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1 Office of Internal Audit July 9, 2014 Dr. Kirk A. Calhoun, President UT Health Northeastt U. S. Hwy 271 Tyler, TX Dear Dr. Calhoun: We have completed the that was part of our Audit Plan. The objectivee of the audit was to determine the adequacy of processes and controls in place for ensuring that patientt accounts are billed timely to prevent past filing deadline denials. The detailed report is included for your review. This audit was conducted in accordance with guidelines set forth in The Institute of Internal Auditor's International Standards for the Professional Practice of Internal Auditing. We appreciate the assistance provided by management and other personnel and hope the information presented in our report is helpful. Sincerely, Kris I. Kavasch Executive Director of Internal Audit Enclosure cc: Mr. Vernon Moore, Senior Vice President, Chief Financial and Business Officer Mr. Joe Woelkers, Executive Vice President, Institutional Operations & Chief of Stafff Dr. Steven Cox, Chief Medical Officer, Physician-In-Chief Ms. Rose Mary Van Norman, Executive Director of Revenue Cycle Dr. Raymond S. Greenberg, UT System Executive Vice Chancellor forr Health Affairs Mr. J. Michael Peppers, UT System Chief Audit Executive Mr. Richard St. Onge, UT System Associate Vice Chancellor for Shared Services Ms. Dyan Hudson, UT System Assistant Director, Specialty Audit Legislative Budget Board - [email protected] Governor - [email protected] State Auditor s Office - Sunset Advisory Commission -

2 (Medicaid and Medicaid Managed Care Past Filing Deadline Denials) July 9,

3 TABLE OF CONTENTS Executive Summary... 4 Background... 5 Audit Objective... 6 Audit Scope and Methodology... 7 Audit Results... 9 Conclusion Summary of Priority Findings

4 Audit Report Executive Summary We completed this audit as part of our Audit Plan. Since patient revenue is a high-risk area for the institution, Internal Audit generally includes at least one project annually on the Audit Plan to assess key aspects of patient revenue as deemed important due to significant financial, operational or industry changes and management interest. This audit was focused on Medicaid and Medicaid past filing deadline denials for which the institution experienced significant increases in the amounts denied by the payers in recent years, due in part to complexities associated with the Texas Medicaid program s continued transition to a managed care model. The Medicaid and Medicaid Managed Care past filing deadline denial amounts have significantly improved year-todate in over FY However, improvements in underlying revenue cycle processes are needed to sustain this positive trend, especially when facing the state s announced plan to add an estimated 80,000 new Medicaid clients to managed care plans effective September 1, 2014, to include the Northeast Texas Medicaid Rural Service Area (MRSA). It is important for management to stay abreast of impending payer changes that impact patient billing and to proactively address the challenges before changes become effective. The audit objective was to determine the adequacy of processes and controls in place for ensuring that patient accounts are billed timely to prevent past filing deadline denials. Based upon work performed, we do not believe processes and controls currently in place across revenue cycle functional areas are adequate to ensure that patient accounts are billed timely to prevent past filing deadline denials for Medicaid and Medicaid Managed Care payers as well as other insurance payers, especially those with short claim filing timelines. Although the predominance of claims are filed timely due to processes and controls in place and the hard working, collaborative efforts of many employees and their leaders, UT Health Northeast continues to be at risk of realizing lost revenue from claims that miss filing deadlines. Our opinion is based upon our assessment of processes that are important for successful and timely claim submission as follows: Patient registration and insurance verification personnel are not consistently and adequately verifying insurance coverage for all services as required by institutional policies and procedures. The institution has policies and procedures which require providers to promptly complete dictation and documentation but these policies and related penalties have not been strictly enforced. In addition, monitoring and notification of the medical record timeliness deficiencies have not consistently been performed in accordance with the policies. The Coding staff has historically focused their work on higher dollar accounts but not on each payer's filing deadlines. Prior to, Coding had no procedures in place for monitoring to get accounts coded that were nearing the claim filing deadline but in procedures have been implemented for the Claims Denial Management Coordinator to manually notify them when accounts are nearing the 95 day filing deadline for Medicaid and 4

