MeHIMA Fall conference – Augusta, ME presented by Jason McDowell MBA RHIA CCS
9/14/2012
1

Payment Structure Changes
 Hospitals faced with recent decreased reimbursement for
Medicare and Medicaid services
 Increased volume of patients on Free care.
Minor fluctuations in market share
Opportunities for Hospitals
 Attempt to increase volume of patients with commercial insurances to compensate for decreases in Medicare and Medicaid reimbursement.



Prompt Free care patients to sign up for MaineCare where appropriate.
Increase operational efficiencies.
Control costs.
 Right size service lines
2

 Each year, hospitals write off a lot of money which negatively affects their margin.

“Margin is the measure of management’s ability to control operating expenses in relation to sales.”
(Source: Managerial Accounting, Tenth Addition, pg. 244)
 Total uncompensated care (Free care) + Contractual allowances (Discounts) = Total Hospital Write offs
 Contractual allowances

Blue Cross – Hospitals can negotiate with BC to determine discount rates

Medicare and Medicaid – CMS decides how much they are going to pay for claims.
• Contractual for Medicare accounts for as much as
50% of the chargeable amount.
(Source: ICD-10 and the Revenue Cycle , AHIMA 2012 Audio Seminar Series, http://campus.ahima.org/audio , July 10, 2012, presenter: Rose T. Dunn, copyright 2012.)
3

 Stay in business
1) Positive Margin (operational goal)
2) Promote positive patient outcomes and experiences.
(clinical goal)
3) Keep your patient population healthy (clinical goal)









Whether your hospital is for-profit or non-profit, you want a positive margin.
--Why?
---
Decrease risk of going out of business
Less urgency to have to borrow money at a certain interest rate
Lenders more willing to lend to you
Building and plant reinvestment
Capital reinvestment
Operations reinvestment
To cover employee salaries and benefits.
Put money aside for the future in case you need it
4

 Revenue > Costs

Revenue = Gross charges







Cost Containment

FTE budget, Expense budget, Capital budget, Building and maintenance, and expenditures outside the budget process.
Appropriate Pricing
Operational efficiencies via PI
Hire the right people
Retain the people you hire
Supply Chain consolidation
Promote environment that yields positive patient experiences
Favorable clinical outcomes
5






% of market share vs. competition.
% of your community you are providing services to.
Rightsizing service lines to meet the needs of the people you serve.
Insurance payment structures.

Local coverage determinations (LCD) and National Coverage
Determines (NCD)
Case Mix Index (CMI)
Each one of these areas present opportunity for HC organizations.
6

“ The revenue cycle includes all administrative and clinical functions that contribute to the capture, management and collection of patient service revenue.”
Source: http://www.hayesmanagement.com/busops/busops33.php, MDapproach™ Solution 1: Overall
Revenue Cycle Improvement
7

Hummm... What is it?
8

Revenue Cycle – Process flow
9. Payment Resolution, Claim denial, external collections, or write off
1. Pre-Registration
8. AR / Collections 2. Registration
7. Account Billing
3. Patient
Admission or encounter
6.
HIM dept.
Record Analysis and Coding
5. Patient
Discharge
4. Services Rendered
9

Revenue Cycle – Process flow
9. Payment Resolution, Claim denial, external collections, or write off
1. Pre-Registration
8. AR / Collections 2. Registration
7. Account Billing
3. Patient
Admission or encounter
6.
HIM dept.
Record Analysis and Coding
5. Patient
Discharge
4. Services Rendered
10

Revenue Cycle
– steps # 1 - 3
1.
Pre-Registration


Speaking to pt. to prepare them for the encounter.
Account created


Capture Payer and Financial Class
Scheduling
 Referral
 Walk-in
2.




Registration / Admitting
Account created (if not created prior)
 Patient demographic and insurance info. entered into patient profile in abstracting software.

•
•
•
Insurance verification (where applicable)
Eligibility
Coverage limitations
Copy/ scan card
Get consents for treatment
Insurance Pre-Certification for Inpatient & Observation pts.
Requisition verified and scanned into abstracting software.
(unless order is electronically interfaced from system-to-system)
11

Revenue Cycle – steps # 1 - 3
2.

Registration / Admitting
Payment Plan / Collections
‘Establishing a payment plan prior to pt. of care is important so the patient knows their liability and expectations and the organization can expect on receiving some money for their services.’
‘ Collections at pt. of service because if we wait until after the service rendered, an org. can typically expect to receive about 25 cents to thedollar we would have collected at the point of care.’
(Source: ICD-10 and the Revenue Cycle , AHIMA 2012 Audio Seminar Series, http://campus.ahima.org/audio , July 10, 2012, presenter: Rose T. Dunn, copyright 2012.)
12

Revenue Cycle – steps # 1 - 3
3.




