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1, 2, 3Collections
Proven Strategies for Collecting Long-Term Care Accounts Receivable
Laura McDonnell
�ColleCtions 1, 2, 3: Proven strategies for ColleCting long-term Care aCCounts reCeivable
About the author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
Chapter one: Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The importance of collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
How to track accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Getting it right the first time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Obtaining correct information on admission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Obtaining demographic information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Chapter two: Medicare A and B . . . . . . . . . . . . . . . . . . . . . 13Original billing: Checks for accuracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Double check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Fiscal intermediaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Online claims tracking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Work closely with clinical departments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
MDS to UB-92 check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
What next: After Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Chapter three: Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . 31State specific, but some common factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Coding and paperwork . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Billing within time frame guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Contents
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Correct information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Tracking Medicaid claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Medicaid pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Chapter four: Managed care . . . . . . . . . . . . . . . . . . . . . . . . 41Managed care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Admissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Medicare managed care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Managed care contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Exclusions to the contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
The billing process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Follow up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Relationship with your managed care provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Chapter five: Private pay . . . . . . . . . . . . . . . . . . . . . . . . . . 51Upfront understanding of payment expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Preparing monthly bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Ancillary services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Room and board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Follow ups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Using legal assistance and liens to secure debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Ombudsman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Small claims court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Developing a follow-up plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Chapter six: Resource payments (resident contribution) . . . 61Resource payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
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Representative payee options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Contacting Social Security or pension plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Get the family involved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Notification of income changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
One-time changes for allowable expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Chapter seven: Coinsurance . . . . . . . . . . . . . . . . . . . . . . . . 69Coinsurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Admissions: Determine level and amount of coverage . . . . . . . . . . . . . . . . . . . . . . . . 69
Family/resident understanding of coverage allowances . . . . . . . . . . . . . . . . . . . . . . . . 70
Medicare Parts A and B coinsurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Automatic crossovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
How to bill coinsurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Call: Don’t just rebill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Medicare cost reporting: Third-party recoverable bad debt . . . . . . . . . . . . . . . . . . . . 74
Chapter eight: Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . 77Accounts receivable spreadsheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Analyze data often . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Days outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Collection expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Cash planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Appendix A: Representative Payee Information . . . . . . . . . 83
Appendix B: Breakdown of the UB-92 . . . . . . . . . . . . . . . . 111
�ColleCtions 1, 2, 3: Proven strategies for ColleCting long-term Care aCCounts reCeivable
Chapter one
Collections
The importance of collections
Collections are vital to the financial health of a skilled nursing home, and the billing
and collection department can make or break a facility. Estimates suggest that long-
term care is an industry with a profit margin of four percent—and with such a small
opportunity for profit, facilities cannot afford to miss out on any owed reimburse-
ment. Uncollected amounts can virtually eliminate any such potential, and if money is
not collected as promptly as possible, facilities may have trouble paying bills or making
payroll. The only way to guarantee financial stability is to have a successful collections
program in your facility.
How to track accounts receivable
Although many nursing homes have computer systems capable of tracking accounts
receivable (AR), there is sometimes an information gap. These computer systems
typically allow you to track charges, payments, and even adjustments (usually by date
and payer), but they do not provide extensive details or explain what has been done
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and what needs to be done next. And when tracking receivables, the more informa-
tion you have on each account the better.
Often, many accounts go unattended because they get lost in a large AR aging report
(i.e., a report, generated from a billing software system, that details outstanding
accounts receivable).
Therefore, even with the best and most elaborate computer software, you should still
establish an AR spreadsheet. This spreadsheet should be separated by payer and con-
tain the resident’s name, date of service, amount owed, and status (Figure 1.1).
At the end of each month, update the detailed outstanding balances on the AR
spreadsheet. Once the list of outstanding balances is established, it is easy to update
Figure
1.1Sample ar SpreadSheet
Resident Payer Date of $ due Statusservice
Doe, JaneSunshineHealthcare Apr-04 350
1 day billed to Sunshine 5/04- called spoke with Tim Roberts will pay 6/1/04
Smith, JohnUniversityHealth Plan Dec-03 2500
Billed 1/04- University requested records 2/04- records sent 2/04. Called University 3/2/04 spoke with Mary Rogers - in med rec review lrm
Jones, BrianBay State Healthcare Mar-04 1500
Paid at $300/day not $400-called bc for On rate authorization- case manager will call back 5/6/04
Johnson, MaryAll Care Health Plan Feb-04 7500
Called All Care on 4/3/04- claim not in system - resubmitted 4/4/04
Facility: Any Nursing Home Updated: 7/15/04
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each month by simply adding new charges and removing any paid claims. By maintain-
ing such a spreadsheet, you keep all collection activity in one place and make it
accessible to staff who work on the accounts.
