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Critical Checklist for Hospital Mergers & Consolidations

April 30, 2020

This month we continue with our Top 10 Insights into Medicare/Advantage Bad Debt.  For previous Insights check out back issues of our Blog Posts.

Working in the technology-enabled services space with close to 100 hospitals and health systems nationally, F2 has seen many issues arise in the Medicare Bad Debt, Medicare Advantage, and Uncompensated Care areas when organizations come together in a merger/consolidation.

People, Process, and Technology are obviously key.

In this Insight, we share a checklist to assist healthcare leaders and their teams in their integration efforts.

  1. Aligning Medicare Bad Debt Internal and External Teams – the MBD team typically includes business office, finance, reimbursement, managed care, and, frequently, external resources. The roles and responsibilities of these resources can vary significantly across organizations.  Clearly aligning these teams is a critical first step.
  2. Standardization of Policies and Procedures (P&P) – with teams in place, updating P&P’s and clearly communicating them should lead to clear roles and responsibilities. A comparison of P&P’s across organizations can frequently have the impact of bringing best practices of each organization to the table.
  3. System Conversions – the system that drives people and P&P plays a critical role in the annual MBD process. As documented by F2 in other Insights, system conversions are a leading issue in under-reporting Medicare Bad Debt.  Ensuring that people and P&P’s understand new transaction codes, collection agency transfer practices and how annual MBD reports are prepared should be documented and tested to ensure comparable year over year results are achieved.
  4. Selection of SaaS and Technology-enabled Services to Support Medicare Bad Debt Analytics and Reporting – many organizations utilize a SaaS or technology-enabled service as part of their annual Medicare Bad Debt plan. The selection of these two different approaches heavily influences the team and processes.  SaaS relies upon more internal resources to complete annual processes.  An outsourced technology-enabled service requires fewer internal resources (particularly in the business office).
  5. Addressing Collection Agency Issues – outside system conversions, the “issues” on Medicare Bad Debt related to collection agencies are numerous. Agency hold periods, changing collection agencies, addressing agency inventory and monitoring agencies for MBD purposes are a large component of an optimized MBD operating model.
  6. Charity Care Reporting Policies and Procedures – documenting the various levels of indigent/charity care at each organization and whether they are/are not claimed for Medicare Bad Debt and what the underlying support in terms of P&P’s are is critical.
  7. Addressing Fiscal Intermediary (FI) Notification(s) – a frequently overlooked issue is the point of contact for FI notifications. Who is notified for desk reviews/audits and other correspondence should be documented and changed soon after teams are aligned.
  8. Integration of Medicare Bad Debt with Uncompensated Care(UC) Reporting – the P&P’s of each organization can significantly impact uncompensated care reporting. Instances where MBD may be written off to contractual allowance codes or maintained for tracking purposes on a bad debt trial balance after agency return should be clearly understood as to impact on UC reporting.
  9. Medicare Advantage Contract Reviews – if MCO contracts will be consolidated to a system contract, this is a great opportunity to push for language with Medicare Advantage payers to include reimbursement for many items including bad debt. Advantage comprises a significant and rising percentage of the Medicare business and inclusion of traditional Medicare reimbursement components is a bottom line difference maker.
  10. Medicare Bad Debt Review – all of the suggested items for Medicare Bad Debt can be a bit overwhelming and the impact of lower prioritization of these items is typically not seen for many years post-merger. Engaging an independent organization to align and optimize these issues can have higher return on investment (ROI) than anticipated.  Action on these items can lead to more cash flow more quickly.

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