Health Care Collector - Kluwer Law International

Health Care
Collector
The professional’s guide to success in health care collection
August 2010 • Vol. 24, No. 3
JoAnn Petaschnick, Editor
ABNs Present Problems
for Providers
Fix process or suffer losses
T
he
Advance Beneficiary Notice (ABN) is
meant to provide Medicare beneficiaries with
advance notice of the possibility that a procedure
or service may not be covered by Medicare. The
revised ABN includes a mandatory field for cost estimates
of the items or services at issue. There is also a
beneficiary option whereby the beneficiary may choose
to receive a service and pay for it out of pocket rather
than submit a claim for Medicare coverage.
For a patient to be held responsible for noncovered
Medicare expenses, providers are required
to have a signed and dated ABN in the patient’s
file prior to any service provided by a physician or
health care provider. The ABN must be delivered far
enough in advance that the beneficiary has time to
consider the options and make an informed choice.
I NSIDE THIS ISSUE
Days of Revenue in Medical Records Slides 3
Biller’s Corner 5
Medicare Advantage Appeal
Process Flowchart 7
Helping Patients Understand
Health Care Costs 9
Collection Tips and News 11
Problems with Procedures
For a variety of reasons, providers may have difficulty
getting the ABNs signed up front by patients,
which means that providers may face losses that are
hard to recoup. The reasons can include the many
points of access for patients and the lack of appropriate
staff training, according to Health Care Collector
sources.
“As is sometimes the case with billing issues, we have
had our share of problems regarding the ABN,” says
Jeffrey Shutak, Director of Patient Accounts for The
Memorial Hospital in North Conway, New Hampshire.
If an ABN is not signed, a patient cannot be billed,
and this was creating problems, Shutak explains. “Due
to heavy losses in the Oncology Department over the
past two years, we initiated a strict policy regarding
the issuance of ABNs. This policy was designed from
the CMS guidelines regarding Medicare coverage and
reimbursement for certain high-end costs, including
chemotherapy drugs. Coverage for certain drugs was
being denied because the patient did not meet the
clinical requirements for those drugs. It is not our
policy to refuse treatment, and we were absorbing
the cost of these drugs, which is in the three to six
thousand dollar range,” he says.
Since implementation of the new ABN policy,
losses in Oncology have all but disappeared, according
to Shutak. “Once the patients began to talk to
their primary care physicians, the doctors began to
document more carefully and we used that documentation
to better support the billing. We follow similar
See ABNs Present Problems … page 4

PAGE2
EDITORIAL
ADVISORY BOARD
Chris Becraft
President
Collection Service Bureau, Inc.
Scottsdale, AZ
Frederic W. Burr
Attorney at Law
Senior Partner
Burr & Reid, LLP
Vestal, NY
Kempton S. Smith, CPAM
Director, Patient Financial
Services
Baptist Health System
Pensacola, FL
Ted M. Smith
President
Health Services Program
ACA International, Inc.
Minneapolis, MN
Toni Shamblin
Manager
Summa Health System
Accounts Receivable
Cuyahoga Falls, OH
Linda Thompson
Business Officer Manager
Mark Reed Hospital
McCleary, WA
Judy I. Veazie, CPAM
Senior Consultant
Forum Healthcare
Portland, OR
EDITOR’S PERSPECTIVE
Dear Subscribers,
As we usually do in the Health Care
Collector , we focus this month on some
of the ways that hospitals can avoid losing
the dollars that they having coming
to them.
Hospitals can
lose money in a
number of ways
that are beyond
their control,
but some of
them are at
least partially
controllable.
Contacts in the industry have told
us that they have had ongoing problems
with writing off costs because
of problems with their Advance
Beneficiary Notice procedures. This
can happen for more than one reason,
as you likely know. One patient
accounts director tells us how they
were losing money due to write-offs
and how they made changes to turn
that around. We hope that you will
find the story interesting and helpful.
In the Biller’s Corner, Judy Veazie
presents part two of her article about
appealing Medicare Advantage plan
denials. These plans cover more services
than traditional Medicare and
there are different rules for appealing
claim denials. She explains the
different appeals and how they work,
including those that beneficiaries
can make on their own or with the
help of a provider.
