July 02, 2012
This issue of Insights seeks to discuss techniques and considerations for the effective management of outsourced vendors responsible for billing and collecting on certain portions of your accounts receivable.
The need to engage a vendor for assistance may stem from an isolated occurrence. Perhaps departmental turnover or the extended loss of a key resource on your billing or follow-up team has caused a spike in your receivable days or a delay in other processes within the revenue cycle. Another isolated occurrence could be the residual effects from of a new accounts receivable system implementation, which has taken the focus of your revenue cycle team.
The need for external resources could be more systemic in nature. Specialty billing requirements may be present and your efforts to train an internal resource have not realized the results you were looking for. You may have a desire to leverage a relationship and acquire the expertise a specialty group has developed based on their experience with other hospitals, maybe even your competitor. Perhaps your recent attempts to attract a qualified candidate with the specialized background have proven unsuccessful.
Your desire to outsource may come down to dollars and cents. With an increase in self-pay receivables due to the prevalence of high deductable insurance plans and the high unemployment rate attributed to the continuing economic malaise, self-pay statement costs are taking an ever increased bite out of your budget. Budget constraints may have hampered your ability to add or replace billing or follow-up staff causing you to rely more heavily on your outsourced vendor.
Utilizing a vendor with statement generating capabilities and advanced predictive dialer technology may be a more cost effective solution. Generating statements through your existing billing system and implementing outbound dialer technology can be very costly. The bottom line is, for certain areas of your accounts receivable, an outside vendor may just be a better and more cost effective means of getting your receivables paid in a timely manner. So, how do we capitalize on the economic benefits an outsourced vendor can bring to your organization?
Embarking on an endeavor of this magnitude is not without its pitfalls and challenges.
All outsource arrangements are dependent on data, typically large amounts of data. Although the specific data requirements may vary greatly, the objective is the same - this information is utilized by your outsourced vendor to create a parallel billing and follow-up system. Interfaces are needed to transmit large amounts of demographic and transactional information. This information is typically transmitted on a daily basis.
Considering your Information Systems department policies and procedures, some organizations require information to be transmitted out to the vendor. In addition, system communications will be required to reach out to the vendor's network to retrieve response and transactional data files. HIPPA and data encryption requirements will need to be addressed and enforced. Automating the process and incorporating the proper alerts may require additional programming expertise within your organization.
Depending on the complexity of your existing follow-up workflow and the completeness and quality of the insurance and demographic information collected at registration, segregating the outsource population from your normal follow-up accounts can be problematic. Accounts being worked simultaneously by both your hospital staff and the outsource agency is a risk. It is imperative that a unique identifier / code be used for the vendor accounts to ensure that duplication of efforts does not occur.
Identifying the "right" internal point person for your outsourcing effort is critical to the success of the project. As such, it is necessary to determine the attributes and skills this individual needs to possess as well as the related level of responsibility and accountability he or she should have on the project.
The reconciliation process with an outsourced vendor can present a plethora of obstacles. A thorough reconciliation process will require detailed information. Volume, timing and delivery challenges can occur when dealing with the transfer of large amounts of data between client and vendor. Having resources with the data manipulation skill-set will need to be addressed as well.
For a vendor relationship to be successful, there are key elements (initiatives) that a healthcare provider should consider and follow:
Assess the collection quality of your accounts before placement. Knowing the quality of the accounts that are being placed will help establish realistic expectations before starting a new vendor relationship. You must be realistic about the collectability of the placement. It is important to be open and honest with regard to the accounts placed so that you put your vendor/ partner in a position to be successful. An accurate collection assessment will also assist in goal development. Clearly defined goals and expectations for the project need to be defined at the start of the relationship.
Indentify and empower a dedicated internal vendor management resource with the ability to manage and reconcile large amounts of data and with the excess capacity to handle the additional responsibility. Ultimately, this internal resource should have reconciliation and invoice approval responsibility, with the proper accountability checks and balances in place.
Vendor selection should focus on the specific expertise of the vendor. Try to leverage the strength of the group by narrowing the placement scope to items within the vendor's field of expertise. Considering data requirement needs and ease of implementation, identify vendors who have credible references from organizations utilizing similar health information systems. Evaluate the vendor's ability and track-record for developing two way interfaces which are completely automated. Be selective - just because a vendor excels in one area, does not mean that they are experts in all revenue cycle processes.
In order to maintain operational efficiency, quarantining the outsourced population to prevent duplication of collection efforts is critical. The outsourced population will need to be integrated in the current account workflow design. Depending on types of accounts, there may be a need to transfer responsibility for the account back to the hospital. Incorporating a mechanism to transfer account collection responsibility and account recall needs to be considered in the workflow design as well.
Establish weekly meetings from kick-off through month 1 to ensure all items / expectations / issues are addressed quickly. Once this has been established, monthly meetings are necessary for reconciliation and reporting purposes. This meeting schedule will introduce the required accountability necessary for the project. These meetings should be scheduled for a similar timeframe in the month, but should allow enough time to have completed the reconciliation for the previous month. This will put all parties involved on an expected schedule with the ability to review timely reconciliation data.
The vendor reconciliation should be tied to monthly billing. This vendor reconciliation should be performed by your internal vendor management resource. You should rely on the vendor to supply source information used in the reconciliation process such as a patient listing or trial balance, however, the vendor should not be responsible for completing the reconciliation.
As part of the reconciliation process, focus on vendor feedback for specific areas which are generating collection opportunities for the vendor. Use this feedback from the group to identify and correct problematic registration, billing and follow-up processes. Share this type of feedback with your current staff as an educational opportunity, as well as, to help motivate your staff.
Whatever your need or motivation may be for the utilization of outsourced vendors, developing an implementation plan with vendor accountability and executing that plan is critical. Goals should be set based on a realistic evaluation of the collection quality of the placed accounts. Use vendor performance as an added layer of accountability to motive existing hospital staff. Feedback from your vendors can help identify gaps in your revenue cycle process, so be sure to capitalize on that feedback.
Reconciliation is your most effective means of communication with your vendor. Your vendors are not working in the cubical down the hall. The vendor resources may be in another state, or even in another country. However, that distance factor should be seamless if the implementation and management of the process is structured properly.
The outsourced vendor should be viewed as a partner, not a necessary evil. They are an extension of your business office, and should be given the appropriate tools and attention you would give to any other part of your revenue cycle process. Remember, their success is your success.
We are pleased to have the opportunity to provide this information to you. If you have any questions, please do not hesitate to contact me at (484) 840-1984.