PHYSICIAN REVENUE CYCLE

Transcription

1 PHYSICIAN REVENUE CYCLE STUDY A LarsonAllen Gold Standard series of articles and research Where Technology & Service Come Together

2 ACKNOWLEDGEMENTS LarsonAllen LLP (LarsonAllen) would like to express our appreciation to Gateway EDI and the business managers, office managers, and administrators of the Gold Standard medical practices for sharing their insights with us. With their assistance, we were able to share perspectives beyond the numbers. Their insights were crucial to our findings, which we believe will be valuable to medical practice billing offices. An electronic copy of this report is available at:

3 INTRODUCTION CONTENTS Introduction... 1 Attaining a Gold Standard Revenue Cycle: Nine Focus Areas... 3 Gold Standard Performance in Physician Practices Future Challenges for Physician Practices: Declining Reimbursement Future Challenges for Physician Practices: The Impacts of Consumer Driven Health Care LarsonAllen History and Experience Gateway EDI History and Experience Appendix Additional Information and Gold Standard Committee... 18

4 INTRODUCTION Revenue cycle management is an ongoing journey composed of many small steps. It looks complex, but it can be very manageable if tackled one element at a time. Applying the industry s best practices help achieve the desired results. Curt Mayse, MBA, FACMPE, Principal, LarsonAllen Gold Standard Performance Summary pg. 4

5 INTRODUCTION Gateway EDI, a national clearinghouse located in St. Louis, Missouri and LarsonAllen, a national certified public accounting, consulting, and advisory firm based in Minneapolis, Minnesota have conducted an extensive review of the performance of medical billing practices. At the request of our clients, this report was developed to offer insights into the success of top performers regarding the revenue cycle for medical practices. The health care industry will be facing significant changes in the future, and accordingly, a medical practice s success will become increasingly linked to its revenue cycle. Industry overview and a prominent trend Health care is the largest component of our nation s gross domestic product (GDP). It is a multifaceted and extremely complicated industry, and medical practices must scramble constantly to stay informed of the developments that can profoundly affect them. The current trends impacting the revenue cycles of all physician practices could very well change the face of health care delivery. Consumer driven health care (CDHC) gained momentum in 2003 with the passage of federal legislation providing tax incentives for those employers who offered high deductible plans. Consumer driven health care is intended to provide a possible solution to the rising costs of health care in our country, Medical practices have already started to feel the impact of this trend in their revenue cycles. As little as 20 years ago, when patients sought medical care they understood that they were financially responsible for any services rendered. Insurance was only there to help reimburse them for their expenses. It was during these years that managed care developed nationally and became the standard reimbursement model replacing the traditional model where patients carried much higher financial responsibility. Under managed care, patients had little, if any, financial obligation relating to their health care. The movement toward consumer driven health care is a dramatic economic shift for medical practices and patients alike. This new emerging health care world one that includes catastrophic deductibles, increased co-insurance and co-pay amounts, and gaps in coverage is completely new to an entire generation of health care consumers. National trends indicate that the patient responsibility portion of accounts receivable (AR) is the fastest growing segment. As more and more patients are left with huge balances to resolve, medical practices have had to increase their focus and resources to come up with creative solutions to collect these balances. Establishing financial policies, helping educate the patient, collecting at the time of service, and offering alternative financing options are some of the measures being used to adjust to this trend. In addition to increasing patient balances, medical practices have had to deal with reduced reimbursement from many payers, including a reduced fee schedule, bundling of services (denying some services for payment as part of another service), and reducing other fee payments. Currently, many practices are struggling with payer fee schedules that are at or below Medicare rates. Additionally, in what has become an annual ritual, physicians have to fight to prevent cuts in Medicare reimbursement. These external reimbursement pressures can be compounded by any internal gaps in processes from the revenue cycle. Gold Standard Performance Summary 1

