Using Key Performance Indicators (KPIs) for Managed Care Contract Re-Negotiation

Similar documents
Key Performance Indicators (KPIs): Strategies for a High-Performance Revenue Cycle

Key Performance Indicators (KPIs): How Do You Know You Survived?

Revenue Cycle Objectives Challenges Management Goals and Expected Benefits Sample Metrics Opportunities Summary Solution Steps

Granville Health System

Revenue Cycle Management

Our Journey to the MAP Award. Thursday, March 19, 2015

Revenue Cycle Management

HFMA MAP Keys Patient Access Measure:

5 KPIs That Require Revenue Cycle Managers' Attention. Devendra Saharia FEATURE STORY. healthcare financial management association

Key Performance Indicators for Physician Practices. Sam Eddy Director, Physician Practice Consulting, QHR

University Healthcare Administrative Policy

Back 2 Basics: Revenue Cycle: KPI, Risk Factors, and Compliance

Top Ten Questions. Time and Energy. Robin Bradbury

Top Performing PFS Sustaining Revenue Cycle Excellence. Greg West COO, Healthcare Resource Group

Revenue Cycle Responsibilities. Revenue Cycle. Objectives 4/9/2013

Leveraging Predictive Analytic and Artificial Intelligence Technology for Financial and Clinical Performance

The Power of Metrics Part Two. By Rob Borchert, CPAM Altarum Institute: Revenue Cycle Management Practice

Rejection Prevention. How Actionable Data Can Drive Results in Your Revenue Cycle

University of Iowa Hospitals & Clinics: Using Payer Contract Management to Improve Reimbursement

Revenue Cycle Assessment

Patient Access. The Big Opportunity

CHAPTER 17 CREDIT AND COLLECTION

The Importance of Patient Access to Revenue Cycle Success

Conifer Health Solutions Tenet Investor Webinar

Using Six Sigma Concepts to Improve Revenue Cycle

Making Revenue Cycle Outsourcing an Organization Wide Responsibility

Provider Revenue Cycle Management (RCM) and Proposed Solutions

Your Revenue Cycle It s not just billing anymore. Presented by: Candy Edie, MBA, CRCE-I

NSS Billing Contract Between. Innovative Healthcare Solutions

A Measure of Success Using KPIs to Accelerate Revenue Cycle Performance

How a Pre-Service Center at MetroHealth System Improved Satisfaction, Efficiency, and Revenue

Our Lady of Lourdes Health Care Services, Inc. and Affiliates Administrative and General Policy POLICY NUMBER: AS0019CCP. PAGE NUMBER: 1 of 9

Accelerating your Revenue Cycle: From Patient Encounter Through Account

Best practices for migrating healthcare payments to ACH

EISENHOWER MEDICAL CENTER Financial Assistance Program Full Charity Care and Discount Partial Charity Care Policies

6 Critical Impact Factors of Health Reform on Revenue Cycle Management Pyramid Healthcare Solutions Thought Leadership Series

Managed Care Technology: An Untapped Resource for Operations Improvement, Contract Compliance and Increased Revenue

Effective Revenue Cycles Are No Accident

Patient Finance Services Policy

What the New Health Economy Means for your Revenue Cycle

Keeping the Reimbursement Train on Track

6 Critical Impact Factors of Health Reform on Revenue Cycle Management

Purpose Statement Outlines purpose of and guidelines for receiving charity care or financial assistance at Valley Children s Hospital.

Revenue Cycle Management

6 Critical Impact Factors of Health Reform on Revenue Cycle Management

Rural Hospital Performance Improvement (RHPI) Project

Patient Account Services. Patient Reference & Frequently Asked Questions. Admissions

Medical Reimbursements of America. Get Paid MORE for Accident Claims.

Health Insurance. A Small Business Guide. New York State Insurance Department

Revenue Cycle. An operational overview and some ideas of how to negotiate the complex roads ahead. HFMA ROAD SHOW SUTTER CENTER FOR HEALTH PROFESSIONS

The Power of Revenue Management

Provider Solutions. Sutherland Healthcare Solutions

Compensation and Claims Processing

Provider Solutions. Sutherland Healthcare Solutions

Network Facility Handbook

Revenue Cycle Academy. E-Learning

Patient Financial Policies

Information Integrity in the Revenue Cycle! Order Entry, All Subsystems and The Charge Description Master

Surgical/ASC Claims Revenue Cycle Management: An Introduction to Our Processes and Protocols

Management Report Services. Staff Training and Education Services

Effective: October 1, 1991 Revised: October 31, 2012

December 2011 PRACTICE CHECK-UP. XYZ Anesthesia Group. AdvantEDGE Healthcare Solutions

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

The Future Vision of Access Management: Turning the Revenue Cycle Upside Down!

