Hospices are traversing complex revenue cycle management processes that can hinder their ability to thrive amid growing demand, rising economic pressures and a complex regulatory environment.

Fielding room-and-board reimbursement for hospice patients in nursing home settings represents a significant challenge plaguing hospices, according to Stephen Phenneger, president and CFO of St. Croix Hospice. The intricacies of the billing process can often create bottlenecks that stymie revenue flow, he stated.

Back-office staff spend a disproportionate amount of time on manual billing reconciliations of room-and-board expenses, Phenneger said.

“The most labor intensive and manual process in our revenue cycle is Medicaid room and board components,” Phenneger told Hospice News. “When you talk to hospice operators that’s a real challenge in managing their back office. We do need to look at some sort of Medicaid reform. Certain state legislatures have been successful in taking hospice out of being the intermediary, and we’d certainly love to see a little more light of day and to see that expand into more states.”

Complexities of hospice room-and-board RCM

Hospices make room-and-board payments to nursing homes for terminally ill patients who are dually eligible for Medicare and Medicaid. They expect in turn to be reimbursed for those payments by Medicaid.

However, room-and-board rate changes can change rapidly at regional and state levels, Phenneger indicated. Some regions may see weekly rate updates while other geographic areas experience fairly granular, regular changes. Keeping up with fast-paced changes adds complexities to billing processes, he stated.

Some states’ Medicaid programs have undergone changes that have impacted room-and-board reimbursement. California is among the states that shifted management of its safety net health coverage to private health plans. In that model, the plans would reimburse hospices for room and board. However, in many cases this isn’t happening. The changes have caused confusion among managed care plans, causing some hospices to lose thousands to millions of dollars.

Having a “strong set” of billing review protocols in place is a significant part of balancing revenue cycle management in the hospice, Phenneger said.

Internal audits can include pre-bill review or frontend auditing prior to claim submission, systematic and random reviews of electronic medical records, supporting patient documentation and ongoing quality assessments. These steps can help to ensure high billing integrity and smoother revenue cycle management, he indicated. But these efforts can “go out the window” in terms of navigating room and board reimbursement complexities that “dwarf” the hospice fee-for-service billing cycle, Phenneger stated.

Navigating varied RCM routes

Medicaid billing challenges have been mounting among hospices for several years running, according to Susan Ponder-Stansel, president and CEO of Florida-based Alivia Care.

Despite the smaller proportion of claims in the Medicaid realm, evolutions in state-based reimbursement can add huge revenue cycle management challenges for hospice providers, Ponder-Stansel indicated.

“Medicaid is a nightmare and it is about 7% of our census. So, while it is a smaller portion of our census, it requires more effort per dollar received,” Ponder-Stansel told Hospice News in an email. “We have long delays in payment even on clean claims. It takes more administrative work to get the claims processed than a Medicare claim requires, because Florida turned Medicaid over to managed care companies. You have to spend a lot more time and effort to get authorization or get your claims paid, just as is the case with Medicaid.”

Though few hospices operate on a periodic interim payment (PIP) basis, this methodology can result in greater and more consistent reimbursement, Ponder-Stansel said. PIP payments are received every two weeks, which can help to avoid cashflow issues that can come from other reimbursement avenues, she explained.

The PIP methodology involves careful claim reviews to ensure that Medicare billing is appropriate and accurate. Patient census also comes into play, with larger PIP payments associated with higher volume estimates, Ponder-Stansel indicated.

Difficulties can exist in PIP payments as census volumes fluctuate, which can complicate revenue cycle management processes, she said. Hospices that use this payment avenue often face less issues related to inconsistent reimbursement. However, PIP reimbursement can often involve navigating technical claim issues.

“Medicare is around 82-84% of our patient census, so PIP is a big deal for us,” Ponder-Stansel told Hospice News. “PIP has a lag, because it’s calculated on your average and things can move up or down quickly. Even with PIP, we are finding that our [Medicare Administrative Contractor (MAC)] is much pickier about claims, and we get a lot of denials and have to do resubmissions on many. Lots of times they are technical errors, so we can rectify them.”

Successful revenue cycle management requires investment in a hospice’s workforce, according to Phenneger.

Back-office staff education is key, as is collaboration with interdisciplinary hospice teams on how billing changes impact them, he stated.

“It’s constantly reviewing areas of risk that may or may not exist,” Phenneger said. “The other piece of revenue cycle management is that it can’t really live only in finance. It cross touches with clinical operations of the organization. We’ve implemented some regular, routine meetings between billing and clinical teams to ensure everyone is aware of the meaningful costs, obstacles and best practices of running the business.”

Systematic change is needed at both state and federal policy levels to ensure that the swelling aging population will have access to hospice services, Phenneger stated.

Recent heightened auditing activity has complicated revenue cycle management. Many hospices have undergone multiple simultaneous audits as regulators take a microscope to program integrity issues in the industry.

Hospices have come under greater scrutiny as regulators seek to root out fraud, waste and abuse. Even compliant providers may be getting caught up in the regulatory mixer, experiencing revenue cycle management issues related to audit complications. Navigating the current regulatory environment has added financial strain for some hospices, Phenneger said.

“If we have issues in billing, sometimes they have a compounding effect, because sometimes you can’t submit your next bill until a prior one is approved,” Phenneger said. “The worst thing you can ever end up with is a pre-payment review to the extent that you’re unable to get through an audit successfully, or any sort of Targeted Probe and Educate (TPE). It can take several months for a provider to get caught up.”