Patient Bankruptcy – What Revenue Cycle Professionals Need to Know for Their Organization’s Own Fiscal Health

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What do experts mean when they say high health care bills are the number one cause of bankruptcy in the US?

Studies differ on exactly what percentage of personal bankruptcies filed each year are associated with high medical bills.  Some say the number is greater than 40%. Others estimate the number is larger, even more than 60%.  Regardless of where experts may pinpoint the exact percentage, it seems clear most agree that high healthcare bills are the most common reason cited by debtors for filing bankruptcy, more common than things like job loss and divorce. What’s probably most startling about these numbers is that many researchers note that a significant percentage of these folks actually have health insurance.

What all of these statistics suggest is that the patient who files bankruptcy is not an outlier and not an insignificant part of your provider organization’s overall financial picture.  This article will discuss what revenue cycle professionals need to know about bankruptcies among their patient populations to protect themselves fiscally and from compliance risks. 

The historical approach

When asked, many providers reveal that when they learn a patient has filed bankruptcy, they simply write off debts which are patient responsibility in lieu of filing the appropriate paperwork with the bankruptcy court to collect the sums to which they are entitled. Many providers who do file claims often do so only for very high balances or on a case-by-case basis and very few have a comprehensive strategy that includes proactive identification of bankruptcy filings.

The provider’s need for a solution

As noted previously, the proliferous nature of what some have called medical bankruptcy means that more and more patients cannot pay and are filing bankruptcy as a result.  When a patient files bankruptcy, a statutory protection called the “automatic stay” attaches making it unlawful for a provider to attempt to collect the debt in ways other than presenting a claim to the bankruptcy trustee. Conversely, claims which are timely and properly presented to the bankruptcy trustee are entitled to payment to the extent of bankruptcy estate assets.  Typically, claims must be filed in a short time measuring from the first meeting of the creditors. They must also be filed using the prescribed format and must also follow rules as to what information must be redacted or face liability for violation of HIPAA and bankruptcy rules.

What this means is that many providers have an opportunity not only to protect themselves from unnecessary risk relating to violation of the automatic stay but also to create a new and sizeable revenue stream.  A provider can accomplish both objectives by establishing a proactive bankruptcy identification tool and a comprehensive claim filing strategy. 

Tools available to providers

There are several search tools available to proactively identify bankruptcy filings which can help providers avoid violations of the automatic stay, including the federal PACER database. Once a process is in place to identify bankruptcies, providers can create a process to file by manually producing claims or by filing electronically.  And a very common practice within a bankruptcy strategy is to partner with specialized firm and/or vendor to help with this process.

The value of creating a comprehensive bankruptcy strategy

Regardless of which of the available tools a provider chooses to build its bankruptcy strategy, implementing a program which is proactive and comprehensive will create a new revenue stream and protect the organization from unnecessary risk. 

Like many patients today, providers are facing their own fiscal challenges and it just makes sense for smart providers to take these steps and take advantage of the benefits that come with it. 

When Patients Pass – The Compliance Issue Every Provider Needs to Know

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DCM Services is an organization dedicated to helping providers manage unique and specialty areas of revenue cycle such as probate. Probate is a creature of state law; managed by more than 3450 courts across the United States to promote an efficient system for collecting and liquidating the assets of a decedent and making distribution to creditors and heirs. Nearly a decade ago, DCM Services conducted an informal survey of more than 100 health systems and other providers in an effort to understand current practices in the management of accounts for deceased patients. At that time, almost 85% of survey respondents indicated that they did not search for probated estates or file claims. Survey respondents also acknowledged that they knew there was opportunity to enhance compliance and gain substantial revenue by creating an effective estate strategy, but noted that they lacked the expertise and resources to search and file. Fast forward to today and we almost never hear this reply. Why?

Estates Emerge Among Top Provider Challenges

The answer is simple. The convergence of important socioeconomic and demographic trends means that no successful provider can afford to ignore the opportunity.  The baby boomer generation has aged into retirement, and the Centers for Disease Control (CDC) tells us that this group of people account for more than 75% of persons who pass away each year. By 2050, the number of people on Medicare who are 80 years and older will nearly triple; the number of people in their 90s and 100s will quadruple. We also know that, with regard to healthcare services, this group vastly outspends other generations at three times the percentage of the population they represent. Finally, we know that self-pay percentages are rising for many providers by double digits year over year.   

The end result is that revenue which at one time may have been thought of as a rounding error, or icing on the cake, has now become sizeable enough that it is imperative for providers to capture it as a matter of maintaining fiscal health. However, while many providers have recognized the value of estate revenue, they often miss the crucial compliance risks associated with failing to develop best practices in this area. 

