Key Performance Indicators (KPIs): How Do You Know You Survived?

Transcription

1 HFMA-Florida 2014 Spring Conference & Annual Meeting Tampa, FL 15 May 2014 Key Performance Indicators (KPIs): How Do You Know You Survived? David Hammer, FHFMA Principal Revenue Cycle and Managed Care Healthcare Performance Management Consultants Berkeley Lake, GA

2 Content and Organization Introduction KPI Concepts Today s World... and Tomorrow s Key Performance Indicators Performance Measurement Concepts KPI Hierarchy Level I, II, III, and IV KPIs Metric-Driven Revenue Cycle 1

3 Content and Organization (cont d) Appendices Definitions of HFMA s MAP Keys KPIs by Functional Area Best Practice Performance Standards Best Practice Processes Call to Action Managed Care Contracting 2

4 KPI Concepts Even the VERY BEST Keep Score! In business, words are words, explanations are explanations, promises are promises, but only performance is reality. Harold S. Geneen Former President and CEO of ITT 3

5 KPI Concepts Even the VERY BEST Keep Score! If you can t measure it, you can t manage it. Michael Bloomberg CEO of Bloomberg, Inc. and former New York City Mayor 4

6 KPI Concepts Revenue Cycle Structure and Function Billing Denials & Discrepancies Follow-up Collection Cash Posting Pricing Compliance Contracting Registration Coding Financial Counseling SOURCE: St. Vincent Health System, Indianapolis 5

7 KPI Concepts Revenue Cycle Structure and Function COMPLIANCE HEALTHCARE REFORM Financial Institutions COST CONTAINMENT O.I.G & Other Regulators 5 REGISTRATION & POS CASH COLLECTIONS 6 CHARGE CAPTURE & ENTRY 7 MEDICAL MANAGEMENT Information Technology 8 MEDICAL RECORDS & CODING 9 CLAIMS SUBMISSION Medicare & Medicaid FIs 10 THIRD PARTY FOLLOW-UP RACs & MICs 4 FINANCIAL COUNSELING 3 INSURANCE VERIFICATION PATIENT 12 REJECTION PROCESSING 11 PAYMENT POSTING Capital Markets Affiliated & Employed MDs CONSOLIDATION / STANDARDIZATION 2 PRE-REG & PRE-CERT 1 SCHEDULING Revenue Employers CASH FLOW 14 CONTRACT NEGOTIATION / ADMIN. 13 DENIAL & APPEAL MANAGEMENT HMOs / PPOs QUALITY-DRIVEN REIMBURSEMENT SOURCE: PriceWaterhouse Coopers 6

8 Today s World and Tomorrow s 7

9 Today s World You Know the Trends 8

10 9

11 Today s World If We Can Do THIS 10 10

12 Then Why Can t We Come Up With Something Better Than THIS?!? 11

13 Today s World It s Not Our Fault, But It IS Our Problem! 12

14 Today s World What s the Bottom Line? $ COVERAGE REFORM PAYMENT REFORM Predicting rain doesn't count; building arks does. Warren Buffett 13

15 100% 80% 60% Today s World ACA Readiness Not IF, WHEN! Payment Mix Today Incremental Payment-Mix Shift Under Payment / Delivery Reform Bundling (Episodic) FFS Shared Savings Traditional Capitation Global Payment + Episodic Bundling FFS Shared Savings POV: Market Summary Global Payment + Episodic Bundling 40% 20% Traditional FFS Traditional FFS FFS Shared Savings Traditional FFS P4P: Varying levels of use with Traditional Fee-For-Service Next Generation P4P: ~60% of all payment systems Next Generation P4P: ~80% of all payment systems Government Programs Timeline Hospital value-based purchasing program Shared Savings Program Bundled Payment Pilot Voluntarily meet quality thresholds for ACOs Evaluation until 2016, w/extension Physician Quality Reporting Initiative Individual feedback physician reports 2014-Payments reduced for failure to submit quality measures 14

16 Today s World Fee For Service World Remains Challenging Major Impact of ICD-10 in October 2015 (or not) ICD-10-CM (diagnoses) used for inpatient and outpatient ICD-9 CM Number of Codes ICD-10 CM Number of Codes 13,800 68,000 ICD-9 PCS Number of Codes ICD-10 PCS Number of Codes 3,800 87,000 CPT-4 codes will continue to be used for outpatient procedure coding 15

17 Today s World Fee For Service World Remains Challenging Ten Iron-Clad Rules 1. Just because it has a code, that doesn t mean it s covered 2. Just because it s covered, that doesn t mean you can bill for it 3. Just because you can bill for it, that doesn t mean you ll get paid for it 4. Just because you ve been paid for it, that doesn t mean you can keep the money 5. Just because you ve been paid once, that doesn t mean you ll get paid again 16

18 Today s World Fee For Service World Remains Challenging Ten Iron-Clad Rules 6. Just because you got paid in one state doesn t mean you ll get paid in another state 7. You ll never know all the rules 8. Not knowing the rules can land you in the slammer 9. There s always someone who doesn t get the message 10.There s always someone else who gets the message and ignores it 17

19 Today s World Where to Focus, and WHEN? Comments from Health Insights at Stamford How can we scale for a 28% Medicare cut? Even if we merge it is not scalable We do not think the majority of revenue will be value based only certain products I am a skeptic of population health management when an insurance company wants to off load risk, then we do not want that risk The government is not a good long-term business partner The Pioneer ACOs are not working the juice is not worth the squeeze No incentive for patients to stop smoking, exercise, etc Stick to basics, manage costs, and grow volume We will do an ACO for our employees If we cannot do it there, we cannot do it anywhere (Frank Sinatra) I sat with a bunch of Boston hospitals and they are still fee-for-service Culture is the biggest challenge. Our physician group is not organic, but an amalgamation; the problem is that we are trying to change the tires on a moving car 18

20 Today s World Five New-World Imperatives and Priorities ICD-10 Transition Pricing Transparency Physician & Hospital Alignment Health Care Reform Data Explosion Minimize surprise of new contracts and new denials Deploy defensible pricing and increase upfront collections Integrate physicians into financial operations Manage the transition of fee-forservice to fee-for- value Discover actionable insights to drive clinical and financial advantage 19

21 Where s Your Focus? 20

22 How Should You Measure Performance? 21

23 Key Performance Indicators Performance Measurement Concepts Why Use KPIs? Keep a record and tell a story Benchmark against your goals and industry best practices Identify and manage trends, not singleperiod results Illustrate relationships between KPIs 22

24 Use external, verifiable info sources Share the same data with everyone Board Senior management Peers Key Performance Indicators Performance Measurement Concepts Subordinates Report both good and bad results 23

25 Not All KPIs Are Created Equal 24

26 Key Performance Indicators KPI Hierarchy Level I: Board members, senior execs, financial and clinical directors, and internal reporting for all revenue cycle managers, supervisors, and employees Level II: CFO, finance directors and employees, and internal reporting for all revenue cycle managers, supervisors, and employees Level III: CFO plus internal reporting for all revenue cycle managers, supervisors, and employees Level IV: Internal comparisons of different payors plus external reporting for third party payors 25

27 Key Performance Indicators KPI Hierarchy First-Level Indicators Cash collections Gross and net A/R In-House and D-N-F-B receivables 3 rd -party aging % > 90 days Cash % of net revenue Cost to collect % 26

