Lessons from a 92.1% Net-Collection Rate: What It Takes to Strengthen Revenue Cycle Management

Lessons from a 92.1% Net-Collection Rate: What It Takes to Strengthen Revenue Cycle Management

00:00:0
Hello and welcome to CareSmartZ360 On Air. I’m Erin Cahill at CareSmartz360. Join us as we welcome Alex Ganjizadeh, MBA, LTCCP®, Director of Operations and Business Development at Cornerstone Caregiving. With experience in home care operations, market expansion, and revenue cycle management, Alex brings a practical perspective on improving collections and building a financially sustainable home care business. In this episode, we’ll explore how home care agencies can strengthen their revenue

00:00:39

cycle, improve cash flow, and build operational processes that support long-term profitability. Welcome to the podcast, Alex. >> Thank you. I appreciate you having me, Erin. >> Yes. So, we’ll dive right in. The first question that I have for you is your revenue cycle management, or RCM work, achieved a reported 97.6% net collection rate. What made the biggest difference for you? >>> So, you know what? What am I going to say? It sounds trivial, but it starts out with being diligent and having a

00:01:13
very structured routine. At the end of the day with collections, it starts out at the very beginning stages of onboarding a client to make sure you have your authorizations for the services that require authorizations and your payment sources for your private paid clients. You want to make sure you have all those in place. And when you have a client in the early stages, you want to make sure all the payments are being processed. So, you’re following through and checking those reports. So

00:01:40
all the reports that, uh, maybe we’re not very fond of at the beginning of the year month and end of the month, like we want to check those, but you’re very diligent, and, um, also, you want to make sure that your, uh, electronic visit verification systems, your EBVS, you’re staying on top of those that your geographies are set up correctly and your caregivers are clocking in and out and all your compliance items are in place so you’re not getting any of those kickbacks for someone that has an

00:02:10
authorization that you have to turn those, uh, reports into >> right? absolutely. So, diligence first and foremost. >> And where do home care agencies most often lose revenue between delivering care and collecting those payments? >> Absolutely. So, sometimes it’s really easy to look at the hours that are on the books and on schedule for this week. And so, we get really excited as we see the hours that are growing. Um, but you also want to follow through on the payments. Make sure the payments

00:02:39
are coming in. I talk to peers across the industry with different organizations often that they have 20 $30,000 worth of collectibles on a particular client because they felt behind on the bill and on just the office level; they weren’t diligent making those phone calls on a weekly or monthly basis to understand what was going on with the client. It could be that long-term care insurance had kicked back some payments, and so now they have to go back and submit everything. Maybe that’s why they hit their, uh, daily, weekly,

00:03:13
monthly maximums on long-term care, and so they weren’t getting reimbursed at those rates. They weren’t qualified; authorizations ran out. So those are all parts of it. So, you want to make sure your team stays on top of it, and you know ultimately, you’re seeing the hours grow. But if you’re not collecting revenue, you’re missing out on the back end. You also want to maximize all your authorizations as well. >> Absolutely. And what are the first signs

00:03:40
that an agency’s revenue cycle needs attention? >> Honestly, it’s just those reports, right? I can tell you that about 90% of the problems happen when operators aren’t following through, and they’re not checking those reports. They’re not checking their collections. And when you’re not looking at your accounts receivable on a regular basis, it falls behind. And by the time you go to get caught up, suddenly, you have tens of thousands, hundreds of thousands

00:04:07
of dollars’ worth of accounts receivable that you need to collect on. Well, as an operator, you’re focused on growing your business. And so, you’re out there meeting with referral sources. You’re meeting clients and families. And when you’re not able to do that, when you’re behind the desk making phone calls trying to collect on something that felt like it was behind that you could have, uh, monitored 3 weeks ago and saved yourself time. Well, now you’re not out there capturing the new

00:04:34
revenue. So, it becomes a double whammy for an operator because not only are you providing services, but you also have caregiver expenses and office expenses that were covered as part of that care, and you haven’t received payment for that. You’re also missing out on all the opportunities that are in front of you because you’re spending time collecting. So, you know, the primary part becomes, “Hey, are your payments set up on automatic payments?” ” What are the mechanisms that you have set in place?

00:05:01
for collections for your authorizations, whether it is Medicaid or VA Medicare’s guide program, all these programs that we’re leveraging today for long-term care and long-term care insurance, so yeah, it’s really important that you’re keeping up with all your reports and, uh, all your accounts receivables on a week-to-week basis so you can catch them on the front end. >> Absolutely, how can agency owners improve collections and cash flow as their businesses grow?

