Henry County Health Center’s transparency efforts helped patient access staff increase point-of-service collections by $100,000 between October 2016 and March 2017, compared with the same period in the previous year.
A decade ago, leaders at Henry County Health Center (HCHC), a 74-bed facility based in Mt. Pleasant, Iowa, with $60 million in annual gross revenue, launched a plan to enhance the patient experience by improving patient financial communications and enhancing transparency.
Since then, the organization has made significant progress but their work is far from done, says Dave Muhs, CFO. As HCHC, a two-time HFMA MAP Award winner, cares for more patients with high deductibles—some reaching as high as $5,000—they have added new tools and processes to check eligibility, provide estimates, offer bank loans, and improve point-of-service (POS) collections. They also have stepped up their bad-debt collections, reducing their bad debt as a percentage of gross revenue from 3.6 percent in August 2016 to 0.3 percent in December 2016.
Henry County Health Center Bad Debt Reduction, July-December 2016
Getting a Handle on Charges
Leaders at HCHC recognized that one of the early steps to improve transparency was restructuring their charges. Back in 2008, leaders at HCHC simplified patient billing by bundling all of their supply charges except for implants into procedure-based pricing. The move was prompted by calls from patients who questioned charges for syringes and other supplies on their bills. “Bundling charges got rid of a lot of our complaints and made the bill more patient friendly,” Muhs says. They also eliminated some charges, such as recovery charges in the operating room, and correlated emergency department (ED) physician charges with ED facility charges.
Giving leaders a more active role in charge management was another key step. A few years ago, Muhs and his team developed a rate change request form to help department leaders oversee edits to charges at HCHC.
Whenever a department director or designated associate wants to add, change, or delete a charge, they submit the form online via HCHC’s intranet. The form includes the charge description, the CPT-4 code, and the recommendation for pricing, if applicable. The form is routed automatically to Muhs for approval. If approved, a new or updated charge is sent back to the director and to the clinical IT team, who can adjust any order sets in the electronic health record (EHR) as needed. A deleted charge is routed back to the manager and IT systems administration team so the charge can be made inactive in the EHR.
“Part of running a department is being attuned to your charges,” Muhs says. “This process has helped to smooth the communication between different groups.”
To help educate department leaders about the charge-to-cost ratio and the true cost of their department revenue, Muhs utilizes Medicare cost reports. This can reveal areas where HCHC is highly efficient, such as labor and delivery, and areas where its costs exceed its gross charges, such as physical therapy. In cases where costs exceed charges, leaders can review whether they want to revise their charge structure, outsource services to a third party, or pursue another strategy. Another tool that is available is online pricing information available from the Iowa Hospital Association that compares average charges for all Iowa hospitals, which may point out pricing discrepancies in hospital charge structures.
Providing Patient Estimates
Two years ago, leaders at HCHC began offering estimates for surgeries and high-cost imaging studies. Today they offer estimates to all self-pay patients, which make up 6 percent of their patient population, as well as to patients with high deductibles.
“Patients appreciate knowing what their procedure will cost up front on high-dollar services so they can be prepared,” Muhs says. “And in health care, we have not done a good job with that.”
How it works: During pre-registration, the staff will verify insurance and check eligibility using a third-party tool. Patients who are private pay are checked for Medicare or Medicaid coverage as well as their propensity to pay. These private-pay patients, as well as those who have high deductibles, are run through a patient estimator tool and receive an estimate of their out-of-pocket responsibilities for surgeries or high-dollar imaging procedures. A financial counselor will call patients within three days to discuss their options as well as payment at the time of service.
For unscheduled patients, the staff will verify insurance and check orders for medical necessity. Patient access representatives use scripts to discuss payment at the time of service for any prior balances or to set up a payment plan. Any patients who are private pay are directed to a financial counselor for possible conversion to Medicaid.
Since adding an electronic eligibility tool and checking Medicare and Medicaid eligibility at the front end of the revenue cycle instead of the back end, HCHC has significantly improved its private pay to Medicaid conversions. For example, in March 2017, staff converted 295 of 383 private-pay patients to Medicaid. Accuracy of registration information also has increased.
