Category: For Laboratories

Discover the latest news, trends, and best practices in revenue cycle management for lab and diagnostic providers, including coding, billing, and collections.

Gaining Coverage for Your Lab’s New Diagnostic Test

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By: Quadax and Gordon Brown, A&R Consultants LLC

When it comes to gaining coverage for a Laboratory Developed Test (LDT), insurance companies are not the enemy. Payers are willing to cover and reimburse for an LDT that is clinically relevant, improves patient outcomes and hopefully reduces healthcare spend. So, what gets in the way of a laboratory achieving clinical relevance for their new tests?

Clinical Utility and Health Economics 101

New diagnostic tests are developed by laboratories to address unmet needs in patient healthcare. Intended for a specific audience and use, the performance of these tests must be validated to demonstrate a clinically relevant impact on the treatment decision, confirmation it was the right decision and an improved patient outcome. Also important are quantified health economics which either hold a payer’s cost curve, or preferably, improve it. If results provide positive impact on treatment decisions through improved patient outcomes and health economics, insurance companies are likely to consider coverage options. The burden is on the laboratory to establish this evidence.

Clinical Relevance Defined

The collective goal is to improve upon the standard of care and patient outcomes. It all starts with the lab test’s ability to accurately and reliably measure what it was designed to measure. The measurement is then used to predict outcomes for a specific patient population within a well-defined, intended use. An LDT becomes useful when it provides new, relevant information to confirm or impact a treatment decision. When the treatment decision produces an improved patient outcome, the benefit can then be valued using a health economics model. Using this model, it is possible to demonstrate the lab test’s economic impact on the intended patient population. When a lab properly establishes clinical relevance, it can influence and assist in gaining payer coverage for the lab’s new diagnostic test.

What Gets In the Way of Demonstrating Clinical Relevance and Obtaining Coverage?

A laboratory must be aligned internally when seeking coverage and reimbursement for an LDT. Investors and senior management may focus too early on driving revenue, versus evidence development, on an overly aggressive timeline. When launching an LDT, a lab’s marketing team may want to promote to a broad audience which often leads to inappropriate use. In its pursuit of growth and volume, a company may hire a large sales team to drive utilization well before the evidence is ready to support broad coverage and reimbursement. These approaches have unintentional consequences of high costs and minimal revenue. As a result, demonstrating clinical relevance suffers and insurance companies choose to either not cover the test or cover with many restrictions and at a sub-optimal rate.

Where can your lab go for help?

Pursuing payer coverage requires continuous alignment and commitment to demonstrate clinical relevance at a value-based price. It can and will take years to achieve, but it can be done with a well-defined strategy and execution to develop the necessary evidence while supporting a controlled commercial launch.

Quadax provides a lab-centric revenue cycle solution. From patient advocacy and payer management to claims and remittance management, Quadax software, service, and support is sized to fit your lab’s needs. While your lab is working to establish clinical relevance and utility, our appeals strategy to increase revenue and decrease denials can help you defend the payments you deserve, get ahead of changing payer requirements, and influence payers toward ongoing acceptance of your tests.


An effective appeals strategy, run concurrently with both traditional and innovative evidence development, can help drive private payer coverage. For information and discussion on strategy design, register for the Q1 pre-show webinar Leveraging an Effective Appeals Strategy for Private Payer Coverage presented by Gordon Brown on February 1 at 10:00 a.m. EST.

 

OPPS 2018 Revisions: Outpatient 14-Day Rule Changes to Laboratory DOS Policy

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Centers for Medicare and Medicaid Services (CMS) published its final rule with comment period revising the Medicare Hospital Outpatient Prospective Payment System (OPPS) for 2018. Labs that provide services to hospital outpatients may want to review the new OPPS rule changes, particularly the revisions to the laboratory date of service (DOS) policy (see CMS excerpt highlighted below).

The new carve out exceptions to the 14-day rule will allow labs to bill Medicare directly under the Clinical Laboratory Fee Schedule (CLFS) for molecular pathology tests and advanced diagnostic laboratory tests (ADLTs) that are excluded from OPPS packaging rules and ordered less than 14 days after a patient’s outpatient hospital discharge. In these instances, the DOS for the excepted tests would be the date of testing rather than the date of specimen collection. The OPPS 2018 definition of a qualifying ADLT only refers to criterion A, and does not qualify a test as an ADLT using criteria B or C. The new rule goes into effect with January 1, 2018 date of service. This new rule does not change the inpatient 14-day rule.

