FIGHTING HEALTHCARE COLLECTION CONCERNS

By Ranjan Dharmaraja, CEO, Quantrax Corporation

Thirty years ago, healthcare was a significant percentage of the placements in the collection industry. It is the same today but recent and proposed changes for credit reporting may change the landscape. The industry had a primary product called "Bad debt collections" through which it enjoyed extremely profitable times. Around the time Starbucks was changing coffee as we knew it, healthcare collections was also changing. Volumes were up and rates were down, while predictive dialers were introduced and early-out and insurance follow-up became options for those who wanted to pursue new avenues.

The CFPB's new Regulation-F has added new complexities to the already challenging landscape of medical collections. Many medical service providers were slow or reluctant to adapt to the changes. You had to work with the same placement data they gave you prior to Reg-F. Quantrax and RMEx offered you many options that have been tested and certified by many experienced users.

Unfortunately, there has been limited knowledge and strategy with new services limited to a few innovative companies, and most agencies unaware of how new services should work or be priced. Today's healthcare collection spectrum from insurance billing to early-out, self-pay and bad debt, is distributed and managed across internal hospital-based operations by a range of "Revenue Cycle Management" companies and many collection agencies. This article will conclude that the collection industry is leaving money on the table, and a great deal of it, in healthcare collections. The main reasons for this are :

• Many potential revenue streams from healthcare have been ignored
• Managing higher volumes of small balances, and working with multiple accounts for the same consumer have not been addressed effectively
• Patient billing and insurance follow-up have not been understood or offered as solutions in healthcare
• Secondary products like payment arrangement monitoring and eligibility for Medicare can generate additional revenue streams
• The industry has not targeted collectable accounts, or applied contact strategy and effort based on viable scores and "business intelligence"
• Modern contact options like e-mail, text messaging, ringless voicemail, and intelligent chatbots have not been effectively incorporated with collection strategies. These are important and necessary tools for companies that wish to offer superior levels of customer service.

MANAGING HIGHER VOLUMES

The industry has always had a simple solution for higher volumes - hire more people. That worked as when you were paid 50% and there were plenty of agents to be hired. We know what today's fees are, and with benefits, Walmart will sometimes pay more than you are willing to offer agents. We needed a Plan B many years ago. Working large numbers of accounts for the same consumer requires changes in the design of our collection platforms. How do we address these critical and evolutionary challenges?

• We must work much smarter, not harder, intelligently predicting propensity to pay. We need cleverer scoring models with both static and dynamic scores (scores that change with activity and time).
• Collection platforms must intelligently manage the different data elements on linked accounts (e.g. phone numbers and account status) and quickly provide analysis and information to consumers and agents. Medical collections is typically small balance and high volume. Speed of navigation is an important element in the efficiency model. Most importantly, your software must know when to consider individual accounts, and when to work with the "consumer" (look at multiple accounts as a single group).

PATIENT BILLING AND INSURANCE FOLLOW-UP

Patients must to be treated differently from consumers who have not paid their phone bills or credit cards. They initially require "Patient statements", not collection letters. If insurance exists, insurance companies may need to be contacted and re-billed. Medical billing is a very sophisticated business, requiring the managing of complex contracts, accurate claims editing and electronic billing, features that are not a part of most collection platforms. Leaving those functions to medical billing companies, the industry can take on the important role of insurance follow-up and patient billing, creating a logical path to later-stage collections. With Regulation-F, an efficient extended business office for a medical client works around the complex validation notice, and may initially offer better customer service.

• Along with the traditional collection information, you will require information about doctors, places of service and services rendered. You will often see multiple charges for a patient for a single medical incident (hospital charges, physician services and after care). Unlike with collections, all these services may need to be detailed in any correspondence. Patient statements will need to be planned and designed with your software provider and letter vendors. Eric Mock, President of Medical Business Bureau says "We changed our strategy many years ago. Patient statements and insurance re-billing are now a key part of our services and collection efforts."
• Your collection technology must be able to store and print the insurance claim forms HCFA-1500 (physician billing) and UB-04 (hospital billing).
• You must understand the nuances of "early-out" and "Pre-collection" work, where you usually work the account as "the hospital or doctor's office". In these circumstances, you are reaching out to consumers shortly after insurance billing or final bill. Rates can be in the low single digits, but still, extremely profitable because of very high volumes, greater recoveries, and lower costs of working the accounts.

OFFERING SECONDARY PRODUCTS

Hospitals often struggle to do things that are easily accomplished by the average collection agency. The reasons range from weaknesses in expensive and complex hospital information systems, to weak processes and staffing issues. An example is the monitoring of payment arrangements.

• With payment arrangements, you should be able to load new placements with an established payment arrangement. Your system must send reminders, process payments, and follow up on missed payments. These accounts will usually be in a separate area, where accounts are worked in the name of the hospital or doctor's office (often referred to as an extended business office environment). Automatically being able to move missed payments into collections is a great advantage.
• Based on lower scores, insurance information or the consumer's age, you could move selected accounts to personnel trained to evaluate the eligibility for Medicare. This is a specialized area that requires knowledge that is usually not available in a collection agency.

Those of us who have ever been patients will recall how quickly hospitals seem to erase data from their systems. Offering to provide an archival system, in addition to working older accounts, can also offer interesting new opportunities in healthcare collections.

WORKING THE RIGHT ACCOUNT AT THE RIGHT TIME

While this is a primary goal for every agency, it is a critical requirement in healthcare collections, along with the need for accounts to be worked "by the right person". Unfortunately, today's collection systems may not allow you to easily accomplish the challenging requirements of healthcare collections. What are these requirements?