5 Medicaid Managed Care payers. Although this process is an improvement for Medicaid payers it does not extend to all payers. Patient Financial Services does not have adequate billing processes in place for ensuring that claims that appear in the system as billed but were not accepted by the insurance payer are promptly corrected and re-billed within each payer's claim filing timeline. Patient Financial Services does not have adequate processes in place to ensure secondary insurance is billed promptly after the primary insurance has paid and within the payer's claim filing timeline. The Patient Financial Services Medicaid and Medicaid Managed Care collections staff is assigned accounts within specific aging categories such as 0-30 days/30-60 days/60-90 days and work these accounts by higher dollar within high, medium and low dollar strata but accounts are not being worked by age from oldest to newest. Collections staff assigned to insurance payers other than Medicaid and Medicaid Managed Care accounts work them by dollar amount within high, medium and low dollar strata with little emphasis in the process on aging of the accounts. There is no process in place for analyzing past filing deadline denials received to determine the root cause and for ultimately making process changes needed to reduce these denials. There are not adequate processes or systems in place for effectively tracking appeals and information requests to ensure these are completed within each payer's filing deadline. Also, there is no effective method in place for management to monitor this activity. Coding staff that are responsible for correcting patient account coding errors and deficiencies identified by Meditech edits that are included in the "Unprinted Bills Summary Report" have historically not been given ample measures and timelines for resolving all account deficiencies. Management has not adequately monitored progress made in making these corrections to effectively bill the claims. In 2014, although there has been some renewed interest in working to resolve the account deficiencies noted in this report processes do not appear to be adequate to ensure corrections are made within claim filing timelines. Patient information system pre-registration errors are not being promptly resolved in the patient system to promote successful account flow for billing. Background This was performed as part of the Audit Plan. The audit specifically focused on patient revenue cycle processes involved in past filing deadline denials for Medicaid and Medicaid Managed Care payers. The patient revenue cycle is a highly complex process that includes numerous transactions and crosses various functional activities and areas of responsibility within the institution. Functional activities involved in the revenue cycle include patient scheduling and registration, admissions, financial counseling, provider services and documentation, coding, billing, collections follow-up and claims denial management. Although all of these functional areas have various processes and controls deployed to promote and support successful billing, insurance claim denials often result from breakdowns within one or several of the functional areas involved in the process. Claim denials add unnecessary costs to the patient billing 5

6 process due to the increased effort needed to get the claim re-worked and successfully billed. Some of the general reasons breakdowns may occur include: Ineffective front-end processes in the areas of authorization for services and demographic/insurance information collection and verification Incomplete or untimely provider documentation Inaccurate or untimely coding processes Ineffective billing and collecting processes Ineffective claims denial management processes Continual changes in payer requirements In both fiscal years 2013 and 2014, the combined operational budgets of the Patient Access, Patient Financial Services, and Coding departments were approximately $4.8 million annually. These areas make up the revenue cycle functional areas reviewed, except for provider services and documentation. In these revenue cycle operations function with approximately 152 employees. Patient Financial Services performs all patient billing functions for the institution to include the hospital, on and off-site clinics, and ancillary services. During the period under review Patient Financial Services staff performed collections for all patient accounts, except for those outsourced to collection vendors for third party payer accounts that are 60+ days old and accounts in bad debt status. In FY 2013, UT Health Northeast revenue cycle processes were responsible for billing for gross revenue of approximately $201,497,424, including 1,637 inpatient admissions, 116,589 clinic and emergency room visits, and 151,598 services for ancillary, gastroenterology, radiology, surgery and oncology. In, there was a change in management over revenue cycle operations and in April 2014 UT Health Northeast hired an experienced Executive Director for Revenue Cycle Operations who is directly responsible for management of revenue cycle operations. The Senior Vice President, Chief Financial and Business Officer is organizationally responsible for revenue cycle operations. Effective September 1, 2014, the State of Texas Health and Human Services Commission has publicly announced its intention to expand the STAR+PLUS Medicaid Managed Care program statewide, which will include the Northeast Texas Medicaid Rural Service Area (MRSA). This expansion is projected to add an estimated 80,000 Medicaid clients as members in this managed care initiative. The STAR+PLUS program is designed to integrate the delivery of acute and longterm services and supports (LTSS) through a managed care system. The main feature of the program is service coordination. Audit Objective To determine the adequacy of processes and controls in place for ensuring that patient accounts are billed timely to prevent past filing deadline denials. 6

