POS Collections Evaluate & Improve Your Skills December 2, 2010

1. POS Collections Evaluate & Improve Your Skills December 2, 2010 Jennifer Powers-Johnson Regional Director Recondo Technology

2. Overview >> • Industry Statistics • Compliance Issues • Success Factors • Collection Technology Enablers • Opportunity Areas • Scripting

3. The Problem >> • The losses for many hospitals’ investment income has caused their executives to look for additional ways to increase revenue, reduce bad debt and lower cost. • “Hospitals are 60% less likely to receive payment once the patient leaves the hospital.” –Wall Street Journal  • In 2009, Americans spent $2.5 trillion dollars on healthcare, and the industry spent $375 billion to process and collect payments – Wall Street Journal • “Administrative complexity is a major reason U.S. Healthcare costs are high. Potential savings are $100 billion a year.” –Three Imperatives for Improving U.S. Healthcare, McKinsey, 12/08 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).

4. Healthcare Financial Climate>> Hospitals are experiencing; Lower Revenue Greater patient responsibility Lower return from investments Tougher credit markets Mounting expense pressure Underfunded capital budgets

5. Current Trends • Self Pay is the fastest growing payer class • 52 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

6. Bureau of Economic Analysis - Personal Consumption Expenditures by Major Type of Product and Expenditure www.bea.gov/national/nipaweb/nipa_underlying/TableView.asp?SelectedTable=19&FirstYear=2007&LastYear=2008&Freq=Qtr Current Trends (continued)

7. Percent of hospital net revenue collected 90%+ 50-60% 8-10% Insurance Balance after Insurance Uninsured Source: Standard & Poor’s Industry Surveys March 27, 2008 Current Trends (continued) Commercially insured patients often have high deductible, out-of-pockets, and coinsurance percentages. Presenting patient financial responsibility at point-of-service, can increase hospital revenue and reduce costs. Trends suggest that rising self pay revenue will cut average hospital profits by as much as 50% by 2012. The McKinsey Quarterly, Web exclusiveJune 2007

8. Uninsured Population (Gallup Jan – June, 2009)

9. Wall Street Journal, May 2009 • “Across the industry, hospitals have been reporting no difficulty charging commercial insurance companies the 6% - 9% price increases they’ve become accustomed to in recent years, including into the current year.” • “Price increases may be short lived, however, the chatter that some employers – having already raised employees premiums, deductibles and co pays – are considered leaving hospitals out of networks in 2010 if they continue to demand big price increases.” • Rising healthcare costs – “These kinds of price increases are way out of line with what's being experienced in the rest of the economy.”

10. Growth of HSA/HDHP Enrollment *Treasury Department projects by 2010 will cover 35 to 40 million people -- based on current law.

11. 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 • Reduce bad debt • Increase overall cash flow • Improve patient satisfaction • Reduce call volumes and complaints • Reduce patient confusion about their bills

12. PO$ Collection Facts • The overall cost to collect is typically reported between 2 and 3 percent of revenue • Front-end processes are important … especially in this era of increasingly high deductible health plans • The more time that passes following the patient’s discharge, the cost to collect on that account continues to go up while the chance of actually collecting payment goes down • Educating the patient of their financial obligation in advance improves patient satisfaction • Consider a single department, outpatient radiology, in a medium-size hospital. With a typical monthly volume of 5,000 visits and an average patient obligation of $389, the hospital has the potential to collect $1,945,000. But without collecting at POS, the hospital typically loses 60% of the potential amount, or $1,167,000

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

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

15. EMTALA HIPAA Compliance Barriers Medical Necessity ABNs Compliance Barriers

16. 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

17. 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

18. 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

19. ABN’s Advance Beneficiary Notices • Before services are provided • Hospital believes Medicare will not pay for some or all of the services because they may not be reasonable and medically necessary • Patient must sign a form agreeing to be held personally responsible for payment of services in the event Medicare does not pay PO$ Impact Potential patient liability

20. 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

21. Collection Technology Enablers • Detailed eligibility – 271 data is not enough • Pre-certification validation • Medical necessity verification • ABN notification • Financial responsibility estimator • On-line payments • Integrated credit card authorization system • ATM accessibility • Credit scoring (propensity to pay) • Scripting

22. 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

23. PO$ Collections Opportunity Areas Scheduling In-house/ Discharge Pre-Registration Registration/ED

24. 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 • Ensure every account is financially secured prior to discharge

25. Scheduling/Pre – Registration/ Registration Potentially the first point of contact with the patient! • Verify eligibility • Consistentpre 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

26. 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 secured prior to discharge

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

28. Registrar Response “Depending on service you had last time, you may not have had to pay a co-pay/co-insurance at that time. If the service was in a previous benefit year, maybe you had already met your deductible and/or OOP max. Maybe you also had a secondary policy that picked up where the primary left off. As you can see, there could be several reasons why you were not asked to pay at that time of service. We offer several payment options, will that be cash, check or charge”? Overcoming Excuses #1 Patient Excuse “I’ve never been asked to pay before.”

29. Registrar Response “We do our best to try to inform patients prior to their arrival of their portions due. However, your Insurance handbook should detail for you the portions you are responsible for when receiving healthcare services. I apologize that you were not notified before your date of service. 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? Will that be cash, check or charge”? Overcoming Excuses #2 Patient Excuse “Why wasn’t I told in advance that I would have to pay today?”

30. 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 financially secure the account, if they will not pay. Therefore, ensure that all critical data elements are verified and document your account. This will help the collectors in the back office understand the account better. Overcoming Excuses #3 Patient Excuse “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.”

31. Registrar Response “As a service to you, we’ve contacted your insurance company regarding your coverage guidelines. 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 they receive a discount. I’ll be glad to issue you a receipt today and your payment will be reflected on your itemized statement - which you should receive in about 10 working days. We have several options for payment, will that be cash, check or charge Overcoming Excuses #4 Patient Excuse “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.”

32. Registrar Response Ask if someone would be able to run home or to the bank and bring the payment back Ask the patient, “when will you be able to bring the payment back?” and/or “how will you be taking care of this obligation today?” This puts the responsibility back to the patient to tell us how they plan to take care of their bill. Overcoming Excuses #5 Patient Excuse “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.”

33. Registrar Response “I understand this may be something new for you. We have, however, found that it is best to talk about it up front so that there are no surprises for anyone later on. Also, once you’re finished with your test/procedure, you’ll be ready to go home and you won’t have to worry about stopping back here. We have several payment options available, will that be cash, check or charge”? Overcoming Excuses #6 Patient Excuse “It’s not right to pay for a service before you have it done!” “I’ll stop back at discharge.”

34. Registrar Response “I understand. Unfortunately we cannot become involved in divorce decrees. As the presenting parent you are the responsible party for this account. You, in turn, can seek reimbursement from your ex-spouse. We do have several payment options available, will that be cash, check or charge”? Overcoming Excuses #7 Patient Excuse “My ex-spouse is responsible for paying these bills.”

35. Registrar Response “I understand how frustrating that can be. We’ve done our very best to make sure we’ve verified and estimated correctly. If you find that you are due a refund, please call me directly and I will follow up and ensure your credit balance is promptly refunded. My name is ______ and my direct line is _____. Please call me if you have any problems at all. Now….how would you like to take care of this today? Will that be cash, check or charge? Overcoming Excuses #8 Patient Excuse “I’m always overcharged and it takes forever to get your money back.”

36. PO$ Collections – Evaluate & Improve Your Skills Jennifer Powers-Johnson Regional Director Recondo Technology 435 659.9166 jpj@recondotech.com