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  1. Welcome Emily Casto Territory Sales Manager New York State Craneware, Inc. e.casto@craneware.com Linda Corley, MBA, CPC Corporate Compliance Officer Revenue Cycle Solutions Dell Services Linda_Corley@dell.com

  2. Developing Sound Controls Managing the Shift from Revenue Cycle to Revenue Integrity Practices

  3. Today’s Agenda • Importance of Continued Focus on the Revenue Cycle • Transitioning from Revenue Cycle to Revenue Integrity • Significance of the Chargemaster • Identifying where Problems start • Strategies for Revenue Integrity • Questions & Answers

  4. Why Focus on the Revenue Cycle? • Increase in Bad Debt due to Revenue Leakage • Increase in Compliance Risk • Increase in Non-payment

  5. What is Revenue Leakage? Revenue leakage – the gap between the amount of revenue providers are entitled to and the amount of reimbursement eventually received – is missed or “lost” revenue.

  6. Increase in Bad Debt • 40% of what hospitals bill is collected1 • $31.2 billion in uncompensated care2 • 17% growth in uncompensated care with no increase in • reimbursement at EMH Regional Healthcare System in Ohio3 • 25% of Americans have trouble paying for medical care4 • 80% of payments uncollected at any given time5 Healthcare Financial Management: Trends in Hospital Uncollectible Revenues (February 2008) Healthcare Financial Management Association Report: Getting Rid of Bad Debt Blues (April 2008) Healthcare Finance News:Ohio Hospital System Addresses Bad Debt by Identifying Patients, Resources (January 30, 2008) USA TODAY: Report: Even the Insured Have Trouble Paying Bills (October 25, 2007) The Advisory Board Company, Financial Leadership Council: "Cultivating the Self-Pay Discipline" (2007)

  7. Increase in Compliance Risk • $76.5 million owed to Medicaid from a New York hospital because of • overbilling1 • 42% of improper payments identified by Recovery Audit Contractors • are attributed to improper coding2 • 38 states had either proposed or passed legislation related to pricing • transparency as of September 20073 • $2.2 billion expected recoveries from fraud investigations and audits • by the OIG in the first-half FY 20084 Medicaid Fraud Control Units: 2005 Annual Report HealthLeaders: When the Auditor Comes Calling: Surviving an Audit (June 2008) Healthcare Financial Management: Is Your Strategic Pricing Strategy Based on Fact or Myth? (May 2008) Office of Inspector General: OIG Reports More Than $2 Billion in Recoveries From Fighting Fraud, Waste, and Abuse for First-Half FY 2008 (June 12, 2008)

  8. Increase in Non-Payment through Errors • A $300-million hospital can easily lose $3 million to chargemaster and charge capture errors1 • 90% of claim denials are preventable2 • 67% of denials are recoverable • 14% of claims submitted are denied3 • One out of every seven claims has to be resubmitted, appealed or written off Healthcare Financial Management: Are You Speeding Toward Revenue Loss? (December 2004) American Medical News: Stake Your Claim: How to fight for fair reimbursement (June 21, 2004) Healthcare Financial Management: Improving Cash Flow with Better Charge Capture and Denial Management (October 2005)

  9. Increase in Non-Payment due to Errors • According to a study of 1 million hospitals’ claims:1 • 56% of claims contained coding errors • 86% of the errors were HCPCS based • 79% of the HCPCS errors were chargemaster related • 27% of claims contained billing errors • 17% of claims contained charging errors • $75 to $125 per claim is the cost associated with managing a denial • or reworking a claim Healthcare Financial Management Association: Outpatient PPS Can Undermine Effective Revenue Cycle Management (July 30, 2004

  10. The Case for Revenue Integrity Revenue Integrity (rev-uh-noo in-teg-ri-ty) -noun The achievement of operational efficiency, compliance and ligament reimbursement – can be achieved only with the proper processes, tools, and related expertise.

  11. Symptoms of a Significant Revenue Cycle Problem • High dollars written-off due to lack of medical necessity • Low percentage of: • Medicare APC and other payors’ reimbursement of charges • Claims that transmit electronically without biller intervention • High Percentage of : • “Return-to-provider” (RTP) Claims • Rework Claims • Multiple rejections for “duplicate claims” • Not enough staff to keep up with collections follow-up • High or growing days in A/R • Cash flow problems

  12. How to Stop Revenue Leakage and begin the • Shift to Revenue Integrity “What is the most important tool to ensure optimum and compliant reimbursement?” The Chargemaster

  13. Start in the Middle • The Chargemaster is the database responsible for translating care into billable and payable services

  14. Significance of the Chargemaster • The Charge Description Master, CDM or Chargemaster is the vehicle through which an organization describes all of its services-both internal and to the outside world • Basis for measuring • Revenue Performance • Costs • Productivity

  15. Significance of the Chargemaster • The Chargemaster is your “Friend” to charging • and billing accurately or “Foe” when it creates • careless patterns of • behavior

  16. Significance of the Chargemaster • When does CDM Maintenance cause Lost Charges? HFMA Insta Poll March 2009

  17. Significance of the Chargemaster • Considering the basis of payment, approximately how much of your revenue is charge based?

