Best Practices: Authorization Denial Prevention

1. Best Practices: Authorization Denial Prevention Scott Long – Regional Director April 20, 2012

2. Agenda • Industry Challenges • Authorization Stakeholders • Technology • Q & A

3. Automation Used by Other Industries What do banking and authorizations have in common?

4. Source of Denials in Patient Access Department Auth/Eligibility related denials 10 point increase 2008 -> 2011 Source: Advisory Board, 2008 Source: Advisory Board, 2011

5. Manual vs. Electronic Per-Transaction Costs Milliman: Technology and Operations Solutions 1/06 *Adjustments of 9% to account for inflation ’06-’11

6. Resource Allocation Trends High Performer Mid Performer Low Performer High-performing organizations pay for resources at the front of revenue cycle FTE Total FTE resources after automation 0.4% 1.1% 3.9% $ $$ $$$ Denials (% of Net Revenue) Patient Access Office FTEs Business Office FTEs Source: The Advisory Board Company “Revenue Cycle Benchmarking 2011”

7. Labor vs. Loss • Organizations typically fall in to one of two categories: • Expend labor resources → in turn reducing denials • Minimize labor resources → resulting in increased denials and rework • Goal is to find the optimal balance or resource and efficiency while reducing denials on the back end

8. Breaking Down the Numbers… Net Revenue Denials Based on data from previous slide

9. Juggling Authorization Requirements Patient-type changes Auth Not on File – Physician Communication Admission Notification Authorization Status Authorization Submission In-House Census Referrals Authorization for Add-Ons Discharge Notification

10. Leveraging Automation • Ability to integrate and capture data at various points • Event driven Rules to identify and react real-time to: • Scheduling • Registration • Bed control transfers • Patient-type changes • Multi-communication platform to trigger ADT event data to payers or even community physicians • Blue Cross: Radiology go to MedSolutions; Outpatient Surgery go to Provider Access • Aetna: Inpatient admission go to Navinet; Starting in December use 278 EDI • HealthSelect: ER admit – fax facesheet; Radiology go to CareCore • UnitedHealthcare: NICU admission use 278 EDI; Radiology go to UHC

11. What You Need From Automation • Real-time Payer Communication Activities • Authorization Status • Not found • Approved • Denied (including Why?) • Multiple procedure status • Display Warnings • Date of service outside of authorized date range • Requesting facility does not match the authorized facility • Automatically update authorization data within registration screens • Check status regularly…not just once! • Authorization Submission (online 24/7) • Direct admits • ER admits • Patient type changes • Same-day add-ons

12. Key Stakeholders Secondary Support: IT and internal audit Authorization Circle of influence

13. Technology

14. Disparate Entities…Disparate Systems…Disparate Objectives • Scheduling • HIS • Meditech • Siemens • EPIC • McKesson • Cerner • Others • Order Entry • Patient Accounting • Collections Integration Technology Practice Management • Auth • Administrator • NIA • AIM • CareCore Payer

15. Summary: Integration and Automation • Front-load processes to reduce downstream re-work • Order entry integration – identification of actual procedures • Automated physician communication – fax, e-mail, text • Understand payer communication options • Look beyond existing HIS capabilities • Availability of solutions through SaaS model • Collaborate with IT&S to explore integration options • Leverage automated rules architectures to process and manage your workload

16. Questions & Answers

17. Best Practices: POS Collections

18. Overview • Industry Statistics and Trends • Upfront Collection Facts • Compliance Issues • POS Collection Technology • Opportunity Areas • Success Factors • Scripting

19. Current Trends • The losses for many hospitals’ investment income has caused their executives to look for additional ways to increase net revenue, reduce bad debt and lower cost. • Point of service collections no longer an emerging trend – it’s now mainstream for Patient Access best practices • Maximizing point of service collections rank in top 10 CFO priorities – Advisory Board Company 2011 Result: rising bad debt and less cash on hand; especially with the continued growth of HSA & High Deductible Health Plans (more financial responsibility put on the patient)

