tools for evaluating your health center s financial health

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3. 3 Establishing a culture of Revenue Maximization Setting the Health Center up for Success – operationally Regular Reports and Monitoring Intervening When Necessary

4. 4 Impact of Executive Management and Board While the day to day processes of the revenue cycle are performed by dedicated health center staff, executive management and the Board play a large role in determining the success of the process by: Establishing the proper culture of billing and collection: health centers that have a clear mandate from the board through management to bill correctly and maximize reimbursement as an organization priority do a better job of billing and collection than those who do not. This mandate plays out in management and staff goals Maintaining a balance of financial, operational and regulatory requirements Maintaining the overall financial health of the health center and its revenue streams Developing and monitoring processes; intervening where appropriate

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6. 6 The Revenue Cycle

7. 7 Strong internal control procedures/compliance with policies Collection of proper billing information Proper recording of revenue Maintenance of subsidiary accounts receivable Collection of information for management reporting Satisfy Federal reporting requirements

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9. 9 The billing cycle should include procedures at: Front desk Registration Exam room (by provider) Cashier/Appointment scheduling/Check-out Billing Patient accounts Billing Cycle Procedures

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15. 15 Reporting on Patient Services Revenue and Patient Receivables On a regular basis, the finance department should produce basic reports to: Properly Monitor the Accounts Receivable Evaluate Collection Efforts Monitor Billing Efforts Maximize Collections Evaluate if the process is working Different levels of reporting are required based on the users: Board of Directors Finance Committee Management

16. 16 High level results may be indicative of problems in the revenue cycle: Is the Health Center making or losing money? Is there a negative net worth? How is working capital doing? Are there reserves? Cascading Down the Analysis

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18. 18 The Health Center must constantly analyze its position before it’s in trouble. If the Health Center is making money or has a comfortable cash position, is that enough? NO! That does not mean that it is maximizing revenue. How can we help the help center thrive, not just survive? The billing cycle must be constantly analyzed through a standard set of clear, understandable reports.

19. 19 Board of Directors: Commonly review monthly reports “in total” Days in Accounts Receivable, Net Bad Debt as a Percentage of Net Patient Services Revenue Visit Payor Mix Analysis Visits by Provider Revenue Per Visit Measures commonly compared against: Prior periods – year over year Budget Industry norms – collection percentage, days in A/R, Payor Mix Strategic or Annual Operating Plan Reporting on Patient Services Revenueand Patient Receivables

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22. 22 Sample Board of Directors Report on Activity

23. 23 Finance Committee: Commonly review similar measures/ratios as Board of Directors, both in total as well as by individual payor. Patient Receivable Agings, both in total and by payor If significant Medicaid managed care activity: Change in member mix and capitation revenue by actuarial class Managed care member utilization analysis Reporting on Patient Services Revenue and Patient Receivables

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27. 27 Executive Management: Revenue report (charges, adjustments, payments) Adjustments by payor source and type of adjustment Aged accounts receivable reports: In total By payor source (and carrier/plan) In detail Special reports to monitor activity of billing staff Denial report CFO should be monitoring at least bi-weekly

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29. 29 Reasons why revenue decreases while visits increase: Analyzing Trends in Revenue

30. 30 Analyzing Shifts in Payor Mix

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33. 33 Trends to watch for Overall financial instability (e.g., losing money, negative fund balance) Abnormally high bad debt percentage – or a trend of increasing bad debt Medicaid or other payor audit results in large recoupment of payments, resulting from inaccurate coding and documentation Days in self-pay receivables > 365 Days in Medicaid receivables > 100 Large shift in total volume, up or down Big swings in payor mix

34. 34 Trends to watch for: Shifts in net revenue per visit High denial rates Milestones/benchmarks in the billing cycle aren’t being met Days in Medicaid receivables are higher than target Inaccurate or incomplete coding and documentation

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36. 36 Billing and revenue strategies are intended to improve the billing and collections process in the Health Center and encourage the effective use of staff who perform these functions. Common goals and objectives achieved through billing and revenue strategies: Increased patient revenue. Improved collections rates. Reduced medical coding errors. Cost savings of doing it right the first time.

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41. 41 Eligibility/preauthorization Claims timeliness Complete information Accurate information On appropriate forms In compliance with managed care contract/from provider manual

42. 42 Definition: Consolidating billing functions that may reside within individual sites. Benefits: Health Centers can facilitate communication, standardize work processes, obtain economies of scale, and enhance quality control. Select implementation tasks: Review current billing functions organization-or network-wide. Analyze current productivity standards. Conduct cost-benefit analysis based on changes from decentralized to centralized billing functions including changes in “personal service” and “other than personal service” costs and savings. Develop new policies and procedures.

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44. 44 Strategies to avoid denials

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