  18. Imbed Essential Controls into CDM Maintenance Process • The CDM has a pervasive effect on the charge capture process • Internal controls are most effective when closest to transactions • A control point is located anywhere a process can break down • Internal controls assure that you either prevent or detect errors • The importance of a control point depends on probability, • frequency and materiality of error • What are the controls most important in CDM management?

  19. Essential CDM Controls needed to Shift to Revenue Integrity

  20. Essential CDM Controls needed to Shift to Revenue Integrity

  21. Essential CDM Controls needed to Shift to Revenue Integrity

  22. Essential CDM Controls needed to Shift to Revenue Integrity

  23. Essential CDM Controls needed to Shift to Revenue Integrity

  24. Essential CDM Controls needed to Shift to Revenue Integrity

  25. But How?

  26. The Chargemaster is a key strategic asset in the fight to Stop Revenue Leakage and make the shift to Revenue Integrity – The more accurately it’s managed, the more value it delivers

  27. 7 8MEDICAL RECORDS & CODING 9 8 CHARGE CAPTURE & ENTRY CLAIMS SUBMISSION 6 MEDICAL MANAGEMENT 5 10 REGISTRATION & POS CASH COLLECTIONS THIRD PARTY FOLLOW-UP 4 11 PAYMENT POSTING FINANCIAL COUNSELING 12 3 REJECTION PROCESSING INSURANCE VERIFICATION 13 2 14 DENIAL & APPEAL MANAGEMENT 1 PRE-REG & PRE-CERT CONTRACT NEGOTIATION/ ADMIN. SCHEDULING Revenue Management = Patient Access Functions = Medical Management Functions = Receivables Management Functions

  28. Why are hospitals having more • claim rejections and denials • Patient Financial Services has lost ability to completely “clean-up” claims on the back-end to positively affect reimbursement! • Appropriate “time” for control may be lost if all processes are not in place “prior” to provision of the service • Patient Financial Services (Business Office) does not: • register / schedule / admit • review for medical necessity prior to service • maintain the chargemaster • select / post charge • code the HCPCS / CPT-4 codes • code diagnoses / procedures • add modifiers

  29. Inpatient and outpatient claims undergo thousands of • edits looking at patient status, diagnosis and • procedure data, services provided and demographic • data – they either pay or reject or deny. • Rejections and denials are not contractual write-offs. • This distinction is an important one. • Patients remaining in acute care past the average LOS are • estimated to cost hospitals over 50 million dollars per year. • Hospitals are fined (or placed under a Quality Improvement • Agreement) due to patients being admitted as inpatients when • they do not meet inpatient admission criteria. (RAC • recoupments!) Perplexing Points to Ponder

  30. When is revenue not really “CASH”? When it’s still in “CHARGES” • 2001 – 57% of hospitals were paid less than the actual cost of caring for their Medicare patients¹ • 92% of hospitals lose money on outpatient services – the fastest growing segment of hospital billable services • Medical necessity denials “cost” hospitals more dollars than received in collections in some hospitals • “Lost” revenue has contributed to the negative margins experienced by nearly one-third of all U.S. hospitals every year ¹AHA, The Case for Hospital Payment Improvement, May 2003

  31. Where do denials begin? Patient Access:Why the final bill does not originate in the billing office! • Opportunity vs. Reality: “Know” the facility’s strengths and weaknesses • Pre-registration is a “must” for accurate reimbursement • Insurance verification builds up speed for quicker payment • Scheduling “stops” that may slow down the billing process • Registration collaboration essential!!! • Case Management involvement earns $$ • Manage physician relationships for appropriate reimbursement • Outpatient is not Inpatient – Why the difference means $$ • Medicare “inpatient only” procedures cause denials

  32. Patient Access Strategies for Shifting to Revenue Integrity • Evaluate each and every access point, to flow-chart how • patients are brought into the hospital to receive services; as • well as set goals for planned improvement in data gathering • and POS cash collections • Perform monthly “admissions” review – graph data for ALOS • Pay particular attention to ER admissions. Involve CM / UR in the • “Patient Status” decision-making process • Track all inpatient admissions denied by payer • Establish accountability for medical necessity and the Medicare • “required” Advanced Beneficiary Notice (ABN) or Health Insurance • Notice of Non-coverage (HINN) procedures • Use “compliance” software for diagnosis review for outpatients • Institute required financial counseling sessions with all beneficiaries

