My grandfather, Paw-Paw, started his business when he was literally a teenager and is still running it today at 78 years old. Our family would best be described as serial entrepreneurs, and one thing I remember was that my grandfather had a sign that hung in his office when my mother was still a child that said, “Cash Flow is King.” There is something impactful about learning this at a young age and passing it along over multiple generations. You simply can not spend money you don’t have. So whether your budget is $1 or $10,000,000, you need at least as much money coming in as going out. Even if you have a line of credit or a very generous lender, it’s best practice to stay on top of your accounts receivable. This leaves us to the topic of today’s article: Timely Collections.
While money shouldn’t be the sole reason for serving the senior care industry, it is incredibly important. If you don’t make enough profit to stay in business, the clients, caregivers, and office staff will all suffer. Therefore, one of your priorities is to monitor and verify money is flowing into your bank on a regular basis. It’s not only important for paying bills, it’s critical for making payroll.
This can sometimes lead to difficult conversations with your clients, or their families, but it has to be done. I do not know a single person who enjoys collections, so it’s best to be ahead of the game and collect as soon as possible.
If you want more information about home care agency revenue, check out Five Different Ways to Get Compesenated for Home Care.
Bill Timely
One of the most important things to do to prevent problems with Accounts Receivable and timely collections is to ensure that you follow a regular billing cycle for your clients and their parent payers. You want your clients to get consistent bills so that they can pay you on a consistent basis. Also, always remember that some parent payers, such as insurance companies and the VA, have a time limit on reimbursements, and if you don’t submit timely invoices, you may not be able to collect them.
Your agency likely has clients with multiple payer types and clients who pay for services using a combination of funding sources. Let’s discuss a few of these and some tips for maximizing cash flow with each one:
Private Pay
The first of these are Private Pay clients, who pay for their own care out of their own finances. Keep in mind that for clients who pay by check, you’ll have to factor in the time it takes for the invoice to arrive in their mailbox, and then for them to write a check and mail it back over to your office. If you are accepting payments by credit card, there is often a fee for credit card transactions. Check to see if you can avoid these fees by using ACH. This is typically a fraction of the cost of credit card fees. Also, consider a surcharge to cover the cost of the credit card fees if the client chooses to pay via credit card.
Long-Term Care
For your clients with long-term care insurance policies, there are two basic options for paying for your services. Either way, it is critical to follow the rules of the LTC policy. These rules typically specify the number and type of ADLs that must be completed in order to be eligible for reimbursement. Also specified on the policy will be the number of hours or dollars that are eligible for reimbursement within a specified period of time and for the life of the policy.
- The first is called an Assignment of Benefits. This means that the client signs the paperwork allowing you to bill their Long-Term Care insurance company directly and reimburse your agency directly for the care delivered to the client. This is often the best option. However, it usually means that you will not be able to collect for 30-90 days.
- The second option with long-term care insurance is for you to bill the client for services. The client is responsible for submitting all invoices and care logs to the insurance company. The client first pays your agency and is later reimbursed by their Term Care insurance provider.
- The third option with LTC is to bill the client directly. Offer to submit all the paperwork to the insurance company on their behalf. This can be a very valuable service that may be eligible for reimbursement from the LTC company. This allows the client to get the services, and pay for the services. However, they will not be responsible for submitting the paperwork which can be overwhelming to clients.
Other Third Party Payers
There are many other third-party payers, most of which pay very similarly to LTC insurance. Respite programs and grants typically offer a fixed amount of money for care under certain conditions. Payers such as the VA usually offer a certain number of hours that can be reimbursed. Be sure you stay on top of these payers. You may be asked to “prove” you submitted the claim later and/or submit multiple times for the same claim to get paid.
How to Set up Authorizations
Within Wellsky® Personal Care, formerly known as ClearCare, most of these payment options can be managed using Authorizations. For clients whose payers (whether long-term care, Medicaid, VA, or other community/government programs) only authorize a certain number of hours per day, week, or month, you must make sure that your schedulers follow those guidelines. Any hours not covered by the Authorization are at risk of going unpaid and unrecoverable by your agency. Especially if the client does not have the means to afford to pay for care privately!
A Note about EVV Requirements
If you are working with a payer source that requires Electronic Visit Verification (EVV), make sure your software supports this in your state. EVV is basically a term for verifying that you serviced the client on the day and time for which you are submitting an invoice for services. This means you have an electronic method of confirming that the caregiver was at the home of the client at the time specified and completing the tasks that you have invoiced. Failure to follow these guidelines can jeopardize your ability to participate in or collect from payers that require EVV.
Monitoring and Reporting on Accounts Receivable and Collections
There are many, many reports on accounts receivables, aging, and authorization status available to you in WellSky Personal Care platform. Make it a regular event to review these reports to make sure your Accounts Receivable is not getting behind. Any uncollected funds more than 90 days old can be very difficult to collect. The sooner you collect the easier it is and the more likely you are King or Queen of Cash Flow.
If your agency would like to improve your Collections process, then reach out to us for a Free Consultation. you can reach us on our website www.seniorcareba.com or call us at 678-340-3649. We look forward to working with you.
*Disclaimer: Senior Care Business Advisors is not affiliated in any way with WellSky® Personal Care, formerly known as ClearCare Online. The views and opinions expressed in this article are those of the authors and do not reflect the official use or best practice recommendations of WellSky® or any other organization.
