Michael Zervas: [00:00:02] I had a very informative conversation with Stephen Pfeiffer, President of Encompass Health Care Data Solutions and a former Malcolm Baldrige Excellence Award winner about revenue cycle. And he gave some really good, insightful tips on how to measure the efficacy of a business unit that you might be in charge of, some real concrete yet simple ways to think about it, and to be able to measure and track how well it’s doing. And he also talked a little bit about some of the common mistakes that people make when they’re trying to buy our CRM services. And so it was really nice to have an insider’s perspective on this most important part of health care. So enjoy and get out your notepads. I think you’re going to learn a few things.
Narrator: [00:01:04] It’s time for the Health Care Huddle, simplifying the business of health care presented by Encompass Medical, devoted to helping organizations succeed with customized medical practice management services, visit encompassmedical.com today. Now here’s your host, Michael Zervas.
Michael Zervas: [00:01:31] I’m very happy today to have Steve Pfeiffer join the show. Steve is the President of Encompass Health Care Data Solutions and Encompass is a 30 year old firm providing unique solutions to health care organizations around the country. Encompass processes hundreds of millions of dollars of claims annually. And so Steven has a very good insight into the ins and outs of revenue cycle management. But maybe more importantly, in addition to that specific focus, Steve was part of an executive team that won a Malcolm Baldrige National Quality Award for their work in the health care system, and as most of the listeners to this podcast know that’s no small feat. That’s hard to achieve. And so in doing so, it speaks to Steven’s deep understanding of how to build teams to exceed goals and to meet expectations. So, Steve, welcome.
Steve Pfeiffer: [00:02:22] Thank you, Michael.
Michael Zervas: [00:02:24] Appreciate you taking the time too. I have to tell you, you’re the second guest that we’ve had that has achieved that award. So I’m going to say that we’re just getting the cream of the crop. Tell me a little bit about how is winning that award as hard as they make it seem? Is it a pretty rigorous undertaking?
Steve Pfeiffer: [00:02:44] Yeah, it’s pretty rare air, for example, with the health system down in Fredericksburg, Texas, where I was a part of winning that award. That was not the first time that they applied for the award. What they ended up doing was they frankly were not successful in a couple of temps. So what they did was specifically address the weaknesses that led to their initial failures. And one of them was, in fact, with their employee medical group engagement. So that, in fact, is where I was employed as a consultant to help them through that Auldridge push.
Michael Zervas: [00:03:22] It’s interesting because I know a little bit about your background, and I know that you did work as a consultant. You worked in health care systems, you’ve worked running practices and a lot of different capacities in that capacity. You’ve seen revenue cycle from kind of every different angle and perspective. Right. And so I’m curious, based on that overall experience that you’ve had, how can you help our listeners evaluate in our CRM team? So almost everybody that listens to this either has an in-house team or they’re purchasing those services from an outside group. Right. But they all have in common is this understanding that our CRM has the singular and unique ability to derail an enterprise, no matter if it’s a system, size or practice. So what are some of the ways that you’ve gone about evaluating the efficacy? Or you could explain to our our listeners how to think about that?
Steve Pfeiffer: [00:04:21] I think initially it really comes down to what is the data showing none of this conversation would be possible unless some type of data exists. And frankly, that may be the first red flag is if your data is either nonexistent or very weak.
Steve Pfeiffer: [00:04:37] Having limited data does not allow you to really fully flesh out whether the issue is internal. If you do your own billing or external, if you you move that to a third party vendor. The reality is it does start with the data and we’ll be speaking to much of that as we go forward today. I’m assuming, for example, the collection rate, whether it be net collections, et cetera, you know, that most fees are based off of that really is going to be the culmination of the effort. So if your net collection rate is in line with your regional or national norms, you have a fairly decent ability to assume that the rest of the operation, or at least a good portion of it, is within typical limits. If, however, you start the conversation, you find that your net collections are not within range, you’ll obviously want to dig deeper and find out why.
