From a single donated home, AYN has grown into a multi-location provider of services to over 3,500 children aged five to 18 years annually, with a service array that includes everything from residential treatment with 24/7 nursing to day treatment programs, outpatient services, therapeutic and regular foster-care homes, even multi-systemic therapy for the families of adjudicated children.
But few changes have been more important to fulfilling its mission of service, and more challenging to navigate, than recent changes involving AYN's clinical, financial, and billing operations.
In early 2005, AYN was taking steps to improve its clinical and business operations, but the steps weren't yet paying off, explains Jack Gossett, who joined AYN as its chief financial officer at that time. “We had just gotten new billing software (Clinician's Desktop/Revenue Manager from The Echo Group, North Conway, N.H.) and we were struggling with how to use it and how to get the most out of it. At the same time, we faced some accounts receivable problems and there were some changes on the payer side that made things more difficult.”
Payer-side changes complicate transition
Gossett notes that state mental health reforms enacted around 2006 centralized behavioral health service authorization and payment responsibilities once handled by county-based “local management entities” (LMEs) into a single statewide process handled by ValueOptions and EDS.
While this reform promised a more streamlined process for Medicaid service authorizations and payments, Gossett says that significant authorization delays were common as ValueOptions struggled to right-size its staff in the first year or so.
Then, once ValueOptions got the provider authorizations flowing, other challenges emerged since these authorizations often flowed through multiple LMEs who had responsibility for administering various childrens' services. This meant AYN personnel needed to work with personnel at up to a dozen LMEs across North Carolina to ensure that needed service authorizations could be located and obtained. When it came to billing for services for children ineligible for Medicaid, AYN personnel had to work with LME personnel again to re-create billings that would flow through the LMEs payment process.
All of those process requirements-together with dozens of other changes involving service definitions, authorizations, and payment arrangements-have had a financial impact on AYN and other providers. “At one point, our accounts receivable days reached 113,” Gossett recalls. Despite having a billing staff of five people, “We had over $4 million in receivables, with $2 million in the over-90-day category. That was about a quarter of our revenue.”
“Desperate to find more effective approaches”
“I came in as CFO at a time when AYN was experiencing tremendous growth, yet was also having some serious problems with AR,” Gossett recalls. Quickly recognizing that the situation demanded more help, he tapped Carolyn Spence, a member of AYN's clinical staff, to step in as manager of the new billing process. Spence became AYN's Director of Information Services in 2006.
“We had a billing system in place since 1993, but it was all on paper,” Spence recalls. “We would print out the paper claims and then hand them over to data entry.” At the time, she says that AYN sent about 1,000 claims per month. A decade later, as AYN grew rapidly, so too did the number of claims and the need for a much more efficient process.
“When Jack came in 2005, our accounts receivable was in really bad shape. We were desperate to find out some new approaches.” And, with a new EHR and billing system just installed, the time was right to undertake major changes.
With the help of the Echo Group, Spence says that AYN developed a financial process flow and considered process changes based on best practices used by other successful BH providers. The ultimate goal was to establish a smooth billing process that would reduce AYN's receivables and improve cash flow, based on available, HIPAA-compliant electronic billing forms.
“Early on, the hardest part was to get a sense of the whole process,” says Gossett, noting that the analysis identified a range of challenges.
Challenge 1: Get timely authorizations. All behavioral health providers struggle with service authorizations and AYN was no exception. Along with the failure to obtain proper payer information/eligibility at the time of intake, Gossett says that lack of authorization is a top reason why providers don't get paid.
AYN faced several authorization challenges-with LMEs, with AYN case-responsible staff, and with its internal processes. First, although billings for some AYN services must flow through an LME, authorizations come from a third-party, ValueOptions. Often, these authorizations ended up staying at the LME, rather than passing through to AYN as the service provider. “That was a major process issue that had to be cleaned up,” states Gossett.
Get the latest information on Business Strategy and other valuable topics at this three-day retreat bringing together treatment center owners and executives and key members of the financial community for prime networking opportunities and in-depth discussions for those looking to grow, invest and transform their business.