Category: For Laboratories

Discover the latest news, trends, and best practices in revenue cycle management for lab and diagnostic providers, including coding, billing, and collections.

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!

Leading Industry Innovation in the Healthcare Heartland

Posted on

Celebrating diversity and skill, Cleveland is a town of winners – with or without a championship trophy. Like our sports teams and the fans who support them, the region reveals a loyal, tightly knit community working in coordination to deliver specialized experience and ability.

A vibrant healthcare ecosystem located in the heart of the Midwest Corridor, Cleveland is home to world-class healthcare institutions, health-tech and high-tech companies, and academic centers. Sourcing a specialized workforce, Cleveland has been a leader in medical advancement for decades. Behind the innovation are several planning groups, organizations, and alliances that encourage, promote, and support innovative endeavors and partners in the industry.

One such group, the Cleveland Health-Tech Corridor (HTC) recognizes the region as a “strategic location for innovation”.  Another group, the Global Center for Health Innovation facilitates shared forums for “learning, collaboration, and discovery to power healthcare transformation.” Both groups contribute to growing Cleveland’s dominance in the healthcare sector.

Headquartered in healthcare’s heartland, Quadax is Cleveland born and bred. Quadax maintains five Northeast Ohio locations, engaging the region’s rich resources to serve clients coast-to-coast. With a focus on optimizing revenue cycle and electronic transaction workflow, Quadax operates nationally, serving a diverse set of clients, from large multistate healthcare campuses to cutting edge genomic and molecular diagnostic labs.

Proud of our Midwestern Healthcare Corridor roots, we put our customers first with three principles in mind: create value, champion health, and never settle. As a trusted partner, an industry expert, and dedicated service provider, Quadax works together with our clients in seamless unity. Taking care of our clients, we help them serve and take care of our communities!

Implications of Narrow Healthcare Networks on Laboratory Providers

Posted on

In less than three short years (2014-2017), narrow and ultra-narrow networks have increased from 48% to 53% of all networks. With their majority influence, these networks are reshaping the healthcare industry. To survive, labs of all kinds will need to understand the implications of narrow healthcare networks on their ability to access patients and collect reimbursement.

To begin, it is important for laboratory managers and pathologists to understand the reasons behind insurers’ creation of narrow networks and their perceived value by consumers and employers.

How do plans with limited networks provide cost savings for health insurers and health consumers?

The goal is to deliver increased patient volume (and revenue) to the provider in return for lower costs to the insurer (and ultimately the patient) achieved through reduced rates. Insurers limit the number of doctors, hospitals, and other providers a patient can visit in order to negotiate a lower cost for services with networked providers in return for a higher volume of patients. Insurers also promote to consumers that narrow networks allow insurers to influence the delivery of coordinated healthcare by offering targeted in-network solutions to help physicians and providers give patients more personalized care.

Looking for value, consumers prefer health plans with lower premiums over higher-priced health plans that offer access to more providers—22% and 19% respectively. Similarly, employers prefer the benefit of lower health plan premiums with 56% of employers considering narrow networks as a way to reduce medical costs. The level of savings could be a very good deal for consumers and employers, but whether these health plans can deliver value depends on whether or not the insurer’s selected network can provide adequate care.

With limited accessibility and availability, can narrow networks provide adequate care?

While narrow network plans might save money for insurers, consumers, and employers, they could make it harder for patients to get the care they need, where and when they need it. The plans may not include enough nearby providers and the providers they do include may be too busy to take new patients in a timely fashion. This could be problematic if a patient is unable to obtain the timely healthcare they need within their network. It can be further compounded if the plan provides limited or no out-of-network benefits.

Network Adequacy Standards

Federal and state regulations qualitatively state that networks should provide for reasonable access, without unreasonable travel or delay. Regulation of health plan provider networks often includes quantitative standards that may review the number of providers, provider-to-enrollee ratios, the mix of provider types, and the distribution/location of providers from whom enrollees may reasonably be expected to obtain services. Encouraging network transparency, regulation may also require that provider directories are updated at least once each month. The key to any successful regulation is compliance and enforcement. Without means to measure and enforce Network Adequacy Standards proactively, federal and state regulators are limited to respond after-the-fact to patient complaints regarding network compliance.

Implications laboratory providers may want to consider

Whether your laboratory pursues an in-network or out-of-network strategy, it is important to consider the effect narrow provider networks will have on your lab’s ability to access patients and collect reimbursement.