Fundamental Guide to Understanding Healthcare Payments

BEST PRACTICES IN DENIAL MANAGEMENT

PA PROMISe 837 Institutional/UB 04 Claim Form

The Economics of Outsourcing Billing, Collections, and Contracting. Tom Chirillo President & CEO HealthCare Business Solutions

Revenue Cycle Management

Our clients count on us, and we deliver.

The Patient Contact Center: Finding My Way!

Revenue Cycle Management

Finding Your Way to Prompt Pay. Texas Department of Insurance

Managing and Enhancing Hospital Revenue Cycles 1

Engaging Touch Free Practices Carolinas HealthCare System - A Case Study on Automation in the Revenue Cycle

BCBSM MENTAL HEALTH AND SUBSTANCE ABUSE MANAGED CARE PROGRAM

Patient Access Impact on the Patient s Journey. By: Michele Sutherland

Revenue Cycle Management Rod Garrison

The Joint Commission Page 1 of 6

Agent Instruction Sheet for PriorityHRA Plan Document

Policy: Charity Care Application Policy # 4.70 Department: Patient Access Policy Manual: USMD Hospital Revenue Cycle Manual Effective date:

Compensation and Claims Processing

Ten Overlooked Opportunities For Significant Performance Improvement and Cost Savings

ATTACHMENT A - STATEMENT OF WORK REQUEST FOR PROPOSALS FOR INDEPENDENT BENEFIT CONSULTING, ACTUARIAL AND AUDITING SERVICES DMS-13/14-018

PUBLIC HEALTH TRUST OF MIAMI-DADE COUNTY, FLORIDA A Department of Miami-Dade County, Florida. September 30, 2014 and 2013

Protect and Improve Profitability in Your Practice. Positioning Your Organization for a RAC Audit

Exploring the Impact of the RAC Program on Hospitals Nationwide. Results of AHA RACTRAC Survey, 4 th Quarter 2012

Retrospective Denials Management

Transcription:

Using Key Performance Indicators (KPIs) for Managed Care Contract Re-Negotiation David Hammer Partner Accenture Ft. Lauderdale Caesar s Managed Palace Care Resort KPIs Sunday, 29 January 2012 Key Performance Indicators to Improve Contracting 12:30 PM 2:00 PM

Contents KPIs: Definition / Purposes / Benefits Contracting Cycle Definition Revenue Cycle Definition Contracting KPIs Level I, II, III, and IV Rev Cycle KPIs Rev Cycle KPIs by Contract-Related Area 1

Where s Your Focus? 2

Even the Very Best Keep Score Tiger Woods Masters Golf Tournament 3 3

Even the Very Best Keep Score In business, words are words, explanations are explanations, promises are promises, but only performance is reality. Harold S. Geneen Former President & CEO of ITT 4 4

Even the Very Best Keep Score If you can t measure it, you can t manage it. Michael Bloomberg Mayor of New York City and CEO of Bloomberg, Inc. 5 5

Even the Very Best Keep Score Tom Davenport defines analytic competitors as those who use sophisticated data collection technology and analysis to wring every last drop of value from [their] business processes. SOURCE: Davenport, Thomas, Don Cohen, and Al Jacobson, Competing on Analytics, Babson College Executive Education Working Knowledge Research Center, May 2005 6

Let s Define Terms Key Performance Indicators 7

What is a KPI? Numerical factor Quantitatively measures performance Activities, volumes, etc. Business and/or clinical processes Insurance plans or payor contracts Financial assets Functional groups Service lines The entire enterprise Source: BearingPoint, Key Performance Indicators 8 8

Purposes of KPIs View performance snapshots, at various levels: Individual / Insurance plan Group / payor Department / service line Hospital Region Assess current situation and determine root causes of identified problem areas 9 9

