February 10 12, 2006 Amanda Mewborn Hardy & Adrienne Jarvis Dickerson

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1 Leading Revenue Cycle Process Improvement February 10 12, 2006 Amanda Mewborn Hardy & Adrienne Jarvis Dickerson

2 Speaker Introduction Adrienne Dickerson Adrienne graduated from the Georgia Institute of Technology with a BIE and a Master s of Science in Health Systems. She is has been on the board of the GA HIMSS Chapter since 2002 and is a member of the Institute for Industrial Engineers/Society for Health Systems (IIE/SHS). Adrienne is an independent consultant and works with hospitals and other organizations to expand the use of traditional ISyE techniques in healthcare. Amanda Hardy Amanda works at DeKalb Medical Center as Director of Contracting & Process Improvement. Amanda has served in many roles at DeKalb, including roles in Revenue Management and Decision Support. Amanda earned a Bachelor s degree in Industrial Engineering and a Master s degree in Health Systems, both from Georgia Tech. Amanda has served on the board for the Georgia Chapter of HIMSS for four years and is currently serving as Treasurer.

3 DeKalb Medical Center 3 Hospital Health System in metro-atlanta Not-for-Profit Community Hospitals 550 staffed beds Acute Care, Emergency, Long Term Acute Care, Behavioral Health, Rehab DeKalb Medical Center at Hillandale Opened July 18, 2005 as Georgia s newest hospital and the first master-planned digital hospital in the state.

4 What is Revenue Cycle? Contracting Scheduling or Patient Presentation Pre-Certification Registration Financial Counseling & Insurance Verification Clinical Documentation Case Management Charging Coding Billing Cash Application Follow-Up/Collections Denials Management

5 Simplified Revenue Cycle Patient arrives & is registered. Charges entered for services provided. Patient receives a Procedure. Procedure is documented. Payment or notification of denial of payment received. Health Information Mgt. reviews and codes the account. A bill is generated and sent to the payor.

6 Revenue Cycle Organizational Structure &KLHI([HFXWLYH2IILFHU &KLHI)LQDQFLDO 2IILFHU &KLHI&RPSOLDQFH 2IILFHU ([HFXWLYH 'LUHFWRU 5HYHQXH&\FOH 'LUHFWRU&DVH 0DQDJHPHQW 'LUHFWRU+HDOWK,QIRUPDWLRQ 0DQDJHPHQW 'LUHFWRU &RQWUDFWLQJ 3URFHVV,PSURYHPHQW 'LUHFWRU3DWLHQW $FFHVV 'LUHFWRU3DWLHQW )LQDQFLDO 6HUYLFHV 0DQDJHU 5HYHQXH&\FOH (PSOR\HH 'HYHORSPHQW

7 Contracting & Process Improvement o Director o Project Manager, Charging Senior CDM Analyst Charge Specialist o Project Manager, Denials Denials Specialists (2) o Manager, Contracting Contract Specialists (2) Contract Analyst odepartment Systems Coordinator

8 Accomplishments CDM-Related Activities resulted in $11 Million additional net revenue for the year ending 3Q05 Average Inpatient payment increased $1,000 per case from 2003 to 2005 Denials collections increased 50% from $6.5M per month to $9.7M per month from December 2004 to November 2005 Denials Collections /2004 1/2005 2/2005 3/2005 4/2005 5/2005 6/2005 7/2005 8/2005 9/ /2005 $ Recovered 11/2005 Millions Thousands # Accounts 0

9 Charging Charge Description Master (CDM) Compliance/Regulation/Maintenance Pricing/ Maximization of Net Revenue Charge Capture Charge Reconciliation Late Charges Audits Educate Clinical Personnel about Finances

10 Charging Team Management of CDM Requests Departmental CDM reviews Fair & Competitive Pricing Charge Reconciliation Verifying that patients were appropriately charged Ensuring charges & corrections are made in a timely manner, reducing late charges Education & Awareness Educate others on the importance of charge capture and the effects of incorrect charge capture on reimbursement Reduction of Denials and Billing Errors Review denials resulting from charging errors and communicate errors to departments to prevent future denials.

11 Common Features of a CDM CDM stands for Charge Description Master Hospital specific computer file listing all hospital procedures, services, supplies, and drugs that are provided to patients Elements include: Department Number, Item Number, Charge Description Number, Description, Coding, Price CDM # Hemogram & Auto Diff Basic Metabolic Panel CT Abdomen w/o contrast CT Sinus w & w/o contrast Bone Plate Description HCPC S Code Revenue Code Price

12 Charging = Coding! CDM # Description HCPC S Rev Code Price Qty Hemogram & Auto Diff Basic Metabolic Panel Tylenol Sutures OR, 1 st hour OR, addl 30 minutes

13 Effects of Incorrect Coding of Charges Incorrect coding of charges may result in lower reimbursement Rev Code 270 (General Supply) vs. 275 (Pacemaker) Patient Charge Hospita l Cost Revenu e Code Billed Expected Reimbursement ** Profit/Lo ss Annualized Profit/Loss * Scenario 1 $10,800 $6, $0 ($6, ) ($210,000) Scenario 2 $10,800 $6, $7,020 $1, $35,700 * Based on 35 pacemaker procedures a year. ** Expected reimbursement calculated based on 65% of charges. HCPCS vs. No HCPCS for Herceptin Patient Charge Hospita l Cost HCPCS Code Billed Expected Reimbursement ** Profit/Los s Annualized Profit/Loss * Scenario 1 $90 $30 None $0 ($30) ($600,000) Scenario 2 $90 $30 J9355 $50 $20 $400,000 *Based on 20,000 units of Herceptin provided in a year. ** Based on the Medicare National Payment Average.

