Easy Money?

Easy Money?
Streamlining ASC Billing, Coding, and Collections Practices

By Kris Ellis and Jennifer Schraag

The ambulatory surgery center (ASC) industry rang in the New Year with a hopeful outlook on increased reimbursement rates. Late in 2005, the Ambulatory Surgical Center Payment Modernization Act of 2005 was presented to Congress establishing a new ASC payment system to be effective January 1, 2008.

The proposed legislation adopts the recommendation of the Medicare Payment Advisory Commission (MedPAC) that the ASC procedures list be modified and that ASCs be permitted to perform and receive Medicare facility payment for any surgical service, except for those services: that the Health and Human Services Secretary designates, after consultation with specified organizations, as posing a significant risk to beneficiary safety when furnished in an ASC; or that require an overnight stay.¹

The proposed legislation will bring ASCs comparable rates to those of hospital outpatient departments (HOPDs). The legislation includes:¹

• ASCs shall be paid 75 percent of the HOPD fee schedule amount for each covered service ASCs will receive pass-through payments made to HOPDs for the additional costs of innovative medical devices, drugs, and biologicals and other additional payments HOPDs receive, except outliers, direct medical education payments
• By being paid on the basis of the hospital system, ASCs will receive the same annual updates and other relevant adjustments as HOPDs
• The beneficiary’s copayment for services furnished in the ASCs will be 20 percent of the Medicare payment amount, as provided under current law (In contrast, HOPD copayment obligations vary and can exceed 40 percent) The new payment system will be designed to phase-in over a four-year period.

This is exciting news for ASCs, however, it doesn’t take a genius to recognize that ASCs still face many challenges in the financial arena. Under current law (the Medicare Prescription Drug, Improvement, and Modernization Act of 2003), for example, Medicare pays an estimated $320 more per case to HOPDs than to ASCs for the same surgical procedure.1 This is why it is so important to have solid, effective coding, billing, reimbursement, and collections measures in place.

“Medical billing for ASCs requires a broad range of knowledge in coding and billing because of the variety of services offered, increasing government regulations, and wide differences in payor contracts and reimbursement,” affirms Sandy Chilcote, president of PBMS, Inc., a professional billing and management service company for ASCs.

An ASC’s business office cannot afford to add to the long list of financial challenges. Stephanie Ellis, RN, CPC, president of Nashville, Tenn.-based Ellis Medical Consulting, Inc., shares a few potential problems she has seen occur.

One area of concern involves that of Medicare’s specific payment policies (called LCDs, or local carrier determinations — formally LMRPs or local medical review policies).

“If there exists a policy for a procedure that is being done in an ASC, a lot of billers and coders don’t know about the LMRPs and LCDs and if they are billing a claim to Medicare, they may not realize there may be a policy for that (i.e., colonoscopies, blepharoplasties, some pain management procedures, etc.),” she says. “Those policies from Medicare spell out what diagnoses codes are billable. If the coder puts a code on a claim that is not on that list and it is a Medicare claim, they may get a medical necessity denial. They may not understand why they are having their claim denied because the procedure was medically necessary in their view.” Ellis goes on to explain that grouper lists undergo regular changes and that it is necessary to keep up to date with those changes.

Finally, “You have to be aware of what codes you bill to which payors,” she says. “When you have a Medicare claim that you need to use a healthcare common procedure coding system (HCPCS) code on, some of the other payors won’t accept the HCPCS codes so you may have to use an unlisted regular current procedural terminology (CPT) code.”

Another important aspect to keep in mind is ensuring you include those you know will not be covered when submitting claims to Medicare.

“Some centers struggle with if they should or should not bill something to Medicare when it’s not on the grouper list. You should go ahead and bill everything — whether it is covered or not — and then put the codes that are not covered last and append the -GY non-covered modifier to them. That gives Medicare information that that procedure is being performed in the ASC setting, and the more claims they have where they see a code over and over again, the more likely they are to add that code to the grouper list down the line. So, it’s important for centers to give them that information.”

Judie English, vice president of business operations for Surgery Consultants of America, Inc. and Surgery Center Billing, LLC, points out that successful billing and collections is dependent on accurate patient information. “You need to start out with the first part of the revenue cycle, which begins when you schedule a patient and you’re getting information from a doctor’s office,” she says. “You’ve got to make sure that you’re getting up-to-date information from them, because it affects your ability to collect. It begins there and continues with insurance verification and how important it is to verify that the patient’s insurance is currently active and what kind of coverage they have. Then, talk to the patient about any deductible or co-payment that may exist and ask how they’re going to pay for that. Up-front financial counseling and collections — each one of these things is an important part of the collections process as well.”

