Growing revenue in the healthcare market is not easy. Just ask Doug Gouy, senior vice president of revenue management at American HomePatient (AHOM), which is based in Brentwood, TN. The company is a national product and service provider of home respiratory and infusion therapy, enteral nutrition, and patient mobility needs.
Gouy wrestles with reimbursement cuts and issues pertaining to the third party payer system virtually every day. “In healthcare, margins can disappear overnight,” he says. “You always have to be looking for opportunities to reduce costs.”
In late 2003, Gouy, along with several other members of AHOM’s team, met with representatives of Acculmage, a systems integrator that had worked closely with the company on several technology projects. In this instance, AHOM sought to reduce the time and labor resources needed to execute order processing by customer service representatives at 286 branch offices nationwide.
Gouy notes that these procedures are extremely complex: Customer service representatives collect patients’ demographic information, medically qualify patients, verify insurance eligibility, gather signatures, and bill patients and/or their third party payers. Errors, no matter how few, lead to processing delays, claim denials, rebilling, and in certain cases, loss of revenue (for claims that must be written off).
“We are in one of the most complicated, rules-based industries there is,” Gouy states. “We have about 2,000 different third party payers, all of which have their own unique requirements.” With a turnover rate of 40%, AHOM found it challenging to equip customer service personnel with the training and expertise they needed to remain on top of all third party payer requirements for billing. Consequently, an excessive number of claims were being denied. “Work that should have been completed on our end wasn’t getting done at the level required, and money was being left on the table,” Gouy explains.
AHOM’s extensive reliance on paper also drove up costs. The company handled more than 400,000 pages of sales order paperwork every month, many times incurring the expense of delivering sales documents overnight to its regional billing centers for inspection and processing.
WANTED: AN ENTERPRISE SOLUTION
A workflow software solution was deemed the best remedy for AHOM’s problems. Acculmage assisted AHOM in evaluating different options against a set list of criteria. For example, AHOM wanted the solution to be enterprise-wide to achieve maximum return on its technology investment. The company also wanted a solution that would not require an extensive rollout period and would fit its budget. LiquidOffice from Cardiff won out, based in part on its enterprise-wide configuration stability. The fact that the solution would take only a few months to implement and would cost nearly three times less than another product under consideration further solidified the company’s decision to choose the Cardiff solution.
Gouy says the solution has effectively reengineered AHOM’s processes so that there is less reliance on customer service representatives at the branch level. As soon as a sales inquiry is received at an AHOM branch, a representative initiates the order process by opening a LiquidOffice electronic form to capture all patient demographic information. Depending on the data entered and the insurance company involved, the system then launches as many as nine additional forms through which it guides the representative before the sales inquiry is electronically transmitted to one of 15 regional billing centers for revenue qualification.
“Our customer care personnel no longer have to worry about learning the rules from 2,000 different third party payers,” Gouy says. “Customer service representatives have to know the product that AHOM delivers and how to fill out the forms, but everything else is taken care of by the business rules that were built into the solution. This means there is more time to service the referral and the customer.”
The logic programmed into the solution by Acculmage and AHOM’s IT development staff also raises red flags during the revenue qualification phase, saving money and keeping the company in compliance with U.S. government regulations. “Medicare, for instance, has very specific medical coverage criteria,” Gouy explains. “For many services, patients must have a confirmed diagnosis to qualify for coverage. We developed rules that say, ‘If the patient doesn’t meet the medical necessity criteria, then the product isn’t covered.’ In the past, we may have delivered our product without a high level of confidence that we would get paid.”
Since implementing the system, Gouy says AHOM has reduced office payroll expenses by as much as 22%, with fewer employees processing a higher volume of business. The technology also has raised productivity at the company’s regional billing centers by eliminating the need to handle and inspect volumes of paperwork from the branches. Quality assurance personnel who previously had been responsible for reviewing hard copies of sales orders have since been reassigned to fill more strategic revenue qualification roles within the company.
Meanwhile, the quality of revenue qualification has improved. The number of AHOM invoices denied by insurance companies fell by 17% during the first year with the system in place and continues on a downward spiral. Bad debt has dropped by several percentage points, and the bottom line has been padded by at least $2 million in savings.