Use the following self-assessment tool to ensure that you have key processes covered ("yes" is the preferred response for each process). Then, check your performance measures against the better-practice target levels in the performance indicator section.

Collections and Working with Outsourcing Vendors  

Key Processes

Yes

No

Follow-up Action

1. Long-term payment accounts are written off.

 

 

 

2. An agency is used to monitor long-term payment write-offs.

 

 

 

3. Medicare's bad debt "120 days" rule is applied to all financial classes.

 

 

 

4. Two or more bad debt agencies are used, and referrals are allocated to permit performance comparisons.

 

 

 

5. Different vendors are used for bad debt and extended business office (EBO) pre-bad debt outsourcing.

 

 

 

6. Agencies and outsource vendors accept referrals electronically.

 

 

 

7. The EBO vendor is able to "mirror" the PFS system to obtain notes, etc., or actually works accounts on provider's system.

 

 

 

8. Medicaid-eligible vendors have good relations with state agencies.

 

 

 

9. Agencies remit gross payments and submit invoices for fees.

 

 

 

10. Agencies are willing to put their own support FTEs on-site.

 

 

 

11. Agencies are willing to assign dedicated FTEs to your accounts.

 

 

 

12. Post contractual adjustments at the time of final billing.

 

 

 

Key Performance Indicators

Target

Actual

Follow-up Actions

1. Percentage of bad debt netback ([collections - fees] ÷ placements)

7-11%

 

 

2. Bad debt fees percentage

8-15%

 

 

3. Third-party EBO fee percentage

6-10%

 

 

4. Self-pay EBO fee percentage

10-12%

 

 

  1. Legal collections fee percentage

20-30%

 

 

  1. Medicaid eligibility assistance fee percentage

12-18%

  


This checklist is based on HFMA's February 2004 audio web cast, "Developing Key Performance Indicators for the Revenue Cycle," by David Hammer, Vice President, Revenue Cycle Management Services, McKesson Information Solutions, and Roland Funsten, Assistant Vice President, Revenue Cycle Operations, St. Vincent Hospital. Questions or comments may be directed to david.hammer@mckesson.com  or rsfunste@stvincent.org.

Publication Date: Friday, October 01, 2004