Professional Documents
Culture Documents
2010-033 FS Rev Cycle White Paper FINAL
2010-033 FS Rev Cycle White Paper FINAL
March 2010
Table of Contents
Introduction
2
Revenue Cycle Overview
2
Upstream RCM: Scheduling, Patient Access, Insurance Verification and Financial
Counseling
2
Upstream: Scheduling
2
Revenue Cycle Objectives
2
Discussion and Other Considerations
2
Upstream: Patient Access
2
Revenue Cycle Objectives
2
Discussion and Other Considerations
2
Upstream: Insurance Verification
2
Revenue Cycle Objectives
2
Discussion and Other Considerations
2
Upstream: Financial Counseling
2
Revenue Cycle Objectives
2
Discussion and Other Considerations
2
Midstream RCM: Case Management, Charge Capture and Clinical Documentation,
Charge Description Master (CDM) Maintenance, and Health Information
Management (HIM)
2
Upstream: Case Management
2
Revenue Cycle Objectives
2
Discussion and Other Considerations
2
Midstream: Charge Capture and Clinical Documentation
2
Revenue Cycle Objectives
2
Discussion and Other Considerations
2
Midstream: Charge Description Master (CDM) Maintenance
2
Revenue Cycle Objectives
2
Discussion and Other Considerations
2
Midstream: Health Information Management (HIM)
2
Revenue Cycle Objectives
2
Discussion and Other Considerations
2
Downstream RCM: Billing and Claim Submission; Cashiering, Refunds and
Adjustment Posting; Third Party and Guarantor Processing, Payment Posting and
Follow Up; Customer Service; Collections and Outsourcing
2
Downstream: Billing and Claim Submission
2
Revenue Cycle Objectives
2
Downstream: Cashiering, Refunds and Adjustment Posting
2
Revenue Cycle Objectives
2
Discussion and Other Considerations
2
Downstream: Third Party and Guarantor Follow-Up
2
Revenue Cycle Objectives
2
Discussion and Other Considerations
2
Downstream: Customer Service
2
Revenue Cycle Objectives
2
Introduction
One of the biggest challenges facing healthcare providers today is justifying information
technology systems. Competition is stiff to obtain capital dollars for information
technology systems that are not the focus of ARRA (American Recovery and
Reinvestment Act) stimulus efforts or that do not support a providers targeted service
offering(s).
Revenue cycle management (RCM) has a key role in addressing shifting industry
practices in response to three major trends: real time processing, consumer driven
healthcare, and changes in regulations and reimbursement structures. Health information
technology (IT) is critical to the successful management of the revenue cycle. In addition
to those just listed, there are many other focus areas and industry trends that impact this
discussion.
Justifying RCM information system investments can often be easier than justifying larger
clinical systems because the one-to-one ROI (Return on Investment) relationship is
much clearer. Todays best practice revenue cycle management systems, however, are not
just billing systems. These systems typically cover pre-service financial clearance
through post-service financial settlement functions, including registration, bill
estimation, case management, discharge billing, and post-service billing reconciliation,
among many other functions.
The purpose of this paper is to provide a single-source overview of the revenue cycle IT
life cycle and begin exploration of the use of technology to support reporting of best
practice metrics. These metrics can be leveraged for both benchmarking as well as system
purchase justifications throughout the revenue cycle. This paper focuses on the use of
technology to support identified best practices in three major areas pre-service, service
delivery, and post service billing / customer service. The narrative highlights the best
practices envisioned to optimize the revenue cycle within a health system.
Metrics selected for this analysis are based upon existing best practice standards,
executive preference, and organizational priorities. A metric should be consistently
measured, and the data should provide sufficient information to drive operational
improvement, monitor performance and/or quality, or demonstrate progress toward an
organizational objective. The metrics identified in this paper are frequently reported in
operational and executive dashboards, including decision support systems. Operational
dashboards typically include real time, daily, weekly and monthly performance metrics
needed for structure management decision making. Decision support systems include
summaries from the operational dashboards and additional analysis tools for unstructured
What If (pro-forma) decision making.