The CMS Requirement Many Providers Miss

Chief among the risks in the unique area of estate revenue cycle is failing to comply with 42 CFR 413.89 (e).  This statute codifies the Centers for Medicare and Medicaid Services’ (CMS) requirements regarding bad debts, charity, and courtesy allowances, and it requires an estate search to be conducted and documented for every decedent whose bill goes on the cost report.  CMS’ Provider Reimbursement Manual Part I §308 states that in order for a bad debt to qualify for the cost report it must meet four basic criteria:

1). The debt must be related to covered services and derived from deductible and coinsurance amounts. 

2). The provider must be able to establish that reasonable collection efforts were made.

3). The debt was actually uncollectible when claimed as worthless. 

4). Sound business judgment established that there was no likelihood of recovery at any time in the future.

Defining the Risk

§310 further defines the reasonable collection efforts as requiring a “genuine rather than a token collection effort and requiring documentation of those efforts.” 

Auditors and other compliance professionals have interpreted the CMS requirement that reasonable collection efforts were made in the context of a patient who has passed away to mean that:

  • An estate search has to have been conducted with the courts
  • Those search efforts have been documented. It is noted that reliance on a family member’s statement is not sufficient.
  • Examples of sufficient documentation used to determine that a deceased patient has no estate may include a screen print of system used for inquiry or a signed attestation from the Registrar Office of Wills.  CMS has given guidance indicating that providers must retain evidence showing the date on which a search was conducted in a screen print or in the electronic system of record.

Despite the fact that the language of the statute has been essentially the same and in place for decades, it may be that many providers are unaware of the requirement until they are audited to the specific estate-related mandate. If this is the case, and the provider is unprepared, it can stand to lose hundreds of thousands or millions in reimbursement dollars.

Proactive Identification Is Key

In order to be prepared as a provider and not find yourself surprised by an audit, procedures must be put in place to insure that all of the bills for patients who have passed receive estate searches. Since the Provider Reimbursement Manual requires that the provider’s effort to find an estate and file a claim be a bona fide and similar to any effort that would occur for non-eligible debts, the process should be the same for all accounts. This includes patients who pass both inside and outside of a facility. Often, a provider is unaware that a patient has passed if the death occurs outside the facility. There are many cases where it can take an extended period of time to learn of the death when a provider relies on family or other reactive notification of a patient’s passing. The probate code of each state assigns a finite time in which to file claims, and in the majority of jurisdictions the time for providers to present their claims is as little as 60 or 90 days from the opening of the estate and appointment of a Personal Representative. This means that even providers who do search for estates often find them too late and fall out of compliance with the requirement to make genuine efforts to collect. It makes sense that, in order to comply, a provider should put in place one of the available decedent identification tools to proactively identify all patients who pass in a timely fashion.

Comprehensive, Continuous Searches Overcome Compliance Hurdles

Claim filing windows are brief as noted above.  However, while the requirement is clear that an estate search must be conducted and it must be directly with the court or with a search engine which interfaces with the courts.  Estates can take months and even years to open and 15 to 20% of the time, those probated estates are in a court which is somewhere other than the venue which corresponds to the patients last address. If an estate is not located at the last address in provider records, it could be in any of the 3,450+ probate courts in the US.16  Since the effort to collect on a debt by finding an estate must be genuine and not token, it follows that repeated and comprehensive searches are required. A provider could not search, for example, weeks after the patient passes and conclude that there is no likelihood of recovery in the future.  A manual search conducted in a single location is also likely to miss a significant percentage of estates because those estates will open in a location other than the address of record.

Providers must create processes which can meet the requirement through automation and repeated, continuous nationwide searches. This can help overcome the challenges, and insure genuine and effective estate searches in compliance with the rules.

Efforts will be for Naught without Documentation

We have all heard of the philosophical question posed initially by George Berkeley in his work, “A Treatise Concerning the Principles of Human Knowledge,” which can be paraphrased as asking whether a tree that falls in a forest with no one to hear it actually falls. To be certain, it is true that a provider who fulfills its duty by conducting even comprehensive and continuous searches falls short of compliance if those searches are not documented so that an auditor can see evidence of those searches. The CMS Provider Manual further requires documentation of reasonable collection efforts. Whether a provider is using an automated tool or manually conducting estate searches, there must be a process in place to secure real time documentation should an audit occur.  This documentation should include one of the items described above, such as screen prints or reports from a search engine, notes from conversation with probate courts in the providers system of record made concurrent with those conversations, and/or correspondence both to and from the probate courts which corroborates a request and a reply.

The Components of a Successful Strategy

While understanding the requirements of a compliant estate strategy is key, what matters most is what you do with that information.  Turning again to the survey of more than 100 health systems regarding estates, remember that the number one self-described hurdle to putting in place a successful strategy was not financial constraints or even information technology resources. The major hurdle was a lack of expertise or confidence in their own internal knowledge base. In order to surmount this challenge, a provider first needs to conduct proactive searches to timely identify both decedents and estates. 