6 INTRODUCTION Methodology Of the 40,000 physicians in all 50 states for which Gateway EDI processes claims, this report focuses only on physician practices that have demonstrated a 99 percent accurate electronic insurance claims submission to their clearinghouse over the last 12 months. The goal was to identify why these practices consistently outperform their peers. The top 23 physician practices are identified by Gateway EDI as high performers based on their significantly above average, clean, and accurate claims submissions. This report specifically analyzes operational indicators such as the aging of the accounts receivable, coding, staffing, cost performance, fee schedule pricing, and denial management. We studied these indicators across a range of groupings, including the median performance of all practices, large practices (more than $15M net patient revenues), midsized practices (between $3M and $15M in net patient revenues), and small practices (less than $3M net patient revenues). To gain a better understanding of the meaning behind the data, we also interviewed select leaders of the high performers to explore a wide variety of topics, including: Practice type (see appendix 1) Practice size Practice affiliations (see appendix 2) Medical staff composition (number of full time physicians and mid-level providers) Non-medical staffing Business office processes Insurance verification (see appendix 3) Practice management systems used Coding Technology utilized Managed care and third-party contracting Fee schedule methodologies Employee retention and recruitment strategies Implications Many of the leaders of the 23 Gold Standard Performers identified sound strategies and methods that helped produce the best outcomes for their practices. The practices participated in the survey achieved their results by focusing on nine areas. Attention to these nine areas helped produce the best performing business office/revenue cycles: 1. People 2. Internal monitoring of systems 3. Processes 4. Coding 5. Third-party AR and denial management 6. Collections 7. Reporting and measuring 8. Technology 9. Managed care contracting and fee schedule reviews pg. 2 Gold Standard Performance Summary Gold Standard Performance Summary 2

7 ATTAINING A GOLD STANDARD REVENUE CYCLE: NINE FOCUS AREAS 1. People Good hiring processes and well-defined job descriptions are an essential component of any practice. During the hiring process, you must clearly communicate the duties of the position for which you are hiring. The job descriptions for the entire billing department must include all of the multiple steps required to successfully complete the medical billing process. Accountability and responsibility are critical. As important as it is to make sure that all of the critical job duties are covered, it is equally important to make sure that you have the right staff in the right positions. Staff will perform best at what they are good at and what they enjoy. In addition, the changing billing environment requires you to keep staff current through: a. Continuous learning b. Processes that measure and evaluate staff performance Of the practices surveyed, 100 percent had a lower than 3 percent employee turnover rate which assisted in maintaining a continuity of processes. 2. Internal monitoring of systems Of the practices surveyed, 90 percent monitor their AR and other processes related to the revenue cycle. In an effort to measure and understand how their practices are performing, these practices continually compare their numbers with their own historical numbers as well as those of other similar practices in the industry. Additionally, the best performers share their findings with both leadership and staff. High-performing practices consistently analyze the information and reporting from their practice management systems, as well as the information provided through their clearinghouse. Many practices find tools such as the performance scoreboard (below) useful in educating staff, sharing expectations, and working toward common goals. Jan Feb Mar Apr May June Jul Aug Sept Oct Nov Dec YTD Standard Electronic filing success rate 96.6% 98.1% 97.9% 88.3% 96.5% 96.5% 99.1% 99.2% 99.5% 98.7% 99.4% 98.2% 97.4% 97.0% Support staff / clinic ratio < 5.0 Overtime % 1.4% 2.4% 2.1% 2.2% 2.2% 2.4% 2.1% 2.3% 2.7% 2.5% 1.7 % 1.1% 2.1% < 3.5% Overhead % 20% 34% 30% 31% 28% 36% 26% 29% 29% 34% 36% 34% 31% < 32% Total visits 1, ,066 1,158 1,122 1,048 1, , ,043 > 1,100 Charges / visit $880 $875 $863 $892 $906 $918 $903 $894 $922 $941 $933 $947 $906 > $830 Expense / visit $79 $164 $141 $129 $111 $141 $123 $110 $130 $136 $132 $170 $131 < $141 Visits / FTE support staff > 80 A/R - over 120 days % 23% 26% 30% 25% 24% 22% 21% 23% 24% 24% 25% 27% 25% < 21% Co-pays collections 95% 94% 92% 94% 93% 95% 95% 95% 91% 94% 95% 91% 95% 93% 95% Net revenue / visit $308 $316 $295 $310 $319 $297 $311 $321 $301 $305 $298 $317 $308 > $302 Electronic claims % 96% 93% 94% 95% 96% 96% 97% 95% 95% 97% 96% 97% 95% > 90% Gross collections % 59% 59% 57% 56% 57% 59% 60% 60% 59% 58% 59% 59% 59% > 55% Net collection % 98% 99% 99% 98% 97% 96% 95% 96% 97% 98% 95% 96% 97% > 98% Days in AR < 42 Gold Standard Performance Summary 3