Let s Define Terms Contracting Cycle 10

Contracting Cycle Definition 1. Provide patients 4. Pay claims 11 2. Treat patients 3. Submit claims

Contracting Cycle Definition Reduce Payor Discretion Achieve Target Margins 12

Contracting Cycle Definition Work Denials & Payment Variances Submit & Follow-up Claims Collect Accounts & Post Payments Define Payor s & Provider s Duties Analyze Contract Performance Negotiate Contract Language & Rates 13 Analyze Steerage vs. Discounts Analyze Service Lines Analyze Financial Needs Understand Competitors & Market Understand Payors & Their Reputations

Contracting Cycle Definition Strategy development Strategy implementation Contract negotiations Contract evaluation Forecasting and analysis Contract implementation and operations Performance monitoring Strategic issues and planning Source: Stevenson, Paul B., Managed Care Cycle Provides Contract Oversight, hfm, Mar 2002 14

Let s Define Terms Revenue Cycle 15

Revenue Cycle Definition Denials & Payment Variance Follow-up Billing Coding Collection Pricing Authorization & Certification Payor Negotiation & Renegotiation Registration Financial Counseling 16

Understanding the Processes Upstream Processes Pre-Admission Functions Authorization Authorization Scheduling PreRegistration Financial Counseling Registration Bed Control A Verification Verification 17

Understanding the Processes Midstream Processes A Financial Counseling Inhouse Management Discharge B 18

Understanding the Processes Downstream Processes Customer Service Two-way Communication Two-way Communication B Coding Billing Follow-Up Denial & Underpayment Management Self-Pay Collections Collection Agency Management Cash Management 19

Understanding the Processes Associated Processes Revenue Cycle Support Services CDM Maintenance Compliance Siemens Revenue Invision Cycle Application Support Chart Management HIS & PFS Imaging Services Other Wierd Arrangements (OWAs) 20

Understanding the Processes Rev Cycle Complete Picture Pre-Admission Functions Authorization Authorization Scheduling PreRegistration Financial Counseling Registration Bed Control Verification Verification Financial Counseling Inhouse Management Discharge Customer Service Two-way Communication Two-way Communication Coding Billing Follow-Up Denial & Underpayment Management Self-Pay Collections Collection Agency Management Cash Management Revenue Cycle Support Services CDM Maintenance Compliance Siemens Invision Application Support Chart Management HIS & PFS Imaging Services Other Wierd Arrangements (OWAs) 21

Contracting KPIs 22

Contracting KPIs KPI Description Standard 1. Rate increases compared to CPI medical-care component CPI MCC 2. Outlier $ fraction of total contract revenue ± 5% 3. Contract profitability compared to IRR hurdle rate IRR HR 4. Eligibility / authorization / certification availability 24 / 7 / 365 5. Retro review / timely filing periods (keep in balance) 90 120 days 6. Termination notification period 90 days 7. Renegotiation planning begins prior to renewal date 6 months 8. Optimal contract term 2 3 years 23

Contracting KPIs KPI Description Standard 9. Technical denials as a percent of net revenue 0.5% 10. Medical necessity denials as a percent of net revenue 1.5% 11. Total denials as a percent of net revenue (after appeals) 1.0% 12. Underpayments additional collection rate 75% 13. Appealed denials overturned rate 40 60% 24

Contracting KPIs KPI Description Process 1. Contract contains automatic renewal clause? Yes 2. Contract contains inflation index? Yes 3. All hospital services included / specific exclusions defined? Yes 4. Termination notification period 90 days? Yes 5. Duties for on-going patient care / pmt at termination defined? Yes 6. ABN or equivalent acceptable for non-covered services? Yes 7. Provider authorized to bill guarantor for non-covered svcs? Yes Source: Managed Care Forum Contracting Checklist, HFMA Wants You to Know, 21 Apr 2004 25

Contracting KPIs KPI Description Process 8. Provider authorized to collect deposits for non-covered svcs? Yes 9. Contract discloses all sub-contracting relationships? Yes 10. Contract contains an independent contractor clause? Yes 11. Contract stipulates all parties pay own legal fees? Yes 12. Definition / criteria for all key terms clearly stipulated? Yes Medical necessity? Yes Emergency condition / emergency admission? Yes Source: Managed Care Forum Contracting Checklist, HFMA Wants You to Know, 21 Apr 2004 26

