Priority Management Group, Inc.

Priority Management Group, Inc. Presents Priority Management Group, Inc. 700 School Street Pawtucket, RI 02860 P: 401-616-2000 F: 401-616-2001 www.chcbilling.com Agenda Introduction Clean Claim Components Elements of the Billing Process Feedback to Clinic Operations PMG Benchmarking Client Sampling Summary 1

Speakers: Ray Jorgensen, MS, CPC, CHBME Raymond T. Jorgensen is President and CEO of Priority Management Group, Inc. (PMG). Ray is responsible for oversight of consulting operations as well as coding, reimbursement, and payer related issues for the out-sourced billing component of PMG s services (more than 850,000 annual encounters). He has personally trained thousands of providers from over 35 states on coding, billing, and reimbursement in addition to authoring two books and dozens of articles. Ray s health care experience and education is unique in that he was schooled by the payers. Having worked for Blue Cross and Blue Shield as well as United HealthCare Corporation, primarily in professional relations and contracting, Ray has an understanding and perspective on the payer s objectives and process unlike other medical business consultants groomed from the provider side. BA from The College of the Holy Cross (Worcester, MA) MS from Northeastern University (Boston, MA) CPC from the American Academy of Professional Coders (Salt Lake City, UT) CHBME from the Healthcare Billing & Management Association (Laguna Cliffs, CA) Speakers: Caroline Peucker, CPC, CPC-H, CPC-I PMG s Vice President, Consulting and Compliance Caroline has more than 25 years experience in the physician billing and coding industry. Her extensive experience includes serving as the Vice President, Coding and Compliance, Manager of coding and Billing Operations Manager for physician billing companies that serviced a wide range of specialties and practice types. She has broad experience with hospital-based physician and private practice where she was integral to coding and compliance education and training for clinical providers, practice and billing office staff members. She has performed and managed chart audits with objective of both compliance and optimizing reimbursement through correct coding and thorough documentation. Caroline holds a Bachelor of Science degree in Health Service Administration from Providence College. She is an AAPC certified coder and PMCC instructor. 2

Speaker: Robert Skeffington, CHBME Robert Skeffington a founding partner and Executive VP of Sales and Marketing for Priority Management Group, Inc. (PMG). Responsible for PMG s overall business development strategy, Robert also works with staff to assess the impact of Health Care Reform on PMG and its hundreds of clients. Robert works diligently to enhance relationships with the National Association of Community Health Centers, state and regional CHC organizations, and individual community health sites.individually. In addition to his role in PMG Billing, Robert also leads marketing and sales efforts for PMG Consulting which provides CHC centric education, operational assistance, and training services around revenue cycle management, coding, and other health care finance related matters. During his more than 17 years in health care Robert has worked with CHCs in the 48 contiguous states with an exclusive focus on revenue cycle management for the past 12 years with PMG. He is a speaker for NACHC and other regional CHC associations on a variety of health care revenue cycle related topics. BS from Salve Regina University (Newport, RI) CHBME from the Healthcare Billing & Management Association (Laguna Cliffs, CA) Disclaimer: 1. The coding guidelines, interpretations, and recommendations set forth as part of this training session are presented as a guide only. Attendees understand and recognize that actual coding decisions are the sole liability and responsibility of the provider(s) and respective billing staff. Priority Management Group, Inc. does not accept any liability or responsibility in this regard. 2. The presentation today includes discussion about a particular commercial product/service and the presenter has significant financial interest/relationship with the organization that provides this product/service. 3

Clean Claim Components (What is your percent of clean claims??) Objective: Paid all the money anticipated on first claim submitted CMS Billing Formats: 1500 (Part B/Professional) UB-04 (Part A/Facility and UGS) Critical data Demographic: Name, Address, Phone(s), COB, MVA, etc. Eligibility Verification Payer Specific Data: Member and Provider Number(s), Coding, referrals/authorization DOS, POS, CPT, ICD.9, etc. (No Chart Seen) NO CHART SEEN BY BILLING Billing Process : The Elements Demographics Charge Entry Transmit Claims Patient Statements Post Payments Manage Denials Unpaids pads& Appeals ppeas General Management Close & Reporting 4

