- Revenue cycle management success is the heart of any healthcare organization. Defined as the clinical and administrative management of claims management, payment, and revenue production, revenue cycle management is in essence one large financial circulatory system.
Successful revenue cycle management is truly about going back to the basics, especially when it comes to ensuring accurate, timely, and compliant claims reimbursement.
“Organizations that do not engage in thoughtful preliminary planning regarding revenue cycle operating standards ... can find themselves with a mixed bag of acquired practices that are both difficult to manage and unprofitable," said Benjamin C. Colton and David A. Wofford of ECG Management Consultants.
Here is an exploration of top challenges and opportunities that arise throughout various stages of a medical claim’s life cycle.
Many challenges exist within the verification stage
When a patient first contacts a physician office or healthcare provider to make an appointment, the claims reimbursement process begins.
This is the stage when patient data – including insurance information, provider eligibility, and diagnosis codes – is gathered and stored.
But collecting accurate and timely information is not always easy. A beneficiary’s claim becomes eligible for payment only after the unfolding of a fairly convoluted process.
For one thing, revenue cycle management systems perhaps demand a bit of restructuring.
A more streamlined approach where patient accounting, billing information, and electronic health records (EHRs) are closely integrated and more tightly aligned may help.
But having all of your patient data eggs in one basket can lead to some significant problems.
Data breaches have been especially rampant within the last decade or so.
Between 2009 and 2014, over 40 million Americans were reportedly involved in a personal healthcare data breach.
Last year alone, 80 million patients fell victim to Anthem’s record-breaking data breach involving the possible compromise of birth dates, medical IDs, mailing addresses, employment information, and Social Security numbers.
Despite these staggering numbers, perhaps data breaches are not worth worrying about in the grand scheme of things – even though the number of recorded healthcare data breaches reportedly tops those of the government.
Nearly 9 in 10 surveyed healthcare consumers are supposedly not really concerned with data breaches, according to Wakefield Research.
And hospital leaders simply seem to be more focused on other matters, namely matters of money.
It is financial challenges that apparently top the list of hospital leaders’ primary concerns, and have so for the past several years.
Sixty-nine percent of surveyed hospital leaders confirmed Medicaid reimbursement – such as timeliness of payment – was one of their top problems, according to the American College of Healthcare Executives (ACHE).
Bad debt came in second place at sixty-seven percent.
Medicare reimbursement came in third.
“Taking care of patients and improving patient safety and quality in their organizations is [a number one priority] but CEOs acknowledge they must do so in a climate of complex payment reform, dwindling reimbursement and government mandates,” stated Deborah J. Bowen, FACHE, CAE, ACHE’s President and CEO.
Focus on the front-end to move claims along
To help address these three leading financial challenges – along with many others – healthcare executives, billing managers, and physicians are turning their attention to that initial moment when the patient first initiates communication with a healthcare provider, physician office, hospital, etc.
But a claim simply cannot be forwarded along to the next phase if a patient is not accepted into the system because of information misalignment.
There specifically needs to be more emphasis placed on the front-end of revenue cycle management when it comes to figuring out a patient’s eligibility and insurance information.
RevCycleIntelligence.com readers confirmed in a survey last January that talking about a patient’s responsibility before point-of-service is difficult.
Half of surveyed readers are reportedly collecting either at or before point-of-service. And one in three claimed to mainly collect after point-of-service.
“Competitive and transparent pricing of services, high quality clinical outcomes, and effective billing and collection process are becoming more important than ever,” said Derek Bang, CPA, CGMA, Chief Innovation Officer at Crowe Horwath LLP, to RevCycleIntelligence.com.
“The front-end of the revenue cycle must be diligent with determining Medicaid eligibility and assist uninsured patients understand their coverage options with the insurance exchanges,” he added.
Claims denial means a loss of necessary funding
But figuring out a patient’s eligibility regarding health insurance status or financial assistance eligibility when he or she first walks in the door is often problematic.
Proposed Affordable Care Act (ACA) regulations are often confusing and broad, meaning hospitals are in more danger of losing their tax exempt status.
And hospitals are becomingly increasingly burdened with payment claims audits and payment denials.
Half of all Recovery Audit Contractor claim denials are denied, reported the American Hospital Association (AHA).
And some hospitals are additionally financially strapped because of Medicare appeals.
One hospital in particular, Casa Colina Hospital, filed suit last year and requested the Department of Health and Human Services (HHS) to address payment denial tied to hundreds of thousands of dollars in pending appeals.