28 Key Performance Indicators Cash Collections First Level 27

29 Key Performance Indicators Cash Collections First Level KPI GOAL M-T-D % DAYS % $ $20M $11M 55% 28

30 Key Performance Indicators Gross A/R First Level 29

31 Key Performance Indicators Net A/R First Level 30

32 Key Performance Indicators In-House and D-N-F-B A/R First Level 31

33 Key Performance Indicators 3 rd- Party Aging % > 90 Days First Level 32

34 Key Performance Indicators Cash % of Net Revenue First Level 33

35 Key Performance Indicators Cost-to-Collect % First Level 34

36 Key Performance Indicators KPI Hierarchy Second-Level Indicators Net A/R days Allowance for doubtful accounts Bad debt + charity % of gross revenue Denials % of gross revenue Cash % of collection goal Point-of-service cash % of POS goal 35

37 Key Performance Indicators Net A/R Days Second Level 36

38 Key Performance Indicators Allowance for Doubtful Accts Second Level 37

39 Key Performance Indicators B/D + Charity % of Gross Rev Second Level 38

40 Key Performance Indicators Denials % of Gross Revenue Second Level 39

41 Key Performance Indicators A/R Cash % of Cash Goal Second Level 40

42 Key Performance Indicators P-O-S Cash % of Goal Second Level 41

43 Key Performance Indicators KPI Hierarchy Third-Level Indicators Credit balance receivables Clean claims throughput % Collection agency netback % Net revenue Case mix index (CMI) Complaints to Administration Open accounts 42

44 Key Performance Indicators Credit-Balance Receivables Third Level 43

45 Key Performance Indicators Clean-Claim Throughput % Third Level 44

46 Key Performance Indicators Collection Agency Netback % Third Level 45

47 Key Performance Indicators Net Revenue Third Level 46

48 Key Performance Indicators Case Mix Index (CMI) Third Level 47

49 Key Performance Indicators Complaints to Administration Third Level 48

50 Key Performance Indicators Open Accounts Third Level 49

51 Key Performance Indicators Managed Care Report Cards Fourth Level Revenue Cycle KPI reporting sample for: Board of Directors Finance Committee Finance Division Internal reporting Managed Care Report Cards (letters, actually) 50

52 Key Performance Indicators Managed Care Report Cards Fourth Level By Major Payor Category or Plan Code % of Total A/R >60 Days % of A/R >35 Days (No Pmt, No Response) % of A/R in Underpaid Category % of A/R in Appeal Status % of A/R in Overpaid Category 51

53 Key Performance Indicators Managed Care Report Cards Fourth Level MEASUREMENT PEER COMPARISONS SHOW Total A/R by month Overall A/R trend & direction % A/R >60 days Claims processing issues % A/R >35 days Promptness of payment %/$ Underpaid Contract interpretation issues %/$ Denials under appeal Denial issues %/$ Overpaid Contract interpretation issues 52

54 Key Performance Indicators Managed Care Report Cards Fourth Level 53

55 Key Performance Indicators Managed Care Report Cards Fourth Level 54

56 Key Performance Indicators Managed Care Report Cards Fourth Level 55

57 Key Performance Indicators Managed Care Report Cards Fourth Level 56

58 SO... You Think You Want a Metric-Driven Revenue Cycle? 57

59 SO... You Think You Want a Metric-Driven Rev Cycle? Winning Organizational Strategies 58

60 SO... You Think You Want a Metric-Driven Rev Cycle? According to HFMA Key Action Steps Improve cash collections and revenue cycle operations Examine existing processes to identify those that should be re-engineered to take advantage of EHRs Evaluate performance on current quality measures and begin a campaign to improve them Work to understand the causes of preventable readmissions and develop an action plan to eliminate them Strive to continuously improve operating efficiency Develop a more integrated relationship with physicians Begin ACO planning and implementation 59

61 SO... You Think You Want a Metric-Driven Rev Cycle? Planning and Implementing Key Thoughts How do you start? Open the discussion Take time to define / refine KPIs Gain consensus and commitment How do you use KPIs to enact change? Understand processes that generate KPIs Create a culture of accountability and reward Continuously adapt and iterate 60

62 SO... You Think You Want a Metric-Driven Rev Cycle? Planning and Implementing Key Thoughts Take the complexity out; simplify your work View key indicators that provide early warnings Maintain personal involvement in critical areas Access a mix of early-warning and historical data 61

63 SO... You Think You Want a Metric-Driven Rev Cycle? Planning and Implementing Key Thoughts Consider the following questions How do we enter data? How do we get reports? How do we use information to effect change? When / why are things out-of-control? What do we do? 62

64 SO... You Think You Want a Metric-Driven Rev Cycle? Planning and Implementing Call to Action! Open / frame the discussion 5% Define / refine KPIs 50% Gain consensus / commitment 10% Demand accountability / reward results 25% Continuously adapt and iterate 10% Achieve results! 100% 63

65 Where s Your Focus? 64

66 Bibliography Questions to Ask Before Signing a Managed Care Contract, Private Sector Advocacy, Dec BearingPoint, Key Performance Indicators, Catholic Health East, Canfield, David and Scott Johnston, HFMA Patient Revenue Cycle Industry Study, Healthcare Financial Management Association, Westchester, IL, Clinical Quality Guidelines, NEJM, 348: , June 26, Guyton, Elizabeth and Chuck Lund, Transforming the Revenue Cycle, Healthcare Financial Management, Mar Harris, David, Turning Your Revenue Cycle Into a Hot Rod Using Bolt- On Technology, HFMA ANI, Jun LaForge, Richard and Johnny Tureaud, Revenue-Cycle Redesign: Honing the Details, Healthcare Financial Management, Jan Managed Care Forum Contracting Checklist, HFMA Wants You to Know, 21 Apr

67 Bibliography 9. Miller, Thomas, Conducting a Managed Care Contract Review, Healthcare Financial Management, Jan Pogue, Neil CMS Program Office, Medicare Policy Update, HFMA s Revenue Cycle Strategies Conference, San Francisco, 09 Oct Schneider, Robert, Sheldon Mandelbaum, Ken Braboys, and Cynthia Bailey, Process-Centered Revenue Cycle Management Optimizes Payment Process, Healthcare Financial Management, Jan Stevenson, Paul, Managed Care Cycle Provides Contract Oversight, Healthcare Financial Management, Mar Walters, Roy, Five Steps to Great Revenue Cycle Management, Healthcare Financial Management, May Wennberg, John, E. Fisher, T. Stukel and S. Sharp, Use of Medicare Claims Data to Monitor Provider-Specific Performance Among Patients with Severe Chronic Illness, Journal of Health Affairs, 07 Oct Wilson, David, 3 Steps to Profitable Managed Care Contracts, Healthcare Financial Management, May

