How To Improve A Revenue Cycle

Transcription

1 Evidence-Based Revenue Cycle Improvement An HFMA MAP Educational Program SM Participant s Guide

2 SM Participant s Guide Evidence-Based Revenue Cycle Improvement An HFMA MAP Educational Program Introduction Thank you for participating in this HFMA educational session. In an era of shrinking payment, rising costs, and reform, the hospital revenue cycle is challenged as never before to operate efficiently, manage complex information, communicate clearly with patients, and get the payment that hospitals are due. Ultimately, a high-performing revenue cycle is critical to a hospital s mission. By improving a hospital s cash position, the revenue cycle helps fund investment in clinical resources that make high-quality care a reality. HFMA s MAP initiative, which is highlighted in this program, provides tools that hospitals can apply to achieve a high-performing revenue cycle. Thank you again for generously sharing your time and expertise to participate in this program. By supporting high performance in healthcare finance, you support the mission of health care. This educational program includes the following components: Introduction by the facilitator Video presentation featuring Suzanne Lestina Discussion Review of additional resources Closing Two Westbrook Corporate Center Suite 700 Westchester, IL (800)

3 SM Participant s Guide Evidence-Based Revenue Cycle Improvement An HFMA MAP Educational Program Contents Page(s) 1. Agenda 4 2. Suzanne Lestina biography 5 3. Slides from the video presentation by Suzanne Lestina Background Resources A Reform-Era Revenue Cycle. This HFMA educational report describes the pressures that reform is putting on the revenue cycle and how organizations are responding. Topics covered include charge capture, pricing, and patient access. HFMA s MAP Keys. This document lists all of HFMA s MAP Keys as of November For each performance indicator, the document identifies the purpose, value, and calculation. Mapping Out Strategies for Revenue Cycle Success. This article taps the experiences of HFMA MAP Award winners to identify strategies to measure, compare, and improve performance. MAP App information sheet. This document describes HFMA s MAP App an online tool that hospitals can use to track, compare, and improve performance. 3 It is a violation of federal copyright law to reproduce all or part of this publication or its contents, in any form by any means, without permission. For more information, contact HFMA Chapter Relations.

4 SM Participant s Guide Evidence-Based Revenue Cycle Improvement An HFMA MAP Educational Program 1. Agenda (Times are approximate) Introduction Overview of Session Content Video Presentation Featuring Director of Revenue Cycle MAP at HFMA, Suzanne Lestina Discussion of Revenue Cycle Operations Challenges Measuring, Comparing, and Improving Performance Review of Resources MAP Overview MAP Keys MAP App Educational Report 5 minutes 40 minutes 40 minutes 5 minutes Close 4

5 SM Participant s Guide Evidence-Based Revenue Cycle Improvement An HFMA MAP Educational Program 2. Suzanne Lestina s Biography Suzanne Lestina, CHFP, CPC, is the Director of Revenue Cycle MAP for HFMA. In this role, Suzanne serves as the technical expert and consultant for the MAP product line. She works in an advisory capacity regarding the technical aspects of MAP revenue cycle performance improvement by aligning key topics, strategies, and solutions for MAP users. Suzanne s extensive revenue cycle knowledge has enabled her to provide technical input to various industry caucus and task group meetings as well as serving on several national committees. Suzanne joined HFMA with many years of healthcare experience, including 10 years as a revenue cycle consultant. Her consulting experience includes education, revenue cycle operations assessments, work redesign, and compliance audit/reviews. Prior to her consulting work, Suzanne held revenue cycle leadership roles for two Chicago area hospitals. She is a past president of the First Illinois Chapter of HFMA and speaks frequently to HFMA chapters, healthcare providers, state hospital associations, and other professional associations across the country. 5

6 EVIDENCE-BASED REVENUE CYCLE IMPROVEMENT Suzanne Lestina Director, Revenue Cycle MAP Healthcare Financial Management Association REVENUE CYCLE IMPROVEMENT It is a violation of federal copyright law to reproduce all or part of this publication or its contents, in any form by any means, without permission. For more information, contact HFMA Chapter Relations. 6

7 OVERVIEW Reform and the revenue cycle How hospitals are responding Evidence-based improvement Successful practices Joining our journey REFORM AND THE REVENUE CYCLE 7

8 INCREASING INSURANCE COVERAGE Ame ericans (Millions) Source: CBO CHANGING PAYER MIX Americans (Millions) (5) (20) (5) (3) (35) (32) Uninsured Non-Group Market Employer Sponsored Medicaid Exchanges Source: CBO letter to House Speaker Nancy Pelosi March 20,

9 FINANCIAL IMPACT ON YOUR HOSPITALS Payment Reduction Over a Payment Area 10 Year Period (in billions) New payments for uncompensated care Payment reductions: Market basket update (MBU) Disproportionate Share Hospital payment cuts (Medicare & Medicaid DSH) Reduced readmissions Hospital-acquired conditions Accountable care organizations Net aggregate financial impact on U.S. hospitals Sources: Health Care Facilities Managed Care Analysis; Bank of America Merrill Lynch; March 4, 2010; p. 9 CBO letter to Speaker Nancy Pelosi; March 20, 2010; HFMA estimate OTHER REFORM CHANGES HR 3590 Sec 2178.c Annually, each hospital shall establish and make public a list of the hospital s standardized charges for items and services provided by the hospital, including for DRGs. 9

10 OTHER REFORM CHANGE New requirements Standardized charge reporting Requirements for tax-exempt hospitals New economic incentives Payment linked to quality Accountable care organizations Bundled payment HOW REFORM IS AFFECTING THE REVENUE CYCLE Expanded Coverage Payment Cuts New Requirements New Economic Incentives Revenue Cy ycle Imperatives Eligibility Processes Improve Performance and Efficiency Denials Prevention Charity Care Policies/Process Rational Pricing ICD-10 Documentation and Coding Physician Integration Bundled Payments 10

11 HOW HOSPITALS ARE RESPONDING PRINCETON BAPTIST MEDICAL CENTER BIRMINGHAM, ALABAMA Area of Excellence: Cash Collection How They Did It Consolidated pre-arrival unit Automated insurance verification, including identifying patient financial obligation Communicating about and collecting this amount prior to arrival Instituting continuous quality improvement process to identify and reduce errors 11

12 PRINCETON BAPTIST MEDICAL CENTER BIRMINGHAM, ALABAMA Results Reduce DNFB to 3.7 days Increase cash as a % of net revenue to consistently above 100% Decrease denials to less than.25% of gross revenue Maintain cost to collect at less than 3% DNFB Comparable Statistics 6.2 Median 5.4 Top Quartile Performance Source: HFMA s March 2010 TOUCHETTE REGIONAL HOSPITAL CENTREVILLE, ILLINOIS Area of Excellence: Cash Collection How They Did It Revising charity care policy Adopting an automated patient eligibility system Incorporating charity care criteria into the system s database 12

13 TOUCHETTE REGIONAL HOSPITAL CENTREVILLE, ILLINOIS Results Reduced bad debt charges by 48.6% Increased charity care by 15.5% Decreased overall uncompensated charges by 16.6% Increased cash collections by $2.5 million over the goal of 102% adjusted net patient services revenue Cash Collections Comparable Statistics Median Top Quartile Performance Source: HFMA s March 2010 BAYLOR HEALTH CARE SYSTEM DALLAS, TEXAS Area of Excellence: Cash Collection How They Did It Centralize the business office Centralize insurance verification and pre-registration Centralize denials management 13

14 BAYLOR HEALTH CARE SYSTEM DALLAS, TEXAS Results Improvements from Achieved consistent net revenue cash collection rate of 100% or better Lowered net accounts receivable days from 67.9 in 2000 to 39.9 Decreased 91+ days from discharge aging from 13.0% to 5.8% Reduced cost of collections from 2.5% Days in A/R Comparable Statistics 44.5 Median 37.9 Top Quartile Performance Source: HFMA s March 2010 EVIDENCE-BASED IMPROVEMENT 14

15 EVIDENCE-BASED IMPROVEMENT Components Measuring Performance What are consensus measures of revenue cycle excellence? Comparing Performance How are peers performance and what are performance targets? Improving Performance How do high performers succeed? EVIDENCE-BASED IMPROVEMENT Benefits Identify and manage to trends Validate best practices Trigger corrective action Forecast performance Identify opportunities for process improvement Compare performance with like organizations Use data to change behaviors 15