How the new rule will impact your revenue cycle depends on the type of testing your lab performs for Medicare hospital outpatients. The biggest change is the opportunity for labs who perform testing excluded from the OPPS packaging policy to bill Medicare directly, using the date of testing as the date of service on the claim.

How will this impact your lab’s reimbursement? Hospitals who have been administratively and financially burdened by the outpatient 14-day rule, may be incented to withdraw from institutional billing arrangements in favor of the lab billing Medicare directly. Consider the following.

  • If your lab test is covered by Medicare, is the allowed amount listed on the Medicare CLFS more or less than your current institutional billing fee schedule? How will your lab address and process Medicare pre-claim requirements such as medical necessity or local coverage determinations? Does your claims clearinghouse check for Medically Unlikely Edits (MUEs)? When exposed to MUEs, will your claims submission process perform the necessary edits to ensure your Medicare claims make it to adjudication?
  • If your test is not covered by Medicare, or Medicare’s reimbursement is not at an acceptable level, you may want to attempt to retain the current institutional billing arrangement—such an arrangement is not precluded by the new rule. Ensure your billing system can report the appropriate DOS on the institutional invoice for the ADLTs and molecular pathology tests excluded from OPPS packaging policy. As hospitals have historically absorbed the cost of these tests performed for Medicare hospital outpatients, they may be unwilling to retain institutional arrangements except for those qualifying tests that are in high-demand.

How will the outpatient 14-day rule change affect test ordering behavior? Hospitals waiting to place test orders on day fourteen, can now order tests earlier. Will earlier ordering improve test result quality and delivery? Working with viable specimens, producing better results, and providing faster turnaround times?

The OPPS 2018 laboratory DOS policy exceptions open up a whole new world of reimbursement for labs who perform testing excluded from the OPPS packaging policy. As you consider how these changes will impact your lab’s revenue cycle process and reimbursement results, learn how Quadax can help. Experienced in laboratory revenue cycle optimization, we help labs of all types maximize their revenue.

Living with PAMA–What is Your Lab’s Prognosis?

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The financial impact of PAMA to your laboratory depends largely on the type of testing you perform.  With the recent publication of the 2018 Medicare CLFS reimbursement rates, it is clear that high-volume clinical laboratory testing is facing substantial downward pricing pressure while much of the advanced molecular diagnostics and genomic testing market reimbursement is neutral to positive.  Because of this, it is not surprising that two influential industry groups, the American Clinical Lab Association (ACLA) and Coalition for 21st Century Medicine (C21), have issued opposing statements about the implementation of PAMA. Notwithstanding a successful last-minute legal challenge by those opposing PAMA, the industry must prepare for the likelihood and reality of an implementation on January 1st, 2018.  If you haven’t done so already, knowing how PAMA will impact your lab’s revenue is a critical next step in this preparation.

The Protecting Access to Medicare Act of 2014 (PAMA) revised the payment methodology for clinical diagnostic laboratory tests paid under the Medicare Clinical Laboratory Fee Schedule (CLFS). Final Payment rates released November 17, 2017 will be implemented effective January 1, 2018. Studying Medicare’s new market-based payment system for laboratory services, there are areas of opportunity. Preliminary analysis indicates that molecular and genetic diagnostic testing services may benefit from the new rates. Other clinical testing services may experience a decrease in rates, in which case it becomes very important to understand which claim populations are impacted. may need to apply more complex financial models. All laboratories should also consider PAMA’s secondary impact on commercial payers (both contracted and non-contracted) who derive their allowed amounts from the prevailing Medicare CLFS. Trying to determine the exact impact PAMA will have on your lab can be its own challenge.

Quadax has developed a proprietary modeling tool that is helping our laboratory clients plan and prepare for PAMA’s initial and on-going impact. By using this tool to identify and quantify areas of greatest challenge and opportunity, our client service teams provide the data to help drive our customer’s decision-making process. To deliver the best results, we collaborate with our clients bringing together our joint expertise in the analysis and interpretation of the data, reporting requirements, and clinical aspects of the tests. If you are interested in learning more about our proprietary PAMA modeling tool and how we can use it to benefit your lab, please contact us. We are here to help.

As your lab considers future opportunities—from enhanced operating efficiencies to test menu diversification—an optimized revenue cycle management solution is key. One that solves for both tactics and strategy so that reimbursement efforts maximize revenue in the new world of PAMA-driven pricing.