68 Instructor s Bio David Hammer, Principal Healthcare Performance Management Consultants, LLC Mr. Hammer is a Principal at Healthcare Performance Management Consultants, LLC (HPMC), in Berkeley Lake, GA. In his leadership role at HPMC, he works with hospitals and health systems to optimize revenue cycle and managed care outcomes. Prior to joining HPMC, David was Senior Vice President of Revenue Cycle Advisory Solutions at MedAssets and is a former Partner at Accenture. David focuses on revenue cycle and healthcare reform issues for hospitals, health systems, and related entities. He serves many of the largest health systems, MD-led clinics, and academic medical centers in the US. He was formerly VP of enterprise revenue management at McKesson and previously Chief Revenue Officer for Charter Behavioral Health, a +100-facility health system. David has over 30 years of healthcare experience, including executive leadership and direction, revenue cycle transformation, information system planning / implementation, and consulting. He has worked for a variety of leading health systems, software vendors, and professional services firms. Background and Affiliations Mr. Hammer received an MBA in Management and an MHS in Health Care Administration from the University of Florida. He also received a BBA in Accounting with a minor in Information Systems from the University of North Florida. Mr. Hammer is certified by HFMA as a Fellow (FHFMA) and as a Certified Healthcare Finance Professional (CHFP). He has been repeatedly named an HFMA Distinguished Speaker, and is a 2007 recipient of HFMA s Medal of Honor service award. Recent Publications Mr. Hammer is the author of No Money, No Mission Healthcare Revenue Cycle Best Practices, which will be published in 2014 by Healthcare Performance Press. Mr. Hammer s most recent publication is Health Reform: Intended and Unintended Consequences, which appeared in the October 2010 issue of HFMA s healthcare financial management journal (hfm). Don t Panic: CFOs React to the New Economic Reality, appeared in hfm s March 2009 issue. Mr. Hammer authored the February 2008 cover story in hfm, entitled Beyond Bolt-Ons Breakthroughs in Revenue Cycle Information Systems. He also wrote the July 2007 cover story, called The Next Generation of Revenue Cycle Management, as well as the July 2005 hfm cover story, entitled Performance is Reality: Is Your Revenue Cycle Holding Up? Another one of his articles, UPMC s Metric-Driven Revenue Cycle, appeared in the September 2007 issue of hfm, Contact Information Mr. Hammer can be reached by telephone at (954) and/or by at [email protected] or [email protected] 67

69 68

70 Appendices 69

71 Definitions of HFMA s MAP Keys 70

72 HFMA s MAP Initiative MAP Keys: Net Days in A/R Purpose Value Calculation Indicator Purpose Value Calculation Net days in A/R Trending indicator of overall A/R performance Indicates revenue cycle efficiency Net A/R Average Daily Net Patient Service Revenue 71

73 HFMA s MAP Initiative MAP Keys: Aged A/R Percentage of Final-Billed A/R Purpose Value Calculation Indicator Aged A/R as a percentage of Billed A/R Purpose Value Calculation Trending indicator of receivables collectability Indicates RC s ability to liquidate A/R >30,>60,>90,>120 days Total Billed A/R 72

74 HFMA s MAP Initiative MAP Keys: Point-of-Service Cash Collections ($) Purpose Value Calculation Indicator Point-of-Service Cash Collections Purpose Value Calculation Trending indicator of point-of-service collection efforts Indicates potential exposure to bad debt, accelerates cash collections, and can reduce collection costs POS Payments Total Patient Cash Collected 73

75 Indicator HFMA s MAP Initiative MAP Keys: Cost to Collect Purpose Value Calculation Cost to Collect Purpose Value Calculation Trending indicator of operational performance Indicates the efficiency and productivity of RC process Total RC Cost Total Cash Collected 74

76 HFMA s MAP Initiative MAP Keys: Cash Percentage of Net Revenue Purpose Value Calculation Indicator Purpose Value Calculation Cash Collections as a Percentage of Adjusted Net Patient-Service Revenue Trending indicator of propensity to convert net revenue to cash Indicates fiscal integrity / financial health of the organization Total Cash Collected Average Monthly Net Revenue 75

77 Indicator Purpose Value Calculation HFMA s MAP Initiative MAP Keys: Bad Debt (%) Purpose Value Calculation Bad Debt Trending indicator of the effectiveness of self-pay collection efforts and financial counseling Indicates organization s ability to collect self-pay accounts and identify payor sources for patients unable to meet financial obligations Bad Debt Write-Off Gross Patient Service Revenue 76

78 Indicator HFMA s MAP Initiative MAP Keys: Charity Care (%) Purpose Value Calculation Charity Care Purpose Value Calculation Trending indicator of local ability to pay Indicates organization s ability to collect self-pay accounts and identify payor sources for patients unable to meet financial obligations Charity Care Write-Off Gross Patient Service Revenue 77

79 Indicator Purpose Value HFMA s MAP Initiative MAP Keys: Days in Total DNFB Purpose Value Calculation Days in Total Discharged Not Final Billed Trending indicator of local ability to pay Indicates RC performance and can identify performance issues impacting cash flow Calculation Gross Dollars in DNFB A/R Average Daily Gross Revenue 78

80 HFMA s MAP Initiative MAP Keys: Aged A/R Percentage of Billed A/R by Payor Purpose Value Calculation Indicator Purpose Value Calculation Aged A/R as a % of Billed A/R, by Payor Group Trending indicator of receivables collectability, by payor group Indicates RC s ability to liquidate A/R, by specific payor group Billed Payor Group by Aging (>30,>60,>90,>120 days) Total Billed A/R by payor group 79

81 Indicator Purpose Value Calculation HFMA s MAP Initiative MAP Keys: Days in FBNS Purpose Value Calculation Days in Final Billed Not Submitted to Payor (FBNS) Trending indicator of claims delayed by payor / regulatory edits in the claims processing system Track the impact of internal / external requirements for clean claim production, which impact cash flow Gross Dollars in FBNS Average Daily Gross Revenue 80

82 HFMA s MAP Initiative MAP Keys: Days in DNSP (DNFB + FBNS) Purpose Value Calculation Indicator Purpose Days in Total Discharged Not Submitted to Payer (DNSP) Trending indicator of total claimsgeneration / submission effectiveness Value Calculation Indicates revenue cycle performance and can identify performance issues impacting cash flow Gross $ in DNFB + Gross $ in FBNS Average Daily Gross Revenue 81

83 Indicator Purpose Value HFMA s MAP Initiative MAP Keys: Late Charge Percentage Purpose Value Calculation Calculation Late Charges as % of Total Charges Measure of revenue-integrity effectiveness Identify opportunities to improve revenue integrity, reduce avoidable costs, enhance compliance, and accelerate cash flow Charges with posting dates greater than 3 days from final service date Total gross charges 82

84 HFMA s MAP Initiative MAP Keys: Initial Zero-Pay Denial Rate (#) Purpose Value Calculation Indicator Purpose Value Calculation Initial Denial Rate Zero-Pay Claims Trending indicator of percentage of claims not paid Indicates provider s ability to comply with payor requirements and payor s ability to accurately pay claims Number of zero-pay claims denied Number of total claims remitted 83

85 HFMA s MAP Initiative MAP Keys: Initial Partial-Pay Denial Rate (#) Purpose Value Calculation Indicator Purpose Value Calculation Initial Denial Rate Partial-Pay Claims Trending indicator of percentage of claims partially paid (underpaid) Indicates provider s ability to comply with payor requirements and payor s ability to accurately pay claims Number of partial-pay claims denied Number of total claims remitted 84

86 Indicator HFMA s MAP Initiative MAP Keys: Appeals Success Rate (#) Purpose Value Calculation Denials Overturned on Appeal Purpose Value Calculation Trending indicator of provider s success in managing the appeal process Indicates opportunities for payor and provider process improvement and cash-flow improvements Number of appealed claims paid Total number of claims appealed and finalized or closed 85

87 Indicator Purpose Value HFMA s MAP Initiative MAP Keys: Net Days in A/R Credits Purpose Value Calculation Calculation Net Days Revenue in Credit Balances Trending indicator to accurately report A/R values, ensure regulatory compliance, and monitor overall A/R management effectiveness Indicates whether credit balances are managed to appropriate levels and are compliant w/ regulatory requirements Dollars in Credit Balances Average Daily Net Patient-Service Revenue 86

88 Indicator Purpose HFMA s MAP Initiative MAP Keys: Pre-Registration Rate Purpose Value Calculation Pre-Registration Rate Trending indicator of timeliness, accuracy, and efficiency of patient access processes Value Calculation Indicates revenue cycle efficiency and effectiveness Number of patient encounters pre-registered Number of scheduled patient encounters 87

