Don't ignore payment variances
Don't ignore payment variances
Look for inaccurate reimbursement
All home health managers understand the importance of reviewing financial statements regularly, but are you correctly reporting payment variances? Are you using these variances as a way to uncover documentation or clinical issues that need to be addressed?
An accurate report of payment variances and investigation into the cause of those variances are important tools for home health managers as they manage the financial bottom lines of their agencies, says Rodney Dwyer, CPA, senior consultant for BKD, a Springfield, MO, accounting and financial consulting firm. "You must address any payment variance to determine if the error was made by your agency or by the payer," he says.
"A payment variance is any payment that is different from the expected payment," Dwyer explains. "If there is a variance, be sure to investigate the reason," he suggests. Don't just accept the payment as correct, because you not only will miss the opportunity to recover money that is due to you, but you also will miss the opportunity to improve your documentation and billing process, he says.
"Your HIPPS [Health Insurance Prospective Payment System] code for each admission defines the payment you can expect," Dwyer points out. If your payment differs, post the payment into your system, but indicate the variance, he suggests. Then, take a close look at the claim to find out why the variance occurred.
"The most common reason for a difference in the amount billed and the amount paid is episode timing," Dwyer explains. "An agency will bill Medicare for an early episode and Medicare will pay for a late episode, or vice versa," he says.
Another common reason for variances is a difference in the expected number of therapy visits for the episode versus the actual number of therapy visits, says Dwyer. "At admission, an agency may indicate a need for 14 therapy visits, but only five therapy visits may be provided before discharge," he explains. While most billing systems will automatically adjust the expected payment to reflect the change in visits, not all of them do, he points out. "LUPAs [Low Utilization Payment Adjustment] and claims processing errors are two other reasons that usually create payment variances."
When variances are identified, research the reasons for them carefully to make sure your agency is filing claims properly, coding services correctly, and documenting care accurately, suggests Dwyer. "The best way to keep your accounts receivables accurate is to stop variances before they occur," he says.
Tips to stop variances
There are steps you can take at the beginning of each episode to reduce the number of payment variances, says Dwyer.
Make sure your episode timing is correct.
"Most home health agencies have someone in their billing or accounting department checking the Medicare common working file (CWF) to verify eligibility for service, so episode timing can be verified at the same time," suggests Dwyer.
Project therapy visits accurately.
"Include therapists in the development of the care plan, so you can better project the number of therapy visits needed," recommends Dwyer.
Even if you've taken steps to ensure an accurate care plan and claim, be sure to take these steps during the episode:
Develop a process that enables supervisors or a designated staff person to confirm that scheduled visits took place, says Dwyer. "For example, on a weekly basis, someone should check records to see if scheduled visits were made and documented in the patient's chart," he says. "Documentation is critical. If the visit isn't documented, it didn't occur, according to Medicare," he adds.
Reduce unnecessary LUPAs.
Be sure that staff members understand what visits should be included in the claim, says Dwyer. "I've seen agencies bill for only four visits, which triggers a LUPA, because the staff did not know that therapy visits could be counted," he says. Also, make sure that therapists are also accurately documenting their visits in a way that is clear to the billing department, he adds.
Accounts receivables staff members should investigate payment variances as soon as they are posted, says Dwyer. "It is better to take time to research the variance immediately so that you can re-file a claim that is inaccurately paid," he says. Based on the cause of the variance, there are several actions you can take, he says.
If the payer was correct, make an adjustment to the posted payment in your records, he says. If Medicare was incorrect for example, the payment was based on a late episode and you correctly billed for an early episode just leave the variance in your records until Medicare corrects the payment, says Dwyer.
If your investigation shows that your claim and your documentation are accurate, check your Medicare intermediary's web site to see if there are any postings about this particular type of claims processing error, suggests Dwyer. If there has been, contact the intermediary about correcting the error, he says.
When errors in documentation, projection of visits, or coding are discovered as the reason for the payment variance, be sure the clinical supervisors are made aware of the problems, he suggests. Staff education, one-on-one training with specific staff members, and review of processes might be needed to further reduce payment variances, he says.
The most important step a home health manager can take to ensure accurate payments is to have proper oversight of the billing and accounts receivables processes, says Dwyer. It's also important to remember that even hospital-based agencies must stay vigilant, because the home health billing and payments staff in a centralized hospital billing department don't always have home health-specific training, he says.
Monitoring and investigating payment variances will not only improve a home health agency's bottom line, but it also can prove to be an effective method of identifying potential improvements in the agency's practices, adds Dwyer.
For more information about identifying and researching payment variances, contact:
Rodney Dwyer, CPA, senior consultant, BKD, 901 E. St. Louis Street, Suite 1000, Springfield, MO 65801-1190. Telephone: (417) 865-8701. Fax: (417) 865-0682. E-mail: [email protected].All home health managers understand the importance of reviewing financial statements regularly, but are you correctly reporting payment variances? Are you using these variances as a way to uncover documentation or clinical issues that need to be addressed?
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