Secondly, it is important to have a good mechanism to produce documentation which details the evidence of searches and search results.  Providers will also want to have a process in place to produce the required claim packages in the event that an estate is located, and a process to manage those claims to collect on the sums owed. This can be a bit tricky as there are more than 3,450 probate courts in the U.S. and estates can be located in any of them. In 15-20% of cases, probate is opened in a location other than the address of record.23 This phenomenon may be for any number of reasons, but most often occurs when patients are traveling for care or have multiple residences. Each court has unique requirements for its claim packages including forms, affidavit requirements, filing fees, number of copies, and even the color of paper and ink.

The process will also need to manage claim filing deadlines which, as noted previously, can be as short as 60 days from the opening of an estate. Any process for finding estates should be able to search proactively for decedents and estates to insure timely filing. This means that nationwide, proactive searches are a requirement. Once a claim is filed, putting in place a process for claims recovery is also important.  We have learned that while the filing of a timely and valid claim entitles a provider to the assets available for its class of claims and provider claims can take priority, an optimal post-claim collection strategy can produce more revenue and even expedite payment.

Finally, depending on the resources available internally and your overall revenue cycle strategy, you may choose to acquire the tools and the knowledge to build a self-managed process, or you may choose to partner with an expert to build your estate strategy. 

The Rewards of Compliance

In conclusion, while compliance with 42 CFR §413.89 and the rules described in PRM 15-1, sections 308 and 310 will mean real dollars and cents for every organization who can prove it is entitled to reimbursement when they have searched, documented that search and not found an estate, there is a very sizeable opportunity for nearly all providers when they do find an estate. When an estate is timely located, the provider has a chance to present a claim and receive payment to the full extent of its claim and estate assets.  In fact, many state probate codes recognize a health care provider’s services at or near the time of passing take priority and are paid over all other general creditors’ claims.24 As providers continue to strive to meet today’s regulatory and economic challenges, it is worth taking a moment to recognize that every now and then, like with estates and the CMS requirement, the two challenges coalesce and the benefits of best practice are twofold!

DCM Services Launches New Website

DCM Services (DCMS) is proud to announce the official launch of its new website. The launch is the first phase of an overall digital strategy initiative.

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We invite visitors to explore a site designed to provide the ultimate user experience. The new site offers improved navigation and functionality. Additionally, content-rich materials allow users to access detailed product information, videos, and numerous other resources.

The DCMS mission is to serve our clients, consumers and their families, current and potential employees, and regulatory bodies. That mission is reflected in the information and functionality of our new site.

The new responsive designed site uses the latest technology and is compatible with today’s browsers and mobile devices.

Tim Bauer, DCMS Chief Executive Officer commented, “Our team has been working on the project for a long time. The newly designed site is the positive result of their efforts. The site not only allows users to learn about DCMS, but also promotes immediate interaction with the company.”

Information on the site will be continually updated to reflect industry happenings, trends, organizational updates, and business activities. 

DCMS prides itself on being an extension of its clients. We believe that the way we go to market in the industry provides a unique and valuable partnership. 

DCM Services Announces New CEO

DCM Services (DCMS), the industry leader in estate and specialty account recovery solutions, is pleased to announce the appointment of industry veteran Tim Bauer as chief executive officer, effective October 23, 2017.

 Head shot of Tim Bauer, new CEO of DCM Services.

Bauer joins DCMS from insideARM, where he has been serving as president. He has also been serving as co-executive director of the Consumer Relations Consortium. Bauer’s prior experience includes key executive roles within the ARM industry, including chief executive officer of Integrity Solution Services, Inc. as well as executive leadership positions at Outsourcing Solutions, Inc. (OSI), OSI Portfolio Services, and Risk Management Alternatives, Inc. (RMA). Bauer is a graduate of St. Mary’s University of Minnesota and Loyola University of Chicago, School of Law. Before joining the debt collection agency world in 1995, Bauer spent 15 years as a partner in the Minneapolis law firm of Messerli & Kramer, P.A.


Bauer’s appointment follows the previously announced retirement of Ben Boyum who has served as DCMS’ chief executive officer since 2011. Boyum, who will maintain his role on the DCMS Board, stated, “I am absolutely delighted to add Tim’s insight, expertise, and industry experience to our team. Even more importantly, Tim is a great cultural fit for DCMS and our clients. DCMS will benefit greatly from Tim’s industry connections as we continue to grow and provide new solutions that meet the needs of our clients and the industries that we serve.”   

Bauer commented, “While I loved my role at insideARM, the opportunity to join DCMS was too much to pass up. The company has a culture of compliance and consumers are treated with dignity and respect. The minute I walked into the DCMS offices, I made my decision. I am thrilled to be joining an outstanding DCMS management team previously assembled and led by Ben.”