8 ATTAINING A GOLD STANDARD REVENUE CYCLE: NINE FOCUS AREAS 3. Processes Written policies and procedures provide a framework for staff to perform their duties. They also assure the owners of the practice that the activities performed follow formally set guidelines. Among top performers, formal polices and procedures include: a. Posting charges and transmitting claims within 24 hours of the service. b. Posting payments within 48 hours of receipt by the practice. (Posting should have a complete balancing process tying the transactions posted to the practice management system to the actual deposit in the bank.) c. Working denials (any type) with a 48-hour turn around time. Denial management includes a regular process of analyzing and understanding claims that were denied, provides corrective action, and ultimately, secures payment for services provided. This would include any clearinghouse denials as well as denials received on explanation of benefits (EOBs). d. Patient statements sent on a weekly basis (i.e., true cycle billing). True cycle billing refers to a practice management system that reviews all accounts for a patient balance, and if the patient has not received a statement within the last month (actual timing is set up by practice), then a new patient statement is generated. The patient should receive a statement 7 10 days from when the balance was moved to the patient s responsibility, aligning the statement as closely as possible to the receipt of their EOB. 4. Coding For many practices, coding is both the source of compliance concerns and denials. Of the physicians surveyed, 70 percent code the services they render, while 30 percent entrust this function to staff. Of those who do their own coding, 91 percent require the coding to be reviewed by billing/coding staff before the claims are submitted to payers. The majority of the practices surveyed place a high priority and value on the coding process and coding education, and 48 percent had at least one certified coder on staff. Proper coding allows the top performing practices to appropriately maximize the reimbursement they are due for services rendered. However, top performers understand that coding is also one of the top compliance concerns for most practices and take the steps necessary to ensure that their coding is accurate. Physicians Code Charges Yes 70% No 30% Charge Codes Reviewed Before Entering No 9% Yes 91% Practices With Coders on Staff No coders on staff 17% Had at least one coder on staff 40% No response 35% Had three coders on staff 4% Had more than three coders on staff 4% Ownership of each part of the process is key no process is marked complete until the manager checks with Gateway EDI to verify the claim was received. Patty Karraker, Business Manager, Memorial/St. Elizabeth s Cancer Treatment Center, Belleville, Illinois pg. 4 Gold Standard Performance Summary Gold Standard Performance Summary 4

9 ATTAINING A GOLD STANDARD REVENUE CYCLE: NINE FOCUS AREAS 5. Third-party accounts receivable and denial management Monitoring denials helps practices understand where problems exist. Often, steps can be taken up front to eliminate or greatly reduce denials. High-performing practices have lower denials (some have none), and the few denials received are quickly turned around and resubmitted to the payers. Regular feedback is given to the physicians and staff in an effort to eliminate future denials. Payment Posting Denial Summary Tracking denials from several points in a practice helps a practice correct the root issues. Whether the organization utilizes its practice management system, its clearinghouse denial tracking reporting, or implements a manual process will depend on the systems it has in place (see example below). Successful practices focus on tracking denials received from the clearinghouse, from payment posting, and insurance companies. Overlapping problems should be addressed first. PROVIDER Referral pre-auth missing Untimely filing/ review Paid to wrong PT or prov Not separately payable Need description No record of claim Non-cvd serv-prov response Invalid insurance info Primary EOB or dup clm Prov# error Invalid CPT/ modifier Provider A Provider B Provider C Provider D Provider E Provider F TOTAL Gold Standard Performance Summary 5

10 ATTAINING A GOLD STANDARD REVENUE CYCLE: NINE FOCUS AREAS Making certain that the practice s clearinghouse partner supplies the right management tools is essential in managing the outstanding AR. The denial analysis report pictured below is a tool that should be reviewed on a regular basis to help identify and address the source of denials. These reports attach a dollar amount to the denied claims which provides strong motivation for change. Additional clearinghouse management tools such as the safety net report below ensure that claims that are denied are corrected and resubmitted for payment. Safety Net Report Analyze Rejections pg. 6 Gold Standard Performance Summary Gold Standard Performance Summary 6

11 ATTAINING A GOLD STANDARD REVENUE CYCLE: NINE FOCUS AREAS 6. Collections Nationally, patient balances are growing due to higher deductibles, co-pays, and co-insurance amounts. This trend has prompted practices to devote more resources to collecting their patient balances. Of the practices surveyed, 74 percent discuss the expected co-pay with the patient at the time of service, and 70 percent also discuss existing balances with the patients before their visit. These practices also accept credit cards, offer self-pay discounts, and set up payment plans for patients. This trend has created an environment where practices must take a more proactive role in handling their patient balances. A top priority for better performing practices is to focus on patient balances, and educating their patients (consumers) about their financial responsibility. Providing well-defined and updated financial policies to patients is an important step in this education process. Financial policies should address self-pay discounts, hardship or charity care, payment for non-covered or cosmetic services, payment plans, interest charged for past due accounts, and collection agency fees. The patient should receive a copy of the financial policy at every opportunity: when new patient packets are mailed, during the registration process, printed on the back of the patient statement, and posted on the practice s Web site. Successful practices invest time before the patient s visit to determine if the patient has an existing balance and then contact the patient to instruct them to bring the payment with them. Our employees are great at verifying eligibility ahead of time. Jackie Wood, Business Office Manager with Allergy Consultants, St. Louis, Missouri Discussed Existing Balances With Patient Before Visit 70% Yes 30% No Reviewed Co-Pays Before Visit 74% Yes 26% No Evolving technology, such as online eligibility and benefits and real-time claim adjudication, helps practices collect the amount owed by the patient for services rendered at the time of service. Online capabilities through most payers Web sites allow practices to use automated systems to check patient eligibility/benefits. High-performing practices perform these checks before the patient arrives for his or her visit, allowing time for updates or new information to be collected from the patient and entered into the appropriate systems. Implementing this process greatly reduces the number of denials due to insurance eligibility issues. Gold Standard Performance Summary 7