Strategic metrics, which are those that appear on executive dashboards, encompass
financial, operational, and customer service or quality measures at a high level. Their
purpose is to give executives an overview of each at a glance. These metrics can change
based on an organizations priorities and objectives. Dashboards often include trending,
whether the metric is up or down as compared to last month, and the same month last
year. Dashboards also include cumulative data for the current fiscal year. A detailed list
of revenue cycle performance metrics and industry best practice benchmarks is provided
as an Appendix to this White Paper, and is incorporated by reference in the separate Excel
file, Revenue Cycle Performance Metrics Spreadsheet_03012010.xls (insert URL link)
The information presented herein should be useful to any healthcare provider
organization. For high-performing organizations, there may be some new measures or
processes presented that, if implemented, will further enhance day-to-day operations,
improve the patient experience with the revenue cycle process, and facilitate positive
change to the executive dashboard for key performance measures. For organizations
looking to make major changes in RCM performance management and/or information
technology systems, this paper will provide a blue print for baseline measurements and
system justifications. Measuring department and task level performance, productivity, the
patient experience, and customer demand for services, is critical to an organizations
continuous performance improvement strategy for the revenue cycle. These metrics
provide the data which justify investment in information technology to facilitate
organizational improvement and enhance revenue cycle effectiveness.
Upstream: Scheduling
Revenue Cycle Objectives
The healthcare revenue cycle begins at the time of scheduling. Consequently, we
recommend that scheduling areas should be organizationally aligned with the chief
revenue officer or the employee with this level of responsibility. While scheduling is a
critical step in revenue cycle, it is also important to create a positive first impression for
the hospital and provide quality service for the clinical departments. In consideration of
these factors, the key objectives for scheduling include:
Customers of the scheduling department are physicians and patients, as well as the
clinical departments of the organization. It is critical to monitor both physician and
patient demand for services in a competitive healthcare environment. Optimal access to
care would provide online appointment scheduling and pre-registration around the clock.
Highlights of the systems tools, key performance indicators, and processes that optimize
performance are included in the lists that follow. For more specific details please see the
Scheduling worksheet in the separate file Revenue Cycle Performance Metrics
Spreadsheet_03012010.xls.
System tools to optimize Scheduling / Pre-Registration:
>98%
100%
100%
>95%
100%
individual
<30 sec.
<2 %
individual
individual
<24 hours
<2%
Reminder calls are placed to all patients and include discussion regarding patient
balances and point of service collections policies, confirmation of third party
coverage, and restates proper clinical preparation for the service.
To confirm patient identity (for patient care and compliance with Red Flags
Rules1)
The Federal Trade Commission (FTC), the federal bank regulatory agencies, and the National Credit Union
Administration (NCUA) have issued regulations (the Red Flags Rules) requiring financial institutions and creditors to
develop and implement written identity theft prevention programs, as part of the Fair and Accurate Credit Transactions
(FACT) Act of 2003.
To request applicable patient deposits including copayment, deductible, coinsurance, and prior balances
To ensure that the order is on the patients medical record, and that it is complete
and legible
To ensure all payer requirements are in place or being met prior to service,
including; Notifications, Precertification, Authorizations, and/or Referrals
Customers for the patient access function include physicians and referring-physician
office managers, health insurance companies and patients. Highlights of the IT tools, key
performance indicators, and processes that optimize performance are included in the lists
that follow. For more specific details please see the Pre-Reg +Pre-Auth and Patient
Access +Registration worksheets in the separate file Revenue Cycle Performance Metrics
Spreadsheet_03012010.xls.
System tools to optimize Patient Access:
Real time editing to identify any missing or inaccurate information required for
billing
<5%
<10.0%
10
10.0
35 IP, 40 OP
100%
98%
<1.0%
Integration between the registration system and the patient financial services
system
Red flag systems that identify potential identity theft situations for further
investigation with ability to track events for the required reporting under the Red
Flags Rule
IT systems and/or reports that identify multiple medical records for the same
patients, and helps ensure those duplications are correctly daily
IT systems that identify claims on hold for registration errors, and help ensure the
registrars are required to correct those errors. This process ensures that the team
learns from their mistakes, and reduces the number of those mistakes in the future
Kiosks integrated with the scheduling system and financial systems, able to
request patient balances, and obtain electronic patient signatures.
11
Online verification of coverage and level of benefits directly with the payer
Electronic eligibility system for patient level and batch eligibility inquiries
98%
individual
individual
12
98%
98%
98%
Batch eligibility system for self pay patients, and patients registered as Medicare
only
13
100%
100%
95%
individual
80%
14
100%
65%
100%
100%
100%
All uninsured patients, and patients registered as Medicare only, are screened for
active Medicaid eligibility, and/or eligibility for state, local, or hospital financial
assistance programs
Patients are screened for workers compensation, victims of crime, grants, or other
options for third party payment.
Charity care policies are in compliance with federal, state, and local regulations,
and have reasonable requirements for income documentation, and have a
streamlined process for determining eligibility in a timely and efficient manner.
15
what has historically been a manual, paper process. Further, many financial counselors
are being placed in the emergency room discharge areas, in order to collect more
financial applications and payments for services from all patients.
16
17
of detail are essential to identify issues as they occur, mitigate risk and promote optimal
revenue cycle performance.