Billing Process : Demographics Most Critical Function Battle is won or lost at the front desk. Time of Service (TOS) Correct patient address, phone, work, insurance, etc. Name spelled as it is on the card Eligibility verification TOS Payment (unassigned credits) Co-pay: non-negotiable & CAN BE slid on scale No insurance verified pay cash (NO EXCEPTION) Donations: #1 reason people give? Someone asked Oversight By Whom? Typical boss: Clinic Services Director/VP (COO) Except providers: Medical Director Actual accountable party for revenue: CFO Billing Process : Charge Entry At Centralized Billing NOT Front Desk TOS Full Self-pay (not partial): Only charge entry Why?? Not Simply Data Entry National Correct Coding Initiative (NCCI or CCI) Charges (RVU based? No, how will they know order?) Ranked & linked ICD to CPT Modifier utilization Time from DOS to Charge Entry? Batch Cover Sheet Comparison Time to Enter a Charge: 30 to 40 seconds per Not happening? Why not? Automate EMR/EHR: Never easy or seamless Handheld: Medaptus, PatientKeeper, other PDA options 5

Billing Process : Transmit Claims Direct versus Clearinghouse What do you do really well EDI? Probably not Clearinghouse house edits before payer denials Percentage of Electronic Claims Paper pays monthly versus electronic weekly Frequency of transmission You Must Know Payment deadlines for top five payers Typical volumes (and verify) Secondary Claims to Paper: Who and How Patient Statements Policy to limit number and duration Time from Charge Entry to Transmission System Verification of All Patients Seen versus Billed Billing Process : Post Payments Define: Electronic Remittance Advice (ERA) EDI of Explanation of Benefits (EOB) versus paper Electronic Fund Transfer (EFT) Direct deposit Automatic Payment Posting (APP) Automatically posts entirety of EOB without manual intervention Timeline from Received Payment to Posting Time to Post a Payment: 30 to 40 seconds per Reconciliation of Check Amount to Posted Dollars Underpayment Management If paid within 10% of charge, charge is too low Scan line of EOB from right to left Sum payer payment and patient responsibility columns Subtract this total from charges for the DOS for this patient If 10% of charge, charge is too low 6

Billing Process : Manage Denials Quick Corrections at Time of Payment Posting Examples of Expected Denials to Be Worked ICD missing 4 th or 5 th digit (no record required) Prior Authorization missing (but in system) Place of Service Correction (SNF versus Residential) Should NOT Mitigate Payment Posting Timeliness Corrected Claims Batched for Immediate Resubmission in Next Run Transaction Codes to Track Denial Reasons Eligibilityibili Coding(ICD/CPT) Credentialing Communicate Reasons to Clinic Staff (all reasons to all staff clinical and administrative) Billing Process : Unpaids & Appeals More Complicated Than Denials Regular Work Flow Mondays- 9AMto10AM:UGSMedicare AM: Medicare Tuesdays- 9 AM to 10 AM: Part B Medicare & United Wednesdays- 9 AM to 11 AM: Medicaid Thursdays- 9 AM to 11 AM: Commercial Must Be Scheduled and Worked (ALWAYS) Form Letters with Check Box for Routine Issues Preventive E&M service with Problem E&M Visit Notes for surgical service Wrong DOS/POS/Provider Tracking of All Claims by Transaction Code Communicate Reasons to Clinic Staff (all reasons to all staff clinical and administrative) 7

Billing Process : General Mgmt. Management Information System Vendor relations liaison Internal staff training (front desk/data extraction) Support work with vendor System updates (new version, annual coding, etc.) Q&A Patients (balances, updated insurance) Clinic Staff (system, coding, general billing) Coding (education/auditing/resource) Tracking & Storing Encounter Forms (Charge Tickets) Bank Deposits Interact with Accounting/Finance Third Party Payer Relations Credentialing Billing Process : Close & Reporting Closing and Reconciliation Daily, weekly, monthly, and fiscal year end Management Information System Data Extraction Charges, payments, & adjustments Accounts receivables Unpaid claims work Productivity by provider, clinic, department, etc. Non-standard Data Extraction & Analytics UDS: Ethnicity to disease to age range to income FPAR: Birth control method to age to income Ryan White: HIV patients, multiple cross references Unique, last minute, grant requests Upload to General Ledger (GL) Sustain Auditor Scrutiny 8

Feedback to Clinic Operations What Actually Gets Paid Core Provider visit versus nurse/ma visit Most Common Denials Eligibility verification Inaccurate demographics What They Can Fix Coded encounter forms (at least one ICD and one CPT) Clearly legible and linked Why Patients Call I was told I did not owe any money. I was told my insurance paid for this. Encounter Rate by Clinic (by Provider) Charges versus Payments (by Clinic and Provider) Units of Services (HCPCS with understandable descriptors) Rejected EDI Analysis Monthly Transmission Rejected Claims Summary - MCC Sample Client January 2007 Total Claims Billed $ Number Rejected % 4657 $699,501.80 293 6% Rejection Description # of Claims % Insurance ID# Incorrect 27 9% Demographics Error 14 5% CPT Invalid 0 0% Diagnosis Invalid 13 4% Hospitalization Dates Required Physician Name/Referring e e Physician Error 34 12% 0% Physician Not On File 1 0% Provider Number Invalid 43 15% Subscriber Policy Expired 161 55% TOTAL 293 100% **EDI: Electronic Data Interchange 9

