Recently I was challenged by a CFO who was caught off guard when payments were significantly lower than expected. After a slow couple of summer months charges had appeared to have gone up significantly and they were expecting a corresponding payment increase.
This particular CFO relies solely on his historical “Payment Percent” (Total Payments/Total Charges) to predict payments. If you have a fairly stable center, which includes limited staff and provider turnover, a well maintained EMR and Practice Management system as well as a consistent payer mix, this predictor may work well for you. (I would also like to meet you to pick your brain!)
In this example we needed to look at a few other indicators to determine the cause of the gap in perception of the expected payments. When we looked at the visit trending we noticed that the visit increase did not increase at the same rate as the charges. Also the average charge per visit was significantly higher than previous months. This was a good indicator that something was different for this month.
During this particular month there was a shift of a large number of providers to a new EMR system. This system had many more coding prompts. The providers were coding for services that they had previously not coded for in their previous system. So while charges had increased their visits had increased only slightly. If you are a center that is paid an encounter rate by your top payers’ visits are the key to increased revenue.
In addition to the new EMR product there was also signification front desk turn over. Front end denials doubled. This was identified via denial rate tracking.
It took some time to get this CFO to understand the impact of these factors on his payments particularly since his Payment Percentage has historically been pretty accurate. What I am highlighting here is that it is important to not to rely on only one indicator before spending any expected payments! If this CFO had been tracking visits, average charges per visit and denials he would have been better able to predict his payments and avoided being in the hot seat at the board meeting!