The midstream section can be sub-categorized into the following:
Case Management
Charge Capture and Clinical Documentation
Charge Description Master (CDM) Maintenance
Health Information Management (HIM).
Accountability for each of these functions may be assigned to multiple unique job
classes, each of which typically requires a unique skill set to perform well. Thus, there
are multiple diverse measures of performance required to monitor these functions. A
review of organizational practices was employed to distill a comprehensive set of
performance metrics for each function. Additionally, the review has identified key
operational practices which are correlated with higher levels of performance.
A general discussion of activities by sub-section is presented below, along with
applicable performance metrics and processes to support optimal performance. The
information provided herein is comprehensive, yet the inherent complexity of these tasks
allows for a wide variation in how these tasks may be conducted and measured. Thus,
there may be additional practices or measures not identified here that may or may not be
applicable to the practices in a specific entity.
Upstream: Case Management
Revenue Cycle Objectives
Case management is a vital function for hospitals. Typically, professional nurses are
assigned the task of monitoring admissions within established clinical guidelines and
intervening to provide coordination of care when needed. The role of the case manager
has become increasingly important given the complexity of the hospital care
environment, pressures to control cost of care, and the trend to withhold reimbursement
for inappropriate admissions and extensions of inpatient stays beyond that which is
medically necessary.
The case manager role carries inherent conflict. There is accountability to the patient and
providers to coordinate optimal quality care. There is also accountability to the chief
financial officer and the clinical senior management to ensure that the care is rendered
efficiently and not in excess of what is required. When conflict arises, it is essential that
the case manger have a means of escalation within the hierarchy of both clinical practice
and administration.
Highlights of the systems tools, key performance indicators, and processes that optimize
performance are included in this section of the report. For more specific details please see
the Case Management worksheet in the separate file Revenue Cycle Performance Metrics
Spreadsheet_03012010.xls.
18
Admissions: To ensure that the admission is appropriate and within the parameters
of clinical practice that may be reimbursed. The outcome should be minimum
denials due to inappropriate admission.
Care Planning / Coordination and Discharges: To ensure that the discharge is not
delayed due to preventable causes. Resources consumed during an inappropriate
or avoidable extension of stay may not be reimbursed.
19
Performance Measurement of the case managers functions fall within three categories:
Outcomes Measurement
0%
0%
0%
1:1
0%
* Note: this may vary based on the local availability of Skilled Nursing Facility (SNF) beds.
Where availability is less than demand, an assessment of the carrying cost of these cases should
be weighed against the conversion of a portion of the entities own beds to SNF. A second measure
should also be instituted to measure the average amount of time that cases are on a wait list.
Workload and productivity measures for case managers should be reported on a regular
basis. Performance goals will vary based on how processes are organized, the providers
case mix experience, and other environmental factors. Highlights of these measures
include:
Measure
Number of Admissions / Case Manager (with outcome measure of % appropriate)
Number of Discharges / Case Manager (with outcome measure of % delayed)
Number of Patient days managed and % of total patient days
Accurate assessment of workload should include a measure of complexity of cases
managed. This will vary based on data available for reporting purposes, but may be
based on a case mix index, and/ or a measure of percentages of cases requiring special
interventions such as planning Dural Medical Equipment (DME), SNF transfer, or other
metric(s).
Processes to optimize Case Management:
Alerts on new admissions with indication of date, time, provider, diagnosis, and
admission type
20
Inpatient census with admission and clinical data. Preferably this is sorted based
on the individual Case Manager assigned to that case
Alerts on any case that is approaching a previously defined limit on inpatient days
of care, whether defined by a precertification of care by the patients insurance, or
an established limit based on an expected length of stay for the patients clinical
condition (working Diagnosis Related Groups or DRGs)
Alerts on cases where the discharge will require continued care, i.e., home care
with medical equipment, or transfer to another facility for skilled nursing (skilled
Nursing Facility or SNF) or other long term care. This is essential to insure timely
coordination of these subsequent services to insure there is no delay in the
discharge
Operational reports of delayed discharges with aging, reason for delay and
associated costs of delay
A review of hospital entities with high performance reveals certain processes and tools
that may be closely correlated with their superior level of performance. These include:
Identification and tracking of high risk cases (High dollars, long LOS, complex
care needs, etc.)
21
Systems strategy should account for case managers access to information and the
reporting of case management efficiency and effectiveness.
Midstream: Charge Capture and Clinical Documentation
Revenue Cycle Objectives
Charge capture and clinical documentation are two essential tasks to insure that the
resources provided in the delivery of care and the supporting documentation of the
provided care are documented for the clinical record and for use in billing.