16 HFMA INITIATIVE WHAT IS MAP? MAP is a comprehensive performance improvement strategy Identify indicators Track and improve performance Recognize excellence Share successful practices 16

17 EVIDENCE-BASED IMPROVEMENT: MEASURING PERFORMANCE MAP KEYS MAP Keys are industry-developed key indicators for revenue cycle performance Clearly defined Measurable Discerning Comparable 17

18 MAP KEYS MAP Keys focus on key areas of revenue cycle performance Patient access Revenue integrity Claims adjudication Management PURPOSE VALUE CALCULATION Example Indicator Purpose Value Calculation Net days in A/R Trending indicator of overall A/R performance Indicates revenue cycle efficiency Net A/R Net patient service revenue 18

19 EVIDENCE BASED IMPROVEMENT: COMPARING PERFORMANCE COMPARING PERFORMANCE Manage trends Identify opportunities Prioritize opportunities Identify successful practices 19

20 COMPARING PERFORMANCE Flexible comparisons are needed for in-depth analysis Industry trends Performance over multiple time frames Pre-selected peer groups Customized peer groups Source: HFMA s CUSTOMIZED PEER GROUPS Source: HFMA s 20

21 EVIDENCE BASED IMPROVEMENT: IMPROVING PERFORMANCE MAP AWARD HFMA s MAP Award recognizes healthcare organizations that achieve excellence in the revenue cycle and serve as models for the healthcare industry 21

22 INSIGHTS FROM AND ABOUT HIGH PERFORMERS Area for improvement: Cash collection Point-of-service collections Median: 27% Top quartile: 43% Source: HFMA s March 2010 Research % of high performers citing importance of investing in front-end technology % of high performers having estimates available for patients at registration Successful practices Sample scripts Use of dedicated trainers for patient access staff SUCCESSFUL PRACTICES 22

23 SUCCESSFUL PRACTICES Culture People Processes Technology Communication CULTURE 23

24 CULTURE Culture is made up of the shared attitudes, values and goals that it puts into practice How well an organization develops a sense of mission and vision surrounding the revenue cycle can dramatically affect performance When you don t have the right culture, you can only tinker around the edges. SUPPORT FOR REVENUE CYCLE 7 = Extremely high to 1 = None at all High Performing 86% All Other 76% 24

25 THE VALLEY HOSPITAL RIDGEWOOD, NEW JERSEY Provide Revenue e cycle and finance education to: All revenue cycle employees All departments, staff and directors New managers Managers yearly goals are tied in part to the hospital s financial performance Outcomes achieved: Operating margins increased from 2.1% to 3.5% between PEOPLE 40 25

26 DAYS OF INITIAL REVENUE CYCLE TRAINING REQUIRED High Performers >10 days 5-10 days 3-5 days 2-3 days Registrars 57% 14% 14% 14% 0% Billers 57% 14% 14% 14% 0% Collectors 50% 21% 21% 7% 0% Financial Counselors 64% 14% 14% 7% 0% All Others >10 days 5-10 days 3-5 days 2-3 days Registrars 42% 25% 15% 11% 7% Billers 54% 25% 7% 10% 4% Collectors 47% 30% 10% 9% 5% Financial Counselors 52% 26% 10% 7% 5% 1d day or less 1 day or less STRATEGIES TO MOTIVATE, RECRUIT, AND RETAIN STAFF Provide incentives for staff who meet goals 44% 86% Increase front-line staff salaries (beyond average organizational increase) 31% 64% Increase back-office staff salaries (beyond average organizational increase) 19% 43% 0% 50% 100% High Performing All Others 26

27 BAYLOR ALL SAINTS MEDICAL CENTER, FORT WORTH, TEXAS Staff progress into management positions, (i.e., coordinators, managers, directors & 1 executive director) Staff progress into contract compliance; transplant claims adjudication; and customer service Staff progress into collections Staff progress into billing, credit balance adjudication or payment and adjustment posting Staff work in support services Outcomes Achieved: Increased employee satisfaction and reduced turnover PROCESSES 44 27

28 FREQUENCY OF REVENUE CYCLE TEAM MEETINGS Revenue cycle staff team meet at least monthly 71% 84% Process centered improvement team(s) meet at least weekly Cross-functional team meet at least monthly (including reps from clinical, IT, HIM,... ) Metric triggered leadership teams (triggered by revenue cycle metric outside defined parameters) 26% 25% 50% 57% 51% 50% Other (responses generally include more frequent, targeted meetings) 3% 21% 0% 20% 40% 60% 80% 100% High Performing All Others USE OF PATIENT FOCUS GROUPS High Performing 43% All Others 20% 28

29 COLLABORATION WITH PAYERS Routinely meet to review & discuss issues regarding patient satisfaction 21% 57% Routinely meet to discuss & implement process streamlining initiatives Routinely meet to discuss & implement technology improvements and interfaces Routinely meet to review & discuss payment discrepancies 25% 26% 7% Do not routinely collaborate with payers 35% 57% 64% 64% 86% 0% 20% 40% 60% 80% 100% High Performing All Other SIGNIFICANT CHANGES TO THE FOLLOWING AREAS WITHIN THE PAST 3 YEARS 1 = no improvement to 7 = complete overhaul Financial Counseling 23% 64% Registration Admitting 24% 21% 43% 50% 29% Billing 31% Collections 27% 50% 0% 20% 40% 60% 80% 100% High Performing All Other 29

30 CHRISTUS HEALTH NORTHERN LOUISIANA Coding and Documentation Project: Identified problematic charges identified opportunities to improve documentation, coding, and charging Monitored batch charge rejections within the three-day bill holding period Clinical documentation specialists work with physicians Concurrently to ensure documentation is clear and concise Post-discharge to clarify documentation from physicians Outcomes Achieved: Held late charges to goal of <2% TECHNOLOGY 30

31 TECHNOLOGY High performers are good at realizing the potential and obtaining the greatest value from their investments The specific piece of technology you choose to buy is far less important than if you know how to use it well. It is better to adopt a modest solution very well than to adopt a superior solution only moderately well Focus on improving processes prior to applying automation and prioritizing their purchases by market needs TECHNOLOGY SUPPORT FOR THE REVENUE CYCLE 7 = Extremely high to 1 = None at all IT support for revenue cycle 55% 79% IT collaboration with revenue cycle 51% 71% 0% 20% 40% 60% 80% 100% High Performing All Other 31

32 RIVERSIDE METHODIST HOSPITAL COLUMBUS, OHIO Dedicated IT staff for revenue cycle Health information management under system s VP of revenue cycle Selectively use IT for revenue cycle process improvement Implemented quality assurance system for registrars Monitors all registrations Returns errors to registrars to correct Outcomes Achieved: Percentage of returned mail dropped from 2 % to 1% Increased clean claim rate COMMUNICATION 32

33 AVAILABILITY OF ESTIMATES FOR PATIENT OUT-OF-POCKET LIABILITY We provide estimates to nearly every patient At scheduling, upon request At registration, upon request At time of service, upon request 16% 21% 36% 40% 43% 33% 53% 57% We do not provide estimates 7% 10% 0% 20% 40% 60% 80% 100% High Performing All Others WHO HAS ABILITY TO APPROVE PROVISION OF CHARITY CARE Managers, Directors, CFO 71% 84% Financial Counselors No approval needed if patient meets organizational Charity Care Policy Registrars Schedulers 7% 9% 7% 1% 0% 0% 48% 64% 0% 20% 40% 60% 80% 100% High Performing All Other 33

34 CAROLINAS HEALTHCARE SYSTEM CHARLOTTE, N.C. Extensive training focused on communicating potential financial responsibility prior to service Set payment expectations with patients Create an opportunity to discuss financial needs Obtain complete and accurate patient information pre-service Outcomes Achieved: Point-of-service cash collections more than doubled from 2003 to 2009 SHARE OUR JOURNEY 34

35 NEXT STEPS How to get ready for reform and cope with tight economy Adopt HFMA s industry-created performance indicators Choose metrics that will measure your performance related to key reform provisions and other industry challenges Compare performance with peers Review and adopt practices of high performers MAP Keys MAP Award MAP App MAP Event More information: 35

36 SM Participant s Guide Evidence-Based Revenue Cycle Improvement An HFMA MAP Educational Program 4. Background Resources

37 H F M A E D U C AT I O N A L R E P O R T A Reform-Era Revenue Cycle T H I S H F M A E D U C AT I O N A L R E P O R T i s S P O N S O R E D b y M E D A S S E T S.