Contracting KPIs KPI Description Process 12. Definition / criteria for all key terms clearly stipulated (con t)? Yes Trauma / trauma services / trauma team? Yes Covered services? Yes Material breach? Yes Prompt payment? Yes Stop-loss / outlier? Yes Carve-out? Yes Medicare rate? (should include pass-throughs) Yes Source: Managed Care Forum Contracting Checklist, HFMA Wants You to Know, 21 Apr 2004 27

Contracting KPIs KPI Description Process 12. Definition / criteria for all key terms clearly stipulated (con t)? Yes Sentinel event(s)? Yes Medical-loss ratio? Yes Silent PPO? Yes Clean claim? Yes Timely notification / timely filing? Yes Authorization / certification? Yes Source: Managed Care Forum Contracting Checklist, HFMA Wants You to Know, 21 Apr 2004 28

Contracting KPIs KPI Description Process 12. Definition / criteria for all key terms clearly stipulated (con t)? Yes Service level(s)? Yes Denial / rejection / null event? Yes Negotiation / mediation / arbitration? Yes Plan agreement? Yes Inpatient / outpatient / emergency patient / observation patient? Yes Substantial impact? Yes Member / insured / dependent? Yes Source: Managed Care Forum Contracting Checklist, HFMA Wants You to Know, 21 Apr 2004 29

Contracting KPIs KPI Description Process 13. Advance notice time for contract changes clearly stipulated? Yes Payment / reimbursement rates? Yes Covered services / procedures? Yes Plan documents / requirements? Yes Major groups? Yes 14. Contract includes warranty of HIPAA compliance? Yes 15. Contract forbids reassignment without mutual consent? Yes 16. Payor s reporting requirement duties clearly stipulated? Yes Source: Managed Care Forum Contracting Checklist, HFMA Wants You to Know, 21 Apr 2004 30

Contracting KPIs KPI Description Process 17. Contract clearly material to provider s revenue stream? Yes 18. Eligibility verification process clearly stipulated? Yes 19. Medical necessity verification process clearly stipulated? Yes 20. Prior authorization process clearly stipulated? Yes 21. Payor provides all customers contract / policy manuals? Yes 22. Payor provides copies of all administrative / policy manuals? Yes 23. Appeal / independent review processes clearly stipulated? Yes 24. Payor precluded from changing reimbursement unilaterally? Yes Source: 15 Questions to Ask Before Signing a Managed Care Contract, Private Sector Advocacy, Dec 2002 31

Contracting KPIs KPI Description Process 25. Payor s prompt payment duty clearly stipulated? Yes 26. Payor agrees to pay interest on late payments? Yes 27. Contract complies with statutory processing / pmt duties? Yes 28. Payor precluded from takebacks / offsets? Yes 29. Retro review period balanced to timely filing period? Yes 30. Contract precludes participating in / enabling Silent PPOs? Yes 31. Termination provisions / timing clearly stipulated? Yes Source: 15 Questions to Ask Before Signing a Managed Care Contract, Private Sector Advocacy, Dec 2002 32

Contracting KPIs KPI Description Process 32. Perform annual internal analysis of all contracts? Yes Contractual discounts balanced to gross volumes / net revenue? Yes Use this analysis to identify renegotiation / termination candidates? Yes Compare all contracts to Medicare fee schedule? Yes Calculate relative profitability using payor-specific costs? Yes All contracts cover their direct costs, at minimum? Yes Use relative profitability for leverage in renegotiation process? Yes Recognize internal analysis cannot I.D. below-market contracts? Yes Recognize internal analysis is silent on case mix / stop-loss / etc.? Yes Source: Wilson, David B., 3 Steps to Profitable Managed Care Contracts, hfm, May 2004 33

Contracting KPIs KPI Description Process 33. Perform annual external analysis of all contracts? Yes Compare (legally) your contract rates to those of similar providers? Yes Use independent firms / databases to obtain comparative info? Yes Challenge data s age / geographic relevance before using? Yes Compare specific service lines, as well as overall rates? Yes Target biggest improvement opportunities during renegotiation? Yes Compare rate structures (charge % / DRGs) as well as overall rates? Yes Fully-understand impact of I/P stop-loss / O/P max-pay provisions? Yes Try to eliminate all cost-plus payments in favor of % of charges? Yes Source: Wilson, David B., 3 Steps to Profitable Managed Care Contracts, hfm, May 2004 34