• You must be able to classify accounts flexibly and meaningfully (insurance, self-pay, skip, needs itemized statement etc.). Because of the different skill sets required, individual accounts within a linked group will need to be moved to different areas of your office. You must be able to produce detailed and summary reports based on account status.
• You cannot afford to put the same effort into every account. Scoring models must leverage non-credit data in addition to your historical data such as consumer behavior and client results.
• Contact strategy must be targeted based on the consumer and the status of the account. E.g. Patient statements or collection letters, e-mail or traditional letters, phone calls or text messages. Factors such as consumer age range and availability of e-mail addresses and cell phones with consent will need to be evaluated by your collection platform.

While collection technology becomes an essential part of your strategy, being successful in new areas of healthcare collections requires a knowledge base that extends well beyond traditional collection experience. Individuals with insurance billing and hospital or medical office experience will usually be required.

MODERN TECHNOLOGY IN HEALTHCARE COLLECTIONS

For many years, internet technologies reshaped the way information was accessed and used. The world was introduced to the phenomenal power of artificial intelligence and machine thinking when IBM computers defeated a reigning chess champion in 1997, and won against two of Jeopardy's greatest champions in 2011. Companies like Expedia and Uber used machine thinking to augment human capabilities, enhancing productivity, and offering service levels that we were not previously exposed to. It was not simply a matter of new technology or smartphone apps. It was not only about changing the way we hailed a taxi and paid for the ride. It was about giving the consumer choices. That is what modern technology has given us - Choices. Although few have taken advantage of choices in the collection industry, modern technology will revolutionize the industry in the coming months.

• Machine thinking can analyze medical accounts daily, looking for changes in status and making decisions for next steps
• Based on many different conditions, including client compliance requirements and your own standards, your technology needs to alternate between traditional and digital communication channels. Text messaging must be tightly integrated with your collection platform. We have technology to learn that a consumer reviewed an e-mail and can use that information to define the preferred communication channel. You must be able to handle contact preferences and "Inconvenient times to call". Your technology must count calls and limit attempts for different periods based on state or client rules (E.g. per day, for a week or month).
• Electronic documentation is an important part of resolving medical accounts. Your collection platform must be integrated with document-management software that can attach and store information related to an account (E.g. detailed bills and insurance forms) in a variety of formats (E.g. pdf's or images). You must be able to print or e-mail these documents to different parties, which means your software must be able to store multiple e-mail addresses at the account level.

Let us not forget the preferred communication channel for millennials - the smart phone. While every other industry has moved ahead, our industry that has hidden behind excuses and legal concerns must find ways to compliantly use text messaging. The CFPB's new rule adds clarity to the use of text massaging within compliance guidelines, and we must leverage these new opportunities. The future doctor's office must be able to text a patient's balance, with a link to make a payment. Mobile dashboards and status updates must be a part of your communications strategy. Regarding consumers, fewer and fewer millennials will talk to a collector - They want self-service when they want to contact you, not when you want to contact them. In addition to setting up payments, you must offer options for account inquiries, disputes, updating insurance information, taking requests for itemized statements and updating contact information.

REVENUE OPPORTUNITIES IN HEALTHCARE RECEIVABLES

Do you offer the products and services described? Can you appreciate the advantages of marketing them to your existing healthcare clients? Under pressure to increase revenues, hospitals may sell their receivables to increase cash flow. Sometimes referred to "Factoring", the process assumes that most of the receivables will be recovered. Why not collect quickly in the first place? The experience with COVID-19 will probably force hospital administrators to consider any proposal that could accelerate revenue at a viable cost. They will consider change if you offer them modern technologies like intelligent chatbots that will be perceived as superior customer service options within their own marketing circles. Marc Carter of CBC in Tennessee stated that "Our recently introduced intelligent chatbots are working with thousands of consumers a month, 24/7 and in multiple languages."

And if you thought you are leaving money on the table with the services and options we have presented, think about this. Consider a hospital that gives you 3,000 accounts for $1 million, when they are 350 days old. Assume you recover 15% of that within 5 months. The fees on that may be as little as $30k. If you can recover that from 350-day old accounts, imagine what you could do with "Active A/R", placed with you at 30 days. You would probably be looking at 20,000 accounts for $6 million. You could collect as much as 80% of the insurance balances, and depending on the demographic, 20% or more of the self-pay balances. You won't get the same rates as bad debt, but even at 6%, your fees and profitability are significantly higher than with bad debt. Emil?“Skip”?Speranza,?Jr. the President of BCC Financial Management says, "Like many agencies, we started out in bad debt but have opted to focus on early-out and insurance follow-up, filling a significant gap in revenue cycle management for healthcare."

And a last word? Most collection agencies probably believe they could do a better job than a hospital would, managing all their receivables. What if you talked to your hospital clients and said "We can help you accelerate and increase your cash flow by working with your staff, sharing our technology, giving you additional resources or even managing your entire operation after final bills are dropped. Any increased spending will be easily offset by faster recoveries and reduced expenses for bad debt collections......"

Mark Namba, a VP at Quantrax, astutely observes that "Many in our industry have not been forced to work with numerous types of commerce and make money with less people. That is changing". Yes, just as Starbucks did for coffee many years ago, we must influence a directional shift in healthcare collections. There is a window of opportunity to innovate and lead, and it is one we must not squander.

Quantrax Corporation is a technology company that created an intelligent collection platform over 25 years ago. They believe that the ARM industry has been poorly served by collection technology that has not evolved or kept up with the great potential of computing power, or challenging industry changes. Self-funded, Quantrax has continued to successfully develop and deploy technology that offers modern solutions to old problems.

www.quantrax.com – (301) 657-2084