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Managing the resolution process for legacy accounts receivable

New patient accounting systems and AR in health care

The current focus on implementing new patient accounting systems is the next step in the evolution of health care. However, navigating the complexities of conversion while managing legacy accounts receivable (AR) is a major challenge. This report outlines what’s at stake and provides a practical approach to addressing the major operational and technological impacts of new account system implementation.

A strategic approach to managing legacy AR

After spending several years and millions of dollars meeting federal electronic health record (EHR) mandates, many health care organizations are now ready to transition to new patient accounting systems and decommission their legacy platforms. Understanding the nuances and balancing the need to manage historical accounts receivable (AR) data with the new systems during the transition is critical. With increased regulations related to patient privacy and billing, having a strategic approach to managing legacy patient accounts post-EHR conversion is a must.

As health care organizations embark on this transition, executives are increasingly focused on accelerating cash, mitigating revenue cycle performance risks, and identifying strategies for long-term management and access to legacy accounts receivables data. Federal and state regulations and guidelines define required timeframes for archiving patient accounting data, and it is important that health care organizations know where to access these requirements and understand the functional capabilities of their archiving system.

Identify operational impacts

Organizations need to address critical operational considerations to build a solid foundation for conversion. These include establishing a governance structure, budget, plan, and timeline and identifying resources to help drive the effort. The governance structure should include leadership representation from patient access, health information management, patient financial services, IT, the project management organization, and data analytics.

Revenue cycle leadership typically heads the legacy AR initiative and facilitates the establishing of goals, priorities, responsibilities, and next steps in advance of go-live. Many revenue cycle leaders must choose placement strategies for legacy accounts and decide whether to use internal resources, external resources or a both. To further complicate the issue, they must also select technology in which to store data and manage potential future transactions for patients with unpaid balances in legacy systems.

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Establish a timeline

Legacy AR account placements should ideally begin at least four months prior to go-live and continue monthly until three months post go-live. At this point, most aged receivables should have processed, allowing maximum cash acceleration in a concentrated period. This timeline will also enable a smooth entry into the new AR system and allow time for staff training and preparation.

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Leverage outsourcing opportunities

In-depth analysis will help identify which accounts should be outsourced and enable you to develop an outsourcing strategy. Creating a matrix that includes at least two years of patient accounting system data will provide insight into the average number of touches and average cash collected for accounts that were paid during a specified period. This helps identify which accounts, based on age and financial class, require the most work for the least cash and should, therefore, be outsourced.

Once you determine which accounts to outsource, it is important to identify potential vendors who can partner with your organization to collect and resolve legacy accounts. Issuing a request for proposal/information (RFP/RFI) to no more than eight vendors will enable you to gather comparable information from each. Careful analysis of their responses will help ensure the vendor you select can achieve maximum performance and comply with your organization’s IT protocols.

Data security is a key concern when sending sensitive patient data to external vendors, particularly in the case of agencies that employ representatives outside the United States. It is important that the vendor you select provide adequate data security, devote the appropriate staff to your accounts, has an IT infrastructure that will integrate with your systems and workflows, and provides reports to measure performance.

RFPs should be issued several months prior to the first go-live to allow time for legal and compliance review, vendor meetings and demos and finalization of reimbursement rates, logistics, system access, and credentialing. When evaluating a vendor, consider the following:

  • Past experiences with your organization or a strategic partner organization
  • Brand recognition and market credibility
  • Proprietary software or cutting-edge analytics
  • Commitment to quality and security
  • Ease of interoperability with your legacy AR system
  • Whether services are provided onshore or offshore

The AR governance committee should review the RFP responses and provide feedback and scores that can be aggregated to objectively rank vendors and identify one or two for the legacy accounts receivable initiative.

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Manage technological impacts

Archiving data is a major initiative when transitioning to a new system, and it helps mitigate regulatory and compliance risks and customer service issues. In today’s era of regulatory and payor audits, organizations should keep patient accounts open and active for up to 10 years.

Health care organizations need a data archiving solution that contains up-to-date patient account information from the current billing system and has the functionality to enable revenue cycle representatives to query the data as needed. This allows organizations to manage government and commercial payor audits of legacy accounts, reconcile payments by patients to legacy accounts, and report historical AR and collection activity.

Since activity will continue to occur on legacy accounts after the transition, it is important to work closely with IT and revenue cycle leadership to determine how to store and access legacy data. Organizations should seek a data migration process that offers a seamless transition, requires minimal resources, uses a familiar interface, and provides high security and functionality. Vendor demos will provide insight into the user interface and a detailed overview of the migration methodology.

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Migrating to a new system

Successful migration to a new patient accounting system requires organization and layers of due diligence. Establishing a best practice governance structure will help ensure the appropriate resources are in place, identify key questions to ask and outline the necessary goals to ensure cash is accelerated and potential regulatory, compliance, and performance risks are mitigated. Proactive RFP development, vendor selection, account identification, and data archiving solutions can help optimize cash acceleration, maximize cost savings and performance, and minimize maintenance and migration efforts.

To learn more about the transition to new patient accounting systems, download Managing the resolution process or legacy accounts receivable.

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