7 Audit Scope and Methodolog gy To identify trends and to focus the audit on insurance payers for which the institution has experienced significant increases in past filing deadlinee denials in recent years and the highest amount of past filing deadline denials in FY 2013, we performed a three-year analysis of patient revenue past filing deadline denial amounts for fiscal years 2011 through Between fiscal years UT Health Northeast experienced a significant increase of approximately 173% in past filing deadline denials with the bulk of the increases being in Medicaid and Medicaid Managed Care categories. During FY 2013, 76% of the $2.2 million in past filing deadline denials were from Medicaid and Medicaid Managed Care payers. The most contributive factor in the increase in past filing deadline denials was that in March 2012, Texas Medicaid transitioned approximately 880,000 people from Medicaid Primary Care Case Management (PCCM) to Medicaid managed care. Also, Medicaidd managed care patients are permitted to change managed care providers as often as monthly. As a result, UT Health Northeast experienced operational problems in identifying and billing the correct payers for Medicaid and Medicaid Managed Care patients beginning in 2012 through 2013 which caused a large volume of past filing deadline denials for these payers. Due to the substantial amount of past filing deadline denials for Medicaid and Medicaid Managed Care payers we focused the audit work on processess and controls for these denial transactions. UT Health Northeastt FY 2013 Past Filing Deadline Denials $1,800,, $1,600,, $1,400,, $1,200,, $1,000,, $800,, $600,, $400,, $200,, $ The scope of our audit was September 1, through March 31, To achievee the audit objective we interviewed management and staff to gain an understanding of detail procedures over functions of the revenue cycle ncluding patient registration, dictation and 7

8 documentation for services provided, coding, billing, collections and claims denial management. We reviewed applicable Medicaid and Medicaid Managed Care guidelines and institutional policies and procedures over the revenue cycle functions. We examined patient information system and manual documentation used in the processes. Since management does not have a process in place for analyzing past filing deadline denials for the purpose of identifying the root cause and making process improvements, we selected a non-statistical sample of Medicaid and Medicaid Managed Care past filing deadline denials received during FY 2013 and reviewed documentation within the patient information system to identify some general causes for the past filing deadline denials as well as associated process deficiencies that contribute to them. We obtained management s review and feedback for each transaction assessed. The following diagram depicts the UT Health Northeast Outpatient Revenue Cycle Process Flow. UT Health Northeast Outpatient Revenue Cycle Process Flow: We reviewed processes for all of these areas except for Scheduling. Although the process flow diagram presented is for outpatient services only we also reviewed processes for inpatient transactions which differ slightly in front-end admitting, demographics capture and insurance verification processes performed by Admissions and Financial Counselors but are otherwise basically the same. Since management does not have a process in place for analyzing past filing deadline denials within the claims denial management process we did not display that process in the chart although the processes were reviewed. Collections staff post past filing deadline denial adjustments in the system and initiate appeals when appropriate as part of account follow-up processes as noted in the flowchart. Our examination was conducted in accordance with guidelines set forth in The Institute of Internal Auditor s International Standards for the Professional Practice of Internal Auditing. 8

9 Audit Results In there has been a renewed awareness and management attention to past filing deadline denials due to the higher volume in the prior year. This has resulted in a significant reduction in the amount of Medicaid and Medicaid Managed Care past filing deadline denials in the current year. However, revenue cycle processes and controls have not been redesigned or implemented throughout the cycle to promote consistent and prompt filing of claims to meet each payer's claim filing timelines. Our opinion is supported by the following detailed audit results: Detailed Audit Results We reviewed revenue cycle processes in place during the period under review and selected a nonstatistical sample of FY 2013 Medicaid and Medicaid Managed Care past filing deadline denial transactions to identify some causes and related process deficiencies for past filing deadline denials. With this approach we were able to determine that the transactions reviewed were in fact denied for payment for reasons we identified as risks during the process reviews that preceded detailed testing. We tested twenty-five hospital and physician Medicaid and Medicaid Managed Care transaction adjustments totaling ($193,027) out of the population of approximately ($1.7) million Medicaid and Medicaid Managed Care past filing deadline denial adjustments made in FY We randomly selected our sample within higher, medium and lower dollar strata to get a broader view of processes at various dollar levels. Patient Financial Services collections staff and management subsequently reviewed the results of the testing and concurred with Internal Audit s detailed assessments as to the reasons for the denials. Testing results and review of processes are disbursed within the process sections presented below. Patient Revenue Cycle Scheduling and Registration Processes Patient Access staff members are responsible for scheduling and registering patients. As part of the patient check-in process staff are supposed to verify the accuracy of patient demographics and insurance in the patient information system. They are responsible for verifying insurance using electronic sites and for verifying that a copy of the patient s current insurance card is on file in the records. Although the accuracy of this information is crucial in successfully billing for the services, we determined that registration staff do not consistently verify insurance coverage using electronic resources or obtain copies of insurance cards and documentation as needed. For 16 of the 25 charges reviewed insurance verification procedures were not performed. For several of these transactions, Audit determined that the institution's failure to verify insurance on the front-end had a direct impact on events that ultimately resulted in the institution s failure to collect for services provided. Prior to June 24, 2013 the institution only required verification of insurance coverage for new patients, inpatients and higher dollar tests and procedures. On June 24, 2013 insurance verification policies and procedures were revised to require staff to verify for all services that current insurance cards are on file in the patient's records and to verify insurance coverage by using electronic sites and documenting the results in the patient system. Most of the transactions reviewed originated prior to June 24, 2013 so we performed additional work to verify whether 9

