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Vol. 2. No. 2
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May/June 2000 |
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In This Issue...
Insider Vision by Barry Scheur
Why Plans Should "Follow the Money" and How To Do It
Visit our Website:
www.scheur.com
--- The Managed Care ---
I N S I D E R
is published six times a year by
The Scheur Management Group, Inc.
One Gateway Center, Suite 810
Newton, MA 02458
617 969-7500 * 617 969-7508
Email: insider@scheur.com
Publisher ... Barry S. Scheur
Editor ... Ruth M. Aaron
Research ... Judith A. Jaffe
Production Coordinator
Nancy K. Belle
©2002 By The Scheur Management
Group, Inc. All rights reserved.
Reproduction by any means of any
portion of The Managed Care Insider
without prior permission is strictly
prohibited. We welcome your
comments and suggestions.
ISSN 1523-6110
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WHY PLANS SHOULD "FOLLOW THE MONEY" AND HOW TO DO IT
by Robin McElfatrick
(Editor's note: Ms. McElfatrick presented an overview of health plan premium income in the electronic version of the Insider (The Managed Care Insider eNews, March 9, 2000). In this issue, the author expands on the topic, explaining the process of "Following the Money" and giving some tips on how it can be accomplished.)
Premiums comprise the overwhelmingly greatest portion of a health plan's income, yet no one person or department is typically responsible for managing that resource. Instead, the processes of installing account and individual business, enrolling members and billing and collecting premiums are spread across several departments and divisions, often with differing, and sometimes vague, priorities. Plans frequently lack, or are want to agree upon, the basic corporate policies that form the "rules" for controlling premium income. Management of the various functions across this business process continuum is diverse and sometimes fragmented. In most instances, no one person is strategically assigned to "following the money" to assure it is collected and used effectively.
Consider these common premium income problems within plans:
- Selling new groups as late in the month as possible, for effective dates the subsequent month, takes precedence over prepayment.
- Premium checks received go undeposited until all paperwork on the sold group is completed and signed.
- Billing schedules often don't allow enough lead time for groups and individuals to remit next month's premium prior to the first of the month.
- Premiums remitted after the first of the next month present the dilemma of whether remitters are in arrears or simply responding to a lenient schedule for payment. Should these remitters be placed "on hold," implying no claims payments until premium is collected and posted?
- Uncollected premium amounts (e.g., premium arrearage and termination for lack of payment) and the value of "unfunded care" (claims paid for dates when no accompanying premium was remitted) can be large. This creates a plan scenario of trying to collect overdue premium from a canceled group that has no impetus, vis-a-vis continued coverage, to remit.
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Excluding member reconciliation from the definition -- meaning the premium was collected and posted -- can mean unfunded member claims, balances forward and unaccounted enrollment changes.Allowing groups to document enrollment changes on their returned bills often results in membership discrepancies (between the plan and the group), double credits and retroactivity beyond plan limits.
The bottom line is that by "following the money," assuring appropriate corporate policies and effectively managing the entire business process, plans can mitigate premium "leakage" and maximize their greatest resource.
How to "Follow the Money"
At this point it's probably safe to say that most readers understand the need to "Follow the Money." Unless you are among the very small circle of readers who are certain that all members are enrolled on time, with ID cards and Plan information prior to effective dates, that rates are always quoted accurately, that all premiums are prepaid and collected on time, and that enrollment changes are handled effectively, you will likely want to read further.
These are the principal "how to" steps in following the flow of premium income through a managed care organization. Approaches that might work for you, as well as tips, are presented at each step. Good luck in following the trail!
Step One: Identify the "Lay of the Land"
The first step is to determine exactly how the overall process is conducted across the various departments within your organization, by market segment and line of business. The purpose of examining this initial view is to establish and document an overall picture of the process, including major steps, departments and individuals involved.
For this perspective you will need to confer with management individually in each of the contributing areas or, if you're feeling particularly bold, by establishing one or more meetings at which representatives of all contributing departments attend and define their piece of the process. A word to the wise on this second approach: it can be very productive and eye-opening, but must be well-planned, organized and facilitated to assure that your objective is met.
TIPS for Step One:Prepare an agenda with purpose and objectives of the meeting(s). Give attendees at least a week's notice to prepare.Include Sales, Sales Support, Underwriting, Enrollment, Member Outreach, Billing & Collection, Accounts Receivable, Information Systems and any other departments involved.Have plenty of board space and flip charts on hand to document process, flows and issues. In addition to a facilitator, designate someone to illustrate processes and someone else to keep notes.Establish the ground rules at the beginning. The purpose is fact-finding and problem identification, but not problem resolution.Ask department heads to bring all relevant documentation (departmental organization charts, enrollment statistics, work flows, policy & procedure, process calendars, inter and intra-departmental reports and communiques, forms, etc.) as an efficient way to gather pertinent documentation for later review.