Shannon Marie Smith, CPA, president of The Rush Group, LLC, emphasizes this idea as well. “Verifying insurance and collecting both the co-insurance and outstanding deductible at the time of service has never been more important,” she says. “More and more patients have to pay more of the bill and many just don’t have the money.”

Smith also notes that there are several ways in which ASCs can make it easier for staff to educate patients about their financial responsibility. “First, load all of your payor contracts to your patient account system. Doing so will automate the calculation of the total amount due for the specific services rendered. Your staff will only have to figure out how much is due from the patient which is pretty easy once they have verified the patient’s benefits. Second, if your center is contracted with most of the payors, access their members’ benefit information on the Web,” Smith continues. “Most of the large payors have robust Web sites with all the information needed to complete the insurance verification step in minutes. Third, give them some step-by-step tools for helping them thru the calculation. Most business office staff prefer dealing with patients, not numbers.”

Ellis says the biggest key to coding correctly is to not be too confident, to ask questions, and to verify everything. She recommends coders research online and possess good coding resources such as books and software packages. “The dangers of inefficiencies is leaving money on the table or not coding in a compliant manner and then getting in trouble and have money taken back,” she says.

“The ability to code from operative reports and pathology reports and an understanding of correct coding initiative (CCI) edits is essential,” adds Chilcote. “An example of one complexity relates to the coding and billing for implants since each payor has different policies for submission and reimbursement of claims. There are many items and services in an ASC where reimbursement is not proportionate to costs when they are not separately billable.”

Modifier usage is one of the most common coding errors, according to Ellis. “Modifiers are probably the biggest errors we see.”

Another common error in coding is in following a doctor’s codes, when the doctor’s office codes are incorrect, Ellis adds. “It is very important that the surgery center understands that they are responsible for their own coding,” she warns. “We are supposed to match the doctor’s codes, but if the doctor’s codes appear to be wrong, the facility needs to code correctly and not follow the doctor. They can get in trouble all on their own and the doctor can get in trouble all on his own if the coding is wrong.”

“Improvements can be made in coding with training and paying good attention to the Medicare policies and updates when they come out and trying to learn as much as possible about the different specialties that the ASC performs by going to coding seminars,” Ellis says.

Azadeh Farahmand, chief executive officer and president of GHN-Online, suggests that a few key strategies are needed for ASCs to improve their coding practices:

• Create small incentives for surgeons to provide complete, timely, and accurate information (diagnosis, procedure, site, etc.) for each surgery
• Ensure surgery center information systems offer electronic medical records (EMRs), so that you can systematically and painlessly track anomalies, identify repeat offenders, or illuminate best practices in collecting the data
• Build more reliance on adopting coding technology rather than hiring certified people

“One of the most important things you need to do is to create and follow a very structured plan for billing,” advises Todd Strumpfer, district manager of GreenFlag Profit Recovery by Transworld Systems. “Decide exactly when and how you will follow-up with past due accounts. Without a clear plan, the accounts receivable will quickly get out of control.”

According to Chilcote, the following items must be in place for efficient billing and maximum reimbursement:

• A plan for contract negotiations with payors
• Setting of fees and billable services
• Effective training of front office staff for patient registration and insurance verification
• Requirement for all patients to sign a “Patient Financial Policy”
• Policy to obtain pre-authorization for procedures — this provides for “clean claims” and quick reimbursement
• Process for aggressive follow-up of claims, which will aid amount and timeliness of reimbursement from payors and payments from patients

“Medical billing is a process that must remain watchful to assure it keeps up with the ever-changing environment,” she adds. “This includes new technology, both hardware and software, and new and updated regulations which require new coding processes, along with new medical procedures provided by the ASC. Additionally, the billing must be audited from time-to-time to assure completeness and accuracy of policy and coding procedure.”

Smith contends that the No. 1 best practice in terms of billing is to make sure it’s done within 24 to 48 hours from the date of service. “So many centers take weeks to even get their initial claim submitted,” she says. “If you have checks and balances in place to catch typos and transposed numbers, and to verify key information such as the patient demographics and insurance information, then billing should be a snap.

“The second best practice is to electronically submit as many claims as possible,” Smith continues. “All the edits in the submission process help to ensure the claims are complete the first time — meaning all the fields on the claim that need to be completed are. Plus, many payors pay them faster because they are processed by systems rather than people.”