Included is a flowchart that shows
in graphic detail how the appeal process
should work. This should work
for those of you who want to set up
a procedure for your office, keeping
in mind that those providers who are
contracted with MA plans have no
appeal rights (unless they are acting
on behalf of a patient).
Also in this month’s issue, we
look at the amount of receivables
delayed in Medical Records. It’s
another common problem for
hospitals and it can be tough to
overcome. We get some advice
from one of our editorial advisors
about what providers can do about
establishing a policy—including
teaming with the policy medical
staff in developing that policy—to
make sure all coding is completed
within a specific timeframe. Then,
the specific delays can be tracked by
physician.
As always, we are looking for your
comments about these topics. Let us
know if these stories are helpful to
you and your staff. If there’s a topic
that you would like covered, please
let us know. Please send your comments
to me at jmpeta@aol.com.
Best Regards,
JoAnn Petaschnick, Editor
AUGUST 2010
HEALTH CARE COLLECTOR

Days of Revenue in Medical
Records Slides
Providers seek to fill gaps
F
or
the third time in as many quarterly financial
reporting periods, the average number
of days of revenue in the Medical Records
department fell. In the first quarter of 2010, the average
number of days of revenue held up in Medical
Records was reportedly 5.24. This was down from
the fourth quarter 2009 figure of 6.39 days. And, the
average number of days was also down a tad over the
second (6.93 days) and third quarters (6.32 days). See
Exhibit 1.
Hospitals with 100 to 199 beds responding to the
HARA Report on First Quarter 2010 survey indicated
6.70 days of revenue in Medical Records. This was the
highest figure reported in the first quarter. Hospitals
with zero to 99 beds followed closely with 6.40 days.
See Exhibit 2.
Facilities with 200 to 399 beds reported only 4.00
days, the lowest figure. And, the larger hospitals with
400 to 699 beds were quite a bit higher at 5.61 days in
Medical Records. See Exhibit 2.
Reasons for Delays
Obviously, patients’ accounts get bogged down in
the cycle, but why? Industry consultant Steve Chrapla
of Revenue Cycle Partners in Billings, Montana,
provides some insight into the problem of Medical
Records delays. He offers the following reasons why
accounts are delayed:
PAGE3
Exhibit 1. Days Revenue in Medical Records—Last Four Quarters
2nd Quarter 2009 3rd Quarter 2009 4th Quarter 2009 1st Quarter 2010
6.93 days 6.32 6.39 5.24
Source: HARA Report on First Quarter 2010 , vol. 24, no. 2, Aspen Publishers, Inc. (2010).
Exhibit 2. Days Revenue in Medical Records—By Hospital Bed Size
0–99 Beds 100–199 Beds 200–399 Beds 400–699 Beds 700+ Beds National Average
Number of days 6.40 6.70 4.00 5.61 n/a 5.24
Source: HARA Report on First Quarter 2010 , vol. 24, no. 2, Aspen Publishers, Inc. (2010).
Health Care
Collector
© 2010 Aspen Publishers.
All Rights Reserved.
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JoAnn Petaschnick
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Email: jmpeta@aol.com
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George
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HEALTH CARE COLLECTOR AUGUST 2010

PAGE4
1. Physicians don’t sign attestations on Medicare
accounts or provide the documentation necessary
for coding; and
2. Coding is not completed in a timely fashion. This
is usually the major reason for delays since coding
can sometimes be done with the information in
the record prior to discharge.
“In addition, there is usually a suspense period
for late charges, from two to five days depending
on facilities. But this is often included as part of the
delay,” Chrapla explains.
How to Prevent Delays
Hospitals can prevent or at least combat the problem
of revenue being held up in the Medical Records
department, according to Chrapla. He recommends
the following ideas to avoid late charges and Medical
Record delays.
Late Charges
To prevent late charges the facility should:
1. Establish policies indicating that late charges are
not acceptable; all charges need to be posted
within 24 hours of service;
2. Establish controls and monitor sources and reasons
for late charges;
3. Develop corrective actions specific to each department
to prevent late charges; and
4. Reverse late charges against the revenue of the
department that is causing the revenue delay.