What may seem to be simple and straightforward may be extremely complex, and subject
to a wide degree of variation. Different types of care have different documentation
requirements, different areas of clinical specialization (or even individual providers) may
have unique processes and tools for completing these tasks, and multiple steps may be
involved. Each variation and subsequent step in a process introduces some degree of risk
in completing the process correctly and in a proscribed timeframe. Highlights of the
systems tools, key performance indicators, and processes that optimize performance are
included in this section of the report. For more specific details please see the Charge
Capture and Clin Doc worksheet in the separate file Revenue Cycle Performance Metrics
Spreadsheet_03012010.xls.
Revenue cycle improvement projects will typically look for opportunities to standardize
and streamline the processes for charge entry, and when called for, look at means to
improve the timeliness and accessibility of clinical documentation. Given that only
documented services may be billed, it is important to insure that the record is as complete
and accurate with appropriate clinical detail. For example, documenting that a hip
fracture patient has some general symptoms of pneumonia (not otherwise specified)
could result in lower reimbursement than the same case if the type and extent of
pneumonia were fully documented (assuming the clinician had this information and
appropriate treatment was provided). In this instance, however, the primary clinician
may have been an orthopedic specialist, provided the appropriate care for the pneumonia,
but not taken the time to fully document this since the primary focus was on the hip
fracture. This is another example of how the midstream section of the revenue cycle
process truly is the intersection of clinical care and financial performance.
Revenue cycle objectives for Charge Capture and Clinical Documentation include:
22
23
If information is keyed later from documentation, the edits should be applied at the
earliest point in the process where the data is available and there is a party accountable
for intervention when appropriate. Thus, the transaction is identified and addressed prior
to entry into the claim cycle.
A diversity of processes and tools for charge capture and clinical documentation can add
complexity to the revenue cycle process. Where possible, direct entry at the time of
service supports optimum revenue cycle performance. Direct entry enables real-time edit
checking and circumvents possible delays or errors in processing. Wherever possible,
processes should be standardized and streamlined given available system tools and
clinical acceptance / ability to use automated tools.
Operational controls for Charge Capture and Clinical Documentation:
To guard against omissions, operational controls, checks and balances should be
established for each charge capture and documentation mechanism and site where used,
regardless of the type of mechanism used. Each completed clinical encounter should
result in charges and clinical documentation. The accountable party should be alerted in
real time when these items are not completed within an expected timeframe.
Performance measurement of the charge capture and clinical documentation functions
falls within three categories:
Operational controls (tools and alerts at the encounter specific level of detail)
Outcomes measurement
Essential operational controls for charge capture and clinical documentation should be
automated, and reported at the task and user or performer level of detail. If multiple
systems and processes are used for clinical documentation and charge capture, then each
should have the appropriate operational controls established to monitor performance.
Key operational controls for charge capture and clinical documentation include:
24
100.0%
2.0 days
0.0%
0.0%
2.0%
1.0%
100.0%
100.0%
1.0%
1.0%
25
Minimizing the number of tasks and parties involved in the completion of clinical
documentation and the entry of coded values into the billing system for charges,
procedures and diagnoses
Encounters identified with the billing and performing provider(s) at time of
completion (a necessary pre-requisite for operational controls on clinical
documentation (and charge capture if direct entry by clinicians)
Use of automated reports to identify missing documentation by the accountable
party for all encounters
Use of automated reports to identify missing charges by the accountable party for
all encounters
Performance standards for charge capture (and clinical documentation)
established within department managers job descriptions
Use of an escalation process with defined consequences for missing
documentation and charges
If the clinical documentation is not direct entered by clinicians, the transcription
services are either on-line and/or a voice-recognition system. Processes that rely
on manual transfer of tapes and creation of hardcopy for review are subject to
significant issues
Clinicians have the ability to view and/or e-sign records outside the hospital. This
enables time savings in the review and finalization process.
Denials associated with coding, clinical documentation (and clinical practice) are
categorized and reviewed with providers on a regular basis, with instruction on
guidelines as needed
Parties accountable for charge entry are supported with ongoing continuing
education on charge criteria, coding and compliance guidelines
o Some entities have switched from charge forms to on-line charge entry by
clinicians
o In doing so, the coding knowledge of a charge entry clerk was overlooked,
and this knowledge was not given to providers as part of the training
o As a result, many coding errors ensued until the issue was identified and
additional coding training was provided to the clinicians
26
Order entry items have clinician interpretable descriptions and map accurately to
service codes.
Charge ticket items (if charge tickets are used) map accurately to service codes.
The charge generation process works for all manner of workflow sequences. (e.g.,
orders placed before or after results are posted, such as Stat EKGs)
27
Physician orders for outpatient procedures are received with requisite CPT4
code(s).