Poor billing practices occur frequently. One of the more common poor practices includes not fully reading the operative report. “You have to read the body of the op report and code from the body of the op report, not just the summary at the beginning,” Ellis insists. “If you do code from the summary only, you’re going to leave money on the table or code for something that is not documented in the body, which Medicare considers fraudulent. Or even worse than that, coding from the schedule and not even having an op report in hand when doing the billing. I have seen that happen and it is a very bad and unwise practice.”

Other poor practices Ellis shares:

• Not verifying the patient’s insurance before the case to ensure they do have coverage for the date of service
• Make sure pre-certification is taken care of and never assume the doctor’s office already did it for the facility
• Never assume that if Medicare doesn’t cover it, no one else will

Farahmand describes several key considerations involved in optimizing a facility’s billing operations. The initial step, she explains, is to control the relationship with outside stakeholders. This can be done in several ways, such as dissolving separation lines with doctors’ offices. She says they need to provide better front-end information at the time cases are scheduled. Similarly, after the case is performed, the surgeon must provide timely and complete operating notes.

Farahmand also advises setting succinct reimbursement expectations with payors. “Let’s not leave any room for guess work,” she says. “For example, ask if the payor has payment floors; does the payor offer any incentives to send electronic claims vs. paper? What are covered procedures and acceptable coding methods (ICD9 procedure or CPT)? What are the proper forms to use (CMS 1450 or CMS 1500)? What is to be done in the case of secondary bills? Do they offer electronic funds transfer (EFT)? Who can be contacted for payment questions? Do they require preauthorization for any of the procedures? Do they have online eligibility verification by service line?

“Creating a solid banking relationship will prevent fraud,” Farahmand continues. “Set up a lockbox account and give the onus of cash reconciliation to the bank. Shifting the responsibility will lower operating risks and cash mishandling while it will improve the ASC’s A/R (accounts receivable) days (at least 10 days) if funds from insurance carriers are electronically transferred to the bank.”

Embracing technology solutions that holistically touch every stakeholder outside of the ASC’s walls is also beneficial, according to Farahmand. “For instance, with GHN-Online there are no technical boundaries, so cases can be verified in a matter of seconds via the Internet, claims scrubbed for all business rules between your ASC and the payor, codes are validated against LMRP/CCI rules, payments acknowledged electronically and in your bank in a few days,” she says. “If ASCs’ A/R days are above 40, there is a good opportunity for improvement.”

Performing a reimbursement audit at least once a year or as needed will provide visibility to the weakest areas of the ASC billing practices, Farahmand says. “An independent consultant can be hired to randomly sample patient accounts and immediately offer best ways to minimize issues or map an optimized process for the ASC.”

Outsourcing your collections earlier is beneficial, Strumpfer says. “If you’ve asked your patient to pay three or four times and they have ignored you, what do you think they will do on your fifth and sixth try,” he asks. “Many medical professionals don’t realize there are collection agencies available that are diplomatic enough to use at an early time frame. These services will instruct your patient to pay you directly and will not charge you a large percentage fee. Rather, they will charge just a small fixed-fee per account of around $10. Many services offer online account placement as well. They will get better results than your internal efforts after 60 days and they will cost less as well.”

Mark G. Stanley, president and owner of Delivery Financial Services, LLC, notes that the question of when to place bad debt accounts with a collection agency can be different for every facility depending on their own specific circumstances. “Generally, if an account is 120 days delinquent (90 days after the invoice date), a creditor should initiate placement with a collection agency, particularly if no response has been received from the patient,” he says. “At that point, most creditors have sent out several statements and collection letters and made several collection calls. They have tried to bring to the patient’s attention the delinquency or concern about it. The patient’s lack of response to collection calls and letters indicates either a lack of concern or a cash flow problem. In either case, a collection problem exists, and the account should be placed with a collection agency.”

Additionally, Stanley notes that there may be times when an ASC should place an account with a collection agency sooner, such as if the patient has made two or more broken promises of payment. “Another telltale sign is when the patient’s phone number is disconnected,” he says. “First double-check through directory assistance, and if no new listing can be obtained, place the account immediately. If a patient repeatedly requests documentation even though they have been supplied the documentation previously, consider getting rid of the debt.

This tactic used by debtors is common practice used to delay payment of the account.”