Medical Record Delays
To prevent Medical Record delays the facility
should:
1. Establish policy (include medical staff in policy
development) to make sure all coding is completed
within a specific timeframe;
2. Track reasons and type of delays by physician;
3. Report to physicians and medical staff leadership
about the physicians who are noncompliant with
this policy;
4. Monitor coding delays by account type and coder
backlogs;
5. Establish goals for daily coding performance;
6. Ensure staffing levels of coders are sufficient.
If not, get more resources and outsource if
needed;
7. Provide for flextime for coders and allow them to
work remotely from home;
8. Determine when concurrent coding can be done
on inpatients;
9. Ensure all outpatient procedures have codes
prior to services being performed; and
10. Evaluate what level of chart completion is required
to allow coding to be performed. Workflow needs
to be designed with coding as a priority. ■
Reader’s Resource
For more data and key indicators, see the HARA
Report , published by Aspen Publishers, Inc. Call
800-234-1660, or see www.aspenpublishers.com.
AUGUST 2010
ABNs Present Problems ...
continued from page 1
requirements in radiology and lab procedures. Our
highest success rate in obtaining ABNs is for lab
services,” he says. “Better case management and
documentation has been key.”
Working Toward Change
Hospitals try to make sure that prior to providing
services, the service is covered as a medical necessity,
says Deborah E. Shapiro, President and CEO of WFS
Services, Inc., in Secaucus, New Jersey. “Sometimes, they
are wrong. For example, the severity of the diagnosis
does not match a procedure that is performed. When
Medicare denies the claim due to medical necessity or
as a non-covered service and the patient has signed an
ABN, the patient can be billed,” she says.
Sometimes, patients will elect to have a noncovered
service and they will understand that they
have to pay for it. “For example, some new types of
wound care with artificial skin are not covered by
Medicare,” Shapiro says.
Source of Problems
“Problems can arise when claims are submitted
and providers should have known that the
HEALTH CARE COLLECTOR

PAGE5
procedure was not covered. Procedures may not be
properly investigated and screened prior to service
in order to make sure that an ABN is signed,” says
Stephen Chrapla, Director of Third Party Solutions
for Revenue Cycle Partners, LLC, in Billings,
Montana.
“Claims should be also be checked prior to submission
and, if the service is not covered by Medicare,
the claim should not be submitted. The charge would
have to be written off. If the claim is submitted, it
could potentially be considered an abusive billing
practice and subject to fines under Medicare Fraud
and Abuse regulations,” Chrapla says.
Shapiro concurs. “There is no ‘back end’ procedure
for ABNs. If you have provided the service without
the patient being informed or signing off on the
charge, you may not bill. Anything other than that is
called fraud,” she says.
That is why getting the ABN signed during the registration
process is so important. “What often creates
a problem is not that the patients don’t sign, but that
they sign and are not aware of having done so. During
inpatient and outpatient registration, there are
so many forms for people to sign; they may not really
register having signed the ABN. Because ABNs are
for Medicare patients, and the majority of Medicare
patients are elderly, you may have a confusion factor
anyway,” Shapiro says.
The Appeal
“If a patient has not signed an ABN or even if
they have signed it but the hospital deems that the
service should be covered, then they have to appeal
Medicare’s decision to pay due to medical necessity,”
Shapiro says. “Of course, the ABN cannot be signed
after the fact when services have been rendered, but
appeals can be made. Once the service is provided,
the ABN is irrelevant in the appeal process,” she
says.
In the appeal process, the physicians are asked to
provide additional diagnoses and information to get
a service approved. “ABNs state that if the patient
receives non-medically necessary and/or non-covered
services, they are required to pay for the service. If
they receive a service that Medicare deems not necessary,
the provider might be able to end run the
process by changing the diagnosis to something that
Medicare will cover. This does not mean having
the patient sign an ABN after the fact of service—it
means changing the facts of service so that it would
be covered,” Shapiro says.
