Today, the pressure to reduce health care costs is everywhere. And nowhere is that more evident than within the Medicare system. With approximately 36 percent of national health care expenditures generated by the Centers for Medicare & Medicaid Services, the federal government is actively pursuing initiatives to reduce its program costs.
Long term and post-acute care organizations are particularly affected by these changes, and Medicare often represents a significant portion of their revenue. Initiatives that reduce expenses and assert more control over their Medicare revenue cycles are therefore of primary importance to providers.
It doesn’t take a huge investment to utilize readily available technologies to realize big gains in productivity and revenue cycle management, as the following four testimonies illustrate.
Shorten Revenue Cycle
GentleCare Home Health in Dallas offers a good example for how long term care providers can improve Medicare cash flow using technology. Faced with a growing senior citizen population whose Medicare coverage generates the majority of its revenue, Henry Fofang, GentleCare’s administrator, needed a new strategy to accommodate increased Medicare volume without adding administrative staff.
After analyzing the organization’s cash flow and the time it took to submit each Medicare claim, Fofang decided to send his claims directly to Medicare, instead of outsourcing to a billing company. By doing so, he estimated a resulting cost savings of 50 percent, while shortening his revenue cycle by three days.
Fofang was able to implement this strategy by leveraging GentleCare’s existing Internet connection to access the entire Medicare workflow electronically—from claims submission to payment. By working with an approved third party that provided GentleCare with secure, direct access to Medicare’s systems, the home health company was able to improve the speed and accuracy of its billing cycle.
GentleCare Home Health also has implemented batch claims processing software. Rather than submitting Medicare claims one at a time, Fofang’s staff can now submit a group of claims at once. This allows his team to focus on a certain task for a period of time instead of switching back and forth between tasks, claim by claim.
His team can also use the batch function to check Medicare claim status. GentleCare uploads a group of outstanding claims to Medicare’s online claims status request function and receives a batch of claims status response files, in return.
By doing so, GentleCare is able to identify and address claim issues quickly to speed up payment. This also makes it easier for the organization to spot opportunities to improve its claims submission process, such as identifying diagnostic codes that may be used incorrectly, facilitating lower denial rates and a shorter revenue cycle.
According to Fofang, “I wanted to bring our billing in-house to reduce expenses and gain more control over my cash flow. I now know when our Medicare claims go out, what their status is, and when they get paid. It’s made the entire billing process much easier.”
Accelerate Cash Deposits
Beyond electronic claims submission and batch processing, GentleCare and other providers are taking advantage of Electronic Remittance Advice (ERA), which is an electronic version of the Standard Paper Remittance (SPR). ERA allows a provider to receive all of the information contained on an SPR in an easy-to-read-and-store electronic format.
ERA can be used to automatically post claims payment information into an accounts receivable system, and any provider with an active submitter identification number may apply to receive ERA files or have the ERA forwarded to another party, such as a billing agency, vendor, or clearinghouse that submits claims on behalf of the provider.
A major benefit of an ERA is that it provides the electronic equivalent of the Explanation of Payment several days sooner than the paper posting. While providers can use a claim status request function to determine the corrective action needed to move a claim through the approval process, an ERA enables a provider to uncover trends in claims that are paid, partially paid, or denied.
Neetra Barclay, director of financial services at Glastonbury Health Care Center in Connecticut, currently uses both claims status requests and ERA. Before, it would take days after she submitted claims to find out if they had been accepted by Medicare, and she received all her remittance advice via paper.
By accessing the Medicare workflow electronically, Barclay says, “It increases productivity and makes my job much easier because I have access to all the information that I need immediately.”
For those whose practice management systems are configured to accept ERA, the payment information can also be automatically posted to each patient account. This makes it much simpler to track patient balances and conduct follow-up steps, such as submitting claims to other insurers for secondary payment.
Electronic Funds Transfer (EFT) is a useful companion to ERA. Already widely used in most industries, EFT allows Medicare to deposit payments directly into a provider’s account. In addition to saving time and reducing the amount of paper in an office, providers also gain faster access to funds because banks often credit direct deposits faster than paper checks.
Providers also receive an addenda record in addition to the EFT, so they are able to reassociate the dollars in the EFT to their outstanding claims and close the loop on their Medicare billing cycle.
Speed Up Eligibility Verification
Perhaps one of the most important tools for managing the Medicare revenue cycle is electronic Medicare eligibility verification. It helps prevent billing issues from the beginning by giving providers information about a patient’s eligibility for services before care is provided.
Jacob Perlow Hospice, located in New York City, regularly uses Medicare eligibility verification in its day-to-day operations. The hospice is a large facility that generates 86 percent of its revenue from Medicare.
Allison Maughn, chief operating officer, explains that she needed to update the hospice’s Medicare billing process to meet its increasing Medicare volume. When Jacob Perlow switched from dial-up to broadband for submitting its claims directly to Medicare, the facility also took advantage of the ability to check patient Medicare eligibility electronically.
Jacob Perlow is able to determine the Medicare program benefits available to its patients by accessing eligibility data within just a few seconds, directly from Medicare’s systems.
By combining electronic eligibility checks with direct claims submission to Medicare via broadband technology, the hospice was able to eliminate time-consuming eligibility verification via phone, significantly reduce its claims denial rate, and process more than 600 Medicare claims each month with just two employees.
Upgrade To Broadband
Providers do not need to add staff or make large technology investments to enjoy the benefits of these tools for managing Medicare billing in-house. In fact, because these technologies eliminate manual processes, reduce data entry, and speed up the payment process, providers are able to handle a growing claims volume with the same team or reallocate staff to other functions where they are needed.
For example, Hospice Family Care, Mesa, Ariz., was already billing directly to Medicare but was using a dial-up connection. Six people processed claims: three full-time billers and three back-up staff members.
By upgrading from dial-up to broadband and implementing electronic eligibility verification, the hospice was able to handle a growing volume of Medicare business and free up all three back-up staff to focus on their primary responsibilities.
“The employee time is our biggest benefit, as we now have less people doing more,” says Enrique Ramirez, Hospice Family Care’s regional information systems director. “Before it would take a full day to process Medicare claims, and now it’s just a few hours of work.”
With the baby boomer generation near retirement, experts predict a significant uptick in Medicare volume. Fortunately, by making better use of technology that is readily accessible and does not require additional staff to manage, health care providers can institute more control over cash flow now and prepare for an increased work load in the future.
Clare DeNicola is president and chief executive officer of IVANS, a strategic consulting company that provides fully managed network, electronic data interchange, and agency-company interface solutions to help solve complex business issues. DeNicola can be reached at (203) 698-7209 or clare.denicola@ivans.com.