Michael Zervas: [00:05:34] Well, that raises two things right, because if your net collections are not within the range, that doesn’t necessarily mean you know exactly where the answer is. And let’s hold that thought about how we dig deeper. But if we go to net collections and you’re in the range, I would still argue, and I know you would argue this too, is that that still means you have to have other metrics because maybe you have the potential to be an outlier and be in the top decile and not be in the range. Right. Just being in the range means nothing’s terribly broken, but it doesn’t mean it’s working at top efficiency. So if that’s true, what are some of the other metrics that people should be looking at? Let’s talk about that reporting, because that’s the first place you have to start. What are some of the key things they should be looking at after they’re looking at their net collections?
Steve Pfeiffer: [00:06:21] I think a hot topic today is clearly denials. If the denial rate itself, the initial denial rate is within normal. Is typically 10 percent or less. Then again, it doesn’t mean that the forensic sort of exploration stops. It just means that that portion is likely not to be causing your problems. I think you stated it correctly, that even if net collections look OK, that does not indicate that you just stop and sort of high five yourself. What that indicates is you should look deeper and deeper regardless if you find problems or that you find no problem. Quite honestly, I think I spend more time looking and digging into those environments that I’ve consulted with where the initial data is strongly suggested that, you know, everything is looking OK. But frankly, there’s room for improvement in any enterprise. And for that reason, that just you sort of continue the search in other areas.
Michael Zervas: [00:07:20] So when we talk about denials, I know that you’re a big proponent because I’ve talked with you previously about this, of really understanding what type of denials that you’re getting. Right. And so there’s a stratification of the type denial type. And I think that many even third party vendors, but certainly a lot of in-house teams don’t understand or don’t go through the work that’s required to stratify all of the different types of denials because some are actionable and some aren’t. Right. And you want to know which is which to, I would think to know where to put your energy. So what are the some of the broad categories of denial? So we understand that we need to look at our net collections, then we want to look at our denials. And as we take another step further, we’re saying, hey, denial should be looked at kind of in some of these categories. What would that be?
Steve Pfeiffer: [00:08:09] You’re exactly right. Let me turn back just for a second, though, to set the stage a little bit better inside the denial environment. What you really have is it’s common to express things in terms of initial denials. However, an initial denial ultimately does not necessarily equate to nonpayment. So it’s much better to look at things sort of in categories. For example, you would have an initial denial. You may have a partial denial where something denied you ultimately resubmitted with additional info, et cetera, received partial payment. And then the ultimate in my mind is what are your zero page denials? That is where you’ve absolutely failed to collect on that particular claim.
Steve Pfeiffer: [00:08:54] So with zero page denials, it’s a much better gauge overall of indicating how successful your platform and your billing is to collecting dollars versus the initial denial rate. The initial denial rate oftentimes is wildly different than a zero page denial rate, a zero pay denial rate that sits at around, let’s say one to two percent is highly suggestive that you have a really well-run enterprise in fighting and combating some denials that either should not have been denied initially or the insurance company needed additional information.
Steve Pfeiffer: [00:09:37] And there was a breakdown, let’s say, in another area of the billing cycle. So circling back to answer your question specifically, the best places that I’ve seen really break down the denials into one of several categories, and that can be 10, 13 or more. And they would really be able to point a finger very precisely at any point along the continuum of our system. It starts obviously at the front. You know, demographics are collected when you’re a scheduling appointment. And if those demographics do not contain the elements that the insurance companies require, whether it be a group number, whether it be an identifier for that particular patient, et cetera, those things may not pass an initial sort of vetting by your fiscal intermediary or the payor themselves. The other areas that I look for are deeper into the clinical cycle. Has there been appropriate prior authorization? For example, properly structured denials will be able to precisely pinpoint where the breakdown occurred. Was it at the front desk? Was it with the nurse for prior or was it with the provider in selecting the ICD 10, for example, or a modifier? Also, the denial should clearly be able to articulate whether the breakdown was on our coding or something else downstream. So the bottom line is those are just a handful of categories that are helpful but are precisely able to be sort of identified through the denial. And that allows a course correction and conversation either with the client or internally if you’re doing the billing in-house where you can share those areas up and prevent future denials.