Defining Your Hospital Lab Program’s Value in the Face of PAMA Cuts

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In the face of PAMA’s substantial cuts to the Part B Clinical Laboratory Fee Schedule (CLFS) on January 1, 2018, many hospitals are reassessing the value proposition of their laboratory service offering.

Before deciding to sell or outsource portions of your lab program, your health system may want to consider the laboratory’s contribution to an enhanced patient experience and the powerful patient management decision support afforded by mining laboratory data. Though such a decision to divest your laboratory operation may produce short-term benefits, it may limit long-term growth strategies and competitiveness for your health system.

The PAMA Impact

The Protecting Access to Medicare Act of 2014 (PAMA) revised the payment methodology for clinical diagnostic laboratory tests paid under the Medicare Clinical Laboratory Fee Schedule (CLFS). With the implementation of PAMA just months away, hospitals are reevaluating their laboratory business. Just how big an impact will PAMA have on your lab’s revenue? In the context of a hospital lab program’s possible three business segments – inpatient, outpatient, and outreach (e.g. non-hospital patient) – it appears only outpatient and outreach will be affected by PAMA, with the greatest impact on outreach.

  • Inpatient lab services, governed by Part A, are not impacted by PAMA cuts targeting Part B. Also, Medicare reimburses hospitals for inpatient lab services as part of Diagnosis Related Group (DRG) bundled payments and therefore does not use the CLFS for payment rates.
  • Outpatient lab services, governed by Part B, are most often paid by Medicare within Ambulatory Payment Classifications (APC) payment bundles. Medicare has bundled the majority of CLFS and the technical component of most anatomic pathology procedures from the Physician Fee Schedule (PFS) into the Evaluation and Management (E&M) service payment. However, PAMA rates will still apply to a small subset of CLFS CPT codes that are still paid fee-for-service (e.g. molecular diagnostics).
  • Outreach lab services performed on non-hospital patients will be the segment most impacted by PAMA.

Gain Operational Efficiency

Hospitals expect their labs to be efficient, productive, and competitive. Can hospital labs gain the efficiency to offset anticipated losses expected with PAMA? Do they have the right equipment? Are they doing the right tests on site? Are they staffed appropriately and processing specimens in an efficient manner? Are test menus optimized across multiple hospital campuses?  Is your lab increasing the number of patients served and tests performed, while decreasing the need to repeat tests through improved specimen handling and result reporting? Operational efficiency benefits from continuous improvement efforts. Track your lab’s success in this area by using key performance indicators (KPIs) such as turnaround time (TAT), count of unresulted or canceled lab tests, reagent and material cost per accession, and labor costs.  While operational efficiency is important, defining your lab program’s value still requires a wider view.

Separate Your Lab’s Financials, Claim Management and Reimbursement Processing

A health system’s lab financials are often rolled-up to combine with hospital figures. As part of a merged Profit and Loss, it can be difficult to track the true financial performance of the lab program. The lab’s financial performance can also be impacted by the sharing of hospital billing and reimbursement resources. Viewed as a secondary initiative by shared resources, lab programs may experience a higher incident of bad debt due to inefficient collections and low net revenue. Lab testing services reimbursement efforts may benefit from separation through the implementation of a lab-centric revenue cycle solution.

Another reason to consider separation, is the unique pre-claim requirements of specialized testing. As health systems bring genetic and molecular testing to their hospital lab program to drive personalized medicine, the steps needed to get reimbursed correctly require expert knowledge and processing. Cutting-edge molecular and genetic tests must meet payers’ medical necessity and prior authorization requirements.

Many hospitals now find themselves in a Medicare Administrative Contractor (MAC) Jurisdiction that has implemented the MolDx program.  In order to be considered for reimbursement, all Part A and Part B claims for molecular diagnostics testing, whether performed in-house or by a reference laboratory, must be submitted to the MAC with the appropriate Diagnostics Exchange (DEX) Z-Code assigned to the test.  Given these and other MolDx billing requirements, your hospital lab program may want to consider laboratory business process outsourcing options to receive maximum reimbursement for specialized testing since many legacy hospital billing systems are unable to adapt to the special billing requirements of the MolDx program.  Even for a mid-sized hospital, hundreds of thousands of dollars may be left on the table because of the inability to submit Z-Codes on your claims for molecular diagnostics testing to your MAC.

Alternative Value Proposition

Using cost containment as the sole basis for determining a hospital lab program’s worth may be too limiting. How does your hospital outreach lab contribute to your health system’s patient experience? Balancing service and return-on-investment, health systems may want to consider the value of quality testing done onsite with rapid turnaround times.