The AR spreadsheet should include all the collections-related activity (such as follow-
up calls and promises of payment) that has taken place on the account. Each phone
call or follow-up effort should be listed in the “status” column of the spreadsheet.
All information related to the account must be listed, so collections efforts are not
duplicated or complicated, especially when multiple staff members are working on the
same account.
An account history can be invaluable to the collections process. Therefore, keep all
collection efforts and communications on the AR spreadsheet, no matter how old the
information. Especially with private and managed care cases, it is essential to be able
to identify who you spoke with and what was promised—comprehensive documenta-
tion will allow the collector to hold the person or insurance company liable for such
past promises.
Creating an AR spreadsheet: The 30-day plan
When a facility first brings its accounts receivable into a spreadsheet system, the vol-
ume is often so large that it appears overwhelming. Make the project manageable
with a “30-day plan” (Figure 1.2), in which a supervisor assigns specific accounts to
specific billers for collection. Each biller is assigned approximately 10 accounts with
a plan of how to resolve them within 30 days. Each biller should focus intensely on
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these accounts and aggressively follow up on delinquent payments.
When each biller has only 10 accounts to handle, creating the AR spreadsheet
becomes a manageable task. In addition, this distribution usually ensures resolution of
Figure
1.2Sample 30-day plan workSheet
ResidentDate of service payer $ due Action to be taken Status
Brewer, John Jul-04 Medicare 5450Need to call medicare and check status of medical review
Called Medicare, talked with sue jones: claim will beput into cycle to pay 10/15/04
Martin, Carol Aug-04 coinsurance 3500Need to check status with medex
Called Medex: no record of claim in system - claim resubmitted 9/26/04
Glover, Steven Aug-04 Medicaid 2750
Claim denied: no case mix on file- callcase mix and see if it is now on file- if not, get copy and fax to case mix check- and rebill
Called case mix 4/20: not on file, asked for copy from nursing; faxed copy to case mix 9/21; called on 9/24 case mix now on file- rebilled claim 9/25
at least 80% of the accounts, because each biller will become quite familiar with those
assigned to him or her. This method, therefore, will cause the number of outstanding
accounts to dwindle over time.
Once the AR spreadsheet is under contract, the 30-day plan should no longer be
necessary—the billers will have learned what their responsibilities should be. The 30-
Facility: Any Nursing Home Updated: 10/01/04
day plan will have also introduced to the billers ownership and accountability for their
accounts. They will have the tools and direction they need to resolve outstanding
claims, and they will better understand how successful collections programs can work.
Accountability: Assignment of responsibilities
After the AR spreadsheets have been established, assign each financial class or payer
type (Medicare, Medicaid, private pay, etc.) to a biller. One biller can usually handle
more than one class, depending on the size of the AR. Such assignments establish
biller ownership of the accounts, and once each biller becomes responsible for spe-
cific accounts and financial classes in this way, your facility’s collections processes will
improve. Billers will become intimately familiar with those for which they are respon-
sible, and they will learn how to address quickly any problems and answer questions.
Follow-up timelines
For each account, establish regular status reports that address any updates and activity
as well as protocols for allotted time between follow-up attempts. Figure 1.3 details
timeframes to establish for the different payer types.
Dated follow up
As mentioned earlier, each time a staff member works on an account, list and date
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the action taken in the status column of the AR spreadsheet. Dating each action
allows the supervisor reviewing collections to determine whether sufficient attempts
to collect the account have been made. It also stands as documentation in the event
that legal action is needed or as backup in the event that the account must be written
off. Having dated status reports will also simplify follow up, since the biller will be able
to ascertain whether the promised action has been completed within the anticipated
amount of time.
Getting it right the first time
Figure
1.3Follow-up timelineS
Medicare: After 30 days; check common working file weekly for status
Medicaid: State-specific; but, in general, after 45 days, billers should follow up
to make sure claim has been processed
HMOs/managed care: After 30 days, call HMO’s claim processing center; after
initial call, follow up every 15 days
Coinsurance: Call customer service department of coinsurer after 45 days; follow
up every 30 days thereafter
Private and patient-paid amounts: First follow up when account is 10 days late;
then follow up every 10 days after
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The secret to a successful collections policy is very simple: Bill correctly. Of course,
billing correctly is not always as easy as it seems. Many obstacles stand in the way of
getting a correct bill out the door, as will be discussed in later chapters of this book,
but one of the best ways to prevent the easy mistakes is to have a second set of eyes
review each bill. Before every initial bill is sent out of the business office, a second
biller should review the bills for basic information, keeping the following questions
in mind:
• Are all the necessary fields completed?