12 ATTAINING A GOLD STANDARD REVENUE CYCLE: NINE FOCUS AREAS Real time eligibility lets us verify insurance at check-in or a day before the appointment. Jenny Phillips, Massachusetts Real-time claim adjudication has gained attention and momentum recently as a means to handle growing patient balances. This process allows the practice to submit a patient s claim at the time of service, receive an immediate reply from the payer, and allow the practice to collect the patient s balance at the time the services are rendered. Not only does the practice benefit from a greatly reduced patient accounts receivable, but in most cases the payer electronically deposits the funds directly into the practice s bank account in one to five days. This represents a core process change for most practices essentially the practice is presenting and working the claim before the claim is paid by the patient s insurance. Extra benefits include improved patient satisfaction (most patients are very happy to receive an in-person explanation of their insurance benefits) and the ability to troubleshoot and proactively correct problems or denials. 7. Reporting and measuring Gold Standard Performers understand the key indicators of the revenue cycle and make the most of their reporting systems, if necessary, building custom reports. They run reports frequently and review them in a timely manner. Reviewing and analyzing the information allows the practice to determine where they stand in relation to industry best practices. Additionally, the practice should benchmark their own receivable numbers, look at aging, days in accounts receivable, net and/or gross collection percentages, average charges, payments and adjustments each month to monitor for unusual changes or trends. The following reports should be run on a regular basis: a. Accounts receivable aging total b. Accounts receivable aging patient balances c. Accounts receivable aging insurance by payer, summary d. Credit report line item and account total e. Unallocated/undistributed payments, summary f. Adjustment report by adjustment type and operator g. Financial summaries with payments, charges, and adjustments pg. 8 Gold Standard Performance Summary Gold Standard Performance Summary 8

13 1 0 ATTAINING A GOLD STANDARD REVENUE CYCLE: NINE FOCUS AREAS % 3 4 % 8. Technology All of the practices surveyed indicated they utilize some type of practice management system; however the better performing practices fully utilize this technology to decrease errors and denials, create efficiencies by reducing the manual processes, and reduce the amount of time spent on: a. Insurance eligibility/benefits b. Daily claim submission c. Electronic patient statements weekly cycle billing d. Electronic remittances received from payers e. Electronic fund transfers (EFT) from payers c. Daily review/correction of electronic data interchange (EDI) denial reports Careful review of the practice s needs, technology options, and appropriate vendors results in cost-effective tools that are both relevant and readily applicable % 9. Managed care contracting and fee schedule review 2 6 % One key to managing the revenue cycle is determining the current fee schedule amount 0 for each service and ensuring that it is high enough to capture all applicable insurance company reimbursement. Sixty percent of the practices indicated that they utilize the Medicare RVU factors or a percentage of the Medicare allowed in determining their fees. By utilizing payer fee schedules in their practice management systems these practices are able to report on incidents where the payer had paid less than their fee schedule and request additional payment from that payer. In addition, forty-three percent of the practices surveyed review and/ or update their fee schedule at least annually. Managing each payer contract for provisions such as silent PPO s or extensive recoupment of overpayments is essential to having effective agreements. Further, better performing practices ensure that the maximum reimbursement possible can be attained with each payer contract through active dialogue with their representatives and market review of the current allowables. Y e a r ly E v e r y 2 y e a r s A s n e e d e d N o R e s p o n s e 8 Fee Schedule Determination % 30% % 9% 9% Frequency of Fee Schedule Updates 43% 34% 17% 6% Yearly Every two years As needed No response Medicare RVU conversion factor Percent of Medicare allowable Percent of highest deductible Custom No response Gold Standard Performance Summary 9

