Improving revenue cycle with data analysis and transparency

Legislative reforms, such as the Affordable Care Act's Medicaid expansion, combined with the transition to value-based care have created unique challenges for many providers across the nation. Baptist Health System, one of the largest health systems in Alabama with four hospital campuses, has experienced several major revenue setbacks as a result of these two major shifts. While the health system ultimately addressed the financial struggles with data analytics and new revenue cycle processes, the journey wasn’t without its challenges. '

Juggling Medicaid opt out
As a provider in one of the 19 states that does not plan to expand Medicaid at this time, Baptist suffered financially. In fall 2014, the Department of Health and Human Services reported that states which opted out of Medicaid expansion would see just a $1.5 billion decline (9 percent) in unpaid bills or charity care. This is a starkly lower figure than the predicted $4.2 billion decline (25 percent) in unpaid bills or charity care for the states that expanded Medicaid. Furthermore, a 2015 Moody's Investors Service report showed that hospitals in non-expansion states saw bad debt increase through 2014. The Medicaid opt-out left 100,000 enrollees across the state without coverage which had a ripple effect on Baptist and created significant reimbursement challenges for the health system.

The growing requirements of value-based care further compounded Baptists' new financial burden. Like many hospitals around the country, Baptist is still developing the capabilities required for taking on more risk-based contracts, such as an updated electronic health records (EHR) system, data analytics and revenue cycle automation. Prior to acquiring these technologies, Baptist’s revenue management team noticed a severe lack of credible data analysis. It was impossible to get anything beyond canned reports that reflected past data. Without the ability to conduct predictive analysis, senior leadership and the CFO questioned the validity of the revenue cycle financial data.

Analytics to provide data transparency
To improve revenue management and accounts receivable valuation, Baptist adopted an analytics solution that provided real-time insights into revenue cycle bottlenecks, delays and black hole accounts. With this visibility into the revenue cycle, Baptist could proactively trend A/R data, perform comparative benchmarking and drill down into patient accounts and transaction detail. Revenue cycle staff could thus pinpoint changes in trends, analyze root causes and quickly resolve problems before they arose.

For example, shortly after they deployed their new EHR system, Baptist's self-pay mix had risen from 22.3 percent to 28.95 percent. Using their analytics solution, Baptist was able to drill down into the root causes and learned that the emergency department was the primary driver for the increase and that a process flow caused patient access to miss a step when adding insurance. The revenue cycle team was then able to help the patient access team properly identify patient insurance, load that information into the patients' accounts, and submit the claims prior to the filing limit and before they saw an effect on AR days and cash flow. Baptist quickly translated changes in AR to net revenue and was able to reduce AR days from 47.1 in 2005 to 40.1 at the end of the 2014.

Recommendations for navigating the ever-shifting landscape
There are some best practices for providers who may be going through similar revenue cycle challenges:

•    Be confident in the data.
•    Take a scalable approach when possible.
•    Be ready for setbacks.

The questionable revenue cycle data was a major setback at Baptist. It put the revenue cycle team in a position of having to instill trust in the statistical information while also ensuring that the data was correct. The compounded challenges of trying to deal with the revenue difficulties of the Medicaid expansion opt-out while also transitioning into value-based care and converting to a new EHR was a demanding feat. Although it won't always be possible, taking a scalable approach to major system overhauls is ideal. And the ability to embrace challenges and bounce back quickly will be important as more changes and hurdles are bound to come in the long journey to value-based care.

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