Category: Industry News

Stay current on the latest industry news, best practices, and regulatory changes in revenue cycle management. Gain the knowledge you need to make informed decisions and drive successful outcomes for your healthcare organization.

Hanging in the Balance: Addressing Surprise Billing Issues

Posted on

The topic of balance billing is in the news again, closely associated with the newer term, “surprise billing.”  Patient experiences such as those of Drew Calver, who received an unexpected $109K bill following treatment for his heart attack, have focused new attention on this long-standing issue.

Balance billing is the practice of pursuing from the patient any balance remaining on account after the insurance payer has reimbursed its portion to the provider, beyond the expected co-pay, co-insurance, and deductible.  The terms of the contract between the provider and insurance plan will generally dictate what is or is not billable to the patient – the aforementioned co-pay, co-insurance, deductibles, for example – and these contract provisions (and state law, typically) will control whether or not a patient may have further financial responsibility.

When there is no contract, of course, all bets are off, since an out-of-network provider has no negotiated payment rate.  As high-deductible health plans have become more widespread, many patients are keenly aware of the benefits of staying in-network to keep those expected costs as affordable as possible. But what about when services must be rendered by an out-of-network provider?

In a number of cases highlighted by the media recently, a patient was not aware that out-of-network providers were engaged in the treatment.  This commonly happens when an emergency department physician working through a staffing agency, or an anesthesiologist or radiologist is involved in care but is not in-network. Hence, the surprise of “surprise billing” – the receipt of an out-of-network bill when the patient thought they were at an in-network facility.

New Jersey’s Assembly Bill No. 2039 has likewise garnered quite a bit of attention since its enactment and particularly since its effective date August 30, 2018. Governor Phil Murphy, who signed the legislation earlier this year, said “We’re closing the loophole and reining in excessive out-of-network costs to prevent residents from receiving that ‘big surprise’ in their mailbox. At the same time, we’re making healthcare more affordable by ensuring these costs are not transferred to consumers through increased health premiums.”

New Jersey is among 21 states that have partial or comprehensive protections against balance billing by out-of-network providers in emergency departments or in-network hospitals. Stipulations of the protections vary by state.  Variables include applicability by setting, type of managed care plan, the type of protection, and the payment outcome, whether a payment standard or a dispute resolution process. And since ERISA currently exempts self-funded employer sponsored plans from state regulation, 61% of privately insured individuals are not covered by their state’s protections, adding to the complexity.

There is speculation that changes could be made to ERISA (the Employee Retirement Income Security Act of 1974) to overcome this loophole to state protections.  Senator Bill Cassidy, M.D. (R-LA) announced on September 17 a discussion draft of a bill that would modify ERISA to defer to state limits for patient costs for emergency care; or, in absence of state limits, define restrictions within the proposed legislation itself to cap patient responsibility.  This is one issue among several concerning healthcare price transparency that is being discussed by a working group, and not the only discussion on the topic of potential laws governing balance billing.

So what’s a healthcare provider to do?

  • Be aware of the regulations applicable in your state, and be prepared to comply. As media focus continues on this topic, more legislators are taking up the issue.  Stay tuned to your state’s law-making process to eliminate surprises for your cash flow.
  • Apply your organization’s payment policies consistently.
  • Communicate clearly with patients, whenever possible, about the charges they should expect and their options for payment. In non-emergency settings, check patient eligibility, and provide a pre-service estimate based on their health plan coverage.

Complex billing issues are par for the course in today’s healthcare business office. That’s why Quadax delivers software and solutions that solve revenue cycle complexities, streamlining accounts receivable and reimbursement operations to improve cash flow and payment results.

If you’re ready to work with a partner that believes in transparency, communication, and earning our clients’ trust every day, get in touch with Quadax!

Quadax Earns KLAS Top Ranking for Claims Management

Posted on

The Secret is Out! 

With the release of the 2018 Best in KLAS: Software and Services report, the healthcare industry is learning what Quadax clients have known for years: Quadax can’t be beat for exceptional service and top-performing product functionality.

Although Quadax has served hospitals, laboratories, physician groups, and many others in the healthcare industry for more than 40 years, we have done so somewhat quietly. “Quadax is the industry’s best kept secret; a small but mighty company with talent and expertise to help all types of providers,” said Terry Buterbaugh, Senior Software Engineer.