Contracting KPIs KPI Description Process 33. Perform annual external analysis of all contracts (con t)? Yes Review contract language, especially key terms / provisions? Yes Claim submission and payment Protection against catastrophic cases Procedure-based carve-out payments Stop-loss payment structures Payments for implants / prosthetics / orthotics / high-$ pharmaceuticals Cut-off periods for timely filing / retro review / refunds / etc.? Utilization review process New services / technologies Source: Wilson, David B., 3 Steps to Profitable Managed Care Contracts, hfm, May 2004 35 Yes Yes Yes Yes Yes Yes Yes Yes

Contracting KPIs KPI Description Process 33. Perform annual external analysis of all contracts (con t)? Yes Compare payment levels to premium increases? Yes Ensure contract rate trends mirror premium increase trends? Yes Compare payors relative profitability trends? Yes Compare payors rate trends to medical-care component of CPI? Yes Source: Wilson, David B., 3 Steps to Profitable Managed Care Contracts, hfm, May 2004 36

Contracting KPIs KPI Description Process 34. Conduct annual pmt performance analysis of all contracts? Yes Contracts comply with statutory processing / payment requirements? Yes Report habitual violators to Insurance Commissioner? Yes Compare payors denial and payment discrepancy trends, by group? Yes Insurance plan? Patient type? Service line? Reason code? Physician? Source: Wilson, David B., 3 Steps to Profitable Managed Care Contracts, hfm, May 2004 37 Yes Yes Yes Yes Yes

Contracting KPIs KPI Description Process 35. Contract reviewed by attorney before renewal? Yes 36. Soft contract provisions ( quality / affordable ) avoided? Yes 37. Best efforts language used to define providers duties? Yes 38. Supplemental documents included by reference / attached? Yes 39. Amendments required in writing with mutual signatures? Yes 40. Participating corporations / entities clearly stipulated? Yes 41. Assignment clauses clearly stipulated / require signatures? Yes Source: Miller, Thomas R., Conducting a Managed Care Contract Review, hfm, Jan 1998 38

Contracting KPIs KPI Description Process 42. Contract parties independent and able to compete? Yes 43. Provider listed as participating in directories / websites? Yes 44. Complete list of covered services attached to contract? Yes 45. Ambiguous service descriptions avoided? Yes Avoid services including but not limited to Yes Avoid services customarily provided Yes Avoid services covered by the plan Yes Source: Miller, Thomas R., Conducting a Managed Care Contract Review, hfm, Jan 1998 39

Contracting KPIs KPI Description Process 46. Services not directly provided defined / contracted in adv? Yes Out-of-area services Yes Hospital-based physician services Yes 47. Capitation rates / benefits design (if any) clearly stipulated? Yes 48. Licensing / JCAHO standards adequate for credentialing? Yes 49. Provider not required to report in accordance with HEDIS? Yes 50. Contract / payment terms administratively feasible? Yes 51. Current HIS adequate to handle contract terms / A/R needs? Yes Source: Miller, Thomas R., Conducting a Managed Care Contract Review, hfm, Jan 1998 HEDIS: Healthcare Effectiveness Data and Information Set 40

Contracting KPIs KPI Description Process 52. Mutual information requirements clearly stipulated? Yes Specific information / reports described? Yes Information including but not limited to avoided? Yes Provider s confidential / proprietary information protected? Yes Provider s duty to provide information to payor strictly limited? Yes Payor obligated to reimburse costs of providing records? Yes Source: Miller, Thomas R., Conducting a Managed Care Contract Review, hfm, Jan 1998 41

Contracting KPIs KPI Description Process 53. Mutual duties regarding care reviews clearly stipulated? Yes 54. Provider s duty to notify payor re: adverse events limited? Yes Risk management incidents? Yes Physician malpractice suits? Yes Physician status changes? Yes Medical staff disciplinary actions? Yes Notify only on receipt of suit from members at time of event? Yes Notify only on intent to report adverse event to regulatory bodies? Yes Source: Miller, Thomas R., Conducting a Managed Care Contract Review, hfm, Jan 1998 42