00:05:32
>> So, I can tell you this. Um, this is one of the things that I struggled with early on in my career. As your business grows, your role changes, and so it means more delegation. And how you manage is by you having to be willing to give up some controls along the way. You need to hire the right people. You need to train the right people and have the right processes because you can only wear so many hats as your business grows. And so, as your service hours grow as an

00:06:07
operator, there’s only so much time in the day, and there’s so much that your attention can go to. So, it’s important that you build a team so your team can focus on those cash flows and collections as you’re bringing in the business. Or if somebody else is bringing into business, you’re looking at the numbers and making sure that you’re managing collections, and you’re guiding up your team. What you can’t do is you can’t try to wear 30 different hats

00:06:34
>> when your service hours are growing. >> Right. Okay. And Alex, which financial metrics and operational processes should homecare owners prioritize to strengthen their revenue cycle? You know, the net collection rate is obviously top of mind for everyone. Um, your margin. So, whatever your baseline margins are as you set, uh, you want to stay with those. You need to understand what your floor is on your margins wherever you set that number, and that should be the non-negotiable for

00:07:06
you. Your accounts are receivable; um, we’re all monitoring those. The days that an account receives receivables are adding like those days you need to monitor because if that continues to grow, it will be those expenses that you’ve already spent and written the checks for but you haven’t received payments for. So it’s important to look at those days and accounts receivables and then, like, your, uh, denial rates when they’re coming in on long-term care on VA. You want to make

00:07:37
Sure, you’re monitoring those. Those are really, really important to prioritize. But first and foremost, you’re looking at your authorizations 30 days out, and you’re submitting everything they need because the last thing you want is for an authorization to expire, and all a sudden someone goes without care for 30 days. That is >> that particular individual missing out on care during that, uh, span of time. And at the same time, you’re missing out on revenue, and the caregivers are missing out.

00:08:00
on paychecks. So, you want to make sure you’re proactive. Um, and I, in my opinion, think that the most important part of being financially healthy is that you can’t be reactive to what’s coming in front of you, so you have to have systems set in place so you’re very proactive, right? Yeah. And my last question for you, Alex, um, is looking ahead to 2027, what major change do you expect to shape the home care industry, and what agency owners should start doing now to prepare?

00:08:30
for that? I think, uh, for everyone in the home care industry, there are lessons to be learned from, uh, 24 and 25, uh, going into those, uh, coming out of those years. Last year, the VA had major changes in reimbursement rates. Uh, Texas. Large areas in Texas were impacted by those greatly. There were a lot of agencies that were caught off guard that they had to change how they operate because they lost those revenues. And so, you know, we want to make sure that throughout the year we’re staying well and very well aware.

00:09:09
of trends that are happening nationally and locally when it comes down to Medicare, Medicaid reimbursement rates, and VA reimbursement rates. We’re staying really vigilant. We know the cost of living is increasing. We know gas isn’t as cheap as it used to be. And so, caregivers are driving from location to location to provide care. Uh, that’s an extra expense for them naturally. That means for us, we’re going to have to pay the caregivers more, and we’re going to have to take care of the caregivers.

00:09:38
So that cost goes up for everyone that we’re caring for. So, you must have your pulse year-round in the marketplace to understand what’s happening. Um, and also being able to advocate for ourselves, going to the state capital, and talking to our representatives, uh, they have an impact on a lot of the reimbursement rates, and we need to make sure that they understand the challenges that we face and the challenges that our caregivers face. So, we have the proper reimbursement rates. Um, home care in

00:10:09
2027, Things are changing. And so, we have, uh, some of the laws that were passed a couple years ago, and some milestones are coming in 2030. So, you have a lot of changes that are happening in that, uh, spectrum. But even beyond that, it’s very imperative for us to be very aware of the political environment and advocate for ourselves. >> Absolutely. And Alex, we really appreciate you coming on. These are actionable insights, and like you said, stay on top of that weekly

00:10:41
monthly, and, um, those metrics that you mentioned, I think, will be helpful for a lot of our agencies tuning in. So, thank you so much for your time. Really appreciate it. >> Thanks Erin. I appreciate you. >> And for all our listeners, tune in to our next podcast with CareSmartz360 On Air. Thank you so much.