10 the revised policies and procedures were implemented. We found that although existing staff was trained in the new policy requirements in August 2013, new employee training for patient check-in procedures had not been updated to include the new insurance verification requirements. In addition, based upon review of some transactions and interviews held with staff, the new policies and procedures were not consistently being applied after they became effective. After Internal Audit discussed the deficiencies with management, the new employee training modules were immediately updated and employee training assignments were made within Performance Manager for staff to review the new policy requirements. The Patient Access Manager sent correspondence to all patient registration personnel to remind them of the insurance verification requirements. Recommendation #1: The Executive Director of Revenue Cycle Operations should collaborate with the Patient Access Manager to ensure processes are implemented for providing periodic staff training and refreshers concerning insurance verification requirements and its importance in successful billing. Procedures should be implemented for periodically verifying adherence to the institution s insurance verification policies and procedures. Management s Response: The Executive Director of Revenue Cycle Operations collaborated with the Patient Access Manager and an alternate solution is planned for resolving the issue. Two new positions within patient scheduling have recently been approved by senior management but are not yet filled. These positions will be responsible for verifying each patient s insurance coverage prior to scheduled appointments. Processes will be implemented for verifying coverage when appointments are not pre-scheduled. Insurance verification policies and procedures will be updated as needed to reflect the process changes. Implementation Date: August 31, Plans are for positions to be filled and procedures to be in place by fiscal year end. Within the revenue cycle there are key reports used to monitor and correct deficiencies. One of the reports used by Patient Access is the Pre-Registration Status Report, which includes patient accounts left in pre-registration status due to various types of front-end registration errors. These accounts are not billable until corrections are made and charges are allowed to move forward in the billing process. Patient Access has processes in place for a designated employee within the department to work the Pre-Registration Status report to resolve the pre-registration errors or deficiencies noted in the report. Pre-registration status errors are not consistently being resolved promptly in the system to promote timely claim submission. We reviewed four transactions on the Pre-Registration Status Report dated March 28, 2014 and found that all four transactions reviewed were ranged in age from one to six months from the date of service. Recommendation #2: The Executive Director of Revenue Cycle Operations should collaborate with the Patient Access Manager to implement processes for promptly resolving patient registration errors included in the Pre-Registration Status reports to help promote timely claim filing. 10

11 Management s Response: The Executive Director of Revenue Cycle Operations collaborated with the Patient Access Manager to develop a plan for resolving the issues. An employee has been assigned primary responsibility for resolving pre-registration errors and a secondary employee has been assigned as back-up to ensure these errors are resolved timely. Plans are to have the Information Technology department revise the current Pre-Registration Status Error Reports to bring into the reports insurance information and date of service. Management will monitor all transactions that are 60 days and older to make sure these are prioritized for resolution and issues are fully resolved at least 30 days prior to the payer s claim filing deadline. In early June 2014 efforts were focused on the pre-registration status errors and all accounts in pre-registration status on the date the report was worked were cleared. Implementation Date: August 31, Information Technology Department to revise Pre- Registration Status Reports and procedures for monitoring for older claims nearing the filing deadline will begin. Patient Revenue Cycle Physician/Provider Documentation Processes After patient services are provided, the healthcare provider must complete dictation and documentation in the patient s electronic health record before the charges can be analyzed, coded and billed. The institution has implemented IHOP Medical Staff policy #09.32 for guidance in Delinquent Medical Records. Inpatient records are considered delinquent when incomplete 30 days after discharge and outpatient records are considered delinquent 7 days from the date of service. Inpatient and observation histories and physicals, operative reports, and emergency room visits are delinquent after 24 hours, and electronic signatures are delinquent 7 days after the transcription date. The Health Information Management Director is responsible for notifying the responsible healthcare provider of any delinquent medical records twice monthly. The policy prescribes specific procedures for the healthcare provider to follow for resolving the deficiencies. The policy includes penalties for first through fourth episodes of delinquent medical records in a year. Concerns we have with the process which we believe do not contribute to timely billing include the following: a. The Director of Health Information Management has not consistently fulfilled responsibilities denoted in the policy by sending out medical record delinquency letters twice monthly to providers. She says she has been sending the letters out about once per month but has not performed the process at the level required by policy due to other responsibilities. b. Although the process for identifying unsigned documents includes medical records in draft for all hospital and clinical areas, the Health Information Management Department is only analyzing inpatient, observation and day surgery records to determine completeness. This limited review by Health Information Management results in the Coding Department s need to track down documentation and physician dictation for numerous incomplete medical records for emergency room, ancillary and outpatient services which we believe may negatively impact their productivity in coding claims. 11

