Revenue Cycle Performance: Optimizing Effectiveness June 17, 2014 CPAs & ADVISORS M. Aaron Little, CPA Managing Director mlittle@bkd.com
2 OBJECTIVES
OBJECTIVES Review key influences on revenue cycle performance Analyze key revenue cycle performance management metrics Assess revenue cycle performance management strategies 3
4 REVENUE CYCLE INFLUENCES
Payers Technology Process People 5 KEY INFLUENCES
Medicare Commercial & other Medicare Advantage Other managed care Medicaid Medicaid managed care 6 PAYERS
Intake Eligibility & authorization Service delivery Documentation & orders Pre-billing audit Claims submission Claims tracking & collecting Payment posting & reconciling Reporting 7 PROCESS
Eligibility & authorization Initial & reauthorizations Claims submissions Claim capture Clearinghouse services Documentation & orders Face-to-face Orders Tracking Claims tracking & collecting Timely followup Aging management Pre-billing audit Tracking Automation, too much, too little Payment posting & reconciling Timely followup Adjustment & write-off management 8 PROCESS
RAP billing requirements Verbal order First billable visit OASIS completed Plan of care completed PPS claim billing requirements OASIS transmitted Episode ended Signed & dated face-to-face encounter Signed & dated order for every visit Visit accounted for every order Therapy reassessment requirements met 9 PROCESS
Notice of election billing requirements Patient election Physician certification, verbal FTF encounter, if applicable Initial plan of care Claim billing requirements Patient status Month ended Signed & dated physician certification Pharmacy & infusion pump invoices Levels of care confirmed Services documented Nursing facility room & board 10 PROCESS
Clearinghouse vendor MAC systems Medicare specialized vendor Payer portals EDI vendor Data analysis tools Billing/EMR vendor General ledger 11 TECHNOLOGY
Intake personnel Prior authorization personnel Coding personnel Clinical personnel Medical records personnel Billing personnel Who are? Problem solvers vs. complainers? Idea generators vs. habit formers? Influencers vs. followers? Accountable vs. unstable? Risk aware vs. risk taker? Compliance & quality personnel Technology personnel Management & leadership personnel 12 PEOPLE
Senior financial leader Accountability void Medicare billing specialist(s) Medicaid billing specialist(s) Insurance billing specialist(s) Payment posting specialist(s) Insurance authorization specialist(s) 13 PEOPLE
Senior financial leader Billing supervisor Data specialist(s) Medicare billing specialist(s) Medicaid billing specialist(s) Insurance billing specialist(s) Payment posting specialist(s) Insurance authorization specialist(s) 14 PEOPLE
Key attributes Responsibility & accountability Problem solving Self motivated Timely Organized Strong communicators Detail oriented Embracing of technology Adaptable Warning signs Undependable Problem complainers Comfortable Un-present Disorganized Poor communicators Casual & inattentive to details Technologically uncomfortable Rigid & unwilling to change 15 PEOPLE
16 PERFORMANCE METRICS
Suggested Home Health Revenue Cycle Performance Metric Poor Average Best Medicare days in AR 45 days or more 35 days 25 days or less Non-Medicare days in AR 75 days or more 60 to 75 days 60 days or less Total days in AR 60 days or more 50 days 40 days or less Medicare AR older than 120 days Total AR older than 120 days 10% or more 7% 3% or less 15% or more 10% 7% or less Collections Less than 100% 100% More than 100% Medicare write-offs 2% or more 1% 0% Total write-offs 3% or more 2% 1% or less Days to bill RAPs More than 10 days 7 to 10 days Less than 7 days Days to bill claims More than 10 days 7 to 10 days Less than 7 days 17 HOME HEALTH METRICS
Suggested Hospice Performance Guidelines Metric Poor Average Best Medicare days in AR 45 days or more 35 days 25 days or less Total days in AR 55 days or more 45 days 40 days or less Medicare AR older than 120 days Total AR older than 120 days 10% or more 7% 3% or less 10% or more 8% 5% or less Collections Less than 100% 100% More than 100% Medicare write-offs 1% or more 0% 0% Total write-offs 3% or more 2% 1% or less Days to bill claims More than 5 days 5 days Less than 5 days 18 HOSPICE METRICS
19 PERFORMANCE MANAGEMENT STRATEGIES
AGED RECEIVABLES $100,000 >120 $75,000, Traditional Medicare $5,000, Medicaid $20,000, 10 other payers 58 episodes ~ 15 hours 20 claims ~ 4 hours 25 claims ~ 25 hours $100,000 >120 $10,000, Traditional Medicare $5,000, Medicaid $85,000, 25 other payers 8 episodes ~ 2 hours 20 claims ~ 4 hours 106 claims ~ 80 hours 20 PERFORMANCE ANALYSIS
Example RAP Billing Analysis Example A Example B Example C Days in month 30 days 30 days 30 days Days before RAPs are billed 8 days 10 days 12 days Days to pay once RAPs are billed 10 days 10 days 10 days Episode beginning deadline Day 12 Day 10 Day 8 RAP billing deadline Day 20 Day 20 Day 20 Payment eligible RAPs 75 RAPs 75 RAPs 75 RAPs RAPs paid during month 50 RAPs 35 RAPs 20 RAPs Missed RAP payments 25 RAPs 40 RAPs 55 RAPs Average RAP payment $ 1,300 $ 1,300 $ 1,300 Lost RAP payment opportunity $ 32,500 $ 52,000 $ 71,500 21 PERFORMANCE ANALYSIS
Example FTE Analysis Medicare Specialist(s) Medicaid Specialist(s) Insurance Specialist(s) Full time equivalents (FTEs) 1 FTE 1 FTE 1 FTE Annual revenues $ 5,000,000 $ 1,000,000 $ 3,000,000 Average annual transactions 3,700 2,000 3,750 Average revenues per transaction $ 2,700 $ 500 $ 800 Average monthly transactions 308 167 313 Average rebill percentage 10% 20% 40% Estimated monthly transactions 339 200 438 Average work days per month 20 days 20 days 20 days Average work hours per month 160 hours 160 hours 160 hours Average monthly time available per transaction 28 minutes 48 minutes 22 minutes 22 PERFORMANCE ANALYSIS
PERFORMANCE ANALYSIS Identify problem causers Clinical vs. quality vs. billing vs. financial personnel Identify problem payers Evaluate contract stipulations, if applicable Identify technology constraints Assess technology contributions to claim generation & follow-up collections management Assess cost/benefit to filling accountability void Assess potential performance incentives 23
24 ACCOUNTABILITY ANALYSIS
25 SUMMARY
Payers Technology Process People 26 SUMMARY
27 QUESTIONS?
Revenue Cycle Performance: Optimizing Effectiveness June 17, 2014 CPAs & ADVISORS M. Aaron Little, CPA Managing Director mlittle@bkd.com