The Real Cost of Inadequate Patient Access
Processes
Presented by: Tim Raimey
Date: October 31, 2012
Who is Beacon
Partners?
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• One of the largest healthcare consulting firms in
North America.
• We develop strategies and deliver services that
support the latest industry trends such as ICD10 strategy, Meaningful Use, EHR
implementations, ACO readiness, HIE planning,
physician-hospital alignment and much more.
• We’re focused on helping healthcare leaders
improve operational, clinical and financial
performance, ultimately leading to increased
patient safety and better outcomes.
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Why are –claims
denied?
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Many claims are
denied due to
inadequate
patient
registration
processes
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Common–Registration
Errors
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• Missing Social Security Numbers
• Incomplete or Missing Guarantor
Information
• Incomplete or Missing Employer
Information
• Policy Identification number incorrect
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Common–Reasons
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• Patient not eligible
• Charges are not covered in the plan
• No authorization or no precertification on
file
• Wrong payer identified
• Benefit reached maximum allowable under
plan
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Cost to Rework
Claim: Physician
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 Assumptions:
Item
Cost
Staff Time
$10.67
Supplies
$ 1.50
Interest
$1.75
Overhead
$1.00
TOTAL
$14.92
Source: Walker, Woodcock, Larch, 2009
- Staff Time includes 20 minutes of
billing staff time at $22 per hour, plus
10 minutes of another staff member’s
time(ex: front office) valued at $20 per
hour
- Supplies include telephone, paper,
envelope postage
- Interest is calculated on $200 at 10%,
compounded monthly for 30 days
- Overhead includes management,
equipment, space and other fixed
costs
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Cost to Rework
Claim: Hospital
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 Assumptions:
- Staff Time includes 30 minutes of
Item
Cost
billing staff time at $24 per hour, plus
Staff Time
$15.30
10 minutes of at least another staff
Supplies
$ 4.50
member’s time(ex: front office) valued
at $20 per hour
Overhead
$5.20
- Supplies include telephone, paper,
TOTAL
$25.00
envelope postage
- Overhead includes management,
Source: HFMA Executive Roundtable, Nov 2010
Zimmerman and Associates 2009
equipment, space and other fixed
costs for hospital
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Physician Practice Stories
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Pulmonary
Sleep
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Ariel
40 Study Practice
• Pulmonary and Sleep Study Practice with
offices in 4 locations:
̵ Five providers seeing an average of 80
patients per day collectively
̵ Sleep studies account for about 45 of the 80
patients per day
̵ Sleep studies tend to be costly
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Claims Payment
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• Pulmonary services for this practice typically
have a 95% success rate with claims paid
• Sleep study services average 78% success
rate with claims paid
• Front desk staff minimally
experienced
• Claims denied for sleep
study are very costly to
the patient, provider, and
provider staff
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Looking –atAriel
the Real
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40 Costs
A closer
look at the
costs of a
denied
sleep study
claim:
Office visit $1,550, plus $1,500 for
medical equipment and supplies =
$3,050
$3,050 x 10 patients
(22% x 45 patients) =
$30,500
Add 40 minutes of the provider’s time
explaining to an angry patient about
the claim
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Ophthalmology
Practice
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Ophthalmology practice,
one provider:
• Averages 15 patients per
day
• Patients tend to be older
population
• Success rate for claims
paid in this practice 95%
• Experienced front desk
staff
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Looking –atAriel
the Real
Heading
40 Cost
A closer look at
the
Ophthalmology
Practice:
Office visit for new patient, Level IV $225
Provider sees 15 patients per day for 4 days a
week total 60 patients
On average 3 patients per week claims are
denied (5% x 60)
Weekly average loss in claims
(3 patients x $225) =$675 or
($2,700 per month)
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Opportunity
Costs
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40
But dig a bit deeper…..
• Add 2 to 3 hours of the front desk staff’s
time investigating the reason claim denied
• Add 1 hour to the provider’s time
explaining the denial to his elderly patients
• Add the potential of write offs
• Add the potential of “he’s a good doc,
don’t worrying about paying”
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Hospital Story
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Hospital –inAriel
the Midwest
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40
General Hospital in Midwest with 340 beds
• Emergency Department (ED) capable of providing
services for all levels of care, including critical
• ED averages 65 patients per day
• Patients are billed for
ED services based on
categories of care
provided
• Category 1 (lowest) to
Critical Care (highest)
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Looking –atAriel
the Real
Heading
40 Costs
A closer
look at the
costs:
Category 3 charge is $441
(majority of patients)
This hospital reports the success rate
for claims paid for ED charges is about
75%
Assuming 25% of 65 patients can’t or
won’t pay, loss would be
(16 patients x $441) =$7,056 per day
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Additional
Time40
and Effort
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Let’s look even deeper….
• $7,056 per day x 7 days = $49,392 a week
• $49,392 x 4 weeks = $197,568 a month
• Add in the hours the billing staff spend
with insurance companies, patients, and
medical records staff
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What’s the
goal?
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40
• Reduce
claims denial
• Increase
cash flow
• Improve patient
experience
• Decrease bad debt
• Reduce provider and staff time spent on
discussions about why claims denied
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How do we
get there?
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40
• Adequately train front desk staff to get
registration right the first time
• Assign enough staff for registration
activities
̵ It’s better to capture the data right the first
time, than to spend time investigating what
was missed
• Use integrated systems to assist staff in
registration and verification
• Pre-register as many patients as possible
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How do we
get there?
(continued)
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40
• Pre-verify insurance eligibility,
authorizations, pre-certifications
• Audit registration outcomes and processes
• Track denials by payer, reason, financial
impact
• Communicate denial rates back to front
end staff
• Collect copayments
• Collect self pay
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Leading –
Performance
Indicators
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• Error
Number
of patients
priorbilling:
to visit:
rates
due tocleared
front end
̵̵ 90
%
< 2%
•• Claim
edits
and denials
due to
Time of
service
collections:
registration and referrals:
̵̵ Copayments:
100%
< 2%
̵ All other time
of service
• Percentage
of insurance
verified:
payments: 75%
̵
98%
Source: Walker-Keegan, Woodcock, Larch, 2009
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Leading Claims
Rates
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40
• Clean claim submission rate
– 90%
• Medicare return to provider denial rate
– 3%
• Bad debt write off as a % of gross income
– 3%
• Charity write off as a % of gross income
– 2%
• Overall final denial rate after appeals
– 1%
Source: 2010 HIMSS Financial Systems Steering Committee
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Healthcare
Reform
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40 Impact
If all of these processes are being addressed,
then you will have one less challenge as your
organization moves toward achieving
Meaningful Use and preparing for ICD-10
implementation.
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Light at the
end40
of the tunnel
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Thank You
For more information
please contact:
traimey@beaconpartners.com
1.800.4BEACON │ BeaconPartners.com
BOSTON · CLEVELAND
· SAN FRANCISCO · TORONTO
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