Charges are generated for delivered/ resulted (not ordered) services (labs, meds,
etc.)
CDM item descriptions and prices are comprehensive and not editable on-line.
0.0
0.0
0.0
0.0
0.0
CDM Item is missing the standard code (HCPCS, CPT-4, NDC, etc.)
0.0
CDM item is assigned an incorrect / invalid code (HCPCS, CPT-4, ICD-9/10) 0.0
CDM item is assigned an incorrect / invalid revenue codes
0.0
0.0
Yes
Yes
28
The third set of measures track activities of CDM Maintenance, and identify broad
parameters of performance in the maintenance functions. These include:
Key Performance Indicators
100%
Yes
Yes
Yes
A standardized CDM pricing methodology which is defensible for all items and
services
Certain characteristics of the CDM structure and records themselves may be closely
correlated with higher levels of overall revenue cycle performance. These include:
Procedure code Modifiers are static coded in the CDM where appropriate (and
codes with and without modifiers are selected as appropriate in charge capture).
Nursing procedures (CPR, infusion, etc.) are defined as unique items in the CDM.
29
APC pass-through items are defined in the CDM and captured for reporting.
30
o Note: Other measures of compliance are captured for HIM, but these are
not necessarily specific to revenue cycle performance and therefore are not
addressed here
System implications for Health Information Management:
HIM processes are dependent on access to all clinical documentation and any pre-coded
data. Thus, HIM coders will require access to all areas where this data may be recorded.
In the absence of a unified EMR, the HIM coding function requires access to the paper
chart and / or component systems used to document clinical care. Where an EMR is
used, coders require access to view all of the areas within the EMR where documentation
and coded data may be recorded.
Sites that allow multiple means to store clinical documentation (scanned text, posted
transcription, direct entry) may be satisfying individual provider choices yet complicating
the function of the coders if each method fails to place the documentation in a logical and
searchable context for a given clinical encounter. Ultimately, coders must be able to
identify and access all clinical documentation for a given episode of care.
When planning an EMR and options for clinical documentation, the downstream use of
the data by coders should be considered. Otherwise, there is risk of missing essential
clinical information to insure coding accuracy, risk of creating inefficiencies in the coding
process, and risk of subsequent negative impacts on revenue cycle performance.
The task of coding the clinical documentation may also employ coding specific systems
tools within a comprehensive HIS or a HIM specific application that is integrated with
other HIS applications. There are trends to move more coding functions to remote
services, either in off-site in office complexes or decentralized to coders home offices.
This adds to the system requirements for remote access, and this carries additional
security considerations, given the protected nature of the patient data. Decentralization
requires appropriate tools for the distribution of work. Thus, electronic worklists are
needed so each individual coder has clear accountability for specific cases to be
completed.
Clinical care coding must adhere to explicit and sometimes complex guidelines. Coders
must have access to guideline reference materials, either in hard copy or in a searchable
soft-copy format. Decentralization may complicate distribution of hardcopy reference
materials.
Once code assignment has been determined, coded values for diagnosis and procedures
must be entered into the billing system for inclusion in claims processing. In the
physician revenue cycle, professional charges are identified in the coding of procedures
and these must also be entered. In a streamlined workflow this work may be done
directly by coders. Some organizations may first capture coded values on forms and then
transfer these to a second party within the organization for data entry.
31
To insure compliance and coding accuracy on outpatient claims, edits should be applied
to coded clinical data prior to claims submission for CCI and LMRP/ NCD edits.
Automated edits may be imbedded in transactions systems to identify discrepancies at the
time of entry (prior to submission into the claim cycle). Should an error or issue be
reported as the edits are applied, the coded items either require refinement or the claim
may be denied.
Refinements to coded values are likely dependent on addendums to the clinical record.
Thus, the ideal circumstance is for providers to enter coded values for charges and
diagnoses directly, receive immediate feedback on the coding edits, and create
addendums to clinical documentation as appropriate. Where many tasks and multiple
parties are involved in the coding and data entry process, the greater the difficulty in
providing essential feedback to providers and refining the clinical record and coding.
Once coding of diagnoses and procedures have been completed, hospital claims require
assignment of the DRG for case-based reimbursement. Final coded records must be
submitted through diagnosis-related grouping system tools to calculate and assign DRGs.
Integration of the grouper application with the HIS allows for automated completion of
this process. DRG assignment is calculated on the documented diagnoses and
procedures. Thus, coding inaccuracies may have an adverse impact on case-based
reimbursement. Once DRGs are assigned, an attestation must be completed by the
provider. Availability of records for review and attestation can also impact revenue cycle
performance.
