By Louis Devaleix, COO, Dazos
LinkedIn: Louis Devaleix
LinkedIn: Dazos
My business partner and I operated a multi-state behavioral health organization with 10 facilities across five states. We struggled with the lack of accountability and transparency in our operations, feeling as though we were running our business blindly. Ultimately, we realized the tools we needed didn’t exist. With our expertise in software development and behavioral health operations, we created our own technology and approach to marketing and revenue recovery. While few owners are equipped to build their own software, there are three things we learned about admissions, marketing, and revenue, that others can apply to revenue capture.
Traditional behavioral health billing systems miss revenue opportunities
Even though EHR companies with good AI solutions can enable that first claim to go through properly, the manpower required to follow up on claims and collect every dollar is daunting. Let’s say a facility is a traditional behavioral health operator helping a client for whom it is Out-of-Network, or OON. The operator’s staff has to understand whether insurance should pay the claim at the local rate, allowable rate, or home state rate. Compounding this is that a lot of OON rates have third-party repricing. Because of these billing challenges, some operators think they should outsource the task. If they do, they still have to hold the billing company accountable. That requires making sure the billing company files claims on time.
If an operator can integrate their CRM with tools like Square, Stripe, or QuickBooks, they can collect payments, track balances, automate charges, and create reports. Without the right tools, an operator will miss subtleties of billing, especially when they enter the industry. When we operated a behavioral health facility, we had a billing company and almost went bankrupt because the firm couldn’t keep up with our growth.
A billing company may process 95 percent of claims properly. But when a billing company only charges six percent for the revenue it collects, they typically won’t go after the harder to track opportunities because the financial incentive isn’t there. Those missed revenue opportunities can break an operator’s financial health. And even at the in-network level, we still see behavioral health agency owners with in-network claims get paid by insurance companies at a rate for a lower level of care. Assume an agency provides PHP services to a client, but the insurance company mistakenly reimburses the claim at an IOP or standard outpatient rate. That’s an error that can occur across all claim types, whether medical, in-network, or OON.
Three things BH owner-operators can do to manage the revenue cycle
First, understand your average daily revenue, or ADR. There’s a stigma among clinicians that an operator shouldn’t talk about the economics of care. Caring for and helping clients is job one, for sure. But unless you’re a non-profit, an agency needs a for-profit mindset. If operators aren’t profitable, they can’t treat clients. To keep providing great care, operators need to go into their facility and work with their team, so the team not only understands treatment but also knows the importance of ADR by client and facility.
Second, you can have the right clinical documentation in place. But if an insurer doesn’t see the proper progress notes by therapist, the insurance company won’t pay the claims. In fact, if an owner-operator’s team is not properly documenting care, an insurance company will see that there is a lack of clinical documentation; the pattern may trigger an audit. Ensuring solid, regular documentation requires a good relationship between an agency’s clinical and operations teams, having all the departments aligned.
Third, whether billing is done inside or outside an agency, understand what is happening each day with submitted claims. Follow up on claims every three weeks to assess what’s going on with the agency’s revenue; managing billing might require an automated system that holds an agency’s billing company accountable. For our agency, we initially handled billing internally. When we found it too difficult to keep up, we outsourced billing. We worked with two billing companies, until we picked one based on its performance and open-mindedness about allowing us to hold them accountable. We made sure not to get locked into an annual contract. We also made sure we could control the flow of communication through a billing liaison we requested. Our interactions were daily until we felt comfortable about moving to weekly calls. Also important for us was having access to all our billing data, including the ability to make changes.
A word about technology as the link for notetaking and billing
We know an agency that spent $1 million to integrate its EHR with a CRM and, ultimately, the project failed. The owner then had to look elsewhere and start over. Facilitating notetaking correlates to billing.
When an agency admits a client, their data should go into an agency’s CRM and then, automatically, to the EHR. When an agency discharges the client, their data should go back to the CRM. That process is critical for engaging with alumni and managing the census through the CRM. The EHR and CRM have to work together.
Final thoughts on revenue
Attract and draw from the right target audience with the right marketing mix. Some agencies, even large ones, go from profitable to shutting down locations because they don’t have the right marketing engine. Their marketing mix targets clients who rely on Medicaid as well as those who use private insurance. But with the right marketing mix, an owner can have the right program, enabling them to get granular with their ADR and break even.
If owner-operators decide to use AI technology, make sure it’s trained on real behavioral health admissions calls. With that kind of tool, an owner operator can deploy an AI agent to handle missed call opportunities. If someone can get help right away, they won’t call elsewhere. This prevents missed calls, which can equal up to $50,000 in lost revenue (i.e., average per-episode reimbursement).
Operators whose facilities are at 90 percent capacity can still struggle at the end of year with deductibles and coinsurance resets that kick in Jan. 1. To be profitable, they go after digital leads, and that starts each year before Thanksgiving. That’s a growth strategy, but it caters to insurance cycles instead of focusing on client needs and taking a thoughtful, diligent approach to revenue recovery.