Instead of making a lot of noise, we’ve focused our attention on building partnership with our clients.  We continuously work to improve our revenue cycle products and services to meet the needs of providers looking for high-performing transaction management tools to improve operational efficiency and cash flow, cost-effectively.

Quadax Performance

You expect comprehensive standard edits for cleaner claims and faster payments, and Quadax delivers.  Thanks to the diligence of our team of claim edit researchers, 99.6% of the claims we transmit are accepted by payers on the first pass. The Quadax Claims Management system, Xpeditor, also gives you powerful tools for configuration of custom edits and claim data processing rules as well as dynamic workflow rules to fit your business office. Not the other way around.

Inseparable from our superior products are the people of Quadax EDI Services that empower providers to use the Xpeditor system to its fullest by providing person-to-person, relational customer support. Whether it’s on-site, on the phone, through virtual meetings, or otherwise—we’re here for you.

Quadax is honored to receive the distinction of Category Leader for Claims Management. However, the driving force behind all that we do is not the achievement of a trophy or seal. Rather, it’s the attainment of a relationship of trust and mutual benefit with the healthcare providers we serve. We enjoy overcoming new challenges as they arise, rolling up our sleeves, and working with client teams to help them achieve success.

If the power and flexibility of Xpeditor are news to you, we’d love to let you in on the secret. Contact us so we can give you more information and show you what makes Quadax Claims Management #1!

KLAS Research

KLAS is a data-driven company on a mission to improve the world’s healthcare by enabling provider and payer voices to be heard and counted. Working with thousands of healthcare professionals, KLAS collects insights on software, services and medical equipment to deliver reports, trending data and statistical overviews. KLAS data is accurate, honest and impartial. The research directly reflects the voice of healthcare professionals and acts as a catalyst for improving vendor performance.

Each year, KLAS publishes a Best in KLAS Report, identifying the top vendors in more than 80 categories.  “Category Leader is more than a ranking. It is a recognition of vendors committed to delivering superior solutions,” said Adam Gale, President of KLAS. “It gives voice to thousands of providers who are demanding better performance, usability and interoperability in healthcare technology.”

The Best in KLAS Report scores vendors on the performance categories sales and contracting, implementation and training, functionality and upgrades, service and support, and general. What they learned put Quadax at the top of the list.

KLAS data is freely available to healthcare providers on their website. You can learn more about KLAS and the insights they provide, and download the 2018 Best in KLAS: Software & Services Report when you log in or create a free account.

OPPS 2018 Revisions: Outpatient 14-Day Rule Changes to Laboratory DOS Policy

Posted on

Centers for Medicare and Medicaid Services (CMS) published its final rule with comment period revising the Medicare Hospital Outpatient Prospective Payment System (OPPS) for 2018. Labs that provide services to hospital outpatients may want to review the new OPPS rule changes, particularly the revisions to the laboratory date of service (DOS) policy (see CMS excerpt highlighted below).

The new carve out exceptions to the 14-day rule will allow labs to bill Medicare directly under the Clinical Laboratory Fee Schedule (CLFS) for molecular pathology tests and advanced diagnostic laboratory tests (ADLTs) that are excluded from OPPS packaging rules and ordered less than 14 days after a patient’s outpatient hospital discharge. In these instances, the DOS for the excepted tests would be the date of testing rather than the date of specimen collection. The OPPS 2018 definition of a qualifying ADLT only refers to criterion A, and does not qualify a test as an ADLT using criteria B or C. The new rule goes into effect with January 1, 2018 date of service. This new rule does not change the inpatient 14-day rule.

How the new rule will impact your revenue cycle depends on the type of testing your lab performs for Medicare hospital outpatients. The biggest change is the opportunity for labs who perform testing excluded from the OPPS packaging policy to bill Medicare directly, using the date of testing as the date of service on the claim.

How will this impact your lab’s reimbursement? Hospitals who have been administratively and financially burdened by the outpatient 14-day rule, may be incented to withdraw from institutional billing arrangements in favor of the lab billing Medicare directly. Consider the following.

