Improving billing and claims results

Pathways, a comprehensive care center in Ashland, Kentucky, had a collection rate from Anthem Blue Cross Blue Shield of just 3.25% for the first six months of 2011. When agency leaders saw the result, they decided to do something about it.

Together with other behavioral health provider agencies in Kentucky, Pathways joined a NIATx collaborative, funded by the Center for Substance Abuse Treatment. Each collaborative member agency would aim to improve the fee-for-service billing processes it uses with insurance companies.

Today, these processes are increasingly important. Due to coverage changes in the Affordable Care Act, insurers are expected to fund a larger share of the costs for substance abuse treatment, replacing the government grants of the past.

Four of the agencies chose to start their process improvement efforts by focusing on a single insurer, Anthem Blue Cross Blue Shield, and a single goal, improving their claims collection rate. While other agencies used different measures, all used a process recommended by NIATx to drive the improvement process.

In less than nine months, the four agencies increased their Anthem collection rates from baseline levels of just 2% to 41.8% up to 52.1% to 90%. The improved collection rates were accompanied by increases in revenue.

How did they do it?  

All of the collaborative participants used the NIATx Model to guide their billing improvement processes. The steps in this model include:

(1) Focus on key problems. Participating agencies generally focused on the need to increase collections. To keep their improvement processes focused and manageable, each selected:

•    ONE aim,
•    ONE population (clients with insurance),
•    ONE third-party payer/insurer (most selected Anthem), and
•    ONE of their provider locations.

Unlike other approaches to change that require extensive research and analysis before making any changes, the NIATx Model starts by asking three questions:

1.    What are we trying to accomplish?
2.    How will we know that a change is an improvement?
3.    What changes can we make that will result in improvement?

The answers make it easy to create an “aim” statement. For example, Pathways’ aim was: Increase our collection rate for substance abuse outpatient services billed to Anthem at the Boyd County location from 3.25% to 50%.

(2) Understand and involve the customer. Two customers of the billing process were identified—the service recipient and the third-party payer. To understand the billing process itself, then examine it from each customer’s perspective, agencies typically performed a series of “walk-throughs” (see Figures 1 and 2).

These steps and others, and the “Who does what chart” are included in “The NIATx Third-party Billing Guide,” which is available from NIATX.

(3) Pick a powerful change leader. Each agency selected a change leader to facilitate the improvement process and guide a change team that included financial, billing, and clinical staff members.

Together with the change leader, change team members used results from the pilot test and walk-throughs to identify the first change idea. The process of implementing the first change typically led the change team to the next change idea.

(4) Get ideas from outside the organization.  Providers participated in monthly calls with the other providers from Kentucky and a NIATx process improvement coach. They also attended monthly NIATx webinars, which included providers from six additional states that were working on similar process improvement projects.

(5) Use rapid-cycle testing to identify effective changes. Rapid-cycle testing involves a series of Plan-Do-Study-Act(PDSA)cycles:

•    Plan a change,
•    Do the change,
•    Study the results, and
•    Act on the results.

Each PDSA cycle evaluates a single change. Data from each change are analyzed to determine if the change resulted in improvement. After this analysis, any change may be adopted, adapted further, or abandoned.

Walk-throughs discover change opportunities

The walk-throughs helped providers identify and understand barriers to collecting payment. Findings started with the pilot test, where teams discovered billing process steps that had been overlooked, neglected, or inconsistently applied. Later, as additional improvement opportunities were discovered, agencies responded with a combination of process, policy, or training changes (see Figure 3).

Many variables, consistent results

All of the providers made dramatic improvements and most exceeded their original improvement goals. Overall, the four agencies who aimed to improve collection rates from the target insurer (Anthem Blue Cross Blue Shield) improved these rates between 12 and 88 percentage points (see Figure 4). All achieved collection rates above 50%, as well as an increase in their service revenues, which were the ultimate goal of the process improvement effort.

The other participating agencies also achieved improvements, but used different measures.

Communicare sought to reduce its rate of denied claims because its billing system (since replaced), could not separate billings and revenue by insurer. Communicare’s effort reduced its rate of denied claims by Anthem from 19.3% to 10.6%. Cumberland River Comprehensive Care, sought to reduce the rate of claims denied by Medicaid due to three common errors. It too reported positive results.

There were differences in the availability and choice of financial data used by each agency to calculate its collection rate. As a result, the results in Figure 4 are not comparable across agencies and no agency could claim a perfect 100% collection rate. However, by maintaining consistency in the data, collection intervals (collection start and cut-off dates), and calculation methods used to measure their own monthly progress, each agency was able to reliably measure its overall progress toward improvement.

Ideally, improvements in collection rate are measured as follows:  

Collection rate = Total cash collected / Total $ charged

with the Total $ charged adjusted to reflect contracted amounts (some used unadjusted total $ billed instead) and the Total cash collected inclusive of both insurer payments and co-pays collected from covered clients (some used insurer payments only). In addition, some agencies could not separate charges for substance abuse services from those for mental health.

While improvements in collection rate are the nominal goal, it is important to track revenue increases as well since collection rates can increase without increasing revenue, for example, if claims for ineligible clients are no longer submitted. An increase in revenue confirms that changes are not only improving efficiency but impacting the bottom line.

Next steps

Although the revenue increases achieved were small relative to overall agency revenue, all of the participating agencies anticipate additional revenue growth from applying what they have learned to additional locations and insurance payers.

Beyond increased revenues, agency leaders realize that their process improvement experience has resulted in greater operating efficiencies. Tom Leach, CFO at Pathways, recognized that having staff verify coverage before the billing process begins means that more valid claims are submitted correctly the first time and that time and cost for reworking and resubmitting rejected claims is reduced.

Insurers also welcome the process improvements that have been made. When agencies began tracking claims using the Availity.com website, Anthem representatives found they spent less time talking to agency billers and received fewer inaccurate or resubmitted claims.

“Helping them [providers] become more efficient billers is a benefit to us all, including our members,” noted Richelle Burress, a Network Support Senior Consultant for behavioral health in Anthem’s central region.

For more information about the NIATx Model and opportunities to participate in future NIATX collaboratives, visit www.NIATx.net.

Elizabeth Strauss, a NIATx process improvement coach since 2003, holds an MS in Industrial Engineering from the University of Wisconsin and can be reached at elizcstrauss@gmail.com. Lynn R. Posze, MA, who convened the Kentucky collaborative, is a licensed professional counselor, a certified NIATX coach, and a program administrator for the Kentucky Department of Behavioral Health. She canbe reached at Lynn.Posze@ky.gov.