Your Infusion Revenue Forecast Says You’ll Collect $2M This Quarter, but Your Cash Flow Tells a Different Story. Here’s Why

This quarter, your infusion center expects collections of $2,000,000. Treatment volume is good, at least a lot of claims are going out and expected reimbursements seem to be more than enough to cover operating costs. But the actual amount of money in your wallet tells a different story. There’s bills to be paid to the drug supplier, payroll approaching, and thousands of dollars in outstanding claims to be paid.

The resulting deficit is a financial issue of significant magnitude for the infusion center owner, CFO and revenue cycle leader. A component of infusion revenue forecasting is to predict when funds will be received rather than just making a guess about how much infusion revenue a center can expect. Revenue forecasting performance is linked to billing results, payers’ actions, when payments are received, and when the cash actually comes in the door to the process of infusion revenue forecasting.

The first step in a solution is a financial forecast that is linked to the actual performance of the revenue cycle. Your team must be able to access stable billing information, sensible projections of reimbursement, and frequent cash in comparison to cash projected. These controls enable quick identification of revenue deficits, have positive bearing on working capital and allow for better financial decisions.

Why Infusion Revenue Forecasting Often Misses Actual Collections

A lot of infusion centers develop financial projections primarily based on plans of therapy, previous income, or what the payer is rebating. These figures are indicative, but not comprehensive of the financial situation. A forecast gets unreliable when it takes for granted that all scheduled services shall happen, that all claims will be paid properly and that all payments will be made on time. Accurate infusion revenue forecasting requires your finance team to differentiate between deliveries of services, recognition of infusions, submission of claims and receipt of infusions in physical cash. Each phase occurs at a different pace and has various financial risks.

Projected Treatments Do Not Guarantee Completed Services

A scheduled infusion is a service as opposed to guaranteed revenue. Patients may make appointments and not show up or may cancel appointments or need authorizations changes prior to getting treatment. Any changes in treatment plan also impact on the amount of medications, the services needed to administer the medications and the reimbursement that is expected.

Often, the centers in which these schedules are made use are very reliant on the volume of scheduled appointments which could lead to overstated forecasts. You should periodically evaluate actual visits, bill for services, actual dosage, and completed treatment dates to see how your team is doing this. This method will provide a better basis for infusion revenue forecasting and, consequently, for forecasting future collections.

Billed Charges Do Not Equal Expected Payments

Could be over-optimistic when projecting the revenue position, due to gross charges. Payers reimburse based on grants, contractual agreements, coverage criteria, fee schedules and payment methodology. The final collectible amount is adjusted by contractual adjustments, non-covered services, and claim-level reductions. So you should be preparing an infusion revenue forecasting based on average net reimbursement, not gross charges. Use Payer-specific reimbursement assumptions on completed and billable services. Check payment history to see if your assumptions are valid based on your center’s actual history.

Submitted Claims Do Not Guarantee Timely Payment

Once a claim is submitted it begins the reimbursement process. It does not prove payment, adjudication and correct payment or payment of the claim. Denials and delays in reimbursement may occur if any of the following issues impact the documentation. A helpful infusion revenue forecasting course of action takes those dangers into account, tracking the claims on every stage of the revenue cycle. You need to determine which claims are still under-billed, under adjudication, in the needs for corrections category, or payments are due to be made. This transparency enables finance leaders to be more sure about the timing of collection.

Five Revenue Cycle Gaps That Distort Infusion Cash Flow

The forecasting of revenues is frequently affected by problems in operations. Though a small delay at one stage may appear to be not much, if there’re a few stages where the money is being delayed, that can pose a bigger cash flow issue.

1. Authorization and Eligibility Delays

Services under infusion therapy may need extensive authorization review prior to the start of services. Coverage terms and approved drug amounts, treatment schedules and authorization periods need to coincide with provision of services. Requirements and coverage for patients could change, which may involve extra verification tasks. Claims have an increased likelihood of being rejected or could be delayed if authorization information is missing or incomplete.

When creating your forecast, you should include items that are not approved for services as well as differentiate between treatments that are approved but have not been received yet and treatments that have already been received but aren’t approved. A billing team must ensure that you are eligible for the treatment and check that authorizations are in place, as well as keep tabs on treatment expiration dates before providing the treatment. These steps help minimize unnecessary delays and ensure more predictable collection dates.