Michael Zervas: [00:11:29] I think that’s really important. It’s not sexy or exciting, but it’s important and it’s important because the denials are really your dashboard. A look into how the whole revenue cycle process is working. And if you set that up correctly in the beginning, i.e. the categories, as you so articulately put it, it allows us to go back at any given time and look and say, how’s the machine running? And I see an anomaly here. And so that tells me, like you said, it’s in this area or this area and then you can go in and work those processes. My experience in running organizations has been that what I call organizational drift happens all the time. You set up the greatest process and system in the world inevitably, and it takes you months to get everyone to agree and understand and set the system up. And then inevitably one patient comes through that system, whatever it is, clinical business, and there’s a one off and somehow, miraculously, the one off now becomes the new norm. And so that drift happens, it just happens. And in this denial’s is the dashboard that I think many physician owners don’t spend enough time looking at.
Michael Zervas: [00:12:41] They just assume that it’s working OK. And so I think your point is, is spot on. And I wanted to emphasize that, but I want to go back and have you a hammer home. Another point, this zero pay denial, I think is really important. And tell me if you’ve had this same experience. But when I was running a large system or a practice or a large practice or even a small practice, all too often denials would come through and they were never, quote-unquote worked. And so it was kind of we’re not going to chase it in. This was whether or not I had an in-house team or a third party team. The third party didn’t want to chase it for their reasons, which maybe you can elucidate. But tell me if you’ve encountered that same thing. And that’s why it’s so important, because you don’t know what you don’t know. Right. I don’t know when claims are being stuck in a drawer or not chased, but zero denial should give me some insight into that. Right. Am I overstating this?
Steve Pfeiffer: [00:13:42] No, not at all. I think the zero pay is a great indicator, again, of the prowess of the our system itself, whether that’s a third party or internal to really effectuate payment.
Steve Pfeiffer: [00:13:56] And for example, one of the cool metrics that I like to sort of suggest to some management and sweet people is using a ratio between initial denial and zero pay because it is that effective as sort of bird dogging how your process is efficient or not. But let me back up and sort of be a bit more specific. Let’s face it, within an RCM, we really don’t drive a significant portion of the insurance market. The insurance companies do. And I think that’s the same story for physicians themselves. To a large degree, we’re all beholden to the industry itself. And we have not had a deck that’s been stacked in our favor for for quite a while. For example, when a denial is given to us from a payer, it’s often written, as we all know, in a language that can be best described probably as from R2D2. It’s quite unclear as far as what that denial is really for. So part of what I think we’re trying to elucidate here is the fact that the best RCMs will have a process where they can take that R2D2 denial reason code and articulate it in a more clear fashion for those physicians who don’t understand denials to really understand. And what they end up doing is simply put into two buckets. Typically, this has been my experience and has been very effective. First is, is it an actionable denial or is it informational? If it’s strictly informational, that is not something that should require or get a lot of your time from your staff or yourself or your management team. However, if it is in fact an actionable denial, which means if we do something, if we resubmit with X, Y or Z piece of information, we will have this successful payment. So I think it’s in that context that it’s important to understand how zero paid denials are really a good gauge.
Steve Pfeiffer: [00:16:04] But it really stems from the fact that work must be done upfront, whether it’s proprietary or the industry itself kind of come together through our systems to identify denials first and foremost as actionable or not.
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Michael Zervas: [00:17:25] I think that’s it’s a good point you make, and I’m sitting here thinking and going back in my life experience and thinking to myself, I’m going to hazard a guess and tell me if you think I’m way out of line here. But I would hazard a guess that if we went and did an audit of every independent practice and maybe even some that our hospital owned and asked them how often or if in fact, they even running a zero pay denial report, I would guess seventy five or eighty percent of them would say they’re not maybe even higher. Do you think that’s right?
Steve Pfeiffer: [00:18:00] I think it’s certain that the majority definitely are not aware or really paying attention to zero pay. I think once you get to a level where infrastructure wise, like a health system, hospital, et cetera, they probably have people. Sure, but not likely in the group practice setting.