The patient access staff also has improved POS collections. From October 2016 to March 2017, staff collected $155,600—a $100,000 increase compared with the same period in the previous year.
The revenue cycle team continues to refine its workflows to ask patients for their portion of payment up front. Muhs concedes that the new process was difficult for a few staffers because they were not comfortable asking patients for money at registration. But such workflow changes reflect the growing need to improve POS collections. “It’s a new industry, and we have to change with the times,” Muhs says.
For Muhs, patient testimonials have helped reinforce the importance of their efforts to improve transparency. “The feedback we’re getting from patients on these changes is more positive than negative,” he says. “They appreciate knowing what they are going to pay up front.”
Patient satisfaction scores are beginning to reflect this as well: The hospital met its patient satisfaction goal for the first time last quarter, achieving 80 percent satisfaction in six of the eight indicators they track. The hospital also recently switched its patient satisfaction survey tool in an effort to collect more robust information.
In the future, leaders at HCHC plan to provide estimates of co-insurance and co-payments for all patients. But this will require new workflows for revenue cycle staff as well as the IT team, Muhs says. Also, it may not be realistic for front-office staff to provide estimates for all types of procedures, such as labs.
Muhs offers the following advice to organizations looking to improve their price transparency with patients.
Embrace established principles for promoting transparency. HCHC has adopted the principles of HFMA’s Patient-Friendly Billing Project as well as the Iowa Hospital Association Statement of Transparency Principles.
Listen to the community. HCHC hosts community advisory groups to solicit feedback and ideas from employers, seniors, government officials, schools and universities, and retired employees. These groups have helped HCHC shape its transparency efforts to reflect community values.
Educate patients. HCHC developed a patient access brochure that helps patients understand the new payment process. The handout explains when payment is due and what options are available if they need help paying their bills. The brochure also covers the payment process for walk-in and emergency services.
See related tool: A Patient’s Guide to Paying for Services
Give staff a career path. As revenue cycle positions have evolved over the years, Muhs and his team have revamped their patient access and financial counselor job descriptions. They also are exploring new career paths for patient access staff that would allow them to earn more if they are certified.
At HCHC, each patient financial services staff member requires dual certification as a Certified Revenue Cycle Specialist-Institutional (CRCS-I) and Certified Revenue Cycle Specialist-Professional (CRCS-P) through the American Association of Healthcare Administrative Management (AAHAM). Level 2 patient access representatives and financial counselors also complete HFMA’s Certified Revenue Cycle Representative (CRCR) program. In addition, all revenue cycle staff complete three online modules as part of HFMA’s patient financial communications coursework.
Use scripting to provide a template for staff conversations with patients. In addition to using scripts to increase collections at registration if patients have a past-due balance, staff also leverage scripts when informing patients with high deductibles about their out-of-pocket expenses.
Forge strategic partnerships. HCHC works with four vendors who help them manage various processes across the revenue cycle, from registration quality assurance to bad debt collection.
Promote your successes. HCHC publicizes its price transparency efforts in its community newsletters and sends an annual report to the community with quality and patient satisfaction scores to help link quality to costs.
Preparing for Payments in the ED
As a CAH with limited resources, Muhs says it can be difficult to roll out too many new initiatives at once, but HCHC is committed to making patient-friendly changes. This includes improving up-front collections in the ED.
To explore this change, HCHC has developed a taskforce that includes the revenue cycle director, the head of communications, and staff from patient financial services and accounting. The taskforce, which meets twice a month, has set a goal for rolling out the new workflows to improve up-front collections in the ED by the end of the summer.
“This really is a journey,” Muhs says. “Our processes just keep evolving and evolving.”
Laura Ramos Hegwer is a freelance writer and editor based in Lake Bluff, Ill., and a member of HFMA’s First Illinois Chapter.
Interviewed for this article:
Dave Muhs, FHFMA, is CFO, Henry County Health Center, Mt. Pleasant, Iowa, and a member of HFMA’s Iowa Chapter.
This article was based in part on a presentation at HFMA’s 2017 ANI.