It’s no secret today’s healthcare business leaders are strapped for budget and staff resources.
And while most RCM leaders believe predictive scoring and account segmentation make it easier to work their patient accounts, there are differing opinions over when a score should be used.
Is it better to segment accounts at the point-of-service (front-end) or at some point during the billing process (back-end)?
In this series, we’ve connected with members from our Healthcare leadership team at RevSpring, to help you decide the best approach for your organization. Our second post comes from Jeff Popp, our Director of Business Development & Consulting for RevSpring’s Healthcare Division.To read the first post in our series, click here.
Jeff has over 20 years of Healthcare RCM experience – specializing in business practice analysis and process redesign. In this post he shares a proactive, financially conservative, segmentation strategy based on his past experience as both a Revenue Cycle Director and VP of Consulting.
It can be argued that using a front-end scoring process may cause hospitals to lose potential revenue from individuals. For instance, patients could be scored as charity eligible or unable to make payment, when in reality they have other methods to acquire the funds needed – methods that a scoring model may not have the capability to address.
The advantage to front-end scoring is validation of the collectability of an organizations account receivable as quickly after service as possible. Organizations know what they can expect in regards to cash collections and can draft a hospital charity policy to insure those who are unable to pay due to income and/or prior history are categorized as charity care.
Also, front-end scoring is helpful from a public relations standpoint and aids in 501 (c)(3) compliance – making reasonable efforts to determine whether an individual is eligible for assistance.
This process can significantly reduce the amount of effort required on the back end. Touching all the accounts on the front end is a frightening proposition for many hospitals because it appears to add considerable expense up front.
A more proactive and financially conservative approach to front-end scoring would be to score only the straight self-pay or uninsured accounts.
Additional considerations for front-end scoring
Commercial contracts. Even though a patient may prove to be charity eligible based on the score the hospital may be contractually obligated to complete certain collection efforts prior to charity consideration. This further substantiates the reason to use the front-end scoring approach on the uninsured accounts only.
Charity policy. The other key to front-end scoring is to clearly illustrate in the hospitals charity policy how accounts are considered in the process. Implementing a front end process may also require internal process and staffing changes that a hospital may be apprehensive to adopt due to other competing priorities.
Back-end scoring can mean a number of things, but in this case we will consider back-end to be prior to bad debt placement.
The advantage to back-end scoring is that it will come at a significantly lower price than front-end scoring, based on volume.
Also, scoring accounts prior to bad debt placement is definitely better than not scoring at all from a public relations standpoint and can also aid in 501 (c)(3) compliance as mentioned in the front-end scoring section.
What this approach does not consider is the amount of work required to resolve accounts later in the process – chasing accounts which, if scored, would require no work effort. After accounts cycle through the account receivable process, many will drop out due to payment resolution, no balance due after insurance or for other various reasons.
Additional considerations for back-end scoring
Self-pay and uninsured patients. At the back-end, it makes sense to consider your self-pay/uninsured population along with the patients covered by insurance – providing one last attempt to correctly categorize accounts prior to bad debt placement.
In a situation where a front-end scoring process is already in place for self-pay/uninsured patients, an additional back end scoring process for insured patients makes sense from a compliance perspective (with the Affordable Care Act).
In my opinion, the most proactive approach is to have a front-end segmentation process for the uninsured and a back-end process for insured individuals.
The important piece to consider when implementing either or both approaches is insuring facility processes and policies clearly illustrate how accounts are processed and considered within the individual scoring model selected. When in doubt discuss plans with your auditors to insure everything is in order.