These appeals are very difficult and time consuming,
Shapiro says. “The process requires coordination
among the different departments, such as IT, registration,
and patient accounts, so that future issues don’t
arise. Because it is so difficult, some hospitals just
write off the smaller amounts rather than take the
time,” she says. ■
Biller’s Corner
Why You Need to Understand
Medicare Appeals, Part II
Medicare Advantage Plans
Judy I. Veazie, CPAM
A
Medicare Advantage plan is a health coverage
choice for Medicare beneficiaries
besides traditional Medicare. Medicare
Advantage plans, sometimes called “Part C” or “MA
plans” are offered by private companies approved by
Medicare. Through a bidding process, these private
payers must submit plans and assurances that they
can meet the established standards and rules for
processing claims under the Medicare system. Under
these rules, the Centers for Medicare & Medicaid
Services (CMS) intend to reassure the beneficiary
and the provider that they can count on fair treatment
by the MA plans.
When a beneficiary joins an MA plan, the plan
assures that it will provide all Part A (hospital
HEALTH CARE COLLECTOR AUGUST 2010

PAGE6
AUGUST 2010
insurance) and Part B (medical insurance) coverage
to that beneficiary. MA plans must cover all
the services that traditional Medicare covers except
hospice care.
The lure for many beneficiaries is the “advantage”
that MA plans can offer extra coverage, such as
vision, hearing, dental, and/or health and wellness
programs. Almost all MA plans include Medicare
prescription drug coverage. Because patients pay
one monthly premium (in addition to their Part B
premium), they often view the program as a simplified
alternative requiring less paperwork.
But MA plans bring an element of risk to the
marketplace. These plans often seek to balance their
risk by passing extra costs on to the provider and
indirectly to the patient. Unlike traditional Medicare,
MA plans add additional levels of authorizations and
medical records requests that delay payment. In one
survey, some providers reported that they can expect
payment from Medicare within 25 days while MA
plans take over 50 days to pay the same claim.
While MA contractors will see cuts in premium
levels from CMS, MA plans will remain a choice for
beneficiaries under health care reform. Regardless of
premium amounts, the contractors cannot cut core
benefits to the beneficiaries. The risk for providers is
that the MA plans will continue to balance their budgets
by taking their “savings” from providers.
Beneficiary Choice and Consequence
Patients often think that an MA plan will administer
their benefits while simplifying the paperwork.
When patients choose an MA plan, they don’t factor
into their decision the restrictive policies that exist
under these plans. But CMS makes it very clear in
their official beneficiary handbook, Medicare & You
2010 , when they state:
Medicare pays a fixed amount for your
care every month. These companies follow
the rules set by Medicare. However, each
Medicare Advantage Plan can charge different
out of pocket costs and have different
rules for how you get services (like whether
you need a referral to see a specialist or if
you have to go to only doctors, facilities, or
suppliers that belong to the plan). . . .
If you get health care outside the plan’s network,
you may have to pay the full cost. . . .
Make sure you understand how a plan works
before you join. Not all plans work the same
way, so before you join, find out the plan’s
rules, what your costs will be, and whether
the plan will meet your needs. . . .
It is important that you follow the plan’s
rules, like getting prior approval for certain
services when needed. . . .
It is questionable how many patients have conducted
a thorough review of their MA plan, and
whether they fully understand that they have given
up the flexibility of a full choice of providers. For
more mobile beneficiaries, they may not realize the
financial impact of seeking care outside their service
area. This is often a big shock to patients who travel
or who split their time between summer and winter
homes. While emergent services are covered, the routine
care is not. It falls upon the provider to inform
patients that they may not be covered for the services
they need.
MA plans often seek to balance their
risk by passing extra costs on to the
provider and indirectly to the patient.
When patients are unprepared for the additional
responsibility they take on when they sign up for an
MA plan, the provider must take an active role in
advocating for their patients so that their patients get
the most out of their benefits. Part of this is about
educating the patient. If the patient was not fully
informed about the risks and limits of the MA plan,
the patient can request to un-enroll in the plan. In
the Medicare & You 2010 handbook there are instructions
for patients who are already in MA plans who
need to switch to traditional Medicare.
Risk Points
Indeed, gaps in provider documentation have
promoted the image that MA plan savings come
from preventing what they deem to be unnecessary
care. In most cases, despite these documentation
gaps, the care follows the standard courses
of treatment. However, much of the payer savings
are recouped in other risk points. The provider
is vulnerable in a number of areas and these are
the very points that the MA plan claims processor
exploits to gain profits. Some examples of these
risk points are:
• The point of service. Providers have difficulty identifying
MA plan coverage vs. Medicare coverage,
authorization requirements, notification requirements,
and care management requirements.