12 c. The Chief Medical Officer, Physician-in-Chief and Medical Executive Committee are responsible for monitoring medical record delinquencies and letters submitted to providers by the Health Information Management department and prescribing resulting penalties. However, operationally it is often the Coders and/or Health Information Management who continually contact providers in an attempt to get the medical records completed so charges can be coded for the claim to be billed. This reduces coding efficiency and we believe it causes some of the coding backlog the institution experiences. d. The Medical Staff policies and procedures relative to medical record delinquencies do not appear to be working effectively to reduce or eliminate delinquent medical records. On the day that we reviewed the delinquent medical records report there were 45 providers who had a total of 445 incomplete documents in the medical records that ranged from 7 to 61 days old and exceeded the seven day policy requirements for sign off. Upon reviewing these reports on various dates, this figure appears to reasonably reflect deficiencies on any given day. Although senior leadership recently took effective action to address two recurring delinquency situations, penalties prescribed by Medical Staff policies have not been strictly enforced for elevated episodes of delinquency. Detailed account testing revealed that for 1 of the 25 charges reviewed the physician did not complete dictation for 94 of the 95 days allowed by the payer for claim submission which resulted in the charges for the services being adjusted rather than collected. Recommendation #3: a. The Director of Health Information Management needs to consistently fulfill her responsibilities in monitoring and reporting medical record deficiencies as denoted in IHOP Medical Staff policy #09.32 Delinquent Medical Records. b. The Chief Medical Officer, Physician-In-Chief should implement an effective solution for resolving the root cause of the problem of late completion of dictation and medical record documentation. During the interim, the Senior Vice President, Chief Financial and Business Officer should consider relieving the Coders from validating the completeness of the medical records by assigning this responsibility to Health Information Management for all services. c. The Clinical Department Chair or other supervisors of providers who are in violation of the delinquent medical records policy, instead of Coding or Health Information Management staff, need to be held accountable for monitoring the provider's progress toward compliance with this policy. d. The Chief Medical Officer, Physician-in-Chief and Medical Executive Committee should determine the best course of action for reducing the number of delinquent medical records and revise policies and procedures accordingly. Procedures should be implemented for monitoring and tracking a provider's progress in resolving medical record delinquencies. Provider performance appraisals should include aspects of medical record delinquencies. Providers and others involved in processing these records need to be made aware of how their deficiencies have a negative result on the institution's ability to bill and collect for services provided. Providers need to be informed about the dollars lost due to past filing deadline denials and other delinquencies. 12

13 Management s Responses and Implementation Dates: a. The Director of Health Information Management implemented processes for fulfilling her responsibilities prescribed in the IHOP Medical Staff policy # Medical record delinquencies will be monitored and letters will be sent to providers who have delinquent records twice per month as required by policy. Implementation Date: June 1, 2014 b-d. Management is reviewing the issues and will develop a course of action. Implementation Date: August 31, 2014 Revenue Cycle Billing and Collections Process Prior to, Patient Financial Services functioned with designated billers for all primary insurance payers. In October 2013, Patient Financial Services reassigned duties for primary insurance billing in the institution s Physician Billing and Practice Management Application (PBR) for Medicaid and Medicaid Managed Care payers from a designated biller to one staff member who is also assigned to work Medicaid related account collections. All secondary insurance billing is performed by collections staff during account follow-up work. Patient Financial Services staff performs collections of patient accounts by using Aged Trial Balance Reports with various employees assigned to certain payers. During FY 2013, patient accounts were assigned to staff by alphabet based on patient s last name and the account balances were worked by higher dollar amounts. Beginning in, the employees who work Medicaid and Medicaid Managed Care accounts collections have been assigned accounts by an account age range and they work the accounts within high, medium and low dollar strata on various days of the week. Although accounts are not truly worked by aging, this does allow for some of the medium to lower dollar accounts to be worked. We identified the following collections processes that do not support timely claim filing: a. Patient Financial Services does not have an adequate process in place for monitoring accounts for which Medicaid/Medicaid Managed Care coverage is pending to ensure claims are filed within Medicaid s 95 day filing deadline or for those with retroactive approval within the 365 day federal claim filing limit. For 2 of the 25 charges reviewed, which were in excess of $154,000 combined, although the patient was retroactively approved for coverage for the date of service there were no manual or electronic controls in place to ensure the claim was filed by the 365 day federal filing limit. b. Patient Financial Services has not deployed patient system alerts or other means for tracking and following up on patient charges to ensure billing is performed within each payer s claim filing deadline. For 1 of the 25 charges reviewed the claim was never billed in 95 days because late charges for services rendered were not entered before the deadline. For 1 of the 25 charges reviewed lack of proper insurance verification caused the claim to be filed with the wrong insurance and collections staff did not follow up on the account to re-bill to 13