38 H F M A E D U C AT I O N A L R E P O R T Although healthcare reform law is trimming the ranks of the uninsured and in the process, working to ease healthcare providers bad debt reform otherwise is expected to do little to alleviate pressures on the revenue cycle. Hospitals will see some increase in revenue as the uninsured gain medical coverage through Medicaid or still-to-be-formed insurance exchanges. They also, however, will see cuts in Medicare and Medicaid as well as disproportionate share (DSH) payments, and will still have a sizable self-pay population as businesses shift greater numbers of employees to highdeductible or consumer-driven health plans. New healthcare law will further complicate the revenue cycle for hospitals by fostering alignment with physicians and bundling payment. Providers will have to manage the revenue cycle from both the hospital and the physician side and coordinate processes within financial clearance, eligibility, and price estimates as they move to accommodate patients throughout the healthcare encounter. Faced with having to do more with less, hospitals will be challenged to protect revenue and accelerate and increase cash collection, avoiding process failures that result in a denial or a decrease in payment due to medical necessity. They also will likely consolidate or leverage front-end resources to gain more efficiency from the technologies and processes they already employ. As an over-arching strategy, hospitals should focus on revenue cycle initiatives that drive optimal performance: charge capture, pricing, and patient access. Charge Capture Rather than relying on clinical or support personnel whose primary job is patient care, many hospitals are creating charge specialists and building expertise in specific clinical areas to ensure charges are posted correctly, consistently, and completely. Providers also are running predictive or analytic quality checks to prevent errors and add charges that often go unrecognized. Denny Roberge, revenue operations manager for 295- bed Concord Hospital, Concord, N.H., has been leveraging the hospital s clinical systems to capitalize on charge opportunities, which can be worth as much as 10 percent or more in increased net revenue for some departments. There are many charge opportunities legitimate charges that would add net revenue, he says. As payment tightens up with reform, hospitals need to make sure they are not missing anything. Now more than ever, IT systems that can obtain the documentation and the reports that are required to generate charges are critical for hospitals. Without such systems, it could be all but impossible for hospitals to meet their margins under reform. Concord Hospital made charge capture a top priority approximately three years ago, when leadership created a centralized charge capture department to follow a patient from admission through discharge. Although some hospitals require departments or service lines which are closer to the point of care to be responsible for charge capture, Roberge believes that tactic isn t effective in every situation. IV therapy is a great example, he says. When patients show up in the emergency department (ED), they start getting infused. Then they move to another area where the drugs change. When someone in each department is responsible for the department s share of the charge capture, it s impossible to know who did the initial hydrations and who did the sequencing. Under a centralized charge capture system, hospitals can look at a case from start to finish. Centralized charge capture works particularly well for highvolume services, such as IV therapy, that often are provided in multiple departments. Centralization often eliminates the need to rework claims and make edits. For example, when individual departments at our hospital did charge capture, there were times when three initial IV hydrations were included in the same claim, Roberge explains. Centralized charge capture also can significantly improve revenue across the board. Concord Hospital found $3 million in gross lost charges last year. This year, it is on track to find more than $5 million in gross lost charges that were overlooked in previous years, Roberge reports. To support centralized charge capture, Concord Hospital installed a robust electronic clinical documentation system on nursing floors. The system drops into a report any nursing service that may carry a charge. Charge capture specialists

39 H F M A E D U C AT I O N A L R E P O R T then review each of the services to identify the associated charges. Nurses do a great job of documenting what they did, but they do not think in terms of charges nor should they, says Roberge. They shouldn t be deciding how to charge for a service or when not to charge for it. By having the documentation system in place, we can have charge specialists look for chargeable services. This approach works particularly well for common nursing procedures, such as central line or catheter placements. As a final check on every claim, an audit team reviews the edits generated by the hospital s charge capture auditor technology. The tool helps with compliance because it tells you when you charged for too many of one item. More important, it really links everything together. It tells you, If you did X and Y, then you should expect to see Z. The edits in the tool are so robust, they are helping us find a net of $1 million every year, Roberge says. Capturing charges in ED. A Web-based electronic system for the Concord Hospital ED reconciles professional and technical charges. Like many organizations, Concord Hospital outsources coding of professional services. Charges based on this coding are entered into the ED system and compared with coding for technical services so charge capture specialists can more easily find discrepancies. This has substantially reduced the amount of work our charge entry coding staff has to do. All the information is in one place, and if there is something wrong with an account, then the system tells staff right away. They don t have to wait a couple of days down the road to find out where the bill is hung up, Roberge says. As a result, Concord Hospital has trimmed discharged not final billed (DNFB) days for the ED, which handles more than 68,000 patient visits a year. Before the reconciliation system was initiated, discharge not final billed was in the high 20s. Redundancies and other errors required staff to take extra time to rework and fix claims, reducing efficiency. DNFB is now under five days. The hospital also has increased net revenues from the ED by more than $1 million and targeted cost improvement efforts. If I see the same problem occurring over and over again, I can identify it as a trend, figure out the root cause of the issues, and correct them at the source to make the revenue cycle quicker, cleaner, and more accurate, Roberge says. Streamlining the charge integrity process. Debbie Messina, director of business operations for Stamford Health, Stamford, CT., is setting up new workflow processing to avoid late charges and rebilling, which wastes resources for hospitals as well as insurance plans. Messina is holding first bills that do not include all charges and asking department directors to add the necessary charges within 24 hours. I send the accounts directly to the departments, saying You re missing this, this, and this charge. Please add them within 24 hours. she explains. It s more of a concurrent process, rather than a retrospective one that audits bills after the fact. It doesn t delay the claims division, eliminates late charges, and frees up back-end resources. Stamford Health s profile of charges links charges with assigned CPT procedure codes and ICD-9 diagnoses. It then identifies exceptions so a nurse auditor can screen for documentation that supports the service or equipment that was used in patient care. Between January and December of 2009, this process identified $3 million in charges that otherwise would have been missed. Pricing Healthcare reform legislation places providers on a path toward bundled payments for episodes of care. But since few steps have been taken along the path, providers are only beginning to think about the ways in which they will have to restructure pricing to incorporate physician and other clinical and ancillary services under a single payment. Providers have done more to meet reform goals for enhanced accountability and transparency of hospital pricing, in hopes of helping consumers understand not only what services will cost, but also how much they will have to contribute out-of-pocket. Although some providers publish on their websites the amounts they charge for the most common procedures they perform, others like Integris Health, a 14-hospital system in Oklahoma City, give to every patient who inquires a thorough and highly accurate estimate of the amount they will charge for that patient s care.