Returned Item Analysis Reason For Return Jul Aug Sep Oct Nov Dec TOTAL % CPT Date(s) MISSING/INVALID INFO CPT not clearly indicated on encounter 24 4 7 3 3 41 36.61% Invalid CPT 6 6 5.36% Missing Tooth/Surface 1 1 0.89% Modifer indicated but not linked to procedure 0 0.00% Was an E&M service performed? 0 0.00% Missing Pre-natal Dates 2 2 1.79% Missing Date of Injury 1 1 0.89% Diagnosis Fee Schedule Insurance Invalid Dx marked on encounter 3 3 2.68% Diagnosis not marked on encounter 21 2 5 7 35 31.25% Dx missing 4th or 5th digit 1 1 0.89% Fee not in system for Procedure 0 0.00% Invalid Insurance ID 0 0.00% Invalid/missing Patient/Subscriber DOB 6 8 7.14% 2 Provider OTHER Treating Provider not indicated 0 0.00% Billing/Supervising Provider not indicated 8 8 7.14% Adjustments Sliding Scale Expired 1 0.89% 1 Reconciliation Missing Encounter 0 0.00% Registration/Demographic Error Patient not registered 5 5 4.46% Name does not match account # 0 0.00% Missing pt/subscriber address 0 0.00% TOTAL 0 59 6 9 16 22 112 100.00% Claim Status Analysis Jul Aug Sep Oct Nov Dec TOTAL # $ # $ # $ # $ # $ # $ # $ STATUS No Claim Found - Rebilled 135 $24,971.27 3 $296.00 138 $25,267.27 Claim on File - In Process 16 $1,643.05 16 $1,977.00 32 $3,620.05 Claim on File - Set to pay 82 $9,820.81 24 $2,588.00 106 $12,408.81 Suspense 7 $229.00 7 $229.00 Sent back to office for info 11 $1,309.00 11 $1,309.00 Denial: Demographics 2 $205.00 3 $497.00 5 $702.00 Eligibility 7 $615.00 7 $615.00 PCP 7 $857.00 7 $857.00 Diagnosis/CPT 1 $390.00 1 $93.00 2 $483.00 UGS Rev Code Correction 0 $0.00 Duplicates 0 $0.00 EOB Needed 0 $0.00 Adjustments: Global 17 $1,262.00 17 $1,262.00 Non-covered 6 $493.00 6 $493.00 Free Care 1 7 $888.00 8 $888.00 Capitation 10 $376.00 60 $8,612.00 70 $8,988.00 Small Balances 0 $0.00 Other (see comments) 34 $1,802.00 7 $975.00 41 $2,777.00 Transfer Balance to: Secondary 6 $941.60 6 $1,056.00 12 $1,997.60 Tertiary 1 $1,500.00 1 $1,500.00 Patient- 37 $4,023.51 21 $1,525.42 58 $5,548.93 Ded/Coins 10 $914.48 1 $169.01 11 $1,083.49 Mental Health Vendor 0 $0.00 Totals 383 $49,359.72 156 $20,669.43 0 $0.00 0 $0.00 0 $0.00 0 $0.00 539 $70,029.15 10

PMG s Recommended Benchmarks DAR: < 60 Weeks of AR: < 9 FTE to Encounters Ratio: 1 : 12,000-15,000 Expense as Percent of Payments: < 9% Cost Per Claim: < $8 Electronic Claim Transmission: 90%+ Clearinghouse Utilization: Yes Certified Staff: At least one Net AR: As close to $0 as possible RVU/Medicare Based Charges: Yes Charge Entry or Payment Posting Each is 18-28% of Process Encounters equals visits equals units Full Time Equivalent is FTE Just entering charges and posting payments (no automation), FTE should manage 30,000 visits annually (easily) Production Benchmarking Charges or Payments Daily Units (Units = EF/Visit) 240.00 Units Per 5 Day Week 1,200.00 Monthly Units (4.3 weeks) 5,160.00 Annually Units (48 weeks) 61,920.00 NOTE: Daily Units- 6 Hours @ 40/hour 11

