Billing Third-party Payers: Tips from Fayette Companies

Submitted by: 04/14/2011

Fayette Companies is a behavioral health organization located in Peoria, Illinois. With 17 sites across Peoria County, Fayette Companies provides services for people with serious mental illness, substance use disorders, and co-occurring disorders.

Among the first organizations to implement NIATx techniques as a participant in the Paths to Recovery pilot project, Fayette Companies made dramatic improvements in access and retention—and the agency’s bottom line. Since then, NIATx has become part of the organization’s way of doing business.

Fayette Companies earns the majority of its revenue from state contracts, but has also been contracting with third-party payers for over 20 years. In 2008, David Moore, vice president of quality improvement, identified a problem: third-party payer denials were high—and getting higher—and collections were dropping.

“I realized that we needed to change our culture and systems to bill effectively with third-party payers,” says Moore. When he took a closer look at the denials and collections, Moore recognized that the way Fayette Companies addressed contracts and credentialing had become fragmented and decentralized. For example, the agency had nearly lost a preferred provider contract with a large managed care organization (MCO) simply because they’d neglected to re-credential.

“Different people in the organization were dealing with contracts at different times, and we had not established any goals or metrics,” explains Moore.

Another system that needed attention was the front door process for checking benefits. “It was hit or miss at best,” says Moore. “Because we have a mix of state funding and third-party private payers, we had to make certain that the process for determining eligibility was much more accurate.”

Plus, there was little communication between the staff responsible for benefit checks and prior authorizations and staff responsible for the billing and collections. “These two silos were not talking with each other to discuss what we could do at the front door to avoid denials.”

Moore and his change team then set about gathering baseline data, identifying metrics, and establishing benchmarks for four areas: contracts and credentialing; benefits, pre-certifications, and re-authorizations; billing; collections and denials.

Contracts and Credentialing. “We first had to figure out what contracts we already had, when we could renew them, and when we could renegotiate rates.” The team also came up with uniform fees to set for all contracts and a system for gaining new contracts.

Benefits, Pre-Certifications and Re-Authorizations. The team used process improvement techniques to implement a new policy to verify benefits and request pre-certifications and reauthorizations.

Billing. Moore’s team reviewed Fayette Companies’ fee policy to make sure that fees were covering costs. Adds Moore, “All organizations will have to continue to review their fee policy regularly and revise it to address the changing reimbursement landscape.”

Collections and Denials. The key was to get the staff members doing benefits verification, pre-certifications, and reauthorizations together in the same room with the staff handling collections and denials. “Together, they worked out a way to change the way we view financial documentation at the front door as well as on-going clinical documentation throughout the treatment episode,” explains Moore.

The results of these changes? “We have been gaining revenue from appealing denials. The numbers add up quickly,” says Moore. “We have also added new MCO contracts and have more staff credentialed with existing contracts.”

Moore recommends this approach to other treatment organizations that want to reduce their third-party payer denials and increase collections. “By using the NIATx model—taking baseline data and setting goals—we have continued to improve our collections and lower our rate of denials. Our approach to managing third-party private contracts is completely different today.”

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