REVENUE CYCLE IMPROVEMENT

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1 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. 1

2 OVERVIEW Reform and the revenue cycle How hospitals are responding Evidence-based improvement Successful practices Joining our journey REFORM AND THE REVENUE CYCLE 2

3 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,

4 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. 4

5 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 5

6 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 6

7 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 7

8 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 8

9 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 9

10 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 10

11 HFMA INITIATIVE WHAT IS MAP? MAP is a comprehensive performance improvement strategy Identify indicators Track and improve performance Recognize excellence Share successful practices 11

12 EVIDENCE-BASED IMPROVEMENT: MEASURING PERFORMANCE MAP KEYS MAP Keys are industry-developed key indicators for revenue cycle performance Clearly defined Measurable Discerning Comparable 12

13 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 13

14 EVIDENCE BASED IMPROVEMENT: COMPARING PERFORMANCE COMPARING PERFORMANCE Manage trends Identify opportunities Prioritize opportunities Identify successful practices 14

15 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 15

16 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 16

17 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 17

18 SUCCESSFUL PRACTICES Culture People Processes Technology Communication CULTURE 18

19 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% 19

20 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 20

21 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 21

22 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 22

23 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% 23

24 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 24

25 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 25

26 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 26

27 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 27

28 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 28

29 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 29

30 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: 30