Collect the most of your patient dollars with us…your profit depends on it! 1 Communication for Compensation- Best Practices for Collecting Co-Pays, Deductibles Presented by: Dave Bargmann, Senior Consultant

Collect the most of your patient dollars with us…your profit depends on it! 2 Background 12 year HME industry background, includes owning HCS (Homecare Collection Service), which was acquired by Invacare in 2008 Billing & collections executive with experience delivering services to the largest HME providers Clients include companies with revenue that range from $1M to $500M –Understand the challenges small and large businesses face Change advocate –Underlying philosophy is if you are not proactively changing to address business climate you will be left behind

Collect the most of your patient dollars with us…your profit depends on it! 3 Past, Present, Future Where has patient follow-up been? Where is it today? Where is it going?

Collect the most of your patient dollars with us…your profit depends on it! 4 Past Patient portion was a throwaway Manual labor needed to send statements

Collect the most of your patient dollars with us…your profit depends on it! 5 Present Sending monthly statements is common Many companies can more easily send them for you More patient responsibility Insurance releasing less $ But two real problems still exist: –Wrong methodology –Growing patient confusion

Collect the most of your patient dollars with us…your profit depends on it! 6 Legislative Actions with Impacting Revenues Round 1 & 2 Medicare Competitive Bidding Round 1 & 2 Medicare Competitive Bidding The Affordable Care Act

Collect the most of your patient dollars with us…your profit depends on it! 7 Medicare Competitive Bid Reduction in reimbursement rates for products included in competitive bid Winners –Must change their operating models to drive down service-delivery costs –Must collect every dollar of the new allowable Non-winners –Be aware that commercial payers and Medicaid programs will be following suit –Must also begin the change process

Collect the most of your patient dollars with us…your profit depends on it! 8 Affordable Care Act Mandatory Coverage –Many small business will opt-out of providing health insurance coverage as a benefit –Cheaper to pay the penalty Health Insurance Exchanges –Employees will be forced to purchase insurance through state/federal exchanges –Plans will carry high deductibles and larger out-of- pocket expenses Millions of uninsured people will begin to access the healthcare system

Collect the most of your patient dollars with us…your profit depends on it! 9 Consumer Driven Health Plans The ACA will have a substantial impact on the dollars the insured member will be responsible for paying for healthcare encounters Increasing Insured Population Patient Out-of-Pocket $

Collect the most of your patient dollars with us…your profit depends on it! 10 The Problem: High Deductibles & Co-Pays Deductibles & Co-Pays Historically InsuredNewly Insured

Collect the most of your patient dollars with us…your profit depends on it! 11 –5 year Annual Deductible Trend In-network deductibles increased by 80% - $550 increase Out-of-network deductibles increased by 110% - $1100 increase –2012 – 12% of Employers offered ONLY high deductible health plans (>$1000 deductible) – % of Employers offered ONLY high deductible health plans (31% increase) – % of Employers are considering high deductible health plans as the ONLY benefit option Source: 2013 PwC Health & Well Being Survey Deductible Trends

Collect the most of your patient dollars with us…your profit depends on it! 12 Revenue dollars that will be “rolled” to the patient are increasing every year and will continue to increase Patient pay collections directly impacts your bottom line Your organization’s ability to collect those dollars may mean the difference between thriving or just surviving Impact of Patient Pay

Collect the most of your patient dollars with us…your profit depends on it! 13 Traditional Patient Pay Collection Very few dollars collected at delivery Monthly statement after insurance has paid In-house staff making collection calls Typical collection rate is well < 50% At some point in time, the uncollected A/R is written off to bad debt Balances may or may not be sent to an outside collection agency Cost of collections is EXPENSIVE LONG wait for cash

Collect the most of your patient dollars with us…your profit depends on it! 14 Problem: Using Only One Traditional Method 21 st Century billing will produce less results if you rely on just sending statements ANYTHING can happen!

Collect the most of your patient dollars with us…your profit depends on it! 15 Solutions Assess & measure your current situation Establish a new culture Pay for performance Outsource the activity

Collect the most of your patient dollars with us…your profit depends on it! 16 Some Questions to Ask What is your Cash Opportunity at Delivery (COD) Policy? What is your Cash Opportunity at Delivery? Does your company have a “Collections Culture”? What is your patient pay collection rate? How much of your patient pay A/R >120 days? What is your bad debt as a % of net revenue? How much of your bad debt is patient pay? Does ALL of your staff know how to “Ask for THEIR Money”?