Contracting KPIs KPI Description Process 55. Obtain background information about payor? Yes Audited financial statements? Yes Annual report(s)? Yes Identify management turnover? Yes Understand financial performance trends? Yes Size / stability of physician network(s)? Yes Territory served and future growth plans? Yes Marketing style and types of employers targeted? Yes Source: Managing Your Managed Care, HFMA-NC Tarheel News 43

Rev Cycle KPI Hierarchy 44

KPI Hierarchy: Level 1 Indicators Cash collections Gross and net receivables Payor aging % > 90 days Cash % of net revenue Cost to collect % 45

Cash Collections: 1 st Level 46

Gross A / R: 1 st Level 47

Net A / R: 1 st Level 48

Payor Aging >90: 1 st Level 49

Cash % of Net Rev: 1 st Level 50

Cost-to-Collect %: 1 st Level 51

KPI Hierarchy: Level 2 Indicators Net A/R days Denials % of gross revenue Cash % of collection goal Point-of-service cash % of goal 52

Net A / R Days: 2 nd Level 53

Denials % of Gross Rev: 2 nd Level 54

Cash % of Cash Goal: 2 nd Level 55

P-O-S Cash % of Goal: 2 nd Level 56

KPI Hierarchy: Level 3 Indicators Credit balance receivables Clean claims throughput % Net revenue Case mix index (CMI) Open accounts 57

Credit-Balance A / R: 3 rd Level 58

Clean Claim %: 3 rd Level 59

Net Revenue: 3 rd Level 60

Case Mix Index: 3 rd Level 61

Total Open Accounts: 3 rd Level 62

KPI Hierarchy: Level 4 Indicators By Major Payor Category or Plan Code % of Total A/R >60 Days % of A/R >35 Days (No Pmt, No Response) % of A/R in Underpaid Category % of A/R in Appeal Status % of A/R in Overpaid Category 63

64

65

66

67

Rev Cycle KPIs by Area 68

Rev Cycle KPIs by Area Pre-Registration / Pre-Authorization KPI Description Standard 1. Overall pre-registration rate of scheduled patients 98% 2. Overall insurance verification rate of pre-registered patients 98% 3. Deposit request rate for co-pays and deductibles 98% 4. Deposit request rate for elective admissions / procedures 98% 5. Deposit request rate for prior unpaid balances 98% 6. Data quality compared to pre-established dept standards 98% 69

Rev Cycle KPIs by Area Pre-Reg / Pre-Auth (cont d) KPI Description Process 1. Have dedicated pre-registration / pre-authorization unit? Yes 2. Process and IT integrated between scheduling and pre-reg? Yes 3. Services postponed if not pre-authorized in advance? Yes 4. Financial counseling part of pre-reg / pre-auth process? Yes Patient balances and payment obligations discussed? Hospital policy for point-of-service payment explained? Reminder to bring required payment & insurance cards given? Yes Yes Yes 70

Rev Cycle KPIs by Area Insurance Verification KPI Description Standard 1. Overall insurance verification rate of scheduled patients 98% 2. Overall ins verification rate of pre-registered patients 98% 3. Ins verf rate of unscheduled IPs w/in one business day 98% 4. Ins verf rate of unscheduled hi-$ OPs w/in one business day 98% 5. Data quality compared to pre-established dept standards 98% 71

Rev Cycle KPIs by Area Insurance Verification (cont d) KPI Description Process 1. Have dedicated insurance verification unit? Yes 2. Process and IT integrated between ins verf / patient access? Yes 3. Use on-line insurance verification system? Yes 4. Financial counseling part of insurance verification process? Yes Alternate arrangements for non-covered patients explored? Hospital policy for point-of-service payment explained? Reminder to bring required payment & insurance cards given? Yes Yes Yes 72

Rev Cycle KPIs by Area 3 rd -Party & Guarantor Follow-Up KPI Description Standard 1. Ins A/R aged more than 90 days from service / discharge 15-20% 2. Ins A/R aged more than 180 days from service / discharge 5% 3. Ins A/R aged more than 365 days from service / discharge 2% 4. Cost-to-collect ([PA + PFS + agency expenses] cash) 3% 5. Patient cash as a % of net revenue 100% 73

Rev Cycle KPIs by Area 3 rd -Party & Guarantor F-U (cont d) KPI Description Standard 8. In-House A/R days ALOS 9. DNFB A/R days 4 6 A/R days 10. Net A/R days 55 A/R days 11. Cash as a % of cash goal 100% 12. Total point-of-service cash as a % of cash goal 2 3% 74

