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2. GOALS. Understanding the Characteristics of Patient Service RevenueMaximizing All Components of Patient Revenue FlowsEvaluating Trends in Patient RevenueManaging and Evaluating Patient ReceivablesUtilizing Proper Analytical Procedures and Management ReportsUnderstanding and Monitoring Manage
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2. 2 GOALS Understanding the Characteristics of Patient Service Revenue
Maximizing All Components of Patient Revenue Flows
Evaluating Trends in Patient Revenue
Managing and Evaluating Patient Receivables
Utilizing Proper Analytical Procedures and Management Reports
Understanding and Monitoring Managed Care Costs and Revenue
3. 3 TYPES OF PATIENT SERVICES REVENUE Traditional Sources of Patient Revenue
Medicaid
Medicare
Private Insurance
State Uncompensated Care Programs
Self Pay
4. 4 FORMS OF PATIENT SERVICES REVENUE Each type of patient revenue can have different reimbursement schemes. These include:
Fee-For-Service
All-Inclusive Rate
Prospective Payment System
Capitation
5. 5 OVERVIEW OF FEE-FOR-SERVICE (FFS) REIMBURSEMENT Fee-For-Service Methodology:
In a FFS environment, reimbursement is based on Current Procedural Terminology (CPT) code.
Different Charges for Different Services
Reimbursement Based on CPT Code at Fees Established by Third Parties
Amount of Revenue Earned Is Based on the Number and Type of Billable Services Provided
Fee-for-service procedures include, but are not limited to, laboratory, radiology, etc.
6. 6 MAXIMIZING FFS REIMBURSEMENT To generate more revenue, a health center can:
Provide more procedures
Properly code encounter forms to ensure all services provided are billed
Utilize a comprehensive encounter form to ensure all billable procedures are included
7. 7 OVERVIEW OF COST-BASED REIMBURSEMENT
Allowable Costs $1,000,000
Billable Visits (?) 10,000
All-Inclusive Rate = $100 per visit
Medicaid Visits 7,500
Medicaid Revenue (7,500 x $100) $750,000
OR
Medicaid Visits = 75% x $1,000,000
Total Visits
8. 8 All-Inclusive Rate Methodology: MAXIMIZING COST-BASED REIMBURSEMENT
9. 9 CALCULATION OF ALLOWABLE COSTS Allowable costs are calculated as total costs less non-reimbursable costs:
Total Costs $1,350,000
Non-reimbursable Costs:
WIC Program 250,000
Adjustment:
Contracted Lab 100,000
<350,000>
Allowable Costs $1,000,000
10. 10 ENCOUNTERS VS. BILLABLE VISITS UDS Billable
Encounters Visits
Physicians 6,000 6,000
Midlevels 1,500 1,500
Nurses 1,000 0
Dentists 1,000 1,000
Dental Hygienists 500 500
Other Health 1,500 500
Educational / Social Services 1,000 500
12,500 10,000
11. 11 ENCOUNTERS VS. BILLABLE VISITS How does using total encounters affect my cost based revenue?
UDS Billable
Encounters Visits
Total Costs $1,000,000 $1,000,000
Visits 12,500 10,000
Rate / Visit $80 $100
Revenue $800,000 $1,000,000
12. 12 COST-BASED REIMBURSEMENT SYSTEMS Interim Rates
Desk Review
Final Settlement (rate reconciliations)
Field Audits
Retrospective Versus Prospective (by provider type)
13. 13 MAXIMIZING COST-BASED REIMBURSEMENT Tips to Maximize Reimbursement:
Review provider utilization vs. productivity screens
Review billable visit count vs. encounters
Properly accounting for non-allowable costs and any adjustments
Evaluate appropriateness of non-allowable costs and adjustments
Verify FTE calculations, especially provider staff
14. 14 FQHC Medicare
Interim Payment Rate - Prospective Rate Based on Submitted Cost Report Based on Prior Year Costs and Visit Information
Opportunity to Adjust After Desk Review
Final Reconciliation - Receive Difference Between Interim Payments for Year and Actual Cost Based Rate
May Appeal Rate If Appropriate
Regulations
FQHC
HIM-15 MAXIMIZING COST-BASED REIMBURSEMENT
15. 15 FQHC Medicare
Part B billing for non-covered services (i.e. Lab & X-Ray)
100% Reimbursement for Pneumococcal and Influenza Vaccines and Administration
Medicare Bad Debt Recovery
Coinsurance Reimbursement and Sliding Fee Scale Applicability
No Patient Deductible
CMS Form 855A to enroll in FQHC – (site specific) MAXIMIZING COST-BASED REIMBURSEMENT
16. 16 The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 renamed the Medicare+Choice plan and made other changes including regional PPOs, special needs plans for dual eligibles, and others, and created private drug plans effective 1/1/06. Rates paid to managed care companies were also increased in many cases.