What about serving the increasing number of hospital-employed physicians? As physician provider’s become hospital employees, labs are jockeying for position. Hospital labs have a unique advantage… location, location, location. But to leverage that advantage, hospital labs need to sell their service, speed, and quality to the ordering physicians. Is your hospital lab program creating valuable connections with hospital employed physicians? Can your outreach lab compete solely on a cost basis? Or is there additional value to be considered?

Laboratory data is actionable and has predictive value. As hospitals and health systems move toward value-based health care, their lab programs could provide a major source of information. What if your hospital lab was viewed as a collaborative partner offering innovative data analytics, utilization management, and diagnostic decision support? What if your lab could gather information on and provide an understanding of referral patterns, helping physicians order the right tests?

Defining Your Hospital Lab’s Future Value

Many health system executives feel forced to sell off the lab program because it is not viewed as a core fundamental service. Without a process in place to measure the profitability or value of their lab’s business, hospitals tend to undervalue their worth. You can respond by communicating your lab’s value. You can start by optimizing your lab’s revenue cycle. Quadax, an expert in laboratory billing, can help. With service options sized to fit (Business Process Outsourcing, Software-as-a-Service, Hybrid), your lab can maximize reimbursement and demonstrate its value. Learn more about Quadax services, visit Understanding Your Lab’s Revenue Cycle.

Is Your Lab Aware of CMS Claim Requirements for “Unlisted” Test Codes?

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Centers for Medicare & Medicaid Services (CMS) released Transmittal 3881 on Friday, Oct. 13, 2017 requiring the submission of data for lab tests processed with “unlisted” codes effective beginning January 16, 2018. Medicare Contractors (MACs) will report to CMS specific laboratory tests and associated claims data for any test paid under the Clinical Laboratory Fee Schedule (CLFS) as a Not Otherwise Classified (NOC), Not Otherwise Specified (NOS), or an Unlisted Service or Procedure code, including but not limited to the following: 81099, 81479, 81599, 84999, 85999, 86849, 86999, 87999, 88749 and 89398. Claims that fail to follow the new procedures will be returned as unprocessable.

The PAMA Impact

Section 216(a) of the Protecting Access to Medicare Act of 2014 (PAMA) added Section 1834A to the Social Security Act (the Act), which requires revisions to the payment methodology for clinical diagnostic laboratory tests paid under the CLFS. PAMA requires reporting entities to report private payer payment rates for laboratory tests and the corresponding volumes of tests. To be in compliance with PAMA, CMS is instructing MACs to assure that providers submit private payer data on unique tests currently being paid as a NOC code, NOS code, or Unlisted Service or Procedure code effective beginning January 16, 2018.

 

CMS Claim Requirements – What Your Lab Needs to Know

CMS updates to the “Medicare Claims Processing Manual,” Chapter 26, “Completing and Processing Form CMS-1500 Data Set,” clarify how providers of service or suppliers should populate field 19 of the form when billing NOC codes. Specifically, when billing for unlisted laboratory tests using a NOC code, field 19 must be populated with the specific name of the laboratory test(s) and/or a short descriptor of the test(s). MACs will gather the claims data on specific laboratory tests being paid under the CLFS as a NOC, a NOS, or an unlisted service or procedure code and report it to CMS on a quarterly basis.

Issues for Labs

How will CMS define a “unique” test? Laboratories may need to create a “specific name of the laboratory test(s) and/or short descriptor of the test(s)” to correspond with that definition. This may present challenges as most CMS “unlisted” codes fall within the MolDX program and may require running multiple gene panel tests.

In less than three months, your laboratory’s claims and reimbursement processing must be ready to handle CMS changes. The Quadax Blog will post updates as CMS releases additional information and resources on this topic. Better yet, why not subscribe to The Quadax Blog today and get timely, relevant revenue cycle information delivered directly to your inbox.

Strategies for Managing Genetic and Molecular Test Preauthorization

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In the world before molecular diagnostic CPT codes and payer required prior-authorization, labs could develop, validate, and immediately go to market with a new test. Labs focused their accession workflows on delivering rapid turnaround times and deferring reimbursement efforts until after test results were reported. Today, many payers require pre-test authorization for genetic and molecular tests. Using third party online utilization management programs, payers are able to enforce pre-testing requirements. To secure reimbursement, labs will need to determine how best to integrate prior authorization into their accession and revenue cycle workflows.

