5 Red Flags-Is Your Business Office Costing You Thousands? (Part 1)

The Business Office is critical to the operation and survival of every Skilled Nursing Facility.  The Business Office is usually the least understood of all the major departments, as well as having the lowest level of supervision.  In our two-part “Red Flags” blog series, we will be discussing areas and indicators that can be monitored and reviewed to ensure your Business Office and Business Office Manager are at the top of their game.

No matter how well the rest of a facility functions, the efforts and results posted by the Business Office staff are critical in making sure that the revenue needed for the facility to thrive are received.  As the Administrator or Financial Director, how do you know if your Business Office is not performing as well as you thought, or are being told? How can you check into it before it is too late? What are the “Red Flags” you can keep an eye out for?

There are areas and key indicators of the Business Office Operations that can be monitored and assessed. Based on years upon years of experience in SNF Billing the staff at SNF-Solutions has identified several key Indicators to look for and are happy to share with you our top 10 (5 here and 5 more in part 2).

These “Red Flags”are:

1. Your A/R Aging increases significantly month after month.  This is usually a clear indication of a lack of timely, accurate billing and/or collections with appropriate attention to follow up and resolve denials or claims issues.
2. When reviewing you’re A/R Aging Report, you see several consecutive months with nearly identical outstanding amounts for the same payer type.  For example, your outstanding Medicare balance shows essentially the same amount in the 30, 60 and 90-day columns. This usually indicates that the claims for those months have not been submitted.  One of the few universal truths in billing is that you will never get paid for a claim that is never submitted.  A quick example of this may look something like this:
   • 30 days $50,000
   • 60 days $48,000
   • 90 days $53,000
   • 120 days $18,000
   • 150 days $10,000
     • In this case, it might be an indication that 30-90-day old balances have not been submitted, while the 120 and 150-day balances have been billed and at least worked on some.
3. A quick look at the Cash Receipt Journal report may show issues such as the overuse or misuse of Cash Correction or Cash Adjustments.   You should be alarmed when you see a trend of funds or balances being moved from payer to payer, month to month, or account to account without proper backup.  There should always be supporting documentation related to any type of cash correction or adjustment. You should be able to easily and quickly get the answers to these questions:
   1. Why was this adjusted off?
   2. Were all opportunities to get paid pursued?
4. Excessive, or escalating, Contractual adjustments and write-offs.  This almost always indicates that there is no, or at least insufficient, effort and research done on any remaining balances after a payment is received.
5. 1. Do you know if the claim was paid correctly?
   2. Do you really know why you were paid less than you expected?
   3. Why is so much being contracted off?
   4. Should the balance be paid by another entity or the resident?

5. Complaints from Residents or Responsible Parties about statements not being received, payments made not being posted correctly, and account disputes not being resolved in a timely, professional manner.

Remember this is not an all-inclusive list, these are just some hot buttons the Staff at SNF-Solutions have observed over our years of working in Long Term Care.  

If at any point you are unsure of any of these “Red Flag” signs and how they may apply to you, do not hesitate to get an outsider’s perspective from your accountant or a firm like ours.  Just because you are in charge of all that goes on, you don’t have to be, and no one can be, the expert on everything.  Very often the smart play is to get that neutral opinion.

Check in next month for part 2 of “Red Flags” it will be more focused on the Business Office Manager and issues that might indicate you have a possible problem.  Only you can decide what these indicators mean to you and what action is necessary.