Overall HHS target is to increase Medicare enrolles in managed care to 30% by 2013 from 12% (and declining) currently.
Also includes supplemental wrap-around payments to FQHCs who contract with Medicare Advantage (MA) plans. Understanding Medicare Advantage
17. 17 Three contractual requirements:
Must be written contract between FQHC and MA Plan
MA plan must pay FQHCs no less than it pays other non-FQHC providers
FQHC must accept MA payment and wraparound as payment in full
Covers FQHC services only
Does not include certain Part B services such as lab and x-ray. Does not include pharmacy costs under Part D.
Part B services should be billed directly to the MA plan. Understanding Medicare Wrap-Around
18. 18 System changes made to accept payment on 4/3/06 (bill type 73x and revenue code 0519)
For first 2 rate years, FQHC submits an estimate of MA payments to fiscal intermediary
FQHC will receive payment for each wraparound bill it submits to fiscal intermediary
Understanding Medicare Wrap-Around
19. 19 Starting 1/1/06, prescription drug plans (PDPs) will be the primary mechanism for Medicare enrollees to receive prescription drug benefits
Optional benefit; enrollees will need to sign up
Dual eligibles will receive coverage through Medicare Part D, not Medicaid
Health centers with pharmacies will need to contract with PDPs to receive reimbursement for Medicare pharmacy patients
No statutory provisions preventing health centers with 340B programs from participating in Part D Understanding Medicare Part D
20. 20 Medicaid
Each state has implemented the Prospective Payment system differently
Each State’s Filing Requirements Differ
Regulations:
State Specific
If Medicaid Regulations are Silent, Then Medicare Regulations Apply MAXIMIZING COST-BASED REIMBURSEMENT
21. 21 The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA) - [P.L. 106-554] - Section 1902 (aa): “Payment for Services Provided by Federally Qualified Health Centers and Rural Health Clinics”
(1) Effective January 1, 2001, and for each succeeding year, the State plan shall provide for payment for services described in section 1905(a)(2) (C) furnished by FQHCs in accordance with a new method (PPS). OVERVIEW OF PPS
22. 22 (2) Fiscal Year 2001: Payment to be made (calculated on a per visit basis) equal to 100% of the average of the costs of the center during fiscal years 1999 and 2000 which are reasonable and related to the cost of providing such services, adjusted to take into account any increase or decrease in the scope of such services during fiscal year 2001.
(3) Fiscal Year 2002 and Succeeding Fiscal Years: Payment to be made (calculated on a per visit basis) equal to the amount calculated for the preceding year (a) increased by the percentage increase in the MEI for primary care services, and (b) adjusted to take into account any increase or decrease in the scope of such services during that fiscal year. OVERVIEW OF PPS
23. 23 (4) For New FQHCs who first qualify as an FQHC after fiscal year 2000, rates shall be established in an amount (calculated on a per visit basis) equal to 100% of the costs of providing such services during such fiscal year based on rates established for other such centers located in the same area with a similar case load, or in the absence of such center, in accordance with paragraph (2). Rates for subsequent years shall be established in accordance with paragraph (3). OVERVIEW OF PPS
24. 24 (5) In cases where an FQHC contracts with a managed care entity, the State plan shall provide for supplemental payments equal to the amount by which the amount determined in accordance with PPS exceeds the amount of payments provided under the contract. Payments shall be made pursuant to a payment schedule agreed to by the State and the FQHCs, but in no case less than every 4 months. OVERVIEW OF PPS
25. 25 (6) Alternative Payment Methodologies: The State plan may provide for payment under an alternative payment methodology that (a) is agreed to by the State and the center, and (b) results in an amount at least equal to the amount otherwise required to be paid to the center under PPS. OVERVIEW OF PPS
26. 26 PPS STRATEGIES Ensure that base year cost reports were prepared accurately
Allocation of costs
Billable visits
Monitor “wraparound” payments
Monitor rate appeal opportunities for change in scope of services
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29. 29 Final Note
On an Interim Basis, CHCs Should Project Estimated Year-end Settlements and Their Impact On:
Financial Statements
FSR and Resulting UOB/EPI MAXIMIZING COST-BASED REIMBURSEMENT
30. 30 ANALYZING TRENDS TO MAXIMIZE PATIENT FFS REVENUE As part of the preparation of the monthly financial statements every finance department should begin to analyze even the smallest fluctuations in patient service revenue and receivables.
