Revenue Cycle
Management
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Here’s What You’ll Learn
 Introduction to Revenue Cycle
 Concept Zero to Zero
 Departments & Functions
 Process
 Key Definition & Metrics
 Market Conditions
 Impact to Revenue Cycle
 Modern Day Bounty Hunters
 Charity Care
 Future with Health Care Reform
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What is Revenue Cycle?
All the administrative and clinical
functions, processes, and software
applications that contribute and
manage the registration, charging,
billing, payment and collections tasks
associated with a patient encounter.
Revenue Cycle is the process that
begins when a patient comes into the
system and includes all those activities
that have occurred in order to have a
zero balance
In other words, think…
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Zero to Zero!
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Importance of Revenue Cycle
And You…
“Hospitals exist in a very uncertain time.
Reimbursement risk runs high, and receiving
payments from patients is not guaranteed. The
ability to capture lost revenue and improve the
ability to forecast actual revenue received to the
budget is necessary for hospitals' and other
service providers' survival and vitality.”
Source: Wall Street 2010
The Revenue “Cycle”
SCHEDULING
POST
PAYMENT REVIEW
REGISTRATION
INSURANCE
VERIFICATION
CASH POSTING
POINT OF SERVICE
COLLECTIONS
PROGRAM
ADMINISTRATION
SELF PAY
COLLECTIONS
CULTURE
CUSTOMER
SERVICE
PROCESS
PEOPLE
FINANCIAL
CLEARANCE
TOOLS
FINANCIAL
COUNSELING
DENIALS
MANAGEMENT
THIRD PARTY
FOLLOW- UP
CASE
MGMT/QUR
BILLING
CDMP
MEDICAL
RECORDS
CDM/CHARGE
CAPTURE
Process Flow by Department
Patient
Access
Scheduling
Hospital
Care
Delivery
Documentation
Of
Services
Charge
Master
Billing
Claims
Editor
Receivables
Management
Payment
Posting
Case
PreRegistration Management
Transcription
Bill
Secondary
Reconciliation
Billing
Utilization
Eligibility &
Verification Management
Coding/
CDMP
Claims
Submission
Financial
Counseling
Discharge
Planning
Charge
Capture
Appeals/
Contractual
Denial Mgmt
Adjustments
Registration
Patient
Discharge
Late
Charges
Patient
Statements
Follow-Up
Bad Debt/
Write Offs
Legal
Collections
Feedback
Customer
Service
Customer
Inquiries
Issue
Resolution
Patient Access
 The “Front Door” to the hospital and the first step in the revenue
cycle process for the majority of patients.
 The important functions and information gathered in Access
include:
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Scheduling services (surgery not included)
Verifying of Insurance
Obtaining Authorizations and certifications
Gathering patient demographics and insurance information
Pre-Services/Point of Service collections
Identifying the referring physician
Informing the patient on instructions for the date of service, referral
process, etc.
Informing patient of referral process
Financial Counseling
Medicaid Eligibility/Charity Care
Responsible for 50% of claims data
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Health Information Management
(HIM)
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Health information management (HIM) is the practice of maintenance and care of
health records by traditional and electronic means in hospitals, physician's office
clinics, health departments, health insurance companies, and other facilities that
provide health care
The important functions and information gathered in HIM include:
 Providing and Managing Transcription Services
 Coding services documented by Physicians
 CPT codes (procedures)
 ICD-9 (diagnosis)
 HCPC (supplies, drugs, etc.)
 ASC Codes
Ensure Codes accurately reflect patient services
Acts as a Liaison between all areas
Serves as Subject Matter Experts in HIPAA, Documentation and Coding
Educates, presents, and trains on opportunities to improve
 Case Mix Index (CMI)
Oversees and responds to Defense Audits
Manages storage and retrieval of medical records
Implementation of Electronic Health Record System
Building the Compliant Documentation Management Program (CDMP)
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Patient Financial Services (PFS)
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Patient Financial Services is the “cash machine” of the hospital.
The important functions and information gathered in PFS include:
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Charge Master/Revenue Integrity
Billing
Overseeing Claims Edits to ensure “Clean Claim Submissions”
Employing tools to ensure accuracy in charge capture
Follow-Up with Insurance companies
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Customer Service
Collections
Cash Posting
Subject Matter Experts
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Government Billing
Commercial and Managed Care Billing
Employs and Oversees systems and vendors to enhance
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Appeals
Denials
Un-paid Claims
Services provided to patients
Revenue
Cost to Collect
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Charge Master
 A comprehensive listing of hospital charges
 The Revenue Integrity team are a critical component to billing
compliance and charge capture and is often considered the "life blood"
to a Hospital's Revenue Cycle by touching almost every department
within the facility.