“Casa Colina is sitting on $1.1 million in reserves, which is a tremendous amount of money in our world,” Felice Loverso, PhD, President and CEO of Casa Colina Hospital and Centers for Healthcare, told RevCycleIntelligence.com.
“Each appeal costs us about $6,000 to $7,000 on top of the $1.1 million in reserves,” he said.
“We might be denied 100 percent of our reimbursement based on either a technical denial, such as the missing signature of one person in a patient’s chart.”
Loverso said reimbursement was also denied “for a medical necessity, such as when a non-clinical person (auditor) determines that a patient who’s already been discharged home from Casa Colina for eight months and living a functional life, could have been treated in a nursing home setting at a lower cost.”
The art of claims correction is key
When claims are suspended, such as in the case of Casa Colina, the chance of denial implodes and hospitals may feel like their payments are constantly being reverted back to square one as debts pile up.
Up to 1 in 4 claims are denied, according to research from the Government Accountability Office (GAO).
Claims denial occurs when many different possibilities arise.
For instance, an insurer may consider care a patient received as being medical unnecessary.
Or a beneficiary may have received care outside of his or her network without realizing it.
Perhaps a name was spelled incorrectly or a number inconsistently entered between two or more parties creating a data freeze of sorts.
Data correction staffs nonetheless work diligently to review suspended claims and analyze where holes or gaps exist with things like compliance, errors, and timeliness.
“Revenue cycle leaders must be on the lookout for outliers or trends that indicate shifts in payment or denial patterns,” stated Karen England, MBA, CPC, Revenue Cycle Consultant at Ingenious Med, to RevCycleIntelligence.com.
“Payers will become smarter and more aggressive in pending claims for documentation in order to support medical necessity,” she said.
“Healthcare providers will continue to struggle with increased performance and limited resources, and must strive for efficient and effective workflows.”
Looking forward to the value-based care future
A claims denials discussion perhaps feels incomplete without at least some mention of ICD-10 implementation – “the biggest event that no one heard about,” remarked Andy Slavitt, Acting Administrator of the Centers for Medicare & Medicaid Services (CMS).
“I fully expect denial rate to go up,” Joshua Berman, RelayHealth Financial’s Director of ICD-10, told RevCycleIntelligence.com last November.
“The question is, will they blow up when they go up?” he asked. “Will it be so much that you're not prepared to handle it?”
ICD-10 implementation came and went last October – luckily without a reimbursement hitch.
According to post-ICD research from Porter Research and Navicure, sixty percent of healthcare organizations “did not see any impact on monthly revenue” after October 1, 2015.
Thirty-four percent reportedly saw revenue drop by up to 20 percent.
Forty-four percent of respondents said denial rates “remained the same.”
“Everyone saw the world hasn't ended because we're at ICD-10,” Dave McCann, Managing Director at Berkeley Research Group, told RevCycleIntelligence.com.
“Most places did a nice job preparing their coders for the transition. They went to ICD-10 classes to avoid major backlogs in coding,” he said. “They lined up vendors or coding support or increased staff. They were pretty well prepared to handle it.”
“As long as they continue to monitor the documentation, the coding, and the billing, and then nip any problems in the bud, they're going to be just fine. ICD-10 has gone better than the worst-case scenarios people expected. They survived it. Now, they just have to keep moving, tracking, and improving.”
2016 is the year of value-based care
Now that the ICD-10 implementation dust has settled, this year may be the year of value-based care.
With the ICD-10 transition now over, two-thirds of healthcare organizations plan to work on strengthening their overall healthcare revenue cycle management processes this year, said Porter Research and Navicure.
A top focus includes working towards a value-based care model, researchers said.
Value-based care models are indeed gaining prominence across the industry, especially in recent months.
For one thing, the number of accountable care organizations (ACOs) is growing.
“[In] 2016, we will not only have more ACOs, we will have better ACOs," said Slavitt during January’s J.P. Morgan Healthcare Conference.
“AMA and CMS share a motivation to empower physicians to deliver higher value care with reduced regulatory burden,” added James L. Madara, MD, CEO and Executive Vice President of the American Medical Association.
“When one thinks of the evolving healthcare market – technology, digital revolution, biomedical advances, precision medicine – these are the things that come to mind,” he stated.
“2016 will be an enormous and pivotal year of progress and it’s starting off with a bang,” Slavitt asserted.
What exactly this “bang” entails is still yet to be realized as the year unfolds.
But the healthcare industry is on the right track to make revenue cycle management and claims reimbursement progress by adapting to the challenges and opportunities of yesterday, today, and tomorrow.
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