89 Indicator Purpose Value HFMA s MAP Initiative MAP Keys: Insurance Verification Rate Purpose Value Calculation Insurance Verification Rate Trending indicator of timeliness, accuracy, and efficiency of patient access processes Indicates revenue cycle process efficiency and effectiveness Calculation Total number of verified encounters Total number of registered encounters 88

90 Indicator Purpose HFMA s MAP Initiative MAP Keys: Service-Authorization Rate Purpose Value Calculation Service-Authorization Rate Trending indicator of timeliness, accuracy, and efficiency of patient access processes Value Calculation Indicates revenue cycle process efficiency and effectiveness Number of encounters authorized Number of encounters requiring authorization 89

91 Let s Get Down to Details... KPIs by Functional Area 90

92 KPIs by Functional Area Scheduling Pre-Registration / Pre-Authorization Insurance Verification Patient Access / Registration Financial Counseling Health Information Management Charge Entry / Revenue Protection 91

93 KPIs by Functional Area Billing / Claim Submission 3 rd -Party and Guarantor Follow-Up Cashiering / Refunds / Adj Posting Denials Customer Service Collection / Outsourcing Vendors Physician Practice Management Managed Care Contracting 92

94 KPIs by Functional Area Scheduling KPI Description Standard 1. Overall scheduling rate of potentially-eligible patients: 100% Scheduling rate for elective and urgent inpatients 100% Scheduling rate for ambulatory surgery patients 100% Scheduling rate for hi-$ outpatient diagnostic patients 100% 2. Scheduled patients pre-registration rate 98% 93

95 KPIs by Functional Area Scheduling KPI Description Process 1. Use on-line scheduling software house-wide? Yes 2. Have central scheduling unit? Yes 3. Central scheduling answers to Chief Revenue Officer? Yes 4. Surgery uses same scheduling software as other depts? Yes 5. Scheduling system integrated with registration system? Yes 6. Use on-line OP medical necessity system prior to service? Yes 7. Pre-certification requirements shared with MDs offices? Yes 94

96 KPIs by Functional Area Scheduling KPI Description Process 8. MDs and patients able to make on-line appt requests? Yes 9. Non-emergency services scheduled 12+ hours in advance? Yes 10. Process and IT integrated between scheduling and pre-reg? Yes 11. Services postponed if not pre-authorized in advance? Yes 12. Financial counseling part of scheduling process? Yes Patient balances and payment obligations discussed? Hospital policy for point-of-service payment explained? Reminder to bring required payment & insurance cards given? Yes Yes Yes 95

97 KPIs by Functional Area Pre-Registration / Pre-Authorization KPI Description Standard 1. Overall pre-registration rate of scheduled patients 98% 2. Overall insurance verification rate of pre-registered patients 98% 3. Deposit request rate for co-pays and deductibles 98% 4. Deposit request rate for elective admissions / procedures 100% 5. Deposit request rate for prior unpaid balances 98% 6. Data quality compared to pre-established dept standards 99% 96

98 KPIs by Functional Area Pre-Registration / Pre-Authorization KPI Description Process 1. Have dedicated pre-registration / pre-authorization unit? Yes 2. Process and IT integrated between scheduling and pre-reg? Yes 3. Services postponed if not pre-authorized in advance? Yes 4. Financial counseling part of pre-reg / pre-auth process? Yes Patient balances and payment obligations discussed? Hospital policy for point-of-service payment explained? Reminder to bring required payment & insurance cards given? Yes Yes Yes 97

99 KPIs by Functional Area Insurance Verification KPI Description Standard 1. Overall insurance verification rate of scheduled patients 98% 2. Overall ins verification rate of pre-registered patients 98% 3. Ins verf rate of unscheduled IPs w/in one day 98% 4. Ins verf rate of unscheduled hi-$ OPs w/in one day 98% 5. Data quality compared to pre-established dept standards 99% 98

100 KPIs by Functional Area Insurance Verification KPI Description Process 1. Have dedicated insurance verification unit? Yes 2. Process and IT integrated between ins verf / patient access? Yes 3. Use on-line insurance verification system? Yes 4. Financial counseling part of insurance verification process? Yes Alternate arrangements for non-covered patients explored? Hospital policy for point-of-service payment explained? Reminder to bring required payment & insurance cards given? Yes Yes Yes 99

101 KPIs by Functional Area Patient Access / Registration KPI Description Standard 1. Average registration interview duration 10 min 2. Average patient wait time 10 min 3. Average IP registrations per registrar / per shift Average OP registrations per registrar / per shift Average ER registrations per registrar / per shift Data quality compared to pre-established dept standards 99% 7. ABNs / MSPQs obtained when required 100% 8. MPI duplicates created daily as a % of total registrations 1% 100

102 KPIs by Functional Area Patient Access / Registration KPI Description Process 1. Patient Access reports to Chief Revenue Officer? Yes 2. All registrars report to Patient Access or within rev cycle? Yes 3. Use on-line document imaging system? Yes 4. Financial counseling part of patient access process? Yes Patient balances and other payment obligations collected? Policy for payment alternatives explained (credit cards, etc.)? Copies of required payment & insurance cards obtained? Yes Yes Yes 101

103 KPIs by Functional Area Patient Access / Registration KPI Description Process 5. Registrars incentive compensation tied to quality indicators? Yes 6. Registration system integrated / interfaced to PFS system? Yes 7. Use on-line / web-enabled patient self-registration system? Yes 8. Use on-line OP medical necessity system prior to service? Yes 9. Use on-line registration data quality tracking system? Yes 10. Have on-line interface to owned MDs registration system? Yes 102

104 KPIs by Functional Area Financial Counseling KPI Description Standard 1. Collection of elective services deposits prior to service 100% 2. Collection of IP patient-pay balances prior to discharge 65% 3. Collection of OP patient-pay balances prior to service 75% 4. Collection of ER patient-pay balances prior to departure 50% 5. Screening of uninsured IPs and hi-bal OPs for fin assist 98% 6. Pmt arrangements for non-charity eligible IPs / hi-bal OPs 98% 7. Prompt-payment discount percentage(s) 05 20% 103

105 KPIs by Functional Area Financial Counseling KPI Description Process 1. Financial counseling reports to Chief Revenue Officer? Yes 2. Uninsured IPs and high-balance OPs screened for fin assist? Yes Medicaid eligibility? State, local, and hospital charity programs? Grants / studies, etc.? Yes Yes Yes 3. Financial counselors interview patients in their rooms? Yes 4. Prompt payment discounts offered? Yes 104

106 KPIs by Functional Area Financial Counseling KPI Description Process 5. Fin counselors incentive compensation tied to collections? Yes 6. Discuss pmt alternatives w/ non-charity eligible patients? Yes Credit cards? Bank-loan financing? Interest-bearing hospital-funded payment arrangements? Yes Yes Yes 7. All IPs cleared thru financial counselors before discharge? Yes 8. Proof of income / assets obtained from charity applicants? Yes 105

107 KPIs by Functional Area Health Information Management KPI Description Standard 1. IP charts coded per coder / per day OBSV charts coded per coder / per day AMB SURG charts coded per coder / per day OP charts coded per coder / per day ER charts coded per coder / per day Chart delinquency greater than 30 days 5% 7. Total chart delinquency 10% 106

108 KPIs by Functional Area Health Information Management KPI Description Standard 8. HIM DRG development hold greater than late charge hold 2 A/R days 9. Copies of medical records pursuant to payors requests 2 work days 10. Transcription rate per line Transcription backlog 1 work day 12. Chart retrieval pursuant to MDs requests 90 minutes 13. MPI duplicates as a % of total MPI entries.5% 14. PEPPER 1 potential over-codes beyond 75 th percentile 2% 15. PEPPER potential under-codes below 10 th percentile 2% 1 Program for Evaluation Payment Patterns Electronic Report 107

