Monthly Archives

October 2016

Audit

To Audit or Not to Audit – That is the Question

By | Revenue Cycle Management | No Comments

Uncover the black holes in your revenue cycle management processes that impact your ASC’s bottom line.

Do you know what you don’t know?  Many revenue cycle management companies assess their services based on key performance indicators (KPIs).  Accounts receivable (AR) days, collections, bad debt, net revenue per case, days to bill, and days to pay are usually at the top of the KPI list.  While KPIs can provide you with a high level view of what is happening with your business, other seemingly minor items can result in uncollected revenue that may go undetected.  This is why auditing is crucial.

Auditing is a time consuming, daunting task.  Those being audited may feel it is punitive.  However, this necessary evil reveals a lot about the efficiency of your revenue cycle management processes.  Let’s look at the bright side of what you can discover while auditing and how your findings can result in process improvement that typically increases your bottom line.

There are many areas to audit – patient registration, coding, charge entry, denied claims, AR follow-up, and collections to name a few.  Routinely and randomly auditing your internal processes allows you to identify gaps that need to be closed, provide additional employee education when needed, ensure your payors correctly load your contracts in their systems, tighten your patient collections process, and so many more.  Let’s look at some of these in more detail.

Registration Audits

Accurate patient registration is the first step to a clean claim.  Routine auditing of registration errors will shed light on struggles being faced at your front desk.  Medicare Advantage Plans routinely trip up front desk personnel who may register the insurance carrier as Aetna rather than Aetna Medicare.  A key point to share with your front desk team is to consider the age of the patient to determine if he or she is a candidate for Medicare coverage.  Also, spend some time looking at copies of insurance cards with your front desk.  Create a notebook of insurance card samples and review them routinely, highlighting areas on the cards that will lead to proper insurance registration.

Another common registration error is registering a young child as the policy holder.  If the patient is not the policy holder, the date of birth of the policy holder will be required to file a clean claim.

Finally, ensure your front desk is taking advantage of online payor tools to verify eligibility and benefits, file requests for authorization, and determine the remaining deductible on each patient’s plan.

Coding Audits

Internal and external coding audits are an essential undertaking.  External audits supply an additional level of compliance and accountability for your coding services.  The external audit results can support internal audit findings or identify areas needing focus that your internal audits may have overlooked.  An external auditor can provide a non-biased, objective audit for you.  Internal audits provide a benchmark to compare to your external audits.  They also help you recognize when additional coder and/or physician education is needed to maintain compliance or secure proper reimbursement.

In your endeavor to obtain maximum allowed reimbursement, ask yourself the following questions.  Are you capturing all available procedures and billing them properly?  Are special modifiers required by individual payors recorded accurately?  Do your diagnosis codes reflect the greatest level of specificity?

Cash Posting Audits

Cash posting audits serve many purposes.  The accuracy of cash posting determines the need for the following:

  • Appeals on underpaid claims
  • Fee schedule increases
  • Payor contract updates in your patient accounting system
  • Additional education to employees on payor contracts and terms
  • Patient statement accuracy
  • Proper journal coding of adjustments
  • Timely credit balance reconciliation
  • Additional education to employees based on your audit findings

Denial Audits

Auditing your denials can be telling.  Are your employees filing timely appeals?  Timely filing requirements, similar to those applied to claims submission, also come into play with appeals.  Do your employees know what they are appealing and why?  If they don’t, unnecessary time is spent appealing denials that will not be successfully overturned.  Some examples are:

  • Filing an appeal on a code bundled into another procedure
  • Filing an appeal on a code that required a pre-authorization which was not obtained
  • Filing an appeal for medical necessity without reviewing the payor’s coverage policy of the procedure
  • Filing an appeal outside the timely filing limits set on the appeal
  • Filing an appeal of an implant payment when separate payment for implants is not allowed per the payor contract

Final Notes

Getting everyone involved in process improvement fosters buy-in and improves your chances of successfully tackling specific issues; but you can’t stop there.  You have to conduct routine audits to make sure old processes or bad habits don’t resurface.