  • If your lab test is covered by Medicare, is the allowed amount listed on the Medicare CLFS more or less than your current institutional billing fee schedule? How will your lab address and process Medicare pre-claim requirements such as medical necessity or local coverage determinations? Does your claims clearinghouse check for Medically Unlikely Edits (MUEs)? When exposed to MUEs, will your claims submission process perform the necessary edits to ensure your Medicare claims make it to adjudication?
  • If your test is not covered by Medicare, or Medicare’s reimbursement is not at an acceptable level, you may want to attempt to retain the current institutional billing arrangement—such an arrangement is not precluded by the new rule. Ensure your billing system can report the appropriate DOS on the institutional invoice for the ADLTs and molecular pathology tests excluded from OPPS packaging policy. As hospitals have historically absorbed the cost of these tests performed for Medicare hospital outpatients, they may be unwilling to retain institutional arrangements except for those qualifying tests that are in high-demand.

How will the outpatient 14-day rule change affect test ordering behavior? Hospitals waiting to place test orders on day fourteen, can now order tests earlier. Will earlier ordering improve test result quality and delivery? Working with viable specimens, producing better results, and providing faster turnaround times?

The OPPS 2018 laboratory DOS policy exceptions open up a whole new world of reimbursement for labs who perform testing excluded from the OPPS packaging policy. As you consider how these changes will impact your lab’s revenue cycle process and reimbursement results, learn how Quadax can help. Experienced in laboratory revenue cycle optimization, we help labs of all types maximize their revenue.

Living with PAMA–What is Your Lab’s Prognosis?

Posted on

The financial impact of PAMA to your laboratory depends largely on the type of testing you perform.  With the recent publication of the 2018 Medicare CLFS reimbursement rates, it is clear that high-volume clinical laboratory testing is facing substantial downward pricing pressure while much of the advanced molecular diagnostics and genomic testing market reimbursement is neutral to positive.  Because of this, it is not surprising that two influential industry groups, the American Clinical Lab Association (ACLA) and Coalition for 21st Century Medicine (C21), have issued opposing statements about the implementation of PAMA. Notwithstanding a successful last-minute legal challenge by those opposing PAMA, the industry must prepare for the likelihood and reality of an implementation on January 1st, 2018.  If you haven’t done so already, knowing how PAMA will impact your lab’s revenue is a critical next step in this preparation.

The Protecting Access to Medicare Act of 2014 (PAMA) revised the payment methodology for clinical diagnostic laboratory tests paid under the Medicare Clinical Laboratory Fee Schedule (CLFS). Final Payment rates released November 17, 2017 will be implemented effective January 1, 2018. Studying Medicare’s new market-based payment system for laboratory services, there are areas of opportunity. Preliminary analysis indicates that molecular and genetic diagnostic testing services may benefit from the new rates. Other clinical testing services may experience a decrease in rates, in which case it becomes very important to understand which claim populations are impacted. may need to apply more complex financial models. All laboratories should also consider PAMA’s secondary impact on commercial payers (both contracted and non-contracted) who derive their allowed amounts from the prevailing Medicare CLFS. Trying to determine the exact impact PAMA will have on your lab can be its own challenge.

Quadax has developed a proprietary modeling tool that is helping our laboratory clients plan and prepare for PAMA’s initial and on-going impact. By using this tool to identify and quantify areas of greatest challenge and opportunity, our client service teams provide the data to help drive our customer’s decision-making process. To deliver the best results, we collaborate with our clients bringing together our joint expertise in the analysis and interpretation of the data, reporting requirements, and clinical aspects of the tests. If you are interested in learning more about our proprietary PAMA modeling tool and how we can use it to benefit your lab, please contact us. We are here to help.

As your lab considers future opportunities—from enhanced operating efficiencies to test menu diversification—an optimized revenue cycle management solution is key. One that solves for both tactics and strategy so that reimbursement efforts maximize revenue in the new world of PAMA-driven pricing.

Defining Your Hospital Lab Program’s Value in the Face of PAMA Cuts

Posted on

In the face of PAMA’s substantial cuts to the Part B Clinical Laboratory Fee Schedule (CLFS) on January 1, 2018, many hospitals are reassessing the value proposition of their laboratory service offering.

Before deciding to sell or outsource portions of your lab program, your health system may want to consider the laboratory’s contribution to an enhanced patient experience and the powerful patient management decision support afforded by mining laboratory data. Though such a decision to divest your laboratory operation may produce short-term benefits, it may limit long-term growth strategies and competitiveness for your health system.