109 KPIs by Functional Area Health Information Management KPI Description Process 1. Health Info Management reports to Chief Revenue Officer? Yes 2. Use on-line DRG and APC groupers? Yes 3. Use on-line, bar-code enabled chart location system? Yes 4. Use on-line, scanning-enabled HIM records imaging system? Yes 5. Use on-line and/or voice-recognition transcription system? Yes 6. Use on-line clinical abstracting system? Yes 7. MDs able to view and/or e-sign records outside the hospital? Yes 108

110 KPIs by Functional Area Health Information Management KPI Description Process 8. Storage / retrieval / release of records HIPAA-compliant? Yes 9. Use on-line, up-to-date coding compliance system? Yes 10. All coding done by employees reporting to HIM Director? Yes 11. All coding done by certified coders who are retrained often? Yes 12. All coding done in descending balance order, not FIFO? Yes 13. All coding done in best payor order (FFS, MCR, HMO)? Yes 14. All coding done when info is sufficient, not 100% complete? Yes 109

111 KPIs by Functional Area Health Information Management KPI Description Process 15. Receive and discuss denials info provided by PFS or others? Yes 16. Provide and discuss denials / delinquency info with MDs? Yes 17. Have effective tracking system to locate missing records? Yes 18. Have appropriate staffing to prevent process backlogs? Yes 19. Consistently monitor / control D-N-F-B A/R due to HIM? Yes 20. Perform internal quality-control audits at least quarterly? Yes 21. Have external quality-control audits done at least annually? Yes 110

112 KPIs by Functional Area Health Information Management KPI Description Process 22. Review PEPPER to compare MCR pmts w/ state & nat l avgs? Yes 23. Use PEPPER to identify problem-prone DRGs? Yes 24. Use PEPPER / OIG Work Plans to focus internal reviews? Yes 25. Track / trend all outside record-audit requests? Yes 26. Self-review all charts selected for audit by RACs / others? Yes 27. Submit all self-reviews w/ Things Done Right cover letters? Yes 111

113 KPIs by Functional Area Charge Entry / Revenue Integrity KPI Description Standard 1. Late charge hold period 2 4 days 2. Late charges as a % of total charges 2% 3. Lost charges as a % of total charges 1% 4. CDM duplicate items 0 5. CDM incorrect / missing HCPCS / CPT-4 codes 0 6. CDM incorrect / invalid revenue codes 0 7. CDM revenue code lacks necessary HCPCS / CPT-4 code 0 112

114 KPIs by Functional Area Charge Entry / Revenue Integrity KPI Description Standard 8. CDM item has invalid / incorrect modifier 0 9. CDM item has missing modifier CDM item price less than HOPPS APC rate CDM item price is $ CDM item description is Miscellaneous CDM item description / price is editable on-line 0 113

115 KPIs by Functional Area Charge Entry / Revenue Integrity KPI Description Process 1. CDM Coordinator reports to Chief Revenue Officer? Yes 2. Have formal CDM change management process? Yes 3. Have formal annual CDM review process with clinical depts? Yes 4. Modifiers static coded in CDM; chosen via order-entry sys? Yes 5. All charge items ordered via on-line order-entry system? Yes 6. Late / lost charge perf stds in dept mgrs job descriptions? Yes 7. Annual HCPCS / CPT-4 changes in place by Jan each year? Yes 114

116 KPIs by Functional Area Charge Entry / Revenue Integrity KPI Description Process 8. Surgery HCPCS / CPT-4 appear in UB-04 form locator 44? Yes 9. Surgery lab / X-ray charges properly unbundled? Yes 10. CDM pricing methodology standardized / defensible? Yes 11. Depts understand difference between billable / payable? Yes 12. CDM items have Patient Friendly Billing descriptions? Yes 13. Have formal annual charge sheet / ticket review process? Yes 14. Receive / review CPT-4 manual / Addendum B annually? Yes 115

117 KPIs by Functional Area Charge Entry / Revenue Integrity KPI Description Process 15. Nursing procedures (CPR, infusion, etc.) built into CDM? Yes 16. HIM assigns interventional / surgical procedure codes? Yes 17. ER Nursing levels match Medicare descriptions? Yes 18. MDs OP orders received with requisite CPT-4 code(s)? Yes 19. Order entry items map accurately to service codes? Yes 20. Charge tickets, etc. map accurately to service codes? Yes 21. Appropriate charge in CDM for all services delivered? Yes 116

118 KPIs by Functional Area Charge Entry / Revenue Integrity KPI Description Process 22. Charge data flow reliably from points of service to claims? Yes 23. Modifiers are conveyed correctly / reliably to claims? Yes 24. CCI edit conflicts controlled by correct reg / charge entry? Yes 25. Units of service accurate / flow reliably to claims? Yes 26. Clinical depts charge awareness monitored / enhanced? Yes 117

119 KPIs by Functional Area Billing / Claim Submission KPI Description Standard 1. HIPAA-compliant electronic claim submission rate 100% 2. Final-billed / claim not submitted backlog 1 A/R day 3. Medicare supplement ins billing following adjudication 2 bus days 4. Non-Medicare COB-2 ins billing following COB-1 payment 2 bus days 5. Medicare RTP (Return To Provider) denials rate 3% 6. Outsourced guar stmt cost to produce / mail (w/out stamp)

120 KPIs by Functional Area Billing / Claim Submission KPI Description Process 1. Primary / secondary billing completed by dedicated team? Yes 2. Staffing sufficient to minimize / prevent billing backlogs? Yes 3. Quantity / quality perf stds part of billers job descriptions? Yes 4. Perform regular quality control reviews of billers work? Yes 5. All billers finish CMS s Medicare billing training? Yes 6. All billers receive annual Medicare compliance training? Yes 7. Billers cross-trained on more than one payor type? Yes 119

121 KPIs by Functional Area Billing / Claim Submission KPI Description Process 8. Use on-line electronic billing system? Yes Easy to add new billing edits? Automatic daily downloads from PFS system? Provides final-bill download reconciliation reports? Provides biller-specific worklists? Major-payor edits supplied / supported by vendor? Claim-submit notice automatically uploaded to PFS system? Claim corrections automatically uploaded to PFS system? Yes Yes Yes Yes Yes Yes Yes 120

122 KPIs by Functional Area Billing / Claim Submission KPI Description Process 8. Use on-line electronic billing system (con t)? Yes All claims (paper + electronic) editable? Standard errors automatically corrected? Provides biller-specific productivity and error reporting? Provides clinical department-specific error reporting? Automates Medicare-supplement / COB-2 claim submission? Interfaces with on-line Medicare-compliance system? Yes Yes Yes Yes Yes Yes 121

123 KPIs by Functional Area Billing / Claim Submission KPI Description Process 9. Use Patient Friendly Billing concepts for guarantor billing? Yes 10. Use proration to bill ins and guarantor simultaneously? Yes 11. Guarantor stmts include credit card option? Yes 12. Guarantor stmts clearly communicate payment policies? Yes 13. Guarantor stmts provide customer service phone number? Yes 14. Guarantor stmts provide customer service web address? Yes 15. Guarantor billing cycle designed to optimize collections? Yes 122