Rev Cycle KPIs by Area 3 rd -Party & Guarantor F-U (cont d) KPI Description Process 1. High-balance follow-up completed by dedicated team? Yes 2. Staffing sufficient to minimize / prevent aged A/R build-up? Yes 3. Quantity/quality perf stds part of collectors job descriptions? Yes 4. Perform regular quality control reviews of collectors work? Yes 5. All collectors finish CMS s Medicare compliance module? Yes 6. All collectors receive annual Medicare compliance training? Yes 7. Collectors cross-trained on more than one payor type? Yes 75

KPIs by Functional Area 3 rd -Party & Guarantor F-U (cont d) KPI Description Process 8. Use on-line receivables work station system? Yes Easy to add new collector assignments? Automatic daily downloads from PFS system? Full interface for collection notes, etc. to PFS system? Provides collector-specific worklists? Worklists presented in descending-balance order? Next activity date automatically uploaded to PFS system? Yes Yes Yes Yes Yes Yes 76

KPIs by Functional Area 3 rd -Party & Guarantor F-U (cont d) KPI Description Process 9. Use on-line, web-enabled 3 rd -party payor inquiry system(s)? Yes 10. Guarantor follow-up outsourced or on predictive dialer? Yes 11. Collectors receive 3 rd -party / guarantor follow-up training? Yes 12. Collectors use 3 rd -party / guarantor follow-up scripts? Yes 13. Collectors have no competing duties (customer svc, etc)? Yes 14. All collectors receive annual Medicare compliance training? Yes 15. Collectors receive performance-based incentive comp? Yes 77

KPIs by Functional Area Cashiering / Refunds / Adj Posting KPI Description Standard 1. HIPAA-compliant electronic payment posting % 100% 2. Transaction posting backlog (during the month) 1 bus day 3. Transaction posting backlog (end of the month) 0 bus days 4. Credit-balance A/R days (gross) 2 A/R days 78

KPIs by Functional Area Cashiering / Refunds / Adjs (cont d) KPI Description Process 1. Cashiering completed by dedicated team w/ no other duties? Yes 2. Refunds completed by dedicated team w/ no other duties? Yes 3. Quantity / quality perf stds part of cashiers job descriptions? Yes 4. Perform regular quality control reviews of cashiers work? Yes 5. All cashiers finish CMS s Medicare compliance module? Yes 6. Cashiers cross-trained on more than one payor type? Yes 79

KPIs by Functional Area Cashiering / Refunds / Adjs (cont d) KPI Description Process 8. Use lockbox for non-electronic / non-edi payments? Yes 9. Lockbox remits payment data electronically / EDI / OCR? Yes 10. Denial transaction codes entered to facilitate follow-up? Yes 11. Use on-line system to compare expected vs. actual pmts? Yes 12. Post contractual adjustments at time of final billing? Yes 80

Rev Cycle KPIs by Area Denials KPI Description Standard 1. Overall denials rate (% of net revenue) 2% 2. Clinical denials rate (% of net revenue) 3% 3. Technical denials rate (% of net revenue) 1% 4. Underpayments additional collection rate 75% 5. Denials overturned on appeal rate 40 60% 81

Rev Cycle KPIs by Area Denials (cont d) KPI Description Standard 6. Electronic eligibility rate 75% 7. Physician pre-certification double-check rate 100% 8. Total denial reason codes 25 82

Rev Cycle KPIs by Area Denials (cont d) KPI Description Process 1. Denials tracked by payor, reason, and financial impact? Yes 2. Denials distinguished between technical and clinical? Yes 3. Denials tracked by physician, DRG, and department? Yes 4. Contractual allowances growing slower than gross revenue? Yes 5. Dedicated denials unit w/ payor-specific appeals experience? Yes 6. Respond to clinical documentation requests w/ in 14 days? Yes 7. Use on-line system to compare expected vs. actual pmts? Yes 83

Rev Cycle KPIs by Area Denials (cont d) KPI Description Process 8. Use on-line payment tracking software? Yes 9. Use on-line contract management software? Yes 10. Maintain denials database; self-developed or purchased? Yes 11. Use on-line OP medical necessity system prior to service? Yes 12. All denial reason codes actionable? Yes 13. OBSV and IP authorizations tracked separately? Yes 14. Pre-cert, auth, and re-cert functions in a single department? Yes 84