Performance measurement for Health Information Management:
Claim submission is dependent on completion of the HIM coding processes. Errors and
delays in the process will degrade revenue cycle performance. Operational controls
should be established to monitor performance of the component tasks in completing the
coding process. Operational controls should provide checks and balances for each task
and accountable party. The accountable party should be alerted in real time when these
items are not completed within an expected timeframe.
Performance measurement of the HIM coding functions fall into three categories:
Operational Controls (tools and alerts at the encounter specific level of detail)
Outcomes Measurement,
Essential operational controls for tracking and management of HIM coding activities
should be reported at the task/user performer level of detail. These may include:
32
List of cases pending completion of coding (by assigned coder) with aging
5%
Avg days age in pending queue < X days from entry into queue
Avg days age in pending queue < X days from DOS or Discharge
5%
1%
1%
23.0
Observation (OBSV) charts coded per coder / per day (30 - 34)
34.0
Ambulatory Surgery (AMB SURG) charts coded per coder / per day (30 - 34)
34.0
210.0
210.0
Special Note: though not directly tied to revenue cycle performance, issues in chart
handling (if using paper charts) and / or management of the Master Patient Index in the
EMR or other hospital information systems can have an impact on revenue cycle
performance. Lost charts cannot be coded, and duplicate electronic records can delay
the coding processes or even result in lost charges. If paper charts are still processed,
the entity ideally will use an on-line, bar-code enabled chart location system. A few
fundamental parameters to monitor include:
Key Performance Indicators
0.5%
5%
33
Missing charts
0%
Aging reports on HIM claim processing with both dollars of charges and number
of claims
34
Active coding education program for all parties accountable for charge entry
Accountability for each of these functions may be assigned to a unique employee class,
and requires a unique skill set to perform well. The performance metrics, processes to
support optimal performance, and general discussion are presented by sub-category in the
sections that follow.
Downstream: Billing and Claim Submission
35
Biller-specific worklists
36
100.0%
1.0
2.0
2.0
3.0%
$ 0.20
>85%
37
38
100.0%
1.0
0.0
1.0
39
0.0
All lockbox, electronic, and mail receipts are reconciled and posted each day
Types of Payments:
40
Cash is usually paid only by guarantors and is almost never mailed to the provider.
Cash payments are typically given directly to cashiers at their windows, hence the
term "window payment."
Money orders are usually paid only by guarantors and may be given directly to
cashiers, or mailed to the provider.
Checks may be paid by guarantors and by third-party payors and may be given to
cashiers, mailed to the provider, mailed to a lockbox, or (rarely) picked up by
someone from the business office at the end of the month. Some third-party payors
use a single check to pay multiple accounts, and these checks are typically
accompanied by a remittance advice that details the specific payment amounts
Direct deposit and electronic funds transfer are usually paid by third- party payors.
They involve sending payments directly to the hospital's bank, either through the mail
or by computer
41
Receivables WorkStation
Remittance posting
Contract-management
Imaging
Address and credit checking / scoring
KPI reporting
Insurance A/R aged more than 90 days from service / discharge (15 20%)
15.0%
Insurance A/R aged more than 180 days from service / discharge
5.0%
Insurance A/R aged more than 365 days from service / discharge
2.0%
3.0%
2.0%
Cost-to-collect
3.0%
100.0%
5.0
4.0
55.0
100.0%
3.0%
42
Quantity
Regular
Collectors
All
Collectors
Use
Final
bill date used for driving initial follow up (bill date from last billing submission
system / editor used)
Collector
Automatic
Full
Next
Use
Guarantor
Collectors
Collectors
Collectors
Underpayments
System
Proper
Reasons
Productivity
43
Identification and detailed review of work drivers should take place to ensure
proper work assignments for each department and group. Goals should be to
provide the proper resources to the correct employee(s) who can move each
process forward at the earliest point in the revenue cycle. Worklists must be
sorted and prioritized for each employee, and work must be distributed to
maximize resource utilization and minimize bottlenecks. Worklists may be
electronic (preferred) or paper-based (if properly managed)
High dollar / high risk / high delinquency account review meetings should
become a weekly occurrence. Accounts that are of significant value and have
aged past expected timeframes in their respective process area should be tracked
and documented through to resolution. Coordination between key departments
should be used to assist in resolving these accounts
44
to-work list-driven tool. Requests should be filed at a detailed process level and
monitored by volume, dollar level and age-since-request, to properly manage and
prioritize requests. The process for routing these requests, as well as the follow-up
required to resolve requests, must be monitored at an executive level. This will
help ensure timely response and compliance across unit and department
boundaries
A weekly revenue cycle meeting should take place to review the core set of
weekly revenue cycle reports. This event should include designated
representatives for each key area of the revenue cycle (including but not limited to
access management , HIM, billing, cash posting, follow up, case management and
information technology) who are accountable for communicating weekly process
status, identifying key issues, problems, and accomplishments, and forecasting
results on a weekly (and monthly) basis. Multi- or cross-department issues should
be addressed during this meeting, supported by data and facts not hearsay,
innuendo, or anecdote. Assignment of tasks, issue identification, and strategy
refinement should be tracked and directed by leadership at this time. A weekly
and month-end summary of accomplishments, forecasts, and issues identified
within this meeting should be summarized for C-suite executives review
45
46
employees. Thus, there is a need for defined processes, steps, and open communication
channels with other functions and departments to resolve account and claim issues.
