In reimbursement-driven environments – including skilled nursing facilities and nursing homes – effective cash-flow management is essential. No matter how big organizations may be, their financial leaders face the same ongoing challenge: balancing high operational costs and delayed insurance payouts.
Impact Medical Chief Financial Officer Christine Boyd answers some pointed questions to help skilled nursing facilities implement cash-flow strategies and maintain a healthy bottom line by optimizing the revenue cycle, accelerating claim clean-rates and managing patient responsibilities.
What makes insurance claim reimbursement so complicated?
The complexity of the healthcare revenue cycle requires understanding outside of standard finance and accounting. Selling direct to consumers – especially when paid at time of goods or services – is less complicated. With differing contractual arrangements among insurance payers, claim submission requirements and claim processing time, healthcare cash management is challenging.
What is front-end revenue optimization?
Front-end revenue cycle optimization requires an impeccable understanding of Centers for Medicare & Medicaid Services (CMS) guidelines on what qualifies as billable. For example, wound depth and exudate level determine if wound care supplies can be billed through insurance. We qualify the order per CMS’s local coverage determination, verify the patient’s insurance and obtain an understanding of coverage available. Finally, a licensed provider signs the order as appropriate and necessary for care.
How can long-term care organizations streamline claims and denial management?
One key metric used to analyze the billing team’s efficiency is first-pass acceptance rate, which is the percentage of error-free claims received by insurance payers. Claims can be rejected for errors in a patient’s date of birth, typo in a name, etc.
Impact Medical maintains a first-pass success rate over 93%. We manage our open A/R closely once billed, ensuring more than 85% of our billed revenue is in a closed status 120 days from date of service. That may seem like enough time, but providers aren’t simply taking payment at the time of purchase like in a clothing store. A specialized team must create an insurance claim, work through denials (especially any that may require appeal), move outstanding balances to secondary or tertiary insurance and collect any remaining patient balance where applicable.
Maintaining clean claims prevents facilities and/or patients from receiving faulty or delayed invoices. The claim must be appropriately adjudicated by insurance before assessing any remaining balance, and in a timely fashion.
How can facilities maintain A/R efficiency?
Setting an aging standard is important for any organization to improve its accounts receivable (A/R). Effective financial leaders know how long their cash cycle should take. Once they’ve established a standard, all A/R aged beyond that standard should be prioritized until resolved. This can require a special project – or even overtime – depending on the volume of A/R aged beyond the standard. Once the team has cleaned up aged A/R, it is easier to manage month over month. Just like a weed in the backyard, the longer it grows, the harder it is to pull out. Facilities should always ensure their aged A/R meets their standards and be ready to deploy staff when and if it grows outside of that standard again.
While clearing aged A/R is a top priority, one caveat is that they shouldn’t close out all their invoices as uncollectible just to meet the aged A/R standard. In addition to managing aged A/R, facilities should ensure they maintain collection as a percentage of billed and not disproportionately compromised in A/R cleanup.
What is the impact of cash flow forecasting and reserves?
Being nimble in business is crucial. Especially at a time where everything is at our fingertips – whether it’s door dashing hot wings or asking ChatGPT for decorating advice – everyone wants instant gratification.
If your finance team isn’t managing cash flow closely, the business risks becoming distracted from its broader business goals. A good strategy is to ensure you have a strong finance professional on your administrative team – someone you can trust to alert you if financials begin to take a turn and can answer tough questions such as, “What happens if X revenue stops?”
Impact Medical ensures patients receive Part B supplies on time, while anticipating changes to their care. We use proprietary technology to ensure we have the latest physician/nurse practitioner orders. If the physician determines the wound requires more aggressive treatment, our goal is to qualify and ship supplies as quickly as possible.
How should facilities manage accounts payable and supply chain?
We recommend facilities consistently review suppliers’ pricing and services. It’s best practice to collect three quotes – or even formal bids depending on the situation – before selecting a supplier. Facilities should never assume the right answer today is still the right answer tomorrow, as we all know prices move more than we would like (hot topic: eggs at the supermarket).
Supplier terms follow pricing in terms of importance. We recommend always negotiating the best terms possible, especially with the largest suppliers. Are they willing to offer 60-day terms as opposed to the standard 30 days?
Impact Medical’s billing staff ensures our facilities don’t pay a dollar more than necessary to treat their patients. We offer detailed, transparent cost-avoidance reporting that breaks down every item we ship to facilities over the course of a month, and to which resident, so they always understand the value we provide.
How does working with Impact Medical improve cash flow for long-term care facilities?
Many Part B supplies billable through Medicare are low cost and therefore low reimbursement. It requires expertise to understand and bill supplies appropriately and correctly. Many nursing homes find it challenging to manage the labor required to bill through insurance and typically end up eating the cost so as not to delay patient care.
Because we serve patients across the U.S., we’re able to utilize economies of scale not available to individual nursing homes. We improve the cash flow of facilities that would have otherwise purchased Part B supplies at their own expense. This reduces the burden on administrative staff and improves the finances of facilities, allowing them to use the time, energy and cash flow toward what matters most – caring for patients.
