With a new chief executive officer at the helm and opportunities for growth on the horizon, one of North Carolina’s premier optometric practices saw an unprecedented opportunity to improve how it managed receivables and revenues. To that end, Horizon Eye Care focused on streamlining internal workflow to decrease days in accounts receivable and on identifying strategies to maintain current levels of staffing during this period of expansion. Among its top priorities was the adoption of claims management technology that would permit auto-posting to an existing practice management (PM)system with the goal of reducing delays and minimizing reliance on manual processes.

The Problem

Horizon Eye Care is staffed by 21 physicians and sees more than 110,000 patient encounters per year. We had relied upon a single clearinghouse since our practice was founded in 1998 with the merger of two independent groups. While the system had served us well, we became aware of one significant shortcoming as we assessed the efficiency of our billing and accounting functions: We lacked the ability to automatically post payments to our PM system.

In August 2005, when our new CEO came on board, our Patient Accounts department was staffed with six individuals who served as billers and posters. They were tasked to work receivables and perform other revenue cycle management tasks. We recognized that one way to keep costs down was to increase efficiency, automate processes wherever possible and reduce the number of full-time equivalent (FTE) employees relative to the number of practicing providers. At the same time, we wanted our staff to invest more time in value-added activities, such as collecting on unpaid patient balances and analyzing financial data to enable us to increase profitability.

These became increasingly significant goals as Horizon identified opportunities for expansion. A multispecialty practice with six locations throughout the Charlotte and Mooresville metropolitan areas of North Carolina, we were serving a growing patient base by offering a broad spectrum of services ranging from routine eye care, to refractive surgery, to remote diabetic retinopathy screening. In addition, because the average age of the population in the area is increasing — reflecting a nationwide trend — we anticipated growth to not only continue, but also to accelerate. In some ways, the solution was obvious: Horizon Eye Care needed to upgrade its technology systems.

The Solution

We began our search for an improved clearinghouse early in 2006. I provided oversight to the process, while the Patient Accounts team served as the selection committee. We involved these staff members from the outset because they had the most comprehensive understanding of our current processes and would be able to evaluate how effectively vendor-touted functionality would truly meet our needs. We also included representatives of our information technology (IT) department to provide input on how well solutions under consideration would integrate with current systems. The process, however, was driven by Patient Accounts, not by IT.

To kick off the process, we held a department meeting and asked staff members to provide us with their input about which systems we may want to evaluate. Most of these staff members either had previous experience with other solutions or routinely networked with colleagues who used different systems. We ultimately met with representatives and viewed demonstrations from three vendors (including our previous clearinghouse). The Web-based Navicure solution rose to the top of our list because it provided auto-posting to our PM system. Beyond this, it offered enhanced reporting capabilities, which would allow us to slice and dice information to improve workflow. Additionally, a highly sophisticated edits engine would enable us to scrub claims so they could be adjudicated faster. We expected to receive greater value from the new system, even though it was priced lower than the one it was replacing.

The transition from our previous clearinghouse progressed with very few challenges. Integration with our PM system was seamless, in large part because the vendor had extensive experience with the clearinghouse. Prior to go-live, we transmitted claims in a test environment to ensure data moved from our PM system through the clearinghouse and on to payers without any issues. After flipping the switch on the new clearinghouse in May 2006, the biggest adjustment we needed to make was our corporate culture. Automation required that we evaluate all of our legacy processes to discover which would continue to work well with the new technology — and which should be retooled. In some cases, we needed to adjust how we gathered information and how we transmitted it in order to maximize the benefits of automation. We asked ourselves, “Why do we do it this way?,” and sought to improve even further.

Likewise, our Patient Accounts staff needed to reconsider their own roles. Suddenly, they were not “posters,” but “verifiers.” The claims would automatically post to the system, and staff would simply review exception reports. This required them to consider their responsibilities in a new way and, in some cases, adjust how they spent the majority of their time. Because the Patient Accounts team was involved in the process, they were fully on board and understood what needed to be accomplished during the transition. In addition, they saw the benefits that auto-posting could provide.

The Results

It quickly became apparent that our efforts to re-engineer the billing and accounting functions at Horizon were very successful, and that the conversion to a new clearinghouse vendor was one of the most significant factors in that success. Staffing is the area where improvements have been noticed the most. Between 2005 and 2007, Horizon Eye Care added five new physicians and saw net revenues increase more than 10 percent. Yet, there was no need to add Patient Accounts staff. Under the previous clearinghouse scenario, we most likely would have had to hire two additional FTEs to handle the increased transaction volume. Annual compensation and benefits for each of these positions would have equaled about $45,000, depending on their level of work experience. This means we are enjoying a perpetual annual savings of approximately $90,000.

Our old system was able to forward claims only once a day. Now, Blue Cross Blue Shield receives claims three times a day, while many other third-party private insurers like United Healthcare access them twice a day.

Beyond the cost avoidance, however, we have been able to use the existing staff members in more productive ways. Before transitioning to the new system and implementing new workflow patterns, two of our six full-time Patient Accounts staff dedicated their time to posting. The other four spent approximately 40 percent of their time posting on a monthly basis. This has been decreased to two FTEs, allowing other staff to focus exclusively on revenue-generating activities. At the same time, we experienced a dramatic decline in A/R days. This figure stood at 32.5 at the end of 2005, for instance, but had dropped to 26.7 by the end of July 2008. This represents a reduction of about 18 percent.

Because payers can collect claims more frequently (our old system could forward claims only once a day), Blue Cross Blue Shield receives claims three times a day, while many other third-party private insurers like United
Healthcare access them twice a day. This means payers can process claims faster and we receive more timely payments. The reporting functionality enables us to identify isolated problems or error patterns that slow payments. We can use the reporting tools to drill down into claims, rejections and payment information, and to identify areas for improvement.

The detail that is now available to us is amazing; we can generate reports by physician or by office location, for example. In one case, where we identified a problem with how demographic information was being entered, the reports revealed to us that it wasn’t a universal issue but localized to one office, and by providing additional training, it was quickly resolved.

The edits engine likewise helps us submit cleaner claims and prevent denials, which further decreases days in A/R and improves cash flow. In addition, the new system has improved our ability to catch invalid policy identification and terminated policies before the claims are submitted to the payer. The edits allow us to be more conscious of coding issues, enabling us to closely monitor specific manifestation codes that are required with particular diagnosis codes.

We also have access to advanced lock-box capabilities as well. A number of our larger payers, such as
Medicare, have provided electronic deposits and explanation of benefits documents for some time. However, smaller payers are unable to offer this and, therefore, Horizon used our bank’s lock-box feature. This functionality is now part of our clearinghouse solution, which further enhances efficiency. Within months, we expect to reduce the staff dedicated to posting and re-deploy one of the two these individuals.

Overall, we are very satisfied with the changes we’ve made within our Patient Accounts department. Adopting innovative clearinghouse technology to automate our receivables management and posting processes paved the way for improved efficiency and better use of our human resources.

Christopher Salisbury has served as the outsourced chief financial officer for Horizon Eye Care since 2006. Contact him at [email protected].