40 H F M A E D U C AT I O N A L R E P O R T Integris created its Consumer Price Line in 2007 after CEO Stanley Hupfeld asked secret shoppers to contact each of the system s hospitals and ask what the facility would charge for a relatively minor outpatient procedure or a more extensive inpatient procedure. One typical response was, Gee, I don t know. But I bet it s a lot. Another was Let me transfer you. Then there was a click, and the shopper wound up in a black hole, recalls Greg Meyers, system vice president for revenue integrity. Integris modeled the format of its Consumer Price Line after the explanation of benefits that patients get from insurance companies to show what has been paid and what the patient owes. Staff from the health system s managed care division, who understand health insurance contracts, discounts, and negotiated rates, gather information from callers who are price-shopping for hospital care. Staff work with an automated contract modeling system that identifies the amount the hospital would charge a specific insurer based on CPT and ICD-9 codes. Staff then calculate the amount a patient would pay based on information on the insurer s website and a conversation with someone in the insurer s claims department, and they report back to the patient by phone within 24 hours and by letter in a few days. Such transparency and consistency in pricing strategy supports compliance efforts and contributes to a foundation of trust within the community and patient satisfaction. Integris continually tracks the accuracy of its price estimates for patients. The price we quote 95 percent of the time is pretty much dead on, says Meyers. The system also determines how many inquiries from patients turn into patient care encounters. Integris handles about 800 to 1,200 calls a month, and 40 percent of the patients end up receiving their care at one of the system hospitals. The health system is planning to automate as much of the process as possible. No matter how much we are able to automate, there will still be some insurance companies whose claims systems don t return information electronically. So we will still run into situations where we will have to contact the insurer for the information, Meyers explains. The next step is to move the process to patient registration. Our ultimate goal is to close the transaction at the time of service, he says. We want to be able to tell patients exactly what they owe, collect the amount they owe, and work with them to make payment arrangements or get them qualified for government assistance or charity care at the time of service so we will never have to send a bill to the patient. Advanced pricing capabilities, when combined with a defensible pricing strategy and meaningful communications, are proving to be a key way for hospitals to distinguish themselves in the marketplace. Communicating pricing is important from a competitive standpoint, notes Meyers. As healthcare consumers take on greater financial responsibility for their care, they increasingly will be seeking providers able to demonstrate greatest value: high-quality care at the best price that is provided in a customer-centric service environment. Patient Access Healthcare reform is pushing providers to fix problems early in the revenue cycle, where they start. But front-line patient access professionals work with data systems that typically don t talk to one another: the admission-discharge-transfer (ADT) system that registers a patient, a quality system that flags problems that have to be fixed after the fact, a separate eligibility system that verifies eligibility but doesn t validate information against the ADT, and another credit-scoring or charity application process. Providers therefore are trying to integrate patient access workflows and technologies to improve these disparate processes much like the functions on the back end of the revenue cycle where coordinated efforts complete billing, collecting, and follow-up tasks. The idea is to create a financial clearance center so registration, eligibility, and financial counseling can be done cohesively and ahead of time. Providers are gradually but steadily working toward that goal by adding and combining capabilities. Messina is replacing Stamford Health s manual process of determining the patient s responsibility for services with an automated tool that operates in real time. The system will provide an estimate to patients based on their insurance plan benefits and deductibles as well as their physicians procedures, protocols, and choices of equipment. One physician performs a procedure in less OR time than another. One physician chooses a certain implant, and another chooses something else. We will be able to provide information for

41 H F M A E D U C AT I O N A L R E P O R T Prioritizing Patient-Based Payment Most hospitals and health systems recognize the need to develop more efficient collection processes, particularly at the front end of the revenue cycle, and to determine ways of better managing self-pay receivables. Yet patient-based payment often receives little prioritization when revenue cycle leadership examines opportunities for improving financial performance. Typically the healthcare industry acknowledges that collecting self-pay balances from patients is an issue. But we don t treat that population as a payer source. We don t treat it as part of our business. We view it more as a part of the business we can t afford, says Kaycee Orman, executive director of revenue cycle services for CHRISTUS Health. That mindset should be changing, Orman believes, as healthcare organizations continue to see more and more self-pay patients, as well as patients who have high co-payments or deductibles, and as they struggle to find ways to manage the collection of receivables from these patients. A National Trend Nationwide, more than 83 percent of 46 healthcare organizations surveyed reported increases in uninsured/ underinsured patients over the past 12 months. According to TransUnion s credit risk metric, growing ranks of patients are less capable of paying off debt in a timely manner. Credit risk is a weighted average probability that consumers in a given region will take 90 days or more to pay on a debt as compared with consumers in the nation as a whole. At the beginning of the current recession, credit risk as measured by TransUnion s metric was At the end of 2009, it was This 9.54 percent increase is far higher than the increase in 4.34 percent debt risk that occurred during the 2001 recession. The likelihood that a consumer will be 90 or more days delinquent on any credit obligation is at an all-time high. a Healthcare organizations may start taking a new look at uninsured and underinsured patients, with an eye toward helping patient eligibility vendors do a better job of identifying patients who may qualify for assistance. Success, however, is achieved when the provider has objectives set before the engagement starts. Priorities such as standards to meet, benchmarking, and reporting requirements are crucial. Otherwise, When you ask a facility, How is your eligibility vendor doing?, you get a Well, OK, I guess response, Orman says. Assessing Performance Revenue cycle leadership decided to take a close look at the services that patient eligibility vendors were providing for self-pay patients at CHRISTUS Health. We wanted to know how much money we were potentially leaving on the table and how we could do a better job of screening for eligibility coverage, Orman says. According to an assessment, CHRISTUS Health was capturing only a portion of its self-pay revenue for Almost half of the self-pay patients were being seen in an outpatient setting, but there was almost no outpatient eligibility screening. Yet Orman estimates that redesigned front-end eligibility and financial screening processes that focus on self-pay patients, regardless of their point of entry into the healthcare system, could yield a significant net benefit opportunity in the $3 million to $5 million range. Orman is currently drilling down into the details of the findings from the self-pay balance assessment to determine what more can be done. We know there can be a more structured approach. a TransUnion: Latest recession negatively impacting healthcare organization balance sheets more than 2001 economic recession. TransUnion, April 13, 2010.

42 H F M A E D U C AT I O N A L R E P O R T Areas of Opportunity for Reform-Era Success As healthcare reform alters the coverage environment, many experts predict continued growth of consumer insurance options that include high coinsurance and deductibles. Strategies for addressing patient payment vary. Some include significant process shifts or technology investments while others entail little more than improving methods of communication. Regardless, key areas of opportunity for improving patient payment often include: Enhancing estimates of patient financial obligation and automating as many supporting processes as possible. Ensuring patient financial communications are reader-friendly, with an emphasis on establishing expectations for the patient s response. Offering convenient business office hours and providing multiple means for receiving patient payment, including online. Educating patient access staff on the importance of point-of-service cash collection and role-playing communications. Strengthening financial assistance eligibility screening. Prioritizing back-end collection efforts, including examination of payment likelihood. Benchmarking revenue cycle performance to identify and address potential challenges close to time of occurrence. September 2010 HFMA Educational Report Copyright 2010 Healthcare Financial Management Association All rights reserved. For reprints contact HFMA, ext. 2. This published piece is provided solely for informational purposes. HFMA does not endorse the published material or warrant or guarantee its accuracy. The statements and opinions by participants are those of the participants and not those of HFMA. References to commercial manufacturers, vendors, products, or services that may appear do not constitute endorsements by HFMA. patients by physician, procedure, and diagnosis and determine financial status as well as opportunities to offer financial assistance before the patient appears, Messina says. At the same time, the system will be able to check patients eligibility for insurance coverage prior to service. Right now for our outpatient procedures, we have to check for eligibility at the time of service, she says. With the new system, we will have more streamlined workflow for all the different types of processes. Improving financial assistance screening. Kaycee Orman, executive director of revenue cycle services for Texas-based CHRISTUS Health, a not-for-profit healthcare system with more than 40 hospitals in multiple states and Mexico, is exploring automated tools that are designed to improve screening for charity care or payment assistance, including Payment Assistance Rank Order (PARO), which was developed for Catholic Healthcare West, San Francisco. Unlike existing credit scoring systems that use collection and credit scores to analyze the likelihood that a patient can repay debt, PARO is based on the patient s ability to pay. On the basis of aggregate data from 9,000 sources of historical financial assistant information in 2 billion records as well as U.S. Census and other public data sources, PARO assigns a numeric value that reflects a patient s liquidity position. As such, it indicates the degree to which a patient is in financial need. This does not pull a patient s credit report to see how much debt and available credit they have and then determine whether they are eligible for charity care or they can put the healthcare bill on their credit card. This is different type of scoring that is not tied to credit ratings, Orman explains. PARO simplifies the application process for charity care or financial assistance by eliminating the need for patients to gather multiple pieces of documentation and complete often complicated forms. It also is more than twice as effective as traditional credit scoring methods in finding patients who meet charity care or financial assistance requirements, according to Catholic Healthcare West. Tracking collection performance. CHRISTUS Health has installed quality assurance tools that measure collection performance in each of its six hospitals. We re not talking about the total amount of money that is collected at the time of service. The metric we assess at the time of service is the amount collected as a percentage of the potential.

