A Central Texas HMO
Customized Review of Revenue Processing
Our client
for this project was a staff model HMO associated with a nationally
known teaching hospital. The Plan has a national reputation for
consistently high levels of member satisfaction and unusually low
administrative expenses. The Plan has enjoyed both consistent
profitability and growth. The Plan has nearly 200,000 members and 1,800
employer groups.
Objective
Our client
wanted to improve the timeliness of their employer and member bills and
to assure the quality of their balance sheet. They hired the Robert E.
Nolan Company to review and redesign their processes for bill generation
and presentment, payment processing and accounts receivable management.
Challenges in Bill
Processing
We found a
relatively low rate of bill compliance (i.e., paid-as-billed ratio) and
higher-than-normal rates of both late payments and retroactive
adjustments. These issues were interrelated and driven by two primary
elements—the information communicated on the bill and the timing of the
billing cycle.
Customers
did not have enough time to process their bills and return their payment
before the due date. These late payments caused an increase in the
number of retroactive transactions, which in turn resulted in a more
complicated bill and more time required for processing. This problem
circled back to more late payments and started the cycle all over again.
The high
percentage of late payments also contributed to higher-than-normal
accounts receivable balances. Finally, because of a lack of effective
performance metrics, these problems were difficult to monitor and
manage.
Improving the Monthly
Billing Cycle
The
redesign team reviewed key processes and the monthly billing cycle.
Direct feedback from the HMO’s customers about the billing and payment
processes was gathered by phone interviews.
The
redesign team made these core recommendations:
The project
was successful because it had clear objectives, a thorough discovery
process, and a high degree of cooperation between the HMO executives and
staff and the Nolan consultant.
Today our
client is well-positioned to deliver excellent revenue processing and
service to their customers. The Plan’s customers benefit from bills that
are understandable, timely and accurate. The Plan’s financial officer is
assured that the revenue processes, management reporting and the
financials are timely and accurate.