The PAMA Impact

The Protecting Access to Medicare Act of 2014 (PAMA) revised the payment methodology for clinical diagnostic laboratory tests paid under the Medicare Clinical Laboratory Fee Schedule (CLFS). With the implementation of PAMA just months away, hospitals are reevaluating their laboratory business. Just how big an impact will PAMA have on your lab’s revenue? In the context of a hospital lab program’s possible three business segments – inpatient, outpatient, and outreach (e.g. non-hospital patient) – it appears only outpatient and outreach will be affected by PAMA, with the greatest impact on outreach.

  • Inpatient lab services, governed by Part A, are not impacted by PAMA cuts targeting Part B. Also, Medicare reimburses hospitals for inpatient lab services as part of Diagnosis Related Group (DRG) bundled payments and therefore does not use the CLFS for payment rates.
  • Outpatient lab services, governed by Part B, are most often paid by Medicare within Ambulatory Payment Classifications (APC) payment bundles. Medicare has bundled the majority of CLFS and the technical component of most anatomic pathology procedures from the Physician Fee Schedule (PFS) into the Evaluation and Management (E&M) service payment. However, PAMA rates will still apply to a small subset of CLFS CPT codes that are still paid fee-for-service (e.g. molecular diagnostics).
  • Outreach lab services performed on non-hospital patients will be the segment most impacted by PAMA.

Gain Operational Efficiency

Hospitals expect their labs to be efficient, productive, and competitive. Can hospital labs gain the efficiency to offset anticipated losses expected with PAMA? Do they have the right equipment? Are they doing the right tests on site? Are they staffed appropriately and processing specimens in an efficient manner? Are test menus optimized across multiple hospital campuses?  Is your lab increasing the number of patients served and tests performed, while decreasing the need to repeat tests through improved specimen handling and result reporting? Operational efficiency benefits from continuous improvement efforts. Track your lab’s success in this area by using key performance indicators (KPIs) such as turnaround time (TAT), count of unresulted or canceled lab tests, reagent and material cost per accession, and labor costs.  While operational efficiency is important, defining your lab program’s value still requires a wider view.

Separate Your Lab’s Financials, Claim Management and Reimbursement Processing

A health system’s lab financials are often rolled-up to combine with hospital figures. As part of a merged Profit and Loss, it can be difficult to track the true financial performance of the lab program. The lab’s financial performance can also be impacted by the sharing of hospital billing and reimbursement resources. Viewed as a secondary initiative by shared resources, lab programs may experience a higher incident of bad debt due to inefficient collections and low net revenue. Lab testing services reimbursement efforts may benefit from separation through the implementation of a lab-centric revenue cycle solution.

Another reason to consider separation, is the unique pre-claim requirements of specialized testing. As health systems bring genetic and molecular testing to their hospital lab program to drive personalized medicine, the steps needed to get reimbursed correctly require expert knowledge and processing. Cutting-edge molecular and genetic tests must meet payers’ medical necessity and prior authorization requirements.

Many hospitals now find themselves in a Medicare Administrative Contractor (MAC) Jurisdiction that has implemented the MolDx program.  In order to be considered for reimbursement, all Part A and Part B claims for molecular diagnostics testing, whether performed in-house or by a reference laboratory, must be submitted to the MAC with the appropriate Diagnostics Exchange (DEX) Z-Code assigned to the test.  Given these and other MolDx billing requirements, your hospital lab program may want to consider laboratory business process outsourcing options to receive maximum reimbursement for specialized testing since many legacy hospital billing systems are unable to adapt to the special billing requirements of the MolDx program.  Even for a mid-sized hospital, hundreds of thousands of dollars may be left on the table because of the inability to submit Z-Codes on your claims for molecular diagnostics testing to your MAC.

Alternative Value Proposition

Using cost containment as the sole basis for determining a hospital lab program’s worth may be too limiting. How does your hospital outreach lab contribute to your health system’s patient experience? Balancing service and return-on-investment, health systems may want to consider the value of quality testing done onsite with rapid turnaround times.

What about serving the increasing number of hospital-employed physicians? As physician provider’s become hospital employees, labs are jockeying for position. Hospital labs have a unique advantage… location, location, location. But to leverage that advantage, hospital labs need to sell their service, speed, and quality to the ordering physicians. Is your hospital lab program creating valuable connections with hospital employed physicians? Can your outreach lab compete solely on a cost basis? Or is there additional value to be considered?

