Develop a timeline, assess your resources, and tackle legacy A/R aggressively
Whitepaper | Giliane Poole
Executive Director of Revenue Management
Giliane leads service delivery for patient liability and revenue management at Change Healthcare. She has extensive RCM knowledge and experience managing hospital and physician revenue cycle functions.
Tackling A/R Wind-down
Whether you’re upgrading your current revenue cycle management (RCM) solution or introducing a new one that’s part of a larger health information system (HIS), the transition can be bumpy, especially if you haven’t planned for how to handle A/R inventory while you migrate from one system to another. Without proper planning, you may see significant cash-flow disruptions and unnecessary write-offs, not to mention increased staff frustration as confusion mounts and delays occur.
There are many moving parts associated with A/R wind-down projects, and it can help to view the various activities across a timeline to clearly identify when certain tasks should start, continue, and complete.
Best Practice Recommendations
12 Months Prior to Go-Live: Health System Planning
To lay the foundation for a seamless RCM/HIS system transition, it is critical to kick off an A/R wind-down project at least a year in advance.
Things to do during this phase:
First and foremost, you need to define project goals. A crucial step in this process is to ask what exactly is changing. Are you switching to a whole new RCM system or just implementing some key elements? What are the potential impacts of these changes on your A/R? What do you hope to accomplish and by when?
Along with the abovementioned tactical questions, you should also consider whether you will seize this opportunity to revamp underperforming collection processes. Migrating to a new system or undergoing a significant upgrade offers a prime opportunity to examine current processes to see where they have become unproductive — and to identify changes that will create the most impactful improvements.
Although you may already know areas that could be more productive (e.g., self-pay collections, payer interactions and processing, and payment posting/ reconciliation), it may be beneficial to have a neutral third party evaluate existing systems to spot possible improvements you may have missed.
Deciding on a project lead is also important at this time. This person or group of people will own the A/R wind-down project and be responsible for moving it forward. Depending on your organization and the project’s size and scope, the lead may be a single individual, such as a revenue cycle director, or a task force made up of key stakeholders, including A/R management staff.
After project goals and leadership are set, you should assess the current state of your A/R. This allows you to understand where your revenue is being held up and where you may not have the resources to address any backlogs. For example, if you’re seeing high levels of aged A/R, especially A/R >365 days, an assessment could point to the need for additional resources to get the outstanding revenue in check prior to transitioning to a new system. While it may seem a little early for this review, if you have a relatively consistent census, your A/R aging balance mix will most likely remain consistent over time. By assessing the mix well in advance, you can start planning early on how to address it.
Questions to ask during the assessment include:
- What is the anticipated volume of aged A/R that must be collected prior to go-live?
- What is the collectability of aged A/R?
- What will it cost to properly collect all aged A/R?
- Is it worth spending resources to collect the aged A/R? Or is it better to write it off?
- What are archival and storage options of legacy A/R data and records?
- Will existing staff be able to manage working in both the old and new systems?
- Will you need to supplement with outside resources?
To accurately answer these questions, be sure to involve all stakeholders in the assessment, including revenue cycle staff tasked with A/R management. Asking about further concerns upfront can also help anticipate possible roadblocks.
During this time, it will become evident whether your organization has the experience and resources to handle the planning and project design on its own or whether you need a partner. There are some risks with going solo for A/R wind-down project design. Details matter in the planning process, and for this kind of initiative, there are a lot of details. If you don’t allocate resources sufficiently or your schedule is overly ambitious, you could be setting yourself up for problems, especially if there are critical tasks at risk of being overlooked. That’s why it can be beneficial to bring in an outside expert to help create a transition plan, review an existing plan, and/or supplement a plan with additional resources.
8-10 Months Prior to Go-Live: Define the Scope of Work
After the assessment is complete, you will be able to define a scope of work more clearly. This will then launch other key activities that will enrich the planning process even further.
Things to do during this phase:
Now is the time to figure out the resources you need to address legacy A/R and whether you have the right number and type of staff available to handle the work. Note these resources are different from those used to plan the project. At this point, you want to figure out whether you have enough A/R professionals at your disposal to simultaneously manage A/R wind-down and tackle accounts in the new system. The more you can precisely quantify what it will take to address legacy A/R, the more you can plan for, budget for, and allocate the necessary resources—even if it means bringing in an outside entity.
To get a sense of resource requirements, conduct time studies to quantify how long it takes to resolve different A/R scenarios. These studies will help you understand the lift involved in cleaning up A/R. You may also want to conduct a risk assessment to understand the timeframe in which you must have the inventory resolved as the timing will also affect the number of resources needed.
Once you have a clear idea of what’s required, you can flesh out a reasonable timeline and communicate with all stakeholders, so everyone is on the same page.
It’s also important to set a realistic project budget and agree on where to prioritize funds. As part of this effort, be sure to engage in contingency planning and coverage for any ‘drift’ or delay in a scheduled transition. If you think you’re going to work with an external partner, it’s helpful to weave in some flexibility there as well, so you can be confident you’ll have the support you need when you need it.