  • If your lab is seeking to be an in-network provider in a limited network plan, it may be helpful to learn about the network’s size, mix, and distribution/location as well as any governing Network Adequacy Standards that may be in effect. This information can help you communicate how your lab will fit within and add value to the network’s model. Also, be prepared to discuss price. It may be helpful to approach the topic of price from a value-based perspective. Payers will be interested to learn how your lab testing services can contribute to improve patient outcomes and reduce the cost per episode of care. You may want to demonstrate your lab’s value by sharing relevant statistics. For additional network negotiation strategies, reference Developing Clinical Laboratory Strategies to Gain Network Access.
  • If your lab remains an out-of-network provider, your lab will need to balance offering a low price through the narrow health network with preparing for patients to be responsible for paying the entire cost of the test. Be aware that out-of-network providers face new constraints on their ability to balance bill members of government-funded and commercial plans, while commercial payers are continuing to sue out-of-network providers to stop improper referrals and cost-sharing waivers.

Regardless of your network strategy, it is important to know the implications of narrow healthcare networks on your lab’s business model and to have available your lab’s performance statistics so you can negotiate value and drive efficiency and cost containment measures. Learn how Quadax can help; visit Reveal Opportunities. Analyze Impact. Deliver Results.

How to Improve Payments as HDHPs Increase Patient Responsibility

Posted on

Patient responsibility has always been a liability for providers. Unlike automated claims processing that submits electronic 837s to an established group of payers, the ability to collect on patient responsibility requires individual patient billing and often involves manual processing and time-intensive follow-up.

While the upfront dollar value of patient responsibility continues to increase across all plan types (HMO, PPO, POS, and HDHP) – now averaging $1,478 – the escalating adoption rate of high deductible health plans (HDHPs) means that a growing segment of the patient population is now responsible for greater payment amounts before insurance coverage begins. According to the Kaiser Family Foundation 2016 Employer Health Benefits Survey, 29% of covered workers are enrolled in an HDHP – up from 20% in 2014 – and the average HDHP deductible is $2,199.

As the financial liability shifts, the best way to reduce your exposure to uncompensated care is to expedite the collection of your patients’ responsibility—co-pay, co-insurance, and deductible.

Successfully collecting payment directly from the consumer rather than a payer may require a shift on the part of the provider: consider introducing a B2C payment processing model. Targeting patient payment processing solutions, both pre- and post-billing, this new B2C model should be patient-friendly and provide convenient and efficient automation with self-help payment options. The goal is to make it easy for patients to pay so you can collect patient payment as soon as possible.

Here are four steps you may want to consider.

1. Assist patients in making informed decisions.

Start by confirming your patient’s eligibility for the services to be rendered. While verifying your patient’s insurance and coverage, identify if there are any pre-claim requirements such as prior authorization and medical necessity documentation. Then calculate upfront your patient’s out-of-pocket cost, informing your patient of his/her responsibility. To learn more, visit A Smart Start to Your Revenue Cycle.

2. Collect patient payment information.

Think B2C. In addition to obtaining correct patient demographic information, consider gathering credit card information. Remember, HDHPs shoulder patients with a greater upfront cost burden. To get paid, providers need to be able to collect payment directly from the patient.

3. Make it easy for patients to pay.

Begin by communicating to patients easy-to-understand charges. Then offer convenient, accurate, secure B2C payment processing options—in today’s world, consumers expect online. In addition, consider offering payment plan options for select services. Smaller, easy-to-pay installments can help patients meet their responsibility. To learn more, visit Patient Responsibility Made Easy.

4. Coach your patient-facing staff.

Your patient-facing staff excels at helping patients with their healthcare needs. Now, coach your staff on how to help patients manage their payment responsibility. With assistance from your staff, your patients will come to understand their HDHPs and will learn to anticipate and know their responsibility in paying for healthcare services.

Most providers are already collecting a patient’s co-pay and co-insurance at time of service. With HDHPs, this model needs to be expanded to address a patient’s total out-of-pocket cost as it relates to the patient’s unpaid deductible. Finding ways to expedite your patient payments can help optimize your revenue cycle and accelerate your revenue cash flow.

 

4 Strategies for Molecular Diagnostic Labs to Maximize Reimbursement

Posted on

At the forefront of innovative medical technologies, genetic laboratories are making breakthroughs in testing and treatment that confer significant benefit to patients. After overcoming regulatory hurdles to bring these procedures to market, however, the essential task of moving that test or treatment from unlisted to commercially reimbursable is a long road fraught with difficulties.