Laboratory data is actionable and has predictive value. As hospitals and health systems move toward value-based health care, their lab programs could provide a major source of information. What if your hospital lab was viewed as a collaborative partner offering innovative data analytics, utilization management, and diagnostic decision support? What if your lab could gather information on and provide an understanding of referral patterns, helping physicians order the right tests?

Defining Your Hospital Lab’s Future Value

Many health system executives feel forced to sell off the lab program because it is not viewed as a core fundamental service. Without a process in place to measure the profitability or value of their lab’s business, hospitals tend to undervalue their worth. You can respond by communicating your lab’s value. You can start by optimizing your lab’s revenue cycle. Quadax, an expert in laboratory billing, can help. With service options sized to fit (Business Process Outsourcing, Software-as-a-Service, Hybrid), your lab can maximize reimbursement and demonstrate its value. Learn more about Quadax services, visit Understanding Your Lab’s Revenue Cycle.

Is Your Lab Aware of CMS Claim Requirements for “Unlisted” Test Codes?

Posted on

Centers for Medicare & Medicaid Services (CMS) released Transmittal 3881 on Friday, Oct. 13, 2017 requiring the submission of data for lab tests processed with “unlisted” codes effective beginning January 16, 2018. Medicare Contractors (MACs) will report to CMS specific laboratory tests and associated claims data for any test paid under the Clinical Laboratory Fee Schedule (CLFS) as a Not Otherwise Classified (NOC), Not Otherwise Specified (NOS), or an Unlisted Service or Procedure code, including but not limited to the following: 81099, 81479, 81599, 84999, 85999, 86849, 86999, 87999, 88749 and 89398. Claims that fail to follow the new procedures will be returned as unprocessable.

The PAMA Impact

Section 216(a) of the Protecting Access to Medicare Act of 2014 (PAMA) added Section 1834A to the Social Security Act (the Act), which requires revisions to the payment methodology for clinical diagnostic laboratory tests paid under the CLFS. PAMA requires reporting entities to report private payer payment rates for laboratory tests and the corresponding volumes of tests. To be in compliance with PAMA, CMS is instructing MACs to assure that providers submit private payer data on unique tests currently being paid as a NOC code, NOS code, or Unlisted Service or Procedure code effective beginning January 16, 2018.

 

CMS Claim Requirements – What Your Lab Needs to Know

CMS updates to the “Medicare Claims Processing Manual,” Chapter 26, “Completing and Processing Form CMS-1500 Data Set,” clarify how providers of service or suppliers should populate field 19 of the form when billing NOC codes. Specifically, when billing for unlisted laboratory tests using a NOC code, field 19 must be populated with the specific name of the laboratory test(s) and/or a short descriptor of the test(s). MACs will gather the claims data on specific laboratory tests being paid under the CLFS as a NOC, a NOS, or an unlisted service or procedure code and report it to CMS on a quarterly basis.

Issues for Labs

How will CMS define a “unique” test? Laboratories may need to create a “specific name of the laboratory test(s) and/or short descriptor of the test(s)” to correspond with that definition. This may present challenges as most CMS “unlisted” codes fall within the MolDX program and may require running multiple gene panel tests.

In less than three months, your laboratory’s claims and reimbursement processing must be ready to handle CMS changes. The Quadax Blog will post updates as CMS releases additional information and resources on this topic. Better yet, why not subscribe to The Quadax Blog today and get timely, relevant revenue cycle information delivered directly to your inbox.

Strategies for Managing Genetic and Molecular Test Preauthorization

Posted on
In the world before molecular diagnostic CPT codes and payer required prior-authorization, labs could develop, validate, and immediately go to market with a new test. Labs focused their accession workflows on delivering rapid turnaround times and deferring reimbursement efforts until after test results were reported. Today, many payers require pre-test authorization for genetic and molecular tests. Using third party online utilization management programs, payers are able to enforce pre-testing requirements. To secure reimbursement, labs will need to determine how best to integrate prior authorization into their accession and revenue cycle workflows.

Know Your Payer Requirements.

When it comes to preauthorization, it is important to know what your payers require. Some prior authorization programs may require test registration and/or genetic counseling and may limit or discontinue retro-authorization options. The latest payers to adopt such programs are Anthem Blue Cross and UnitedHealthcare.

 

Define Your Lab’s Financial Goals.