Know Your Payer Requirements.

When it comes to preauthorization, it is important to know what your payers require. Some prior authorization programs may require test registration and/or genetic counseling and may limit or discontinue retro-authorization options. The latest payers to adopt such programs are Anthem Blue Cross and UnitedHealthcare.

 

Define Your Lab’s Financial Goals.

Before you can determine the best strategy for managing pre-test authorization, you need to define your lab’s financial goals and establish your lab’s identity, including the willingness to trade reimbursement for market share and volume. Start by analyzing your historic revenue data. Analytics will help you understand and anticipate what the new pre-test requirements will cost your lab. A good revenue cycle system can help you identify which of your tests, patient populations, providers, and payers perform best financially and which do not. Investigate under-performing product-market segments. Is it a volume issue, a cost issue, or both? Are the right tests being ordered and performed? Engage in a low-cost, high-impact educational campaign targeting providers and patients as well as your own sales team and back-office support.

To Test or Not To Test – Things to Consider.

When you are sure the right tests are being properly ordered, you need to decide whether or not your lab should perform the tests. Delivering rapid turnaround in the midst of rigorous payer pre-test requirements adds complexity and cost to your lab’s operations. What level of calculated risk to reimbursement is your lab willing to accept in order to maintain market share and deliver rapid turnaround? Here are some things to consider during your decision-making process.

  • With certain exceptions, Medicare defines Date of Service (DOS) as the date the specimen is collected, making it virtually impossible for the laboratory to obtain prior authorization after the specimen has been received. Some commercial and Medicare Advantage plans may allow the DOS to be the date the test report is signed. It is in the lab’s best interest to have all pre-test requirements before starting the test. Pre-test requirements include not only payer prior authorization, but also basic coverage determination. In the event the test is not a covered benefit, the payer may require patient consent through the use of an Advance Beneficiary Notice (ABN) form in order to bill for the test. How will the need for prior authorization and ABN impact your accession process? Consider deploying a client-facing ordering portal that will include the payer pre-test requirements so that the ordering physician has the necessary information at the time of ordering.
  •  Another strategy is to revisit your payer contracts. If during payer negotiations your lab cannot eliminate a payer’s requirement for prior authorization, then you may want to attempt to negotiate the terms. Some labs have been successful in negotiating a 2-week window from specimen collection in which to secure pre-test requirements. If granted, it would be the lab’s decision whether or not to go to testing during this time, tailoring accession operations based on product-market segment performance. Specimens from high-performing segments would move to testing immediately, while specimens from other segments could be held until all pre-testing requirements are met.
  • Consider the demands of proper specimen handling. Many biological specimens (blood, urine, bone marrow) do not have long viability. Define your lab’s specimen handling requirements to ensure the integrity of your test results. Identify these procedures and protocols in your negotiations with payers stating the adverse effects of testing delays. Plan for these operations in your accession workflow strategies.

 

Choose Your Next Move.

The choices you make for how your lab moves forward in the midst of today’s rigorous pre-testing requirements depends on your lab’s ability to optimize its revenue cycle while delivering quality test results. Achieve operational success and maximize reimbursement efforts by understanding the payer’s requirements and then deploying an optimized, prioritized workflow.

 

Start Smart! Split Remits to Match and Relieve A/R

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When the day does not end until lockbox receipts are balanced, you need the power of remittance management tools. Smart remittance processing starts by splitting remittance files and comingled funds to the right system so deposits can be balanced, payments posted, and the A/R reduced.

The value of lockbox processing is that it allows for same-day deposit of payments. But what happens after? How does your staff manage lockbox balances and files to correctly split comingled data from multiple entities and post to the right system? Lockbox contents can be a mixed bag: paper and electronic; payer and patient; checks, EFT, VCards, and credit cards; EOBs and correspondence; and other, just to name a few. Adding to this complexity the fact that many healthcare organizations have more than one system, and the task of balancing becomes a “search and find” mission.

Accounting is clear, one plus one will always equal two. But when you start with the deposit of two, finding the associated “one plus one” among a batch of comingled, multi-sourced data isn’t accounting, it is operational management.

Data flow that supports work flow.

Intelligent automation can help you streamline your accounting operations. A remittance data management solution can help you split remits to get the right data into the right system’s work flow.