Your time is valuable – make it count!  Determine where your pain points are and begin auditing there.  Share audit results with your employees.  Resolve the issues.  Celebrate the successes and the failures.  Those “failures” lead to correction of issues and improved processes.  Your efforts will pay off in reduced errors and, ultimately, enhance your bottom line.


By Carol Ciluffo – Vice President of Revenue Cycle Management

Payor Contracting

Payor Contracting Tip: How to Determine Market

By | Payor Contracting | No Comments

First, let’s define what we mean by the market. In a general sense, the market is what customers are willing to pay for a product.  Along the same lines, your ASC’s market is what both governmental and commercial payors are willing to pay for the use of your facility.  In this sense, it is the reimbursement range your ASC receives from its most common payors for the services it most frequently provides.

Your ASC’s definition of market will most likely differ from that of your payors. Commercial payors may define the market as part of a state, an entire state, or even an entire region of the country.  However they define it, it will not likely favor your ASC.  Unlike the payor, who may organize data to support lower the reimbursement they offer your ASC, you’d be wise to organize your reimbursement data to help optimize your ASC’s reimbursement.

How Should Facilities Determine Market?

For starters, most regions typically have four to six major commercial payors. Think of them as the “major league payors.” The other commercial payors are usually “minor league payors.” Your minor league payors may reimburse at a higher rate, but your ASC may only provide care to a fraction of patients from these payors compared to the rest.  When looking at the market, it’s more important to focus on your major league payors – those whose members commonly fill your operating rooms.

Next, look at what each major league payor is reimbursing your ASC for the services you’re routinely providing.  This includes measuring how your ASC is reimbursed for its top volume procedures – the codes representing the bulk of your collective commercial volume.  I generally start by looking at the top 20-25 procedure codes then target the codes with at least 50% of the ASC’s procedure volume.  What you are seeking to obtain from this data is a snapshot of the most likely overall reimbursement composition for each payor. This is a statistic that can be compared to that of your other payors as well as with Medicare. By assembling the data reflecting reimbursement by payor and overall percent of utilization by procedure, you can calculate the average rate of reimbursement. This approach will allow you to define your ASC’s market.  In addition, after compiling reimbursement data, you can drill down to see if, and how, each payor reimburses differently by procedure which will help you establish practical renegotiation goals.

What Should Facilities Do With This Information?

Now that you’ve determined the market, what can you do with this information? You can use the data to leverage payors.  If necessary, you can even submit blinded comparative data to each payor you are dealing with, reflecting where each unfavorably compares to their peers.  The key is leveraging your data wherever, and however, it is advantageous to your ASC.  By navigating this correctly, you can start the process to achieve optimal reimbursement. At the very least, you get a picture of the fluctuations you experience for each procedure reimbursement by payor, while being armed with the ammunition necessary to prompt more productive payor contract negotiations.


Dan Connolly – Vice President of Payor Relations and Contracting

Physician-Hospital Joint Venture

Creating a Firm Foundation for a Successful Physician-Hospital Joint Venture ASC

By | Leadership | No Comments

Successful physician-hospital joint venture (JV) ambulatory surgery centers (ASCs) should be built on foundations of alignment that allow both parties to reap the benefits of the partnership.  Physicians seek greater autonomy, efficiency, convenience, and potentially more favorable contracts while hospitals (or health systems) want to expand or maintain their relationship with area physician groups.  Hospitals recognize their service continuum must include outpatient strategies to maintain a well-balanced customer base while physicians appreciate the stability and potential leverage health care systems can bring to the project.  Both parties seek to provide quality care at an affordable price and a reasonable return on their investment.

Entering into a JV relationship can be fraught with difficulties.  However, when executed well, both parties can be pleased with the end result and maintain long term satisfaction.  Here are eight building blocks that place JVs on the path to success.

