In this episode, we are joined by Angela Horn, Vice President and Corporate Counsel at DCM Services, to discuss the implications on revenue and reimbursement when a patient passes.
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Highlights of this episode include:
- Background on DCM Services and how they work with providers to create and implement specialty revenue cycle strategies such as estates and bankruptcies.
- Details on how the estates of deceased patients can affect reimbursement.
- What proof do auditors require when identifying an estate of a deceased patient.
- Advice for CFOs or VPs of Revenue Cycle on how their facility can better focus on these issues.
- And more…
Mike Passanante: Hi, this is Mike Passanante. And welcome back to the award-winning Hospital Finance Podcast.
When patients pass outside of the hospital facility, there can be implications for reimbursement and compliance. To help us understand more about this, I’m joined by Angela Horn, Vice President and Corporate Counsel at DCM Services.
Angela is a nationally-recognized expert in the area of probate and claimants’ rights. She frequently speaks to regional and national organizations, including national and regional HFMA venues.
Ms. Horn has written articles and had been interviewed for national publications including HFM, Credit & Collections Risk, Fierce Health Finance, Healthcare Finance News, Long-term Living, and Becker’s Hospital Review.
Angela, welcome to the program.
Angela Horn: Hi! Thank you, Michael. A pleasure to be here.
Michael: So Angela, your company works with health systems and other providers to create and implement specialty revenue cycle strategies such as estates and bankruptcies. What does that mean in just a few words?
Angela: Sure! Michael, that means that we work with, for example, a health system to put in place technology that can proactively identify all their patients who pass outside the facility. It’s a simple thing that can be thought of as a first step which helps avoid fraud and avoid less than an optimal what we call at DCM a survivor experience. It’s kind of analogous to the patient experience that most people are familiar with.
By removing items from traditional debt collection in that world and putting them in a position to collect the money directly from probated estates, non-probated estates and trusts—which are very time-sensitive creatures. So, proactively identifying folks who passed is really important to that. We help our clients set up processes specifically to locate probated estates and file or present the right claim package which can be a challenge because probate courts are found oftentimes at the county level (but sometimes in the city level) and populous counties may have multiple physicians.
There are 3450+ courts in the US. And each of them have different rules in terms of what the claim package looks like. And with any given estate, any given decedent, we find that an estate can open over time. And it can also open somewhere in about 15% to 20% of the cases other than the last suggested record that our client has.
So, searching for estates anywhere in those 3450 different locations over the course of several months (and sometimes, several years) is a challenge that we work with them to meet.
And then, for some of our clients, we actually help them collect the revenues from those estates. And for others, we help them design programs that they can manage internally to do their own collection.
And with the bankruptcy specialty retrieval, it’s a similar path—the difference would be that you’re following federal law and there’s less differentiation from one court to the next in terms of forms and procedure.
That’s the nutshell version.
Michael: Great! No, that’s great. Let’s unpack some of that a little bit. So, the areas where you and your company focus as part of the revenue cycle, specifically probate and bankruptcy. Would you say that’s niched? Is that something that most health systems have in place or not?
Angela: That is a great question. If you had asked me 10 years ago, I would’ve said no. And I can’t say it’s owing exclusively to our evangelism and education in the space. But today, the answer is more and more, increasingly yes.
And I think the reason—again, beyond what we’ve tried to do to educate the industry—is really a result of the confluence of a number of factors—you might even call it a perfect storm—that are financial and demographic in nature.
And what those things coming together have done for the healthcare industry is such that every health system that what you thought was a nice to have, this estate revenue, years ago (a rounding error, you might’ve been wrong) today is really an essential part of overall fiscal health for an organization. It’s become that big.
So, a funny anecdote that reminds me of the topic is that, 10 years ago, I gave one of my first lectures to the healthcare industry on this topic, and I’m speaking to Connecticut HFMA. It was my first time really letting it sink in that I was talking to a group of professionals whose job it is to prolong life and increase the quality of life and folks in the healthcare industry. So, when I started talking about estates, there was sort of a collective gasp among the audience.
And we’ve since overcome that challenge and recognized that challenge, but it’s been a long journey.