2. High-Cost Drug Billing Errors

Infusions result in significant exposure as drugs make up a large percentage of claim costs, and serious drug billing errors can occur. Over resultant reimbursement could be impacted or claims denied due to incorrect HCPCS codes, inappropriate number of units, missing document, drug quantities, etc.

A special focus must be given to reporting on drug wastage. CMS provides specific guidance for drugs dispensed in single-dose containers or single-use containers or packaging (SUP) where the drug is under Medicare Part B, on when providers are required to report these amount modifiers: the JW modifier for discarded drug amounts and the JZ modifier when no drug amount is discarded. Requirements vary depending on the type of drug and the claims situation and policy. Be sure to consult the latest CMS guidance before using these modifiers.

Your team can accurately capture charges and document drugs, which results in the more accurate estimation of reimbursement. Utilizing improved drug-level information provides greater confidence for the infusion revenue forecasting of products estimates for infusion reimbursement will better represent the amount billed, drug-mounted units reported, and applicable payment requirements associated with a product.

3. Claim Denials and Underpayments

If the payment is denied, it changes the normal flow of payments and value adds some work. You may need to fix a claim, provide the needed documentation, challenge a payment posture by a payment, or detect a contractual claim payment issue. Separate issues arise underpayments that are made less than what the work is worth. A claim could be paid without reimbursement of the full amount due under the prevailing contract and payment policy. If you assume that each claim paid hits the bottom line and you have already paid its adjudicated amount, what you forecasted will still be higher than the number of cash claims you have.

Monitor denial rates, underpayments, appeal and recovery statuses by each payer. By analysing past outcomes, reasonable assumptions about outstanding balances that will be converted to cash and balances that should be chased can be made. Consider realistic denial recovery assumptions when making infusion revenue forecasting rather than assuming all challenged balances to be gold coins.

4. Slow Accounts Receivable Follow-Up

Accounts receivable is the amount of money your center anticipates collecting but if accounts are aging, that doesn’t mean that you will get paid. Payer decisions on claims that have been submitted and not yet processed, denials and incomplete follow-ups cause payment uncertainty. Analyze outstanding claims based on claim age, denial and A/R by Payer. Treat the most valued and near balance that may lead to filing or appeal deadlines. Assignation of responsibility for each untaken issue and all required next action.

A/R aging is also important information for infusion revenue forecasting as it gives insights around how long sales take, as well as financial risk exposure. It’s more useful to have a forecast based on an expectation of when claims are likely to be collected, than on the assumption all outstanding claims will be paid in the quarter.

5. Drug Acquisition Costs and Payment Timing

Often, infusion centers buy costly medications, and only after they are already priced and on-board are they reimbursed to receive the medication. This leaves a lag between the business’s cash flow and when cash reaches its payers. For a center, there could be good expected revenue reporting, but at the same time, high drug invoices, payroll, rent and other operating costs may be pressing. The issue gets worsened if reimbursements are not received on time or the bill is rejected as reimbursement amounts are less than what was estimated.

You should consider schedules for drug purchases, terms of payment against suppliers, expected payments from patient payments and other regular operating costs in your infusion revenue forecasting. By this more comprehensive approach, predicting infusion revenue can help guide working capital decisions rather than just relying on anticipated reimbursement.

Build a More Reliable Infusion Revenue Forecasting Model

A successful forecasting model involves looking at service volume, expected reimbursement, claim status, and payment timing. It should also take into account the historical collection performance and the current operation conditions. Infusion revenue forecasting is critical if use of infusion revenue is to be a feature of the strong projections that have been established.

Start With Completed and Expected Infusion Services

Complete Services as the basis of short term collection estimates. Compare chart notes with charge collection and submitted claims for services that have not progressed to the charge collection/billing cycle. Specify the size of treatment for future periods based on planned appointments, completion rates from previous periods, known authorization status and anticipated changes in body services. Separate forward looking treatment forecasts from any revenue already collected or claims made. This distinction prevents your team from treating every scheduled infusion as a confirmed collection.