14 Importance of Accurate Charge Capture Incorrect charge capture may result in lower reimbursement Missing charges on accounts that pay x% of charges Patient Charge for Pacemaker Pacemaker Charge Entered? Total Charges for Service Expected Reimbursement Scenario 1 $10,800 Yes $20,800 $13,520 Scenario 2 $10,800 No $10,000 $6,500 Patient Charge for OR Time *Expected reimbursement calculated based on 65% of charges. Missing charges on accounts that pay based on revenue code/cpt code. For example, OR services paid based on revenue code 360. Revenue Code Assigned to OR Time OR Time Charge Entered? Total Charges for Service Expected Reimburse ment Scenario 1 $5, Yes $10,000 $6,500 Scenario 2 $5, No $10,000 $0 *Expected reimbursement calculated based on 65% of charges.

15 Charge Reconciliation Hospital Policy Home-Grown System

16 Late Charge Home Grown System

17 Audits Defense Audits Defend 90% of Questioned Revenue average audit results in +/- $200 in net revenue Managed care contract terms Charge Audits/Compliance-Charge Entry Does every ER claim have an ER visit charge? Does every injectable medication have an accompanying medication administration charge? Patient Audits Overcharges and undercharges addressed

18 Clinical Department Education Late Charge % Dashboard Overall Late Charge/Credit Summary Thousands 5,000 4,000 3,000 2,000 1,000 4% 6% 5% 2% 3% 3% 4% 4% 3% 2% 2% 6% 5% 4% 3% 2% 1% 0 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 0% Late Charge $$ Late Charge % Lunch & Learn Educational Sessions for Clinicians & Department Heads Physician-based Education and Help with Documentation and Coding Interventional Radiology

19 Denials Management Average Denials Recovery Rate of 70% What is a denial? Denials Management System Worklists Reporting/ Analysis Denials Prevention Trend Analysis and Correct Core Problem Process Improvement Examples: HDX, Payer Websites, F.A.S.T. Team (Financial Assessment Services Team) Denials Council

20 Denials At DMC, a denial is defined as any account where we received less payment than we expected Possible Denial Reasons Timely Filing Duplicate Claim Missing Pre-cert/Authorization Coding Error Denials require additional work to research the problem, correct it and appeal or resubmit the claim, which delays payment

21 Denials Mgt. System Denials system to categorize, route and report on denials Identify patterns and focus on prevention (Top 10 each month) Denials Council educate, share dashboard, develop Performance Improvement groups October Top 10 Denial Types Non Cov Chrgs Payment Adjusted Dup Claim Paymt Denied Lacks Info Info Needed (SMS) Inconsis Diag w... Proc Code Incon... COB Not Pd Sep.

22 Our Denials Progress Incoming Denials Dollars are remit rejection amounts, not Invision acct. balances Thousands Jan Feb Mar Apr May June July Aug Sept* Oct Volume Dollars $24 $20 $16 $12 $8 $4 $- Millions *September forward includes two new payors added to system Denied dollars recovered December 2004 to November 2005 = $89,374,019

23 Denials Performance Improvement Projects Coordination Of Benefits (COB)/Insurance through F.A.S.T. Team Timely Filing Duplicate Claims Sterilization forms Insurance Cards on Chart

24 Contracting Maximize Reimbursement & Minimize Risk Pitfalls Contract Management System Recouping Underpayments/ Reallocation of Potential Refunds New/Hidden Money (ex. Clinical Trials) Payer Relationships

25 Reimbursement Methodologies Inpatient Per Diems x% of Total Billed Charges DRG Payment Stop Loss (Outliers) Outpatient Flat Rates, usually based on HCPCS or revenue code Case Rate x% of Total Billed Charges CDM maintenance has the biggest impact on Outpatient Reimbursement.

26 Contract Mgt. System Calculates Expected Reimbursement on Managed Care Accounts Based on Contract Terms Variance Reporting Recouping Underpayments in Bulk Through Identification of Trends

27 Payor Relations Payors are Just People Too - Relationships Go a Long Way Tips & Tricks for Contracting Be Clear in Defining Rates (e.g., Implants 75% Charges compared with Implants, Revenue Code , 75% Charges) Use State Laws to Your Advantage Administrative Requirements and their Impact on Rate Expectations New Services/ Technology Protection Automation in Adjudication of Claims on both the Payor and Hospital Side Billing/Coding Requirements Annual Inflators

28 Summary of Accomplishments CDM-Related Activities resulted in $11 Million additional net revenue for the year ending 3Q05 Average Inpatient payment increased $1,000 per case from 2003 to 2005 Denials collections increased 50% from $6.5M per month to $9.7M per month from December 2004 to November 2005 Decreased late charge percentage from 6% to 2% over 10 months Average Denials Recovery Rate of 70% Denied dollars recovered December 2004 to November 2005 = $89,374,019

29 Questions? Adrienne Dickerson Amanda Hardy

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