Before you can determine the best strategy for managing pre-test authorization, you need to define your lab’s financial goals and establish your lab’s identity, including the willingness to trade reimbursement for market share and volume. Start by analyzing your historic revenue data. Analytics will help you understand and anticipate what the new pre-test requirements will cost your lab. A good revenue cycle system can help you identify which of your tests, patient populations, providers, and payers perform best financially and which do not. Investigate under-performing product-market segments. Is it a volume issue, a cost issue, or both? Are the right tests being ordered and performed? Engage in a low-cost, high-impact educational campaign targeting providers and patients as well as your own sales team and back-office support.

To Test or Not To Test – Things to Consider.

When you are sure the right tests are being properly ordered, you need to decide whether or not your lab should perform the tests. Delivering rapid turnaround in the midst of rigorous payer pre-test requirements adds complexity and cost to your lab’s operations. What level of calculated risk to reimbursement is your lab willing to accept in order to maintain market share and deliver rapid turnaround? Here are some things to consider during your decision-making process.

  • With certain exceptions, Medicare defines Date of Service (DOS) as the date the specimen is collected, making it virtually impossible for the laboratory to obtain prior authorization after the specimen has been received. Some commercial and Medicare Advantage plans may allow the DOS to be the date the test report is signed. It is in the lab’s best interest to have all pre-test requirements before starting the test. Pre-test requirements include not only payer prior authorization, but also basic coverage determination. In the event the test is not a covered benefit, the payer may require patient consent through the use of an Advance Beneficiary Notice (ABN) form in order to bill for the test. How will the need for prior authorization and ABN impact your accession process? Consider deploying a client-facing ordering portal that will include the payer pre-test requirements so that the ordering physician has the necessary information at the time of ordering.
  •  Another strategy is to revisit your payer contracts. If during payer negotiations your lab cannot eliminate a payer’s requirement for prior authorization, then you may want to attempt to negotiate the terms. Some labs have been successful in negotiating a 2-week window from specimen collection in which to secure pre-test requirements. If granted, it would be the lab’s decision whether or not to go to testing during this time, tailoring accession operations based on product-market segment performance. Specimens from high-performing segments would move to testing immediately, while specimens from other segments could be held until all pre-testing requirements are met.
  • Consider the demands of proper specimen handling. Many biological specimens (blood, urine, bone marrow) do not have long viability. Define your lab’s specimen handling requirements to ensure the integrity of your test results. Identify these procedures and protocols in your negotiations with payers stating the adverse effects of testing delays. Plan for these operations in your accession workflow strategies.

 

Choose Your Next Move.

The choices you make for how your lab moves forward in the midst of today’s rigorous pre-testing requirements depends on your lab’s ability to optimize its revenue cycle while delivering quality test results. Achieve operational success and maximize reimbursement efforts by understanding the payer’s requirements and then deploying an optimized, prioritized workflow.

 

Business Continuity for Your Revenue Cycle – Are You Prepared?

Posted on

Witnessing the aftermath of Hurricane Harvey, businesses are reminded that disaster can strike at any time. Being prepared is critical. For healthcare organizations, the rigors of contingency planning are on-going. Whether a catastrophic event or a localized outage, an interruption in your organization’s operations can be costly, compromising performance, productivity, and cash flow.

Achieving a state of preparedness, business continuity planning considers contingencies to create the options and ensure their reliable availability during and after an event. Effective healthcare IT business continuity planning protects against the inability to access critical data, an interruption in communications, or technology downtime due to an infrastructure failure. Consider all possible risks—natural disaster, power outage, hardware or network failure—analyzing the likelihood of occurrence and its impact on your operations. Determine, document, and regularly test your mitigation strategy and recovery procedures.

To help you get started, The Office of the National Coordinator for Health Information Technology has published the Safety Assurance Factors for EHR Resilience (SAFER) guide complete with self-assessment contingency planning checklists, recommended practice worksheets, and additional resources and references.

Business continuity planning in healthcare is more than just good business, it’s the law. Mandatory under the Health Insurance Portability and Accountability Act (HIPAA), The Department of Health and Human Services (HHS) requires that organizations have a “comprehensive testing and monitoring strategy in place to prevent and manage downtime events.” This mandate, as part of HIPAA’s Security Rule, requires technology and protocols to back up data, be able to rapidly restore data and continue operating in “emergency mode” after an event. For more information, visit Summary of the HIPAA Security Rule and Guidance on Risk Analysis on the HHS website.