(Utilization review nurses and doctor intervention
is needed to prevent gaps.)
HEALTH CARE COLLECTOR

PAGE7
Medicare Advantage Appeal Process Flowchart
STANDARD
EXPEDITED
Pre-service: 14-day time limit
Payment: 60-day time limit
Pre-service: 72-hour time limit
Payment requests cannot be expedited
60 days to file 60 days to file
Health Plan Reconsideration
Pre-service: 30-day time limit
Payment: 60-day time limit
First-Level Appeal
Health Plan Reconsideration
72-hour time limit
Payment requests cannot be expedited
60 days to file Automatic IRE Review
60 days to file
(if plan upholds denial)
IRE Reconsideration
Pre-service: 30-day time limit
Payment: 60-day time limit
Second-Level Appeal
IRE Reconsideration
72-hour time limit
Payment requests cannot be expedited
60 days to file
Third-Level Appeal
Administrative Law Judge
Office of Medicare Hearings and Appeals
AIC over $120*
No statutory time limit for processing
60 days to file
Fourth-Level Appeal
Medicare Appeals Council
No statutory time limit for processing
60 days to file
Fifth-Appeal Level
Federal District Court
AIC over $1,220*
AIC = Amount in Controversy
ALJ = Administrative Law Judge
IRE = Independent Review Entity
*The AIC requirement for an ALJ hearing in federal court is adjusted annually in
accordance with the medical care component of the Consumer Price Index.
• The billing rules process. MA payer staff has fragmented
understanding of uniform billing (UB)
rules and codes, and, thus, often falsely deny
claims when they misread or fail to properly
interpret the claim information provided by the
UB codes.
• Demands for additional information or records. MA payers
request records and conduct medical review at
double the rate of Medicare.
MA payers are also known to reject claims based
upon a “technical denial” at excessive rates compared
HEALTH CARE COLLECTOR AUGUST 2010

PAGE8
AUGUST 2010
to traditional Medicare. These technical denials
include medical necessity, DRG assignment, length of
stay denials, pricing reviews, etc.
MA Appeals
As if CMS anticipated the potential abuse of the
claims payment process, a solid appeal structure was
established to offer recourse to damaged providers
and concerned beneficiaries. Providers and patients
should view the MA appeals process as a way to hold
MA plans accountable, ensuring that good payers are
rewarded for their investment in meeting expected
standards and bad payers are driven out of the
marketplace. Unless this occurs, the bad payers will
unfairly benefit from their poor compliance with billing
rules, enabling them to reap profits, even reduce
premiums, to gain more market share. The appeals
process is the best way to ensure fair trade practices
among the MA payers.
When patients are unprepared
for the additional responsibility they
take on when they sign up for an MA
plan, the provider must take an active
role in advocating for their patients
so that their patients get the most
out of their benefits.
Providers may not be using the opportunity to
appeal MA claim denials as extensively as they might.
At a recent appeals workshop conducted by the
American Association of Healthcare Administrative
Management (AAHAM), Medicare consultant Diana
Smithson outlined the options for appealing traditional
Medicare and Medicaid Advantage plans. (The appeals
process for traditional or original Medicare in discussed
in the July 2010 issue of Health Care Collector. ) 1
As Smithson outlined the steps to appeal claim
denials and other payment barriers, I realized that
the majority of the audience had not used their
appeal options with Medicare or the MA plans. I
asked my fellow audience members how many had
successfully filed MA appeals. One audience member,
Seattle’s Northwest Hospital Business Office Director,
Janet Walthew, reported that she had a great appeal
success rate. One reason for Janet’s success is her
confidence in the appeals process, in part because
she previously worked for an MA plan and she has an
insider’s view of the process. She also understands the
importance that CMS places on the appeals process
to ensure balance in the marketplace.
Beneficiary Appeals
Medicare beneficiaries have appeal rights, too.