Michael Zervas: [00:18:20] And I’m hopeful that’s one thing that people will take away from this that you’re helping us understand is get that report and start understanding and reading it. And it kind of leads me to my next thought, though, is that so there’s this challenge, right? If I have an in-house team I’ve got an RCM director or a manager who’s running that division, and I’m trusting that they, in fact, are doing what they’re supposed to be doing. But in the same is true for an outside firm. But in point, I’m trying to make and I want to ask you how you solve this problem is that, you know, if if I got an system manager who says, yeah, I’m not chasing after these anything under one hundred dollars and the RSM company has this kind of attitude of, yeah, we chase at all, but they really only put resources on the big dollars because it’s not as efficient or effective for them to chase the small dollars. If you’re an owner of a practice or a surgery center or how do you know that that’s going on? How do you know that? In essence, yes, the zero pay denials will show me what is being paid or what is and what percentage. But how do I know that in fact and the two hundred dollars claim that we got paid 50. They’re not just saying we’ll call it good, even though there’s another one hundred and twenty five they could go chase. Right. And so I found that to be a real problem in the industry. It’s this doggedness or a lack thereof.
Steve Pfeiffer: [00:19:43] I think one of the first places that they would probably have some success looking to ensure that either is not happening. I think in the context that you presented, this would be in your allowables that you have with each of your pay or by CPT or code or whatever. So, for example, if a 99213 office visit was expecting to be reimbursed one hundred and twenty five dollars, for example, and you find that your average over a year or whatever time frame is something closer to one hundred and fifteen or one hundred and ten, you really have to step back and say what is causing that? And frankly, with something as commonplace, is that particular code. Anything less than the full allowable should be very, very rare. So, again, if you take a timeframe like a year and look backwards, you would expect near full payment almost all the time. Anything less is a clear red flag that somebody is not following up on something. And it is a high confidence presumption that it was the denial that they simply didn’t follow up. Those are real troubling for folks who own the business, like a physician, to make sure that the folks that they have working for them are in fact, looking at the nickels and dimes as much as the dollars.
Steve Pfeiffer: [00:21:05] And frankly, I would add caution to anyone who does have suspicion that the nickels and dimes are not being looked after. They need to understand that, frankly, having a process where you go after a lower dollar is not actually very time consuming. That’s part of the learning process. When you set up these environments where you have your denial reason, codes broke down by actionable, non actionable, you follow that up with the actionable ones that can be assigned to precise teams based on what that denial reason was. So a code that suggests that it was a problem at the front desk would immediately be assigned automatically with no hands on this. Where the people who created or allowed that problem to happen are the ones fixing it. So there’s a feedback loop. Conversely, if you find out that it is the physician know a send back, for example, would identify through the coding team that we probably need to either have an alternate code selected or the like. But again, it reinforces a feedback loop that we can have a course correction that doesn’t just keep getting fixed, but in fact reduces the overall denials as we go forward.
Michael Zervas: [00:22:26] So to encapsulate kind of up into this point, it starts with developing in an appropriate and robust reporting package that is delivered to key stakeholders, and that reporting package has to be then benchmarked by region or practice or some combination thereof so that there’s identifiable and mutually agreed upon target metrics. For that, we can measure performance against. Right. We should be doing better or at least as good as this group or this cohort. And it leads me kind of to now that we’ve set the stage for what are some of the specific things and in general, how you would look at an RCM system is the role of audits. And so I’m a bit I’ll tell you, I have a bias. I’m a big believer in outside audits, because if I ask the same people to do the work, to do the audit, if they’re making mistakes, they may not catch them in the audit. One would argue if they were going to, they would have caught them real time. And to some, humans don’t want to do an audit that may show that they have, in fact, been maybe not chasing as hard or as good or there’s a flaw in the process that they didn’t catch. Tell me if you’ve used audits, what you think about them and if they’re a good tool and can they be done in-house by the same people, maybe being too tough?
Steve Pfeiffer: [00:23:51] Yeah, I think to compare and contrast where your position is versus my experiences, I find great value both in internal audits as well as external. So why would that be? Internally, I think too few times you actually have a leadership proposing and having a policy that really relies on self audits. So I think that, from my perspective, is worth a tremendous amount of value is missed. If a cell phone is in fact left out, just having a chance for a coder, for example, to go back to work that they’ve done prior and look back at that, you know, not in the heat of the moment, ex cetera, provides real value in allows sort of course, corrections to happen naturally. There’s self-identified. But as you sort of go up further, the chain, obviously having audits done by managers and directors internally can very, very quickly find problems that can be corrected right away. Now, ultimately, I agree with you. You have to have some type of external participation here. And whether that is, you know, with a formal third party that does nothing but audits or even partnering with other folks in your region where you would do their audit, potentially they would do some of yours. That kind of audit sharing is not uncommon and it’s really encouraged. So for all those reasons, I find a balance of audits, both internal and external, to be the most valuable versus one or the other.
