October 26, 2010
Featured Article
Evaluate and remedy your bad debt ratio

By using both in-house and outsourced resources to intensify eligibility efforts, St. Charles Health System has added more than $16 million to its bottom line since 2006.

By Diana Mahnke

It's impossible these days to pick up a newspaper or tune into a broadcast without hearing how the recent recession is affecting nearly every segment of the American economy. Healthcare is no exception. In particular, hospitals are feeling a significant pinch when serving self-pay populations.

Current economic conditions have triggered increased unemployment and loss of benefits - which translates into greater numbers of self-pay patients and intensifies the already significant financial burden providers assume when caring for the uninsured. A 2009 study by the Healthcare Financial Management Association (HFMA) found that "97 percent of respondents saw an increase in self-pay patients" over the previous fiscal year.

St. Charles Health System (SCHS) is a nonprofit organization serving central and eastern Oregon with hospitals in Bend, Redmond and Pineville, and an affiliated hospital in Madras. The primary facility in Bend is also a Level II trauma center. As the only healthcare system in the region, SCHS serves many self-pay patients, the volume of which has risen significantly from about 5 percent to 7 percent over the past several years. As a result, SCHS found it was carrying a troublesome bad debt load of 4 percent, which further limited its ability to extend charity care to patients who couldn't pay their hospital bills.v

By 2005, SCHS realized that the magnitude of write-offs and charity care was reaching critical levels, and executive leadership decided to investigate strategies to turn the trend around. Ultimately, the organization looked to outside resources that would bring renewed focus on eligibility and enrollment services - a strategic move that, to date, has added millions to the bottom line.

Relieving the strain on overburdened staff

Until a few years ago, SCHS had neither in-house nor outsourced eligibility specialists to help identify coverage for self-pay patients. Instead, it relied upon a dedicated cadre of staff social workers that would provide federal and state assistance applications to patients in need. The social workers were already overloaded, however, and unable to spend a great deal of time with patients to help them navigate the sea of potential coverage programs and application requirements. As a result, there was minimal follow up once applications were distributed and patients struggled unsuccessfully to comply with the complexities of program enrollment processes.

Looking to alleviate the strain on social workers and better serve patients while reducing bad debt, SCHS began to investigate alternative approaches. Leadership quickly realized that it would be difficult to develop the necessary expertise in-house, and so began to evaluate eligibility and enrollment outsourcing firms that demonstrated in-depth knowledge of state regulations and programs. To optimize effectiveness, SCHS also wanted to ensure that potential partners could provide specialists "on the ground" in their facilities.v

Integrating in-house and outsourced resources

This process ultimately led SCHS to partner with Chamberlin Edmonds and, early in 2006, specialists began collaborating with staff at the hospital in Bend. Leadership recognized that this change in direction could potentially raise concerns among social workers, who were highly valued resources. To mitigate any anxiety and validate the important role social workers would continue to play, SCHS held meetings to introduce all players to each other, as well as to clarify roles and streamline the implementation process.

These efforts paid off in a big way, as the transition proceeded smoothly. Social workers have come to appreciate the distinct expertise that the eligibility and enrollment specialists bring to the table and are fervent supporters of the program, routinely referring patients to these new colleagues.

Working seamlessly to increase enrollment

SCHS has intensified eligibility efforts throughout the enterprise, particularly within inpatient, outpatient and obstetrics (OB) departments, which has produced significant increases in coverage. Because they specialize only in eligibility services, outsourced staff members are well equipped to maintain close relationships with coordinators of various state-administered programs, as well as with contacts at local clinics and charities, and are able to act quickly to determine eligibility.

The SCHS model is comprised of several distinct steps:

  • Lists of patients who have presented as self-pay are generated daily;
  • Eligibility staff meets one on one with patients, gathering general information that may help identify coverage;
  • When options are identified, personnel work closely with patients to assist them in the enrollment process;
  • Serving as patient advocates, eligibility specialists monitor the progress of each application and provide reports to SCHS leaders so they know the status of all cases (and thus the potential impact on the bottom line).

Within weeks of implementing the new approach, SCHS made one surprising discovery: Some patients had mistakenly identified themselves as self-pay when, in reality, they had coverage. This information was typically uncovered during the initial interview with the patients after admission and immediately forwarded to the billing department so claims could be submitted to the payer from day one. SCHS has also received reimbursement from non-resident patients found to be eligible for coverage under Medicare's Section 1011, a program established by the Medicare Modernization Act that provides reimbursements for non-US citizens.

Likewise, SCHS has been increasingly effective when obtaining reimbursement for services rendered in the OB department. Each facility runs a daily census of newborns who appear to fall into the self-pay category and screens their mothers to determine eligibility for state or federal programs. After assisting the family in completing and submitting appropriate application forms, eligibility staff tracks the enrollment process until a determination of coverage is made. If an Oregon Medicaid application is approved, eligibility staff monitors the Medicaid Management Information System for the patient's new Medicaid number, alerting the billing department and letting the family know that the child is now covered going forward for both well-baby and sick care.

Prior to SCHS's new eligibility approach, OB accounts like these would have remained on the self-pay census. The Medicaid enrollment process was not always completed. The reason was simple: There was a high volume to manage and staff did not have the time to make follow-up calls to the agencies, contact the parent, assist in collecting verifications, ensure that a Medicaid number was issued and, finally, confirm that reimbursement was received.

In addition to success seen in the OB department, SCHS has also improved reimbursement for cancer patients who may have otherwise been classified as self-pay. Time is of the essence when identifying coverage for individuals with a potential cancer diagnosis, so eligibility specialists must act fast. Once an uninsured patient receives a definitive cancer diagnosis, the finding is considered a pre-existing condition and options for coverage become extremely limited. To minimize response time, SCHS begins to work on eligibility issues with seemingly self-pay patients as soon the individual is referred from local clinics or community practices. Eligibility staff then continues to check on coverage, once eligibility is confirmed and enrollment has been secured, to ensure it is not dropped during the course of treatment.

After the transition to the new eligibility model, SCHS discovered that the state of Oregon was not administering several programs in accordance with federal policies. Primarily, it was neglecting to retroactively reimburse healthcare facilities for care provided prior to enrollment, as stated in CMS guidelines. Because the eligibility specialists exhibited a deep understanding of the issues, they were able to work with state representatives to address concerns on the administration of its disability program. These efforts resolved problems not only for SCHS, but for all hospitals across the state.

Optimizing reimbursement

Thanks to its forward-looking leaders, SCHS was able to evaluate and remedy its bad-debt ratio before the economic downturn took place. This pre-emptive step mitigated the "bad-debt effect" resulting from increasing numbers of recession-driven self-pay patients. During the downturn - recognizing the return on investment that its dedicated eligibility efforts produced - SCHS has expanded its program and even increased the number of specialists assigned to work self-pay cases.

Other hospital systems can likewise benefit by turning a critical eye to their current enrollment and eligibility programs. SCHS discovered in short order how effective additional boots on the ground can be when managing self-pay patient populations.

How effective? Despite growing numbers of self-pay patients, SCHS has added more than $16 million to its bottom line since 2006.

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