A strong relationship between the ASC and the agency is necessary, according to Stanley, and the ASC must take care to select an agency that meets all of its needs. Considerations include:

• Compatible business ethics
• Confidence and compatibility of support staff in both organizations
• Value-added services that make the ASC’s job easier, such as reports, tools, and analysis
• Technology — many agencies now offer online access to your accounts via a secured Web portal
• Reasonable rates
• Demonstrated expertise — select an agency that only performs healthcare collections
• Exceptional references

“The keys to a strong ASC/agency relationship are value-added service, communication, and a team relationship that strives for mutual success,” Stanley concludes.

Revising procedures regularly, or at the very least, reviewing procedures regularly, will help keep the center in the black. For example, Ellis strongly advises ASCs to continually review its EOBs (explanation of benefits) that come in from their payors and look for their denial reasons.

“If they do that, they can tell what types of things are being denied. The EOBs will tell you the story of what is wrong with your facility’s coding and billing,” she points out. It is also a good idea to have the facility’s billing audited periodically — twice a year, or at least annually, she says. In addition, when a new coder is in place for three to six months it is a good idea to check to see if the coder is working successfully or investigate where improvements need to be made, Ellis adds.

“If you are going to do your billing inhouse, develop a billing/coding/collections audit or quality assurance initiative to make sure things are not being dropped through the cracks, to make sure that every patient is being billed,” English recommends.

Smith agrees, adding, “An independent review of their processes is often well worth the money. Processes erode over time.”

Reviewing current practices and recognizing where changes need to be made can be accomplished in a more effective, simplistic manner by using software programs such as those offered by Medibis and Source Medical.

The Medibis solution allows ASCs to analyze their current practices and benchmark themselves to improve countless financial aspects. For example, the reimbursement analysis cube allows users to identify and analyze cases that may have been underpaid or undercharged as well as identify cases that meet certain criteria such as having an outstanding balance greater than a given dollar amount and/or not having made a payment in a given number of days. “The reimbursement cube transcends any technology currently available in the market today,” adds Roy Georgia, founder and chief executive officer of Medibis. “ASCs now have a tool that provides a tactical vs. shotgun approach to payment analysis and revenue management.”

The technology also provides reports on how reimbursements vary for the same case across payors and what the center’s historical CPT codes are and the reimbursements they generate by payor. Tyler Strain, Medibis’ vice president of sales explains, “Medibis provides unprecedented access to key operational information. Administrators and managers can now truly understand their revenue cycle by leveraging their existing information.”

In addition, the Medibis Accounts Receivable Cube is helpful in streamlining the collections process and reducing receivables. It measures several trends by physician, payor or procedure, for example, to identify paying behavior, billing inefficiencies and overall collection performance.

Source Medical’s AdvantX ASC, Surgical Hospital and AdvantX PM systems help in tracking and improving a facility’s billing, collections, and revenue cycle management processes. The billing and collections module enables users to keep a workable record of all charges, payments, adjustments, transfers, and credits on accounts, in addition to logging insurance billing transactions and adding unlimited comments on each patient record. The software also allows for tracking accounts that have been turned over to outside collection services. A “collector’s desktop complementary module” is also available to assist with accounts receivable management.

The AdvantX systems’ revenue cycle management module aides in eligibility verification, payor claims management, and electronic remittance posting.

Finally, the managed care and contract management module assists the business office staff with complete contract management, features a multi-tiered fee schedule, lists authorized services, and tracks insurance authorization by carrier.

Each center encompasses its own set of unique challenges. These factors must be evaluated carefully in deciding whether or not outsourcing certain coding, billing, or collections practices may be beneficial for a particular ASC. “Many ASCs perform inhouse billing and collections better than others,” says Stanley. “The decision of what to outsource and what to keep in-house, therefore, must be tailored to the unique circumstances one faces.”

Stanley notes that various accounts receivable projects can be outsourced as either short-term or long-term arrangements. “Shortterm assistance may be required during system conversion or consolidation, during staffing shortages, or during turnaround,” he says. “An important, value-added benefit an outsourcing agency will provide is assistance in identifying problems, causes, and solutions in the administrative system and payor aspects of the office.”

“I think one of the obvious benefits of outsourcing is that you have dedicated people working on the billing process,” says Caryl A. Serbin, RN, BSN, LHRM, president and founder of Surgery Consultants of America, Inc. and Surgery Center Billing, LLC. “When you’re doing it in-house, it’s hard to separate out those people and have them work only on billing — they seem to be filling in for the scheduler or dealing directly with some sort of patient care. It seems like when we go into centers that are troubled, the last thing on the food chain is the billing department, so they often don’t really have the resources to do the work, and that’s a problem. It just sets them up for failure right away.”