Michael Zervas: [00:25:27] And it’s interesting because it’s a great point you make about this ability to have an organic discovery of somebody’s own work process. I couldn’t argue with that at all. And in fact, one would say that a lot of data shows that if, in fact, they find the mistake themselves, it’s more likely that they’ll develop a system to avoid it in the future and stick with that system then as opposed to it being imposed. So I think your point is well made there. But I also hear quite frequently and it’s kind of tied into this next area I want to talk about, I hear and it’s counterintuitive to me that they don’t have the time to do the audit work. We’re too busy. And usually when I hear somebody say too busy because of my background in lean, that’s a red light for me. And I go, stop that mean something’s broken, right? It’s very rarely that the system is running so smooth and we’ve grown so much that the system is buckling under the weight. I’m not saying it can’t happen, but it’s not the first place I look. And so there’s this counterintuitive approach that in that I think that physicians or providers too often accept because they’re used to working hard to, that they don’t have the time. But maybe you can talk about some of the real dollars that are at play or as a percentage or maybe real dollars that when we don’t stop and look at the work or the work that we could be foregoing in, that extra dollars could hire another person to do nothing but audit in a lot of cases.
Steve Pfeiffer: [00:26:57] Yeah, I think there’s definitely a cost justification in inherent in the audit. So if you look at it only from that perspective, there’s certainly worth it. But I look at things a little bit more balance perhaps, where there’s a value in just having confidence in your team, in your assumptions that their work is as good as you think it is. So when I hear those suggestions that perhaps we don’t have time to do something.
Steve Pfeiffer: [00:27:26] Look at them very, very critically, as you just explained, for the same reasons, I think there’s good value in having a confirmation through an audit that our people are as good as what we think they are. But conversely, it’s that opportunity for improvement that you’re alluding to or additional collections that would materialize that often results. So for either reason, I think it’s justified, but combined, that’s just a real powerful message that I think you cannot ignore. One cannot ignore the fact that there is likely going to be some missed billing opportunity through an audit. For example, the recent audit that was done for a large system here in Fort Collins, it materialized several hundred thousand dollars of potential enhanced billing opportunity that was missed. That is nothing to sneeze at. Even if it’s a one or two percent sort of opportunity. That’s a real opportunity that wouldn’t have been seen prior. The flip side, though, would also be what kind of liability is identified during an audit? For example, overbilling happens. It’s OIG speaks of this frequently. And if overbilling has happened, we’re either through an incorrect code choice or whatever. There’s a liability that you have and the potential to have to return funds to that payer, either preemptively or if they find it through, take back. So there’s the opportunity to make more money, but there’s also the opportunity to identify where you’ve already been paid too much, which carries a pretty heavy penalty if, in fact, it’s seen as something that shouldn’t have occurred.
Michael Zervas: [00:29:14] It’s a great point you make because when you add them together, it goes from, you know, we just found a quarter of a million dollars in revenue and we found three hundred thousand dollars in liability that would only keep growing if it wasn’t corrected. And so you’re talking about in any given year is a half a million bucks and the audit might cost somewhere between 30 and 50 thousand dollars. And so maybe twenty five to fifty ranges, depending on how deep and complicated and statistically valid you need to make it. But and I always when I’m having these conversations, I try to turn that into a real thing for and not an esoteric number. Right. And so it’s like two hundred fifty thousand dollars is a C.R.N.A And a or six hundred thousand dollars is another surgeon on staff. And when you put it in those terms, all of a sudden it gets real. Right, because we’re sure.
Steve Pfeiffer: [00:30:08] You know, Mike, if you take a look at some of the specialties that are out there, for example, you know a lot most are based off of CPT. Right. But not all.
Steve Pfeiffer: [00:30:18] Like there’s if you take, for example, anesthesia, you know, their compensation, their payment is based off of units and time. So, for example, unless you do an audit where you may have what you find oftentimes is the number of units remain exactly the same for two completely different codes.
