Welcome
Emily Casto
Linda Corley, MBA, CPC
Territory Sales Manager
New York State
Corporate Compliance Officer
Revenue Cycle Solutions
Craneware, Inc.
Dell Services
e.casto@craneware.com
Linda_Corley@dell.com
NOTICE: This document contains confidential or proprietary information which may be legally privileged. It is intended only for the named recipients, and may not be shared with vendors outside of Craneware.
p.1
Developing Sound Controls
Managing the Shift from
Revenue Cycle to Revenue
Integrity Practices
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 Today’s Agenda
Importance of Continued Focus on the Revenue
Cycle
Transitioning from Revenue Cycle to Revenue
Integrity
Significance of the Chargemaster
Identifying where Problems start
Strategies for Revenue Integrity
Questions & Answers
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p.3
 Why Focus on the Revenue Cycle?
Increase in Bad Debt due to Revenue Leakage
Increase in Compliance Risk
Increase in Non-payment
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p.4
 What is Revenue Leakage?
Revenue leakage – the gap
between the amount of
revenue providers are entitled
to and the amount of
reimbursement eventually
received – is missed or “lost”
revenue.
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p.5
 Increase in Bad Debt
1
40% of what hospitals bill is collected
2
$31.2 billion in uncompensated care
17% growth in uncompensated care with no increase in
3
reimbursement at EMH Regional Healthcare System in Ohio
4
25% of Americans have trouble paying for medical care
5
80% of payments uncollected at any given time
1.
Healthcare Financial Management: Trends in Hospital Uncollectible Revenues (February 2008)
2.
Healthcare Financial Management Association Report: Getting Rid of Bad Debt Blues (April 2008)
3.
Healthcare Finance News: Ohio Hospital System Addresses Bad Debt by Identifying Patients, Resources (January 30, 2008)
4.
USA TODAY: Report: Even the Insured Have Trouble Paying Bills (October 25, 2007)
5.
The Advisory Board Company, Financial Leadership Council: "Cultivating the Self-Pay Discipline" (2007)
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p.6
 Increase in Compliance Risk
$76.5 million owed to Medicaid from a New York hospital because of
1
overbilling
42% of improper payments identified by Recovery Audit Contractors
2
are attributed to improper coding
38 states had either proposed or passed legislation related to pricing
3
transparency as of September 2007
$2.2 billion expected recoveries from fraud investigations and audits
by the OIG in the first-half FY 2008
4
1.
Medicaid Fraud Control Units: 2005 Annual Report
2.
HealthLeaders: When the Auditor Comes Calling: Surviving an Audit (June 2008)
3.
Healthcare Financial Management: Is Your Strategic Pricing Strategy Based on Fact or Myth? (May 2008)
4.
Office of Inspector General: OIG Reports More Than $2 Billion in Recoveries From Fighting Fraud, Waste, and Abuse for First-Half FY 2008 (June 12, 2008)
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p.7
 Increase in Non-Payment through Errors
A $300-million hospital can easily lose $3 million to chargemaster
and charge capture errors
1
2
90% of claim denials are preventable
67% of denials are recoverable
3
14% of claims submitted are denied
One out of every seven claims has to be resubmitted, appealed
or written off
1.
Healthcare Financial Management: Are You Speeding Toward Revenue Loss? (December 2004)
2.
American Medical News: Stake Your Claim: How to fight for fair reimbursement (June 21, 2004)
3.
Healthcare Financial Management: Improving Cash Flow with Better Charge Capture and Denial Management (October 2005)
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p.8
 Increase in Non-Payment due to Errors
1
According to a study of 1 million hospitals’ claims:
56% of claims contained coding errors
• 86% of the errors were HCPCS based
o
79% of the HCPCS errors were chargemaster related
27% of claims contained billing errors
17% of claims contained charging errors
$75 to $125 per claim is the cost associated with managing a denial
or reworking a claim
1.
Healthcare Financial Management Association: Outpatient PPS Can Undermine Effective Revenue Cycle Management (July 30, 2004
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p.9
 The Case for Revenue Integrity
Revenue Integrity
(rev-uh-noo in-teg-ri-ty) -noun
The achievement of operational efficiency,
compliance and ligament reimbursement
– can be achieved only with the proper
processes, tools, and related expertise.