20. Growth of HSA/HDHP Enrollment Source: AHIP Center for Policy Research, June, 2011

21. Population Trends • Self Pay is the fastest growing payer class • 50+ million Adult Americans are uninsured (18.7% ) • 25 million Adult Americans are underinsured • 75 million working-age adults uninsured or underinsured • Fastest growing group of uninsured aged 25 – 34 with income > $70K • Figures increase significantly when including children or undocumented individuals • Employer-based health coverage continues to decrease

22. Unemployment and the Uninsured impact * * *1% increase results in 1M new Medicaid/CHIP enrollees and 1.1M uninsured Bureau of Labor and Statistics and the Kaiser Family Foundation

23. Increasing patient out-of-pocket Percentage of Covered Workers Enrolled in a Plan with a General Annual Deductible of $1,000 or More for Single Coverage Note: These estimates include workers enrolled in HDHP/SO and other plan types. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2010.

24. Increasing PO$ Collections: Why the Focus? Significantly improve the bottom line of your organization through: • Reduce cost to collect • Reduce uncompensated care • Reduce self-pay receivables • Increase overall cash flow • Improve patient satisfaction • Reduce call volumes • Reduce patient confusion about their bills

25. PO$ Collection Facts • Cost to collect is typically reported between 2-3% of revenue • Front-end processes are important … due to increase in patient out-of-pocket • Post discharge, cost to collect increases, likelihood of collection decreases • Educating the patient of their financial obligation in advance improves patient satisfaction

26. Example • Medium size hospital • Radiology department with 5,000 visits • Average liability $389 • Potential to collect $1,945,000 Result: Without collecting at POS, the hospital can typically lose up to 60% of the potential amount, or $1,167,000

27. PO$ Collections – Best Practices, is this possible?

28. Compliance Compliance Hurdles

29. HIPAA Health Insurance Portability and Accountability Act • Disclosure of information must be limited to the minimum necessary for the purpose of the disclosure PO$ IMPACT Potential compliance risks while engaging in financial activity

30. EMTALA Emergency Medical Treatment and Active Labor Act • The hospital cannot delay in providing a medical screening examination or stabilization services in order to inquire about the individual payment method or insurance status. PO$ Impact Collection activity ONLY AFTER medical screening examination and stabilization

31. Medical Necessity Social Security Act 1862(a)(1) is defined as: • Consistent with symptoms or diagnosis of the illness of injury being treated and not for the convenience of the patient, attending physician, or supplier • Within generally accepted professional medical standards (not exploratory or investigational) PO$ Impact Potential patient liability if not medically necessary

32. ABN/Notice of Non-Coverage Advance Beneficiary Notices or Notice of Non-Coverage • Before services are provided • Medicare/select commercial payers will not pay for some or all of the services because they may not be reasonable and medically necessary • Patient/representative must be informed of non-coverage and liability in the event Medicare does not pay PO$ Impact Potential patient liability

33. Collection Technology • Detailed eligibility – 271 data is not enough • Medical necessity verification • ABN notification • Financial responsibility estimator • On-line payments • Integrated credit card authorization system • ATM accessibility • Propensity to pay score • Scripting

34. Collection Readiness • Scripting, scripting, scripting • Training • Policies and procedures • Set expectations and accountability • Communicate goals and expectations • Measure potential vs. actual cash • Develop incentive plan

35. PO$ Collections Opportunity Areas

36. Scheduling/Pre – Registration/ Registration • Potentially the first point of contact with the patient! • Verify eligibility • Consistent pre-registration process • Obtain benefits (coverage, co-pay, co-insurance and/or deductible, YTD accumulators) • Inform patient of liability in advance • Offer debit/credit card payment option

37. Financial Counseling • Plays key role in protecting the hospital’s cash flow and exposure to bad debt and collection expense • Medical assistance screening • Alternative state funding application process • Charity care screening • Credit scoring (propensity to pay) • Establish financial arrangements

38. In House / Discharge • Make in-house visits to patient rooms for third party coverage, collect patient financial responsibility, and/or payment arrangements • Implement financially focused discharge control process for all point-of-service areas • Ensure every account is financially evaluated prior to discharge

