How identifying the right revenue cycle solutions partner can save hospitals millions: A case study

As one of the area's only locally-owned, nonprofit health systems, Springfield, Mo.-based CoxHealth plays a major role in both the physical and economic health of southern Missouri.

Along with five hospitals, a health plan, home health agency, home parenteral services (home infusion therapy), CoxHealth Foundation and Cox College, the health system encompasses 84 clinics and nearly 1,000 beds across its 25-county service area. CoxHealth's 10,000 employees and more than 550 staff physicians account for a payroll of more than half a billion dollars — part of an economic impact on the region that exceeds $710 million.

This content is sponsored by Xtend Healthcare

Along with its size and strength, CoxHealth is also known for excellence in care. All of the hospitals in the system are accredited by DNC-GL Healthcare for quality and patient safety. In fact, CoxHealth was the first hospital system in Missouri to receive this accreditation. In addition, the health system's flagship Springfield facility is the only one in the city to be named for four consecutive years to U.S. News & World Report's list of best regional hospitals, and received 28 number one rankings by CareChex for quality.

In 2015, after new revenue cycle leadership came onboard at CoxHealth, the team perceived a need for additional resources to address a stubborn backlog of aging accounts. The looming implementation of ICD-10, hospital officials realized, only reinforced the need to stockpile cash reserves before the new regulations took effect.

"We recognized that we didn't have the internal bandwidth," says CoxHealth's CFO, Cox Medical Center Branson, System VP of Hospital Revenue David Strong. "We lacked the staffing to give us as much ability as we needed to flex to cover all the various tasks."

After making the decision to bring in an external partner, Mr. Strong talked to David Flexer, VP of Sales at Xtend Healthcare. "We knew they had a phenomenal reputation in the market, even though we had never worked with them directly," Mr. Strong says.

Mr. Strong consulted several of Xtend's previous clients. Then, after consulting with his internal team, CoxHealth engaged Xtend for a major project. The assignment: for the entire health system, resolve and collect on all aged third-party receivables that had surpassed the 90-day threshold (many of CoxHealth's receivables were older than 180 days).

Spearheading the effort for Xtend was Will Eley, who managed the project onsite at CoxHealth's Springfield operation. He was supported by a dedicated team at Xtend's offices in the Nashville, Tenn. area. At any given time, Mr. Eley notes, between 18 and 24 Xtend personnel were working CoxHealth's inventory of accounts.

Meanwhile, Mr. Eley worked daily to coordinate the company's efforts with CoxHealth's business office, patient access and compliance staff, to ensure a smooth flow of communication and to resolve any issues that arose.

"With our volume of [aged] accounts, we had such a large task ahead of us that having a manager onsite was very important," says Paul Weaver, Director of Patient Financial Services at CoxHealth. "Having Will here got the project moving from the start, and he has done a fantastic job working with our staff. Because Xtend was here working closely with us, we got good buy-in from our team."

It also helped immensely, CoxHealth executives say, that Xtend was thoroughly familiar with the health system's Cerner Soarian health information services, which helped the Xtend team hit the ground running. By interfacing with Cox's billing information and then using Xtend's own proprietary interfaces with third-party payers, Nashville-based staff enabled Cox's revenue cycle team to see the current status, in real time, of all assigned accounts.

Finding Root Causes
Throughout the engagement, Xtend billing experts, viewing accounts remotely, performed "root cause" analyses to ascertain why they were not being paid in a timely way, or, in some cases, denied. These analyses pointed toward a number of process improvements that could be communicated to CoxHealth and implemented on an ongoing basis throughout the project.

For example, Xtend identified a primary payer code issue with CoxHealth's Medicaid secondary billing. Because these bills were leaving the health system with an incorrect identifier, Medicaid was automatically rejecting them, requiring CoxHealth's billing staff to perform manual data entry and resubmit the claims. After Xtend identified the root cause and corrected the coding, the time required by CoxHealth to correctly submit each claim fell from 10 minutes to one minute. And since this improvement resolved a backlog of more than 2,100 accounts awaiting manual intervention, the time savings was so significant that CoxHealth was able to reallocate one FTE to focus on other priority areas.

Similarly, Xtend also identified and helped CoxHealth correct other billing issues that were causing claim denials — such as claims that failed to include the primary indicator of commercial insurance from problems with present on admission indicators on inpatient rehab claims, to missing healthcare common procedure coding system codes on lab charges that Medicaid requires, ICD-10 coding errors and VA claims submitted without medical records. Meanwhile, Xtend also identified issues with precertifications that had resulted in lost revenue opportunities, identified more efficient processes for billing qualified Medicare benificiary accounts, and updated the CDM to report correct codes for Medicaid processing.

To help cement process improvements for the long term, Xtend also provided a number of onsite training sessions, lasting two to three days each, for CoxHealth's billing staff. "They focused on some specific areas and skillsets in billing and collections," says Mr. Strong. "And since the root cause analyses had identified certain areas for improvement, they could tailor the training to what they were actually seeing in our billing staff's work. The training was a big area where we got value."

Making a Bottom-Line Impact
After approximately 10 months, the results to-date have been impressive.

All in all, Xtend collected $37.8 million, resolving 99 percent of the total revenue represented by the aged receivables CoxHealth had assigned to it.

In particular, the Xtend team had reduced the volume of inventory older than 360 days by $11.3 million, while resolving an additional $5 million in receivables between 180 to 360 days.

At the start of the engagement, accounts older than 90 days represented 39 percent of CoxHealth's third-party inventory and 24 percent of its dollars. These metrics have improved significantly. Currently, accounts over 90 days represent 16 percent of the inventory, and dollars more than 90 days are at 15 percent of the total.

"We have seen an increase in cash and reduction in bad debt that helped us solidify our year-end close," says Strong. "We significantly reduced our A/R and are moving toward peak performance indicators."

Meanwhile, based on these improvements, CoxHealth extended Xtend's involvement to include a new, 12-month project focused on smaller balances. There, too, the work is paying dividends that go beyond the actual accounts the Xtend team has worked. As an example, Mr. Eley notes, staff at the Nashville service center recently discovered that the Medicaid accounts they were handling contained an inaccurate code descriptor that was causing payments to be delayed.

The issue "was creating the need for a significant amount of manual rework" by the billing staff, Mr. Eley says, "and it involved a pretty sizable amount of volume and manpower. Now we've been able to solve this problem with automation."

The fix is so recent that Xtend and CoxHealth have not yet been able fully to measure its impact on the health system's revenue cycle. But they suspect it will be significant. "What we found," Mr. Eley says, "involves only one payer — Medicaid. This could spill over into Medicare accounts, which we do not work [for this client]. I would imagine the correction will create a systemic improvement."

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