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p.10
 Symptoms of a Significant Revenue Cycle Problem
High dollars written-off due to lack of medical necessity
Low percentage of:
•
Medicare APC and other payors’ reimbursement of charges
•
Claims that transmit electronically without biller intervention
High Percentage of :
•
“Return-to-provider” (RTP) Claims
•
Rework Claims
Multiple rejections for “duplicate claims”
Not enough staff to keep up with collections follow-up
High or growing days in A/R
Cash flow problems
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p.11
 How to Stop Revenue Leakage and begin the
Shift to Revenue Integrity
“What is the most important tool to ensure
optimum and compliant reimbursement?”
THE CHARGEMASTER
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p.12
 Start in the Middle
The Chargemaster is the database responsible for
translating care into billable and payable services
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p.13
 Significance of the Chargemaster
The Charge Description Master, CDM or
Chargemaster is the vehicle through which an
organization describes all of its services-both internal
and to the outside world
Basis for measuring
•
Revenue Performance
•
Costs
•
Productivity
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p.14
 Significance of the Chargemaster
The Chargemaster is your “Friend” to charging
and billing accurately or “Foe” when it creates
careless patterns of
behavior
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p.15
 Significance of the Chargemaster
When does CDM Maintenance cause Lost Charges?
HFMA Insta Poll March 2009
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p.16
 Significance of the Chargemaster
Considering the basis of payment, approximately how
much of your revenue is charge based?
Greater than 50%
13%
24%
25-50%
21%
5-25%
43%
<5%
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p.17
 Imbed Essential Controls into CDM Maintenance Process
The CDM has a pervasive effect on the charge capture process
Internal controls are most effective when closest to transactions
A control point is located anywhere a process can break down
Internal controls assure that you either prevent or detect errors
The importance of a control point depends on probability,
frequency and materiality of error
What are the controls most important in CDM management?
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p.18
Essential CDM Controls needed
to Shift to Revenue Integrity
Control Risk
Materiality
Control Point
1. CDM not
updatedfor
changes to coding
rules
Impacts 100% of
transactions using incorrect
code
Continuous audit of CDM
prioritizes records by
significance of issue
2. CDM missing
services
Clinical transaction is never
billed
Constant comparison to
Best Practice compare &
Identification of linked
services
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p.19
Essential CDM Controls needed
to Shift to Revenue Integrity
Control Risk
3. Medication units of
service incorrect
Materiality
Impacts 100% of
transactions using incorrect
dosage
Control Point
Comparison of
description and CPT
Intent of service to
identify incorrect unit of
service
4. Pharmacy
acquisition costs
do not reconcile
with revenue
100% of transactions tied to
billable supplies
Compare Pharmacy
purchase history against
CDM
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p.20
Essential CDM Controls needed
to Shift to Revenue Integrity
Control Risk
5. Clerical data entry
error to CDM table
Materiality
Impacts 100% of
transactions using incorrect
code
Control Point
Automated checking of
key data elements by
comparing to external
sources
6. Delay creating
new charge codes
Clinical transaction is never
billed or can’t be delivered
Electronic change
request form with
automated escalation
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p.21
Essential CDM Controls needed
to Shift to Revenue Integrity
Control Risk
Materiality
Control Point
7. Clinical
department’s
inappropriate use
of charge due to
absence of
education
Varies from random error to
100% of transactions
Automated way to notify
department managers
of information specific to
clinical department
8. Clinical department
disengaged from
CDM
Risk increases with staff
turn-over
Provide department
read only access to the
CDM
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p.22
Essential CDM Controls needed
to Shift to Revenue Integrity
Control Risk
9. Order entry
system doesn’t
reflect CDM edits
Materiality
Impacts 100% of
transactions using incorrect
code
Control Point
Implement workflow that
includes e-mail
acknowledgement & sign
off
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p.23
Essential CDM Controls needed
to Shift to Revenue Integrity
Control Risk
Materiality
Control Point
10. Poor
documentation
results in loss
of knowledge
Reliance on individual
knowledge and best effort
documentation is common
Automated, defensible
documentation of all edits
and guidance.
11. Price falls
below cost
and/or fee
schedules
Lost revenue on all
contracts paying lesser
Line item comparison to
fee schedule benchmark
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p.24
But How?