Running un-split 835s against multiple systems can be inefficient, resulting in large kick-out volumes occurring in each system. Not only are these volumes burdensome, requiring a manual process to clear them, they can bury the remittance transactions that truly need your staff’s intervention to proceed. By applying exclusive splits upfront, the right data flows to the right system, and only that system. Redundant handling is eliminated and exceptions can be readily identified and worked.

Remits can be split in a variety of ways. The best solutions use patient account number as one of the key data filters. In a multi-system, multi-service healthcare organization, one patient can have multiple account numbers—where each system in the organization generates a unique patient account number. Creating a custom algorithm that uses this unique patient account number in the file splitting logic can ensure that the remittance transaction data is sent to the right system so that a match can be found and efficiencies gained.

With the industry’s increased merger and acquisition activity, many healthcare organizations are facing the need to support legacy systems or incur the high-cost of conversion. If your organization is in this situation, consider implementing a remittance splitting strategy. You can control your data flow and maintain each system’s revenue integrity while saving time and money.

Posting files to match.

After remits are split, posting files are created. Based on how your accounts receivable (A/R) is structured, posting files can group remittance transactions by system, by payment category, and more to help staff balance the day’s deposits. As a healthcare provider, your A/R is unique. When selecting a remittance management solution, find one that understands your accounts receivable and get the balancing tools your staff needs. Consider the value of a matrix reporting tool where your staff can balance once to the day’s deposit and then to each system within minutes.


Relieve your A/R… and your staff.

Once balanced, your remittance processing should allow for automated accurate and organized posting, adjustments, and follow-up in coordination with claims management, denials and appeals management, and business analytics. With the right solution, your remittance management can be a highly-functioning, results-oriented operation.

RemitMax by Quadax offers a full remittance management solution. Working with you, our RemitMax team engineers your remittance data flow to support your work flow, relieving your A/R… and your staff. Learn more about reimbursement management solutions by Quadax.

Fielding an All Star Healthcare Revenue Cycle Operations Team

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Gatekeepers to your cash flow, healthcare operational staff—front and back office—can make or break your bottom line. If one member of the team drops the ball, it can result in significant revenue losses for your organization. Fielding a strong revenue cycle operations team is your best strategy for securing a winning financial future. How do you attract, grow, and retain these healthcare All Stars?

You can begin by acknowledging the dedicated men and women who ensure your compliance and profitability. Fully integrated into your healthcare revenue cycle—from patient access management, where insurance eligibility is verified and pre-claim requirements such as prior authorization and medical necessity are met, to claims submission, remittance handling, payment posting, statement processing, denials management, and appeals follow-up—your operations team provides your organization end-to-end service and support. They work hard to make sure you get paid the full amount you are owed as quickly as possible.

As a provider of Business Process Outsourcing (BPO) for labs, we know how important it is to have an All Star revenue cycle operations team. We have experienced some of the same recruiting, training, and retention joys and frustrations as you. Based on our experience and the advice of other industry experts, we are confident of one thing: to be the best, you need to employ the best.

Know Where to Look

Finding the right employees is everyone’s job. Getting the right people on the field needs to be an enterprise-wide commitment.

  • Start by clarifying job expectations. The job posting needs to go beyond the job’s title to frame the specific traits and abilities you are seeking based on the type of work that needs to be done and how.
  • Though industry experience is always a plus, it may be helpful to consider candidates with experience in other related industries to increase your potential talent pool. We have found that backgrounds in finance, accounting, and customer service offer skillsets transferable to healthcare revenue cycle management.
  • Current staff can help recruit. Offer incentives, such as a referral bonus or extra PTO, to employees who refer job candidates who become new hires.
  • Search the local community colleges and technical schools—particularly those schools with continuing education and certification programs.
  • While posting on online job boards, don’t forget to include regional online recruiting sites as well.

Training and Learning Management

Smart technology and optimized workflow are powered by knowledgeable staff. A well-organized employee training program is critical and ongoing employee development and learning managementa must.

  • New hire onboarding that goes beyond orientation. Prepare new employees to become fully engaged, productive members of the team. New hires to our revenue cycle operations staff go through an extensive 3-week CORE training program to learn the software and process workflow.
  • Job shadowing produces the best training results. New team members witness real case work in a controlled approach to further advance their understanding and build experience. We strongly value job shadowing and provide 3-days of Specific Process and Responsibility Coaching (SPARC) for all job changes.
  • Standardize best practices. Document procedures for use as reference and to help communicate changes. Our BPO teams can reference detailed, client-specific Standard Operating Procedures (SOP) to optimize revenue cycle processing.
  • Communicate updates. Weekly team huddles on the floor help our staff keep pace with industry changes.