When a beneficiary disagrees with a coverage or
payment decision made by an MA plan, the beneficiary
can appeal for a variety of reasons, which are
explained in the Medicare & You 2010 handbook. In
addition to fee-for-service denials, beneficiaries can
also file appeals for:
• Organization determinations to not authorize services.
This can include, but is not limited to:
— Specialist referrals;
— Service denials; and
— Refusal to authorize durable medical equipment
(DME);
• Out-of-area services that the MA plan does not
consider urgent or emergent;
• Non-authorized, out-of-network services that the
MA plan does not consider emergent; and
• Out-of-area dialysis services.
CMS also provides recourse for patients who need
assistance with an appeal. While contracted providers
have no appeal rights, the appeal options for the
beneficiary could include appointing the provider
as a representative. Providers can secure a signature
from the patient authorizing them to take their place
in the appeal.
Expedited Review
A patient can also request a “fast appeal” under
the Expedited Review process. If the patient is receiving
Medicare services from a hospital, skilled nursing
facility, home health agency, rehab facility, or
hospice, and the patient thinks his or her Medicarecovered
services are ending or ending too soon,
the patient has the right to an immediate appeal
response under the Expedited Review, process. With
an Expedited Review, an independent reviewer,
the Quality Improvement Organization (QIO), will
decide if the services should continue.
Editor’s Note: For an overview of both the MA
Standard Appeal and the Expedited Appeal, see the
Medicare Advantage Appeal Process Flowchart.
Provider Appeals
Providers contracted with an MA plan have no
appeal rights, as mentioned, but non-contracted
HEALTH CARE COLLECTOR

PAGE9
providers may appeal. However, they must agree to
waive payment if the appeal upholds the original
decision. Providers start by asking for a “reopening.”
Requested by the provider, the appeal can be
based on a factor outside the provider’s controls that
changes the perspective of the claim, such as late
medical documentation or clerical errors. Appeals
must be made within a year unless the provider can
prove “good cause” for delay.
Special Appeals Under LCD and NCD
Local coverage decisions (LCDs) made by the
Medicare administrative contractor can result in coverage
or non-coverage in different localities. A littleknown
option built into the LCD as well as national
coverage determination (NCD) rules is that CMS
allows for exceptions to the decisions that adversely
impact patients in one US geographic region vs.
another.
For example, some procedures that are excluded
for West Coast residents under LCDs are approved
under East Coast LCDs. Thus, CMS allows for a
patient to appeal this limitation. Appeal rights only
apply to beneficiaries and are filed when an LCD or
NCD is involved and the patient is adversely affected
in accessing care.
Indeed, there may be some common ground in the
LCD and the recourse under expedited appeal cases.
While appeals may be made to the CMS Regional or
Central Office, it is acceptable to ask for congressional
intervention in those cases where variances in local
jurisdiction impact a beneficiary and his or her care.
In the next Biller’s Corner, we will explore the
anatomy of a Medicare Advantage appeal by examining
some case studies and outcomes involving Seattle’s
Northwest Hospital. Its Business Office Director, Janet
Walthew, shares her tips for providers. ■
Note
1. Volume 24, no. 2, Aspen Publishers, Inc.
About the Author
Judy I. Veazie, CPAM, has over 30 years of experience
in the health care industry. She has consulted
extensively on revenue cycle management; she is an
instructor in HIM and medical practice management,
and a frequent speaker to professional organizations,
as well as former editor of the Health Care Biller
newsletter (Aspen Publishers, Inc.). Contact her at
judyveazie@yahoo.com.
Helping Patients Understand
Health Care Costs
Helen Osborne, M.Ed., OTR/L
W
illiam Shrank, MD, MSHS, knows a lot
about health care costs, especially the
copays (out-of-pocket expenses) that
patients spend on prescription medications. Shrank
is not only a practicing physician but also an instructor
at Harvard Medical School and at the division
of pharmacoepidemiology and pharmacoeconomics
at Brigham and Women’s Hospital in Boston. As a
researcher, Shrank looks at the big picture of health
economics and studies how the cost of prescription
medication affects physicians, pharmacists, and
health care systems. And as a physician, he sees the
more personal side of how out-of-pocket expenses
can have an impact on a patient’s health.
