Unless you’re a coin collector or a big fan of Thomas Jefferson, you’d never trade a half-dollar for a nickel coin. But that’s exactly what many hospital business office directors are doing by prematurely sending motor vehicle accident claims to either health insurers or a self-pay vendor.
Business office directors tend to live by the motto, “Days outstanding means everything.” Many of them receive bonuses based on how aggressively they whittle down the hospital’s average days outstanding. For accident claims, it is common for them to take the fastest (and easiest) path to revenue by pushing these claims directly to either health insurance or self-pay, instead of performing the complex work required to get fully paid from property and casualty (P&C) insurance carriers. And for those willing to do the work to file no-fault and liability claims with P&C carriers, many still become nervous at the 120-day mark and downright panicky when aging reaches the 180-day threshold.
What business office directors should keep in mind is that reimbursement for accident claims is a niche unto itself—and that there are two great reasons to go beyond 180 days: significantly greater reimbursement and higher patient satisfaction. Moreover, a hospital can achieve both without adding a single new patient or increasing the number of procedures performed.
Every year—regardless of whether the economy is up or down—about 1.5 to 2 percent of a hospital’s gross revenue comes from motor vehicle accidents treated in the emergency department. (ED) You can understand why hospitals shy away from aggressively working these accident claims. Without an experienced partner, it can be a workflow nightmare: interviewing accident victims, tracking down police reports, dealing with multiple P&C insurers for both no-fault and liability coverage, and so forth. If the injured patient has health insurance, some hospitals simply direct the bill in that direction. If the patient is uninsured, they often send it straight to a collection agency. But in their haste to get the claim off their days outstanding list, they may be leaving a lot of money on the table.
For claims involving medically uninsured patients, the average reimbursement rate from a self-pay collection agency is typically 5 to 10 percent. But if business office directors are patient, they can often get 50 cents on the dollar on these specialty claims. The extra money comes from two places.
Roughly two-thirds of the additional revenue comes from no-fault insurance (Med-Pay or PIP), which has the dual advantage of lowering the patient’s co-payments and deductibles while dramatically increasing the hospital’s reimbursement rate.
About one-third of the extra revenue comes from lien protection in cases where an uninsured victim was not “at fault” and has a financial settlement pending. By placing a lien on the future settlement, the hospital is guaranteed to receive their fair share before the patient receives the settlement check—and the hospital avoids the negative publicity of pushing an accident victim through a self-pay collection process.
For no-fault claims, it typically takes about 60 days to receive reimbursement. And for liability claims, it typically takes about 250 days to receive reimbursement from the patient’s settlement—and reluctance to wait this long can significantly hurt the hospital’s revenue stream. Some business office directors get so concerned at the 180-day mark that they remove the lien and send the claim to a collection agency. They could be missing out on a big chunk of additional income by not waiting those additional 70 days.
Days outstanding is a vital metric for any hospital, but it’s a mistake for business office directors to use only that single yardstick. Pushing claims too quickly to either health insurance or self-pay will definitely lower days outstanding, but the hospital gets significantly lower reimbursement.
The old adage “haste makes waste” comes to mind here. No one would hurriedly swap a half-dollar for a nickel. But that’s exactly what hospital business office directors are doing when they race to get auto accident claims off the books. It’s much smarter to find an accident claims management partner with the expertise and patience to help achieve maximum reimbursement.
Lyle Beasley is president of Medical Reimbursements of America, Brentwood, Tenn.
Publication Date: Friday, December 20, 2013