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1, 2, 3Collections

Proven Strategies for Collecting Long-Term Care Accounts Receivable

Laura McDonnell

�ColleCtions 1, 2, 3: Proven strategies for ColleCting long-term Care aCCounts reCeivable

About the author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

Chapter one: Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

The importance of collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

How to track accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Getting it right the first time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Obtaining correct information on admission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Obtaining demographic information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Chapter two: Medicare A and B . . . . . . . . . . . . . . . . . . . . . 13Original billing: Checks for accuracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Double check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Fiscal intermediaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Online claims tracking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Work closely with clinical departments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

MDS to UB-92 check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

What next: After Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Chapter three: Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . 31State specific, but some common factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Coding and paperwork . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Billing within time frame guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Contents

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� ColleCtions 1, 2, 3: Proven strategies for ColleCting long-term Care aCCounts reCeivable

Correct information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Tracking Medicaid claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Medicaid pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Chapter four: Managed care . . . . . . . . . . . . . . . . . . . . . . . . 41Managed care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Admissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Medicare managed care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Managed care contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Exclusions to the contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

The billing process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Follow up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Relationship with your managed care provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Chapter five: Private pay . . . . . . . . . . . . . . . . . . . . . . . . . . 51Upfront understanding of payment expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Preparing monthly bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Ancillary services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Room and board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Follow ups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Using legal assistance and liens to secure debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Ombudsman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Small claims court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Developing a follow-up plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Chapter six: Resource payments (resident contribution) . . . 61Resource payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

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ColleCtions 1, 2, 3: Proven strategies for ColleCting long-term Care aCCounts reCeivable

Representative payee options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Contacting Social Security or pension plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Get the family involved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Notification of income changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

One-time changes for allowable expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Chapter seven: Coinsurance . . . . . . . . . . . . . . . . . . . . . . . . 69Coinsurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Admissions: Determine level and amount of coverage . . . . . . . . . . . . . . . . . . . . . . . . 69

Family/resident understanding of coverage allowances . . . . . . . . . . . . . . . . . . . . . . . . 70

Medicare Parts A and B coinsurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Automatic crossovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

How to bill coinsurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

Call: Don’t just rebill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

Medicare cost reporting: Third-party recoverable bad debt . . . . . . . . . . . . . . . . . . . . 74

Chapter eight: Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . 77Accounts receivable spreadsheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Analyze data often . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

Days outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Collection expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

Cash planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

Appendix A: Representative Payee Information . . . . . . . . . 83

Appendix B: Breakdown of the UB-92 . . . . . . . . . . . . . . . . 111

�ColleCtions 1, 2, 3: Proven strategies for ColleCting long-term Care aCCounts reCeivable

Chapter one

Collections

The importance of collections

Collections are vital to the financial health of a skilled nursing home, and the billing

and collection department can make or break a facility. Estimates suggest that long-

term care is an industry with a profit margin of four percent—and with such a small

opportunity for profit, facilities cannot afford to miss out on any owed reimburse-

ment. Uncollected amounts can virtually eliminate any such potential, and if money is

not collected as promptly as possible, facilities may have trouble paying bills or making

payroll. The only way to guarantee financial stability is to have a successful collections

program in your facility.

How to track accounts receivable

Although many nursing homes have computer systems capable of tracking accounts

receivable (AR), there is sometimes an information gap. These computer systems

typically allow you to track charges, payments, and even adjustments (usually by date

and payer), but they do not provide extensive details or explain what has been done

C h a p t e r o n e


and what needs to be done next. And when tracking receivables, the more informa-

tion you have on each account the better.

Often, many accounts go unattended because they get lost in a large AR aging report

(i.e., a report, generated from a billing software system, that details outstanding

accounts receivable).

Therefore, even with the best and most elaborate computer software, you should still

establish an AR spreadsheet. This spreadsheet should be separated by payer and con-

tain the resident’s name, date of service, amount owed, and status (Figure 1.1).

At the end of each month, update the detailed outstanding balances on the AR

spreadsheet. Once the list of outstanding balances is established, it is easy to update

Figure

1.1Sample ar SpreadSheet

Resident Payer Date of $ due Statusservice

Doe, JaneSunshineHealthcare Apr-04 350

1 day billed to Sunshine 5/04- called spoke with Tim Roberts will pay 6/1/04

Smith, JohnUniversityHealth Plan Dec-03 2500

Billed 1/04- University requested records 2/04- records sent 2/04. Called University 3/2/04 spoke with Mary Rogers - in med rec review lrm

Jones, BrianBay State Healthcare Mar-04 1500

Paid at $300/day not $400-called bc for On rate authorization- case manager will call back 5/6/04

Johnson, MaryAll Care Health Plan Feb-04 7500

Called All Care on 4/3/04- claim not in system - resubmitted 4/4/04

Facility: Any Nursing Home Updated: 7/15/04

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C o l l e C t i o n S


each month by simply adding new charges and removing any paid claims. By maintain-

ing such a spreadsheet, you keep all collection activity in one place and make it

accessible to staff who work on the accounts.

