity or even by department. Establish teams (a denial infrastructure) to visit specific departments to identify the root cause of denials. Implement corrective action, where appropriate, and then monitor the results.

Use IT controls to limit who has authority to post cash. One major risk in cash posting is unrestricted IT access rights by staff. IT access rights are traditionally difficult to maintain, as users who shouldn’t have access to post cash (or process refunds) somehow obtain that access. Implement cash posting controls to detect incidents where incorrect cash postings occur. At the end of the month, ask accounting to run a high-level report showing total journal postings and total bank deposits, then reconcile the two to determine leftover total unapplied cash (i.e., account for timing delays). With careful oversight and monitoring, incorrect postings/potential refund fraud will most likely be detected in a timely manner.

Implement a post-payment review system. It is imperative to ensure the services you provide are paid for at the agreed-upon contractual rate. Underpayments and overpayments are quite common in the healthcare field. A post-payment review system will help capture revenue and ensure compliance with payers during the adjudication/payment process.


Steven Stocki, MSA, CIA, CPCO, is senior internal auditor, Steward Health Care, Boston.

Publication Date: Monday, December 02, 2013

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