  33. Medicare’s Advanced Beneficiary Notice (ABN) • for outpatients and Hospital Issued Notice of • Non-Coverage (HINN) for inpatients Caution flags to watch out for • Is your facility providing “bed and breakfast” along the • trip? • Observation after OP Surgery – Non-covered by Medicare • Must have physician documented “complication” of the OP • surgery to qualify for Observation – even then, it is not • reimbursed • Nausea and vomiting generally considered not a • complication

  34. Charge Capture Strategies • Continued training for: • clinical areas on Medicare coverage and coding requirements • “charge” posting staff on ensuring all services being charged • Continual review of CDM to ensure all line items are • correct • Incorporate payer specific coding for reimbursement • Is there a line item for every service, test, exam, drug, • supply (non-routine) and procedure the hospital may • provide? • Is CDM coding revised quarterly? • CMS publishes new OPPS edits and Addendum B (APC by HCPCS code) each quarter

  35. Charge Capture Strategies • Review of UB to determine if “coded” HCPCS are dropping • to the claim • Does a soft-coded HCPCS override a CDM HCPCS? • “Test” claims important for accurate and compliant billing • Is the HCPCS appearing under the correct • Revenue Code? • Who audits charge process to ensure all services provided • have been charged appropriately? • “Strength” in identification and correction of lost charges • Important for optimum payment but most important for compliant reimbursement and ability to retain $$ after RAC or Medicaid Integrity audits

  36. Charge Capture Strategies for Claim Edits • Compliance (medical necessity) edits – “front-end” edits • Compile “write-offs” by line item service, department, physician, and • registrar • Publish results and communicate to all parties • Use results for educational sessions for registrars/departments • Pre-bill edits – “back-end” edits prior to claim transmission • Require review by “eagle-eyed” manager prior to reversing to the • department whose revenue cannot be collected • Post to spreadsheet for reporting to departmental managers • FISS edits – “return-to-provider” claims with error reason • codes • Require weekly report (itemized list) by biller or collector of claims in • the FISS that have not been cleared for payment.

  37. Charge Capture Strategies for Claim Edits • Erroneous information provided by patient • No coverage on date of service – Commercial, and, yes, Medicare • Medicare should be billed as “secondary” payer – not primary • Auto or other accidents require “primary” payer information • Typographical error at time of registration or billing • Inconsistent information within claim form • Therapy date of onset of symptoms, number of prior visits • Insufficient information required to consider claim • for payment • Overlapping dates of service – Home Health & SNF patient • Need accurate and complete Discharge Planning data • OP services provided within 72 hours of IP admission

  38. Comparing Apples to Oranges “Returned to Provider” or “Denied” Error messages are sometimes difficult for collectors to understand – maintain “error resolution” manual with screen prints and instructions on corrections Medicare Fiscal Intermediary Standard System (FISS) errors (glitches) cause payment delays – analyze $$ and call FI or MAC if substantial Create task force for focused correction for specific payers if problems exist Know standard “payment receipt” time (days in collection) by payer

  39. Comparing Apples to Oranges Health Information Management • Promote collaboration of HIM staff and clinical charge posting staff • Track problematic accounts that require additional work or re-work by HIM • Establish written procedure for clinical area review or HIM review of line items rejected for modifier determination • Ask HIM to meet with PFS to discuss accounts on hold • Track by outpatient area, by physician and by error message • Drill down into DNFB for inpatient accounts to establish $$ by issue

  40. Comparing Apples to Oranges Medical Management • Although Case Management and Utilization Review have been considered components of the Revenue Cycle, NOW is the time to ensure their participation in optimization of payment. • Consider defining written procedure for admission practices! • Important component of compliance. • Often given “responsibility” with no “authority” • Identify CM strengths and weaknesses • Draft improvement plan • Measure performance • Ensure measurable outcomes to document and report “quality” initiatives

  41. Comparing Apples to Oranges • “I sometimes visit a hospital where PFS staff state they have no Medicare denials…” • Why do they think there are no or very few denials? • What change does this thinking require? • Do you know? • What was the total dollar amount of all the services provided in your hospital last month that did not result in a payment?

  42. Receiving the Remittance Advice • How sweet is its arrival or does it ever arrive? • Payment • Denials • Reasons for Denials • Appeals

  43. Communication – How do we know we • have made the shift to Revenue Integrity? • Revenue Cycle Management – Establish monthly meeting to review: • Total revenue earned • Total cash received • Total “non-collectable” charges • And all “benchmark” and best practice data the hospital can track! • Quality Assurance for Revenue Integrity • Set goals and quantify! • Celebration!

  44. Questions? Emily Casto Territory Sales Manager New York State Craneware, Inc. e.casto@craneware.com Linda Corley, MBA, CPC Corporate Compliance Officer Revenue Cycle Solutions Dell Services Linda_Corley@dell.com