14 GOLD STANDARD PERFORMANCE IN PHYSICIAN PRACTICES This report compares practices whose performance consistently ranks them as top performers compared to other medical practices in the summary. People The most successful practices hire the best people and empower them to perform their duties. The staff size must be appropriate for the demands of the organization. These practices recognize that the revenue cycle begins the moment a patient contacts the practice to make an appointment and continues through the actual resolution of the patient s bill. All staff understand the role they play from front desk staff, who inform the patient of the practice s policies, to the providers and clinical staff who properly document charge information, to the billing office that completes the billing cycle. Staff skills are aligned to appropriate duties, and these practices provide ongoing training to keep staff informed of industry changes. Clear job descriptions ensure that all critical job duties are complete, that staff are accountable, and inefficiencies and redundancies are reduced. Processes Practices that streamline procedures consistently outperform other practices. They continuously review their processes and seek out ways to improve them. Practices that achieve the highest level of performance understand and complete all the necessary steps in the billing process and avoid redundant work. Timelines are kept; patient information is gathered and entered accurately before or at the time of service. There are minimal delays in completing and posting charges for services rendered. Claims are sent to the clearinghouse daily, and denials and account receivable follow up is handled in a timely manner. Because coding is complex and fraught with compliance issues, rules and regulations vary greatly from payer to payer. High-performing practices keep current on all coding changes and include the participation of the provider and a well-trained coder in the coding process in order to reduce their denials and optimize the proper reimbursement due for the services rendered. Successful practices also look at their coding procedures and coding frequencies and compare them to averages published by Medicare. Under-coding signifies that the practice is not receiving full reimbursement for services rendered while over-coding may bring compliance concerns from payers. Because improper coding can be a costly mistake, best performers review their coding procedures and patterns to make sure that they are capturing (coding) all of the services rendered and that their documentation supported the charges billed. After the charges have been billed to the payer, managing the outstanding AR is the next critical step in the revenue cycle. Often the daily duties necessary to keep the billing office functioning are complete, but no time or focus is given to working the actual AR trial balance. This means that a practice receives payments for clean or non-complicated claims and that the only accounts receivable that are worked involve problems or denials that have generated correspondence to the practice. Outstanding receivables that are not received by a payer are left sitting on the trial balance uncollected. The best performing medical practices set up systems that address every aspect of the AR so that it is reviewed, monitored, and worked on a daily basis. They also focus the necessary resources on completely working their trial balance reports every month. This includes printing and reviewing a total AR report and ensuring that every outstanding account is addressed at least monthly. Denial management is a second step in managing accounts receivable and is one of the most often overlooked aspects of the revenue cycle. Tracking denials allows a practice to identify trends and issues that can be corrected up front, ultimately reducing the denials and improving reimbursement. The best performers track their denials and reduce or eliminate the problems in order to maximize the reimbursement due their practices. We have good staff in strategic places. Lisa McCoskey, Office Manager, Heartland Women s Clinic, Kansas City, Missouri pg. 10 Gold Standard Performance Summary Gold Standard Performance Summary 10

15 GOLD STANDARD PERFORMANCE IN PHYSICIAN PRACTICES Historically, patient balances have not been a focus for most practices because they have accounted for only a small portion of the accounts receivable. But as high deductible plans, higher co-insurance and co-pays, and gaps in insurance coverage continue to leave patients with larger balances, practices need to review their patient collection policies and restructure them if necessary. The best performing practices position themselves as patient advocates and work diligently with patients to resolve their balances. They help educate patients regarding their responsibility and proactively collect fees at the time services are rendered, or offer alternative financing options. Practices that take time to measure, analyze, and assess the financial results related to their revenue cycles place themselves among the best performers. Benchmarking against the previous year can help a practice measure progress, while benchmarking against industry standards allows a practice to understand where the practice rates among the best performers. A simple benchmarking tool such as a one-page scoreboard provides a monthly snapshot relating to the revenue cycle for the practice. Gold Standard Performers used scoreboards that included elements such as: Gross collection rate (to compare the reimbursement from third-party payers) Co-pay collection rates Electronic claim filing success rate Turn around time for charge entry, payment entry, and denial resolution Days in accounts receivable Percentage of accounts receivable over 120 days Bad debt percentage Best performing practices monitor and review their systems and processes to ensure that they are functioning at optimal levels. They fully utilize their practice management system, which sometimes means obtaining custom reports (which are more expensive, but ultimately worth the investment). Reports are run daily, weekly, and monthly and allow for consistent review of the practice s numbers. Fee schedule Gold Standard Performers also review their fee schedules, at least annually, to make sure their fees are above their payers allowables (the amount determined by payer for reimbursement for each CPT or service). These practices have processes in place to review payments and explanations from the payers. In addition, they review the payments received from the payers to make sure they are upholding the agreed upon fee schedule. Many also use their practice management system to run payment exception reports to file reviews to the payers on claims that are not paid at the appropriate level. Technology Technology in medical practices includes many elements: a practice management system, a clearinghouse partner, electronic remittances and electronic fund transfer, electronic patient statements, patient eligibility/ benefits, and online tools. Selecting the most appropriate current technology allows staff to efficiently accomplish their work. Four days after a claim has been submitted to a payer, I call and verify receipt of the claim. Karen Dottom, Office Manager, Orrin Schiff, Maryland Gold Standard Performance Summary 11