Find Ways to Keep Great Staff

Great employees are hard to find, and even harder to replace. Skillsets can be found, but it is the lost experience that only time and effort can rebuild.

  • Recognize achievement and reward good work. When our teams go above-and-beyond on special projects, we show our appreciation (pizza parties, monetary gift cards, flex time, etc.).
  • Engage creativity with enriching work. Our operations staff understand how what they do fits into the big picture.
  • Nurture positive, caring relationships. Realizing that flexible schedules can help keep great staff, our managers get to know our staff and work with them to meet their needs.
  • Provide opportunities for growth and advancement. We are proud of our employees and try to promote from within whenever possible.
  • Communicate what’s happening – keep employees in the loop. Internal team meetings, department roadmaps, and monthly newsletters are just a few of the ways we stay informed.

Hiring for today’s healthcare is its own challenge. As healthcare reimbursement becomes even more complex, critical thinkers are required at every level in every area of the organization. With the proper investment in time, effort, and money, it is possible to field an All Star healthcare operations team that can produce profitable returns well into the future.

RAC Audits and What They Mean for Healthcare Providers

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A legacy of the Medicare Modernization Act of 2003 and mandated by the Tax Relief and Health Care Act of 2006, the Recovery Audit Contractor (RAC) program recovers hundreds of millions of dollars for the Medicare Trust. Designed to identify and correct improper Medicare payments made to providers, RAC audits can cost healthcare providers time and money.

In their 2016 annual report, the Medicare Trust predicted the fund behind Medicare Part A, at the current rate of spending, is due for depletion in 2028.* Concern about this potential insolvency combined with RACs increasing ability to harness the power of big data has led to an enormous increase in RAC audits and their subsequent appeals during the last several years.

The Government Accountability Office (GAO) issued a report in June 2016 stating that there had been a 936% increase in appeals at CMS (Centers for Medicare & Medicaid), which ultimately led to a severe backlog in the appeals process and mounting criticism. In a recent court order, Health and Human Services (HHS) has been mandated to fix the Medicare appeals backlog by the end of 2020 and to meet annual backlog reduction goals during the interim.* While efforts to reduce the case backlog are underway, the RAC program continues to generate new RAC audits. RAC audits are not going away. *Since publication, the appellate court on Friday, August 11, 2017 overturned the recent district court ruling which ordered HHS to clear the Medicare reimbursement appeals backlog by 2020 stating that the order was “an error of law” and “an abuse of discretion.”

How do RAC audits play out for providers?

First, the provider gets a hardcopy letter notifying them of the audit. The contractor will then carry out one of two types of reviews: complex or automated. Complex audits must be done manually and typically involve a Manual Records Request / ADR letter. Automated RAC claim reviews do not require manual input, using powerful algorithms that can potentially land any given provider with fee-for-service Medicare claims in a stressful situation.

A big audit has the potential to cause a lot of damage, especially to smaller providers that may not have the cash to pay the amount indicated by the audit before appealing it. If a provider doesn’t pay the amount right away, it will start gaining interest at a very high percentage (ca. 10-12%). If that provider neglects to pay with the intent to appeal, and then loses the appeal, they will have to pay for the owed amount revealed in the audit as well as the interest accrued. On the other hand, if a provider pays right away, appeals the audit, then wins the appeal, CMS will reimburse the amount with interest. However, considering the current state of CMS’s appeals backlog, this decision is not always an easy one to make.

What can providers do to stay vigilant regarding RAC audits?

Fortunately, there are many steps providers can take to ensure that potential RAC audits don’t lead to any unpleasant surprises.

Stay informed

The CMS website is a good place to start along with the CMS’s three official auditing partners: Performant Recovery, Inc. (Region 1 and 5), Cotiviti, LLC (Region 2 and 3), and HMS Federal Solutions (Region 4). Each of these organizations offers information aimed at preparing providers for a RAC audit.

In addition to Medicare-sponsored resources, there are plenty of industry publications that regularly report on RAC audits and offer RAC-focused articles, blog posts, webinars, and other useful content. To name a few: Becker’s Hospital Review, RACmonitor, HME Business, For the Record Magazine, the American Medical Association, the American Hospital Association, and more.

Make sure your RCM partner uses RAC-specific edits

The best protection is prevention. Healthcare providers of considerable size often elect to partner with Revenue Cycle Management (RCM) organizations to manage everything from claim scrubbing, to bill collection, to appeals management. The best solutions out there will help you stay a step ahead of potential audits by automatically scrubbing your Medicare claims to make sure they are CMS-compliant before you send them.

