As the Patient-Driven Groupings Model (PDGM) is approaching, organizations are currently focusing on how it will impact revenue cycle functions. To prepare financially prior to PDGM’s implementation date of January 1, 2020, home health organizations can focus on cash collections to be prepared for any loss or delay in cash flow due to the significant changes under the new model and identify risks that could cause potential delays across the revenue cycle. There are three strategies organizations can focus on to increase cash flow prior to the implementation of PDGM:
- Manage accounts receivable aged over 120 days
- Tackle unbilled accounts receivable
- Create and utilize financial dashboards
Manage Accounts Receivable Aged over 120 Days
Prior to PDGM, organizations should place a focus on aged accounts receivable, specifically anything aged over 120 days. Managing accounts receivable is one of the most important financial components for any home health organization and placing a focus on AR aged over 120 will assist greatly in generating cash flow while decreasing accounts receivable altogether. This will also assist in identifying any potential payer or process issues. The recommended percentage of AR aged over 120 days for any home health organization is 10-15% of total AR. This will allow them to collect on aged accounts to increase cash collections prior to January 1, 2020. Resolving accounts aged over 120 days will also assist in the overall stance of the organizations’ accounts receivable.
Tackle Unbilled Accounts Receivable
Additionally, organization can focus on handling unbilled accounts receivable now as this is another way to increase cash flow by identifying claims that are able to be billed. Organizations could outsource or increase staffing to focus on identifying outstanding documentation, types of pre-billing errors, and other components affecting unbilled claims from being billed. Ultimately, this will assist in the overall position of an organizations’ unbilled, while increasing cash collections prior to the implementation of PDGM.
Create and Utilize Financial Dashboards
Lastly, organizations can create dashboard reports to monitor several financial metrics including cash collections by AR and payer. This can help agencies track and identify trends, identifying payer-related issues, and possibly forecast cash collections prior to January 1, 2020. This will assist in determining what metrics agencies should prioritize to potentially increase cash collections. The table below shows the recommended metrics and the frequency these reports should be created:
In summary, working to ensure no more than 10-15% of an organization’s total AR is in the 120+ bucket, focusing on accounts in the unbilled AR bucket, and creating dashboard reports to monitor cash collections and AR by payer, can help to create a “cushion” for organizations prior to PDGM, as there are expected delays across the revenue cycle with Medicare’s PDGM reimbursement changes.
McBee Solution for PDGM Cash Acceleration
McBee has specific solutions to keep the cash flowing through your organization while you prepare for PDGM. These solutions include:
- Eliminating backlogs and bringing receivables up to date
- Identifying missed revenue, correcting claims errors, and resolving problem accounts with no disruption to your organization’s daily operations.
- Utilizing your existing accounts receivable system or employ our secure proprietary collection system
Want to learn more on PDGM’s impacts? Our page “PDGM – Resources and Insights to Help You Prepare” has all our clinical, operational and financial resources to help https://mcbeeassociates.com/insights/pdgm-resources/you understand and prepare for a seamless transition to the new model.