124 KPIs by Functional Area 3 rd -Party and Guarantor Follow-Up KPI Description Standard 1. Ins A/R aged more than 90 days from service / discharge 15-20% 2. Ins A/R aged more than 180 days from service / discharge 5% 3. Ins A/R aged more than 365 days from service / discharge 2% 4. Bad debt write-offs as a % of gross revenue 3% 5. Charity write-offs as a % of gross revenue 3% 6. Cost-to-collect ([PA + PFS + agency expenses] cash) 3% 7. A/R cash as a % of net revenue 100% 123

125 KPIs by Functional Area 3 rd -Party and Guarantor Follow-Up KPI Description Standard 8. In-House A/R days ALOS 9. D-N-F-B A/R days 4 6 A/R days 10. Net A/R days 50 A/R days 11. A/R cash as a % of cash goal 100% 12. Total point-of-service cash as a % of cash goal 2-3% 124

126 KPIs by Functional Area 3 rd -Party and Guarantor Follow-Up KPI Description Process 1. High-balance follow-up completed by dedicated team? Yes 2. Staffing sufficient to minimize / prevent aged A/R build-up? Yes 3. Quantity / quality perf stds part of collectors job descriptions? Yes 4. Perform regular quality control reviews of collectors work? Yes 5. All collectors finish CMS s Medicare billing module? Yes 6. All collectors receive annual Medicare compliance training? Yes 7. Collectors cross-trained on more than one payor type? Yes 125

127 KPIs by Functional Area 3 rd -Party and Guarantor Follow-Up KPI Description Process 8. Use on-line receivables work station system? Yes Easy to add new collector assignments? Automatic daily downloads from PFS system? Provides download reconciliation reports? Full interface for collection notes, etc. to PFS system? Provides collector-specific worklists? Worklists presented in descending-balance order? Next activity date automatically uploaded to PFS system? Yes Yes Yes Yes Yes Yes Yes 126

128 KPIs by Functional Area 3 rd -Party and Guarantor Follow-Up KPI Description Process 9. Use on-line, web-enabled 3 rd -party payor inquiry system(s)? Yes 10. Guarantor follow-up outsourced or on predictive dialer? Yes 11. Collectors receive 3 rd -party / guarantor follow-up training? Yes 12. Collectors use 3 rd -party / guarantor follow-up scripts? Yes 13. Collectors have no competing duties (customer svc, etc)? Yes 14. Collectors receive performance-based incentive comp? Yes 127

129 KPIs by Functional Area Cashiering / Refunds / Adjustment Posting KPI Description Standard 1. HIPAA-compliant electronic payment posting % 100% 2. Transaction posting backlog (during the month) 1 bus day 3. Transaction posting backlog (end of the month) 0 bus days 4. Credit-balance A/R days (gross) 2 A/R days 5. Medicare credit-balance report submission timeliness due date 128

130 KPIs by Functional Area Cashiering / Refunds / Adjustment Posting KPI Description Process 1. Cashiering completed by dedicated team w/ no other duties? Yes 2. Refunds completed by dedicated team w/ no other duties? Yes 3. Quantity / quality perf stds part of cashiers job descriptions? Yes 4. Perform regular quality control reviews of cashiers work? Yes 5. All cashiers receive annual Medicare compliance training? Yes 6. Cashiers cross-trained on more than one payor type? Yes 129

131 KPIs by Functional Area Cashiering / Refunds / Adjustment Posting KPI Description Process 8. Use lockbox for non-electronic / non-edi payments? Yes 9. Lockbox remits payment data electronically / EDI / OCR / 835? Yes 10. Denial transaction codes entered to facilitate follow-up? Yes 11. Use on-line system to compare expected vs. actual pmts? Yes 12. Post contractual adjustments at time of final billing? Yes 130

132 KPIs by Functional Area Denials / Underpayments KPI Description Standard 1. Overall initial denials rate (% of gross revenue) 4% 2. Clinical initial denials rate (% of gross revenue) 5% 3. Technical initial denials rate (% of gross revenue) 3% 4. Underpayments additional collection rate 75% 5. Appealed denials overturned rate 40 60% 131

133 KPIs by Functional Area Denials / Underpayments KPI Description Standard 6. Electronic eligibility rate 75% 7. Physician pre-certification double-check rate 100% 8. Case managers time spent securing authorizations rate 20% 9. Total denial reason codes

134 KPIs by Functional Area Denials / Underpayments KPI Description Process 1. Denials tracked by payor, reason, financial consequence? Yes 2. Denials distinguished between technical and clinical? Yes 3. Denials tracked by physician, DRG, and department? Yes 4. Contractual allowances increasing slower than gross rev? Yes 5. Dedicated denials unit w/ payor-specific appeals experience? Yes 6. Respond to clinical documentation requests w/ in 14 days? Yes 7. Use on-line system to compare expected vs. actual pmts? Yes 133

135 KPIs by Functional Area Denials / Underpayments KPI Description Process 8. Use on-line payment tracking software? Yes 9. Use on-line contract management software? Yes 10. Maintain denials database; self-developed or purchased? Yes 11. Use on-line OP med necessity system prior to billing or svc? Yes 12. All denial reason codes actionable? Yes 13. OBSV and IP authorizations tracked separately? Yes 14. Pre-cert, auth, and re-cert functions in a single department? Yes 134

136 KPIs by Functional Area Denials / Underpayments KPI Description Process 15. Pre-certification requirements shared with MDs offices? Yes 16. Provide MDs with regular feedback on clinical denials rates? Yes 17. Hold regular payor meetings to discuss denials issues? Yes 18. Contract terms regularly distributed to rev cycle employees? Yes 19. Rev cycle employees learn of contract changes in advance? Yes 20. Structured feedback between rev cycle and mgd care depts? Yes 21. Non-emergency services scheduled 12+ hours in advance? Yes 135

137 KPIs by Functional Area Customer Service KPI Description Standard 1. Correspondence backlog 1 bus day 2. Walk-in patients wait time 5 min 3. ACD system average hold time 2 min 4. ACD system abandoned call % (calls on hold 30 seconds) 2% 5. ACD system % of calls answered in 20 seconds 75% 6. ACD system % of calls resolved in 5 minutes 85% 7. ACD system % of calls not resolved in 10 minutes 5% 8. Calls resolved in unit, w/out complaint / referral to Dir PFS 95% 136

138 KPIs by Functional Area Customer Service KPI Description Process 1. Cust service handled by dedicated team w/ no other duties? Yes 2. CS unit responsible for walk-ins, phone calls, mail, & ? Yes 3. Quantity / quality perf stds part of CS reps job descriptions? Yes 4. Perform regular quality control reviews of CS reps work? Yes 5. All CS reps receive annual Medicare compliance training? Yes 6. CS reps cross-trained on more than one responsibility? Yes 137

139 KPIs by Functional Area Customer Service KPI Description Process 7. CS reps cross-trained on most / all PFS system functions? Yes 8. Use voic sys so patients can request basic info / IBs? Yes 9. Use ACD (Automated Call Distribution) system? Yes 10. ACD system automatically maintains unit / rep statistics? Yes 138

140 KPIs by Functional Area Collection / Outsourcing Vendors KPI Description Standard 1. Bad debt netback ([collections fees] placements) % 7 11% 2. Bad debt fee % 15 18% 3. 3 rd -party EBO (Extended Bus Ofc) fee % (IP + OP + ER blend) 6-10% 4. Self-pay EBO fee % (IP + OP + ER blend) 10 12% 5. Legal collections fee % 20 30% 6. Medicaid eligibility assistance fee % 12 18% 139