43 H F M A E D U C AT I O N A L R E P O R T O u r S p o n s o r S P E A k s Taking Your Revenue Cycle Performance to the Next Level Neil Hunn, CFO and president, Revenue Cycle Technology, MedAssets, discusses strategies for optimizing revenue cycle performance in an environment with shifting payment dynamics. QHow do you know whether your revenue diligence in maintaining regulatory compliance, charge cycle is performing at the level needed to integrity, and revenue optimization across your health improve your margins? system. Best practice processes include routine alignment A of your chargemaster to an industry standard, validating As you prepare to access the impacts of future your charges to your item master and closed receipts reimbursement models, you also need to file to ensure all charges are captured, annual review of validate that your current revenue cycle is performing prices to ensure competitiveness, as well as a consistent effectively. The key to managing your margins is mark-up policy and an automated daily audit of itemized ensuring your organization is accurately paid for every bills to ensure billing compliance and transparency. patient. Best-performing organizations use business rules and workflow to automate every step of accounts Next ensure your billing processes achieve minimal receivables management. rework and payment accuracy through automation of accurate bill submission for payer compliance. Timely Best practice processes: management and automated workflow of all billing and Secure current patient and payer liability payment exceptions is critical to capturing all net revenue Capture appropriate charges contractually owed to you. Another key component of Submit an accurate and compliant bill achieving your margin objectives is a comprehensive Ensure you are paid correctly by all payers contract management system that can accurately price all From the time the patient procedure is scheduled to components of your negotiated contracts to automatically when the accounts receivable is paid and cash posted, identify payment accuracy, so underpayments and denials your revenue cycle processes need to be in alignment to can be resolved immediately and consistently. secure appropriate reimbursement. Identifying and calculating appropriate patient financial liability pre-service With automated business process management as a key to future financial sustainability, there are opportunities and at time-of-service is critical to collecting accurate everywhere. Even today, the automation of processes point-of-service collections to improve margin, as well as such as bill submission and calculating secondary payer patient satisfaction. liability will help you capture net revenue. Take action Accurate charge capture and defensible pricing are now and ensure your revenue cycle is performing as it fundamental revenue cycle processes that require should to secure your margin for the future. Source: MedAssets. Depending on the area of registration, that metric can be as high as 50 percent in an inpatient/outpatient setting. In the ED, the goal is 30 percent, Orman says. The entire CHRISTUS Health system is transitioning toward a set of metrics that may be more precise in measuring revenue cycle performance than conventional assessments. Traditional metrics do not necessarily present a good picture of the revenue cycle. For example, cash as a percent of net revenue is a good indicator of your net revenue 30 days ago, but that s not your true net just yet, because there is a lot of noise in that number. So we look at cash as a percent of net revenue 120 days ago, Orman explains. By using that information to flag problems and find out why accounts are not paying within the first 30, 60, and 90 days, one of CHRISTUS Health s regions has improved collections from $36 million to more than $40 million a month.

44 H F M A E D U C AT I O N A L R E P O R T Readying the Revenue Cycle for Tomorrow s Challenges The downstream effects of healthcare reform law are just beginning to be felt at hospitals and health systems. As financial executives and managers prepare for the coming surge, they will need to watch for challenges that erode revenue cycle performance. One of these challenges is inadequate attention to documentation by clinical professionals. What s happening with healthcare reform and RACs [Recovery Audit Contractor programs] all comes down to documentation and understanding the billing rules, says Roberge. Not a day goes by without at least one physician or nurse saying, I m not here to worry about charges. But everyone has to recognize the importance of the revenue cycle, and start appreciating that everyone who touches a patient between admission and discharge plays a role. That awareness needs to be driven by the clinical leadership team, Roberge adds. Also a challenge in a post-reform era is a highly restrictive charity care policy. At many hospitals, deserving patients are challenged with completing overly complex or excessive application paperwork and documentation requirements. You need to have a flexible charity care policy that can be easily administered on the front end, says Orman. In addition, many providers haven t yet taken time to deeply scrutinize what their eligibility vendors will need to do. You need to understand what your eligibility services currently are so you can strengthen them and About HFMA Educational Reports HFMA is the nation s leading membership organization for more than 35,000 healthcare financial management professionals employed by hospitals, integrated delivery systems, and other organizations. HFMA s purpose is to define, realize, and advance the financial management of health care. HFMA Educational Reports are funded through sponsorships with leading solution providers. For more information, call HFMA, ext become more structured, Orman says. When CHRISTUS Health analyzed its eligibility vendors recently, it found several areas for improvement, including the need for better screening in the outpatient setting, additional ED coverage, and improved Qualified Medicare Beneficiary screening. Perhaps most important in the face of the uncertainty of healthcare reform, providers need to be flexible and resilient. Providers need to have a revenue cycle team or committee to look into every aspect of the revenue cycle so they can make changes, protect their revenue, make sure they are getting paid for the service they are providing, and keep pace with changes as they happen, Messina says. It s a matter of communication and coordination, agrees Roberge. You have to form teams and committees to get everyone on the same page and understand that, with healthcare reform, things are going to change quickly, he says. And everyone has to be working toward the same goal. MedAssets delivers proven results with spend management and revenue cycle management solutions to improve margins, cash flow, and operational efficiency. Our best-in-class technologies and expertise increase net patient revenue by 1-3 percent and decrease supply costs by 3-10 percent, resulting in more than $1 billion attributed to financial improvement. Visit MedAssets is a registered trademark of MedAssets, Inc. It is a violation of federal copyright law to reproduce all or part of this publication or its contents, in any form by any means, without permission. For more information, contact HFMA Chapter Relations.

45 SM Created by and for healthcare leaders, HFMA s MAP gives you the tools you need to Measure performance Apply evidence-based strategies for improvement Perform and be recognized for your success For the first time, MAP Keys define the critical indicators of revenue cycle performance in clear, unbiased terms. MAP Keys ensure consistent reporting across institutions, allowing users to track progress against goals and compare performance to peer groups and to the industry as a whole. Measure: Days in Total Discharged Not Final Billed (DNFB) Purpose: Trending indicator of claims generation process Value: Indicates revenue cycle performance and can identify performance issues impacting cash flow Equation: Gross Days in A/R (Not Final Billed) Average Daily Gross Revenue Measure: Aged A/R as a % of Billed A/R by Payer Group Purpose: Trending indicator of receivable collectability by payer group Value: Indicates revenue cycle s ability to liquidate A/R by payer group Equation: Billed Payer Group by Aging (>30, >60, >90, >120 days) Total Billed A/R by payer group Measure: Days in Final Billed Not Submitted to Payer (FBNS) Purpose: Trending indicator of claims impacted by payer/regulatory edits within claims processing system Value: Track the impact of internal/external requirements to clean claim production, which impacts positive cash flow Equation: Gross dollars in FBNS Average Daily Gross Revenue 44

46 SM Measure: Days in Total Discharged Not Submitted to Payer (DNSP) Purpose: Trending indicator of total claims generation and submission process Value: Indicates revenue cycle performance and can identify performance issues impacting cash flow Equation: Gross Dollars in DNFB + Gross Dollars in FBNS Average Daily Gross Revenue Measure: Late Charges as % of Total Charges Purpose: Measure of revenue capture efficiency Value: Identify opportunities to improve revenue capture, reduce unnecessary cost, enhance compliance, and accelerate cash flow Equation: Charges with post date greater than 3 days from last service date Total gross charges Measure: Initial Denial Rate Zero Pay Purpose: Trending indicator of % claims not paid. Value: Indicates provider s ability to comply with payer requirements and payer s ability to accurately pay the claim Equation: Number of zero paid claims denied Number of total claims remitted Measure: Initial Denial Rate - Partial Pay Purpose: Trending indicator of % claims partially paid Value: Indicates provider s ability to comply with payer requirements and payer s ability to accurately pay the claim Equation: Number of partially paid claims denied Number of total claims remitted 45