Calculate Expected Net Reimbursement

Estimate reimbursement based on applicable payor contracts, Medicare payment rules (if applicable), covered services and previous payment outcomes. Factor in contractual adjustments and reimbursement restrictions that are known. Don’t use estimates of bills instead of actual bills. When considering Medicare Part B drugs, consider the current CMS guidance on the available payment methodology. Drug reimbursement should be based on the applicable billing code, payment rules and reporting period and not a percentage against all medications.

Your team should cover real-life payments and receipts data to check for pattern differences between payment received and what was expected. This research will help refine the assumptions in future forecasts and will make infusion revenue forecasting more accurate.

Adjust for Claim Status and Payment Timing

Manage the high quality claims into sensible categories like unbilled services, submitted claims, rejected claims, rejected claims, appealed claims, and claims awaiting payment. Use historical data on the performance of their payers, and the status of claims, to determine when to expect payment. Do not use the same collection date for all balances. A high value disputed drug claim has more uncertainty than a clean claim with a predictable history of payment. These differences must be taken into account in forecasting. Adjust collection estimates as a consequence of a payer’s request for further documentation, when a claim is denied, and when the payment expected date is changed. Infusion revenue forecasting is updated to match the claim activity.

Separate Revenue Forecasts From Cash Forecasts

There is a distinction between recognized revenue and expected reimbursement and between cash receipts. Revenue is the accounting process accounting for services according to the accounting method. Expected reimbursement is an estimation of what cash the centre expects to receive. Cash forecasting is an estimate of the amount of cash going in/out of the business.

Your Finance team must have their own perspective on these measures. Include any cash receipts (expected) that would be received by the employer, payments received by patients (where applicable), purchase of any drugs, payroll and other operating costs, payables to any suppliers, and other costs.

This method will allow the leadership to respond to a couple of burning questions: How much will the center receive when it is reimbursed and when will the cash come in to pay for any obligations that may be due? This also helps to avoid the risk of infusion revenue forecasting as a total cash flow plan.

The Financial Metrics Every Infusion Center Should Track

When operational metrics affecting collection are tracked by the finance/billing team, forecast accuracy is enhanced. Stick with the same definitions and reporting time periods to allow for comparisons over time.

The Healthcare Financial Management Association publishes MAP Keys revenue cycle performance measures. These measures offer consistent definitions for tracking the revenue cycle’s performance in patient access, claims, account resolution, and financial management.

Calculate each KPI using a standardized calculation. For this example, calculate forecast variance as shown:

Forecast variance percentage = [(Actual cash collected − Forecast cash collections) ÷ Forecast cash collections] × 100

When a negative result occurs, it is an indication of less than expected collections. A positive result indicates that collections were greater than they were forecast.

Investigate these metrics on a weekly basis in case cash flow is tight and on a monthly basis for trend analysis. Determine thresholds with reference to the history of your center, payer mix and operating requirements. Infusion revenue forecasting becomes more practical to move towards continuous improvement with regular measurement. Your infusion revenue forecasting dashboard should also feature expected payment dates, claims which are likely to be paid out for large amounts, and any claims that have been denied and not resolved. This report allows finance leaders to see ahead for future cash flow issues, and on the work front, to follow up tasks before the end of the next quarter.

A Worked Example: Where Did the Forecasted $2 Million Go?

Suppose that a hypothetical infusion center has $2 million to expect during a particular quarter from its infusions. Infusion revenue forecasting model with projected treatment volume, historical reimbursement, and outstanding claims. The center has raised $1.72 million so far, at the end of the quarter.

A negative variance of 14% occurred for the center, with a negative number ($280,000), for the collected amount compared to projections. This does not mean that the center lost their entire amount. Claims may, in some instances, be eligible to be claimed but afterwards received past quarter end, or the balances may need corrections, appeals, and/or contractual reviews.

Assume that the center identifies a number of factors that were involved. A few claims were not billed due to lack of documentation. Other claims were refused either because of the need for authorization or for coding reasons. There were also some additional payment receipts received that were after the forecast period and some of the adjudicated claims paid less than forecast.

Each factor should have a defined number behind it on the finance side based on claim level data, not just putting a number in a dollar sign. It should also be able to differentiate between late collections and verified underpayment and uncollectible. This review converts a negative financial outcome into a plan of action. Management will learn what operations had an impact on cash flows, which balances are still collectable, and what assumptions should be adjusted before the next quarter. These insights will help in infusion revenue forecasting for the next period.