Steve Pfeiffer: [00:30:42] So the bottom line is what appears to be a neutral or no liability is in fact still a failure from an audit perspective, when you’re looking at things through the glasses of right and wrong, you know, was this done correctly, yes or no? And if the answer’s no, but it happens to be net neutral from a revenue standpoint or a liability standpoint, it still reflects opportunity for improvement. And those can’t be identified any other way than through an audit.
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Michael Zervas: [00:32:23] Yeah, it’s a great point and, you know, as I see practices being squeezed around the country, squeezed in terms of increased documentation burden, regulatory burdens and decreasing reimbursement, it seems like an easy kind of an easy, no brainer way to go find extra money that’s been laying there. And so I really strongly encourage anybody to make sure that they’re doing this because it’s your money, it’s their money. And if they don’t take it, the insurance companies are happy to gleefully rub their hands together and say thank you. And so you’ve done the work, you’ve invested in the infrastructure and the people and your own education. You should go and do this because I’ve never been part of an audit. Maybe you have you can speak to this that hasn’t found significant liability and significant revenue. Have you ever had one come back where you all that that wasn’t even worth the time doing it?
Steve Pfeiffer: [00:33:22] Never, in 30 plus years there.
Michael Zervas: [00:33:26] Me either,it’s why I say it’s a no brainer. It’s almost guaranteed in and it is a guarantee. It’s one hundred percent guarantee that the cost of the audit will pay for itself. And so there’s if there’s an inaction or frozenness, I’m hopeful that people will get over that hurdle and do this work. It kind of leads me to this frozenness and hurdle that I also see that I think is important. I will say in all my years of being in health care, I’d say of all the groups and practices and systems of everybody that was working with a third party vendor or even an in-house group, let me just say everybody that is doing our audit, half of them were unhappy with the results that we’re getting. Either they could see it from the reports or they had this niggling feeling in there that this doesn’t feel quite right. And I looked at some benchmarking and these numbers don’t seem right yet. Almost all of them don’t pull the trigger to make a move. So that’s my thesis. Either confirm or deny. And then let’s talk about why you think that’s the case.
Steve Pfeiffer: [00:34:31] So I think overall, I would definitely agree with that premise from my perspective. I think much of it stems back to the fact that if things are done in-house, you know, there’s this familial a sort of oversight that occurs where you never want to be too rough on anyone internally. And while that might be true, I think it’s a necessity exploration to make sure that the work that is being performed is at the highest level. What makes an audit done by a third party, to me really powerful is the fact that before the audit or before the audit is finalised, there is always a chance to interact between the professionals who perform the audit and the professionals who perform the initial work. So it is very much a peer to peer interaction. And through that process there is clearly agreement. I don’t recall a time where, you know, peer to peer, there has been disagreement at the end of an audit. There’s always a realisation that, yep, you’re right. Or you know what? We did it this way because we never had, for example, the OP not available at that moment. We only have the office notes. Whatever happens to be, we can’t forget that audits are done by peers. And if that interaction exists from peer to peer to either agree or deny that the audit, it adds a tremendous amount of weight to the result. You know, it’s not as if it’s just a one-way discussion from the auditor to those being audited. It’s always bidirectional in my experience. And because of it, that just becomes powerful.
Michael Zervas: [00:36:16] And I think that key stakeholders, people who are responsible for the decision making, are also keenly aware that if they make a change, move it from in-house to a third party or move from one-third party to another. There is these horror stories of our billing got screwed up and there was no in cash flow stopped. And so maybe you could talk a little bit about how to manage that process. If you want to move, what do you do with the stuff that’s already been built? How do you ensure that on February 1st the new company is handling the billing and there’s a clean changeover? How do you gain assurance or how would you give assurance to those practice owners who are stuck in a situation that isn’t great, but they’re kind of terrified, you know, maybe better than the one you don’t at some level.
