Why Is Our Cash Low?

Most of what is done in patient accounting is quite simple and routine. Days are gone, for the most part, when people had to load paper into printers and type in all sorts of information so that it came out properly onto a bill. These days, if registration has done its job, and the departments have done their jobs, and your charge master is up to date, most of the time your billing personnel will never even see an account, let alone touch a bill.

This does not mean there aren't complications, obviously, otherwise every single bill would be paid and there wouldn't really be a need for a billing department at all, though we've switched to calling ourselves patient accounting these days, which is still a strange name for what's really done.

Regardless, a big question I have for you is this: if your CFO came to you today and asked why cash was low, how would you answer the question? Would you have an answer as to why the balance for your accounts over 90 days is too high? Would you have an answer as to what the biggest issues are in your department? Would you immediately blame the staff for not doing their job all that well?

Preparation is always key to having a handle on what's going on with your receivables. Just having reports at your beck and call don't do you any good if you're not sure what you're looking for in the first place. In today's newsletter, we're going to highlight some quick hitting issues that you should be looking at, which could be affecting your receivables and your cash. And, lucky for you, it's not all your fault.

1. New Code Changes. As I write this, we're a month into the new year. The first big question to ask is if your facility has updated its charge master with the latest CPT and HCPCS changes. Every year, there are additions, deletions, and changes of description to each of these, as well as other rules. This year there were over 450 CPT changes, deletions, or new codes added, along with over 300 HCPCS codes with the same occurrence. Some of these could be significant, with the most drastic changes occurring in the surgery section pertaining to the musculoskeletal system and, once again, radiology.

2. Days in unbilled receivables. If your days in unbilled receivables is more than 5, your facility could be in trouble, because, obviously, the longer it takes to have the ability to bill, the longer it takes for the facility to get its money, and the CFO always comes to you first. This one you really need to keep up on and always know what the numbers are, because one day they could be at 10 days, the next at 5, and it looks like your department isn't doing its job. Or it could be consistently high; that happened at one hospital I consulted at, and the CFO kept wondering why the billed dollars weren't higher. When I was finally able to get him to understand what I was talking about, things drastically improved, and cash flow wasn't an issue anymore.

3. Denial tracking. My hope is that everyone, at this point, understands why looking at denials is critical to bringing in cash. Some denials indicate problems up front; incorrect dates of birth, SSI numbers, or insurance contract numbers, as well as lack of or improper authorizations. Many hospitals still haven't quite figured out how to handle all those lab denials by Medicare for charges that don't match up to diagnosis codes; sure, it's small money, but when it's not paid, and there's a lot of them, your receivables look horrible. Others could be the aforementioned CPT or HCPCS code problems, things not matching up, missing modifiers and the like. Rarely is an initial denial the fault of the billing department. However, if a claim is denied a second time, often an alert billing person or manager could have made a fix so that the problem didn't happen again.

4. Percentage of claims over 90 days. Ah yes, we've come back to this. We all know that self pay claims can easily be higher than 90 days; no one has a real problem with this. However, in today's world, most insurances pay fairly quickly if everything is clean, and they even deny relatively quickly. This statistic is the trickiest because it could highlight a problem within the department that you may or may not have control over. For instance, if you're in a large hospital and have a very small billing department, most probably you'll never get to everything and you're going to have some unwieldy numbers that no one is going to like. If your Medicare outpatient claims are over 40% at 90 days and you only have one person working them, it may tell you either the person working them isn't very good or the volume is too much for one person (if you've been reading this newsletter for awhile, you know I advocate having multiple people working insurances so that there's more than one person who knows how to work that particular financial class). No matter what, it's better to know the reason and not be able to do anything about it than not know the answer and look like you're not in control of your department.

5. Monthly tracking of total revenue and cash. I've never been someone who tracked cash on a daily basis; too many other things to do. However, I would compile statistics on a weekly basis so I could see if we were close to the dollars I expected to see. I knew how much I expected to see because I also tracked revenue on a monthly basis. I knew that revenue from this month would affect cash overall within 30-60 days. Therefore, if revenue was low in February, which is traditional, then cash is going to be low in April. Why not March? A bit of it will touch March, but you won't really notice the decrease in cash until April; it just always seems to be the second month more than the first. Of course, not every facility probably sees the same thing, which is why it's best to track your numbers so you know what's going on in your hospital.

It's always better to be ahead of the question when it comes to your department. If a CFO has to send in a consultant, someone like me, to answer the questions asked, and you can't supply some of those answers without sounding like you're protecting yourself, well, let's just say it wouldn't be a good sign for long term employment.