7 Ways You Could Improve Revenue Collections for Your SNF Facility 

Let’s explore the ways medical facilities can enhance revenue collection through better billing practices.

7 Ways You Could Improve Revenue Collections for Your SNF Facility 

Efficient and timely revenue collections are critical to financial success for any medical facility, including skilled nursing homes. However, achieving this can be challenging due to the complexity of medical billing and collections. Numerous issues, such as inaccurate patient information, many claim denials, and inadequate follow-up on unpaid balances, can all contribute to lost healthcare profits and negatively impact the bottom line. As such, SNFs must identify signs that indicate the potential for improvement in medical billing collections and the healthcare revenue cycle.

This article provides seven ways medical facilities could use to enhance revenue collection through better billing collection practices.

1. High Claim Denial Rates:

One of the most significant challenges that SNFs face is Medicaid and Medicare-denied claims, which can severely impact healthcare profits, as the facilities rely heavily on reimbursements.

High claim denial rates are a leading cause of a slowdown in the revenue collection process. They suggest that the facility spends significant resources on researching and resubmitting claims. Many rejections happen due to a need to understand the payor’s requirements – each payer has specific rules regarding what services are covered and what documentation is required. It is essential to check the latest insurance regulations and requirements regularly.

Another reason for this is coding errors, as even small mistakes (like an invalid code) frequently cause rejected claims. Medical billing codes are complex and often changing. SNFs should prioritize coding accuracy and ensure that the staff is well-educated in billing and coding procedures, with a thorough understanding of the payor’s requirements.

If you experience high claim denial rates, consider using billing software that minimizes the amount of manual work through integrations with EHR platforms and which validates claims before sending them to the payers – this should decrease the number of errors and speed up revenue collection.

2. Accounts Receivable Turnover:

Accounts Receivable Turnover measures how efficiently a medical facility collects payments from patients and insurers. It is calculated by dividing the net billable amount during a specific period by the average accounts receivable (AR) balance during the same period. The higher the resulting number is, the better the facility is at collections. A low Accounts Receivable Turnover indicates slow revenue collections and may lead to issues in cash flow. This is one of the key indicators of the facility’s financial health.

There are several reasons a facility may have a low Accounts Receivable Turnover. However, the main ones are:

  • Billing errors due to incorrect patient or insurance information.
  • Delayed submission of claims.
  • Failure to follow up on unpaid balances.

Denials also contribute to this metric. If a denied claim is not researched and resubmitted correctly, this can lead to a repetitive cycle of denial and resubmission, exacerbating this metric.

Low Accounts Receivable Turnover may indicate the facility isn’t paid for all services. For example, a patient was admitted to an SNF and stayed there for 35 days. He has a $150 daily co-payment starting from day 21; however, the insurance policy was improperly verified during the admission, and his out-of-pocket expense was noticed only after discharge. Therefore, the facility will have to collect the co-payment for days 21-35 of the stay ($2,250) from the patient.

If the deal can’t be reached with a patient quickly, this amount increases the average accounts receivable balance. When this happens repeatedly across multiple patients, it can lead to a low Accounts Receivable Turnover and high AR balances, one of the first indicators of financial health problems.

Additionally, insurance companies may calculate the allowed services incorrectly, or pay at an incorrect rate which will result in underpayments by the insurance companies. Billing needs to review all payments for accuracy, not just denied claims.

This metric is very important for the healthcare revenue cycle and should be re-evaluated regularly. Any reduction in AR turnover should be investigated for root causes, and corrective actions should be taken. Simple Excel or more sophisticated financial planning software can be used for this purpose.

3. Patient Eligibility Verification Mistakes:

Verifying a patient’s insurance coverage during admission and thereafter during a patient’s stay is critical to ensure that the provided service will be reimbursed. For example, if a patient is not eligible for a particular service or has exhausted his/her benefits, insurance will refuse to pay, leading to nursing home revenue losses.

Verification mistakes usually occur due to data entry errors, lack of updated patient information, incorrect insurance information, and incomplete patient forms. Inaccurate insurance data may result in the wrong insurance company being billed. In such cases, the facility may have to wait an extended period before receiving payment, dramatically slowing billing collections.

For example, a common scenario could be admitting a patient with full Medicare coverage (100 days) and not knowing that the patient’s coverage was switched to Medicare HMO during the stay. Without being alerted of this change, the facility may not even be able to collect for the services provided since prior authorization was not received from the new Medicare HMO. 

Automation streamlines verification process

Many healthcare providers still use time-consuming manual processes for tracking patient eligibility changes, resulting in errors since they rely on human input, which can be subject to mistakes due to fatigue, distractions, or lack of training.

One way to minimize mistakes in patient eligibility verification and tracking of eligibility changes is with automation solutions, like Approved Admissions. Such software minimizes the amount of manual work, automatically tracks changes in the patient census, and provides alerts when coverage changes are detected, ensuring that all the necessary patient information is collected and updated correctly. With reduced manual work, the staff may focus on other tasks, such as improving Accounts Receivables Turnover or providing higher-quality care to patients. 