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p.25
THE CHARGEMASTER
is a key strategic asset in the fight to
Stop Revenue Leakage and make the
shift to Revenue Integrity
– The more accurately it’s managed, the
more value it delivers
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p.26
6
MEDICAL
MANAGEMENT
7
CHARGE
CAPTURE
& ENTRY
8
MEDICAL
8
RECORDS &
CODING
9
CLAIMS
SUBMISSION
5
10
REGISTRATION
& POS CASH
COLLECTIONS
THIRD PARTY
FOLLOW-UP
Revenue Management
= Patient Access Functions
4
11
= Medical Management Functions
FINANCIAL
COUNSELING
PAYMENT
POSTING
= Receivables Management Functions
12
3
REJECTION
PROCESSING
INSURANCE
VERIFICATION
13
2
PRE-REG &
PRE-CERT
1
SCHEDULING
14
CONTRACT
NEGOTIATION/
ADMIN.
DENIAL &
APPEAL
MANAGEMENT
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p.27
 Why are hospitals having more
claim rejections and denials
Patient Financial Services has lost ability to completely
“clean-up” claims on the back-end to positively affect
reimbursement!
Appropriate “time” for control may be lost if all processes
are not in place “prior” to provision of the service
Patient Financial Services (Business Office) does not:
• register / schedule / admit
• review for medical necessity prior to service
• maintain the chargemaster
• select / post charge
• code the HCPCS / CPT-4 codes
• code diagnoses / procedures
• add modifiers
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p.28
Inpatient and outpatient claims undergo thousands of
edits looking at patient status, diagnosis and
procedure data, services provided and demographic
data – they either pay or reject or deny.
Rejections and denials are not contractual write-offs.
Perplexing Points
This distinction is an important one.
to Ponder
Patients remaining in acute care past the average LOS are
estimated to cost hospitals over 50 million dollars per year.
Hospitals are fined (or placed under a Quality Improvement
Agreement) due to patients being admitted as inpatients when
they do not meet inpatient admission criteria. (RAC
recoupments!)
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p.29
When is revenue not really “CASH”?
When it’s still in “CHARGES”
2001 – 57% of hospitals were paid less than the actual
cost of caring for their Medicare patients¹
92% of hospitals lose money on outpatient services – the
fastest growing segment of hospital billable services
• Medical necessity denials “cost” hospitals more
dollars than received in collections in some hospitals
“Lost” revenue has contributed to the negative margins
experienced by nearly one-third of all U.S. hospitals every
year
¹AHA, The Case for Hospital Payment Improvement, May 2003
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p.30
 Where do denials begin?
Patient Access:
Why the final bill does not originate in the billing office!
Opportunity vs. Reality: “Know” the facility’s strengths and
weaknesses
Pre-registration is a “must” for accurate reimbursement
Insurance verification builds up speed for quicker payment
Scheduling “stops” that may slow down the billing process
• Registration collaboration essential!!!
• Case Management involvement earns $$
• Manage physician relationships for appropriate
reimbursement
Outpatient is not Inpatient – Why the difference means $$
• Medicare “inpatient only” procedures cause denials
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p.31
 Patient Access
Strategies for Shifting to Revenue Integrity
Evaluate each and every access point, to flow-chart how
patients are brought into the hospital to receive services; as
well as set goals for planned improvement in data gathering
and POS cash collections
Perform monthly “admissions” review – graph data for ALOS
Pay particular attention to ER admissions. Involve CM / UR in the
“Patient Status” decision-making process
Track all inpatient admissions denied by payer
Establish accountability for medical necessity and the Medicare
“required” Advanced Beneficiary Notice (ABN) or Health Insurance
Notice of Non-coverage (HINN) procedures
Use “compliance” software for diagnosis review for outpatients
Institute required financial counseling sessions with all beneficiaries
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p.32
 Medicare’s Advanced Beneficiary Notice (ABN)
for outpatients and Hospital Issued Notice of
Non-Coverage (HINN) for inpatients
Caution flags to watch out for
Is your facility providing “bed and breakfast” along the
trip?
Observation after OP Surgery – Non-covered by
Medicare
Must have physician documented “complication” of the OP
surgery to qualify for Observation – even then, it is not
reimbursed
Nausea and vomiting generally considered not a
complication
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p.33
 Charge Capture Strategies
Continued training for:
• clinical areas on Medicare coverage and coding requirements
• “charge” posting staff on ensuring all services being charged
Continual review of CDM to ensure all line items are
correct
• Incorporate payer specific coding for reimbursement
Is there a line item for every service, test, exam, drug,
supply (non-routine) and procedure the hospital may
provide?
Is CDM coding revised quarterly?
