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Home Health & Hospice Week

Reimbursement:

GET YOUR CASH FLOW READY FOR THE PPS SWITCH

Published on Tue Nov 13, 2007

Don't get stuck by possible claims delays.

Hope for the best but prepare for the worst--that old adage will serve home health agencies well as they prepare for the prospective payment system refinements taking effect Jan. 1.

The Centers for Medicare & Medicaid Services says its claims system is on track to process HHA claims during the transition (see Eli's HCW, Vol. XVI, No. 42). And most software vendors express readiness as well.

But agencies shouldn't be too comfortable with that, cautions Bob Wardwell with the Visiting Nurse Associations of America. "Folks who have experienced glitches with other system conversions are making sure they have enough ready cash to pay the bills in case there is a cash flow disruption," reports Wardwell, a former top CMS official who oversaw PPS' design and implementation.

"Make sure you have enough cash on hand in case of glitches that may delay payments," advises consultant Sharon Litwin with 5 Star Consultants in Ballwin, MO. Be aware that those problems could come from either your billing software or your intermediary's, she cautions.

HHAs that fail to prepare for cash flow problems could face the ultimate consequence, warns financial consultant Tom Boyd with Rohnert Park, CA-based Boyd & Nicholas. "Sometime in the next few months, we will be talking about the HHAs that ran into trouble, ran out of cash and closed," Boyd predicts. "Do not let that be you."

You should have about 90 days worth of cash to get you through the transition, Boyd recommends. To arrive at that figure, take your average monthly expenses times three. Don't forget to up the figure if your business is growing quickly.

Do this: Set up credit before you need it, Boyd recommends. "If you have an existing good relationship with your banker, then approach them now to obtain a line of credit for emergency use," he instructs.

Also look at ways to cut your cash commitments during this time period. For example, consider leasing or financing big purchases like equipment, software or vehicles rather than buying them outright.

Other tips Boyd offers to improve cash flow include:

• bill daily, or at least more often than you do currently;
• bill RAPs within five days;
• bill Medicare Advantage, HMO, insurance and private pay as soon as possible;
• follow up on all billing within 35 days, making sure to document the effort and contacts;
• use credit cards when possible. But you should document their use properly;
• charge interest for late payments from non-Medicare and non-Medicaid payors;
• pay your bills on time--not early and not late.

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