Leading Revenue Cycle Process Improvement February 10 12, 2006 Amanda Mewborn Hardy & Adrienne Jarvis Dickerson
Speaker Introduction Adrienne Dickerson Adrienne graduated from the Georgia Institute of Technology with a BIE and a Master s of Science in Health Systems. She is has been on the board of the GA HIMSS Chapter since 2002 and is a member of the Institute for Industrial Engineers/Society for Health Systems (IIE/SHS). Adrienne is an independent consultant and works with hospitals and other organizations to expand the use of traditional ISyE techniques in healthcare. Amanda Hardy Amanda works at DeKalb Medical Center as Director of Contracting & Process Improvement. Amanda has served in many roles at DeKalb, including roles in Revenue Management and Decision Support. Amanda earned a Bachelor s degree in Industrial Engineering and a Master s degree in Health Systems, both from Georgia Tech. Amanda has served on the board for the Georgia Chapter of HIMSS for four years and is currently serving as Treasurer.
DeKalb Medical Center 3 Hospital Health System in metro-atlanta Not-for-Profit Community Hospitals 550 staffed beds Acute Care, Emergency, Long Term Acute Care, Behavioral Health, Rehab DeKalb Medical Center at Hillandale Opened July 18, 2005 as Georgia s newest hospital and the first master-planned digital hospital in the state.
What is Revenue Cycle? Contracting Scheduling or Patient Presentation Pre-Certification Registration Financial Counseling & Insurance Verification Clinical Documentation Case Management Charging Coding Billing Cash Application Follow-Up/Collections Denials Management
Simplified Revenue Cycle Patient arrives & is registered. Charges entered for services provided. Patient receives a Procedure. Procedure is documented. Payment or notification of denial of payment received. Health Information Mgt. reviews and codes the account. A bill is generated and sent to the payor.
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Contracting & Process Improvement o Director o Project Manager, Charging Senior CDM Analyst Charge Specialist o Project Manager, Denials Denials Specialists (2) o Manager, Contracting Contract Specialists (2) Contract Analyst odepartment Systems Coordinator
Accomplishments CDM-Related Activities resulted in $11 Million additional net revenue for the year ending 3Q05 Average Inpatient payment increased $1,000 per case from 2003 to 2005 Denials collections increased 50% from $6.5M per month to $9.7M per month from December 2004 to November 2005 Denials Collections 12 10 8 6 4 2 0 12/2004 1/2005 2/2005 3/2005 4/2005 5/2005 6/2005 7/2005 8/2005 9/2005 10/2005 $ Recovered 11/2005 Millions 6 5 4 3 2 1 Thousands # Accounts 0
Charging Charge Description Master (CDM) Compliance/Regulation/Maintenance Pricing/ Maximization of Net Revenue Charge Capture Charge Reconciliation Late Charges Audits Educate Clinical Personnel about Finances
Charging Team Management of CDM Requests Departmental CDM reviews Fair & Competitive Pricing Charge Reconciliation Verifying that patients were appropriately charged Ensuring charges & corrections are made in a timely manner, reducing late charges Education & Awareness Educate others on the importance of charge capture and the effects of incorrect charge capture on reimbursement Reduction of Denials and Billing Errors Review denials resulting from charging errors and communicate errors to departments to prevent future denials.
Common Features of a CDM CDM stands for Charge Description Master Hospital specific computer file listing all hospital procedures, services, supplies, and drugs that are provided to patients Elements include: Department Number, Item Number, Charge Description Number, Description, Coding, Price CDM # 42112345 42167890 44511111 44522222 50133333 Hemogram & Auto Diff Basic Metabolic Panel CT Abdomen w/o contrast CT Sinus w & w/o contrast Bone Plate Description HCPC S Code 85025 80048 74150 70488 Revenue Code 300 300 352 351 278 Price 1.00 2.00 3.00 4.00 5.00
Charging = Coding! CDM # Description HCPC S Rev Code Price Qty 42112345 Hemogram & Auto Diff 85025 300 1.00 2 42167890 Basic Metabolic Panel 80048 300 2.00 1 67811111 Tylenol 259 3.00 3 77011111 Sutures 270 4.00 2 40499998 OR, 1 st hour 360 10.00 1 40499999 OR, addl 30 minutes 360 5.00 2
Effects of Incorrect Coding of Charges Incorrect coding of charges may result in lower reimbursement Rev Code 270 (General Supply) vs. 275 (Pacemaker) Patient Charge Hospita l Cost Revenu e Code Billed Expected Reimbursement ** Profit/Lo ss Annualized Profit/Loss * Scenario 1 $10,800 $6,000 270 $0 ($6,000.00 ) ($210,000) Scenario 2 $10,800 $6,000 275 $7,020 $1,020.00 $35,700 * Based on 35 pacemaker procedures a year. ** Expected reimbursement calculated based on 65% of charges. HCPCS vs. No HCPCS for Herceptin Patient Charge Hospita l Cost HCPCS Code Billed Expected Reimbursement ** Profit/Los s Annualized Profit/Loss * Scenario 1 $90 $30 None $0 ($30) ($600,000) Scenario 2 $90 $30 J9355 $50 $20 $400,000 *Based on 20,000 units of Herceptin provided in a year. ** Based on the Medicare National Payment Average.
