5 key metrics to determine the health of a hospital billing department

As the healthcare reimbursement environment continues to become more complex, the ability of organizations to self-assess their billing department is growing in importance.

At the Becker's 2nd Annual CIO/HIT + Revenue Cycle Conference on July 27, Karl Johnson, senior vice president of business development at MediGain — a full-service revenue cycle management company based in Plano, Texas — presented methods healthcare organizations can use to assess the efficiency and accuracy of their billing departments.

Mr. Johnson opened the presentation by offering up a personal ethos. "I'm a firm believer that it's a lot more fun to play a game if you're keeping score."

Here are five key metrics that can provide an accurate assessment of an organization's billing department.

1. Overall collection rate versus closed claim collection rate: After examining the payment to charge ratio on closed claims, Mr. Johnson suggested examining at least a years' worth of claims-level detail and creating a closed claim rate to establish the average reimbursement of an organization's best paid claims. The next step is to compare the closed claim rate with the overall collection rate. Comparing these two measures should highlight areas where improvements can be made. Upon completing this test, one should be able to assess the amount of money that could presumably be coming in the door if all of the claims were paid as good as the average of the most profitable claims.

2. Reimbursement rate by payer and Current Procedural Terminology code: These tests are to be done on closed claims only and should determine which CPT codes are generating the most revenue. Within the test exist a number different analyses that can be conducted by comparing similar payers to their peers and to a baseline of reimbursements of Medicare and major commercial payers. After conducting these tests, one should be able to identify low-paying CPT codes and subsequently conduct an investigation to determine why those particular codes are yielding lower reimbursements than they should be.

3. Zero only write-off test by payer and CPT code: This test examines claims that have been written off in total and should detect root causes for write-offs that seem to be occurring regularly. Write-offs should be categorized and measured by CPT code and payer. Detailed documentation should be given to write-offs that happened early in the revenue cycle, occurring around 30 days.

4. Accounts receivable tests: Accounts receivable tests that exclusively organize data by simple 30-, 60-, 90- and 120-day intervals have become outdated because they can be easily manipulated. Accounts receivable tests should also be broken down by payor, CPT code, provider and locations. This test is designed to identify instances of accounts receivable rollover — i.e. when totals in the 60-day column roll over to the 90-day column and become the same or similar amount. When rollover occurs, accounts aren't being collected upon in full.

5. Top CPT and payer matrix: Creating a chart comparing an organization's 20 most profitable CPT codes with the top 10 payers can be a powerful tool, Mr. Johnson said. The chart can determine a number of things, including the best and worst payer per CPT code, what is the best payer and CPT code combination, what payers reimburse over or under Medicare allowable and what payers are paying above and below the average payment per CPT code.

More articles on revenue cycle management: 
6 keys to achieving successful risk adjustment 
The financial impact of the Pulse nightclub shooting on victims, hospitals: 5 findings 
6 characteristics of consumer-friendly revenue cycles


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