The AR spreadsheet should include all the collections-related activity (such as follow-

up calls and promises of payment) that has taken place on the account. Each phone

call or follow-up effort should be listed in the “status” column of the spreadsheet.

All information related to the account must be listed, so collections efforts are not

duplicated or complicated, especially when multiple staff members are working on the

same account.

An account history can be invaluable to the collections process. Therefore, keep all

collection efforts and communications on the AR spreadsheet, no matter how old the

information. Especially with private and managed care cases, it is essential to be able

to identify who you spoke with and what was promised—comprehensive documenta-

tion will allow the collector to hold the person or insurance company liable for such

past promises.

Creating an AR spreadsheet: The 30-day plan

When a facility first brings its accounts receivable into a spreadsheet system, the vol-

ume is often so large that it appears overwhelming. Make the project manageable

with a “30-day plan” (Figure 1.2), in which a supervisor assigns specific accounts to

specific billers for collection. Each biller is assigned approximately 10 accounts with

a plan of how to resolve them within 30 days. Each biller should focus intensely on

C h a p t e r o n e


these accounts and aggressively follow up on delinquent payments.

When each biller has only 10 accounts to handle, creating the AR spreadsheet

becomes a manageable task. In addition, this distribution usually ensures resolution of

Figure

1.2Sample 30-day plan workSheet

ResidentDate of service payer $ due Action to be taken Status

Brewer, John Jul-04 Medicare 5450Need to call medicare and check status of medical review

Called Medicare, talked with sue jones: claim will beput into cycle to pay 10/15/04

Martin, Carol Aug-04 coinsurance 3500Need to check status with medex

Called Medex: no record of claim in system - claim resubmitted 9/26/04

Glover, Steven Aug-04 Medicaid 2750

Claim denied: no case mix on file- callcase mix and see if it is now on file- if not, get copy and fax to case mix check- and rebill

Called case mix 4/20: not on file, asked for copy from nursing; faxed copy to case mix 9/21; called on 9/24 case mix now on file- rebilled claim 9/25

at least 80% of the accounts, because each biller will become quite familiar with those

assigned to him or her. This method, therefore, will cause the number of outstanding

accounts to dwindle over time.

Once the AR spreadsheet is under contract, the 30-day plan should no longer be

necessary—the billers will have learned what their responsibilities should be. The 30-

Facility: Any Nursing Home Updated: 10/01/04

day plan will have also introduced to the billers ownership and accountability for their

accounts. They will have the tools and direction they need to resolve outstanding

claims, and they will better understand how successful collections programs can work.

Accountability: Assignment of responsibilities

After the AR spreadsheets have been established, assign each financial class or payer

type (Medicare, Medicaid, private pay, etc.) to a biller. One biller can usually handle

more than one class, depending on the size of the AR. Such assignments establish

biller ownership of the accounts, and once each biller becomes responsible for spe-

cific accounts and financial classes in this way, your facility’s collections processes will

improve. Billers will become intimately familiar with those for which they are respon-

sible, and they will learn how to address quickly any problems and answer questions.

Follow-up timelines

For each account, establish regular status reports that address any updates and activity

as well as protocols for allotted time between follow-up attempts. Figure 1.3 details

timeframes to establish for the different payer types.

Dated follow up

As mentioned earlier, each time a staff member works on an account, list and date

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C h a p t e r o n e


the action taken in the status column of the AR spreadsheet. Dating each action

allows the supervisor reviewing collections to determine whether sufficient attempts

to collect the account have been made. It also stands as documentation in the event

that legal action is needed or as backup in the event that the account must be written

off. Having dated status reports will also simplify follow up, since the biller will be able

to ascertain whether the promised action has been completed within the anticipated

amount of time.

Getting it right the first time

Figure

1.3Follow-up timelineS

Medicare: After 30 days; check common working file weekly for status

Medicaid: State-specific; but, in general, after 45 days, billers should follow up

to make sure claim has been processed

HMOs/managed care: After 30 days, call HMO’s claim processing center; after

initial call, follow up every 15 days

Coinsurance: Call customer service department of coinsurer after 45 days; follow

up every 30 days thereafter

Private and patient-paid amounts: First follow up when account is 10 days late;

then follow up every 10 days after

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The secret to a successful collections policy is very simple: Bill correctly. Of course,

billing correctly is not always as easy as it seems. Many obstacles stand in the way of

getting a correct bill out the door, as will be discussed in later chapters of this book,

but one of the best ways to prevent the easy mistakes is to have a second set of eyes

review each bill. Before every initial bill is sent out of the business office, a second

biller should review the bills for basic information, keeping the following questions

in mind:

• Are all the necessary fields completed?

