converting your lab’s test claims into cash · 9) know your structure 8) know your managed care...

Converting Your Lab’s Test Claims into Cash: Best Practices, Worst Practices, and Lessons from Labs that Consistently Collect the Most Money

Brian Kemp Vice President Laboratory Operations McKesson

May 3, 2017

Purpose: Arm lab administration with the tools to effectively position their lab to optimize reimbursement.

•  At the conclusion of this presentation, you’ll be able to:

•  Identify how elements such as NPI, Tax ID and Taxonomy interact

•  Understand the importance and basics of evaluating your geographic market

•  Understand the importance of monitoring your metrics

Learning Objectives

McKesson Corporation Confidential and Proprietary 3

Top 10 Ways to Convert Cash

5/3/17 McKesson Corporation Confidential and Proprietary 4


10: Understand the Drivers of Cash

McKesson Corporation Confidential and Proprietary 6

9: Know your Structure

Tax ID

NPI

Specialty

Claim Form (UB v. HCFA) Managed Care

• Segregates Remittances • Defines PAMA reporting

• 69 defines a clinical laboratory

• Non 69 becomes problematic

Key Items to Note:

•  Expiration dates

•  Covered services

•  Carve-outs

•  Preferred v. non-preferred status

•  Payments tied to CMS CLFS (and corresponding PAMA impact)


8: Know your Manage Care Contracts


7: Know your Niche

Demographic

Geography

Referral Source

Test Menu

Hybrid

Learn more than your share; assess the market:

•  Who is your competition? •  Why do practices choose your lab?

•  Why do they choose your competitor?

•  How can you better target your message?


6: Know your Market Share

Key Contributor’s to Client P&L • Volume: look for trends of increase

or decrease •  Test Mix: watch for client’s who

cherry pick your lab for “hard” cases • Payer Mix: how well are you paid

relative to your total practice • Clean Data: both demographic and

DX completeness and correctness


5: Know your Customer’s Profitability (to you)

1. Start with Charges 2. Expect a Collection Rate 3. Understand how cash

comes (relief) 4. Gauge performance


4: Create Cash Expectations 1

Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16

Total Gross Charges $100,000 $125,000 $90,000 $98,000 $102,000 $115,000

2 Collectable % 25% 25% 25% 25% 25% 25%

Eventual Gross Collections $ 25,000 $ 31,250 $22,500 $24,500 $ 25,500 $ 28,750

3

Cash Relief Table

0-30 $ 3,750 $ 4,688 $ 3,375 $ 3,675 $ 2,825 $ 4,313

31-60 $ 15,000 $18,750 $13,500 $ 14,700 $ 15,300

61-90 $ 3,750 $ 4,688 $ 3,375 $ 3,675

91-120 $ 1,500 $ 1,875 $ 1,350

121-150 $ 1,000 $ 1,250

Expected Collections $ 3,750 $ 19,688 $25,875 $23,363 $ 24,775 $ 25,888

4 Actual Gross Collections $ 2,000 $ 16,000 $30,000 $24,000 $ 25,500 $ 25,500

Variance for Month $ (1,750) $ (3,688) $ 4,125 $ 638 $ 725 $ (388)

Variance % for Month -47% -19% 16% 3% 3% -1%

Top KPIs to Help Optimize Collections AR Health •  AR % >120 days •  Days Sales Outstanding (DSO)

Collection Efficacy •  Gross Collection Rate •  Collections/ Procedure •  Bad Debt %

Charge Capture •  Clean Claim % •  Charge Lag


3: Establish KPIs

Key Elements to Auditing • Choose a reasonable (and random)

sample from requisitions • Review detail against each stage in

the process •  Charge capture •  Claim filing •  Claim adjudication •  Payment receipt •  Final disposition

•  Feedback loop on findings


2: Audit (periodically)


1:Learn to Count

10) Understand what drives cash

9)  Know your structure

8)  Know your Managed Care Contracts

7)  Define your market

6)  Know your market share

5)  Know your clients profitability to you

4)  Create business expectations

3)  Establish KPIs to reinforce expectations

2)  Audit

1)  Learn to count


Top 10 Ways to Convert Claims to Cash

Questions?


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