Transcript Revenue Cycle – Process flow

Revenue Cycle – How a Health Care Business Functions
MeHIMA Fall conference – Augusta, ME
presented by Jason McDowell MBA RHIA CCS
9/14/2012
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Maine’s Health Care Landscape
Payment Structure Changes
 Hospitals faced with recent decreased reimbursement for
Medicare and Medicaid services
 Increased volume of patients on Free care.
Minor fluctuations in market share
Opportunities for Hospitals
 Attempt to increase volume of patients with commercial
insurances to compensate for decreases in Medicare
and Medicaid reimbursement.
 Prompt Free care patients to sign up for MaineCare
where appropriate.
 Increase operational efficiencies.
 Control costs.
 Right size service lines
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Maine’s Health Care Landscape

Each year, hospitals write off a lot of money which negatively affects
their margin.

“Margin is the measure of management’s ability to control
operating expenses in relation to sales.”
(Source: Managerial Accounting, Tenth Addition, pg. 244)

Total uncompensated care (Free care) + Contractual
allowances (Discounts) = Total Hospital Write offs

Contractual allowances

Blue Cross – Hospitals can negotiate with BC to determine
discount rates

Medicare and Medicaid – CMS decides how much they are
going to pay for claims.
• Contractual for Medicare accounts for as much as
50% of the chargeable amount.
(Source: ICD-10 and the Revenue Cycle, AHIMA 2012 Audio Seminar Series, http://campus.ahima.org/audio, July 10, 2012,
presenter: Rose T. Dunn, copyright 2012.)
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Goals of a Health Care Organization

Stay in business
1) Positive Margin (operational goal)
2) Promote positive patient outcomes and experiences.
(clinical goal)
3) Keep your patient population healthy (clinical goal)

Whether your hospital is for-profit or non-profit, you want a positive
margin.
--- Why? --
Decrease risk of going out of business

Less urgency to have to borrow money at a certain interest
rate

Lenders more willing to lend to you

Building and plant reinvestment

Capital reinvestment

Operations reinvestment

To cover employee salaries and benefits.

Put money aside for the future in case you need it
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Cost Containment

Revenue > Costs

Revenue = Gross charges

Cost Containment

FTE budget, Expense budget, Capital budget, Building
and maintenance, and expenditures outside the budget
process.
Appropriate Pricing
Operational efficiencies via PI
Hire the right people
Retain the people you hire
Supply Chain consolidation
Promote environment that yields positive patient
experiences
Favorable clinical outcomes

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Factors Affecting a HC organization’s Ability to Thrive





% of market share vs. competition.
% of your community you are providing services to.
Rightsizing service lines to meet the needs of the people you serve.
Insurance payment structures.

Local coverage determinations (LCD) and National Coverage
Determines (NCD)
Case Mix Index (CMI)
Each one of these areas present opportunity for HC organizations.
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Revenue Cycle - Definition
“The revenue cycle includes all administrative and clinical
functions that contribute to the capture, management and
collection of patient service revenue.”
Source: http://www.hayesmanagement.com/busops/busops-33.php, MDapproach™ Solution 1: Overall
Revenue Cycle Improvement
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Revenue Cycle
Hummm... What is it?
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Revenue Cycle – Process flow
9. Payment Resolution, Claim denial,
external collections, or
write off
1. Pre-Registration
2. Registration
8. AR / Collections
3. Patient
Admission
or encounter
7. Account Billing
6. HIM dept.
Record Analysis
and Coding
4. Services Rendered
5. Patient
Discharge
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Revenue Cycle – Process flow
9. Payment Resolution, Claim denial,
external collections, or
write off
1. Pre-Registration
2. Registration
8. AR / Collections
3. Patient
Admission
or encounter
7. Account Billing
6. HIM dept.
Record Analysis
and Coding
4. Services Rendered
5. Patient
Discharge
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Revenue Cycle – steps # 1 - 3
1.
2.
Pre-Registration

Speaking to pt. to prepare them for the encounter.

Account created

Capture Payer and Financial Class

Scheduling

Referral

Walk-in
Registration / Admitting

Account created (if not created prior)

Patient demographic and insurance info. entered into
patient profile in abstracting software.

Insurance verification (where applicable)
•
Eligibility
•
Coverage limitations
•
Copy/ scan card

Get consents for treatment

Insurance Pre-Certification for Inpatient & Observation pts.