Aside from experience, knowledge, and skills, efficient and effective Customer Service
heavily depends on the information system infrastructure. Todays Customer Service
information systems capabilities include integration with the main information systems to
track and report key quantitative and qualitative aspects of the function (e.g., call wait
times; recorded calls to assess quality and identify training needs; length of actual call
times; etc.). In particular, automatic call distribution (ACD) systems that are tightly
integrated with a providers exiting information systems can streamline patient account
look up and review, as well as facilitate the monitoring and performance of the
department and individual employees.
As with any other revenue cycle function, the more information that resides in the
information system(s), the better the ability of Customer Service employees to fulfill their
role in serving patients. Indeed, the success of resolving patient inquires and complaints
in a timely manner depends on the availability of real-time and accurate information
within the patient account. As such, Customer Service not only serves to address patient
account and claims issues, but this unit can also be a vital source of information for
identification of improvement opportunities throughout the revenue cycle.
Performance measurement for Customer Service:
Specific to Customer Service in healthcare, a variety of quantitative metrics can be
measured to assess and improve performance. These measures and associated best
practice goals typically fall within the categories of operational controls and associated
reporting, outcomes measurement, and productivity, and include, but are not necessarily
limited to, the following metrics:
Key Performance Indicators
1 day or less
5.0 or less
0.5 or less
ACD system abandoned call percentage (% of calls on hold 30 seconds) 2.0% or less
ACD system percentage of calls resolved in 5 minutes
ACD system percentage of calls not resolved in 10 minutes
85.0% or more
5.0% or less
99.0% or more
47
The Customer Service unit should be responsible for assisting walk-in patients,
answering phone calls, and responding to snail mail and email correspondence
48
Voicemail and web-based systems should be in place for patients to request basic
information and/or itemized bills
Such channels can include the use of e-mail, automated referrals sent
through the information system, or other technology means that facilitate
tracking of the communication and resolution of the issue
49
Form 990 and the implementation of the Sarbanes-Oxley Act. Form 990 and SOX have
changed how providers report bad debt and charitable care, and when they report it.
For Collections and Outsourcing, key objectives relate to selection of vendors
experienced in the resolution of healthcare accounts, either early in the collections
process (i.e., early-out or extended business office arrangements) or after exhaustion of
internal collection efforts (i.e., placement of bad debt accounts). An additional objective
is establishment of routine monitoring of the performance of selected vendors to assess
results and return on investment.
The discussion of Collections and Outsourcing presented below is both in-depth and
broad. Although additional practices and measures may be relevant, however, given the
many facets of these areas and variability among providers with respect to needs,
volumes, organizational structure, and information systems.
As in many industries, Collections and Outsourcing is a normal part of day-to-day
business operations in healthcare. Historically, healthcare providers relied upon external
collections vendors primarily for resolution of bad debt accounts. Once internal efforts to
collect on a given account were exhausted, the account would be deemed bad debt and
placed with an external vendor to continue the collections process.
In todays environment, however, many external collections vendors position their
services to assist with efforts beyond bad debt accounts. Common arrangements still
include the servicing of bad debt but may also encompass additional activities, such as
extended business office (EBO) services to resolve accounts prior to bad debt status, as
well as the total outsourcing of most, if not all, key downstream revenue cycle functions
(e.g., billing, posting, collections follow-up, and customer service).
Further, some vendors offer upstream collection services to establish and operate
collections at the point of service for healthcare providers. For the content of this section,
the focus is on downstream collections, although certain aspects of the information can
apply to activities prior to an accounts arrival in the patient financial services unit.
Systems to optimize Collections and Outsourcing
In developing the following information related to Collections and Outsourcing,
important processes, tasks, and functions specific to each area were carefully considered.
In addition, key metrics and associated desired levels of performance for each measure
have been addressed. Heavy emphasis was placed on the use of technology to automate
and/or streamline certain tasks, activities, and processes, as well as facilitate the
monitoring and management of these areas.