Even though the change may be minimal, it may indicate the start of a downward trend or a negative shift in payor mix.
Recognizing a trend before it becomes a dramatic shift can help avoid unnecessary cash flow problems.
31. 31 What are possible explanations for an increase in visits and decrease in revenue? ANALYZING TRENDS TO MAXIMIZE PATIENT FFS REVENUE
32. 32 Reasons why visits may increase while revenue decreases:
Retroactive settlement in prior period
Shift in payor mix
Poor collections in current year
Rate Revisions
Large bad debt write-off in current period pertaining to old receivables currently on books
Improper Coding ANALYZING TRENDS TO MAXIMIZE PATIENT FFS REVENUE
33. 33 ANALYZING TRENDS TO MAXIMIZE PATIENT REVENUE
34. 34 ANALYZING TRENDS TO MAXIMIZE PATIENT REVENUE
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36. 36 Rate X Visit Calculation for Cost-Based Reimbursement
Exclude all one time events from calculation, including:
Retroactive Takeback
BBA Wraparound Protection Payment
Specific State Supplemental Payments
Any Other Revenue or Takeback That Was Not Based on Visits From the Current Period
Calculation Should Approximate Net Revenue
37. 37 Summary of Techniques
Compare % Change in Revenue to Change in Visits
Compare % Change in Visits to Change in Cash Collections
Analyze Payor Mix From Period to Period
Rate X Visit Calculation
Calculate Gross Charge and Net Revenue Per Visit
(See Exhibits 1 & 2)
38. 38 What are the components of the patient receivable balance?
Gross Accounts Receivable
Less: Allowance for Contractual Adjustments
Less: Allowance for Doubtful Accounts
Equals: Net Accounts Receivable
39. 39 A good way to analyze the receivable balance is to calculate and evaluate the days in accounts receivable:
Patient accounts receivable, net
Patient services revenue/365 days
Days in accounts receivable is an indicator of the length of time between the date a patient is seen and the date payment is received. ANALYZING PATIENT ACCOUNTS RECEIVABLE BALANCE
40. 40 Managing Accounts Receivables
Days in Accounts Receivable:
Compare Measure Between Periods
Aged Accounts Receivable List:
Compare Aging, by Category, Between Periods
Analyze in Total and by Payor
Analyze Gross and Net Receivable Balances ANALYZING PATIENT ACCOUNTS RECEIVABLE BALANCE
41. 41 Sample Analysis - Days in Accounts Receivable, Net:
ANALYZING PATIENT RECEIVABLES
42. 42 Sample Analysis - Days in Accounts Receivable, Gross:
ANALYZING PATIENT RECEIVABLES
43. 43 Factors impacting days in accounts receivable:
Amount outstanding for current billing:
Billing lags
Payment lags
Retroactive rate adjustments/final settlements
Pending Claims
Rebilled/denied claims
Accounting Errors (Improperly Reserving) ANALYZING PATIENT ACCOUNTS RECEIVABLE BALANCE
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48. 48 Forms of Reimbursement Under Managed Care
Fee-For-Service:
Based on CPT Codes
Earn More Revenue by Performing More Services
Different Charges for Different Types of Services
49. 49 Forms of Reimbursement Under Managed Care
Capitation:
Revenue is based on a prepayment of a fixed periodic amount per member per month (PMPM).