When developing and testing your business continuity plan, be sure to assess the preparedness of your service and software vendors, including RCM systems and support in your assessment. Your cash flow is critical to your organization and should not be overlooked.

At Quadax, we are committed to security, privacy and compliance; investing heavily to protect our clients’ data as well as our own, with infrastructure designed for optimal business continuity, risk mitigation, disaster recovery, and HIPAA and HITECH compliance. With robust data centers, we have the redundancy to supply our clients a high level of uptime. To further enhance our effectiveness, Quadax recently installed a 500-kilowatt, 850-gallon diesel-powered generator at our main office. The generator, capable of supplying full power to maintain 100% of our operations at Quadax’s main office, provides our staff with reliable uptime so they can deliver dependable service and support to our clients. Learn more about RCM solutions powered by Quadax.

RAC Audits and What They Mean for Healthcare Providers

Posted on

A legacy of the Medicare Modernization Act of 2003 and mandated by the Tax Relief and Health Care Act of 2006, the Recovery Audit Contractor (RAC) program recovers hundreds of millions of dollars for the Medicare Trust. Designed to identify and correct improper Medicare payments made to providers, RAC audits can cost healthcare providers time and money.

In their 2016 annual report, the Medicare Trust predicted the fund behind Medicare Part A, at the current rate of spending, is due for depletion in 2028.* Concern about this potential insolvency combined with RACs increasing ability to harness the power of big data has led to an enormous increase in RAC audits and their subsequent appeals during the last several years.

The Government Accountability Office (GAO) issued a report in June 2016 stating that there had been a 936% increase in appeals at CMS (Centers for Medicare & Medicaid), which ultimately led to a severe backlog in the appeals process and mounting criticism. In a recent court order, Health and Human Services (HHS) has been mandated to fix the Medicare appeals backlog by the end of 2020 and to meet annual backlog reduction goals during the interim.* While efforts to reduce the case backlog are underway, the RAC program continues to generate new RAC audits. RAC audits are not going away. *Since publication, the appellate court on Friday, August 11, 2017 overturned the recent district court ruling which ordered HHS to clear the Medicare reimbursement appeals backlog by 2020 stating that the order was “an error of law” and “an abuse of discretion.”

How do RAC audits play out for providers?

First, the provider gets a hardcopy letter notifying them of the audit. The contractor will then carry out one of two types of reviews: complex or automated. Complex audits must be done manually and typically involve a Manual Records Request / ADR letter. Automated RAC claim reviews do not require manual input, using powerful algorithms that can potentially land any given provider with fee-for-service Medicare claims in a stressful situation.

A big audit has the potential to cause a lot of damage, especially to smaller providers that may not have the cash to pay the amount indicated by the audit before appealing it. If a provider doesn’t pay the amount right away, it will start gaining interest at a very high percentage (ca. 10-12%). If that provider neglects to pay with the intent to appeal, and then loses the appeal, they will have to pay for the owed amount revealed in the audit as well as the interest accrued. On the other hand, if a provider pays right away, appeals the audit, then wins the appeal, CMS will reimburse the amount with interest. However, considering the current state of CMS’s appeals backlog, this decision is not always an easy one to make.

What can providers do to stay vigilant regarding RAC audits?

Fortunately, there are many steps providers can take to ensure that potential RAC audits don’t lead to any unpleasant surprises.

Stay informed

The CMS website is a good place to start along with the CMS’s three official auditing partners: Performant Recovery, Inc. (Region 1 and 5), Cotiviti, LLC (Region 2 and 3), and HMS Federal Solutions (Region 4). Each of these organizations offers information aimed at preparing providers for a RAC audit.

In addition to Medicare-sponsored resources, there are plenty of industry publications that regularly report on RAC audits and offer RAC-focused articles, blog posts, webinars, and other useful content. To name a few: Becker’s Hospital Review, RACmonitor, HME Business, For the Record Magazine, the American Medical Association, the American Hospital Association, and more.

Make sure your RCM partner uses RAC-specific edits

The best protection is prevention. Healthcare providers of considerable size often elect to partner with Revenue Cycle Management (RCM) organizations to manage everything from claim scrubbing, to bill collection, to appeals management. The best solutions out there will help you stay a step ahead of potential audits by automatically scrubbing your Medicare claims to make sure they are CMS-compliant before you send them.