47 SM Measure: Denials Overturned by Appeal Purpose: Trending indicator of hospital s success in managing the appeal process Value: Indicates opportunities for payer and provider process improvement and improves cash flow Equation: Number of appealed claims paid Total number of claims appealed and finalized or closed Measure: Net Days Revenue in Credit Balance Purpose: Trending indicator to accurately report account values, ensure compliance with regulatory requirements, and monitor overall payment system effectiveness Value: Indicates whether credit balances are being managed to appropriate levels and are compliant to regulatory requirements Equation: Dollars in Credit Balance Average Daily Net Patient Services Revenue Measure: Preregistration Rate Purpose: Trending indicator that patient access processes are timely, accurate, and efficient Value: Indicates revenue cycle efficiency and effectiveness Equation: Number of patient encounters preregistered Number of scheduled patient encounters Measure: Insurance Verification Rate Purpose: Trending indicator that patient access functions are timely, accurate, and efficient Value: Indicates revenue cycle process efficiency and effectiveness Equation: Total number of verified encounters Total number of registered encounters 46

48 SM Measure: Service Authorization Rate Purpose: Trending indicator that patient access functions are timely, accurate, and efficient Value: Indicates revenue cycle process efficiency and effectiveness Equation: Number of encounters authorized Number of encounters requiring authorization Measure: Net Days in Accounts Receivable (A/R) Purpose: Trending indicator of overall A/R performance Value: Indicates revenue cycle efficiency Equation: Net A/R Average Daily Net Patient Service Revenue Measure: Aged Accounts Receivable (A/R) as a Percentage of Billed A/R Purpose: Trending indicator of receivable collectibility Value: Indicates revenue cycle s ability to liquidate A/R Equation: >30, >60, >90, >120 days Total Billed A/R Measure: Point-of-Service (POS) Cash Collections Purpose: Trending indicator of point-of-service collection efforts Value: Indicates potential exposure to bad debt, accelerates cash collections, and can reduce collection costs Equation: POS Payments Total Patient Cash Collected 4 7

49 SM Measure: Cost to Collect Purpose: Trending indicator of operational performance Value: Indicates the efficiency and productivity of revenue cycle (RC) process Equation: Total RC Cost Total Cash Collected Measure: Cash Collection as a Percentage of Adjusted Net Patient Services Revenue Purpose: Trending indicator of revenue cycle to convert net patient services revenue to cash Value: Indicates fiscal integrity/financial health of the organization Equation: Total Cash Collected Average Monthly Net Revenue Measure: Bad Debt Purpose: Trending indicator of the effectiveness of self-pay collection efforts and financial counseling Value: Indicates organization s ability to collect self-pay accounts and identify payer sources for those who can t meet financial obligations Equation: Bad Debt Write-Off Measure: Charity Care Purpose: Trending indicator of local ability to pay Value: Indicates services provided to patients deemed unable to pay Equation: Charity Care Write-Off Gross Patient Service Revenue Gross Patient Service Revenue 48

50 strategies for revenue cycle success In an era of healthcare reform, excellence across all areas of revenue cycle operations is critical to a hospital s success. Here, winners of HFMA s MAP Award for High Performance in Revenue Cycle share their strategies for performance excellence. by jeni williams 49

51 HFMA s MAP Initiative: Taking a Closer Look HFMA s MAP initiative gives providers the tools they need to measure revenue cycle performance, apply evidencebased strategies for improvement, and perform to the highest standards of revenue cycle excellence. HFMA s MAP initiative features the following. Map Keys are defining key indicators of revenue cycle performance. Using MAP Keys, healthcare finance professionals can improve business intelligence, strengthen revenue cycle management, and decide based on industry-created metrics where to focus for improvement. This award is an annual award recognizing healthcare organizations that achieve excellence in the revenue cycle. Applications for the third-annual award will be available in early The MAP App is a tool being piloted for tracking a provider s performance throughout the revenue cycle and comparing performance with that of other organizations. The MAP App also offers tips on evolving best practices and includes a community discussion forum for airing common concerns. HFMA plans to roll out the tool for general use later this year. The MAP Event will bring together the best ideas on how to improve revenue cycle performance. A MAP event will be held Nov. 7-9 in San Diego; more information is available at org/mapevent. As healthcare reform leads to significant changes across the industry, achieving optimal performance in revenue cycle operations has never been more important for hospitals. In an environment of healthcare reform, we re going to need to drive toward excellence, Richard L. Clarke, DHA, FHFMA, HFMA President and CEO, told attendees of HFMA s ANI: The Healthcare Finance Conference in June. HFMA announced its MAP initiative and the 2010 MAP Award winners at ANI. The status quo and incremental change will not prepare us for the drastic changes in patient access, insurance, and payment coming our way, Clarke says. To thrive, we will need to provide high-quality care and service at low cost. And we will need to ensure that our revenue cycles are as efficient and productive as possible. In 2009, HFMA created the MAP Award for High Performance in Revenue Cycle to honor hospitals that achieve revenue cycle excellence. MAP Award winners excel in meeting key benchmarks for success, as established through HFMA s MAP initiative while adhering to the principles outlined by HFMA s PATIENT FRIENDLY BILLING project. The award is sponsored by 3M Health Information Systems. Here, three MAP Award-winning hospitals share the specific strategies and tactics that made their organizations high performers and what your organization can do to enhance revenue cycle performance. For more information about HFMA s MAP initiative, visit

52 Strategies for a More Collaborative Revenue Cycle Seven years ago, Saint Francis Hospital in Tulsa, Okla., undertook an initiative to significantly overhaul its revenue cycle operations. At that time, the hospital relied on four different IT systems for revenue cycle management. The need for improved communication between front-end and back-end revenue cycle staff at Saint Francis had become increasingly clear, and the hospital s days in accounts receivable (A/R), which were in the mid-40s, were higher than the organization would have liked. Additionally, Saint Francis sought to implement new tools that would enhance insurance verification. We really imploded our revenue cycle operations to make them more efficient and much more collaborative, says Eric Schick, vice president of finance for Saint Francis Hospital. We studied our revenue cycle from the front end to the back, and ran dry scenarios to determine where areas of improvement existed. Through that process, we determined that there were some processes that could be shifted from the back end to the front end of the revenue cycle. We also made the decision to create a centralized scheduling department and prearrival department. One of the first challenges Saint Francis revenue cycle department tackled was the need to increase collaboration between frontend and back-end revenue cycle staff. At that time, the front-end staff really didn t connect with the back-end staff; they were both in separate worlds, Schick says. He and Renee Edwards, director of patient financial services, began to hold meetings with staff from both areas to show them how their work is connected and the ways in which their efforts are integral to the performance of the department as a whole. They began to understand that they are one team that they succeed together and that they fail together. When Saint Francis implemented new software and tools for revenue cycle management, the hospital trained its front-end revenue cycle staff in back-end processes, and vice versa. This helps front-end and back-end staff understand each other s worlds. It also increases collaboration among the revenue cycle team, Schick says. Saint Francis also hired two full-time and one part-time trainer for the department, with training programs held monthly for new staff and quarterly for staff who desire or need increased education in a particular area. Saint Francis measures performance against metrics such as days in A/R; aged A/R as a percentage of billed A/R by payer, which enables the health system to monitor its partnership with managed care payers; days in discharged not final billed (DNFB), with a DNFB goal of four days or less; point-of-service cash collections; insurance verification rate; and service authorization rate. When performance falls below expectations, revenue cycle leaders discuss the issues with the directors of specific areas or with individual employees, when appropriate, and develop plans for improvement. And when a claim is rejected, the claim is sent back to the staff person who originally made the error to be corrected. This helps the person who made the error to learn from it, Edwards says. We re a very productivity driven system, Schick says. For example, we count transaction codes on the back end and look at the number of claims that are processed to make sure staff are meeting their monthly targets. Over the past year and a half, we ve also paid increased attention to the intricate role that our medical records department plays in revenue cycle performance, and have worked with medical records staff and physicians to ensure that charts are completed in a timely manner. It s important for physicians and medical records staff to recognize that when DNFB spikes from three days to seven days for a period of 60 days, then 60 days from now, our organization is going to have trouble meeting our cash goals, because that increase in DNFB days will have a domino effect throughout the revenue cycle. The hospital s focus on tightening its revenue cycle operations has paid off. Saint Francis has dramatically reduced its days in A/R, from the low 40s in late 2008 to the mid-20s today, and its days in total DNFB measured just 3.42 in February 2010, when the hospital s MAP Award application was submitted. Now, the hospital is working with managed care payers on issues that have caused delays in processing claims. Ultimately, Saint Francis efforts in this area will lead to claims being paid more quickly. Our efforts to improve revenue cycle operations have really given us the capacity to move our performance to the next level, Schick says.

