This content was written by Erin Petrie and was published in ASC Focus’s May 2021 issue. Please see the original content here.
While the COVID-19 pandemic underscores the need for outpatient surgery to be available outside the hospital setting, ASCs across the country continue to grapple with revenue cycle challenges presented by pandemic-related slow-downs in case volume and reimbursements from payers.
According to The Impact of the COVID-19 Pandemic on Outpatient Visits: A Rebound Emerges, a May 2020 report from The Commonwealth Fund, while the number of visits to ambulatory care practices plummeted by almost 60 percent early in the pandemic, by summer 2002, centers were rebounding and ramping back up. As facilities continue to adjust to new expectations and requirements tied to the pandemic, they need to give immediate attention to improving their cash flow.
In our work with ASCs, we have found that to collect as much revenue as possible during this difficult time, making the revenue cycle more front-end driven can help. Giving patients the opportunity to pre-pay helps centers control their collection costs, reduce exposure to bad debt and keep accounts receivable (AR) days under control. We recommend centers focus on two important areas:
- Aging AR
- Upfront collections
We also recommend ASC’s evaluate all aging AR reports for completed cases while maximizing upfront collections from patients for new cases.
Two recent case studies demonstrate the effectiveness of these two strategies.
East Hills Surgery Center, Greenvale, New York
For East Hills Surgery Center, a focused approach on implementing rigorous processes for reviewing every single case resulted in significant revenue cycle management improvements.
A strategic approach to upfront collections and financial counseling — clearly explaining to patients the highest potential estimate before making any reductions — helped the center reach its cash collection goal. A dedicated team also focused on AR follow-up during the slowdown caused by the pandemic.
- Financial counseling accounted for 99% of upfront collections in 2020, compared with 36% in 2019
- The percentage of due collected was 36% in 2020, up from 16% in 2019
- The center reached 149% of its cash goal, decreased its AR days over 90, and increased AR follow-up to 99%
Glasgow Medical Center, Newark, Delaware
Glasgow Medical Center saw similar successes in aging AR and upfront collections. Most outstanding AR balances were in the patient self-pay category, traditionally a challenging one to collect on, highlighting the importance of financial counseling and upfront collections.
The center began a process of educating patients about their financial responsibility when they checked in for procedures, which led to more successful collections and greater peace of mind for the patients.
- Financial counseling accounted for 100% of upfront collections in 2020, compared with 43% in 2019
- The percentage of due collected was 40% in 2020, an increase from 11% in 2019
- The center achieved 155% of its cash goal, and decreased its AR days over 90 by 17%, and increased its average AR follow-up to 99%
When it comes to communication, we have found that a high-touch approach works best. Calling patients directly instead of relying on standard mail has proven to be very effective.
During those calls, we recommend tightening up the approach. When centers are open-ended on what they are asking patients to pay upfront, they tend to reduce the amount right away without explaining the potentially highest amount to the patients. We suggest starting high to give wiggle room, rather than starting in between and later having to lower it from there.
Increasing upfront collections is a drop in AR, so there is less bad debt to write off and fewer receivables moving into the aging buckets. It makes a significant difference when patients are aware of what they will owe when they check in because they are now coming in with either a plan or a payment.
Good revenue cycle management takes both proven practices and a lot of discipline while working on improving upfront collections and aging AR. As case volume begins to rebound, ASCs that prioritize revenue cycle processes will be better equipped to weather future storms.
Erin Petrie is the vice president at Regent Revenue Cycle Management. Contact her at email@example.com.
Ateev Mehrotra, Michael Chernew, David Linetsky, Hilary Hatch, and David Cutler: The Impact of the COVID-19 Pandemic on Outpatient Visits: A Rebound Emerges https://www.commonwealthfund.org/publications/2020/apr/impact-covid-19-outpatient-visits