Collect the most of your patient dollars with us…your profit depends on it! 17 The Change from the Beginning Capture more demographic information from the patient AND the responsible party –Home phone numbers, mobile phone and addresses Use the information available on insurance verifications –Deductibles, plan %, out-of-pocket remaining Train your staff to have financial discussions to educate the consumer Calculate and COLLECT whatever you can at the first encounter Change Behavior of the Staff and Patient

Collect the most of your patient dollars with us…your profit depends on it! 18 Changing Your Behavior Every employee MUST understand the importance of patient collections Every employee MUST be trained to understand deductibles, co-insurances and out-of-pocket Every employee MUST be comfortable with collections becoming a part of their job descriptions –How many employees have contact with a patient in the delivery process, or through on-going contact? –How many opportunities to collect balances are lost? –Coach your salespeople to stop telling patients they will owe nothing!

Collect the most of your patient dollars with us…your profit depends on it! 19 Reward System Capture your potential Cash on Delivery Set collection goals for the staff –Start slow so it is attainable Measure the % of collections Celebrate and reward the success! Raise the bar every month or quarter based on initial results +90% collection rate can be achieved!

Collect the most of your patient dollars with us…your profit depends on it! 20 Billing Policies Review your insurance billing practices. The faster you can bill the initial claim, the faster you can bill the patient balance. Are you billing the patient payment with the primary bill whenever possible? The closer to the service encounter an invoice/statement is received, the more likely the patient will recognize it as an obligation.

Collect the most of your patient dollars with us…your profit depends on it! 21 Outsourcing Patient A/R There are several compelling reasons for outsourcing this responsibility Reduction of employee expenses Increased automation and increased patient contact Improved cash flow through lower Days Sales Outstanding (DSO) Lower bad debt/Higher earnings They are better at it…

Collect the most of your patient dollars with us…your profit depends on it! 22 Outsourcing Rationale The typical HME company has limited resources dedicated to private pay collections after billing If a single person - the activity usually stops when they are absent If spread across collections staff - the level of effort, competency and results varies Collectors would rather focus on the higher dollar insurance claims Your company should focus resources on higher $ claims for a better return on expense

Collect the most of your patient dollars with us…your profit depends on it! 23 Outsourcing Partner Selection How do you choose the right partner? Look for an industry leader – an innovator Is there a defined process with multiple levels of activity? Does the collection process allow a variety of contact modalities? –Print –Telephonic – both automated and personal –Text – Do they offer an easy way for the patient to pay?

Collect the most of your patient dollars with us…your profit depends on it! 24 Outsourcing Partner Selection Do they understand the importance of frequency of contact by a variety of methods? –Limiting the number and manner of contacts allows the debt to become stale and less collectable. Do they have the ability to automate the transfer of invoices, payments and adjustments? What is their track record of performance? –Do they offer tools that track resolution and collection performance?

Collect the most of your patient dollars with us…your profit depends on it! 25 Outsourcing Partner Selection What other business solutions can your partner offer? –Consulting –Compliance calls –A/R portfolio analysis –Facilitate the purchase of A/R –Strategic business partners

Collect the most of your patient dollars with us…your profit depends on it! 26 Outsourcing Outcome Your outsourcing partner’s product should prompt the patient to: –Pay the bill, or –Pick up the phone to call to resolve the debt The number one obstacle to success is the perception that patients calling is a bad thing –Can your outsourcing partner handle these calls?

Collect the most of your patient dollars with us…your profit depends on it! 27 Maximizing Cash Recovery Part of the outsourcing process should include addressing your existing patient A/R portfolio Traditional approach has been to send it off to a collection agency and wait to see what happens –Rarely see much pay back on this –Collection rates are usually in the single digits and you pay a premium Approach is antiquated and returns little value Selling A/R to these same collection companies returns pennies on the dollar.

Collect the most of your patient dollars with us…your profit depends on it! 28 Where Does This Leave Us? Patient A/R will continue to increase over the coming years Patient A/R is the single largest opportunity to reduce bad debt and return those dollars to the bottom line The three most important components of the change process is –Changing your staff’s behavior –Changing the patient’s behavior and last, but not least –Choosing the right outsourcing partner Outsourcing will help you reduce expenses, improve bad debt and return dollars to the bottom line

Collect the most of your patient dollars with us…your profit depends on it! 29 Reality of Healthcare Time Reimbursements Services

Collect the most of your patient dollars with us…your profit depends on it! 30 Cash Collections Checklist Answer these questions –What is your patient pay collection rate? –How many dollars do you lose from deductible/co-pay waivers? –Will you start the process by analyzing the potential cash you could be collecting and what it costs you to collect today? Consider these actions –Establish a collection culture –Ask for the cash –Get bills to the patient sooner –Automate, automate, AUTOMATE! –Use outside services to reinforce collection culture

Collect the most of your patient dollars with us…your profit depends on it! 31 Summary What you choose to do (and what you choose not to do) with your private pay A/R has the greatest potential impact on your bottom line. What will you do?

Collect the most of your patient dollars with us…your profit depends on it! 32 Communication for Compensation- Best Practices for Collecting Co-Pays, Deductibles Presented by: Dave Bargmann, Senior Consultant Q & A – Next Steps