Patient Admission or Encounter
Patient transferred to appropriate area for treatment
History & Physical assessment
Physician order
Medical record created.
13

Revenue Cycle – Process flow
9. Payment Resolution, Claim denial, external collections, or write off
1. Pre-Registration
8. AR / Collections 2. Registration
7. Account Billing
3. Patient
Admission or encounter
6.
HIM dept.
Record Analysis and Coding
5. Patient
Discharge
4. Services Rendered
14

Revenue Cycle – step # 4
4. Services Rendered
 Treatment and care given
 Documentation generated
 UR/ CM assessment of appropriateness of care
• Includes pt. type, supporting documentation, LOS, discharge disposition.
• Hospital to follow strict admission criteria when assigning pt. type. of Inpatient or Observation.
• Possibility to work in conjunction with utilization review specialist company

Executive Health Resources (E H R) or Other.
15

Revenue Cycle – step # 4
4. Services Rendered
 Source documentation created
 Clinical documentation specialists
• Concurrent record review
• Ensure documentation reflects conditions, treatments and services rendered.
 Charges entered in the item master (aka: charge master)
• Procedures
• Treatments
• Medications
• Room (Inpatient)
• OR time (outpatient surgical)
• Observation hours
• Supplies
16

Revenue Cycle – step # 5
5. Patient Discharge
 Discharge disposition assigned
 Discharge arrangements made
 Medical record binders broken down (If hybrid record system).
 Discharge Education packet
• Includes discharge instructions, directions for follow up care, transportation arrangements, billing information.
17

Revenue Cycle – Process flow
9. Payment Resolution, Claim denial external collections, or write off
1. Pre-Registration
8. AR / Collections 2. Registration
7. Account Billing
3. Patient
Admission or encounter
6.
HIM dept.
Record Analysis and Coding
5. Patient
Discharge
4. Services Rendered
18

Revenue Cycle – step # 6
6. HIM Dept. Record Analysis and Coding
 Record Reconciliation consists of:
• Generating a report of yesterday’s discharged patients/ acct. #s.
• record retrieval of yesterday’s discharges,
• folder creation (where appropriate).


Assembly and Analysis
Coding
• Coding in grouper software based on source documentation
• Coding summary created
• Coding information transferred to abstracting software
• Account Finalized by coder
• Coding information sent to Billing department
Note: Discharge not final coded (DNFC) days begins when the patient has been discharged.
19

Revenue Cycle – Process flow
9. Payment Resolution, Claim denial, external collections, or write off
1. Pre-Registration
8. AR / Collections 2. Registration
7. Account Billing
3. Patient
Admission or encounter
6.
HIM dept.
Record Analysis and Coding
5. Patient
Discharge
4. Services Rendered
20

Revenue Cycle
– step # 7
7. Account Billing
 UBO4 (for inpatient accounts) includes:
• ICD-9-CM Dx. and Px. Codes
 PX. Dates and surgeon name
• DRG
• Item master charges
 Includes Revenue code, Service date, units, and total charges.
• Patient related information
(MRI #, name, DOB, DOS, Insurance Name)
 HCFA 1500 (for outpatient surgical accounts) includes:
• ICD-9-CM Dx. and Px. Codes
• CPT Px. Codes
 Px. Dates and surgeon name
• APC
• Item master charges
 Includes Revenue code and charge date
• Patient related information
(MRI #, name, DOB, DOS, Insurance name)
21

Revenue Cycle – step # 7
7. Account Billing
 Data scrubbed for errors
 Electronic Claim File to insurance companies for payment on the claim.
 Insurance verification (Includes eligibility and coverage limitations)
• If needed and not performed by Registration dept.
• Mostly for Mainecare when pt. is self pay.
Note: Accounts receivable (AR) days begins at the date of the encounter for an outpatient setting, and date of discharge for an
Inpatient setting.
22

Revenue Cycle – Process flow
9. Payment Resolution, Claim denial, external collections, or write off
1. Pre-Registration
8. AR / Collections 2. Registration
7. Account Billing
3. Patient
Admission or encounter
6.
HIM dept.
Record Analysis and Coding
5. Patient
Discharge
4. Services Rendered
23

Revenue Cycle
– step # 8
8. Accounts Receivable (AR)
“The average number of days a company takes to collect payments on goods sold.”
•
•
AR at a convenient store is immediate or within 2-3 days.
The AR benchmark for hospitals is < 50 days.
Source: http://www.businessdictionary.com/definition/days-accounts-receivable-Days-A-R.html
24