14 the correct insurance until the account was 320 days old. c. Patient account collections are worked by dollar amount in high, medium and low strata but are not prioritized by aging when worked to help ensure collections and any needed appeals are adequately processed within claim filing deadlines. d. When claims pass the institution's claim scrubber and are billed to the insurance but do not pass the payer's edits there are no procedures in place for promptly working claim rejection reports and rebilling the claims. In the current process the biller is not responsible for reviewing rejection reports or monitoring to make sure all claims submitted are accepted by insurance. These claims that are not accepted by the payer are placed within the accumulation of work for collections staff which is generally prioritized and worked by higher dollar amounts and not prioritized at any point by unbilled claims. In testing the accounts we found that for 11 of the 25 (44%) physician and hospital charges reviewed for which the institution received a past filing deadline denial from insurance, documentation in the patient information system reflects that the claim was submitted timely and it appears in the system to have successfully billed. However, the claims billed were immediately rejected by the insurance company and not re-billed within the payer s claim filing period. e. There is no process in place for promptly billing secondary or tertiary insurance after the primary insurance has paid on the accounts. Patient Financial Services does not have a dedicated biller assigned to promptly process secondary insurance billing after the primary insurance pays. When the primary insurance payer has made payment on the patient's account, the account is accumulated within the collection staff's Medicaid/Medicaid Managed Care Aged Trial Balance report which is worked by higher dollar amounts but there are no procedures in place for prioritizing the transactions to ensure secondary or tertiary insurance billing is promptly performed. For 2 of the 25 (8%) charges reviewed claims were never billed to the patient's secondary insurance within the 95 day filing timeline although there was adequate time for filing the claims after primary insurance paid. No collections follow up work was performed for these accounts by Patient Financial Services collections staff within the approximate 60 days they had the accounts for collection and no follow up work was performed by the collections vendor between the 60 day point when they were assigned the account and the payer's 95 day filing deadline. f. When past filing deadline denials were received from the payer, Patient Financial Services staff had processes in place for reviewing the patient's account to determine the cause of the past filing deadline denial and to determine whether an appeal was appropriate. However, the department had no processes in place for documenting in the patient system detailed reasons that Medicaid and Medicaid Managed Care and other payer claims were not filed by the payer's filing deadline so management had no ability to monitor reasons for the denials. After this audit began, the Interim Director of Business Operations in collaboration with staff involved in the revenue cycle processes developed some standard descriptions for past filing deadline denials for inclusion in the patient information system. The Interim Director instructed her staff that the new requirement is to consistently add this detailed information in the description field within the patient system. Although management has recently begun the process of making the detailed reasons for the denial available they are not fully developed and management has not identified or implemented 14

15 any monitoring activity or plans for improving processes based upon the results of this documentation. g. Management has not communicated to staff specific goals for reducing insurance denials or kept staff informed about the dollar effect to the institution for past filing deadline or other significant denials received. Although some process changes were made in early to reduce Medicaid/Medicaid Managed Care denials and resulting adjustments management has not provided meaningful financial information to the staff to help them monitor their progress and achievements. h. Less complex and lower dollar appeals and information requests are processed by Patient Financial Services collections staff and more complex appeals must be referred to the Managed Care Claims Administrator for handling. Although the progress of appeals is noted in the comments field in the patient account, there is currently no data, reporting or alert mechanism in use or available within the patient information system for effectively tracking and managing appeals. There are no policies and procedures in place for guiding staff about when claim appeals need to be referred for a higher level of review. There is no consistent method for referring appeals for a higher level of review and no documentation standards for the referral. Also, management has not provided guidance to staff about which appeals are beneficial to the institution and which ones are not because they may result in appeal costs that are greater than payment received. For 4 of the 25 (16%) hospital and physician charges reviewed that insurance denied for being past the filing deadline, appeals although appropriate either were not initiated or appeal documentation requests were not fulfilled by Patient Financial Services or the contracted collections vendor within the 120 day appeal deadline. Recommendation #4: The Executive Director of Revenue Cycle Operations should collaborate with the Patient Financial Services Manager and consider implementing the following to improve processes for reducing past filing deadline denials: a. Implement a process for monitoring accounts in which Medicaid/Medicaid Managed Care coverage is pending to ensure claims are filed within Medicaid s 95 day claim filing deadline or for those with retroactive approval within the 365 day federal claim filing limit. b. Begin using patient information system alerts or alternate means for tracking and following up on patient charges to ensure billing is performed within each payer s claim filing deadline. c. Sort or filter the Aged Trial Balance report by account aging, in addition to dollar amount, to ensure collections and appeals are completed within the required payer timeframes. d. For claims billed but rejected by insurance, implement processes for promptly correcting the claim and re-billing insurance by using epremis rejection reports to identify rejected claims rather than risking they will miss filing deadlines because their follow-up is mixed in with account collections work. 15