Requisition verified and scanned into abstracting software.
(unless order is electronically interfaced from system-to-system)
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Revenue Cycle – steps # 1 - 3
2.
Registration / Admitting

Payment Plan / Collections
‘Establishing a payment plan prior to pt. of care is
important so the patient knows their liability and
expectations and the organization can expect on
receiving some money for their services.’
‘Collections at pt. of service because if we wait until after
the service rendered, an org. can typically expect to receive
about 25 cents to thedollar we would have collected at the
point of care.’
(Source: ICD-10 and the Revenue Cycle, AHIMA 2012 Audio Seminar Series, http://campus.ahima.org/audio, July 10, 2012,
presenter: Rose T. Dunn, copyright 2012.)
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Revenue Cycle – steps # 1 - 3
3.
Patient Admission or Encounter

Patient transferred to appropriate area for treatment

History & Physical assessment

Physician order

Medical record created.
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Revenue Cycle – Process flow
9. Payment Resolution, Claim denial,
external collections, or
write off
1. Pre-Registration
2. Registration
8. AR / Collections
3. Patient
Admission
or encounter
7. Account Billing
6. HIM dept.
Record Analysis
and Coding
4. Services Rendered
5. Patient
Discharge
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Revenue Cycle – step # 4
4. Services Rendered
 Treatment and care given
 Documentation generated
 UR/ CM assessment of appropriateness of care
• Includes pt. type, supporting documentation, LOS,
discharge disposition.
• Hospital to follow strict admission criteria when
assigning pt. type. of Inpatient or Observation.
• Possibility to work in conjunction with utilization
review specialist company
 Executive Health Resources (E H R) or Other.
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Revenue Cycle – step # 4
4. Services Rendered
 Source documentation created
 Clinical documentation specialists
• Concurrent record review
• Ensure documentation reflects conditions, treatments
and services rendered.
 Charges entered in the item master (aka: charge master)
• Procedures
• Treatments
• Medications
• Room (Inpatient)
• OR time (outpatient surgical)
• Observation hours
• Supplies
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Revenue Cycle – step # 5
5. Patient Discharge
 Discharge disposition assigned
 Discharge arrangements made
 Medical record binders broken down (If hybrid record
system).
 Discharge Education packet
• Includes discharge instructions, directions for follow
up care, transportation arrangements, billing
information.
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Revenue Cycle – Process flow
9. Payment Resolution, Claim denial
external collections, or
write off
1. Pre-Registration
2. Registration
8. AR / Collections
3. Patient
Admission
or encounter
7. Account Billing
6. HIM dept.
Record Analysis
and Coding
4. Services Rendered
5. Patient
Discharge
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Revenue Cycle – step # 6
6. HIM Dept. Record Analysis and Coding
 Record Reconciliation consists of:
• Generating a report of yesterday’s discharged patients/ acct. #s.
• record retrieval of yesterday’s discharges,
• folder creation (where appropriate).
 Assembly and Analysis
 Coding
• Coding in grouper software based on source documentation
• Coding summary created
• Coding information transferred to abstracting software
• Account Finalized by coder
• Coding information sent to Billing department
Note: Discharge not final coded (DNFC) days begins when
the patient has been discharged.
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Revenue Cycle – Process flow
9. Payment Resolution, Claim denial,
external collections, or
write off
1. Pre-Registration
2. Registration
8. AR / Collections
3. Patient
Admission
or encounter
7. Account Billing
6. HIM dept.
Record Analysis
and Coding
4. Services Rendered
5. Patient
Discharge
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Revenue Cycle – step # 7
7. Account Billing
 UBO4 (for inpatient accounts) includes:
• ICD-9-CM Dx. and Px. Codes
 PX. Dates and surgeon name
• DRG
• Item master charges
 Includes Revenue code, Service date, units, and total charges.
• Patient related information (MRI #, name, DOB, DOS, Insurance Name)
 HCFA 1500 (for outpatient surgical accounts) includes:
• ICD-9-CM Dx. and Px. Codes
• CPT Px. Codes
 Px. Dates and surgeon name
• APC
• Item master charges
 Includes Revenue code and charge date
• Patient related information (MRI #, name, DOB, DOS, Insurance name)
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Revenue Cycle – step # 7
7.
Account Billing
 Data scrubbed for errors
 Electronic Claim File to insurance companies for payment on
the claim.
 Insurance verification (Includes eligibility and coverage
limitations)
• If needed and not performed by Registration dept.
• Mostly for Mainecare when pt. is self pay.
Note: Accounts receivable (AR) days begins at the date of the
encounter for an outpatient setting, and date of discharge for an
Inpatient setting.
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Revenue Cycle – Process flow
9. Payment Resolution, Claim denial,
external collections, or
write off
1. Pre-Registration
2. Registration
8. AR / Collections
3. Patient
Admission
or encounter
7. Account Billing
6. HIM dept.
Record Analysis
and Coding
4. Services Rendered
5. Patient
Discharge
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Revenue Cycle – step # 8
8. Accounts Receivable (AR)
“The average number of days a company takes to collect
payments on goods sold.”
•
•
AR at a convenient store is immediate or within 2-3 days.
The AR benchmark for hospitals is < 50 days.
Source: http://www.businessdictionary.com/definition/days-accounts-receivable-Days-A-R.html
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Revenue Cycle – step # 8
8.
Collections
 Collections agent can
• Validate information on the bill,
• Assist patient with payment collection,
• Help determine eligibility for MaineCare and help pt. apply
for MaineCare.
• Help establish a monthly payment plan.
 Payments options
• Phone via credit card
• By mail
• Electronic bill pay - via patient portal on secured website
using pay pal
• Walk in, Billing Dept.
• Monthly payment plan
• Discounts for eligible patients
(example: patients who meet poverty guidelines).
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Revenue Cycle – Process flow
9. Payment Resolution, Claim denial,
external collections, or
write off
1. Pre-Registration
2. Registration
8. AR / Collections
3. Patient
Admission
or encounter
7. Account Billing
6. HIM dept.
Record Analysis
and Coding
4. Services Rendered
5. Patient
Discharge
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Revenue Cycle – step # 9
9. Payment Resolution, Claim Denial, External Collections,
or Write Off Account
Payment Resolution
 Payment paid to Hospital
Claim Denial
 Reasons for denials vary
 Additional Determination Request (ADR) via FISS.
External Collections Representative
 Can contact insurance company representative to walk thru
verifications and denials
Write Off Account
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Revenue Cycle – Process flow
9. Payment Resolution, Claim denial,
external collections, or
write off
1. Pre-Registration
2. Registration
8. AR / Collections
3. Patient
Admission
or encounter
7. Account Billing
6. HIM dept.
Record Analysis
and Coding
4. Services Rendered
5. Patient
Discharge
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Conclusion – Things HIM depts. Can Affect

