Leverage the claims process for short- and long-term savings.

by Jeff Jordan

According to CMS, in June 2005, more than 99 percent of Medicare bills were submitted electronically in HIPAA-compliant formats. CMS calls it an "outstanding job of adopting the HIPAA claims formats." But when providers acquired the software to submit electronic claims, they became more than just HIPAA compliant; they acquired a valuable tool for managing their revenue cycle.

ELECTRONIC PAYMENT

Now that long-term care providers have passed the hurdle of preparing and submitting bills electronically, they can further increase efficiency and enhance the receivables process by moving to electronic payment. While getting paid electronically is new to many LTC providers, it is a proven process used by hospitals.

Providers that submit electronic Medicare claims in the HIPAA-compliant ANSI 837I format can receive their remittance advice electronically in the ANSI 835 format. Depending on the accounts receivable software employed, facility staff simply import the file and the software then matches the remittance with claims and reports any discrepancies. Electronic payment eliminates the tasks of entering each line item and performing manual reconciliation.

If your organization is already receiving payment electronically, congratulations! Working with a paperless claims processing and payment system increases efficiency, and when it comes to the billing process, efficiency quickly translates to dollars saved by reducing AR days and improving the collection process.

BENEFITS OF AUTOMATION

LTC providers are catching on to the advantages of completely automating the billing process. One of the first benefits is a reduction in rebilling since bills are sent out accurately the first time. While payers' rules can be complex and vary from payer to payer, an online billing system "remembers" each payer's rules and submits bills accordingly every time.

When retroactive changes are needed, software can take care of them without manual input. It can correct original billing charges, create new charges and update current totals.

Billing software can further streamline the claims process by automatically coordinating benefits to make sure all payment sources are billed. Some software systems prorate the charges for all of a resident's payers and produce claims automatically, passing on charges not covered by one payer to the next.

Billing software can significantly accelerate the collections process by providing accurate and timely claims, which are paid more quickly. Software provides real-time information in formats that are easy to understand. Staff can have fast answers to family members' questions when they look up a resident's account balance online. When the staff is armed with well-designed reports, it takes only one phone call to check on the status of all residents covered by a certain payer.

MEASURING IMPROVEMENTS

Organizations that use a billing software system simply to submit electronic claims are missing out on a tool that can help strengthen management of the revenue cycle. In addition to the benefits described above, AR/billing software can provide the data needed for effective quality improvement projects for the business office.

In an educational session at the 2005 AHCA convention, "Improving Business Office Performance," Pam Skrzynski, a consultant with Howard, Wershbale & Co., explained that an important step in developing an action plan for improving workflow efficiency is to identify critical data elements associated with that workflow. To ensure success, staff involved in the project must understand the significance of the data elements in terms of staff time, dollars and cash flow. As the saying goes, you can't improve what you can't measure.

A common yardstick for measuring business office performance is the number of days it takes to turn a receivable into cash, also known as days in account receivable and AR days. Skrzynski presented the following formula for calculating days in account receivable:

Annual Revenue — Annual Days = Daily Revenue.

A/R Balance at 12/31/05 — Daily Revenue = Days in Receivable

You can easily retrieve the information needed for this calculation from your billing software. By tracking the days in accounts receivable over time, LTC providers will see trends in business office performance. The data provides a feedback loop indicating the success of workflow changes implemented to improve quality.

MEETING HIPAA GOALS

Electronic billing is an early step toward meeting HIPAA's goal to improve the health care system by establishing standards and requirements for electronically transmitting certain health information. The next steps include adopting a national provider identifier and implementing the HIPAA transaction standards for electronic claims attachments.

As HIPAA rules are implemented, forward-thinking health care providers will find ways to leverage their billing software to increase efficiency in their businesses by implementing improvements such as electronic payment and paperless financial systems.

Jeff Jordan is managing director of Keane Care, Redmond, Wash. He can be reached at Jeffrey_P_Jordan@keane.com. Pam Skrzynski is a consultant with Howard, Wershbale & Co.,Cleveland, Ohio, and can be reached at pamski@hwco.com.