Production Benchmarking Unpaid Claims Management 25-30% of Process Encounters equals visits equals units Full Time Equivalent is FTE FTE should work 20,000 unpaid claims annually (easily) Charges or Payments Daily Units (Units = EF/Visit) 90.00 Units Per 5 Day Week 450.00 Monthly Units (4.3 weeks) 1,935.00 Annually Units (48 weeks) 23,220.00 NOTE: Daily Units- 6 Hours @ 15/hour PMG s Evaluative Tool (1 of 3) Evaluative Category Scoring DAR <50 days, yes = 2, no =0 0 FTE Biller Managing 12K encounters annually; yes = 1, no = 0 0 Billing expense as percent of payments less than 8%; yes = 1, no = 0 0 Cost per claim less than $7; yes = 2, no = 0 0 90% of claims filed electronically; yes = 1, no = 0 0 Clearinghouse; yes = 1, no = 0 0 Staff with CPC or compliance/billing certification; yes = 1, no = 0 0 RVU system for charge schedule calculation; yes = 1, no = 0 0 Total: 0 Rating: 8+ = Exceptional billing process/product 6-8 = Needs improvement, change in process desirable 5 or less = Significant loss to organization, effect immediate change PMG Created Scoring for Mini-Assessment of Billing Process 12

PMG s Evaluative Tool (2 of 3) CHC Data Requirements Time Period (Months) Used for Charge & Visit Data: 12 Total Charges: $ 3,200,000.00 Total Payments: $ 2,100,000.00 Total Expenses: $ 2,600,000.00 Total Patient Visits 30,000.00 Medicare Encounter Rate: $ 115.00 Medicaid Encounter Rate: $ 127.00 Accounts Receivable (A/R): $ 700,000.00000 Total Number of Full Time Equivalent (FTE) Billing Staff: 8.00 Total Detailed Billing Expense: $ 319,898.00 Basic Data Necessary for Mini-Assessment of Billing Process PMG s Evaluative Tool (3 of 3) Annual Billing FTE Expense Analysis: Data Points Total Number of Full Time Equivalent (FTE) Billing Staff: 8.00 Salary for billers $ 210,000.00 Salary for billing manager $ 50,000.00 CHC share of FICA / Social Security (6.20) & Medicare (1.45) $ 19,890.00 Health Benefits $ - Dental Benefits $ - Disability insurance $ - Unemployment taxes $ - Retirement match / costs $ - Workmens compensation $ - Billing software maintenance and support $ 40,000.00 Billing department computer, email and network support* $ - Billing department printer, cartidriges, maintenance $ - Billing department rent & cleaning costs $ - Local government tax on equipment (tangable prorerty tax) $ - Patient call center cost $ - Temporary staff to augment billing staff for vacations, sick, etc. $ - Billing staff Training, Certification, Subscriptions & seminars (inc. $ - travel): Advertising i for new billing staff $ - Allocation of overhead to billing staff (CFO time, utilities, etc.) $ - Compliance officer (may be % of FTE dedicated to billing staff) $ - Personal Computer, IT Networking, Internet: $ - Telephone Expense (phone lines, handset, etc.) $ - Office Supply Expense (e.g., paper, printing supplies, claim forms) $ - Delineation of actual billing expense for purpose of Mini- Assessment. Postage for claims not sent electronically $ - Postage machine rental and maintenance $ - EDI (clearinghouse, direct payer link(s), etc.) $ - Total: $ 319,898.00 13

PMG Consulting Client Sample A Benchmark Category/Description Benchmark Data Blended Encounter Revenue Rate: $ 136.28 Blended Encounter Expense Rate: $ 134.58 Net Profit/Loss Per Encounter: $ 1.70 Days of A/R: 52.89 Annual Encounters Per FTE Biller: 5,732.40 Billing Cost Per Encounter: $ 9.10 Expense as a Percentage of Payments: 13.36% PMG Consulting Client Sample B Benchmark Category/Description Benchmark Data Blended Encounter Revenue Rate: $ 19.60 Blended Encounter Expense Rate: $ 276.30 Net Profit/Loss Per Encounter: $ (256.71) Days of A/R: 98.27 Annual Encounters Per FTE Biller: 8,125.33 Billing Cost Per Encounter: $ 5.79 Expense as a Percentage of Payments: 29.56% 14

PMG Consulting Client Sample C Benchmark Category/Description Benchmark Data Blended Encounter Revenue Rate: $ 104.34 Blended Encounter Expense Rate: $ 126.36 Net Profit/Loss Per Encounter: $ (22.02) Days of A/R: 63.51 Annual Encounters Per FTE Biller: 7,602.22 22 Billing Cost Per Encounter: $ 8.42 Expense as a Percentage of Payments: 8.07% Summary Stay Informed & Analyze Data Metrics Based Management & Compensation Longitudinal Analysis Staff Feedback & Education Commit to Educate (Top down) 15