16 FUTURE CHALLENGES FOR PHYSICIAN PRACTICES: DECLINING REIMBURSEMENT Physicians across the country are concerned with declining reimbursement. This may be the single greatest challenge facing physician practices today. For the last several years physicians have had to lobby their legislators to prevent steep cuts in Medicare reimbursement. While these cuts have been largely prevented, the conversion factor has not been adjusted and, combined with rising costs, the result is, in effect, a decrease. So while costs of providing care have gone up, the overall reimbursement for those services has gone down. Many payers use the Medicare fee schedule when setting reimbursement rates, so declining reimbursement affects a practice s Medicare population as well as its commercial payers. Faced with finding ways to improve their revenue stream in the wake of decreasing reimbursement, physician practices have found two areas that can impact their revenue cycle. Pay-for-performance and emerging technologies are not without challenges of their own, but they have emerged as areas that deserve attention. The Medicare Physician Quality Reporting Initiative (PQRI) program is the leading pay-for-performance model. Medicare s 2008 PQRI program includes 119 quality measures that can be reported on claim forms using Category II CPT codes. Practices who satisfactorily report this quality information for 2008 will earn an incentive payment of 1.5 percent of total allowed charges for covered services. The main challenge facing physician practices is capturing the data to be reported. Electronic health records (EHR) can ease this process and some programs may already have templates built in to obtain quality measures during the patient visit. Groups that do not use an EHR will need to create a method of capturing data on quality during the patient visit and make sure this information finds its way to the claim form to be reported. Practices who do not take advantage of these quality programs are passing up opportunities to improve their revenue. Private payers are also gathering physician data to measure performance and value. Payers make this information available to consumers to enable them to make better decisions about where to obtain quality care at a reasonable cost. Physician practices will want to internally measure their performance and be aware of the information available to their current and potential patients. Technologies available to medical practices such as EHR, online eligibility/benefit verification, electronic remittance advice (ERA), electronic payments, and real-time claim adjudication are expensive; however, practices that have weighed the cost/benefit ratio and implemented available technology have been rewarded with increased efficiency, reduced denials, faster payments, and improved revenue cycles. Electronic health records and improved practice management systems are by far the most costly technologies, but can significantly increase the efficiency of the revenue cycle, especially when combined with other technology to minimize the financial impact. EHRs can help practices streamline the patient visit process and assist providers in choosing the correct code for services provided. As part of a practice management system, EHRs can reduce or even eliminate the need for manual charge entry since this information is captured directly by the provider during the visit and documentation process. The ability to check patient eligibility and verify benefits online is an effective use of staff time since the most common claim denials are because of incorrect patient information, and the cost of reworking a claim can be significant. If the practice is able to use ERA, this information can often be automatically applied to patient accounts in the practice management system and thus reduce time spent manually posting payments. Receiving payments electronically allows practices to receive claim payments faster, and making use of real-time claim adjudication allows them to collect payment from patients at the time of service. Pay-for-performance and emerging technologies require significant investments, but they may provide for the improvement in the revenue cycle that will allow the practice to face the challenge of declining reimbursement. Conclusions By studying those practices that have achieved 99 percent clean claims status, LarsonAllen was able to identify the nine key areas that allowed the practices to achieve the Gold Standard of Revenue Cycle for Medical Practices. Reaching the Gold Standard produced the following value: Faster access to revenue Better realization in gross revenue Less cost associated with collection of revenue (i.e., decreased overhead) As a result, physicians received higher income and were more satisfied in their work. At the same time, patient satisfaction levels increased with fewer questions and complaints about the administrative portion of their visit. pg. 12 Gold Standard Performance Summary Gold Standard Performance Summary 12