4. Inaccurate or Late Charge Capture

Late or inaccurate charge capture refers to a problem where skilled nursing facilities fail to capture and record all patient services. When charges are not accurately captured, bills may not reflect the full scope of services, leading to lost revenue through improper billing.

The charge capture issue may occur due to incomplete medical records, a lack of proper documentation, or human errors. A lack of communication between responsible staff members can exacerbate this problem. For example, if nurses or documentation department employees responsible for handling the medical records fail to document all services provided, the billing department won’t include them in the patient’s bill.

To mitigate this problem, providers may use automated software and establish clear communication channels and protocols for documenting and capturing all patient services. Facilities should also review the Medicare Skilled Nursing Facility Consolidated Billing policy to ensure that they include the appropriate services in their daily fees and billing for any appropriately billable services. 

5. High Days Sales Outstanding:

Days Sales Outstanding (DSO) measures the average days to collect payment after providing care. The longer the collection takes, the longer the company must wait to reinvest that money or use it to pay its expenses. In the case of skilled nursing facilities, high DSO can be a sign of inefficient billing and collections processes, inadequate billing software, or lack of follow-up on past-due accounts. These problems can be caused by various factors, such as a shortage of skilled billing staff or the inability to automate the complex billing process.

Another common issue impacting this metric is the inconsistent documentation of services provided, which delays submitting claims and slows the medical billing revenue cycle.

Implementing automation tools such as electronic billing and payment systems is recommended to cope with high DSO, outsourcing at least a part of billing functions (like denial management, documentation, coding) to third-party service providers, such as Carebiller, and improving collections policies. Additionally, facilities should strive to maintain accurate documentation of services provided and follow up with customers promptly to avoid past-due accounts. By reducing DSO, skilled nursing facilities can accelerate billing collections, improve cash flow and speed up investments in their operations. 

6. High Percentage of Write-Offs:

Write-offs in the healthcare revenue cycle represent the amount of money a facility agrees to forego as uncollectible debt. They occur when a patient has a balance on their account that cannot be paid or when an insurance provider denies a claim and the facility decides not to pursue this sum further.

Write-offs can be categorized as either contractual or bad debt. Contractual write-offs refer to the difference between the facility’s billed charges and the amount that is contracted with the payer (e.g., the facility bills $1,000 for a service, but the contracted amount with the payer is $800, meaning a $200 difference is a contractual write-off). On the other hand, bad debt write-offs are the amounts the facility determines are uncollectible after all efforts to get the payment have been exhausted. Although contractual write-offs happen more frequently, bad debt has a more significant impact on healthcare profit as it often represents a complete loss of revenue.

One approach to addressing the issue is to verify the patient’s insurance coverage to ensure they are eligible for the services provided, guaranteeing reimbursement to the facility. Additionally, collaborating with patients to ensure they can pay their portion of the bill, establishing payment plans, or applying for financial assistance when necessary can help reduce the probability of write-offs. 

It is very important to carefully review the adjustment/write-off reports regularly to catch inappropriate write-offs such as claim denials that should be appealed, underpayments by the insurance companies misinterpreted as contractual obligation adjustments, and incorrectly categorized patient or secondary payer responsibility.

7. Excessive Billing Staff Turnover:

High billing staff turnover can result in a lack of continuity in billing processes, leading to increased errors, which will undoubtedly slow down revenue collections. Onboarding new staff members may require additional training and an adjustment period, which can further prolong the billing process. The primary drivers of high turnover rates for billing specialists include inadequate compensation, a lack of career advancement opportunities, burnout from an overwhelming workload, and a surplus of manual billing tasks.

Several measures can be taken to address the issue, including offering competitive compensation packages, creating more internal career opportunities, and providing ongoing training for billing staff to develop them as professionals. It is important to consider using automation software for eligibility verifications, coding, and claims submissions to decrease excessive manual work.

Addressing high billing staff turnover helps to boost staff morale and job satisfaction, leading to enhanced productivity. Moreover, a supportive work environment attracts top talent, driving revenue growth and increasing overall medical billing business income.

Importance of Regular Checks and Automation

Regularly checking the signs that point towards areas with potential for medical billing revenue cycle improvement is of utmost importance. By doing so, medical facilities can identify weaknesses and proactively address them, leading to increased revenue and improved financial stability.

Implementing automation tools can be particularly beneficial in streamlining revenue collection processes, leading to enhanced efficiency and a reduction in errors. They provide greater visibility into revenue streams, which is particularly advantageous for businesses seeking to stay ahead of potential issues.

By regularly monitoring performance and leveraging technology, businesses can drive sustainable growth over the long term. This approach not only enhances revenue collection but also supports a culture of continuous improvement and innovation within the organization.

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