ASC Revenue Cycle New Year's Resolutions: 8 Areas of Focus for 2021
As the end of the year approaches, now is a good time to evaluate your ambulatory surgery center for its performance quotient for the past year and make some New Year's resolutions. Because of the COVID-19 pandemic, 2020 has not been a traditional year for healthcare nor other businesses. With distribution of vaccine now underway, this should thankfully allow industries to recover and gradually phase back toward pre-COVID normalcy.
Since 2020 has been so unprecedented and 2021 looks to be a recovery period, at least for a significant portion of the year, New Year’s performance resolutions may need to be phased in with different timelines than in previous years. To assist your ASC in gradually regaining its pre-COVID financial health, focus on and carefully review each of the following eight areas of the revenue cycle to ensure you are following recommended best practices:
1. Surgical Case Volume
If your surgery center's case volume is down due to the virus and any associated regulatory business shutdowns, now is a good time to evaluate this critical metric and work to assess how much of it you can potentially recover in 2021.
Until your center returns to normal case volume, your business office staff will likely have idle time. You can utilize your business office staff to assist in auditing and making necessary changes in data tables, fee schedule updates, and managed care organization review. Evaluation of business office and revenue cycle tasks can be performed by business office staff and they can make recommendations to improve performance based on their observations.
2. Fee Schedule
Reviewing your surgery center's fee schedule is an important task that is often overlooked. Doing so can be detrimental as the fee schedule plays an essential role in determining whether your ASC is receiving optimum reimbursement.
If you have not done so this year, prioritize auditing your fees by checking your most common procedures to ensure you are maintaining the profit margin projected in your budget for the coming year. Compare reimbursement rates for commonly performed procedures from Medicare and your major third-party carriers to your fee schedule and to case costs (direct and indirect).
If this review, which should be performed annually, reveals you are not meeting your projected profit margin, you may need to consider increasing your fees. Once changes are determined and approved by your governing body, be sure to add these new procedures and rate changes to the data table in your software system. Follow up by comparing reimbursement of specific procedures pre- and post-fee schedule changes to determine if payers are allowing and paying increased reimbursement.
If your ASC is in need of a fee schedule, you can learn more about developing a fee schedule here.
3. Managed Care Contract Reimbursement Rates
Managed care contract negotiation is not commonly recognized as a part of revenue cycle management, but that perspective is changing. Due to increasing supply and staff expenses, your ASC’s current contracted reimbursement may be insufficient to cover the costs to perform certain cases. After identifying these cases and comparing them to your current contract’s rate structure, make it a priority to discuss these higher-cost cases with your provider representative. Negotiating carve-outs for these cost-expensive cases will often result in a fair and equitable change in reimbursement. Continue to audit these newly negotiated rates to determine if the payer is reimbursing accurately.
Like the fee schedule review, an evaluation of your managed care contracts should also be performed at least annually.
4. Pre-Procedure Revenue Cycle Tasks
Another important but often overlooked as part of the revenue cycle are pre-procedure tasks that include scheduling, insurance verification, patient financial counseling, and patient collections. Inaccurate data collection, inadequate insurance verification, and delayed contact with patients concerning financial responsibility can result in non-payment of pre-procedure patient financial responsibility. It can also result in pre-procedure cancellations, claim denials, payment delays, and higher patient accounts receivable balances.
To eliminate these cash flow disruptions, audit each of these pre-procedure areas of the revenue cycle for timeliness and accuracy and plan to do so going forward.
5. Coding Accuracy and Optimization
Inaccurate or incomplete coding can drastically decrease or delay reimbursement and possibly expose your surgery center to allegations of non-compliance.
Set a goal to reduce your coding errors by reviewing claim denials due to errors and regularly auditing coders for accuracy and compliance, including coding for implants and supplies as well as proper utilization of modifiers.
6. Post-Procedure Revenue Cycle Tasks
The billing and collections process — charge posting, claim submission, collection efforts, payment posting — are often the primary places where errors and delays occur. Any resulting delay or denial of claim reimbursement can appreciably decrease cash flow.
To assist in decreasing the error rate in these crucial areas, strive to perform regular and ongoing audits for timeliness and accuracy of how each of these revenue cycle duties are being completed. If you haven't already, establish realistic goals for each area. Then, in 2021, ensure you are reviewing applicable reports or logs to measure goal compliance.
7. Denial Trends
Your ASC should be tracking denials and regularly auditing common areas where they occur. However, now is a good time to review and address any trends, such as data entry errors, late or erroneously dictated operative notes or transcription, coding or claim submission errors, payment posting errors, or third-party payer delays or incorrect reimbursement. A worthwhile goal for the new year is to address each area and trend with appropriate discussion, education, and regular follow up to determine improvement.
8. Accounts Receivable (A/R)
Your center’s software system reports can provide you with insight into the financial health of your center, as well as possible explanations for inconsistent cash flow. In managing your accounts receivable, two basic but important goals are:
Days in A/R should be less than 50.
Accounts greater than 120 days old should be less than 20% of total A/R.
To better ensure accurate totals, audit these reports and make the following recommended changes:
Adjust off necessary contractual adjustments not made at time of payment posting.
Write off small balances below $10 (or amount agreed upon by your governing body).
Offer patients a one-time discount of 25% off their balance if paid in full within 30 days.
Review claims that are being appealed due to incorrect or non-payment to determine if they are being worked regularly and appropriately. If accounts have been appealed to the highest level of adjudication available with no success, consider writing off uncollectible balances and assigning them to bad debt losses.
After any necessary changes have been made, use corrected totals to then measure days in A/R and total accounts over 120 days.
These amended totals should direct your assignment of collection efforts to applicable categories, starting with oldest, highest balance claims first (e.g., Medicare/Medicaid, managed care, workers’ compensation, liability, and attorney cases). Set collector’s goals and regularly audit their goal compliance.
Establish Reasonable Goals
Even though these commitments to improving your ambulatory surgery center’s financial wellbeing are labeled as New Year's resolutions, you do not have to evaluate and implement them all at once in January. Choose a timetable that best suits your needs. If you decide to work on only one suggested best practice each month, within just six months, your center’s financial health, workflow efficiency, and revenue stream will show appreciable improvements — delivering great reward for what should be relatively modest effort.
2020 was a year like no other, and one that we would largely like to forget. Let's work to start 2021 off right and establish for our ASCs a new foundation for success going forward.