Many skilled nursing facilities (SNFs) struggle to realize adequate revenue for Medicare Advantage (MA) residents. The reasons for this leakage are frequently a result of unique contracting provisions and billing requirements for each plan that have implications for both contract management processes and revenue cycle operations. It’s important for SNFs to take a systematic approach to identifying the root causes of MA revenue loss and develop a holistic plan that addresses each of these areas. As organizations evaluate where MA revenue leakage is occurring and look to improve performance, they should consider the following.
MA Contract Management Opportunities for SNFs
Inadequate contract management infrastructure frequently limits SNFs’ ability to negotiate contracts that provide adequate reimbursement and are simple to administer. The lack of a centralized repository of contract terms and provisions frequently exacerbates any revenue cycle issues that may exist. Questions to help SNFs understand contract management opportunities include:
Is there a widely accessible contract repository?
Essential details such as effective and renewal dates, timely filing windows, appeals deadlines, payment methodology, billing codes and related rates, carveouts, electronic payor IDs, and payor contacts need to be readily available to support efficient revenue cycle operations and proactive contract renegotiations. When this information is not readily available, it can result in incorrect claims, missed timely filing and appeals deadlines, an inability to diagnose underpayments when they occur, and delayed responses to audit requests by plans.
In our experience, SNFs that have a single contract management system or structured repository that captures this information and includes appropriate reminder alerts are better equipped to support revenue cycle operations and effective contract renegotiations.
How does the organization approach contract renegotiations?
Proactive contract renegotiations typically result in improved rates and reduced administrative burden. However, many facilities do not request rate increases prior to the renewal date, thus missing an important opportunity for margin improvement. Even when organizations ask for rate increases, many do not have data in hand to support their request for changes in contract/billing terms that can reduce administrative burden.
By leveraging available data and market research, SNFs can tailor proposals to align with the priorities of MA plans. This proactive approach allows facilities to anticipate how they will be evaluated on metrics such as STAR ratings, quality indicators, referral patterns, and expense metrics. It also provides insights into network adequacy issues that MA plans may consider during negotiations, including relationships with nearby hospitals and health systems and impacts on their operations (readmissions, etc.).
To support proactive contract negotiations, SNFs first need to prioritize MA plans in the market. Plan enrollment data is publicly available and can help SNFs identify which plans to focus on. Second, SNFs should create a calendar-driven process to collect and organize data (such as utilization, case mix trends, denial and appeals history, and cost drivers) at least 120 days before renewal. Regularly analyzing denial patterns, reimbursement variance by payor, case mix shifts, and days in accounts receivable (AR) can help SNFs identify systemic issues and provide evidence to support the renegotiation of more favorable MA contracts.
Revenue Cycle Operations Improvement Opportunities for SNFs
Many SNFs have opportunities for improvement across all stages of the revenue cycle, including resident intake, billing processes and AR management system configuration, and follow-up workflows. To reduce MA revenue leakage, SNFs should identify and remediate issues in each phase of the revenue cycle by considering the following questions.
Resident Intake
Are resident intake workflows standardized?
Rework (and revenue leakage) frequently stem from failing to identify that a resident has MA coverage at intake. This leads to admissions billed to traditional Medicare, which can result in delayed payments or timely filing denials. In addition, failing to identify MA patients prior to admission can delay obtaining prior authorization, which can also increase denials.
Organizations that are more successful in reducing MA revenue leakage have consistent intake workflows that check for insurance benefits, determine prior authorization requirements, and, if prior authorization is required, provide an opportunity for approval from the plan prior to admitting the resident. This can help reduce not only revenue leakage but also costly rework.
Claims Billing
Claims billing issues in SNFs typically occur as a result of issues with AR system configuration and processes for managing prior authorizations.
Are AR systems effectively configured?
Incorrect payor identification in the billing system can result in claims being routed to the wrong payor or cause claims to be “dropped.” In addition, many AR systems have not been configured to include payment rules specific to an MA plan or contract. In these instances, bills may be dropped without appropriate edits to catch missing or inaccurate data, resulting in denials and rework that could have been avoided. For example, certain plans may use case mix group codes separate from the Minimum Data Set (MDS). In these instances, failure to update Health Insurance Prospective Payment System (HIPPS) codes can lead to claim rejections or repricing.
Like all managed care contracts, MA contracts evolve over time. Periodic audits to check payor setup and electronic payor IDs in the billing system, and to test the configuration of revenue codes based on plan level-of-care rules, can help SNFs avoid misbilling. This is also where revenue cycle management dashboards come into play. While periodic audits are an important tool, they will not catch all issues before revenue leakage occurs. However, using dashboards that track performance across all phases of the revenue cycle can help identify issues between audits so they can be addressed before creating financial challenges.
Are authorizations tracked and communicated in a timely manner?
Inaccurate or late communication of authorization details to the billing department can lead to denials and rework, contributing to revenue leakage. Failure to track authorizations for renewals not only creates a financial challenge for the SNF but could also disrupt service.
To help prevent these challenges, SNFs should put billing processes into place that track prior authorizations and renewals using automation and notifications to improve billing accuracy.
Follow-Up Workflows
Even when SNFs correctly bill claims to MA plans, it’s important that they have effective follow-up workflows. Failure to follow up on denials in a timely manner, respond to post-payment audits promptly, or correctly shift coinsurances to the patient or a secondary payor can increase revenue leakage.
Where is revenue leakage occurring because of post-claims follow-up processes?
Focusing on key areas such as revenue lost to denials, post-payment audits, and failure to appropriately bill coinsurance balances not only helps identify follow-up workflow improvement opportunities but also highlights potential changes in MA contract terms that can reduce the need for follow-up.
How Forvis Mazars Can Help
SNFs that put processes in place to address workflow gaps in contract management and revenue cycle operations can achieve faster, more accurate claim adjudication. Creating standardized workflows helps reduce retroactive corrections and MA revenue leakage and builds a better financial experience for residents, allowing SNFs to focus on providing high-quality care.
At Forvis Mazars, our senior living and long-term care professionals work with SNFs to help them fulfill their role in achieving health for the communities and residents they serve. Our team has deep experience with post-acute care provider revenue cycle process improvement and managed care contracting, which positions us to help SNFs succeed in MA through a holistic and integrated approach.
If you have questions about conducting a strategic review of your organization’s MA performance, please reach out to a professional on our team.