And where we’re at today because of those demographic trends—which I’ll just mention briefly. They are things like the aging of America, one way to refer to it, the fact that you have a huge population bubble moving into the over-65 category—which the CDC tells us 70% of people who passed come from that category. You have that happening.
The second thing you have happening is that post-ACA, post-Affordable Care Act, you had plans that had higher deductibles, your co-pays. And finally, you have a trend that has kind of continued as long as I’ve been paying attention (and many others have been) which is end of life care cost continuing to go up.
I’ve seen some studies say that more than 70% of lifetime healthcare expenditures (all the money that your average American patient is going to spend on healthcare) comes in the weeks and months before he/she passes.
So, that’s that perfect storm that I’m talking about. And that’s really what I think has turned the tide from what you might call a niche and just a few really smart providers putting together a strategy. Today, what we see is that the provider, the health system that doesn’t have a strategy has become the person on the outside looking in.
Insofar as, for example, we work with more than half of the top 50 health systems to find that patient revenue and more than 150 others of various sizes. This again is becoming more of the norm.
Michael: So, let’s dig in a little bit around estates and how they affect reimbursement. Can you explain that to our audience in a little more detail?
Angela: Yeah, it’s not a natural and curative thing, but it’s a beautiful thing in revenue cycle when you find out that you kind of win and win.
So, what I mean by that is that, when you collect from an estate of course, that’s a win, right? That’s bad debt that doesn’t have to be written off. That’s essential revenue which oftentimes is in the millions. This is that idea that it’s not a rounding error anymore because of that perfect storm. We’re talking multiples of millions from those health system.
But that’s the money that you can collect from the estate. But you can also collect as much, if not more, than those millions that I’m talking about annually from the state in the case where there is no estate. And that’s because of reimbursement.
So, anything that’s eligible for reimbursement relating to a decedent (a patient who’s passed), CDC and federal law has said that a provider is required to search for an estate and document those estate searches in real-time and be able to produce them in the context of an audit, so that they are then entitled to a reimbursement.
It goes back to the federal law that says that, for any bad debt, you have to otherwise be eligible. You have to prove that you have bonafide collection effort. And you have to prove that, at the end of your efforts, the debt is actually worthless and there’s no likelihood of collection in the future.
And all of those things then make you eligible for reimbursement.
What CMS has, an auditor, have interpreted that to mean in a decedent context is the patient who’s passed requires a search for an estate. You search for an estate, you present the claim, you file the claim, you’re entitled to payment from the estate.
In the case where there is no estate (you’ve searched for it, you have proof that told you there’s no estate), that then is eligible for reimbursement.
This is something that has been on the rulebook, in the Provider Reimbursement Manual and codified in the federal statute for literally decades. And we have only, in the last few years, seen our clients coming to us saying that they are being audited for this requirement. But guess what? The trajectory has gone through the roof.
So, one of our clients came—gosh, I want to say this was almost 10 years ago. And they became sort of the canary in the coalmine in the sense that they told us they are being audited. We have never heard of anybody being audited for this requirement. And guess what? Last year, we had 30 clients for the first time come to us and say they are being audited. And so then we help them provide the proof that yes, indeed, they did search for an estate and the court did tell them there was no estate.
What we’ve seen from auditors in terms of what is sufficient to prove that is typically in contrast to “just sort of taking someone’s word for it,” or using some sort of algorithm to assume there isn’t an estate, it’s really just about putting in place a mechanism to search for estate and a mechanism to document those searches in real-time such that you’re able to produce that in the context of an audit.
We help our clients do that. But that’s something that’s increasingly going to be a concern for any health system.
Michael: And what do the auditors generally require as proof?
Angela: So, that was kind of what I was alluding to earlier—which is that, historically, I think a lot of health systems would say, “If nobody called us or sent us a letter saying, ‘Hello, there is an estate here’ and ‘file a claim here’ and ‘here’s the case number,’” that they felt justified in assuming there was no estate.” And what auditors have said (and what CMS have said) is that that’s not sufficient.
There are two things really that they require. One is that the answer, “No, there is no estate,” come directly from the court. The other is that there is real-time proof recorded of the court’s statement.