17 Future Challenges for Physician Practices: The Impacts of Consumer Driven Health Care Consumer Driven Health Care (CDHC) is creating a significant shift in A/R responsibility for medical practices as patients face higher and higher deductibles, higher co-insurance amounts, and general gaps in insurance coverage. The movement toward CDHC is affecting both medical practices and consumers. While the impact on medical practices is not fully understood, challenges in patient care, patient registration, collections at the time of service, fee schedules, pricing transparency, billing, and collections are already clear. Because of higher out-of-pocket expenses, patients may avoid making appointments until they are seriously ill, which may treatment more extensive and expensive. As a result, providers may see fewer patients, and the patients they do serve will be more acutely ill and require more time for treatment. Productivity may be affected as patients begin to seek more medical advice over the telephone. The practice will have to make sure that the triage staffing and protocols are in place to handle this increase. Using electronic systems to help with the triage process can be a useful but would be an added expense to the practice. Particularly in the case of chronically ill patients, follow-up and future appointments should be made in advance, at check-out. Appointment confirmations calls are already becoming much more critical as patients who begin to feel better begin to choose to not spend their health care dollars on a follow-up visit. Patient registration may become even more vital to ensure that all parties clearly understand patient eligibility and benefits. Additional staff maybe required to perform these tasks. The very act of checking eligibility will become more complex. The information that needs to be gathered now includes the following: Co-pays Individual and family deductibles Deductible plan year Deductible balance Co-insurance Differentiation of preventive or routine care coverage benefits Other limited benefits Current or expected balance in HRA or HSA A review of the practice management system will be necessary to ensure that the technology has the capacity to meet the changing demands of the industry. Systems that can automatically check patient eligibility and benefits will be invaluable. The front desk will also be responsible for collecting more and higher balances than ever before, so communication between billing staff and the front desk staff will be extremely important. A significant shift in practice culture will also be required asking for more than the standard co-pays at the time of the visit will be an adjustment for staff and patients alike. Educating both the staff and the patients with updated brochures and financial policies will be necessary. Other communication tools may include: Practice newsletter, local newspaper, TV, or radio feature Informational seminars bringing in an outside expert speaker Web page New patient information packet Video/PowerPoint presentation in reception area In addition to updating written policies and procedures for the variety of new types of plans, training and education will help staff become more comfortable collecting the correct fees for these patient accounts. Though lack of consumer knowledge in this arena will not damage insurance company or employer s revenue stream, lack of the patient/consumer s knowledge can directly affect a practice s bottom line. One of the difficult aspects of collections is due to insurance contracts that do not allow practices to collect more than the set co-pay at the time of service. Some practices circumvent these clauses by calling their time-of-service collections deposits. These contracts were written in the 1980s and 1990s, and many insurance companies now recognize that this contract language is obsolete and accept that medical practices should be able to collect a portion of the payment at the time of service. Gold Standard Performance Summary 13

18 Future Challenges for Physician Practices: The Impacts of Consumer Driven Health Care All of these changes will force practices to review their current systems and technology infrastructure from the practice management system to electronic medical records, and from electronic prescriptions to eligibility. For some practices a major technology investment may be required to bring the infrastructure in the office to the level required to manage this shift in reimbursement methodology. Conclusions The arrival of consumer driven health care and high deducible plans has already impacted the revenue stream of medical practices. Although no one knows if the movement towards these consumer driven health plans is temporary or permanent, practices must adapt and forge new relationships with both insurance companies and patients in order to continue to thrive. pg. 14 Gold Standard Performance Summary Gold Standard Performance Summary 14

19 LARSONALLEN HISTORY AND EXPERIENCE We promise to transform complexity into opportunity for our health care clients. Health care mission LarsonAllen is one of the top 20 accounting firms in the nation, according to Public Accounting Report. We provide assurance, accounting, tax, consulting, and advisory services to organizations and individuals managing business ventures and finance. Founded in 1953, LarsonAllen is dedicated to creating a noticeably different experience for our clients. We provide our clients with industry specialists and high quality business resources. With approximately 1,400 people and nearly 30 locations, we have significant depth of talent, experience, and a national perspective. LarsonAllen is an independent member of Nexia International, a top 10 worldwide network of independent accounting and consulting firms. Founded in 1971, Nexia provides you with a global network of independent auditors, business advisors, and consultants. We serve our clients with quality and integrity and meet their needs through a primary advisor relationship. We stress open communication, efficiency, and a relationship grounded in fairness and trust as your accountants, consultants, and advisors. LarsonAllen s dedication to health care LarsonAllen has developed one of the nation s largest health care practices. Approximately 225 people, including more than 50 principals, are exclusively devoted to serving over 4,000 health care clients. To break it down further, we serve: 1,100+ senior living providers 200+ home care and hospice agencies Approximately 2,000 physicians comprising 853 medical practices 700+ hospitals and health systems, including approximately 100 CAHs 300+ other health care entities Our health care professionals are located throughout our offices in Arizona, Florida, Massachusetts, Minnesota, Missouri, North Carolina, Pennsylvania, Washington DC, and Wisconsin. Health care is the largest industry group served by our firm. Our team includes CPAs and a diverse range of experienced specialists with backgrounds and skill sets ranging from CEOs and CFOs to RNs, certified coders, and certified medical practice executives. Represented by team members possessing up to 30 years of dedicated experience to the health care field, we develop innovative responses and creative solutions for clients who demand specialized consultation and advice, as well as providers who require traditional CPA services. Our consulting and advisory services focus on finance, strategy, capital planning, internal audit, operations and performance improvement, and facilities. Our independent and objective professionals are guided by your strategic vision and your unique environment. Our range of clients includes physician practices such as multispecialty medical groups, radiologists, orthopedic surgeons, dentists, orthodontists, oral and maxillofacial surgeons, chiropractors, dermatologists, cardiologists, pediatricians, plastic surgeons, anesthesiologists, urologists, and other physician group practices. To understand the emerging issues faced by medical practices, we immerse ourselves in all aspects of the health care field. We analyze data, conduct research, develop tools, surround ourselves with health care leaders inside and outside of our firm, speak at association events, and support state and national health care associations. Gold Standard Performance Summary 15

