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Apr 26

Why FSC Consolidation?

  • April 26, 2017
  • Theresa McKinney
  • Revenue Cycle

A front desk representative stares at the pick-list of Financial Status Categories (FSCs), trying desperately to match one of the myriad choices to a patient’s Aetna HMO plan. Should she choose “Aetna HMO,” “Aetna HMO/POS CAP,” “Aetna HMO/POS Non Cap,” “Aetna Medicare HMO,” or “Aetna Medicare HMO/POS?”  What is the difference between them?  What does all this even mean?  With so many choices, in all probability, she’ll choose the wrong one.

As a result, incorrect edits will be applied, the claim will be routed incorrectly and will be denied. Unnecessary man-hours will be spent correcting the error and resubmitting the claim.  But again, the problem of too many FSCs available remains.  More denials, more man-hours wasted.  Eventually, the patient is billed.  More time is spent in customer care calls before the charges are finally resolved, if they are resolved.  In a worst-case scenario, the patient refuses to pay for services which are covered by their insurance and the invoice goes into collection.  Nasty reviews on social media and bad word-of-mouth could be the least of the trials faced by a good practice that only wants to be able to focus on quality patient care.

All because the organization has too many FSCs.

The most common reply to an entity being informed they have too many FSCs is “So what?” How could having too many financial classes possibly hurt an organization?  The answer is “a great deal.”

The impact of too many FSCs include:

  • Confusion about which FSC to select for registration
  • Increased time needed to register a patient
  • Claims routed to the incorrect payer ID or address
  • Increased rejections or denials creating additional work for A/R staff impacting, productivity, days in A/R, and revenue/cash flow
  • Reduced customer satisfaction due to incorrect billing
  • Increased customer service calls
  • Possible compliance issues, as certain plans have specific regulations associated with them
  • Fines or lawsuits because of an audit or customer complaint
  • Inaccurate reporting reflecting insurance activity

Luckily, it is not difficult to resolve all these issues and reduce FSCs to a manageable number. Common scenarios indicating the need to consolidate are the sheer number of FSCs, poor claims submission resulting in high numbers of rejections/denials and high days in A/R rates.

Once a need for consolidation has been determined, all that is needed is to plan the future state of the organization’s FSC structure and then implement.

Part of setting the future state is determining which FSCs are obsolete. Useful tools for this decision are examining which FSCs have the most A/R, billing rules such as claim forms, state regulations, and payer rules/billing requirements.  Revenue activity, claim production, and payer rules all have direct bearing on determining if a FSC is obsolete or a living, useful component of an organization’s revenue cycle.

Once FSC requirements are determined and broad FSC groups are laid out, individual FSCs can be analyzed and consolidated into a surviving FSC. It is also possible to eliminate FSCs which are completely obsolete and can simply be deactivated.

The overall goal is to have a minimal number of FSCs in the future state. A simple optimization resulting in big payoffs across the full revenue cycle.

 

 

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