The use of integrated information technology and automated processes can significantly
support high-performing Collections and Outsourcing for healthcare providers. Similar
to the need to provide strong customer service in Patient Access as the initial point of
50
Use of an automated billing and collection system, with the latest or most current
version of the system software, as well as a clear plan for routine and future
upgrades of the software
Clear description and detailed processes for the bi-lateral transfer of accounts
between the vendor and provider, as well as capabilities to transfer accounts to
other collection companies
Use of a phone dialer system that is integrated into the main collection system
User-friendly patient statements that can be easily customized within the vendors
information system
51
11.0% or more
(minimum of 7%)
15.0%
(maximum of 18%)
6% to 12.0%1
25.0% or less
(maximum of 30%)
15.0%2
(maximum of 18%)
52
Every 60 days
1. Goal is dependent on when third-party or self-pay accounts are sent to a vendor. Lower fees should be
expected the earlier an account is submitted to an external vendor.
2. A flat fee amount per account qualified for Medicaid could also be considered. Additionally, differing
fee amounts could also be established for inpatient, outpatient, and emergency room accounts.
Of all the measures outlined above, the net-back percentage is the most important. This
metric allows a provider to determine the return on investment for a given arrangement
with an external collections vendor, which can be compared to other collections
companies used by the provider. The obvious goal is to maximize the result of this
metric, meaning that return on investment is maximized.
Processes to optimize Collections and Outsourcing
As with Customer Service, the listed quantifiable measures for Collections and
Outsourcing should be supplemented with additional criteria which are often
characteristic of best-practice organizations, including:
Providers should use two or more bad debt agencies for primary as well as
secondary account placements
o
Different vendors should be used for separate placement of bad debt and EBO
accounts, to eliminate conflicts of interest
Long-term agency payment plan accounts should be written off, with close
monitoring and reporting by the external vendor
The Medicare bad debt 120-day rule should be applied to all financial classes for
equal treatment of all financial classes and patient types
The external vendor should be able to access the providers information system to
review account notes and other important data and information for account
resolution
External vendors should send gross payments to the provider, and then submit
invoices for fees to the provider, along with account-level reports for fee
reconciliation.
External agencies should be willing to provide their own support employees onsite as needed
53
Financial stability
HIPAA-compliant operations
54
It also provides highlights of specific tools and processes known to contribute to optimal
revenue cycle performance. Specifics of all the identified metrics can be found in
Revenue Cycle Performance Metrics Spreadsheet_03012010.xls. Sources of the
performance metrics and systems tools identified here included review of the relevant
literature, system specifications, and personal experience of the workgroup members.
Our goal was to provide, in one place, an overview of the complex world of the revenue
cycle life-cycle. We have addressed upstream and midstream financial clearance
functions and downstream financial settlement functions. The paper incorporates the
highlights of the best-practice metrics that were identified during research by the
contributing members HIMSS Revenue Cycle Workgroup.
Justifications for RCM information systems are often easier than those for clinical
systems because the one-to-one relationship of dollars invested to dollars returned
(ROI) is much clearer. RCM systems are, however, no longer simple billing systems.
They are much more sophisticated and include registration, bill estimations, case
management, discharge billing, and post-service billing reconciliation, among many other
features.
The information presented herein should be useful to any healthcare provider
organization, especially those looking to improve their revenue cycle performance.
Measuring department- and task-level performance, productivity, patient satisfaction, and
customer demand for services is critical to an organizations revenue cycle performance
improvement strategy. These metrics provide the data which justify investment in
information technology to facilitate organizational improvement and enhance revenue
cycle effectiveness.
55
Acknowledgments
The Revenue Cycle Task force would like to thank HFMA and David Hammer for use of
material found in Performance is Reality: How is Your Revenue Cycle Holding Up?
Healthcare Financial Management Magazine, July 2005, and The Next Generation of
Revenue Cycle Management, Healthcare Financial Management Magazine, July 2007.
Members of the HIMSS Financial Systems Revenue Cycle Task Force, who spearheaded
the development of this white paper, include:
Shari Bailey, SPHR
Healthcare Revenue Cycle Consultant
Verite Healthcare Consulting
[email protected]
Bradley Tinnermon
Director
Accretive Health
[email protected]
David Whitham
Director of IT and Accounts Receivable
Dimock Community Health Center
[email protected]
Scott Murphy
General Health Solutions
[email protected]
Holly Gaebel
Coordinator, Healthcare Information Systems
HIMSS Staff Support
[email protected]
The inclusion of an organization name, product or service in this publication should not
be construed as a HIMSS endorsement of such organization, product or service, nor is
the failure to include an organization name, product or service to be construed as
disapproval. The views expressed in this white paper are those of the authors and do not
necessarily reflect the views of HIMSS.
56