Shrank talks about a patient he is treating who has
several chronic conditions. He has prescribed numerous
medications for this patient but recently learned
the patient does not always fill them. It turns out that
the patient is on a fixed income and, despite having
health insurance, must sometimes choose whether to
pay for rent, food, or drugs. Shrank says that when
faced with these choices, “drugs don’t always win.”
The Value of Opportunity
The situation Shrank describes is all too common
in health care today. What is unusual is that Shrank
and his patient talked about it. Once Shrank learned
of the choices his patient had to make, he changed
his patient’s prescriptions from nonpreferred drugs
(with the highest copays) to less costly generic and
preferred ones.
While many providers agree it is important to talk
about health care costs, they are not equally clear
about whose job it is to do so. Shrank thinks that
all health professionals can help. Below are suggestions
he offers for ways to get started. Many of the
HEALTH CARE COLLECTOR AUGUST 2010

PAGE10
AUGUST 2010
examples that follow apply to the cost of medication.
But the principles are the same whether you are
talking about transportation to and from the office,
arranging daycare for an elderly parent, or participating
in patient education programs. Patients often
need to be encouraged to talk about health care
costs. And when they do, it’s important to listen to
their concerns and help them explore their options.
Editor’s Note: As more hospitals are publishing
information about the cost of their services, managers
or employees working with patients in billing and collections
are often called upon to talk to patients about
the cost of services—and about their patients’ insurance
coverage. Educating patients about billing and
services are two big issues for the patient accounting
staff. Health Care Collector editors believe that
Osborne’s patient education/communication tips are
valuable no matter what the topic.
Ways to Approach Discussing Health Care
Costs with Patients
Know the basics of health care costs. Almost every
day, there seems to be new information about health
care costs. It can be hard to keep up to date. Patients
are likely to have an even more difficult time understanding
the complexities of cost structures and payment
options.
It’s important to learn the basics of health care
costs and then to teach this information to patients
in ways they can understand. One example would be
to explain drug formularies. As defined by Medicare
Part D, this is “a list of prescription medications that a
drug plan will pay for.” Most insurers offer three tiers
within a formulary:
• Generic (lowest cost);
• Preferred (middle cost); and
• Nonpreferred or brand name (highest cost)
drugs.
But just explaining drug formularies is not sufficient.
You also need to teach patients that there
can be several options within each tier as well as
cost differences when purchasing prescriptions at
the pharmacy or by mail. In my health plan, for
example, a one-month supply of a generic drug
costs $5 while a nonpreferred drug costs $40. When
patients understand what is available to them when
it comes to filling prescriptions, they can discuss cost
saving options in the provider’s office and with the
pharmacist.
Open the Lines of Communication
In most purchasing situations, buyers want to talk
with sellers about ways to save money. Admittedly,
health care transactions are more complex, but the
principles remain the same—one party has to pay
for services and goods rendered by the other. Shrank
says there are a couple of reasons why patients and
health care providers seldom have conversations
about costs.
For one thing, patients rarely initiate conversations
about expenses. In part, Shrank says, this may
be due to patients feeling embarrassed or ashamed
about financial concerns. Time is also a factor. In
a brief office visit, patients, like their doctors, are
usually more concerned about diagnosing health
problems than about talking about how they plan to
pay for treatment.
Likewise, physicians and other health care providers
seldom start discussions about costs. In a recent
survey, Shrank found that almost all physicians agree
it is important that patients’ out-of-pocket costs be
managed. But only about one third of physicians surveyed
believe it is their job to do so.
Physicians and nurses can help open lines of communication
by routinely asking patients if they are
taking their prescribed medications. This might be
done when taking a patient’s health history or vital
signs. If you ask, “Are you taking (x) medications?”
and the patient says no, follow up with a question
about why. If the answer has to do with money,
encourage patients to ask about less costly options.
Another example: In the instance of patients who
may not have the financial resources to cover costs,
but are embarrassed to mention it, financial counselors
can bring up the issue.
Use Plain Language
Many health plans now mail patients letters about
the cost of prescription drugs. These letters often
include a statement along the lines of “You are currently
charged (x) for this medication and there is a
generic for (y) that will cost less.” Shrank knows of
no research about the effectiveness of these letters
and wonders, from a health-literacy perspective, how
well this information is being communicated. You can
help by offering to review the readability of these letters
and advocating for them to be rewritten in plain
language.
