Addressing management issues

Edited by Christopher S. Fring, PhD, CSP

Percent of billing collected

Q.What collection rate/percent-age of billed charges should a laboratory hope to realize for patient samples when the laboratory bills the patients insurance payer?

A.Alton Sturtevant points out,There is no simple answer to this question that can be applied to all labs, payers or locations. The large number of variables that must be taken into consideration include:

  • labs fee schedule (i.e., the higher the charges above allowable charges will result in a higher nonallowed portion of the bill),
  • payers reimbursement level,
  • test mix performed,
  • number of providers seen on the day of service (e.g., did the physician perform a hematocrit in his office and then order a CBC from the lab on the same day?),
  • accuracy of the billing data received from the physicians office,
  • accuracy of Current Procedural Terminology (CPT) coding of each billable procedure,
  • patients deductible,
  • accuracy and efficiency of the filing process,
  • diligence of follow-up to reimbursement (i.e., rebill patient for portion of the bill when allowed by carrier),
  • level of your small-balance write-off, and
  • medical necessity review by the payer.

The only realistic way to answer your question is to select a representative portion of bills for your payers (at least 20 each) and do a post-payment audit. This will allow you to find points of error within your process. Our laboratory performs this procedure on a routine basis.

Larry Crolla advises, Between 30% and 40% is my best guestimate. This depends on your charges in relation to fee schedules. Some private insurers, however, still pay the majority of the bill or what is billed. Medicaid on a state-by-state basis can be 0% to 20% on the low side, to 30% to 40% on the high side.

According to Marti Bailey, I would estimate the average to be something on the order of 30% to 50%. But there are a number of points to consider when you are trying to determine your reimbursement rate, and it is wise to be cautious about comparing your rate with that of other hospitals. It is very difficult to accurately capture payment rates for hospital (technical) charges due to the way that these are paid by payers. Diagnosis related group (DRG) pays inpatients on a case basis. Certain charges are considered outliers and paid separately, but for the most part, inpatient visits are paid by one lump sum, based upon DRG, regardless of what the charges were. This same bundled payment is usually made for short-stay visits, and for many procedures performed on an outpatient basis. The method for outpatient payment is termed Ambulatory Payment Classification or APC and Outpatient Prospective Payment System or OPPS, which are analogous to DRGs. So, the trend is for payers to bundle the individual charges for treating a patient episode into one payment.

In the clinical laboratory world, for outpatient services, most payments are still made from a fee schedule based on CPT code. If you can work with claims that include only laboratory charges, you can easily determine your payment rate by dividing your payment by total charges. if the claims include more than lab charges however, you will not get a line-item breakdown of reimbursement. There is generally just a single payment made per claim. Charges that are denied for one reason or another will be identified, but individual charges that are paid will not be identified.

Here are some important points to keep in mind when you are looking at reimbursement for hospital charges:

  • Reimbursement rate will vary inversely with charges. The more your charge goes up, the lower your payment rate will be unless payments increase.
  • Although Medicare did make a modest increase in technical payments for 2003, most payment increases come as a result of contracting with individual insurance payers.
  • To draw any conclusion from comparing your payment rate to someone elses, you need to compare both your charges and your payments.

Bottom line: Meet with someone in your billing department and actually review some claims together or learn how to review claims in your hospital billing system. Do not spend too much time focusing on payment rate. You are going to get paid what you are going to get paid! If you can make a difference where you are currently not getting paid, you have a real opportunity to enhance your cash stream. For instance, if you are getting denials for no referral, for lack of medical necessity or for timely filing, these are all cash opportunities if you could correct the processes that are creating the denials. Do not forget to focus on the cost for your services. Anything that you can do to minimize the cost of your services will have direct impact on your bottom line.

Testing for honesty

Q.We discovered that we had several medical technologists omitting a maintenance-check step in the automated procedure for our routine chemistry tests. The step is part of the written daily procedure, and all techs were trained on the procedure. There is a place on the daily maintenance form for the techs to initial they performed this task each day. a concerned tech notified us that this step was not being done along with verification of computer printouts, but the techs always initial that they performed this. My question for the panel is: Should we be testing for honesty traits on a pre-employment basis? Can the panel offer suggestions?

A.Marti Bailey points out, Pre-employment honesty testing comes with its own set of issues that need careful consideration. The Congressional Office of Technology Assessment defines honesty tests as written tests designed to identify individuals applying for work who have relatively high propensities to steal money or property on the job or are likely to engage in behavior of a more generally counterproductive nature. Employee-rights advocates have strongly criticized the use of honesty tests, claiming potential privacy and discrimination infringements due to the personal nature of test questions. Thus, an employer could conceivably be found liable for invading an applicants privacy if the testing process caused perceived injury. Privacy could also be compromised if any of the information from the testing happened to fall into the hands of persons who did not need to know. The employer would be advised to obtain written, informed consent to perform honesty testing and that the results of such testing be strictly confidential and maintained in a secure place.

Ms. Bailey adds, There are legitimate concerns regarding use of honesty-testing tools. The results of honesty testing should not stand alone in making or breaking a hiring decision. You would still need to make the same judgments as you do today, based on review of employment history, resume, background checks, recommendations and interview. I am doubtful that honesty testing would have prevented the problem you have experienced.

Sound and consistently enforced employment policies seem to be what is lacking. The deficiency that you describe is extremely serious. Patient care could be compromised. Not only was an important quality assurance step not performed but also records were falsified. My own opinion is that this is justification for immediate dismissal. I would start by meeting personally with all your staff to let them know of the deficiency and that any future failures to follow protocols or falsification of records will not be tolerated and will result in disciplinary action that may include immediate dismissal. You then need to be true to your word. when there was a breech of confidentiality issue in our hospital, a number of employees were terminated on the spot, and it made a resounding impact. I do not think your issue is of any lesser importance.

Alton Sturtevant advises, I am not personally aware of a method to test for honesty as a trait. When I conducted an Internet search for honesty testing, I found over 35,000 references to honesty as a trait and testing for it. I would attack the problem described as more of a management problem relating to the instrument in question (and the others in the laboratory) and document the process. The appropriate supervisor then must review the daily checklists for completion. Anyone not complying with company policy should be subjected to company disciplinary procedures. The supervisor directly responsible for the instrument must be reviewed for his compliance with policy, as well. This should correct the problem and ensure that employees understand the necessity of compliance with policy.

According to Larry Crolla, I do not think doing pre-employment checks will necessarily solve this problem. People become lazy, have a bad day or never see a problem and think the check is unnecessary. Explain to people how important it is to do what they say they did in light of the reaction over medical errors that have been in the news lately. This also emphasizes the point that instrumentation that does self-checks will be significant in the future in helping to reduce medical errors.

Bottom line: It is doubtful that honesty testing would have prevented the problem you have experienced. Close supervision, retraining, employee competency checks and explaining the reasons for doing each step in the maintenance procedure are probably the answer. Meet personally with all your staff members to let them know of the deficiency. Make clear that any future failures to follow protocols or falsification of records will not be tolerated and will result in disciplinary action that may include immediate dismissal.

Christopher S. Frings is an internationally known consultant and speaker on the topics of leadership, managing change, time management, reaching goals and stress management. His consulting firm, Chris Frings & Associates, is in Birmingham, AL.

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