In the Long Term Post-Acute Care (LTPAC) provider community, Administrators hold the ultimate accountability for the operations of their organization. Of course, their focus is always on the delivery of quality care. Many Administrators I know have a clinical background of some sort – the better for understanding and managing a holistic approach to patient care.  But at the same time, they must also focus on efficiencies and fiscal management – as a part of this, Administrators have to regularly review Accounts Receivable (AR). A simple set of touchpoints can help the Administrator keep up to date and ensure that the financial operations are doing well.

Accounts Receivable Touchpoints For LTPAC Administrators

•       It all begins with the AR Aging Report: Administrators should have full access to the AR Aging report, and be able to interpret what the numbers tell us. What is the percentage of AR over 90 days? Industry benchmarks indicate 15% is a reasonable goal. Take a deeper dive to ask why these balances exist:

o   Are the balances due to a lag in Medicaid application approval? How is the financial office managing the pending process? Are they well educated in eligibility requirements?

o   Is there an issue with Medicare claim processing? Does the billing office have current claim status on each balance? Are there issues in the intake/ admission process that are making it difficult to identify the proper primary payer?

o   Is the issue with the Managed Care/ Commercial insurance accounts? Is the facility experiencing non-payment, delayed or short payment due to lack of pre-admission verification and authorization? Is it due to lack of contracts?

•       What is the Days Sales Outstanding (DSO), by payer and overall? The DSO will tell us the average number of days that it is taking to collect revenue. If we have a large private pay population, we may expect to have a very low DSO (under 20 days) as we are billing in advance with a due date on or around the 10th of the following month. Understanding the DSO by payer is important as well – Medicare has a 14-day payment floor for clean claims so if we have a high Medicare DSO, is the problem with the claims or the process for billing?
•       What is the percentage of collection of revenue each month? Organizations should be able, on average, to collect 100% of revenue each month. Of course, there are payers that cannot be billed within the same month, but collections of prior month claims should be making up the difference.
•       Is the facility booking a large number of adjustments each month for contractual allowances? Make sure the billing system reflects actual reimbursement rates to ensure appropriate revenue recognition.
•       What is the percentage of bad debt? Industry standards would indicate that an acceptable level would be 1% of revenue. Increases in bad debt may be due to payer issues, but they may be signifying a lack of process.

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Revenue Cycle Process

I really can’t say it enough – process is everything. Administrators must have more than a basic understanding of the revenue cycle process in order to ensure that staff has the tools they need to manage receivables, and for them to be held accountable.      

Intake/ Admissions

o   Payer benefits/ eligibility established prior to admission?

o   How is staff completing the payer verification process?

o   How is payer information documented and communicated to organization staff?

o   Who is communicating financial liabilities to the patient?      

Daily census and cash management

o   Is census accurately updated on a daily basis?

•  Look for frequent census corrections as an indicator of process issues

o   Is cash deposited and posted on a daily basis?

o   Is staff able to forecast payment?    

Timely, accurate billing and collections

o   What date are private statements mailed out?

o   Is there a preponderance of statement complaints and/ or corrections on a monthly basis?

o   Is the facility billing all other payers within the first week of the month?

•  Medicaid billed the first day of the month? If state allows for weekly or bi-monthly billing, is this completed as of the cut-off date?
•  Medicare Part B claims should be billed within a couple days – once the services are booked and triple check is completed, of course
•  Medicare Part A claims triple checked, submitted and accepted well within the time frame for payment by the end of the month?
•       Administrators should know the denial rate on the facility Medicare claims – it is not too much to expect submissions to be 95% error-free.

Month end process and reporting

o   Is the facility able to close AR on a timely basis each month? The 5th business day of the month should be an easy timeline to meet.

o   Is the business office completing a revenue test each month to ensure that all revenue is accurately captured? This does not have to be complicated, a quick days times rates to test room and board revenue, and a comparison of source documents to ancillary posting to ensure that all ancillary revenue has been booked. Further review of the ancillary charges to the contractual allowances booked will help ensure that we are not carrying AR on the aging report in error.

Of course, there is much more to the management of the revenue cycle than what is outlined here, but Administrators don’t need to be able to bill a claim in order to manage the process.

If the abovementioned questions only bring MORE questions, contact Richter Healthcare Consultants. We can assess the process, outline how it should look and provide you with the tools to manage your revenue cycle. It is all about the process – we can help refine yours.