As every long term care provider knows, effectively managing accounts receivable is critical to an organization’s financial success.
The primary cause of bad debts is usually the lack of timely follow-up on outstanding claims, especially with regard to Medicaid pending and private pay. As we have stressed throughout the years, the ability to collect starts in the admissions process. This is the critical step for new residents who are trying to apply for Medicaid eligibility, and who are classified as Medicaid pending residents in the billing process.
Gathering Required Documentation
As all providers know, the information and timeliness of the documentation required to be submitted to the Department of Social Services (DSS) depends on the responsiveness of a resident and/or responsible party. Providers can guide and push, but at the end, it is the responsible party who must cooperate and provide all required documentation under a very specific timeframe to ensure eligibility and payment. Failure to meet deadlines will result in disallowed periods of time for Medicaid eligibility.
The majority of providers learned a long time ago that they need to play a proactive role in this eligibility process if they want to get paid for services provided. Concise, easy-to-follow checklists should be provided to the responsible party to assist them in gathering and submitting the required documentation. If difficulties are encountered, either with the responsible party or with the DSS, a provider should take immediate action, including identifying:
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The steps that need to be taken at each level of potential breakdown in the process,
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Which personnel should participate in meetings with the responsible party
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What type of correspondence should be issued, if necessary, and
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Whether or not an attorney might need to become involved at some point in the process.
When you plan ahead for potential issues and take the time to formalize how to handle each “what if” scenario, the likelihood for greater success improves. Employees are prepared for and have formal guidance on how to respond to each situation. This, in turn, usually can expedite the timely filings with the DSS.
Minimizing Bad Debt
The lesson we have all learned with Medicaid pending cases is that the sooner a resident becomes Medicaid eligible, the risk of potential bad debt is minimized and employees spend less time chasing down these cases.
Once a bill has been issued, it is the provider’s responsibility to monitor and manage the receivable to ensure collections. As mentioned previously, the lack of timely follow up on outstanding claims, along with ineffective management oversight, is the primary reason most receivables become uncollectible.
Receivable Management Policies
Based on our experience, it is important that providers establish in writing the appropriate policies and procedures related to receivable management. These policies and procedures should address, at a minimum, the following:
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Timeline and the specific procedures that need to be performed for each type of payer. Each type of payer will require different timelines and certain specific procedures that are unique to that payer. The timeline should address procedures to be performed at each 30-day interval a balance is outstanding.
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Assignment of the personnel responsible for performing the established written procedures.
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Oral and/or written explanations of the status of outstanding receivables, a summary of what has been performed and an action plan for the next step. For claims that exceed a provider’s established timeline by payer type, it is extremely important that this analysis be in writing.
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Monthly review of the aged accounts receivable by management and discussion with the billing personnel on the history of the claim and the established of the next steps. This review process needs to be signed off by management as evidence of their review and approval.
All four of the recommended items above are important to the success of collection, but from the knowledge we have gained from our first-hand experience with our clients, number 4 is the most critical. Without management’s consistent monitoring, review and analysis of the aged account receivable, the likelihood of future bad debt is extremely high.
Providers with the least amount of bad debt have instituted these policies and they are diligent about monitoring and enforcing them. This also leads to employee accountability.
The recommended items are not new and providers might think they actually have them in place, but we strongly recommend that each provider take the time to thoroughly review their own policies and procedures and make sure what they think is occurring on a daily basis is based in reality. This exercise can only enhance your ability to collect and minimize bad debt. But remember, having policies and procedures in writing is a first step but without constant management supervision, these policies and procedures become dusty reference materials that no one uses.
Need Help?
Gross Mendelsohn's Healthcare Group helps clients review, revise and create effective policies and procedures over accounts receivable management. Contact us online or call 800.899.4623.
This post was originally published in August 2013 and has been updated for accuracy and comprehensiveness.