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Standardization of charge master
Department level review of all processes and charges with
management staff to ensure all billable charges are represented on the
CDM
CDM reviews and updates to ensure compliance for all payors
Market pricing, transparency and defensibility strategies
Revenue cycle system mapping to ensure charge capture and
compliant billing
Acuity-based charging methodology development and implementation
Maintenance strategies, controls and tools for maintaining an accurate
and compliant CDM
Educational and training tools
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The Importance of Charge Capture
 A key part of the Revenue Cycle but does not report to Revenue Cycle
 “Bill what you do” – the process where services provided are entered
into the system; charges and expected reimbursements are calculated
 The important functions and information gathered in Charge Processing
include:
 Keyers and coders enter data automatically from a charge master
or manually input
 Claims Manager software scrubs entries for correctness
 Problems sent to department work file for processing or corrections
 Reconciliation performed to insure all entries received and entered
into the system
 Accuracy of service and charge
 Appropriate edits to scrub data
 Charge entered timely for prompt payment
 Daily Charge Logs Reviewed
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Process Flow: For Real?
Process Flow Overview
Revenue Cycle – Where Does the
Information Come From?
Required Billing Elements - Where do they come from?
Required Elements:
50% - Patient Access, Registration
15% - Medical Records
15% - Charge Entry Areas
20% - Billing
Patient Demographic Data
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Patients last name, first name, and middle initial
Patient address
Birth date
Male (M) or Female (F)
Marital Status
Admission date or start of care date
Encounter Specific
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Hour patient was admitted for inpatient or outpatient care
Occurrence Codes
Code indicating the priority of admission--1 indicates emergency; 2 urgent;
3 elective; 4 newborn; and 9 information not available.
Code indicating the source of admission or outpatient service
Provider has patient signature on file permitting release of data (Y or N)
Principal Diagnostic Coding (ICD-9-CM code)
Admitting Diagnostic Coding (ICD-9-CM code)
Insurance Information
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The name and number identifying each payer that payment is expected
Assignment of benefits (Y) yes; (N) no
The name of the patient or insured individual
Relationship of the insured (person having insurance) to the patient
Insured’s identification number assigned by the payer organization
The group name/plan through which the insurance coverage is provided
The insurance group number
Employment status code
Employer’s name and address
Access: Metrics
 Registration accuracy rate
 Denials
 No Authorization
 Not Eligible
 Telephone Statistics
 Hold Times
 Abandonment Rates
 Other
 Point of Service Collections
 “Red Flags” – Incorrect Claim Demographics
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HIM: Metrics
 Discharges Not Final Billed (DNFB)
 Turnaround Times
 Dictation/Transcription
 Record Requests & TAT
 CDMP
 Queries Rate
 Response Rate
 Agreement Rate
 RAC
 Audits & Timeliness
 Responses
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PFS: Metrics
 Cash Expected Reports
 Days in A/R
 Aging Analysis by Payer
 Unbilled Accounts Receivable
 Late Charge Postings by Service Area
 Claim Denial Volumes / Amounts / Types
 Bad Debt / Bad Debt Recovery Levels
 Cost to Collect
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Top Issues Influencing
Health Care Industry
 Record spending on health information technology
 Significant changes in benefit plan design, plan pricing and the health
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plan landscape
New risks and opportunities may emerge as payment models shift from
fee-for-service to new models that focus on performance, health
outcomes and shared cost savings
Health organizations may feel the trickle down effect of decreased
utilization by price sensitive consumers.
A further uptick in merger and acquisition activity to share
administrative burdens and IT investments, gain market share and fill
strategic gaps.
Pharmaceutical companies see an opportunity to increase their visibility
with consumers, influence health outcomes and reduce healthcare
costs while increasing revenue using digital strategies and technology.
The use of mobile health and wireless technologies by all health
organizations is expected to continue to surge.
Source: PwC 2010
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Revenue Stream
Where the Money Comes from...
Source: OHA 2010
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Insurance by Percentage Enrolled
Source: Kaiser Family Foundation 2010
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Average Health Insurance Premiums and
Worker Contributions for Family Coverage, 1999-2009
$13,375
131%
Premium
Increase
$9,860
$5,791
$4,247
128%
Worker
Contribution
Increase
$1,543
1999
$3,515
2009
Employer Contribution
Worker Contribution
Note: The average worker contribution and the average employer contribution may not add to the average total premium
due to rounding.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009.