And so, things that they’ve rejected in the past are statements from a family member saying there is no estate, the reliance on an algorithm or silence (you know, not getting any notice of an estate) to mean that there is none.
So, they haven’t been super specific in terms of exactly what kind of proof, but they’ve given examples. Auditors have given examples—a letter from the court, a phone call to the court that is recorded in real-time, some other indication that comes directly from the court that there is no estate has typically been found to be sufficient proof.
Michael: Okay! So, as you’ve mentioned, some hospitals are perhaps already on top of this issue; others, maybe they haven’t looked at it yet or they’re trying to figure out what their strategy is.
So, if you were to talk with the CFO or the VP of revenue cycle that really hasn’t focused on this in the past, what advice would you give them?
Angela: Sure! Well, that’s a very good question. As a very first step, I guess I would do what we typically do which is, if I’m VP or CFO, I would turn around to my PFS team (which is typically the people that I find are managing this type of accounts or episode of care) internally at organizations. I would go to those folks and I would say to those directors and managers of PFS, ask them, what are they doing today.
So, a good place to start is just where we started with our discussion which is ask them how they identify patients who pass outside facility. It’s no stroke of genius to know when somebody passes in your facility. The table stake would be that you flag those appropriately and treat them as such. But the challenge becomes then finding folks that passed outside facility because, as I’ve alluded to earlier, if they don’t have a strategy, they don’t have a technology or tool, to help them identify those folks, they are not finding out typically for weeks and months. And that puts them in a position to be vulnerable to fraud and also to miss out on their otherwise estate revenue or trust revenue opportunity that they’re entitled to.
So, if you hear that from your PFS folks that the way that we find out about people who pass outside facility is, in the case, every once in a while, when somebody calls in and tells us that the decedent has passed, if somebody sends us a letter saying patient guarantor has passed, these are very common responses, and you can be sure then, if that’s the answer, that they are not timely identifying those folks that they should.
And so, just to kind of follow that same trajectory, another question that you want to be asking would be, from there, once you find out that someone has passed or that they passed outside the facility or you have some other tool to identify them, what happens next? It’s very good to ask an open-ended question because you never know what you’re going to get, so to speak.
And if the answer is we just close them and write them off, we don’t do anything to try to capture that estate revenue, that is not an uncommon response (again, just like the earlier one). So you hear that and you know immediately that there is opportunity.
Again, as I’ve said before, a lot of people who don’t have a strategy think we’re talking about a few thousand dollars. We’re actually talking about multiples of millions for most health systems—multiples of millions coming directly from the estate, and then correspondingly, multiples of millions that they need to learn how to protect from any potential audit in terms of reimbursement.
So, following that breadcrumb trail from what they do when they find out, we can also ask questions about, for example—let’s say they completely just write off those accounts and they capture nothing, that’s one answer. They might say that they try to find probated estates. And oftentimes, they do so in manual processes that are kind of limited, maybe they searched only at one time, maybe they searched only for higher balances. Those are all indicators that there is opportunity because, again, estates open over time, searching one, you’re going to miss the majority of the space. If the manual process becomes too costly, which oftentimes it does, and you’re missing out on a huge amount of opportunity. And again, you’re not in compliance with the CMS requirement.
We would want to ask—again, if I met the CFO or that VP of rev cycle, I’d want to ask, “What are you guys doing to collect money from non-probated estates and trusts as well?” We can find that that’ll be oftentimes as much of a revenue opportunity as the formerly probated estates, and sometimes even more.
Those are three good questions to ask as the place to start. And honestly, for the bankruptcy specialty revenue cycle that we manage as well, or help our clients manage, it’s kind of a similar set of questions, right? How do you identify them? And when you do identify them, what happens next? You kind of go from there.
Michael: That’s great information, Angela. If someone wanted to learn more about you or your forum, where can they go?
Angela: They can go to www.DCMServices.com. They can contact us at 612-243-8400. They can contact me directly at 612-384-6210.
And they can also find our technology at www.ProbateFinderonDemand.com as well.
Michael: Angela Horn, thanks so much for joining us today on the Hospital Finance Podcast.
Angela: Michael, thank you so much for having me.