Steve Pfeiffer: [00:37:06] There’s truth to that for sure. But as part of any transition, it’s not a light switch flicking, you know, where one day they make the decision to go with the new vendor or CRM vendor and then the next that materializes. There’s this sort of runout period for a while, that allows discovery and exploration, so, for example, when when we have a new client, we’re onboarding them over the course of typically 45 to 60 days in rare cases, longer, if that’s what they need on their site. But during that interim period, we’re already looking at their historic billing. We see what kind of volumes they have for each code and diagnosis combo. And so we’re getting tremendous insights into their prior sort of life. The cool thing is that’s the time that we get to share what we would advise and what we believe the right way to do things are, of course, it’s not going to be across the board. Nobody does everything wrong every time. But there’s clearly opportunity to identify those hot spots and sort of shore them up, put the Band-Aid on right away. So in short, what you end up doing is you use that discovery period to create your new game plan and process for how you will bill for that particular client. It gives confidence to the client that you have the discussion before it occurred. It allows training, if necessary, on behalf of the physician, clinical staff or the front desk, if that’s where some of the problems are lined. And then on a go forward, once we are, for example, billing for a new client, we are watching those hotspots and reporting on them right from the very first month. And either, yes, we are hitting this. It’s everything that we expected, you know, we’ve reduced these particular denials by X percent. So it becomes a natural, normal part of the conversation that’s transparent for both sides.
Michael Zervas: [00:39:03] So one of the things then that somebody who’s contemplating a move would be looking for would be how the onboarding process is handled by the prospective new vendors. Are they creating that Bible of we’re going to do in situation X? We’re going to do this in situation Y, we’re going to do this. Here’s our metrics that we’re targeting. Here’s what we think is realistic. Here’s the training we’re going to put in. And does that third-party vendor also do that mini audit in reviewing the voluminous data to start to see trends and patterns and be able to make recommendations? Right. So that’s the first move. But what happens to use your example of that? 45 days that you guys are quote-unquote onboarding is nobody getting paid during that time?
Steve Pfeiffer: [00:39:50] Well, I think during that onboard time is leading up to when we are officially billing for the new client. This assumption is that the past hour RCM company is still handling the claims up until the cutoff date. So it’s not that they’re not getting paid, but I would certainly say it’s likely they are not maximizing their sort of revenue. Now, they’re still using the old vendor because they’re still using the old vendor. Now, obviously, it’s encouraged for anything that we discuss that either we can share that directly with another RCM vendor. I think in my experience, we’re very collegial with each other or the client themselves can actually ask for certain things to change in this interim period as well. But that really is more of a relationship between them and their old vendor than anything.
Michael Zervas: [00:40:39] So it’s a great point, so the idea would be that this discovery and build stage is happening behind the scenes while the old vendor is still managing claims, then there’s the switch over agreed upon once all of that discovery, due diligence and process formulation has been agreed on a specific date. And then who’s handling all of the claims that were up until that point? Let’s just call use my example, February 1st or who’s taking care of the money from February 1st backwards? We know the new company starting February 1st is going to handle all those claims. What do you do with that bolus of money that’s already been submitted?
Steve Pfeiffer: [00:41:20] There’s a couple of options. Realistically, assuming your February 1st cutoff date where we would take any claims and work that, you know, materialize after the start date and the old vendor would continue working any claims right up until that. And I’ll give you a kind of a worst case example. Let’s say that a patient is seeing the very last day before the cutover. If you look at this from a calendar perspective, it’s literally within one day of when we’re going to take over. However, that old RCM vendor is going to really follow that through.
Steve Pfeiffer: [00:41:56] So it’s going to assuming that it’s a patient who has insurance, you know, it will go through the insurance process and that would be paid theoretically and in between 12 and 40 days for most and a little bit longer for other payers. And if there’s a responsible patient balance from that after the ERA, you’ll be sort of hits, then it would likely remain the responsibility through a are of the prior vendor. So those cutover dates are, quite frankly, key for both sides, both the old vendor as well as us, so that we know what our responsibility is all too often and it is fairly common. That’s why I think, frankly, that our CRM vendors do maintain really good relationships with their peers. Is there is some confusion on the payment side from the payer, from the insurance. If they, for example, send us a check as the new primary biller for a clinic or an entity. And it really was from a data service that preceded when we took over. You know, rightfully, we need to turn those dollars over to the prior billing company to coordinate sort of their payment processing and posting reconcile and vice versa.
Steve Pfeiffer: [00:43:10] If they receive a check for a data service that is on our side of the fence, they would turn that over to us.