53 Using Data to Drive Revenue Cycle Performance At Riverside Methodist Hospital in Columbus, Ohio, one of five OhioHealth facilities, an atmosphere of teamwork among the health system s revenue cycle departments has helped to propel the hospital s revenue cycle performance. Several years ago, OhioHealth began to consolidate its business office operations as a new IT system was introduced. The health system also brought its patient access, health information management, and central business office operations under the leadership of the health system s vice president of revenue cycle, who reports to OhioHealth s corporate CFO. Weekly, OhioHealth s revenue cycle leadership team meets to discuss challenges, results, projects, training, and resources. Monthly, OhioHealth s revenue cycle leaders, hospital CFOs, and other key finance representatives meet to review results and discuss action plans. Cross-departmental revenue cycle teams meet at least monthly, and targeted revenue cycle improvement teams meet as frequently as needed. Additionally, OhioHealth hired IT personnel who work solely with the revenue cycle team, as well as full-time trainers who develop orientation and continuing education sessions for staff. This atmosphere of systemness among revenue cycle departments throughout the health system has enhanced OhioHealth s ability to effect significant improvements in its revenue cycle operations. At Riverside Methodist Hospital, aged A/R as a percentage of billed A/R over 30 days is just 11.1 percent; over 60 days, 7.4 percent; and over 90 days, 4.5 percent. Days in total DNFB were 4.87 in February 2010, when the hospital s MAP Award application was submitted, and cash collection as a percentage of adjusted net patient services revenue is percent. And 80 percent of Riverside Methodist Hospital s customers would recommend the hospital. One of the keys to our success in revenue cycle performance is that all components of the revenue cycle report to finance, says Jane Berkebile, vice president, revenue cycle for OhioHealth. It s very hard to achieve the same level of results in revenue cycle performance if staff in health information management or patient access don t report to the same leaders as your billing staff. All revenue cycle staff need to be on the same train, going in the same direction. If you don t have that level of systemness, when there are problems, you ll have people pointing fingers at each other rather than working together toward a solution. OhioHealth also relies on data to measure and drive revenue cycle performance at facilities such as Riverside Methodist Hospital. The health system recently implemented an automated quality assurance system for registrars that monitors all registrations, includes more than 200 real-time edits, returns errors to registrars to correct, and provides detailed error reporting and quality assurance data down to the individual registrar. Following implementation of this system, our overall percentage of returned mail dropped from 2 percent to 1 percent, and our clean claim rate increased, Berkebile says. Data from revenue cycle operations also are used to set goals for revenue cycle staff and to measure progress; results are regularly shared with staff. Last year we had significant targets around patient cash and around write-offs. They were stretch targets for us and we exceeded those targets, Berkebile says. Our point-of-service [POS] collection goals are developed by facility and down to the department level based upon the percentage of opportunity. We provide feedback to individual registrars and financial counselors, comparing their individual collections with the target goal. The increased focus on POS collections has paid off for OhioHealth and Riverside Methodist. In the previous fiscal year, POS telephone collections at time of preregistration averaged $180,000 per month. With focused efforts and targets, this year, that average has increased to $370,000 per month. This is just one component of a very successful POS program that increased POS collections year over year by 21 percent, Berkebile says.

54 A Snapshot of Award-winning Performance surance system for registrars that monitors all registrations, Saint includes Francis Hospital Tulsa, Okla. The Valley Hospital Ridgewood, N.J. R Riverside Methodist Hospital Columbus, Ohio Net Days in A/R Operating Margin 10.3% 6.0% 7.7% Cash Collection as a Percentage of Adjusted Net Patient Services Revenue 105.7% 100.5% 113.1% Total Bad Debt Write-Off 4.1% 1.02% 1.4% Total Charity Care Write-Off 3.7% 1.59% 4.29% Days in Total Discharged Not Final Billed Patient Would Recommend 82% 79% 80% *Exhibits reflect responses provided by the organizations in February 2010, when applications for MAP Award were submitted. Estimating Patient Financial Obligations Prior to Service To What Extent Do You Provide Estimates of Patient s Financial Obligations Prior to Rendering Services? Saint Francis Hospital Tulsa, Okla. The Valley Hospital Ridgewood, N.J. Riverside Methodist Hospital Columbus, Ohio To nearly all patients receiving an elective procedure (75% or more of all elective procedures) To some patients (below 75% of all patients) At scheduling upon request At registration upon request At time of service upon request x x x x x x x x x x x One of the keys to our success in revenue cycle performance is that all components of the revenue cycle report to finance. Jane Berkebile, vice president, revenue cycle, OhioHealth

55 About HFMA s MAP Award MAP Award Winners HFMA s MAP Award for High Performance in Revenue Cycle, sponsored by 3M Health Information Systems, recognizes healthcare organizations that are distinctive, innovative, and effective in revenue cycle process improvements and patient satisfaction. In addition, it recognizes sustainable financial performance that serves the mission of the organization. For more information, visit The following organizations received HFMA s MAP Award for Revenue Cycle Excellence in Baylor Medical Center at Irving, part of Baylor Health Care System, Irving, Texas CHRISTUS Schumpert Health System, part of CHRISTUS Health, Shreveport, La. Hospital of the University of Pennsylvania, part of the University of Pennsylvania Health System, Philadelphia Riverside Methodist Hospital, part of OhioHealth, Columbus, Ohio Danbury Hospital, part of Danbury Health System, Danbury, Conn. Saint Francis Hospital, part of Saint Francis Health System, Tulsa, Okla. The Valley Hospital, part of Valley Health System, Ridgewood, N.J. Princeton Medical Center, part of Baptist Health System, Birmingham, Ala. Geisinger Medical Center, Danville, Pa. Brookwood Medical Center, part of Tenet Health System, Birmingham, Ala. Key Performance Indicators for Tracking Performance HFMA recently developed a common set of revenue cycle key performance indicators (KPIs) known as MAP Keys in collaboration with multiple stakeholders. The MAP Keys promote the consistent reporting practices and peer-to-peer comparisons needed to achieve significant revenue cycle performance improvement. Embracing the MAP Keys for tracking revenue cycle performance can help hospitals identify revenue cycle performance trends and proactively prioritize and address areas in need of attention. The following 19 KPIs comprise the MAP Keys: Aged A/R as a % of Billed A/R by Payer Group Days in Final Billed Not Submitted to Payer Days in Total Discharged Not Submitted to Payer Late Charges as % of Total Charges Initial Denial Rate Zero Pay Initial Denial Rate Partial Pay Denials Overturned by Appeal Net Days Revenue in Credit Balance Preregistration Rate Insurance Verification Rate Service Authorization Rate Net Days in Accounts Receivable Aged A/R as a Percentage of Billed A/R Point-of-Service Cash Collections Cost to Collect Cash Collection as a Percentage of Adjusted Net Patient Services Revenue Bad Debt Charity Care Days in Total Discharged Not Final Billed