Revenue Cycle – step # 8
8.
Collections
 Collections agent can
• Validate information on the bill,
• Assist patient with payment collection,
• Help determine eligibility for MaineCare and help pt. apply for MaineCare.
• Help establish a monthly payment plan.
 Payments options
• Phone via credit card
• By mail
• Electronic bill pay - via patient portal on secured website using pay pal
• Walk in, Billing Dept.
• Monthly payment plan
• Discounts for eligible patients
(example: patients who meet poverty guidelines).
25

Revenue Cycle – Process flow
9. Payment Resolution, Claim denial, external collections, or write off
1. Pre-Registration
8. AR / Collections 2. Registration
7. Account Billing
3. Patient
Admission or encounter
6.
HIM dept.
Record Analysis and Coding
5. Patient
Discharge
4. Services Rendered
26

Revenue Cycle – step # 9
9. Payment Resolution, Claim Denial, External Collections, or Write Off Account
Payment Resolution
 Payment paid to Hospital
Claim Denial


Reasons for denials vary
Additional Determination Request (ADR) via FISS.
External Collections Representative
 Can contact insurance company representative to walk thru verifications and denials
Write Off Account
27

Revenue Cycle – Process flow
9. Payment Resolution, Claim denial, external collections, or write off
1. Pre-Registration
8. AR / Collections 2. Registration
7. Account Billing
3. Patient
Admission or encounter
6.
HIM dept.
Record Analysis and Coding
5. Patient
Discharge
4. Services Rendered
28

 Good source documentation

Via Clinical Documentation Improvement (CDI) program


Codes and DRG reflect the services and treatments rendered
Proper Severity of Illness (SI), (Risk of Mortality) ROM, and APR-
DRG assignments
 Discharge to Final Code Days (DFCD)

AHIMA recommends 3-4 days from discharge date/ encounter date
 Discharge to Final Bill Days (DFBD)
•
Best practice, 5-6 days from discharge date/ encounter date
 Accounts receivable (AR)
• Benchmark: about 47-48 days from discharge date/ encounter date
 Avoid Claim Denials

Proper DRG assignment




Proper dx. and px. codes
Proper discharge disposition
Proper item master charges
Proper E&M levels
29

ACO (Future) vs. Prospective Payment System (Past & Present)
 Current payment model – Prospective Payment System (PPS)



Fee for service payment structure
Reimbursement is volume driven
Service lines structure based on volumes
 Future payment model – Accountable Care Organization (ACO)

Hospitals spectrum of service lines based on meeting the needs of the community


Payment Incentives for preventative treatment and screening services
Goal: to keep people in the local community well.

APR-DRG vs. DRG
 APR-DRG reimbursement: DRG, SI, ROM play a role in reimbursement.
 DRG reimbursement: Reimbursement based on DRG only.
30

Keeping your patient population in the community well rather than practicing reactive medicine.




Screening services
•
•
Prostate exam
Breast exam
• Skin CA screening
Preventative services
• Health wellness and weight loss program
•
•
•
•
•
•
Diabetic consulting
Smoking cessation program
Annual check up
Radiology procedures/ exams
Laboratory services
Treat patients before they become severely ill and go to your ICU.
Aligning service lines with community needs.
Full continuum of care
• Acute care, specialty care, PCP, Hospice care, Rehabilitation,
Patient centered medical home, etc.
31

o o o o o o o o o o
Revenue Cycle
Margin
Total uncompensated care (Free care)
Contractual allowances (Discounts)
Insurance verification
Insurance pre-certification
Claim denial
Write off
Collections
Accountable Care Organization (ACO)
32

references
Managerial Accounting, Tenth Addition, pg. 244, Authors: Ray H. Garrison, DBA, CPA and Eric W. Noreen, PhD,
CMA, McGrqw-Hill Irwin, copyright 2003.
ICD-10 and the Revenue Cycle , AHIMA 2012 Audio Seminar Series, http://campus.ahima.org/audio , July 10, 2012, presenter: Rose T. Dunn, copyright 2012.
http://www.hayesmanagement.com/busops/busops-33.php
, MDapproach™ Solution 1: Overall Revenue Cycle
Improvement.
http://www.hand-holder.com/index.php?area=revenue_cycle , Communications Affect the Revenue Cycle (flow chart diagram).
http://www.businessdictionary.com/definition/days-accounts-receivable-Days-A-R.html
33

---- The end ----
34