“I want to thank Ben Boyum for his leadership and dedication to the organization. We are thrilled that Ben will retain his involvement through an active board seat” said Bill Willhite, managing partner of WILsquare Capital and DCMS board member. “We executed an extensive, nationwide search for the next leader of DCMS and could not be more pleased with its outcome. Tim Bauer brings tremendous industry expertise and, most importantly, shares our commitment to regulatory compliance, client engagement and fits well with DCMS’ corporate-wide culture.”

An important note from CEO Ben Boyum

August 2017

Good Afternoon,

As a valued partner, I wanted to inform you that on or around September 30, 2017, I plan to retire from DCM Services (DCMS). This decision comes with mixed emotions, as I have really enjoyed leading our organization and working with our employees and clients for the past 10 years. I am proud of what we have accomplished together and making this decision was certainly a difficult one. Unfortunately, family health issues have caused me to reprioritize, and as a result, I have decided to retire to spend more time with my wife, children, and grandchildren.

I am currently in the process of working with our owners, WILsquare Capital Partners, to hire my successor. Once that individual is named, we will share that information with you.

I am proud of our organization and all of the employees at DCMS. We have achieved so much together over the last 10 years and I look forward to seeing continued success for this organization. I am pleased to inform you that I have agreed, and am honored, to stay on as a member of DCMS’ Board of Directors.

Regards,
Ben Boyum
CEO

2017 DCMS Insights Client Conference

Save the Date!

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We are excited to announce that our 2017 DCMS Insights Client Conference will be held in beautiful downtown Minneapolis!

While our conference name, Insights, may be new, our strive to offer forward-thinking topics and industry knowledge that provides value and creates conversation, remains consistent.

This year, our conference will be held on Wednesday, September 20, 2017. Thanks to last year’s success, we will again be hosting a welcome evening cocktail event the night before, on September 19, 2017.

The conference will be held at Radisson Blu Minneapolis Downtown and we are excited to be able to offer a discounted rate of $209 per night for attendees that would like to stay at the hotel.

To view hotel information, this year’s key note speaker and agenda, and registration details, please click here.

DCM Services Named a Top 150 Workplace for Second Year in a Row by Minneapolis Star Tribune

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DCM Services, LLC has been named one of the Top 150 Workplaces in Minnesota by the Star Tribune for the second year in a row. Top Workplaces recognizes the most progressive companies in Minnesota based on employee opinions measuring engagement, organizational health and satisfaction.

“Being named a Top 150 Workplace for the second time, based exclusively on anonymous feedback from our employees is a real honor for our company,” said Ben Boyum, CEO of DCM Services. “A positive work environment with engaged employees is a very good thing for all stakeholders—including our clients, our owners and employees.”

The analysis included responses from over 69,000 employees at Minnesota public, private and nonprofit organizations. More than two-thirds of DCM Services employees, a total of 181 employees (67 percent) completed the survey. Questions measured employee satisfaction with the organization in four areas: alignment with goals, effectiveness, connection and management. DCM Services received its highest scores in the areas of management and encouraging new ideas.

The Top 150 Workplaces list was published in the Star Tribune on Sunday, June 25, 2017.

DCM Services Announces Two Executive Promotions

DCM Services, the industry leader in estate and specialty account recovery solutions, this week announced the promotion of two key executives: DeAnna Busby-Rast and Shawn Brown.

 Professional headshots of DeAnna Busby-Rast, new Chief Business Development Officer, and Shawn Brown, new Chief Financial Officer of DCM Services. 

DeAnna Busby-Rast is promoted to Chief Business Development Officer (CBDO). In her new role, Busby-Rast will lead all strategic sales and marketing as well as oversee all product and service development, internal and external communications and public relations/media management. Busby-Rast, a recognized expert in the call center and receivables industry for more than 20 years, joined DCM Services in 2008. She has since held the titles of Vice President, Senior Vice President and Executive Vice President of Business Development. Prior to joining DCM Services, Busby-Rast led account receivable sales and domestic and international account management for Omnium Worldwide / West Asset Management. Busby-Rast holds a Bachelor of Arts in Marketing Management from Bellevue University.

Shawn Brown is promoted to Chief Financial Officer (CFO). Brown will oversee the integration of all sales objectives and operational plans in support of the company’s vision in addition to leading annual business planning processes around these strategic objectives. Brown, a financial services industry expert with 25 years of experience, joined the DCM Services team in 2012 as Controller and most recently held the Executive Vice President and Controller role. Brown holds his Masters of Accountancy from Truman State University.

“DeAnna and Shawn have been instrumental in elevating DCM Services to a leadership position within our industry,” said Ben Boyum, Chief Executive Officer of DCM Services. “Their focus on client satisfaction, consultative partnering and the provision of innovative solutions has been a key differentiator for our organization.”