Good source documentation

Via Clinical Documentation Improvement (CDI) program

Codes and DRG reflect the services and treatments rendered

Proper Severity of Illness (SI), (Risk of Mortality) ROM, and APRDRG assignments

Discharge to Final Code Days (DFCD)

AHIMA recommends 3-4 days from discharge date/ encounter
date

Discharge to Final Bill Days (DFBD)
•
Best practice, 5-6 days from discharge date/ encounter date

Accounts receivable (AR)
• Benchmark: about 47-48 days from discharge date/ encounter
date

Avoid Claim Denials

Proper DRG assignment

Proper dx. and px. codes

Proper discharge disposition

Proper item master charges

Proper E&M levels
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ACO (Future) vs. Prospective Payment System (Past & Present)

Current payment model – Prospective Payment System (PPS)

Fee for service payment structure

Reimbursement is volume driven

Service lines structure based on volumes

Future payment model – Accountable Care Organization (ACO)

Hospitals spectrum of service lines based on meeting the needs
of the community

Payment Incentives for preventative treatment and screening services

Goal: to keep people in the local community well.

APR-DRG vs. DRG
 APR-DRG reimbursement: DRG, SI, ROM play a role in
reimbursement.

DRG reimbursement: Reimbursement based on DRG only.
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Accountable Care Organization (ACO) model
Keeping your patient population in the community well rather than practicing
reactive medicine.
 Screening services
• Prostate exam
• Breast exam
• Skin CA screening
 Preventative services
• Health wellness and weight loss program
• Diabetic consulting
• Smoking cessation program
• Annual check up
• Radiology procedures/ exams
• Laboratory services
• Treat patients before they become severely ill and go to your ICU.
 Aligning service lines with community needs.
 Full continuum of care
• Acute care, specialty care, PCP, Hospice care, Rehabilitation,
Patient centered medical home, etc.
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Glossary of Terms
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Revenue Cycle
Margin
Total uncompensated care (Free care)
Contractual allowances (Discounts)
Insurance verification
Insurance pre-certification
Claim denial
Write off
Collections
Accountable Care Organization (ACO)
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references
Managerial Accounting, Tenth Addition, pg. 244, Authors: Ray H. Garrison, DBA, CPA and Eric W. Noreen, PhD,
CMA, McGrqw-Hill Irwin, copyright 2003.
ICD-10 and the Revenue Cycle, AHIMA 2012 Audio Seminar Series, http://campus.ahima.org/audio, July 10, 2012,
presenter: Rose T. Dunn, copyright 2012.
http://www.hayesmanagement.com/busops/busops-33.php, MDapproach™ Solution 1: Overall Revenue Cycle
Improvement.
http://www.hand-holder.com/index.php?area=revenue_cycle, Communications Affect the Revenue Cycle (flow
chart diagram).
http://www.businessdictionary.com/definition/days-accounts-receivable-Days-A-R.html
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