39. Success Factors • Hospital PO$ collections policy • Financially focused Patient Access Department • Financial Counseling best practices • Medicaid eligibility vendor • Physician and physician office manager education • Staff education and incentive program • Consistency in front end process

40. Key Contributors to Success • Senior Management buy in; CEO, CFO, CNO • CIO supporting integration of technology • Physician communication • Clearly defined policies and expectations • Training program • Consumer education and satisfaction • Establish goals and measure performance

41. Best Performers – Hospital wide • CFO/CEO communicates organizational efforts to hospital directors • CNO adopts organizational efforts and level set clinical depts • CIO provides access to currently technology and provides resources to implement • HR incorporates cash collection responsibilities in job description • Patient Access documents Policies and Procedures • Scripting and role playing • Discuss and publish goals and expectations • Track and publish actual vs goals

42. Best Performers – Non ER • Relationship with physician community • Provides specific information at scheduling • Provides insurance information at scheduling • Provides maternity list • Strong Preadmission dept • Insurance eligibility • Medical necessity evaluation • Generates patient liability • Access to propensity to pay data • Access to prior balances • Communicates and collects patient liabilities

43. Best Performers – Non ER cont. • Strong Financial Counselor dept • Evaluates ER admits, direct admits and transfers • Established relationship with case management • Generates and communicates patient estimates • Access to prior balances • Access to propensity to pay information • Access to financial assistance resources • Established prompt payment guidelines • Established uninsured discounting • Decentralized dept adopt and implement existing polices and procedures

44. Best Performers - ER • ER: • Clear and timely communication of MSE completed • Clinical team assisting with acuity level • Financial Counselors and Discharge Process • Calculate and collect patient liabilities • Insurance letters with self addressed envelopes • Established prompt payment and uninsured programs

45. Tips to Motivate Payment • Use • Here are some options for you… • Did you know you could • May I suggest… • We have always encouraged • Avoid • I want you to… • I need… • We require… • Our policy states

46. Overcoming Objections #1 Patient Objection “I’ve never been asked to pay before.” Registrar Response “Historically we have encouraged patients to pay their patient responsibility upfront. We now have a program in place that helps patients know their expected patient responsibility upfront. What payment method would you like to use to pay your responsibility? Patient Objection “I’ve never been asked to pay before.”

47. Overcoming Objections #2 Patient Objection “Why wasn’t I told in advance that I would have to pay today?” Registrar Response “We do our best to try to inform patients prior to their arrival. If you are not in a position to pay the total amount in full today, we will set up a payment arrangement for the remaining. How much will you be paying today?

48. Overcoming Objections #3 Patient Objection “I don’t have any money.” “I can’t afford it right now.” “I am not working. How can I pay if I don’t work?.” “I’m going to file bankruptcy.” Registrar Response “I understand. Why don’t I have you talk with our Financial Counselor and complete a Financial Analysis Statement. This will help us determine how we can assist you in resolving your account balance” **Although we want to collect from this patient, it is equally important to help the patient understanding other funding mechanisms. Ensure that all critical data elements are verified and document your account to help the business office.

49. Overcoming Objections #4 Patient Objection “I like to wait until my insurance pays, then I’ll pay.” “My insurance pays first and then I pay when I receive the bill.” “I don’t even have a Deductible/Co-Pay –my insurance is wrong.” Registrar Response “As a service to you, we’ve contacted your insurance company and confirmed your eligibility and current. We verified that your annual deductible is $____ and you’ve already met $_____. Your co-insurance percentage is ___% or $____, etc, etc. The great news is, we have a contract with your insurance company which means you receive a discount.

50. Overcoming Objections #5 Patient Objection “I don’t have my checkbook/cash/credit cards with me today.” “They told me not to bring valuables with me so I left my purse/wallet at home.” “I just wrote my last check.” Registrar Response We’d like to have your payment method identified prior to your procedure. What method do you expect you’ll be able to use? Is there a way we can obtain that today or later in the week?