Step Two: Get Down to the Nitty Gritty
Once you have management's perspective of the overall process, it's time to dig down into the trenches and find out the particulars. Don't be surprised if you discover that what actually occurs, in each part of the process, is not exactly what management thinks happens. Getting down to the nitty gritty means meeting with the "doers" in each department and finding out exactly what really happens on routine and exception bases.
Set up individual interviews using the list of departments and individuals that management identified. Follow the trail of account sale, installation, membership set-up, billing & collection, posting and managing receivables. During your interviews look at samples, processes, policy & procedure, exception handling and the like for all group and direct sale categories and lines of business. Pay particular attention to the following hand-offs from department to department:
turnaround time frames for each stepmechanisms to monitor completeness and accuracy of each incremental part of the overall processcorporate guidelines as well as the policies & procedures that guide each stepautomation support of individual processes and shared informationdepartmental and cross-departmental reporting, communication and problem solving
Plans frequently
TIPS for Step Two:Interview management in the same order as the process itself. This will enable you to follow the actual flow of work more closely throughout the organization.Have a prepared interview guide for each area/individual interviewed. This is important for obvious reasons, but also allows you to confirm "baton passing" steps across departments.Confirm that written policies and procedures are being followed along the way or identify divergences.Remember that the people in the trenches are the best barometers of what works, what doesn't and what needs to be enhanced. Ask them!Make sure to include in your evaluation the processes for groups/market segments that receive special handling (e.g., Medicare, self-billing groups).
Step Three: Do Your Homework
Plan to spend significant desk time on document review, interview notes cross-checking, analysis and follow-up once all of your planned interviews have been conducted. Using the overall process description learned at Step One (Lay of the Land) and any new process nuances that you learned from "doers," organize the documents and notes collected into process steps, by department, or function, separating out corporate policies.
Direct your analysis to five or six major areas of focus, identifying and documenting holes, problems, ineffective work flows and processes, timing deficiencies, miscommunications and other problems. To direct your analysis, ask and answer the following questions:
Is any one individual, or team, charged with monitoring and managing the overall process?Are corporate policies adequate to support individual processes and effective overall outcomes?Do departmental processes and work flows present effective and efficient incremental mechanisms to support the overall process, and do they function on a timely basis?Does each piece of the process include sufficient management tools (monitoring, reporting, problem solving, etc.) to effect quality control, appropriate turnaround times, cross-departmental information sharing and resolution of inevitable problems?Does automation adequately support individual processes, record keeping and management reporting?What is the financial impact (uncollected premium, interest lost, unfunded claims expense) of the deficiencies that exist?
TIPS for Step Three:Draw your own flow chart of the total process for each market segment and line of business. Add to these a calendar of events. These two documents, combined, will make it easier to spot bottlenecks and disconnects.Follow a few groups/members, for each market segment and line of business, through the entire process. That way you'll see first hand what the internal process is and what groups and members see (and when).Follow-up with those interviewed to confirm work flows, calendars, assumptions and to get buy-in on preliminary findings and recommendations. Establish a list of the corporate policies that should be in place (e.g., cash control, retroactive enrollment/disenrollment, outside time limit for quoting a group, etc.) and compare it to the existing policy.Develop a list of needed enhancements for each segment of the process as well as a list of corporate policies that need to be developed/enhanced.Estimate financial impact and service consequences of current practices.
Step Four: State Your Case to Someone Who Cares
This is the step where you bring it all together -- final conclusions and recommendations. Depending on how the organization is structured and how colleagues like to receive and process information, there are several options for a report and communication formats.
The formal report (summary, methodology, findings, conclusions & recommendations): Using this format you would most likely distribute copies to senior staff a week or so before a formal presentation.The executive summary (highlights only of methodology, findings and conclusions, with specific recommendations): Here, you would also distribute copies, but only a few days before a presentation.The "executive briefing": You would prepare and present several documents (e.g., overall work flow, list of corporate issues, chart of function-specific recommendations, etc.) and walk senior staff through the process, getting buy-in and approval at the same time.
TIPS for Step FourStart with the corporate issues and get buy-in on those first. All of the information may be too much to present at one executive briefing.Consider a two-step approach to presentation and obtaining approval of recommendations wherein senior staff need only consider and approve the corporate issues and a separate, middle-management group entertain the function-specific recommendations.Come prepared to discuss how the recommendations would be implemented with time frames, resources, etc.Prioritize recommendations by listing first those that will create the biggest, most positive financial or service impacts.
Conclusion
It is always a good idea to protect the company's greatest assets, and premium income is, without a doubt, a high priority. Following the money is a difficult, tedious journey. It raises some hackles, brings out some age-old rivalries, asks everyone to air their dirty laundry, and inevitably includes some finger-pointing. Following the money is a bit like following the yellow brick road. If you can keep yourself and your work team focused on the ultimate goal, recognize that every area has room for enhancement and celebrate achievements along the way, the load will be lighter and the trip will be easier. |
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