Achieve Revenue Integrity and Financial Health for your Hospital
Recent studies show that each year, U.S. hospitals lose nearly five percent of gross revenue as a result of ineffective revenue integrity programs. Today's hospitals face increased scrutiny regarding reimbursement and compliance—making the integrity of charges and revenue critical to an organization's ability to balance rising costs, and maintain high-quality, patient-centered care.
Actually, patient-centered care goes hand-in-hand with a revenue integrity program. When processes are optimized, the daily operations of the hospital improve as well. A "well-oiled" revenue integrity program should:
Identify sources of reimbursement and verify benefits available;
Charge correctly and promptly for the service rendered;
Bill payers accurately and promptly;
Minimize claims delays and denials; and
Validate accuracy of payments.
One of the most effective ways to achieve revenue integrity is by establishing a revenue cycle steering committee (RCSC). This multidisciplinary committee includes department directors and ad-hoc members. The unified team is focused on driving a positive impact on revenue and customer service.
Without a steering committee in place, inconsistent processes can lead to breakdowns in communication, fragmented late charges, bad debt and other missed financial targets. King's Daughters Medical Center (KDMC) in Brookhaven, Mississippi, recently implemented a RCSC to optimize its revenue cycle operations. Implementing a team that includes members throughout the organization can be cumbersome and often gets bogged down with little progress. KDMC brought in Quorum Health Resources to help guide the development and implementation of the RCSC.
Once a RCSC is established, an organization can improve the integrity of its revenue programs by focusing on the following:
Payer eligibility and benefits verification performed prior to or within 24 hours of service at least 95 percent of the time:
o This can be difficult to complete upon patient arrival; therefore, the RCSC should work toward pre-registering 90 percent of non-emergent patients.
Chargemaster maintenance is important! Utilizing software or an outside review of your chargemaster and maintenance processes helps confirm charging and billing accuracy.
o The chargemaster should obtain an outside review annually, or at least every three years.
o Since the chargemaster is more than an office function, it is essential to gain buy-in from all charging departments.
Charge accuracy and timeliness require that:
o Late charges be continually tracked and kept below two percent of all charges (credits and debts are important factors here); and
o Charge capture audits must provide valuable information on charging accuracy.
Claim submission accuracy and timeliness must be owned by the entire organization. Many organizations rely solely on their billing department to track claims. However, there can be as many as four claim edit points to manage accuracy and reasons for rejections, including:
o Management information system (MIS) claims edits
o Electronic claims management (ECM) claims edits
o Payer response (transaction code set #277) claim edits
o Payer edits
Payer edits can be a report from the payer, such as Medicare, which provides this data in the Fiscal Intermediary Standard System (FISS);
Or the report can come from your Electronic Remittance Advices (transaction code set #835).
Denial management processes also require adequate tracking for positive outcomes. Denials should be measured for frequency and financial impact for the following events:
o Payer negative responses (payment delays, rework and potential loss of revenue)
If the payer negative response rate is greater than five percent, the RCSC has a process to begin improvement initiatives.
o Final denial (write-offs and loss of revenue)
Ideally, final denial tracks consistently below two percent of the number of claims and of the dollars to gross revenue.
It is important to isolate "avoidable denials" (the RCSC helps facilitate this).
o Payment validation – (underpayments, inappropriate discounts and incorrect payments)
Tracking payment validation is a little different as you look for rebillable actions and patterns by specific payers.
To achieve a consistent and accurate process, the RCSC will likely utilize a software function, perhaps from their ECM or MIS vendor.
In addition to the above key areas, the RCSC can also monitor:
Centralized scheduling activity;
Point of service collections;
A/R Days monitoring by the different statuses (In-house, DNFB and Billed);
Certain care management indicator such as ALOS and Case Mix;
Bad debt and charity adjustments; and
Cash to net revenue.
With focused efforts and a unified mission, RCSCs can capture significant revenue and savings, and ultimately, improving patient care. In just two years of implementing the RCSC, KDMC achieved significant savings. Some results include decreased total self-pay revenue percent coming through the emergency department from 72 percent to 42 percent and reduced bad debt by $2.5 million since RCSC implementation. "Despite challenges from decreasing Medicaid funding and shifts in the payer mix, the process improvements and approach allowed us to increase our bottom line and optimize our revenue cycle performance," explained Randy Pirtle, CFO of KDMC.
If you do not have an established RCSC, you can try the following in the meantime:
Create a team charger
o Add details and steps around your organization's mission statement.
Create team roles and responsibilities
o Establish a team roster with defined responsibilities, including team members from the following areas:
Patient Access
Health Information Management
Case Management
Patient Accounts
Clinical Leadership
Service Departments
Finance/Reimbursement
Information Technology
CEO/CFO
Create a RCSC score card
o Track and trend the right revenue cycle metrics.
Create a RCSC Management Action Plan (MAP)
o Turn discussion into action.
Create an RCSC Agenda
o Keep the team on track and on-time, by including items on your score card and MAP on your agenda.
Achieving revenue integrity in today's environment of increased scrutiny can help your hospital achieve significant savings, offset rising costs and maintain high-quality, patient-centered care.
Dan Hobbs, CRCE, is Senior Consultant, Revenue Cycle at Quorum Health Resources, a hospital professional consulting services firm that works with more than 150 hospitals across the country.
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