20 GATEWAY EDI HISTORY AND EXPERIENCE Gateway EDI history and experience Named by MGMA Connexion as one of the top 10 health care electronic data interchange (EDI) vendors today, Gateway EDI (GEDI) offers simple solutions to complex business electronic connectivity challenges. Its powerful software packages including standard claims processing, electronic remittances (ERA), and secondary claim filing provide a full suite of comprehensive services and offer providers and insurers sophisticated new technology to manage tough challenges all through HIPAA compliant solutions. Gateway EDI was founded in 1983 and has dedicated itself to helping providers receive timely reimbursement for services rendered. Serving over 40,000 physicians in all 50 states and Guam, Gateway EDI focuses on providing an extraordinary product offering backed by the best customer service in the industry. Encouraging providers with programs such as their elite 99 percent Club has increased their clients efficiency and revenue. Gateway EDI s mission is to get providers paid and, with a 99 percent client retention rate and exemplary annual customer satisfaction survey results, Gateway EDI has proven successful at its mission. Gateway EDI understands what it takes to operate a successful practice. It takes leadership, organization, and quick problem solving. Gateway EDI builds cutting edge tools that help each day run more smoothly. From electronic claims management to trackable billing to benchmark reporting, these tools help organizations see how they are performing at a glance. With the continuing changes in the health care industry, it is extremely difficult to accurately forecast what will be in store for practices down the road. Gateway EDI s tools are designed to look to the future and provide help along the way. Year after year, Gateway EDI demonstrates high performance. Ninety-eight percent of all customer service calls are answered in person with a 92 percent instant resolution. Since 1997, Gateway EDI s claims processing volume has increased 1,500 percent, representing a 35 percent increase in volume consistently for 10 years. Based in St. Louis, the privately-held firm maintains full accreditation by the Electronic Healthcare Network Accreditation Commission (EHNAC), an industry endorsement for excellence in industry standards and best practices. For more information, visit pg. 16 Gold Standard Performance Summary Gold Standard Performance Summary 16

21 APPENDIX Appendix 1 Appendix 2 Appendix 3 Practice Type Practice Affiliations Frequency of Insurance Verification Single specialty w/o primary care 52% University affiliated 4% Hospital systems 9% Initial visit 12% Charge in insurance 4% Depends on carrier 4% Every visit 24% Single specialty with primary care 30% None 12% Every six months 8% Multi-specialty specialty 5% Multi-specialty primary care 8% Multi-specialty only 5% Independent 87% Other 24% Once a year 12% Gold Standard Performance Summary 17

22 USEFUL LINKS and GOLD STANDARD COMMITTEE Useful Links To engage Gateway EDI or LarsonAllen leaders for further assistance in your pursuit for Gold Standard Performance, we have provided helpful downloadable tools. The Web address below includes a list of actions for stakeholder groups to take to strategically move toward success, a worksheet to build a sensible road map toward Gold Standard Performance, and ratio definitions. Please visit our Web site to access these documents. You can explore LarsonAllen s other Gold Standard initiatives, research, and resources at: View the Critical Access Hospital Gold Standard Report at: View the Skilled Nursing Facility Gold Standard Report at: Physicians Revenue Cycle Gold Standard Committee Curt Mayse, MBA, FACMPE LarsonAllen Principal, St. Louis, MO cmayse@larsonallen.com Terri Fischer, CMPE, CPC LarsonAllen Manager, St. Louis, MO tfischer@larsonallen.com Jim Bettendorf Gateway EDI Director of Business Development, St. Louis, MO jbettendorf@gatewayedi.com Jeff Ozmon, MBA, CMPE LarsonAllen Manager, Charlotte, NC jozmon@larsonallen.com pg. 18 Gold Standard Performance Summary

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