In The News

Preventing Disasters
From Hidden Claims

By Rachel Kelley

March, 2007

Imagine if you will, one of your managers coming to you with a sort of odd, frightened look on his or her face. This manager pulls you into one of the offices, stands in front of a big file cabinet and says, ' We need a new file cabinet just like this one."

You ask why and the response is, "Because this one is full the manager then starts pulling out charts. The first chart he shows you is for a custom molded TLSO for $1,400 that was not billed because the date of birth was never obtained. The next chart shows another device that was not billed for $2,000 because another piece of easily obtainable information was not acquired.

This goes on for several minutes. You come to find out that the whole cabinet is filled with claims never sent. The total amount of lost reimbursement in that file cabinet for more than one year's time totals $800,000. Such is a true story told by Joe Sansone, chief executive officer of TMC Orthopedic and the Amputee Center in Houston.

It occurred at his company a few years ago. "What I discovered was a filing cabinet full of claims that had been filed a way for lack of easily obtainable, innocuous information," Sansone said. "Since insurance companies enforce filing deadlines, many of the claims were never paid."

What are the problems?

There are six causes of problematic billing:

• Problematic hiring
• Insufficient training
• No established policies and procedures
• No monitoring of day-to-day activities
• No system of checks and balances.
• No accountability.

Problem employees

How could the above story and many like them, happen?

Let us say a manager does something that upsets one of his employees, Sansone said. The daily stack of billing of $75,000 is sitting on the employee's desk.

" How do you know when you leave if that employee decides to be vindictive and rake all that billing straight into their trash can?' Sansone said. "The problem then becomes, would you ever discover what had been done, and if so, would it be too late?"

Sansone said stories like this abound from O&P providers, physicians and other health care professionals. Examples Sansone cites include an employee not pre-certifying so all the surgeries were denied or all the orthoses were denied; claims not mailed out or the wrong diagnosis code used, and sending claims without the proper documentation allowing third party payers to deny or forestall payment.

Sansone even had a person once tell him that they had an employee who would stockpile the reimbursement checks by putting them in a drawer. This disloyal employee created her own $100,000 slush fund or line of credit, if you will. When the business was having a bad month, she would deposit those checks all at once and show her bosses how she had single-handedly turned things around.

Applying business metrics to employees' work

How can a manger know whether employees are doing their work? Sansone has devised a computer monitoring system called business metrics. The system includes:

• Defining goals
• Establishing metrics
• Benchmarking current status
• Developing a system to monitor and report metrics
• Distributing the metrics to employees
• Reviewing the metrics and make decisions
• Promoting successes.

People are scared by the perceived complexities of business metrics and it seems intimidating, but it is a simple spreadsheet and graph, Sansone said.

Hiring, training and accountability

According to Sansone, there are two pre-requisites that greatly accelerate the effectiveness of business metrics: hiring and training.

"Of course, monitoring your employees is of no value if your people cannot do their job," he said. "The best processes in the world are useless if you have hired the wrong employees. Business metrics expose the incompetent and they can be replaced by people who can meet management expectations."

Equally important as hiring the right employees is training. An employer cannot capitalize on his employees' strength unless management teaches the employee how to use his talents.

"Businesses in our industry can no longer afford to simply hire good employees and then allow them to be trained by busy coworkers filling in until a replacement for a vacancy has been hired," Sansone said. "You are only as good as your people and if your people do not care, the problem is going to continue."

Wanting to do a good job

Sansone is also a big believer that employees inherently want to do a good job, but if they are not trained and overseen by management, their interest wanes and productivity goes down the tubes. He also believes in teaching employees how to their job, telling them what is expected, and then giving them free rein to do it, unencumbered by management.

"How can employees please management if they do not know what their bosses are looking for?" Sansone said. "Once employees know what it expected of them, only then can they be monitored effectively."

Monitoring decline in productivity

The first time Sansone said he used the graph, a supervisor came to him and said an employee was not as productive as she used to be. "At that point, I started to monitor what she was doing," Sansone said. "She has three different duties she was responsible for:

• precertification,
• confirmation of order
• and billing.

"Sansone was able to graph her activity for the previous 4 months and she average about 75 activities per week. Since this on particular week, she averaged 25 per week.

He met with the employee and asked what was happening. She began to argue with him. Anticipating her denial, he was armed with the graphs that proved what his manager had seen. He pulled out the graph that illustrated this dramatic decline, which could not be argued. She started crying and explained that during that time period, she suffered mental health issues and had broken up with her boyfriend.

"That is the beauty of monitoring what your employees are doing," Sansone said "When there is a problem, you can identify it immediately and address it."

Monitoring employees

Sansone embraced his troubled employee and let her know he and his company were there for her. But, he reminded her that she was still taking a full paycheck for a third of the productivity. He offered her options like taking some time off, counseling or reducing her work hours.

"We told her we would support her, but when push came to shove, we were running a business," Sansone said.

If you tell your employees you are monitoring their productivity, Sansone said, you are then guaranteed a 20% increase in productivity just because they know someone is looking over their shoulder.

"When you monitor activities and qualify them for your employees by giving them visuals, all the sudden they understand," he said. "It is irrefutable."

Monitoring punctuality

Sansone, who also works as a consultant in the health care industry, said he has never consulted with a company who did not have punctuality problems. Managers do not want to treat employees like children and be jerks about it, so they do not address tardiness and employees take advantage.

"The employee who is punctual might say something like, 'Sue comes in late, so why do I have to show up on time?'" Sansone said. "If you monitor tardiness by using metrics and say, 'Hey, look at your tardies. You are the worst amongst all your peers, please do not do that.' It eradicates the problem."

Role of software

Some software programs allow the user to monitor and quantify activities to assist in developing metrics. But most companies are so busy billing and collecting to take the time to use all the programs offer, Sansone said. So essentially, nothing is ever monitored.

"If my pre-certer is pre-certing, that information goes on an Excel spreadsheet. Every time they pre-certify a patient, it is documented," Sansone said. "Our clerk collects that data at the end of week."

For some businesses it is as simple as the biller bringing the charts to the supervisor at the end of the day so they can be counted. It takes about 20 hours of work a week to produce 20 graphs a month for Sansone's 90-plus employees. Data entry inputs the data, his supervisors verify the data and the receptionist puts it into a graph.

"It is not cost prohibitive at all," he said. According to Sansone, using this system is a way to make sure that claims are not sitting in a cabinet. It will also show the employer if there is a bad apple. "And it allows you to reward your stars," Sansone said. "It is a good motivational tool."

Quantifying activities

If you cannot quantify an activity you cannot monitor an activity, Sansone said. "When I found that messy filing cabinet, my biller looked busy," he said. "But I had no way of quantifying what she was doing."

The goal of business metrics is to make sure the owner is quantifying what an employee is doing. If the employer then sees the drop off then he or she can address it. Without the monitoring and quantifying, Sansone was out $800,000.

"Our industry is being assaulted from all sides," Sansone said. "National exclusive contracts, competitive bidding, reduced fee schedules all threaten the smaller providers. In these difficult times only the strong survive and those who take the bull by the horns and do these types of things are going to be the ones that make it and the timid, that bury their heads in the sand and hope things will turn out okay may not weather the storm."

Rachel Kelley is a staff writer for O&P Business News.