• Are the codes correct? Are the bills signed?
• Are the provider numbers on the bill?
• Do all managed care claims have authorization numbers?
Although many claims are billed electronically, most people find hard copies easier to
review, so a hard copy of each bill should be printed and reviewed by a second biller
prior to being electronically submitted.
After this review, update any changes in the electronic copy of the bill before it is
submitted. The longest delays in getting payment often occur when you wait for an
answer to your claim and then have to resubmit it because of a mistake. By simply
checking your bills before they go out the door, you can help avoid future denials.
Obtaining correct information on admission
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Obtaining all of a resident’s demographic and insurance information is imperative to
successful billing. However, getting the correct and complete information from each
resident upon admission is very difficult. When residents are admitted to nursing
homes, they are often very upset and may be uncooperative with admissions screen-
ers. Also, residents and their families may not realize that providing the facility with
insurance information is important. Admissions screeners must meet these challenges
and do everything they can to obtain as much information about the resident.
Billers should work closely with the admission department. Consider including your
admissions staff in billers’ training about different payers and types of insurance. This
ensures that your admissions staff understand and accommodate the needs of the bill-
ing department. When admissions staff understand billing requirements and insurance,
they will be able to make more informed decisions about whether to admit
specific residents.
Preadmission screening
Most facilities have a screener (usually a nurse) who visits acute-care hospitals to chart
and visit any patients pending discharge. The screener then forwards this information
to his or her facility’s clinical and financial staff for review.
A designee from the clinical department reviews the resident’s clinical needs, ultimately
determining whether the resident is appropriate for the facility and whether the
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facility can accommodate his or her care needs.
Simultaneously, the business office will review the resident’s financial information. At
this point, a biller should refer to the prospective resident’s common working file
(CWF) to determine the number of Medicare eligible days available and whether the
resident has any other insurance that will supersede Medicare. A biller should also call
the local Medicaid eligibility center and verify Medicaid coverage (if available) and any
secondary insurance information.
For managed care residents, most facilities have a case manager who will work with
managed care organizations to acquire an authorization number and approved num-
ber of days and services. After all appropriate insurance checks have been completed,
the biller should inform admissions staff of the prospective resident’s financial status.
In some situations, billers and admission staff will need to defer admission decisions
to the facility administrator. There may be circumstances under which the biller does
not feel comfortable approving a resident, even if he or she has all the information
gathered to help the administrator decide whether the resident is a financial “fit” for
the facility. If, for example, a resident’s Medicaid status is still pending, accepting him
or her could be a financial risk for your facility.
Obtaining demographic information
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Responsible party information
In addition to the insurance verifications, obtain as much information—such as where
the patient has recently received medical services—as possible prior to admission.
Having responsible-party information, including the names and contact information of
anyone responsible for the financial affairs of the resident, can be extremely beneficial
during aggressive collection attempts. The more names and numbers collected during
admission, the better. During some collections attempts, billers may need to contact
several family members in order to receive payment.
The CWF
As mentioned earlier, you must check a prospective resident’s Medicare days available
through the CWF. However, the CWF is only as good as the last bill submitted, so
determine where each prospective resident has been since that time. For instance, if a
resident had previously stayed at a nursing facility that did not bill in a timely manner,
the CWF would not accurately reflect the number of Medicare days remaining.
Social Security numbers and dates of birth
The accuracy of information obtained on admissions is vitally important. For instance,
you cannot access the CWF without the resident’s correct Medicare number and
date of birth. Date of birth and Social Security numbers are frequently misread or
copied incorrectly, so admission staff should take special care to obtain the correct
information.
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Insurance cards
When most people go to a doctor’s office or the emergency room, the first thing
they grab is their insurance card. However, when residents are admitted to a skilled
nursing facility, insurance cards are typically the last thing on their mind. Even a
resident’s family members may be in such an emotional state that they too forget to
bring the resident’s insurance cards.
Therefore, try asking family members to return on the day after admission to review
all the admission paperwork and provide a copy of the insurance cards. Your facility’s
business manager or biller should meet with the resident’s family for 10 minutes dur-
ing the admission paperwork process. This time provides a good opportunity for a
member of the billing staff to meet the family and explain the facility’s billing and col-
lection processes, including when payments are due and what the facility expects in
regard to the resident’s finances.
Although it may be difficult to spend time with every family during the admission
process, such meetings are invaluable. Taking 10 minutes early in a resident’s stay to
explain to families their responsibilities and the facility’s financial expectations of the
resident can save a significant amount of time in collections and bad debt.
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