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 first post comes from Dan Richards, our VP of Sales and Business Development for RevSpring’s Healthcare Channel Customers.
After focusing on software, data and analytics solutions for Healthcare Revenue Cycle over the last 15 years, Dan believes understanding when to score patient accounts comes down to two decision making factors.
The benefits of either approach
Before diving into a Front-End versus Back-End scoring discussion, I think it’s important to point out that either approach can deliver significant returns to a healthcare organization. While there can be several advantages to scoring patient accounts, these are the ones I view as most critical:
1. Reducing cost to collect through automation
- Reduced communications to patients
- Manage outsource vendors more efficiently
2. Adhering to policies & regulations (internal and external) and mission
- Identifying enough charity for 501 requirements
- Ensuring that the indigent are being cared for financially (for faith based organizations)
3. Public relations
- Enhancing the perception of your organization within your community
Now, the extent to which these benefits are realized will depend largely on the execution of your segmentation strategy, including when you decide to score accounts.
Front-End vs. Back-End Scoring: The two deciding factors
I believe that the timing of your segmentation comes down to two factors: (1) your organization’s mission and (2) its tolerance or aggressiveness.
Let me explain.
When Front End segmentation makes sense…
If a Health System believes that their indigent population deserve free care (regardless of whether the patient would pay for given care or not), then it makes sense to utilize a charity score to identify financial assistance cases from the point of access. This approach moves as many qualified patients as possible into their charity program.
Although this approach was not strongly embraced when I was selling these solutions 10+ years ago, I think we will see more of it (especially with the government now mandating charity care). Also, point of service scoring can help to identify potential Medicaid enrollees which can lead to additional reimbursement.
When Back End segmentation makes sense…
If a Health System is simply scoring to avoid negative PR and identifying charity cases before sending them to a Bad Debt agency, then scoring after billing makes sense. However, I strongly believe that a majority of the benefits of scoring are lost in this scenario.
Tolerance / Aggressiveness
Based on prior experiences, we know that some patients will actually pay their bills, after the first or second statement, even though they would score into a charity program.
This leads many to the conclusion that scoring after billing makes more sense. However, that’s not always the case.
In this scenario, an analysis should be leveraged to validate this approach. This analysis should compare the overall cost of billing versus what is collected. While scoring at the front end may move “self-pay payers” from paying their bill into charity care, does the cost of a score and the lost collection dollars outweigh the cost of collecting those balances?
If a Health System has an aggressive approach to managing their Self-Pay A/R, outsource vendors and overall collections communications process, then scoring at the point of service is the ideal scenario.
From my experience, organizations utilizing a score on the front end to drive segmentation and collections workflows are better positioned to move the needle by:
1. Accelerating cash flow. Prioritizing accounts earlier in the revenue cycle and refocusing the efforts of staff can influence patients to make payment faster.
2. Reducing cost to collect. Along these same lines, earlier segmentation allows organizations to take action sooner, so they can:
- Insource accounts that are “easy” to collect and reduce contingency fees
- Reduce and optimize their patient balance communications
- Reduce inbound patient calls to their business office
As I mentioned previously, there are benefits to scoring regardless of the approach that is taken. However, I believe that implementing a strategy that aligns with your organization’s business objectives requires understanding both the mission of your Health System and how proactive you want to be within your segmentation and A/R collection efforts.