Secure professional help.  Find an independent third party with a successful track record of developing and managing joint venture ASCs who will provide the expertise necessary to avoid pitfalls in the start-up process as well as in the ongoing operations of the JV.  An independent organization provides a neutral voice devoid of the politics that may exist between physician groups, specialties, and/or health systems. They are also able to verify data and information gathered during the initial planning stages – and later on during operations – that JV parties can rely upon to make sound business decisions.

The JV should also secure the services of an experienced health care attorney to draft operating agreements and other organizational documents that will allow the group to avoid potential conflicts.

Set clear expectations.  Make sure the JV partners set clear expectations not only for the final project, but also for the process of completing the project. First, the group should select members to participate in a steering committee.  While these individuals may not end up being the final governing board, they should be able to commit to attending meetings and conference calls. They should be entrusted with voting on key topics when necessary. Decision making time frames should be agreed upon upfront to ensure none of the involved parties is under the impression that others are dragging their feet.

Determine the ownership and governance structure. Is there a compelling reason for one group to have more ownership than another? Is the ownership split in such a way that the attorney and regulatory bodies will not take issue with the proposed structure?

Identify the hospital’s or health system’s role in the project.  The role of the hospital or health system should be thoroughly discussed and clearly determined. What will their contribution be to the project? Are they contributing capital, land, a building, access to controlled lives, purchasing power, leasing of staff, services, and/or payor contracting/relations?

Define the goal of the project.  It is also important to discuss the goal of the project. Is the JV ASC the end all result? Or, is it the beginning of a larger initiative to create closer alignment between all stakeholders?

Perform a thorough feasibility analysis.  If the JV still seems feasible and advisable after these steps have been taken, a thorough feasibility analysis should be conducted.  DO NOT ASSUME IT WILL WORK! This is one of the biggest mistakes groups make. They do not thoroughly vet the concept before proceeding. The feasibility analysis should leave the potential participants with a business plan, payor reimbursement assessment, and a complete financial pro forma.  This information can be used to obtain philosophical buy-in from investors, tell the steering committee they need to go back to the drawing board, or scuttle a bad project.

Pare down the size of the steering committee.  If the project still looks like a go after these stages, reduce steering committee membership down to a more manageable size.  This smaller sized steering committee – which may end up being the ASC’s governing body – is necessary to streamline decision making and set deadlines that will be adhered to. These individuals should be able to commit to timely communication either in person or electronically.

Avoid common joint venture pitfalls.  Unclear expectations can leave some participants disappointed.  Others may feel the project did not turn out as expected or is not meeting their needs.  One group may feel they have been taken advantage of if incentives are not properly aligned among the project participants.    Poor contracting, an over- or under-built facility, poorly staffed, poorly equipped, or poorly capitalized project can leave investors questioning the financial modeling that was performed.

Lastly, the primary cause of problems is poor or non-existent communication.  Surprises are fine, but not when they impact your livelihood or finances. Not every, but many, of the issues in your joint venture project can be avoided with clear, timely communication.

The benefits of entering into a joint venture ASC are plentiful. The difference between a successful JV and one that limps along or is full of strife is often tied to the planning that occurred upfront.  If you get that right, you’ve won half the battle!


Robert J. Carrera – President and CEO

Implant and Supply Reimbursement

Implant and Supply Reimbursement Blunders Nearly Every ASC Commits

By | Revenue Cycle Management | No Comments

Obtaining reimbursement for implants and supplies represents something akin to successfully navigating a minefield.  You know the lay of the land and presume the payors you hold insurance contracts with do too.  After all, you both possess the same road map – your ASC contract which clearly (ahem!) outlines the reimbursement you’ll receive.  However, when you receive a denial from the carrier for the billable implant or supply, you quickly recognize your interpretations of the contractual terms differ.

While there are distinct differences between an implant and a supply, these terms are often used interchangeably which can lead to significant confusion – even within your ASC.   So, let’s start with some definitions.