Michael Zervas: [00:43:17] Bottom line is, it’s doable in the horror stories of no money comes in and the practice goes bankrupt. Are to me, it’s stuff of urban legend really. I just I mean, I’m not saying that you hire you have a bad RCM company and you hire one that’s bad or worse, that there isn’t going to be problems. But I mean, someone’s got to actively work to figure out how not to get any money in some place.
Steve Pfeiffer: [00:43:44] Yeah, I don’t recall any situation that’s approaching no money. There’s ways to improve, obviously, collections and rather significantly. But, you know, to use the term like no money, I just don’t think that that’s realistic.
Michael Zervas: [00:44:00] So I’m looking at the clock here and I’ve kept you longer. Normally I want to talk for 30 minutes, and I figured this would be enough to talk for 40 and we’re pushing forty five. And so I still got more questions. So here’s what I’d like to do. I’d like to see if you’d be willing to come back. I actually want to talk a little bit about A.I. and machine learning and how some of that’s being applied and can be used in practices. Not you don’t have to be a giant practice to get some benefits of this stuff and where it maybe still doesn’t work and explore that if you’d be willing to do that.
Steve Pfeiffer: [00:44:34] Oh, absolutely. That’s actually the fun side of our CRM. I am more than it is happy to continue that discussion.
Michael Zervas: [00:44:40] Well, let me do this. Let me say thanks for taking us into some of the details and actually kind of pulling the curtain back on some of the things that people can be asking for and targets that they should be looking at in terms of metrics. It’s I think it’s going to be highly beneficial. And so thank you for that.
Steve Pfeiffer: [00:44:59] Anyone who wants to contact me, please reach out to my email at firstname.lastname@example.org.
Michael Zervas: [00:45:21] That’s perfect, and thank you for your time today, Stephen, and now look to have you back and we can talk about R2D2 in a little bit more detail.
Steve Pfeiffer: [00:45:31] Excellent. Take care, Michael. Thanks again.
Michael Zervas: [00:45:45] In talking with Stephen, I was struck by some of the points he made in the nuanced approach, he had to RCM services in a got me to thinking about a few things. Over the years, I’ve seen countless provider leadership provider executives make the same mistakes when attempting to manage or buy services outside of their experience or scope of education. They tend to default into shopping only for price and as a result get less than ideal deals continuously. To be fair, buying and managing RCM services does not require an extensive high end business education. It can be understood and mastered. People do it all the time. But that mastery takes time and focus. There is a price to be paid to gain that mastery. It is not as simple as buying a car. You can’t just shop for price the active commodities in the service based solely on the prices where the problem starts. Because like much of health care, there are important nuances to revenue cycle management and in those varying shades are where the good deals are made or lost. So why does this happen? I think it starts with what we ask of our providers. We look to them to take on tasks that are complicated in detail, driven at the same time, we limit their time by overloading them with patient care and the attendant regulatory documentation. We also reinforce the idea that their ability to become providers and skill in treating patients is fungible. That in fact being smart one thing makes you smart in all things.
Michael Zervas: [00:47:15] And lastly, our health care ecosystem does not encourage people to admit they do not know that admission is seen as a sign of weakness and ineffectiveness. In an October 2019 article published in the Journal of American Medical Association, research estimated that the range of waste in our health care system was between seven hundred and sixty thousand nine hundred thirty five dollars billion annually. You heard me right between seven hundred and sixty and nine hundred and thirty five billion dollars annually. That’s twenty five percent of our total health care spending for the country to put that number in perspective. That range is larger than the annual nominal GDP of every country in Africa, every country in South America except one and most countries in Europe. We waste more dollars on health care than those countries produce in a whole year. And like all uncorrected financial issues, they happen in such a way as to make them hard to spot. They come at us incrementally over time in small, ill-informed initial decisions that accumulate over time and that inability to spot them or knowing the beginning, what the long term consequence of the decision is, where the waste happens. Collectively, we have to resist the urge to simplify complex issues down to price and allow our decision makers and leaders time that they need to focus and establish the mastery over the subject that will allow them to make good deals and eliminate waste for the enterprise in the system as a whole.
Narrator: [00:49:02] You’ve been listening to the Health Care Huddle, simplifying the business of health care for more information, show notes, guest profiles and more visit encompassmedical.com And subscribe to the podcast at Apple iTunes, Overcast, Google or wherever you get your podcast.