Rev Cycle KPIs by Area Denials (cont d) KPI Description Process 15. Pre-certification requirements shared with MDs offices? Yes 16. Provide MDs with regular feedback on clinical denials rates? Yes 17. Meet regularly with payors to discuss denials issues? Yes 18. Contract terms regularly distributed to rev cycle employees? Yes 19. Rev cycle employees learn of contract changes in advance? Yes 20. Structured feedback between rev cycle and mgd care depts? Yes 21. Non-emergency services scheduled 12+ hours in advance? Yes 85

Don t be in Denial About Denials! 86

Optimizing and Protecting Revenue Denials How Much is Lost Every Year? Total Hospital Denials (as % of total hospital cases) Total Hospital Underpayments (as % of total hospital cases) Total Revenue Opportunity = $3.3 Million $1.7 M additional revenue $1.6 M additional revenue Current Practice Best Practice Current Practice Best Practice SOURCE: Health Care Advisory Board 87

Optimizing and Protecting Revenue Denials How Much is Lost Every Year? Self Pay Bad Debt 12% Denials 41% Underpayments 47% Average Annual Losses = $12.7 million For a Hospital with a Revenue Opportunity of $100 million SOURCE: Health Care Advisory Board, Zimmerman & Associates, HFMA, and McKesson customers experience. Based on hospitals with average payor mix 88

Optimizing and Protecting Revenue Denials Sources of Denials 41% 19% 6% 41% - Authorization 15% 19% 19% - Eligibility 19% - Medical Necessity 15% - Documentation 6% - Billing 80% of revenue cycle errors occur during the up-stream patient access process 89

Optimizing and Protecting Revenue Denials Good News! Percentage of Preventable Denials 10% 90% Preventable SOURCE: Health Care Advisory Board 90

Where s Your Focus? 91

Presenter s Bio David Hammer, Partner, Accenture Mr. Hammer is a Senior Executive (Partner) in Accenture's Health and Public Services Practice, specializing in revenue cycle management and health reform. He serves many of the largest health systems, MD-led clinics, and academic medical centers in the US. Prior to joining Accenture, David was VP of enterprise revenue management at McKesson, the nation's largest healthcare IT firm, and was previously the chief revenue officer for Charter Behavioral Health, a +100-facility health system. David has over 28 years of professional experience in healthcare, including executive leadership and direction, revenue cycle transformation, information system planning / implementation, and consulting. He has worked for a variety of leading health systems, software vendors, and professional services firms. Background and Affiliations Mr. Hammer received an MBA in Management and an MHS in Health Care Administration from the University of Florida in 1987. He also received a BBA in Accounting with a minor in Information Systems (Magna cum Laude) from the University of North Florida in 1985. Mr. Hammer is certified by HFMA as a Fellow (FHFMA) and as a Certified Healthcare Finance Professional (CHFP). He has been named an HFMA Distinguished Speaker for six consecutive years, and is a 2007 recipient of HFMA s Medal of Honor service award. Recent Publications Mr. Hammer s most recent publication is Health Reform: Intended and Unintended Consequences, which appeared in the October 2010 issue of HFMA s healthcare financial management journal (hfm). Don t Panic: CFOs React to the New Economic Reality, appeared in hfm s March 2009 issue. Mr. Hammer authored the February 2008 cover story in hfm, entitled Beyond Bolt-Ons Breakthroughs in Revenue Cycle Information Systems. He also wrote the July 2007 cover story, called The Next Generation of Revenue Cycle Management, as well as the July 2005 hfm cover story, entitled Performance is Reality: Is Your Revenue Cycle Holding Up? Another one of his articles, UPMC s Metric-Driven Revenue Cycle, appeared in the September 2007 issue of hfm, and Data and Dollars: How CDHC is Driving the Convergence of Banking and Health Care was published in hfm s February 2007 issue. His article Black Space Versus White Space The New Revenue Cycle Battleground appeared in the January 2007 issue, and Customer Service Adapts to CDHC appeared in the September 2006 issue. Contact Information Mr. Hammer can be reached by telephone at (954) 648-4764 and/or by e-mail at 92 david.c.hammer@accenture.com or at david.c.hammer@gmail.com