Revenue-Cycle-101.ppt

This is an introduction PPT to RCM (Revenue Cycle management) which provides a details information about the step to step process of RCM with workflows.

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Revenue Cycle
Management

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Here’s What You’ll Learn
Introduction to Revenue Cycle
Concept Zero to Zero
Departments & Functions
Process
Key Definition & Metrics
Market Conditions
Impact to Revenue Cycle
Modern Day Bounty Hunters
Charity Care
Future with Health Care Reform

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What is Revenue Cycle?
All the administrative and clinical
functions, processes, and software
applications that contribute and
manage the registration, charging,
billing, payment and collections tasks
associated with a patient encounter.
Revenue Cycle is the process that
begins when a patient comes into the
system and includes all those activities
that have occurred in order to have a
zero balance
In other words, think… Zero to Zero!

4. “Hospitals exist in a very uncertain time.
Reimbursement risk runs high, and receiving
payments from patients is not guaranteed.The
ability to capture lost revenue and improve the
ability to forecast actual revenue received to the
budget is necessary for hospitals' and other
service providers' survival and vitality.”
Source: Wall Street 2010
Importance of Revenue Cycle
And You…

5. PROCES
S
CULTUR
E
TOOLS
PEOPLE
The Revenue “Cycle”
BILLING
CDMP
SCHEDULING
REGISTRATION
INSURANCE
VERIFICATION
FINANCIAL
COUNSELING
CASE
MGMT/QUR
CDM/CHARGE
CAPTURE
MEDICAL
RECORDS
CUSTOMER
SERVICE
THIRD PARTY
FOLLOW-UP
SELF PAY
COLLECTIONS
PROGRAM
ADMINISTRATIO
N
CASH POSTING
POST
PAYMENT REVIEW
POINT OF
SERVICE
COLLECTIONS
DENIALS
MANAGEMENT
FINANCIAL
CLEARANCE

6. Patient
Access
Documentation
Of
Services
Billing
Receivables
Management
Customer
Service
Hospital
Scheduling
Registration
Pre-
Registration
Eligibility &
Verification
Financial
Counseling
Care
Delivery
Patient
Discharge
Transcription
Charge
Master
Coding/
CDMP
Charge
Capture
Payment
Posting
Claims
Editor
Customer
Inquiries
Bill
Reconciliation
Contractual
Adjustments
Legal
Collections
Issue
Resolution
Secondary
Billing
Bad Debt/
Write Offs
Patient
Statements
Process Flow by Department
Late
Charges
Utilization
Management
Discharge
Planning
Case
Management
Claims
Submission
Follow-Up
Appeals/
Denial Mgmt
Feedback

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Patient Access
The “Front Door” to the hospital and the first step in the revenue
cycle process for the majority of patients.
The important functions and information gathered in Access
include:
Scheduling services (surgery not included)
Verifying of Insurance
Obtaining Authorizations and certifications
Gathering patient demographics and insurance information
Pre-Services/Point of Service collections
Identifying the referring physician
Informing the patient on instructions for the date of service, referral
process, etc.
Informing patient of referral process
Financial Counseling
Medicaid Eligibility/Charity Care
Responsible for 50% of claims data

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Health Information Management
(HIM)
Health information management (HIM) is the practice of maintenance and care of
health records by traditional and electronic means in hospitals, physician's office
clinics, health departments, health insurance companies, and other facilities that
provide health care
The important functions and information gathered in HIM include:
Providing and Managing Transcription Services
Coding services documented by Physicians
CPT codes (procedures)
ICD-9 (diagnosis)
HCPC (supplies, drugs, etc.)
ASC Codes
Ensure Codes accurately reflect patient services
Acts as a Liaison between all areas
Serves as Subject Matter Experts in HIPAA, Documentation and Coding
Educates, presents, and trains on opportunities to improve
Case Mix Index (CMI)
Oversees and responds to Defense Audits
Manages storage and retrieval of medical records
Implementation of Electronic Health Record System
Building the Compliant Documentation Management Program (CDMP)

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Patient Financial Services (PFS)
Patient Financial Services is the “cash machine” of the hospital.
The important functions and information gathered in PFS include:
Charge Master/Revenue Integrity
Billing
Overseeing Claims Edits to ensure “Clean Claim Submissions”
Employing tools to ensure accuracy in charge capture
Follow-Up with Insurance companies
Appeals
Denials
Un-paid Claims
Customer Service
Collections
Cash Posting
Subject Matter Experts
Government Billing
Commercial and Managed Care Billing
Employs and Oversees systems and vendors to enhance
Services provided to patients
Revenue
Cost to Collect

