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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
TriMedx helps health systems control costs and uncover savings opportunities by optimizing the clinical engineering function.
Patient financial engagement is more challenging than ever – and more critical. With patient responsibility as a percentage of revenue on the rise, providers have seen their billing-related costs and accounts receivable levels increase. If increasing collection yield and reducing costs are a priority for your organization, the metrics outlined in this presentation will provide the framework you need to understand what’s working and what’s not, in order to guide your overall patient financial engagement initiatives and optimize results.
A leader from McKesson discusses how healthcare reform is forcing hospitals and health systems to take a different approach to capacity management and patient flow.
No two patients are the same. Each has a very personal healthcare experience, and each has distinct financial needs and preferences that have an impact on how, when and if they chose to pay their healthcare bill. It’s no longer effective to apply static billing techniques to solve the complex challenge of collecting balances from patients. The need to tailor financial conversations and payment options to individual needs and preferences is critical. This presentation provides 10 recommendations that will not only help you improve payment performance through a more tailored approach, but take control of rising collection costs.
Emad Rizk, MD, president and CEO of Accretive Health, discusses the uncertainty facing hospitals and the transitions affecting revenue cycle management.
This white paper, written by Apex Vice President of Solutions and Services, Carrie Romandine, discusses the importance of patient segmentation and messaging specifically related to the patient revenue cycle. Applying strategic messaging that is tailored to each patient type will not only better educate consumers on payment options specific to their billing needs, but it will maximize the amount collected before sending to collections. Further, targeted messaging should be applied across all points of patient interaction (i.e. point of service, customer service, patient statements) and analyzed regularly for maximized results.
Jim Bohnsack, vice president, solution & corporate development for Conifer Health Solutions, explains how the company helps healthcare providers leverage data to deliver better outcomes while optimizing reimbursement for all payment arrangements.
This white paper, written by Apex President Patrick Maurer, discusses methods to increase patient adoption of online payments. Providers are now seeking ways to incrementally collect more payments due from patients as well as speeding up the rate of collections. This white paper shows why patient-centric approaches to online payment portals are important complements to traditional provider-centric approaches.
Steve Scibetta, senior director of channel sales for Ontario Systems' healthcare product line, shares insights into effectively managing receivables.
Increased electronic engagement between healthcare providers and patients provides significant opportunities for improving revenue cycle metrics and encouraging patients to access EHRs. This article, written by Apex Founder and CEO Brian Kueppers, explores a number of strategies to create synergy between patient billing, online payment portals and electronic health record (EHR) software to realize a high ROI in speed to payment, patient satisfaction and portal adoption for meaningful use.
Elena White, vice president of risk, quality, and network solutions for Optum, discusses how healthcare providers can leverage data and technology as they enable risk in their organization.
Faced with a rising tide of bad debt, a large Southeastern healthcare system was seeing a sharp decline in net patient revenues. The need to improve collections was dire. By integrating critical tools and processes, the health system was able to increase online payments and improve its financial position. Taking a holistic approach increased overall collection yield by 10% while costs came down because the number of statements sent to patients fell by 10%, which equated to a $1.3M annualized improvement in patient cash over a six-month period. This case study explains how.
Somnia President and CEO Marc Koch, MD, MBA, explains how hospitals can drive transformative change in the perioperative experience for outstanding clinical and financial outcomes.
With the ICD10 deadline quickly approaching and daily responsibilities not slowing down, final preparations for October 1 require strategic prioritization and laser focus.
PMMC President Roger L. Shaul discusses the effects of healthcare reform on revenue cycle management and how PMMC's products help clients adapt to a changing financial environment.
Read how Gwinnett Medical Center provides clear connections to financial information, offers multiple payment options for patients, and gives onsite staff the ability to collect payments at multiple points throughout the care process.
Greg Burgess, Founder and Chief Product Officer at Burgess Group shares insights and opportunities for payment integrity in the rapidly changing healthcare IT landscape.
Read how Orlando Health was able to perform deeper dives into claims data to help the health system see claim rejections more quickly–even on the front end–and reduce A/R days.
To maintain fiscal fitness and boost patient satisfaction and loyalty, healthcare providers need visibility into when and how much they will be paid–by whom–and the ability to better navigate obstacles to payment. They need payment clarity. This whitepaper illuminates this concept that is winning fans at forward-thinking hospitals.
Financial services staff are always looking for ways to improve the verification, billing and collections processes, and Munson Healthcare is no different. Read about how they streamlined the billing process to produce cleaner bills on the front end and helped financial services staff collect more than $1 million in additional upfront annual revenue in one year.
Effective revenue cycle management can be a challenge for any hospital, but for smaller providers it is even tougher. Read how Wallace Thomson identified unreimbursed procedures, streamlined claims management, and improved its ability to determine charity eligibility.
Before launching an energy-efficiency initiative, it’s important to build a solid business case and understand the funding options and potential incentives that are available. Healthcare leaders should consider taking the steps outlined in the whitepaper to ease the process of gaining approval, piloting, implementing, and supporting sustainability projects. You will find that investing in sustainability and energy efficiency helps hospitals add cash to their bottom line. Discover how hospitals and health systems have various options for funding energy-efficient and renewable-energy initiatives, depending on their current financial structure and strategy.
Health care is a dynamic mergers and acquisitions market with numerous hospitals and health systems contemplating or pursuing formal arrangements with other entities. These relationships often pose a strategic benefit, such as enhancing competencies across the continuum, facilitating economies of scale, or giving the participants a competitive advantage in a crowded market. Underpinning any profitable acquisition is a robust capital planning strategy that ensures an organization reserves sufficient funds and efficiently onboards partners that advance the enterprise mission and values.
The success of healthcare mergers, acquisitions, and other affiliations is predicated in part on available capital, and the need for and sources of funding are considerations present throughout the partnering process, from choosing a partner to evaluating an arrangement’s capital needs to selecting an integration model to finding the right money source to finance the deal. This whitepaper offers several strategies that health system leaders have used to assess and manage capital needs for their growing networks.
Copyright 2016, Healthcare Financial Management Association.
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