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On the Rise…
 Group Health Plan
premiums up 9% with
expectations of 6% in 2012
 High Deductible Health
Plans continue to rise
 Deductibles and Out of
Pockets Increasing 22%
 Charity Care, Government
Payors Increasing
1.3 Million Uninsured equivalent to the population of Columbus
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Adults Living in Poverty
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Market Conditions
 State budget issues continue
Traditional Medicaid/Medicaid Managed Care wanting relief
More Ohio residents live below the poverty level
High Penetration of Self-Insured Employers
Shifts of health care costs to Consumers
 Increases in Deductibles
 Increases in Co-Pays
 But, still coverage offered from employers
Most markets are dominated by few payors
Smaller Payors being closed out of the Market
Aggressive Managed Care payors
 Movements to more complicated contracts
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Market Conditions
 Reimbursement Variances
 Commercial Payors Continue to Subsidize
Government Payors
 High Deductible Health Plans Increase
 Deductibles increasing too
 Quality Scores tied to Contract
Increases/Consumerism
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Hospitals
Physicians
 Multi-Year Contracts with Payors
 Transparency Growing
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Charges, Payments, and Cost
 Charges are the amount the hospital lists as the
price for services. Very few pay this “sticker price.”
 Payment or Reimbursement is the amount the
hospital actually receives in cash for its services.
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Private insurers, public insurers, Self Pay and the
uninsured all pay different amounts for the same
services. Payment can be either more or less than
what it costs the hospital to provide a given service.
 Cost is what it actually costs the hospital to provide
the services.
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Reimbursement Methodologies
 Hospitals
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Percent of Charge
Per Diems
Case Rate Payment
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Ambulatory Patient
Groupings (APGs)
Ambulatory Payment
Classifications (APCs)
Other
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Diagnosis Related
Groups (DRGs)
Medical Severity (MS)
DRGs
Globals
 Professional Services
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Fee For Service
discounts
Fee Schedules
Payment based on
Resource Based Relative
Value Based System
(RBRVS)
Capitation
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Withholds
Pools
Case Rates
Carve-Outs
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Subsidies and Payor Mix
Cost
Government
Reimbursement
Commercial
Reimbursement
Charge
Note: Solid lines are status quo; dashes represent future state with
costs, reimbursement, and charges shifting.
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Contracted Fee Schedule Match
Source: AMA 2011 National Insurer Report Card
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Administrative Costs
 Pre-Authorizations
 Complex Benefit
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Designs
Limitations of Network
Denials
Coordination of Benefits
Audits
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Importance of POS Collections
 Recent Studies on the “Tipping Point” –
Financial Hardship Limit – found that when
the total amount billed to the patient reached
3.5% of the family's gross income, the
likelihood of paying the bill dropped
dramatically.
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Source: TransUnion/NorthShore LIJ Study
Modern-Day Bounty Hunters
 RAC: Recovery Audit Contractors
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Medicare
 MAC: Medicare Administrative Contractors
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The new Fiscal Intermediary
 MIC: Medicaid Integrity Contractors
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Medicaid
 Managed Care Audits
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RACs Findings
4%
2%
6% 4%
35%
40%
8%
17%
85%
Outpatient
SNF
Rehab
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Inpatient
Other
Incorrectly Coded
Other
No/Insufficient Doc
Medically Unnecessary
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Charity
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An IRS study found that 9 percent of
revenue was spent on community
benefit.
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3-7 percent of revenue on a
variety of community benefit
and charity care activities is
likely adequate.
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Nearly 60 percent of the hospitals
surveyed provided less than or
equal to 5 percent of revenue on
uncompensated care
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2
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Twenty percent of hospitals
surveyed reported total community
benefit spending of less than 2
percent of revenue.
Source: Kaiser Daily Health Policy Report Feb 2009
Revenue Cycle Management
Strategies
A CFO’s Focus on Revenue Cycle
 Vendor Management
 Denials Management
 Technology Optimization
 Point of Service Collections
 Strategic Pricing
 Contract Management
 Compliance Documentation/Coding.
Source: Interview with: Vince Schmitz, Senior Vice President & CFO, MultiCare Health System.
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Revenue Cycle & Health Care Reform
Revenue Cycle improvements
Positioning for the Future
Expanded
Coverage
Payment Cuts
New Coverage
Requirements
New Economic
Incentives
Eligibility
Processes
Denials
Prevention
Charity Care
Policies &
Processes
ICD-10
C2C
Rational Pricing
Documentation &
Coding
Physician
Integration
ACO/Bundled
Payments
QUESTIONS