16 e. When the primary insurance payment is received, implement processes for the claim to be promptly billed to the secondary insurance rather than placed in the volume and accumulation of collections work. f. Implement processes for monitoring and analyzing the detailed reasons and areas responsible for past filing deadline denials received. Develop a plan for using these results to make process improvements when warranted. Implement processes for training staff when process changes are deployed. g. Set specific achievable goals for reducing denials and keep staff informed about the amount of revenue lost due to these denials. Staff also needs to be regularly informed about the dollar effect of their progress in achieving goals. h. Revise current appeals policies and procedures to adequately guide staff in which appeals are beneficial to the institution, when an appeal needs to be referred for higher level review and handling, and documentation standards for appeal referrals. Implement a method for properly tracking and managing appeals. Management s Responses and Implementation Dates: The Executive Director of Revenue Cycle Operations collaborated with the Patient Financial Services Manager and issues were addressed or will be addressed as follows: a. The Executive Director of Revenue Cycle Operations requested for the contract Third Party Eligibility vendor, who assists patients in obtaining Medicaid coverage, to implement processes for notifying the Patient Financial Services Manager of the upcoming deadline at least 30 days before the 365 day federal claim filing deadline. The vendor agreed to provide the notification requested. Implementation Date: June 1, 2014 b. The Executive Director of Revenue Cycle Operations will develop policies and procedures for tracking and following up on patient charges to ensure timely billing. Effective immediately supervisors and managers will be responsible for monitoring accounts greater than 30 days old to ensure errors get resolved for timely billing. A new process has been implemented in which the Claims Denial Management Coordinator weekly sends out Unbilled and Uncoded patient accounts reports denoting which ones are nearing claim filing deadlines. Documentation will be made about why the claim filing deadline was not met. Implementation Date: August 31, 2014 c. Managers within Patient Financial Services, Patient Access, and Coding have begun processes for monitoring patient accounts that are 30 days or older to ensure timely resolution. The Executive Director plans to begin outsourcing the lower dollar commercial claims and have her staff focus on higher balances and older claims. 16

17 Implementation Date: December 31, 2014 d. For claims billed but rejected by insurance, processes will be implemented for promptly correcting the claim and re-billing insurance by working epremis front-end rejection reports within hours of the rejection. The Executive Director is working with Relay Health vendor and has received a quote for purchasing epremis Data Extraction and Posting (DEP) product to post rejection details to the patient system to improve monitoring and resolution of these deficiencies. Implementation Dates: June 30, 2014 Collections staff will begin working epremis Front-End Rejection Reports; August 31, Explore feasibility/of purchasing epremis data extraction capability. e. The Executive Director has begun processes for reducing paper claim submissions by expanding the receipt of electronic remits (835 files) to more payers. When payments are received electronically, the secondary and tertiary insurance billing process is automated reducing the need for manual billing processes. For insurance payers in which the institution is unable to submit claims electronically, processes will be developed and implemented to ensure paper claims are submitted timely to secondary insurance payers. Implementation Dates: June 1, 2014 Started process for expanding electronic remits (835 files) to more payers and expects most large payers to be completed by December 31, Processes for submitting paper claims timely for any remaining payers for which electronic remits are not possible will also be implemented by December 31, f. Management has implemented requirements for collections staff to document in the patient system detailed reasons for past filing deadline denials analyzed. Management continues to develop and refine these detailed reasons. Management will review these detailed reasons monthly and revise revenue cycle processes as needed based on results to reduce denials. A report of these reasons is currently available in Galaxy. However, during this fiscal year the institution is replacing the Galaxy reporting system with a new reporting system, Medisolv, so the information will need to be made available in the new system. Implementation Date: December 31, 2014 Refine denial reasons and implement processes for monthly review of denial reasons and refinement of procedures based upon the results of the review. Date may change depending when Medisolv is implemented by IT. g. The Executive Director has requested for the Information Technology Department to develop a detailed denials report from the patient information system which she will use 17

