New Association to Establish Accreditation Program for Health Care Collectors

The saying “Good help is hard to find,” may not be more true than in the medical accounts receivable business.  An association of health care business professionals launching in early August aims to ease that burden.

Typically, hospitals looking to outsource their accounts receivable management and recovery business rely on their peers to recommend health care collection agencies and debt buyers. But the rapid growth of self-pay accounts, which will no doubt entice more companies into the ARM arena and pressure existing players to improve their performance, beckons the industry to provide more reliable referrals and screenings.

“The bane of my existence is (an agency’s) registration practice,” said Meg Reichardt, manager of patient services for the University of Rochester Medical Center’s Medical Faculty Group “I want to make sure an agency isn’t strong-arming our patients, but trying to get the right information so we can bill insurance or make payment plans or sign them up for charity care, if needed.”

Enter the Accredited Healthcare Business Associates (AHBA) – a new organization of accredited companies dedicated to providing health care revenue management services. Organizers believe it is the first group of its kind for medical ARM companies.

Jack Nixon, chief executive of healthcare collection agency CMRE Financial Services, is launching the association with the help of the California Health Care Association and ARM industry advisory firm Kaulkin Ginsberg.  Organizers expect to begin the process of accrediting companies by September.

Nixon, who has more than 40 years experience in the ARM industry, says AHBA’s stamp of accreditation will tell industry players and health care providers that AHBA member companies have considerable experience buying, placing, managing and collecting receivables. And, he said, agencies will be judged by standards specific to the health care ARM industry, not those applied to credit card or financial services companies.

Unlike many industry organizations that allow membership simply by paying a fee, AHBA members also will have to earn their membership by demonstrating standards in 25 areas specific to the health care industry.  For example, companies will have to provide proof of employee certification in their health care specialty, compliance policies, and liability insurance that protects clients in the event of an agency error that could harm the health care provider, said Sandy Lawrence, president of CMRE and an AHBA principal.

Also, health care debt buyers wanting AHBA accreditation will have to agree to not resell the debt, or place it with offshore collection companies.

“AHBA members will be prohibited from using off-shore agencies for collections,” Nixon said. “You have to have a reason why you’re collecting a (medical) bill and they’re not qualified because they may not have all the information offshore that’s required.”

But the first criteria for AHBA eligibility is business mix, Nixon said. At least 80 percent of revenues earned by AHBA members must be health care related – a requirement that will leave many large companies with diverse portfolios unable to qualify. And member companies must have at least five years service to the health care industry.

Nixon believes the minimum revenue and service requirement is in AHBA members’ and their clients’ best interest. Unlike financial creditors who may operate nationally or globally, health care debt holders have more localized customers and they want to keep their business, he said, adding that medical receivables management requires unique care to protect the creditor and its relationship with patients.

While the 80 percent revenue requirement will keep many industry giants from receiving AHBA accreditation, small firms that normally can’t compete in the open market will have an opportunity to compete for business with AHBA certification, Nixon said.

 

“Right now the health care industry doesn’t know who the health care experts are,” Nixon said. “If 80 percent of your business is health care, regardless of size, then you can be considered an expert because you have the experience.”

Curtis Warfield, chief executive of NPAS, Inc., which manages $5 billion in receivables for 230 hospitals, said many hospitals, especially small health care providers, need help assessing new players in the business.

“Self pay accounts are growing at an astronomical rate. And (private equity firms) are starting up companies like gang busters.  If (hospitals) had someone assisting them with that process, that would be a good thing,” Warfield said.

Lawrence said AHBA won’t just take members’ word or paper documentation as proof of standards compliance.  AHBA will conduct annual site visits to verify the information on a company’s application.

“If you say you’re recording calls, you’ll have to prove it,” Lawrence said. “You’re not going to say yes to all these things and expect that no one will check on it."

“All of ABHA’s standards protect the health care provider from the company they use that could cause them financial problems,” Nixon said.  

Besides, the association will help agencies obtain the necessary employee certification and provide guidance to meet other qualifications, he said.

Kaulkin Ginsberg Healthcare Analyst Michael Klozotsky, who will serve on AHBA’s Advisory Board, said the association couldn’t come at a better time, given the well established and growing concern among health care creditors about their reputations in the communities where they do business. “Negative images, coupled with the rapid increase in unpaid receivables, makes it essential for the ARM industry to implement certification and/or accreditation criteria long discussed by other industry organizations,” he said.

“Accreditation helps rehabilitate the industry’s image,” Klozotsky said. “It says: here are companies that are operating above and beyond the ARM industry’s standards.”

Klozotsky added that there’s a consumer benefit to encouraging ARM accreditation.

“If to be accredited an agency has to go above and beyond HIPAA and the Fair Debt Collections Practices Act (FDCPA), you have to treat patients compassionately,” Klozotsky said.

Nixon said he believes health care providers have wanted this kind of accreditation for years. But they don’t know what to ask for.

“There’s a baffling disconnect between the two (medical debt holders and ARM professionals),” he said. “They don’t know the vocabulary to say this is what I want.”

Reichardt, who is looking to place 60 to 120 day receivables with a new agency, agreed that it will be easier having an organization she can turn to for help qualifying candidates.  If fact, “When I sign a new agency, I may require that they go for accreditation,” she said. “That would put my mind at ease.”

If you are an ARM industry firm currently working in the healthcare market, or a healthcare industry professional responsible for accounts receivable outsourcing, and would like more information about the Accredited Healthcare Business Association, please contact Michael Klozotsky, Analyst, Kaulkin Ginsberg Company, at 240-499-3836 or mklozotsky@kaulkin.com.

Kaulkin Ginsberg is the parent company of insideARM.com.