• Are the codes correct? Are the bills signed?

• Are the provider numbers on the bill?

• Do all managed care claims have authorization numbers?

Although many claims are billed electronically, most people find hard copies easier to

review, so a hard copy of each bill should be printed and reviewed by a second biller

prior to being electronically submitted.

After this review, update any changes in the electronic copy of the bill before it is

submitted. The longest delays in getting payment often occur when you wait for an

answer to your claim and then have to resubmit it because of a mistake. By simply

checking your bills before they go out the door, you can help avoid future denials.

Obtaining correct information on admission

C h a p t e r o n e


Obtaining all of a resident’s demographic and insurance information is imperative to

successful billing. However, getting the correct and complete information from each

resident upon admission is very difficult. When residents are admitted to nursing

homes, they are often very upset and may be uncooperative with admissions screen-

ers. Also, residents and their families may not realize that providing the facility with

insurance information is important. Admissions screeners must meet these challenges

and do everything they can to obtain as much information about the resident.

Billers should work closely with the admission department. Consider including your

admissions staff in billers’ training about different payers and types of insurance. This

ensures that your admissions staff understand and accommodate the needs of the bill-

ing department. When admissions staff understand billing requirements and insurance,

they will be able to make more informed decisions about whether to admit

specific residents.

Preadmission screening

Most facilities have a screener (usually a nurse) who visits acute-care hospitals to chart

and visit any patients pending discharge. The screener then forwards this information

to his or her facility’s clinical and financial staff for review.

A designee from the clinical department reviews the resident’s clinical needs, ultimately

determining whether the resident is appropriate for the facility and whether the

�



facility can accommodate his or her care needs.

Simultaneously, the business office will review the resident’s financial information. At

this point, a biller should refer to the prospective resident’s common working file

(CWF) to determine the number of Medicare eligible days available and whether the

resident has any other insurance that will supersede Medicare. A biller should also call

the local Medicaid eligibility center and verify Medicaid coverage (if available) and any

secondary insurance information.

For managed care residents, most facilities have a case manager who will work with

managed care organizations to acquire an authorization number and approved num-

ber of days and services. After all appropriate insurance checks have been completed,

the biller should inform admissions staff of the prospective resident’s financial status.

In some situations, billers and admission staff will need to defer admission decisions

to the facility administrator. There may be circumstances under which the biller does

not feel comfortable approving a resident, even if he or she has all the information

gathered to help the administrator decide whether the resident is a financial “fit” for

the facility. If, for example, a resident’s Medicaid status is still pending, accepting him

or her could be a financial risk for your facility.

Obtaining demographic information

C h a p t e r o n e

�0 ColleCtions 1, 2, 3: Proven strategies for ColleCting long-term Care aCCounts reCeivable

Responsible party information

In addition to the insurance verifications, obtain as much information—such as where

the patient has recently received medical services—as possible prior to admission.

Having responsible-party information, including the names and contact information of

anyone responsible for the financial affairs of the resident, can be extremely beneficial

during aggressive collection attempts. The more names and numbers collected during

admission, the better. During some collections attempts, billers may need to contact

several family members in order to receive payment.

The CWF

As mentioned earlier, you must check a prospective resident’s Medicare days available

through the CWF. However, the CWF is only as good as the last bill submitted, so

determine where each prospective resident has been since that time. For instance, if a

resident had previously stayed at a nursing facility that did not bill in a timely manner,

the CWF would not accurately reflect the number of Medicare days remaining.

Social Security numbers and dates of birth

The accuracy of information obtained on admissions is vitally important. For instance,

you cannot access the CWF without the resident’s correct Medicare number and

date of birth. Date of birth and Social Security numbers are frequently misread or

copied incorrectly, so admission staff should take special care to obtain the correct

information.

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Insurance cards

When most people go to a doctor’s office or the emergency room, the first thing

they grab is their insurance card. However, when residents are admitted to a skilled

nursing facility, insurance cards are typically the last thing on their mind. Even a

resident’s family members may be in such an emotional state that they too forget to

bring the resident’s insurance cards.

Therefore, try asking family members to return on the day after admission to review

all the admission paperwork and provide a copy of the insurance cards. Your facility’s

business manager or biller should meet with the resident’s family for 10 minutes dur-

ing the admission paperwork process. This time provides a good opportunity for a

member of the billing staff to meet the family and explain the facility’s billing and col-

lection processes, including when payments are due and what the facility expects in

regard to the resident’s finances.

Although it may be difficult to spend time with every family during the admission

process, such meetings are invaluable. Taking 10 minutes early in a resident’s stay to

explain to families their responsibilities and the facility’s financial expectations of the

resident can save a significant amount of time in collections and bad debt.

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