Importance of Accurate Charge Capture Incorrect charge capture may result in lower reimbursement Missing charges on accounts that pay x% of charges Patient Charge for Pacemaker Pacemaker Charge Entered? Total Charges for Service Expected Reimbursement Scenario 1 $10,800 Yes $20,800 $13,520 Scenario 2 $10,800 No $10,000 $6,500 Patient Charge for OR Time *Expected reimbursement calculated based on 65% of charges. Missing charges on accounts that pay based on revenue code/cpt code. For example, OR services paid based on revenue code 360. Revenue Code Assigned to OR Time OR Time Charge Entered? Total Charges for Service Expected Reimburse ment Scenario 1 $5,000 360 Yes $10,000 $6,500 Scenario 2 $5,000 360 No $10,000 $0 *Expected reimbursement calculated based on 65% of charges.
Charge Reconciliation Hospital Policy Home-Grown System
Late Charge Home Grown System
Audits Defense Audits Defend 90% of Questioned Revenue average audit results in +/- $200 in net revenue Managed care contract terms Charge Audits/Compliance-Charge Entry Does every ER claim have an ER visit charge? Does every injectable medication have an accompanying medication administration charge? Patient Audits Overcharges and undercharges addressed
Clinical Department Education Late Charge % Dashboard Overall Late Charge/Credit Summary Thousands 5,000 4,000 3,000 2,000 1,000 4% 6% 5% 2% 3% 3% 4% 4% 3% 2% 2% 6% 5% 4% 3% 2% 1% 0 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 0% Late Charge $$ Late Charge % Lunch & Learn Educational Sessions for Clinicians & Department Heads Physician-based Education and Help with Documentation and Coding Interventional Radiology
Denials Management Average Denials Recovery Rate of 70% What is a denial? Denials Management System Worklists Reporting/ Analysis Denials Prevention Trend Analysis and Correct Core Problem Process Improvement Examples: HDX, Payer Websites, F.A.S.T. Team (Financial Assessment Services Team) Denials Council
Denials At DMC, a denial is defined as any account where we received less payment than we expected Possible Denial Reasons Timely Filing Duplicate Claim Missing Pre-cert/Authorization Coding Error Denials require additional work to research the problem, correct it and appeal or resubmit the claim, which delays payment
Denials Mgt. System Denials system to categorize, route and report on denials Identify patterns and focus on prevention (Top 10 each month) Denials Council educate, share dashboard, develop Performance Improvement groups October Top 10 Denial Types 900 600 300 865 598 500 380 305 229 223 182 160 121 0 Non Cov Chrgs Payment Adjusted Dup Claim Paymt Denied Lacks Info Info Needed (SMS) Inconsis Diag w... Proc Code Incon... COB Not Pd Sep.
Our Denials Progress Incoming Denials Dollars are remit rejection amounts, not Invision acct. balances Thousands 8 6 4 2 0 Jan Feb Mar Apr May June July Aug Sept* Oct Volume Dollars $24 $20 $16 $12 $8 $4 $- Millions *September forward includes two new payors added to system Denied dollars recovered December 2004 to November 2005 = $89,374,019
Denials Performance Improvement Projects Coordination Of Benefits (COB)/Insurance through F.A.S.T. Team Timely Filing Duplicate Claims Sterilization forms Insurance Cards on Chart
Contracting Maximize Reimbursement & Minimize Risk Pitfalls Contract Management System Recouping Underpayments/ Reallocation of Potential Refunds New/Hidden Money (ex. Clinical Trials) Payer Relationships
Reimbursement Methodologies Inpatient Per Diems x% of Total Billed Charges DRG Payment Stop Loss (Outliers) Outpatient Flat Rates, usually based on HCPCS or revenue code Case Rate x% of Total Billed Charges CDM maintenance has the biggest impact on Outpatient Reimbursement.
Contract Mgt. System Calculates Expected Reimbursement on Managed Care Accounts Based on Contract Terms Variance Reporting Recouping Underpayments in Bulk Through Identification of Trends
Payor Relations Payors are Just People Too - Relationships Go a Long Way Tips & Tricks for Contracting Be Clear in Defining Rates (e.g., Implants 75% Charges compared with Implants, Revenue Code 274 278, 75% Charges) Use State Laws to Your Advantage Administrative Requirements and their Impact on Rate Expectations New Services/ Technology Protection Automation in Adjudication of Claims on both the Payor and Hospital Side Billing/Coding Requirements Annual Inflators
Summary of Accomplishments CDM-Related Activities resulted in $11 Million additional net revenue for the year ending 3Q05 Average Inpatient payment increased $1,000 per case from 2003 to 2005 Denials collections increased 50% from $6.5M per month to $9.7M per month from December 2004 to November 2005 Decreased late charge percentage from 6% to 2% over 10 months Average Denials Recovery Rate of 70% Denied dollars recovered December 2004 to November 2005 = $89,374,019
Questions? Adrienne Dickerson 404.668.9633 adrienne@cadencehealth.com www.cadencehealth.com Amanda Hardy 404.501.5850 ahardy@dkmc.org www.dekalbmedicalcenter.org