Explore the Use of Technology
Find out what tools there are that can help
patients understand and get a handle on their health
care costs. Once you learn about them, you can then
HEALTH CARE COLLECTOR

PAGE11
work with patients to make sure they know how to use
them. One important step in this process would be to
ask about access to the Internet:
• Does the patient have Internet access at home?
• Is there someone who can help the patient learn
how to use the Internet if the patient doesn’t
already know?
• Can the patient go to the library to get online?
Other tools patients might use include videos
they can borrow from the library for exercise or
diet instruction rather than pay fees to join a class.
Instruction in how to join an email support group
can save a patient the expense of transportation to
meetings while at the same time providing access to
a community of individuals who share the patient’s
concerns.
Editor’s Note: If your offi ce or hospital has
a Web site, advise patients about it. Help them get
signed up so they can take advantage by asking questions
or making payments online.
Consider the Human Costs
Everyone agrees that it is expensive being a
patient. A recent study looked at patients’ nonmedical
costs at three phases of cancer care. These costs
included time spent traveling to and from care, waiting
for appointments, and receiving consultation
from providers. They totaled hundreds to thousands
of dollars per year. By talking with your patients about
these costs, you can help them find ways to reduce
those costs and relieve part of the stress involved in
getting good health care. ■
Reader’s Resource
William Shrank, MD, MSHS, is an instructor at
Harvard Medical School and at the division of
pharmacoepidemiology and pharmacoeconomics
at Brigham and Women’s Hospital in Boston. You
can reach him by email at wshrank@partners.org.
Source: Article reprinted with permission from
the author and On Call Magazine and published
by Boston.com/Monster , a division of Boston Globe
Media. On Call is available online at http://www.
boston.com/jobs/health care/oncall.
Collection Tips and News
Fine Tune Your Payer Collections Strategy
How well do you know your payers? Start by developing
a profile of each payer and identifying how
each payer’s process works. Then, check it against
your employees’ procedures for working with that
payer. You may find that your employees use
the same procedure from one payer to the next.
But one process does not fit all payers. First,
assess what your staff currently knows about the
payer. What information and phone numbers do
they have? To begin, a payer profile should include
the names and phone numbers of the key payer
contact staff, including:
• Customer service;
• Customer service supervisor and manager;
• Claims department;
• Claims department supervisor and manager;
• Mailroom supervisor;
• Medical review manager;
• Medical officer;
• Legal counsel;
• Compliance officer;
• UR manager;
• Appeals manager;
• Provider rep; and
• Provider rep manager.
Tip: Find out how much authority each
provider rep has to resolve claims issue. If
reps have no authority, you can move on to
the next level.
Source: Judy Veazie, CPAM.
HEALTH CARE COLLECTOR AUGUST 2010

PAGE12
When to Refer an Account to Collection
Unless you are using a collection agency on an
early out basis, it is typical to place an account with
a collection agency or attorney 90 days after the
invoice date if there has been no response from the
debtor after routine statements and efforts to contact
the debtor. The debtor’s silence may mean he
or she doesn’t care or is unable to pay; but in either
case, there is a problem. In any of the following
situations, creditors may want to consider earlier
placement with an agency:
• Two or more broken promises of payment;
• The debtor’s phone is disconnected or is now
unlisted;
• The debtor makes repeated requests for documentation,
a common stall tactic;
• The debtor claims he or she can’t pay and refuses
to discuss a date for payment, or a payment
schedule;
• The debtor says he or she will take care of the
account, but won’t commit to a payment plan; or
• The debtor adopts a confrontational attitude
or raises disputes regarding the account after a
lengthy period of silence during routine billing.
Consider these situations to be red flags that
indicate potential problems with this patient. If
your staff is limited, your collection agency or
attorney may be better equipped to address these
difficult situations.
Question? Comment? Suggestion? Idea?
Your ideas are outstanding and we want to
know what you think. Please contact us via email at
jmpeta@aol.com or fax at (414) 545-1150. If we use
your story idea or tip, we’ll give you a gift! ■
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