18 to set achievable goals relative to insurance denials. When the report is made available, monthly staff meetings will be held where management will share with staff the institutional expectations and goals concerning denials. Management will also share information concerning their progress in achieving the goals. Implementation Date: August 31, 2014 h. The Executive Director is currently developing a claims appeals procedures matrix to provide staff with guidelines in filing and referring appeals. Implementation Date: September 30, 2014 Revenue Cycle Coding Processes The UT Health Northeast Coding function performs all coding services for the institution. They use patient information system reports for monitoring and resolving uncoded accounts and system edits. The institution's coding function prioritizes their coding efforts on higher dollar accounts using a Meditech Billing and Accounts Receivable (BAR) report of uncoded hospital inpatient and outpatient accounts. The Coding function runs the Uncoded accounts system report daily and distributes it to the coders for resolution. The Senior Vice President, Chief Business and Financial Officer also monitors the Uncoded accounts report, with a focus on ensuring sufficient progress is being made toward processing the higher dollar claims. The Coding function also codes physician charges using a LSS PBR charge transaction report with a focus of getting all charges coded by month end since the providers work relative value units (wrvus) must be made available for payroll calculations. Coding staff also utilize a Meditech BAR Unprinted Bills Summary Report (Unbilled report) obtained from the Galaxy system for claims that did not pass the Meditech edits for use in correcting coding errors so the claim can be billed. The Unbilled report is worked by higher dollar accounts and although Coding is working to resolve account deficiencies documented in the report over time there has not been a strong emphasis in getting all errors included in this report resolved promptly for bill submission. The Unbilled report which includes accounts that are coded but did not pass Meditech edits is run and distributed weekly. Coding processes that do not support timely billing within each payer s claim filing deadlines include the following: a. Coding prioritizes their coding efforts for working the Meditech Uncoded reports by higher dollar accounts and although the method may be appropriate they need to also prioritize by account aging and payer claim filing timelines to reduce past filing deadline denials. b. Coding has historically worked to resolve the Meditech edits identified in the Unbilled reports for accounts coded that did not pass the system edits. However, Coding has not set expectations at a level adequate to resolve all of the errors and deficiencies on the Unbilled report within each payer s claim filing deadlines. 18

19 Recommendation #5: The Executive Director of Revenue Cycle Operations should collaborate with the Coding Manager to consider implementing the following to improve processes for reducing past filing deadline denials: a. In addition to focusing coding efforts on higher dollar accounts, prioritize work efforts on the Uncoded accounts report by account aging/payer claim filing timelines to reduce past filing deadline denials. b. Focus efforts in resolving all of the errors and deficiencies within the Unbilled report and prioritize work to ensure claims are submitted prior to each payer's filing deadline. Management s Responses and Implementation Dates: The Executive Director of Revenue Cycle Operations collaborated with the Coding Manager and issues willl be addressed as follows: a. The Coding Manager will implement processes for weekly monitoring of uncoded accounts that are 30+ days old for all payers and she will send reminders to staff about gettingg these resolved. Management is in the process of developing policies and procedures. Implementation Date: August 31, Policies, Procedures and Implementation b. The Coding Manager will implement processes for reviewing accounts coded but unbilled due to system edits that are 60 days and older and she will send reminders to stafff to get these resolved for timely billing. For all payers, the Claims Denial Management Coordinator has implemented processes for notifying responsible parties about uncoded and unbilled accounts that are nearing claim filing deadlines. Management is in the process of developing policies and procedures. Implementation Date: August 31, Policies, Procedures and Implementation Conclusion Based on the results of our review of revenue cycle processes and accounts, we do not believee processes and controls currently in place are adequate to ensure that patient accounts are billed timely to prevent past filing deadline denials for Medicaidd and Medicaid Managed Care payers, as well as other insurance payers, especially those with shortt claim filing timelines. Kris I. Kavasch, Executive Director of Internal Audit 19

20 Summary of Priority Findings According to The University of Texas System, a priority finding is defined as an issue identified by an internal audit that, if not addressed timely, could directly impact achievement of a strategic or important operational objective of a UT institution or the UT System as a whole. Standard factors for determining a priority finding have been established in three categories: namely, Organizational Controls, Quantitative Risks, and Qualitative Risks. In view of the above requirements, the for had no priority findings. 20