Take advantage of AHA’s RACTrac Survey with a compatible vendor.

Though RAC audits put providers on the defense, providers do have a voice in negotiations with lobbyists, lawmakers and RAC contractors: the American Hospital Association (AHA). One of the AHA’s initiatives is the RACTrac Survey, which collects data submitted by participating providers and compiles quarterly reports meant to “assess the impact [of] the Medicare Recovery Audit Contractor (RAC) program on providers”.

The survey can be time consuming. But if done with the help of an RCM vendor certified by the AHA to be compatible with the RACTrac survey, your claim data can be automatically imported in a matter of seconds.

As the frequency of RAC audits continues to increase, so does the likelihood that your company will one day face one. They can seem daunting. But with the proper preparation, even a RAC audit can be surprisingly doable.

(*) source: 2016 Annual Report of the Boards of Trustees of The Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, Actuarial Analysis of Present Value, page 71.

FASB New Standard on Revenue Recognition – Are You Ready for ASC 606?

Posted on

With effective dates looming, ASC 606 implementation readiness is top of list for many executives. All entities that enter into contracts with customers will need to be prepared. Effective dates are set to begin after December 15, 2017 for public entities and after December 15, 2018 for nonpublic entities. The intent of the new Accounting Standards Update (ASU) No. 2014-09 is to establish a core principle for revenue recognition across all industries, both domestically and internationally, with converged guidance from the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).

Revenue, as a measure of performance, is used in comparative analysis, risk assessment, and other business venture due diligence. By making revenue recognition consistent, the new standards will help users of financial statements understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

Health care providers should understand not only what rules are changing, but also how the updated standards may impact financial modeling and reporting. Detailed attention should be given to the rules’ impact on net patient service revenue given the variety of contractual arrangements present in this revenue stream. For help understanding ASC 606 unique impact on healthcare, The American Institute of CPAs (AICPA) Health care Entities Revenue Recognition Task Force is one of 16 industry task forces created to identify potential implementation issues and provide guidance.

By way of an overview of the New Standard on Revenue Recognition, please reference FASB ASC Topic 606 Fast Facts below. Another excellent resource for Healthcare Financial Management Association members is the article, Healthcare Revenue Recognition 5 Steps for Net Revenue Modeling and Reporting Considerations, published January 2017.

FASB ASC Topic 606 FAST FACTS
Who All entities that enter into contracts with customers.
What Financial Accounting Standards Board (FASB) New Standard on Revenue Recognition

Accounting Standards Codification (ASC) Topic 606 (ASU 2014-09): Revenue from Contracts with Customers

Core principle: recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
When On 8/12/15, FASB decided to defer the effective date by one year.

Public organizations should apply the new revenue standard to annual reporting periods beginning after December 15, 2017. Nonpublic organizations should apply the new revenue standard to annual reporting periods beginning after December 15, 2018.
Where To help identify WHERE implementation challenges may be greatest for healthcare providers, please visit AICPA’s Health Care Entities Revenue Recognition Task Force landing page for implementation issue updates and guidance.
Why Objective: Establish the principles to report useful information to users of financial statements about the nature, timing, and uncertainty of revenue from contracts with customers.
How FASB ASC Topic 606 outlines for organizations the five steps to use to determine HOW to recognize revenue from customers.

RR-Graph.png

 

Given healthcare’s variety of contractual arrangements with customers to provide services and goods (performance obligations), the numerous ways that entities are paid may make implementation a challenge. Add to that the industry’s transition to value-based reimbursement, and healthcare providers find themselves facing additional complexity when executing revenue recognition step #3, determining the transaction price.

Companies will need to choose which method they will use to comply with the new FASB standard. There are two transition methods: Full Retrospective and Modified Retrospective. Some companies may opt to restate sales for the required number of prior years, while other companies may choose the modified compliance approach, applying the new rules only to existing and future contracts as of the effective date. Regardless of which method chosen, a significant amount of dual reporting will be required—reporting both under the old Generally Accepted Accounting Principles (GAAP) and the new incorporating FASB ASC Topic 606.

Whether public or nonpublic, affected companies should begin preparing now for the adoption of the new requirements. Inventorying revenue streams—developing reporting formulas for every class or type of contract—and evaluating how revenue will be affected by the new rules is a great place start. ASC 606 countdown has begun!