• CMS publishes new OPPS edits and Addendum B (APC by HCPCS
code) each quarter
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p.34
 Charge Capture Strategies
Review of UB to determine if “coded” HCPCS are dropping
to the claim
Does a soft-coded HCPCS override a CDM HCPCS?
• “Test” claims important for accurate and compliant billing
Is the HCPCS appearing under the correct
Revenue Code?
Who audits charge process to ensure all services provided
have been charged appropriately?
• “Strength” in identification and correction of lost charges
• Important for optimum payment but most important for compliant
reimbursement and ability to retain $$ after RAC or Medicaid Integrity
audits
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p.35
 Charge Capture Strategies for Claim Edits
Compliance (medical necessity) edits – “front-end” edits
•Compile “write-offs” by line item service, department, physician, and
registrar
•Publish results and communicate to all parties
•Use results for educational sessions for registrars/departments
Pre-bill edits – “back-end” edits prior to claim transmission
•Require review by “eagle-eyed” manager prior to reversing to the
department whose revenue cannot be collected
•Post to spreadsheet for reporting to departmental managers
FISS edits – “return-to-provider” claims with error reason
codes
•Require weekly report (itemized list) by biller or collector of claims in
the FISS that have not been cleared for payment.
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p.36
 Charge Capture Strategies for Claim Edits
Erroneous information provided by patient
•No coverage on date of service – Commercial, and, yes, Medicare
•Medicare should be billed as “secondary” payer – not primary
oAuto or other accidents require “primary” payer information
Typographical error at time of registration or billing
Inconsistent information within claim form
•Therapy date of onset of symptoms, number of prior visits
Insufficient information required to consider claim
for payment
Overlapping dates of service – Home Health & SNF patient
•Need accurate and complete Discharge Planning data
OP services provided within 72 hours of IP admission
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p.37
Comparing Apples to Oranges
“Returned to Provider” or “Denied”
Error messages are sometimes difficult for collectors to understand
– maintain “error resolution” manual with screen prints and
instructions on corrections
Medicare Fiscal Intermediary Standard System (FISS) errors
(glitches) cause payment delays – analyze $$ and call FI or MAC if
substantial
Create task force for focused correction for specific payers if
problems exist
Know standard “payment receipt” time (days in collection) by payer
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p.38
Comparing Apples to Oranges
Health Information Management
Promote collaboration of HIM staff and clinical charge posting staff
Track problematic accounts that require additional work or re-work by
HIM
Establish written procedure for clinical area review or HIM review
of line items rejected for modifier determination
Ask HIM to meet with PFS to discuss accounts on hold
Track by outpatient area, by physician and by error message
Drill down into DNFB for inpatient accounts to establish $$ by issue
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p.39
Comparing Apples to Oranges
Medical Management
Although Case Management and Utilization Review have been
considered components of the Revenue Cycle, NOW is the time to
ensure their participation in optimization of payment.
Consider defining written procedure for admission practices!
Important component of compliance.
Often given “responsibility” with no “authority”
•Identify CM strengths and weaknesses
•Draft improvement plan
•Measure performance
•Ensure measurable outcomes to document and report “quality” initiatives
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p.40
Comparing Apples to Oranges
“I sometimes visit a hospital where PFS staff state they
have no Medicare denials…”
•Why do they think there are no or very few denials?
•What change does this thinking require?
•Do you know?
What was the total dollar amount of all the services
provided in your hospital last month that did not
result in a payment?
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p.41
 Receiving the Remittance Advice
How sweet is its arrival or does it ever arrive?
1. Payment
2. Denials
3. Reasons for Denials
4. Appeals
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p.42
 Communication – How do we know we
have made the shift to Revenue Integrity?
Revenue Cycle Management – Establish monthly
meeting to review:
• Total revenue earned
• Total cash received
• Total “non-collectable” charges
• And all “benchmark” and best practice data the hospital
can track!
Quality Assurance for Revenue Integrity
• Set goals and quantify!
Celebration!
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p.43
Questions?
Emily Casto
Linda Corley, MBA, CPC
Territory Sales Manager
New York State
Corporate Compliance Officer
Revenue Cycle Solutions
Craneware, Inc.
Dell Services
e.casto@craneware.com
Linda_Corley@dell.com
NOTICE: This document contains confidential or proprietary information which may be legally privileged. It is intended only for the named recipients, and may not be shared with vendors outside of Craneware.
p.44