Serbin recommends a thorough analysis of whether or not it will be more efficient to set up services with a qualified company vs. doing it in-house. “If you decide to do the billing inhouse, make a commitment to acquire the resources to do it right,” she says. “Make it your top priority — put it on equal footing with the clinical piece. It should be as important, because you can have the best nurses in the world, the greatest policies and procedures, accreditation, and everything, and if you don’t have the billing piece right, you won’t be able to maintain all those things.”

Stanley explains that there are several types of projects that may be outsourced on a long-term basis, including:

• Early-out and self-pay projects
• Bad debt collection
• Legal liability claims
• Contract management recoveries
• Electronic claims submission

“For each of these projects, the decision is made to outsource because an agency could provide value that the ASC could not,” Stanley says. “In the early-out/self-pay programs, agencies provide value in many areas. Earlyout/ self-pay programs are programs offered by collection agencies where the agency makes recovery efforts in the healthcare provider’s name. At no point does the patient realize they are dealing with or speaking to a collection agency.”

Stanley notes that temporary outsourcing projects can offer two major sources of value. “First, agencies can provide on-site assistance to cope with staffing turnover during an unstable time,” he says. “Second, no newly formed business office wants to take on a backlog of work from all the former offices. Outsourcing aged receivables eliminates a backlog so a new office can start fresh,” Stanley continues. “Agencies can also help identify areas of weakness within the inhouse operations; such as identifying accounts that could have been paid by insurance or collecting copays that should have been received at the point of service.”

Serbin explains that an excellent billing company doesn’t just do the mechanics, but also gets involved in issues such as verifying that the ASC is collecting all the correct patient information up front, evaluating denial ratios, and so on, as these things can help with collections.

“A good company also gets involved in your managed care contracts to be sure that you’re charging for everything you’re entitled to, such as getting invoices and billing for implants and other things eligible for reimbursement, or making suggestions about things to request when negotiating a managed care contract. If you’re hiring a billing company that does those things, as opposed to those that only bill and do not get involved with the meat and potatoes of the reimbursement cycle, it may not be in your best interest. Those are some of the things that can really make a difference in the bottom line.”

1. American Association of Ambulatory Surgery Centers (AAASC). Summary of the Ambulatory Surgical Center Payment Modernization Act H.R. 4042 and S. 1884.

http://www.aaasc.org/documents/ASCModernizationActSummaryandFacts92305_002.doc. Accessed online Jan. 6, 2006.

Are Certified Coders Necessary?

The benefits of optimal coding can be immense, according to Caryl A. Serbin, RN, BSN, LHRM, president and founder of Surgery Consultants of America, Inc. and Surgery Center Billing, LLC. “There might be more than one procedure if you read the operative note correctly, and you could get more money because of that; not undue money — money that keeps you in compliance but still optimizes what you should be getting.” This can make a highly skilled coder an important asset.

“Unfortunately, having a certified coder doesn’t always guarantee that that person is a good coder,” says Stephanie Ellis, RN, CPC, president of Ellis Medical Consulting, Inc. Ellis says ASCs commonly draw from the hospital or physician market when hiring coders or billers. “Neither one of those markets have billed for ASC services before so it’s hard to find people who know how to bill ASC services,” she warns. In addition, the average salary for a certified coder usually runs outside the average budget for an ASC. “They can be very expensive,” she adds.

“Many times, people who come from doctors’ offices don’t know much about surgical coding, or being able to bill for bi-laterals,” says Judie English, vice president of business operations for Surgery Consultants of America, Inc. and Surgery Center Billing, LLC. “They’re used to using a super bill from the doctor to do billing. Yes, they’re experienced billers, but they’re not experienced in surgery centers. There are many nuances that need to be learned.”

Sandy Chilcote, president of PBMS, Inc., points out that coders “must be certified and have a higher level of training than for other types of billing.” She adds, “Coders must possess training and background in the most recent coding guidelines and regulations — including Medicare LCDs — as well as training in the appropriate use of modifiers and bundling rules.”

Stellar training also is very important, according to Ellis. She says it is crucial when hiring a new coder that solid training is available to them on ASC coding. “Also, make sure someone is cross-trained, so if you lose your coder, you have someone that can train a new person coming in adequately. Cross-training is very important for ASC coding. It takes a long time to learn it and it is very complicated.”