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Charge Master
A comprehensive listing of hospital charges
The Revenue Integrity team are a critical component to billing
compliance and charge capture and is often considered the "life blood"
to a Hospital's Revenue Cycle by touching almost every department
within the facility.
Standardization of charge master
Department level review of all processes and charges with
management staff to ensure all billable charges are represented on the
CDM
CDM reviews and updates to ensure compliance for all payors
Market pricing, transparency and defensibility strategies
Revenue cycle system mapping to ensure charge capture and
compliant billing
Acuity-based charging methodology development and implementation
Maintenance strategies, controls and tools for maintaining an accurate
and compliant CDM
Educational and training tools

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The Importance of Charge Capture
A key part of the Revenue Cycle but does not report to Revenue Cycle
“Bill what you do” –the process where services provided are entered
into the system; charges and expected reimbursements are calculated
The important functions and information gathered in Charge Processing
include:
Keyers and coders enter data automatically from a charge master
or manually input
Claims Manager software scrubs entries for correctness
Problems sent to department work file for processing or corrections
Reconciliation performed to insure all entries received and entered
into the system
Accuracy of service and charge
Appropriate edits to scrub data
Charge entered timely for prompt payment
Daily Charge Logs Reviewed

12. Process Flow: For Real?

13. Process Flow Overview

14. Required Billing Elements -Where do they come from?
50% -Patient Access, Registration 15% -Charge Entry Areas
15% -Medical Records 20% -Billing
Patient Demographic Data
Patients last name, first name, and middle initial
Patient address
Birth date
Male (M) or Female (F)
Marital Status
Admission date or start of care date
Encounter Specific
Hour patient was admitted for inpatient or outpatient care
Occurrence Codes
Code indicating the priority of admission--1 indicates emergency; 2 urgent;
3 elective; 4 newborn; and 9 information not available.
Code indicating the source of admission or outpatient service
Provider has patient signature on file permitting release of data (Y or N)
Principal Diagnostic Coding (ICD-9-CM code)
Admitting Diagnostic Coding (ICD-9-CM code)
Insurance Information
The name and number identifying each payer that payment is expected
Assignment of benefits (Y) yes; (N) no
The name of the patient or insured individual
Relationship of the insured (person having insurance) to the patient
Insured’s identification number assigned by the payer organization
The group name/plan through which the insurance coverage is provided
The insurance group number
Employment status code
Employer’s name and address
Required Elements:
Revenue Cycle –Where Does the
Information Come From?

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Access: Metrics
Registration accuracy rate
Denials
No Authorization
Not Eligible
Telephone Statistics
Hold Times
Abandonment Rates
Other
Point of Service Collections
“Red Flags” –Incorrect Claim Demographics

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HIM: Metrics
Discharges Not Final Billed (DNFB)
Turnaround Times
Dictation/Transcription
Record Requests & TAT
CDMP
Queries Rate
Response Rate
Agreement Rate
RAC
Audits & Timeliness
Responses

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PFS: Metrics
Cash Expected Reports
Days in A/R
Aging Analysis by Payer
Unbilled Accounts Receivable
Late Charge Postings by Service Area
Claim Denial Volumes / Amounts / Types
Bad Debt / Bad Debt Recovery Levels
Cost to Collect

18. Top Issues Influencing
Health Care Industry
Record spending on health information technology
Significant changes in benefit plan design, plan pricing and the health
plan landscape
New risks and opportunities may emerge as payment models shift from
fee-for-service to new models that focus on performance, health
outcomes and shared cost savings
Health organizations may feel the trickle down effect of decreased
utilization by price sensitive consumers.
A further uptick in merger and acquisition activity to share
administrative burdens and IT investments, gain market share and fill
strategic gaps.
Pharmaceutical companies see an opportunity to increase their visibility
with consumers, influence health outcomes and reduce healthcare
costs while increasing revenue using digital strategies and technology.
The use of mobile health and wireless technologies by all health
organizations is expected to continue to surge.
Source: PwC 2010
18

19. Source: OHA 2010 19
Revenue Stream
Where the Money Comes from...

20. Insurance by Percentage Enrolled
20
Source: Kaiser Family Foundation 2010

21. 21
Average Health Insurance Premiums and
Worker Contributions for Family Coverage, 1999-2009$4,247
$9,860
$1,543
$3,515
1999 2009
Employer Contribution
Worker Contribution
Note: The average worker contribution and the average employer contribution may not add to the average total premium
due to rounding.
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009.
$5,791
128%
Worker
Contribution
Increase
131%
Premium
Increase
$13,375