Take advantage of AHA’s RACTrac Survey with a compatible vendor.

Though RAC audits put providers on the defense, providers do have a voice in negotiations with lobbyists, lawmakers and RAC contractors: the American Hospital Association (AHA). One of the AHA’s initiatives is the RACTrac Survey, which collects data submitted by participating providers and compiles quarterly reports meant to “assess the impact [of] the Medicare Recovery Audit Contractor (RAC) program on providers”.

The survey can be time consuming. But if done with the help of an RCM vendor certified by the AHA to be compatible with the RACTrac survey, your claim data can be automatically imported in a matter of seconds.

As the frequency of RAC audits continues to increase, so does the likelihood that your company will one day face one. They can seem daunting. But with the proper preparation, even a RAC audit can be surprisingly doable.

(*) source: 2016 Annual Report of the Boards of Trustees of The Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, Actuarial Analysis of Present Value, page 71.

FASB New Standard on Revenue Recognition – Are You Ready for ASC 606?

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With effective dates looming, ASC 606 implementation readiness is top of list for many executives. All entities that enter into contracts with customers will need to be prepared. Effective dates are set to begin after December 15, 2017 for public entities and after December 15, 2018 for nonpublic entities. The intent of the new Accounting Standards Update (ASU) No. 2014-09 is to establish a core principle for revenue recognition across all industries, both domestically and internationally, with converged guidance from the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).

Revenue, as a measure of performance, is used in comparative analysis, risk assessment, and other business venture due diligence. By making revenue recognition consistent, the new standards will help users of financial statements understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

Health care providers should understand not only what rules are changing, but also how the updated standards may impact financial modeling and reporting. Detailed attention should be given to the rules’ impact on net patient service revenue given the variety of contractual arrangements present in this revenue stream. For help understanding ASC 606 unique impact on healthcare, The American Institute of CPAs (AICPA) Health care Entities Revenue Recognition Task Force is one of 16 industry task forces created to identify potential implementation issues and provide guidance.

By way of an overview of the New Standard on Revenue Recognition, please reference FASB ASC Topic 606 Fast Facts below. Another excellent resource for Healthcare Financial Management Association members is the article, Healthcare Revenue Recognition 5 Steps for Net Revenue Modeling and Reporting Considerations, published January 2017.

FASB ASC Topic 606 FAST FACTS
Who All entities that enter into contracts with customers.
What Financial Accounting Standards Board (FASB) New Standard on Revenue Recognition

Accounting Standards Codification (ASC) Topic 606 (ASU 2014-09): Revenue from Contracts with Customers

Core principle: recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
When On 8/12/15, FASB decided to defer the effective date by one year.

Public organizations should apply the new revenue standard to annual reporting periods beginning after December 15, 2017. Nonpublic organizations should apply the new revenue standard to annual reporting periods beginning after December 15, 2018.
Where To help identify WHERE implementation challenges may be greatest for healthcare providers, please visit AICPA’s Health Care Entities Revenue Recognition Task Force landing page for implementation issue updates and guidance.
Why Objective: Establish the principles to report useful information to users of financial statements about the nature, timing, and uncertainty of revenue from contracts with customers.
How FASB ASC Topic 606 outlines for organizations the five steps to use to determine HOW to recognize revenue from customers.

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Given healthcare’s variety of contractual arrangements with customers to provide services and goods (performance obligations), the numerous ways that entities are paid may make implementation a challenge. Add to that the industry’s transition to value-based reimbursement, and healthcare providers find themselves facing additional complexity when executing revenue recognition step #3, determining the transaction price.

Companies will need to choose which method they will use to comply with the new FASB standard. There are two transition methods: Full Retrospective and Modified Retrospective. Some companies may opt to restate sales for the required number of prior years, while other companies may choose the modified compliance approach, applying the new rules only to existing and future contracts as of the effective date. Regardless of which method chosen, a significant amount of dual reporting will be required—reporting both under the old Generally Accepted Accounting Principles (GAAP) and the new incorporating FASB ASC Topic 606.

Whether public or nonpublic, affected companies should begin preparing now for the adoption of the new requirements. Inventorying revenue streams—developing reporting formulas for every class or type of contract—and evaluating how revenue will be affected by the new rules is a great place start. ASC 606 countdown has begun!