141 KPIs by Functional Area Collection / Outsourcing Vendors KPI Description Process 1. Use two or more bad debt agencies? Yes 2. Use different agencies for bad debt and EBO? Yes 3. Write off long-term payment accts / use agency to monitor? Yes 4. Apply Medicare bad debt 120 days rule to all fin classes? Yes 5. Agencies / outsource vendors accept referrals electronically? Yes 6. EBO vendor able to mirror PFS system to get notes, etc.? Yes 7. Medicaid elig vendor have good relations w/ State agencies? Yes 140

142 KPIs by Functional Area Collection / Outsourcing Vendors KPI Description Process 8. Agencies remit gross payments / submit invoices for fees? Yes 9. Agencies willing to put own support FTEs on-site? Yes 10. Agencies willing to assign dedicated FTEs to your accounts? Yes 141

143 KPIs by Functional Area Physician Practice Management KPI Description Standard 1. Visits w/out charges as % of total visits 0% 2. Co-pay collections as % of total co-pay office visits 95% 3. EDI claims as % of total claims 90% 4. Charge-entry lag period 1 bus day 5. Claims passing claim edits as % of total claims 98% 6. Appointment no-show rate 2-3% 142

144 KPIs by Functional Area Physician Practice Management KPI Description Standard 7. Appointment bumped rate 2-3% 8. Net A/R days (non-specialty practices) 40 days 9. Collections as % of net revenue 100% 10. Collections as % of gross revenue (non-specialty practices) 60% rd -Party A/R aging > 90 days from service date 10% 12. Denials as % of net revenue (including incidental to svcs) 2% 143

145 KPIs by Functional Area Physician Practice Management KPI Description Standard 13. Claims w/ no activity > 90 days from last activity date 0% 14. Credit balances 2 A/R days 15. Average patient wait time after office arrival 15 minutes 144

146 KPIs by Functional Area Physician Practice Management KPI Description Process 1. Send voice and mail reminders for regular annual visits? Yes 2. Send voice and mail reminders for other scheduled visits? Yes 3. Use open scheduling Yes to increase walk-in capacity? to minimize appointment bumping? to increase patient satisfaction? to reduce nursing callbacks? Yes Yes Yes Yes 145

147 KPIs by Functional Area Physician Practice Management KPI Description Process 4. Calculate net revenue and net receivables? Yes 5. Use dedicated billing / follow-up FTEs w/ no other duties? Yes 6. Use collection agencies? Yes 146

148 Let s Pause and Define Terms... Contracting Cycle 147

149 KPIs by Functional Area Contracting Cycle Definition 1. Provide patients 4. Pay claims 2. Treat patients 3. Submit claims 148

150 KPIs by Functional Area Contracting Cycle Definition Reduce Payor Discretion Achieve Target Margins 149

151 KPIs by Functional Area Contracting Cycle Definition Submit & Follow-up Claims Collect Accounts & Post Payments Work Denials & Payment Variances Analyze Contract Performance Analyze Service Lines Analyze Financial Needs Understand Competitors & Market Understand Payors & Their Reputations Define Payor s & Provider s Duties Negotiate Contract Language & Rates Analyze Steerage vs. Discounts 150

152 Strategy development Strategy implementation Contract negotiations Contract evaluation KPIs by Functional Area Contracting Cycle Definition Forecasting and analysis Contract implementation and operations Performance monitoring Strategic issues and planning SOURCE: Stevenson, Managed Care Cycle Provides Contract Oversight, hfm 151

153 KPIs by Functional Area Managed Care Contracting KPI Description Standard 1. Rate increases compared to CPI medical-care component CPI MCC 2. Outlier $ fraction of total contract revenue ± 5% 3. Contract profitability compared to IRR hurdle rate IRR HR 4. Eligibility / authorization / certification availability 24 / 7 / Retro review / timely filing periods (keep in balance) days 6. Termination notification period (without cause) 90 days 7. Renegotiation planning begins prior to renewal date 6 months 8. Optimal contract term 2 3 years 152

154 KPIs by Functional Area Managed Care Contracting KPI Description Process 1. Contract contains automatic renewal clause? Yes 2. Contract contains inflation index? Yes 3. All hospital services included / specific exclusions defined? Yes 4. Termination notification period = 90 days? Yes 5. Duties for on-going patient care / pmt at termination defined? Yes 6. ABN or equivalent acceptable for non-covered services? Yes 7. Provider authorized to bill guarantor for non-covered svcs? Yes 8. Hospital-based MDs use hospital-obtained authorizations? Yes SOURCE: Managed Care Forum Contracting Checklist, HFMA Wants You to Know 153

155 KPIs by Functional Area Managed Care Contracting KPI Description Process 9. Provider authorized to collect deposits for non-covered svcs? Yes 10. Contract discloses all sub-contracting relationships? Yes 11. Contract contains an independent contractor clause? Yes 12. Contract excludes most favored nation provisions? Yes 13. Contract start date clearly defined (to prevent A/R build up)? Yes 14. Contract stipulates all parties pay own legal fees? Yes 15. Definition / criteria for all key terms clearly stipulated? Yes Medical necessity? Yes Emergency condition / emergency admission? Yes SOURCE: Managed Care Forum Contracting Checklist, HFMA Wants You to Know 154

156 KPIs by Functional Area Managed Care Contracting KPI Description Process 15. Definition / criteria for all key terms clearly stipulated (con t)? Yes Trauma / trauma services / trauma team? Yes Covered services? Yes Material breach? Yes Prompt payment? Yes Stop-loss / outlier? Yes Carve-out? Yes Medicare rate? (should include pass-throughs) Yes SOURCE: Managed Care Forum Contracting Checklist, HFMA Wants You to Know 155

157 KPIs by Functional Area Managed Care Contracting KPI Description Process 15. Definition / criteria for all key terms clearly stipulated (con t)? Yes Sentinel event(s)? Yes Medical-loss ratio? Yes Silent PPO? Yes Clean claim? Yes Timely notification / timely filing? Yes Authorization / certification? Yes SOURCE: Managed Care Forum Contracting Checklist, HFMA Wants You to Know 156

158 KPIs by Functional Area Managed Care Contracting KPI Description Process 15. Definition / criteria for all key terms clearly stipulated (con t)? Yes Service level(s)? Yes Denial / rejection / null event? Yes Negotiation / mediation / arbitration? Yes Plan agreement? Yes Inpatient / outpatient / emergency patient / obsv patient? Yes Substantial impact? Yes Member / insured / dependent? Yes SOURCE: Managed Care Forum Contracting Checklist, HFMA Wants You to Know 157

159 KPIs by Functional Area Managed Care Contracting KPI Description Process 16. Advance notice time for contract changes clearly stipulated? Yes Payment / reimbursement rates? Yes Covered services / procedures? Yes Plan documents / requirements? Yes Major employer groups? Yes 17. Contract includes warranty of HIPAA compliance? Yes 18. Contract forbids reassignment without mutual consent? Yes 19. Payor s reporting requirement duties clearly stipulated? Yes SOURCE: Managed Care Forum Contracting Checklist, HFMA Wants You to Know 158

160 KPIs by Functional Area Managed Care Contracting KPI Description Process 20. Contract clearly material to provider s revenue stream? Yes 21. Eligibility verification process clearly stipulated? Yes 22. Medical necessity verification process clearly stipulated? Yes 23. Prior authorization process clearly stipulated? Yes 24. Payor provides all customers contract / policy manuals? Yes 25. Payor provides copies of all administrative / policy manuals? Yes 26. Appeal / independent review processes clearly stipulated? Yes 27. Payor precluded from changing reimbursement unilaterally? Yes SOURCE: 15 Questions to Ask Before Signing a Managed Care Contract, Private Sector Advocacy 159

