Hospital improves collections effort

Due to extraordinary circumstances — some avoidable, some not — Pagosa Mountain Hospital’s (PMH) Patients Accounts Receivable have risen to $858,500 over the past 14 months. According to hospital administrators, they should be closer to $300,000.

At Tuesday’s regular Upper San Juan Health Service District meeting, finance committee chair Karl Irons reviewed the district’s monthly financial report, which indicated that, through February of this year, patient accounts averaged 177 days in Accounts Receivable.

Irons said that, due to problems with Medicare and self-pay billing errors, the number has grown over the past several months. He did, however, imply that a turnaround is at hand.

At the same meeting, Mercy Regional Medical Center’s new Chief Financial Officer, Joe Pedley, said that all hospitals have billing issues, particularly new ones.

While acknowledging PMH’s difficulties, he suggested, “We’re on the right track.” He said patient accounts should be down around 60 days in Accounts Receivable in order to be comparable with “good-performing” hospitals. Pedley predicted that PMH will achieve that goal within five to eight months.

PMH Chief Executive Officer Brad Cochennet attributes difficulties with collections to lapses in Medicare reimbursements and insufficient training that led to numerous coding and billing errors.

Additionally, delays in establishing Medicare and insurance contracts, and achievement of Critical Access designation (PMH first opened as an Acute Care facility), caused further confusion among hospital personnel and Medicare.

Cochennet said that once the hospital received its Medicare ID number, it began submitting patient accounts for reimbursement under a new ID. The change apparently confused the system and delayed payments for about two months.

Since, as an Acute Care facility, reimbursements are calculated at a lower rate than those of a Critical Access Hospital (CAH), billing procedures changed when PMH became a CAH. That triggered another two-month delay in government compensation.

Meanwhile, the overall complexity of coding and billing procedures in the hands of inexperienced accountants led to faulty claims that were ultimately refused by Medicare. Too, delays in developing insurance contracts resulted in patient statements being billed as self-pay or “out-of-network.” Many of those were later resubmitted (and further delayed) or left unpaid.

Tuesday evening, PMH Director of Finance Julia White reported that the hospital has hired R.T. Welter and Associates to act as an interim billing department manager for six weeks. She said that over a 12-week period (every other week), consultants will train PMH staff in proper billing procedures, while assisting in getting “clean” claims out the door.

When USJHSD board chair Neal Townsend expressed concern as to whether system repairs were being implemented, White assured him that new job descriptions were being written and personnel training was underway. She agreed, several past claims had coding problems, but they were being corrected and would soon be resubmitted.

In fact, according to Cochennet, Medicare collections have begun flowing again, with two of the first three months of 2009 showing real promise. While February dipped slightly, both January and March drew more than $400,000 in collections overall, and Cochennet surmised that collections would exceed that amount every month hereafter.

Though system errors were certainly troublesome, Cochennet said they are now being corrected on a daily basis, while older accounts (some past 90 days) are sent to a collection agency for settlement.

Indirectly, added hospital systems will further assist in appropriate billing. For instance, a new Pixes drug dispensing system is now functional and aids in proper medication coding through digital wristband scanning. A new digital x-ray system will also be installed next week, which will increase radiology revenue, while greatly improving diagnostic procedures.

chuck@pagosasun.com