56 Accelerating Revenue Cycle Improvement through a Change in Culture At The Valley Hospital in Ridgewood, N.J., a change in the hospital s culture and the mindset of staff have fueled significant improvements in revenue cycle performance. We ve always been strong in revenue cycle performance, but not as strong as we are today, says Bill Klutkowski, CPA, assistant vice president of finance for the hospital. We weren t struggling for cash, but we knew our revenue cycle performance could be even better. The challenge for us was how to go from good to great. The Valley Hospital began its quest toward excellence in revenue cycle performance in 2000 by educating all employees regarding their contributions to the hospital s financial performance. Everything changed with the introduction of Medicare s ambulatory payment classification system. Edits and payments were all in turmoil. We learned something new every day and realized quickly that we couldn t do it alone. We needed department head involvement and accountability to the revenue cycle, Klutkowski says. We began to offer revenue cycle education to everyone throughout the hospital specifics that really mattered to their department and provided the support to help people improve performance as it relates to the revenue cycle. Our organization also offers a leadership institute series for department leaders three times a year, and we ve given presentations to leaders that address common budget issues, expense management, and various aspects of the revenue cycle. When new managers join the hospital, they meet with our director of budgets and reimbursement staff to review their responsibilities. Each of these initiatives helps to set targets and expectations related to revenue cycle performance earlier. The collaborative approach to revenue cycle performance improvement has pushed revenue cycle performance to a higher level at The Valley Hospital. Department by department, operating margins have increased, from 2.1 percent in 2000 to 3.5 percent in Managers yearly goals are tied in part to the hospital s financial performance, so that all hospital leaders have a stake in the hospital s revenue cycle performance. Monthly reports that compare each department s performance with its target goals keep departments on track. Notably, the hospital s patient satisfaction scores, quality indicators, and employee satisfaction have demonstrated improvement. I think the continual feedback we provide for managers and employees throughout the hospital helps them to participate in working toward the hospital s revenue cycle goals, Klutkowski says. It s important to take the time to sit down with individual departments and talk with them regarding their concerns, because every department is different. For example, what s going on in radiation therapy? What problems is the department experiencing with managed care contracts? What are the concerns of leaders and key stakeholders in the department? It s also important to involve medical records in these discussions, where appropriate, so you can really concentrate on any coding issues that exist and help the department take steps toward improvement. One of the keys to effecting change in individual departments is to include all the appropriate stakeholders in discussions, not just the department leaders. Often, revenue cycle leaders choose to meet with the department director when in fact a staff member might have more influence in improving the department s revenue cycle performance, Klutkowski says. In some instances, including an IT person in discussions with a department also can be key. Bring payment records with you most departments have no idea what they actually get paid. Show the departments what they charged in relation to what Medicare and insurance companies actually paid, without saying, You missed a charge. Information such as this will be an eye-opener for leaders and staff and will help them to better focus on the actions needed for improvement. We began to offer revenue cycle education to everyone throughout the hospital specifics that really mattered to their department and provided the support to helppeople improve performance as it relates to the revenue cycle. Bill Klutkowski, CPA, assistant vice president of finance, The Valley Hospital

57 Lessons Learned Build the morale of your staff. The Valley Hospital in Ridgewood, N.J., created a finance morale committee to discuss issues that could affect employee satisfaction and ways to boost the spirits of staff. Each quarter, representatives who are chosen by their peers plan events for the staff (the group once held a carnival for revenue cycle staff in the hospital parking lot) as well as community service activities, such as contributing to a compassion fund set up to help hospital employees who are experiencing financial hardship. Finance is a very stressful environment; we re all expected to do more with less. It s good to invest in the morale of your staff, says Josette Melillo, director, patient financial administration, for The Valley Hospital. In 2009, employee satisfaction scores ranked in the 91st percentile for revenue cycle staff, with a mean score of 85.7 percent, 12.6 percentage points higher than in Invest in continuing education for revenue cycle staff. MAP Award winners have dedicated trainers for their revenue cycle departments. At Brookwood Medical Center in Birmingham, Ala., trainers provide reeducation for staff who are struggling and conduct mandatory education refreshers for the revenue cycle team. We also encourage our staff to obtain certification, says Doug Carter, CFO. Staff who achieve certification receive an increase in pay, so there is an incentive for them to meet this goal. At Saint Francis Hospital in Tulsa, Okla., where front-end staff have been trained in back-end revenue cycle processes, and vice versa, Staff realize that they are one team, and that they succeed together, says Eric Schick, vice president of finance. Meet regularly with managed care payers to address issues that are delaying processing of claims. Such meetings have enabled Saint Francis Hospital to address problems with contract enforcement and claims processing that are delaying payments to the hospital. Because our revenue cycle is as tight as it is, we re able to pay attention to details such as why some claims aren t being paid quickly, and to dial down into those issues and address them with payers, Shick says. It takes diligence, perseverance, and a lot of data to effect change, but it can be accomplished. There are a lot of other providers in our market who are benefiting from our efforts in this area. Maintain a dedicated IT staff for revenue cycle. I have my own IS team that works solely on revenue cycle projects, says Jane Berkebile, vice president, revenue cycle, for OhioHealth. This allows us to move very quickly to resolve any issues with technology within the revenue cycle. Celebrate successes. OhioHealth keeps a treasure chest full of dollar-store items in each of its revenue cycle departments to reward employees who reach certain targets. This year, the health system also held a Right Choice Awards program to honor individuals and teams who contributed to the health system s revenue cycle success. Staff at Saint Francis Hospital are treated to an afternoon at the zoo or the movies to celebrate the achievement of significant goals. It s important to let your staff know that they are doing a great job and that their efforts are appreciated, Schick says. Recognize the efforts of other departments in the organization that contribute to the organization s revenue cycle success. At The Valley Hospital, revenue cycle staff recently showed their appreciation to employees in other departments by inviting them to a sweets party, complete with a chocolate fountain. You have to develop a good relationship with other departments that contribute to your organization s revenue cycle success, says Bill Klutkowski, assistant vice president of finance. For more information, or to register, visit Learn Strategies for Transforming Your Hospital s Revenue Cycle Performance Move your organization s revenue cycle performance to the next level at HFMA s MAP Event. The event will feature revenue cycle leaders from high-performing hospitals, who will discuss proven tactics for achieving revenue cycle excellence. HFMA s MAP Event, to be held Nov. 7-9 at the Coronado Island Marriott Resort and Spa in San Diego, will offer interactive opportunities for participants to learn best practices for revenue cycle performance. Additionally, the event will feature a tour of MAP Award-winning Sharp Grossmont hospital and insight from keynote speaker Quint Studer, who will discuss the importance of evidencebased leadership It is a violation of federal copyright law to reproduce all or part of this publication or its contents, in any form by any means, without permission. For more information, contact HFMA Chapter Relations.

58 SM the tool for revenue cycle excellence HFMA s MAP Application is the essential tool for improving revenue cycle performance. MAP App is a central component of HFMA s MAP a comprehensive initiative that defines the indicators for revenue cycle excellence, helps you track and improve performance, and honors excellence. Developed by and for industry leaders led by HFMA, MAP App lets you track performance throughout your revenue cycle, compare your results to peer groups and the industry, and identify proven strategies to achieve excellence. FEATURES HFMA MAP Keys provide standard indicators of revenue cycle excellence, vetted by industry experts led by HFMA. Dashboard tracks your performance on MAP Keys and highlights trends. Revenue Cycle Scorecard ranks your performance against your goals. BENEFITS Broad industry participation, standard metrics, and flexible tools let you see show how your performance compares to MAP Award winners, other system facilities, and your peer groups, as defined by HFMA categories or by your own criteria. Comparisons enable you to spot leading or trailing performance, understand market changes, set attainable stretch goals or inspire application for the MAP Award honoring high performance. Analysis tools let you tackle emerging problems at the source. HFMA s trusted content expert advice, proven practices fromtopperformers,news,trainingandanalysis helpsyouimprove outcomes. Peer-to-peer assistance and access to industry experts connect you to other successful users. Root cause analysis through powerful analytics and business intelligence. Aggregateduserdatayieldsmonthlyindustrybenchmarks and trends. TECHNICAL REQUIREMENTS Web Browser (Internet Explorer, FireFox, Safari) Case studies identify proven strategies of MAP Award winners and other top performers. High speed Internet connection Monthly updates give you performance data that is timely, accurate and audited. Microsoft Excel Adobe PDF Alerts keep you on top of MAP Key performance changes. 57

59 START STRONG Home portal gives you an at-a-glance view of your performance and peer group comparisons, plus proven practices, industry discussions, expert advice, and industry news and research. COMPARATIVE DATA Dashboard shows your performance by revenue cycle function (e.g. patient access, revenue integrity, claims adjudication and management). You can compare your performance against your system, against self-chosen peer groups, and against MAP Award winners recognized for high performance. Graphs let you isolate time ranges to pinpoint shifts, or zoom into MAP Key summaries for underlying data. GEARED FOR RESULTS MAP Key Briefs provide snapshots of your performance on the indicators along with functionally rich comparisons, proven practices, ask the experts and relevant research all aimed at helping you understand performance, find opportunity, set strategy and get results. SM learn more at hfma.org/map