Medical supplies refer to the non-durable disposable materials necessary to perform or deliver a health care service in a single episode of care.  These supplies can also be referred to as consumable medical supplies.

Medical supplies:

  • are disposable in nature
  • cannot be used by more than one individual
  • are primarily and customarily used to serve a medical purpose
  • are generally not useful to a person in the absence of an illness or injury
  • are items such as gloves, gauze, dressings, needles, syringes, saline, surgical trays, bandages, skin preps, and other supplies needed during the course of a procedure
  • are typically inclusive to procedure reimbursement and are not separately payable

Most health insurance plans contain exclusions for consumable medical supplies.  Typically, you will not be reimbursed for these products because they are considered integral to the procedure itself.  They are an assumed cost of the surgery.

A medical implant on the other hand, is classified as a medical device manufactured to replace a missing biological structure, support a damaged biological structure, or enhance an existing biological structure. Examples of implants are pins, rods, screws, plates, surgical mesh, ocular lenses, prosthesis, etc.  Many payors define a medical implant as a device or item that remains in the body for six months or more.

Medical implants differ from medical transplants in that they are man-made devices.  Transplants are composed of biomedical tissue. Examples of transplants are allografts, autografts, tendons (musculoskeletal grafts), or corneas.

These differences in definitions may affect your ASC billing reimbursements.

As you know, implants and supplies are expensive and the cost can vary widely from vendor to vendor.  If your employees do not understand which category these items (i.e., implant or supply) fall into, your facility could leave a significant amount of money on the table.

How do you know if you should be billing for an implant or a supply? Start with understanding what each payor contract considers allowable. Most plans contain exclusions for consumable medical supplies although there are some cases where a supply is allowable. A temporary pain pump – a short term drug delivery system for post-operative pain relief – is a great example. 

The Healthcare Common Procedure Coding System (HCPCS) classifies a post-operative pain pump under the “medical and surgical supplies” category. However, because this “supply” delivers an enhancement above and beyond the normal scope of the standard procedure – it may be considered billable by some payors. To secure reimbursement, the item should be mentioned separately in the surgeon’s operative (op) report. 

The op report can also provide clues to other items used in a procedure that might be eligible for billing and reimbursement.  For example, some medications purchased by the facility, such as Botox which is used in occipital injections for migraine headaches, may be reimbursed separately from the procedure when billed properly.  Your coders should be looking for these items in op report narratives and billing for them when applicable.

In large part due to technological advances, implant intensive procedures which were historically confined to inpatient settings are now being allowed in the outpatient ASC setting.  This means outpatient facilities should know when and how to bill for them.  Implants are not cheap and, if left unbilled, could result in a significant amount of lost revenue to the facility.

To ensure you are billing appropriately for implants and supplies that are atypical to a standard procedure:

  1. Audit preference cards to identify supplies normally used in different types of procedures.
  2. Determine which supplies and implants used during a procedure could be viewed as atypical.
  3. Involve your materials management staff in the process – they have specific knowledge of items being ordered for your center. Research these items and assess if they might be billable.  If so, ensure the supply is added to the case implant log and inform your coding and billing team so the proper HCPCS code can be assigned and billed.
  4. If all goes well, you efforts will be rewarded with money in the bank!

To illustrate, let’s say your ASC used temporary pain pumps (a supply) 25 times in the first quarter of the year to provide non-narcotic post-operative pain relief to patients reducing their use of opioids during their recovery process.  The invoice cost of this supply, ordered in a pack of five, is $275 per pump.  If your contracts allow cost plus 10% reimbursement on implants and supplies, your reimbursement would be $302.50 per case.  If reimbursement was allowed on every case, your facility would receive $7,562.50 in reimbursement for those temporary pain pumps alone!

Is this a time consuming project? Yes. However, the rewards far outweigh the initial time investment.  Make sure your ASC is getting the money it deserves for its procedures. Your hard work will pay off in the end.


By Carol Ciluffo – Vice President of Revenue Cycle Management