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Industry Insights

Importance of Source Data Reconciliation in SaaS and Technology-enabled Net Revenue Services

November 1, 2020

Optimized net revenue healthcare organizations increasingly focus on technology-enabled and/or SaaS services to capture net revenue on the margin. Many to all Medicare add-on reimbursements like bad debt and uncompensated care for example have dedicated solutions. These solutions also play a critical role in compliance in governmental reimbursement programs. These solutions use the latest cloud, security, data analytics, and machine learning technologies to consume, digest, analyze, and synthesize insights and strategies needed to know where every dollar went, why it went there, and what can be done to recover it. It goes without saying that, outside the specific technology and analytics, “data” is the driving force. Data is King!  In this regard, reconciling source data to control reports is best practice, good internal control, and can lead to net revenue opportunity when done consistently. We discuss some of these areas and a detailed example below.

Critical Data and Source Reports in Medicare Bad Debt and Uncompensated Care

Transactions and Controller’s Reports

- patient accounting transactions including contractuals, bad debt, charity, denials, administrative adjustments and payments tell the story of what happened to each patient billing from charges to zero-balance.  Reconciling these amounts to a Controller’s Report and/or summary financial statement amounts by period ensures no data is lost.

Medicare Detailed PS&R and Summary PS&R

- organizations are increasing utilizing a Medicare detailed PS&R and/or comparable internal report to ensure that the entire population of Medicare claims is understood and reconciled annually.  Every identified Medicare bad debt dollar, for example, is worth 65 cents on the dollar when recovered through the cost reporting process.  Reconciling the detailed information to Summary PS&R data by year, by report type, is a critical step in this process.

Collection Agency Data and Bad Debt Trial Balance

– patient accounts and data move frequently in a typical health system revenue cycle.  Between internal processes, early-out vendors, and first collection and second collection agencies, there is ample risk for accounts to be “lost” or duplicated in many systems.  The bad debt trial balance is a monthly scorecard that details the buckets of post-internal collection efforts.  Reconciling to collection agency control reports monthly to quarterly utilizing a beginning, ending and transactions balance check will ensure full accounting.

Recent Reconciliation Example Leading to Net Revenue Opportunity

F2 utilizes these practices in most to all that we do. A recent detailed example highlights the importance of diligence in chasing down variances that develop. This example focuses on the Medicare Detailed PS&R (DPSR) and Summary PS&R (SPSR). In optimized Medicare bad debt and uncompensated care environments, the DPSR is an anchor report paving the way for full reconciliation of all Medicare activity. Within the DPSR, the Report Type under which claims are adjudicated is key to determining reporting within the cost report and in determining allowability. In the Medicare outpatient area, most claims are processed under APCs and paid under report type 13P. Fee schedule claims (labs, therapies) are paid under report type 135.  13P claims are allowable Medicare bad debt.  135 fee schedule claims are not.

In a recent 10 hospital Midwest healthcare system example, all revenue center code 636 DPSR activity for 1 of 5 fiscal periods was reported as report type 135; non-allowable.  All other periods reported this revenue center code 636 activity as report type 13P; allowable.  In the reconciliation, the DPSR 135 report type was $2 million higher than the comparable SPSR due to mis-reporting in the DPSR data received.  The underlying source DPSR data needed to be corrected to properly label the activity as report type 13P (allowable) before final load to the processing environment.

Had the information not been reconciled to the SPSR and the source data correction made, the $2 million in deductibles and co-insurance, and any associated Medicare bad debt, would have been flagged as non-allowable.

This is one detailed example of the importance of source data reconciliation and correction that could lead to large net revenue leakage if not corrected.  In summary, most SaaS and technology-enabled solutions are only as good as the data going into them. Solid internal controls should include control reports and/or back-end analytics to highlight instances where differences from control totals exist.

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