The amount of revenue earned is based on the number of members enrolled - not on the number of visits.
To earn more, control utilization and provide fewer and/or less costly services.
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52. 52 Capitation Tracking
During the month, centers will receive a capitation check with an associated roster corresponding to the payment. Centers should begin to perform the following steps:
Identify MCO Members and Perform Reconciliation to Roster
Specify Coverage Dates and Retroactive Changes in Coverage
Evaluate Increase / Decrease in Capitation Revenue Paid
Monitor Voluntary vs. Involuntary Disenrollment
Identify and Track Members and Revenue by Actuarial Class
Manage All Required Data for Multiple MCO Contracts and Payors MONITORING MANAGED CARE REVENUE
53. 53 Referral Tracking:
Record Off-site PCP Referrals
Monitor the Medical Appropriateness of the Treatments
Ensure Conformance With Quality Assurance Policies and Procedures
Estimate Incurred Liability
Compare Treatment Patterns Across PCPS MONITORING MANAGED CARE REVENUE
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55. 55 IMPORTANCE OF A CHARGE STRUCTURE BASED ON THE COST OF SERVICES
66. 66 USING THE APPROPRIATE CHARGE STRUCTURE ON MANAGED CARE If charges ? cost, community health centers can evaluate their viability under specific managed care arrangements:
HealthMed HMO Composite Capitation PMPM: $14.00
HealthMed HMO Members: 1,000
Monthly Capitated Services for HealthMed Members
CPT Description # of Procedures Cost Based Charge Total Cost
99213 Off Visit – Normal 125 $ 50 $ 6,250
99214 Off Visit – Extended 147 $ 70 $10,290
90701 DTP Vaccine 44 $ 35 $ 1,540
$18,080
67. 67 Capitation Payments $ 14,000Less Monthly Cost for HealthMed Members 18,080Loss on HealthMed Contract $ (4,080)
Possible Conclusions:
CHC Costs Are Too High
Too Many Services Are Included in Capitation Contract
CHC’s Patients Are High Utilizers of Capitated Services
Proposed Capitation Is Too Low
Capitation Rate Developed Based on Insufficient or Inaccurate FFS Data
CHC Provides Many Enabling Services Not Included in the Capitation Rate USING THE APPROPRIATE CHARGE STRUCTURE ON MANAGED CARE
68. 68 TOOLS TO MONITOR PATIENT SERVICES REVENUE AND PATIENT RECEIVABLES On a regular basis, the finance department should produce basic reports which will allow management to:
Properly Monitor the Accounts Receivable
Evaluate Collection Efforts
Monitor Billing Efforts
Maximize Collections
69. 69 TOOLS TO MONITOR PATIENT SERVICES REVENUE AND PATIENT RECEIVABLES These reports should include basic patient revenue / receivable indicators such as:
Daily Basis:
Self Pay Collections / Deposits
Visits by Providers vs. Standard
Weekly Basis:
Cash Receipts by Payor
Billings by Payor
Visits by Payor
70. 70 Monthly Basis:
Days in A/R
Visits by Provider vs. Budget
Visits by Payor, Patient Revenue by Payor Source, Both vs. Budget (Exhibit 2)
Change in Member Mix and Capitation Analysis (Exhibit 3)
Analysis of Managed Care Membership (Exhibit 4)
Managed Care Member Utilization Analysis (Exhibit 5)
TOOLS TO MONITOR PATIENT SERVICES REVENUE AND PATIENT RECEIVABLES
71. 71 SUMMARY Understanding patient revenue begins with mastering the different reimbursement models.
Before providing services to a specific population, be sure to understand how the reimbursement rate is calculated in order to maximize revenue.
Each month the finance department should perform analytical procedures on the patient revenue / receivables to identify adverse trends.
72. 72 Strategic management of financial, utilization, operational, and quality data is essential.
An appropriate charge structure will ensure that the center is adequately reimbursed in a managed care environment.
Monthly financial reporting is crucial in analyzing health center feasibility. SUMMARY