Prompt payment depends on revenue-cycle diligence: by applying 10 revenue-cycle principles, you can help ensure that your organization receives prompt payment for delivered healthcare services

Healthcare Financial Management, Dec, 2002 by Robert L. Barber

As if declining payments for delivered services weren't enough of a problem, now providers also are seeing an increasing delay in the time it takes to receive payment following submission of claims to insurance carriers and managed care organizations. Providers often feel they have no choice but to accept the decisions of payers regarding when and whether they will be paid. Yet by applying 10 principles of effective revenue-cycle management, you can substantially improve your organization's prospects for full and timely payment from payers.

KNOW STATE AND FEDERAL LAWS

Your organization's ability to receive prompt, full payment for delivered services depends on your understanding of state and Federal laws regarding payment of healthcare claims and your readiness to seek remedies when payers do not comply with these laws.

State laws include many rights for providers with respect to timeliness of payment and limits on insurance carriers' ability to deny coverage for certain services. State collection laws, in particular, prescribe important rights for providers as creditors. However, they often are double-edged swords for providers, because they also prescribe rights for payers as debtors that limit a creditor's collection activities.

Federal laws and associated rules and regulations similarly prescribe rights, limits, and requirements for both providers and carriers. The Emergency Medical Treatment and Active Labor Act (EMTALA), for example, imposes stringent requirements on providers for delivering emergency medical care and maternity services, prohibits the delay of treatment for collection of insurance coverage information, and restricts the ability of insurance carriers and managed care organizations to require pre-certification and notification and denial of coverage.

Other Federal laws and regulations provide mandated benefit levels, preclude carrier denials, and impose requirements that affect payment amounts and promptness. Notably, the recently amended Department of Labor regulations under the Employee Retirement Income Security Act (ERISA) govern requirements on self-funded employer plans that are mostly exempt from state insurance laws.

To reinforce payer compliance, your admitting, registration, billing, and collections staff should be thoroughly trained on the applicable laws and regulations, and provided with quick reference guides and copies of relevant statutes and regulations that can be faxed to payers if necessary Because these patient financial services (PFS) staff members are directly responsible for the collection process, they are in the best position to identify inappropriate denials--such as a payer's insistence on authorizations not required by law or regulation--and act to ensure the payer's compliance. Illegal claims denials must be paid eventually (as long as the provider makes the necessary appeals). However, a staff that is well informed of relevant rights and empowered to issue challenges on your behalf can effectively forestall such denials, thereby avoiding long payment delays.

CONTRACT FOR PROMPT PAYMENT

The payment provisions in your contracts with payers have a major bearing on whether you receive prompt payment of claims. Therefore, you should negotiate provisions that will ensure prompt payment. When considering a new contract, beware of payers' standard contracts, which typically describe a payer's ideal relationship with providers. Even if the state department of insurance has approved this standard contract, you should examine it closely considering the implications of every definition, clause, and term. These contracts rarely are concerned with protecting the provider's rights or committing the payer to performance obligations beyond what is required by law Responsibility for incorporating contract terms that address your concerns rests with you and your attorney You should be particularly alert to contract provisions proposed by the payer that would deprive you of protections provided by law

Before signing the contract, you should evaluate whether your organization's departmental processes are adequate to fulfill the contract's terms. You may find, for example, that using your current PFS processes, your admitting and registration staff would be unable to properly identify plan members in time to meet required notification deadlines. You should be sure that your PES staff is capable of submitting complete, accurate, and timely claims as specified in the contract, and that your utilization-management staff is capable of meeting contractual requirements for providing information on patients' clinical progress.

UNDERSTAND YOUR CONTRACTS

All relevant staff in your organization should understand what they are required to do under the contract, particularly with respect to notification, authorization, utilization management, and billing. They also should understand the payment rates under the contract, know what the contract requires of the payer, and be prepared to take steps to ensure the payer meets those requirements. As with understanding of applicable laws and regulations, staff should be well trained on these contractual requirements and provided with effective tools, such as quick reference guides, crib sheets, and payer grids, to reinforce compliance with the contract on both your organization's and the payer's part.