Client Stories: 3 Red Flags that show it’s time for your Nursing Facility to get Billing Help
In the belief that knowledge is the key to success, this blog is dedicated to sharing three of our most memorable calls for help. Hopefully you are never in the same situation that some of our most memorable clients found themselves in. They just didn’t know or recognize what was happening around them, but maybe this will help you steer clear of these particular scenarios. These stories may cause you to smile, frown, or even laugh but know that these are true situations experienced by others in our/the SNF Community. The A/R Aging Report is one of the most powerful tools you have at your disposal. For your Administrators, Financial Directors or Accountants this is a key tool in monitoring the success of the Business Office. Often the best and frequently telling factor in identifying that your facility may be in billing trouble is a continually increasing A/R Aging balance/total.
However, once in a while a Unique and Confusing situation makes you scratch your head and yell for help. See our scenario #1.
Scenario #1 – Unique and Confusing A/R Aging
We once received an A/R Aging report from a potential client who was just trying to understand it. The report showed a little over $1,000,000.00 outstanding in the 210+ Day bucket, while the 30-180 buckets were totally clean with just a few small amounts and the current bucket was the largest at a little under $10,000.00.
Most of you are probably thinking, wow, someone did an Amazing Job, and a million plus can be cleaned up successfully! Well hold on, the lesson for today is not as it seems. During the initial contact with the client, they were aware of what the issues were with the 210+ Day bucket balances, but they were confused by the 30-180 buckets that showed amazingly clean low balances. They could not reconcile these results on the A/R Aging Report to the Profit/Loss Statement or the GL Accounts.
So, just what the heck is going on here? Well, through investigation, we discovered that several changes had occurred during the last year:
- Incorporation of a New Billing Software System
- Hiring of a New Business Office Manager (BOM)
- Transition to include Medicare A & B Beds and Services
Quite a few hurdles to conquer here. The result of these changes contributed to the A/R Aging looking the way it did. The main issues at fault here:
- Both the new and previous BOMs were not familiar with the new billing software system, and neither had received sufficient training.
- There were no policies and procedures in place to be followed for completing the Month End Close (MEC) process with the new software.
For the previous 6 months the Business Office had been entering census data, clinical information, posting cash and calculating the billing, but never closing each month’s billing. This resulted in revenue not being properly booked and statements were not generated. And claims? Let’s just say they were guessing at what should be billed and issuing claims manually.
We fixed the major issue by quickly completing the MEC Process for all the open months using the appropriate policies and procedures. This correction resulted in the facility’s A/R Aging Outstanding increasing from $1,000,000.00+ to $3,000,000.00+. Of course these were not the numbers the client wanted to see and, thankfully, we can now say that their A/R Aging is cleaned up and this facility is on the right track and operating much more efficiently.
Another factor that often contributes to an unsuccessful BO in regard to billing, collections and customer service issues is not having the right staff in the right position. See our Scenario #2.
Scenario #2 – Poor Hiring or improper job fit
This situation also starts with a growing A/R Aging Report that led the owners of the facility to ask questions, calling us for help and requesting a Business Office Review. During a two-day facility visit we learned that the BOM was awarded her position not based on her skills, knowledge or experience related to the job requirements. In this case she was related to the Administrator/Owner, but nepotism is not the only cause of a bad job fit or bad hiring. To be fair, we have had a few clients with family members in several positions and it works wonderfully for them.
Whatever leads to having the wrong person in such a vital position as the Business Office Manager, it happens, and the results can be catastrophic. You need to ensure the person hired to this very critical BO Position is the best qualified person available regardless of personal preference or feelings. Also, you need to pay attention to the “Red Flags” that can tell when this is the case. Our next blog will cover some of these warning signs in more detail.
This particular facility had unbilled claims, incorrectly billed claims, and the Resident Trust Fund was a complete disaster. There were also issues in locating cash payments, deposit slips and receipts to tie back to the cash posted. Our investigation revealed that the Assistant BOM did have the appropriate skill set, experience and knowledge necessary, and was promoted to the BOM position, while the original BOM found a better fitting position. With some additional clean up assistance, support and training, this facility is well on the road to improvement.
Our next scenario comes from learning that a surprising number of facilities have just one person doing all the billing with no oversight or accountability for their job.
Scenario #3 – BOM doesn’t want to share access or has sole access to the entire process
We learned a lot working with this client over the past 4 years or so. We started out by helping with the collections of their aging Managed Care claims. When we requested access to the billing software, as we always do, the Business Office Manager said we didn’t need it and that she would send us anything we might need. This can work well, especially in cases like this where there weren’t a great deal of claims.
Everything went pretty well the first few weeks, then it became harder to get the information we needed to help her. We started to find claims where the Managed Care company said they had paid, yet the entire balance was on the Aging Report. Naturally a request was sent to the BOM for backup documentation of each payment and find out where it was posted. After several requests without response we contacted the Administrator, who asked her about it. She never returned to work.
We then went to the facility to review the situation and take on their billing. She was the only person with access to a majority of the systems, including Medicare. There was also no backup person, and it was truly a mess. In this particular case it turned out that the cash was being posted to older balances and incorrect payers, basically wherever it would make the Aging look good. The payments were often split onto several incorrect balances as well.
She had been there 5 YEARS!
We were left having to dig deep, making an amazing amount of calls getting what we could to correctly recreate cash postings. After several months, we were able to get things corrected and their billing is now going smoothly. This is not to say that there weren’t a substantial amount of write-offs, but it was a lot better than it could have been.
This turned out to be a costly lesson for our client that could have largely been avoided. Having all of the access, information and responsibility in just one person’s hands is a real risk. In this case it was someone moving revenue around to cover up their incompetence or lack of ability to keep up with the work. It could easily have been theft.
Every facility needs to have a backup for all key positions. In the case of the BOM, at least 2 other people should have access to the billing software; the backup and the Administrator. The Administrator should also have their own Medicare access. This not only allows for at least some coverage when the BOM is away or on vacation, it also makes it easier to review the billing. In this case where the only person with access left without notice, it took precious time to get Medicare access and rebuild the access to different companies and portals.
There should also be sufficient cross-training to make sure there is always someone who can keep things going when needed. There also need to be systems in place to check on work and accuracy.
It is our hope you found this informative. Every Owner, Administrator and Finance executive worries about what they can’t control. There are ways to reduce risk, monitor results and gain awareness of warning signs that you may need to look into your Business Office very closely. Information, and help, is out there when you need it.
Please keep an eye out for our next exciting Series all about the Business Office including “Red Flags” that indicate there might be problems.
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