How to Improve Infusion Revenue Forecasting Within 90 Days

A plan for reviewing infusion revenue, designed with a focus on improving the estimates, can help your center become more proactive in infusion revenue forecasting. Prioritize the data quality improvements, then operational and finally continuous monitoring efforts.

Days 1 to 30: Establish a Baseline

Make comparisons between current expectations and cash receipts. Review claim submission dates, payment dates, denial reasons, A/R aging, and any differences in reimbursement which exist from one payer to another. Determine the sources that create the most variability. Identify the source of the challenge to be inaccurate treatment plans, late pickup of charges, claim inaccuracies, underpayments or unrealistic payment models. Give specific responsibility to finance/billing groups. Record the existing process so that it can be measured against in the future when improving the process.

Days 31 to 60: Correct Revenue Cycle Gaps

Focus on issues causing largest collection delays. Ensure more effective eligibility verification and tracking of authorizations, drug charge capture, claim scrubbing, denial follow-up, and payment posting. Establish a work queue for high-value outstanding claims. Delegation of responsibility to team members, determination of a next step and tracking progress towards resolution. Check underpayment on applicable contracts and against applicable rules. Fix up recurring billing problems rather than looking at every billing problem separately. Tailor infusion revenue forecasting assumptions at the individual payor level based on these results.

Days 61 to 90: Monitor Forecasts and Variances

Establish a regular review of forecasts of cash receipts versus cash received. Revise forecasts in the event of a change in claim status or altered payer payment practices. Ensure that all claims that are overdue, unusually large, have been denied, and have caused unforeseen differences in reimbursement are marked. Set permissible limits on material deviations and make sure they have owners. At 90 days, review responses against baseline to compare them. Evaluating Forecast Variance, Days In A/R, Clean Claim Performance, Denial Trends & Collection Timing. Adjust collection estimates for the next quarter by incorporating infusion revenue forecasting into weekly financial based reviews that enable leaders to detect potential issues and make other collection adjustments earlier.

How Billing Care Solutions Supports Better Revenue Visibility

Accurate billing data and consistent revenue cycle follow-up is essential for infusion revenue forecasting. Billing Care Solutions can solve these operational problems and ensure healthcare organizations have accurate claims, rightful reimbursements, and see their collections. The Revenue Cycle services such as it consists of claim scrubbing, deny administration, accounts due after, monetary posts, and monetary reporting. These workflows aid in avoiding billing inaccuracies, tracking billing that has yet to be paid, uncovering discrepancies between what reimbursements were received and what was expected, and resolving billing issues.

Infusion providers should expect that these billing and collection activities will provide them with information to factor into their infusion revenue forecasting. Unintegrated claiming assists financing managers to find out which balances are stayed and the place where things have gone wrong, and which matters must be addressed. Regular and consistent reporting also enables teams to differentiate between any normal payment timing issues and repetitive revenue leakage.

Billing Care Solutions partners with medical services associations over greater than 50 specialties. Its Revenue Cycle support provides practices with enhancements for their billing processes and added visibility of their collection performance. Compare your infusion financials to the money you actually have collected over the years, if there is a recurring gap between the two, examine how that occurs with your billing and A/R processes. Talk to Billing Care Solutions, and learn more about how they can help you with revenue cycle management’s contribution to your company’s financial planning.

Make Your Forecast Reflect Collectible Cash

A well-designed infusion revenue forecasting method is associated with the expected reimbursement, the claim status and the time of claim payment. It also factors in the costs associated with using drugs for yourself, and the costs your center has to pay out until you receive reimbursement from payers. The first step is to compare the budgeted cash collection to actual cash collection. Research variances in materials, prioritize the higher dollar salient claims, and adjust billing and payment assumptions as they are available.

See them on a regular basis with finance and revenue cycle teams. Infusion revenue forecasting should be seen as an element of financial control and not simply a quarterly exercise. When your forecasts reflect your actual collections, you have more insight into your future cash requirements and reimbursement risk. Improved infusion revenue forecasting facilitates sound working capital planning and billing processes.

Frequently Asked Questions