22. On the Rise…
Group Health Plan
premiums up 9% with
expectations of 6% in 2012
High Deductible Health
Plans continue to rise
Deductibles and Out of
Pockets Increasing 22%
Charity Care, Government
Payors Increasing
1.3 Million Uninsured equivalent to the population of Columbus
22

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Adults Living in Poverty

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Market Conditions
State budget issues continue
Traditional Medicaid/Medicaid Managed Care wanting relief
More Ohio residents live below the poverty level
High Penetration of Self-Insured Employers
Shifts of health care costs to Consumers
Increases in Deductibles
Increases in Co-Pays
But, still coverage offered from employers
Most markets are dominated by few payors
Smaller Payors being closed out of the Market
Aggressive Managed Care payors
Movements to more complicated contracts

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Market Conditions
Reimbursement Variances
Commercial Payors Continue to Subsidize
Government Payors
High Deductible Health Plans Increase
Deductibles increasing too
Quality Scores tied to Contract
Increases/Consumerism
Hospitals
Physicians
Multi-Year Contracts with Payors
Transparency Growing

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Charges, Payments, and Cost
Charges are the amount the hospital lists as the
price for services. Very few pay this “sticker price.”
Payment or Reimbursement is the amount the
hospital actually receives in cash for its services.
Private insurers, public insurers, Self Pay and the
uninsured all pay different amounts for the same
services. Payment can be either more or less than
what it costs the hospital to provide a given service.
Cost is what it actually costs the hospital to provide
the services.

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Reimbursement Methodologies
Hospitals
Percent of Charge
Per Diems
Case Rate Payment
Diagnosis Related
Groups (DRGs)
Medical Severity (MS)
DRGs
Globals
Ambulatory Patient
Groupings (APGs)
Ambulatory Payment
Classifications (APCs)
Other
Carve-Outs
Professional Services
Fee For Service
discounts
Fee Schedules
Payment based on
Resource Based Relative
Value Based System
(RBRVS)
Capitation
Withholds
Pools
Case Rates

28. Cost
Government
Reimbursement
Charge
Commercial
Reimbursement
Subsidies and Payor Mix
Note: Solid lines are status quo; dashes represent future state with
costs, reimbursement, and charges shifting.

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31. Contracted Fee Schedule Match
Source: AMA 2011 National Insurer Report Card
31

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Administrative Costs
Pre-Authorizations
Complex Benefit
Designs
Limitations of Network
Denials
Coordination of Benefits
Audits

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Importance of POS Collections
Recent Studies on the “Tipping Point” –
Financial Hardship Limit –found that when
the total amount billed to the patient reached
3.5% of the family's gross income, the
likelihood of paying the bill dropped
dramatically.
Source: TransUnion/NorthShore LIJ Study

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Modern-Day Bounty Hunters
RAC: Recovery Audit Contractors
Medicare
MAC: Medicare Administrative Contractors
The new Fiscal Intermediary
MIC: Medicaid Integrity Contractors
Medicaid
Managed Care Audits

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RACs Findings85%
4%
4%6%
2%
OutpatientInpatient
SNF Other
Rehab 35%
17%8%
40%
Incorrectly Coded
Other
No/Insufficient Doc
Medically Unnecessary

36. 3-7 percent of revenue on a
variety of community benefit
and charity care activities is
likely adequate.
An IRS study found that 9 percent of
revenue was spent on community
benefit.
Nearly 60 percent of the hospitals
surveyed provided less than or
equal to 5 percent of revenue on
uncompensated care
Twenty percent of hospitals
surveyed reported total community
benefit spending of less than 2
percent of revenue.
Source: Kaiser Daily Health Policy Report Feb 2009
Charity
9
8
7
6
5
4
3
2
1

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Revenue Cycle Management
Strategies
A CFO’s Focus on Revenue Cycle
Vendor Management
Denials Management
Technology Optimization
Point of Service Collections
Strategic Pricing
Contract Management
Compliance Documentation/Coding.
Source: Interview with: Vince Schmitz, Senior Vice President & CFO, MultiCare Health System.

38. Expanded
Coverage
Payment Cuts New Coverage
Requirements
New Economic
Incentives
Eligibility
Processes
Denials
Prevention
Charity Care
Policies &
Processes
ICD-10
C2C Rational PricingDocumentation &
Coding
Physician
Integration
ACO/Bundled
Payments
Revenue Cycle & Health Care Reform
Positioning for the Future
Revenue Cycle improvements

39. QUESTIONS