161 KPIs by Functional Area Managed Care Contracting KPI Description Process 28. Payor s prompt payment duty clearly stipulated? Yes 29. Payor agrees to pay interest on late payments? Yes 30. Contract complies with statutory processing / pmt duties? Yes 31. Payor precluded from takebacks / offsets? Yes 32. Retro review period balanced to timely filing period? Yes 33. Contract precludes participating in / enabling Silent PPOs? Yes 34. Termination provisions / timing clearly stipulated? Yes 35. Contract terms supersede provisions in Provider Manual? Yes SOURCE: 15 Questions to Ask Before Signing a Managed Care Contract, Private Sector Advocacy 160

162 KPIs by Functional Area Managed Care Contracting KPI Description Process 36. Perform annual internal analysis of all contracts? Yes Contractual discounts balanced to gross volumes / net rev? Yes Use analysis to identify renegotiation / termination targets? Yes Compare all contracts to Medicare fee schedule? Yes Calculate relative profitability using payor-specific costs? Yes All contracts cover their direct costs, at minimum? Yes Use relative profitability for leverage during renegotiation? Yes Recognize internal review cannot I.D. below-mkt contracts? Yes Recognize internal review silent on case mix/stop-loss/etc.? Yes SOURCE: Wilson, David et al, 3 Steps to Profitable Managed Care Contracts, hfm 161

163 KPIs by Functional Area Managed Care Contracting KPI Description Process 37. Perform annual external analysis of all contracts? Yes Compare (legally) your rates to those of similar providers? Yes Use outside firms / databases to obtain comparative info? Yes Challenge data s age / geographic relevance before using? Yes Compare specific service lines, as well as overall rates? Yes Target biggest upside opportunities during renegotiation? Yes Compare pmt structures (charge % / DRGs) + overall rates? Yes Understand impact of I/P stop-loss / O/P max-pay clauses? Yes Try to end all cost-plus pmts in favor of % of charges? Yes SOURCE: Wilson, David et al, 3 Steps to Profitable Managed Care Contracts, hfm 162

164 KPIs by Functional Area Managed Care Contracting KPI Description Process 37. Perform annual external analysis of all contracts (con t)? Yes Review contract language, especially key terms / clauses? Yes Claim submission and payment Yes Protection against catastrophic cases Yes Procedure-based carve-out payments Yes Stop-loss payment structures Yes Pmts for implants / prosthetics / orthotics / high-$ drugs Yes Cut-off date for timely filing / retro review / refunds / etc. Yes Utilization review process Yes New services / technologies Yes SOURCE: Wilson, David et al, 3 Steps to Profitable Managed Care Contracts, hfm 163

165 KPIs by Functional Area Managed Care Contracting KPI Description Process 37. Perform annual external analysis of all contracts (con t)? Yes Compare payment levels to premium increases? Yes Ensure rate trends mirror premium increase trends? Yes Compare payors relative profitability trends? Yes Compare rate trends to medical-care component of CPI? Yes SOURCE: Wilson, David et al, 3 Steps to Profitable Managed Care Contracts, hfm 164

166 KPIs by Functional Area Managed Care Contracting KPI Description Process 38. Conduct annual pmt performance analysis of all contracts? Yes Contracts comply with statutory processing / pmt regs? Yes Report habitual violators to Insurance Commissioner? Yes Compare payors denial / pmt discrepancy trends, by group? Yes Insurance plan? Yes Patient type? Yes Service line? Yes Reason code? Yes Physician? Yes SOURCE: Wilson, David et al, 3 Steps to Profitable Managed Care Contracts, hfm 165

167 KPIs by Functional Area Managed Care Contracting KPI Description Process 39. Contract defines documentation req d to prove timely filing? Yes 40. Contract reviewed by attorney before renewal? Yes 41. Soft contract provisions ( quality / affordable ) avoided? Yes 42. Reasonable efforts term used to define providers duties? Yes 43. Both parties agree not to disclose negotiated rates? Yes 44. Supplemental documents included by reference / attached? Yes 45. Amendments required in writing with mutual signatures? Yes 46. Participating corporations / entities clearly stipulated? Yes 47. Assignment clauses clearly stipulated / require signatures? Yes SOURCE: Miller, Thomas, Conducting a Managed Care Contract Review, Healthcare Financial Management 166

168 KPIs by Functional Area Managed Care Contracting KPI Description Process 48. Start up payors post security deposit / letter of credit / etc? Yes 49. Contract parties independent and able to compete? Yes 50. Provider listed as participating in directories / websites? Yes 51. Complete list of covered services attached to contract? Yes 52. Provider can reduce malpractice ins to state law minimums? Yes 53. Ambiguous service descriptions avoided? Yes Avoid services including but not limited to Yes Avoid services customarily provided Yes Avoid services covered by the plan Yes SOURCE: Miller, Thomas, Conducting a Managed Care Contract Review, Healthcare Financial Management 167

169 KPIs by Functional Area Managed Care Contracting KPI Description Process 54. Services not directly provided defined / contracted in adv? Yes Out-of-area services Yes Hospital-based physician services Yes 55. Capitation rates / benefits design (if any) clearly stipulated? Yes 56. Flat-rate contracts w/ payors known for excessive bundling? Yes 57. Licensing / JCAHO standards adequate for credentialing? Yes 58. Provider not required to report in accordance with HEDIS? Yes 59. Contract / payment terms administratively feasible? Yes 60. Current HIS adequate to handle contract terms / A/R needs? Yes SOURCE: Miller, Thomas, Conducting a Managed Care Contract Review, Healthcare Financial Management 168

170 KPIs by Functional Area Managed Care Contracting KPI Description Process 61. Mutual information requirements clearly stipulated? Yes Specific information / reports described? Yes Information including but not limited to avoided? Yes Provider s confidential / proprietary information protected? Yes Provider s duty to provide info to payor strictly limited? Yes Payor obligated to reimburse costs of providing records? Yes SOURCE: Miller, Thomas, Conducting a Managed Care Contract Review, Healthcare Financial Management 169

171 KPIs by Functional Area Managed Care Contracting KPI Description Process 62. Mutual duties regarding care reviews clearly stipulated? Yes 63. Provider s duty to notify payor re: adverse events limited? Yes No duty re: patient complaints? Yes No duty re: risk management incidents? Yes No duty re: physician malpractice suits? Yes No duty re: physician status changes? Yes No duty re: medical staff disciplinary actions? Yes Notify only when sued by members at time of event? Yes Notify only on intent to report adverse event to regulators? Yes SOURCE: Miller, Thomas, Conducting a Managed Care Contract Review, Healthcare Financial Management 170

172 KPIs by Functional Area P4P: Clinical Decision Support / Finance KPI Description Standard 1. P4P Demonstration Project percentile ranking 80% 2. P4P Demonstration Project bonus achievement 1% 3. Length of stay, by DRG DRG avg 4. Readmission rate, by DRG DRG avg 5. Adherence to quality indicators, by condition 80% 6. Adherence to quality indicators, by mode 80% 7. Overall P4P program ROI 0% 171

173 KPIs by Functional Area P4P: Clinical Decision Support / Finance KPI Description Process 1. Use advanced clinical systems to support patient care? Yes 2. Use electronic medical record system to support patient care? Yes 3. Use advanced decision support / performance mgt system? Yes 4. Use executive information (scorecard) system? Yes 5. Use data warehouse to support DSS / EIS capabilities? Yes 6. Participate in CMS Demonstration Project, if eligible? Yes 7. Have clinical improvement teams in data-enabled depts? Yes 8. Target greatest cost / quality improvement areas first? Yes 9. Use root cause analysis to focus improvement efforts? Yes 172

174 173