Rejects and denials, underpayments, and unbilled inventories are a serious threat to the bottom line. Although most hospitals routinely target these functions for improvement efforts, financial success may ultimately depend upon a strong commitment to revenue integrity.
Revenue integrity requires that each process in the revenue cycle is performed correctly the first time. It also requires a holistic view of the revenue cycle, one that transcends boundaries around traditional functions and roles. And it requires the timely use of key data. That’s the conclusion of Securing Revenue with Improved Data, a new report sponsored by MedAssets, Inc.
This feature describes data-based strategies providers have used to support revenue integrity efforts. For more information on how your peers respond to revenue cycle challenges, consider joining the HFMA Revenue Cycle Forum.
Payer Rejects and Denials
Reducing payer rejects and denials depends on identifying and interrupting systemic patterns of error. The better a hospital’s data-mining abilities, the greater its chances will be of identifying these patterns.
Swedish Covenant Hospital in Chicago uses a list of internal codes to identify reasons payers are rejecting a claim, such as failure to meet medical necessity requirements or the submission of duplicate claims. It also shares all claims denials with the appropriate departments every day. At the end of each month, it goes through all of its denials, sorting them by denial codes. This makes it easy to see how many claims were denied for preventable reasons and the cost of those denials.
Hospitals also need a process for getting information about rejects and denials to the people who can do something about it. Registration quality improvement software, for example, can create a rules engine that brings typical mistakes and omissions back to the registrar on a worklist in real time.
Underpaid Claims
Hospitals must respond aggressively to revenue leaks resulting from underpayments, because the time to appeal an underpayment can be as little as 90 days.
A good contract management system—one that models the contract rules to run claims against—can help stop these revenue leaks. Although it doesn’t pay to chase every dollar, Valerie Woodbury, the director of revenue integrity for Ardent Health Services, suggests a system that enables staff to spot underpayment trends. “If you have a trend where every claim on a fee schedule is being underpaid by $50 and there are a thousand of those, then that’s definitely worth going after.”
Hospitals might also consider turning over recovery work to a dedicated team of underpayment representatives. At Resurrection Health Care in Chicago, that same team acts as an advisory panel for the managed care contracting department. This avoids the disconnect that often occurs between back-end patient financial services and the contractors.
Unbilled Inventory
Unbilled inventory problems occur either in the coding or charging process. A common problem area is when a bill doesn’t drop after a patient is discharged because the claims editor catches missing or inappropriate information. A hospital doesn’t want to submit a claim to Medicare that will be rejected. But if the hospital fails to monitor this inventory to make sure each item is being resolved, it may end up penalizing itself for finding something early but not doing anything about it.
The University of Pittsburgh Medical Center categorizes bill holds by code, allowing staff to aggregate and prioritize them, and also associates each code with a specific person who is responsible for addressing that problem. An unbilled reporting tool sends out automatic alerts to these people.
Biggest Challenges
At the heart of all revenue cycle issues is the quality of the patient bill, which ultimately depends on the quality of data. The providers cited in this feature agree on the need for some sort of quality assurance process to ensure data integrity. HFMA’s Revenue Cycle Strategist newsletter is a great source for monthly updates on improving the quality of revenue cycle processes.
A second challenge is avoiding data overload. The solution is to identify the right data to use. Here are some key steps you can take:
- Match data to user. High-level data may not show the cause and effect behind good or bad results. On the other hand, more specific data may need to be explained to people who are not familiar with it.
- Put the right tools in place. For example, Ardent Health Services uses a tool that tracks actual payment against what the hospital is expecting to receive based on its contract. The hospital is then able to act when the amount expected doesn’t match the amount received.
- Remember that technology can only take your hospital so far. Staff members have to know how to use the technology to drive workflow.
If you’re a revenue cycle or patient financial services executive, director, or manager, or a chief financial officer or other executive who oversees or participates in revenue cycle leadership, plan to attend HFMA’s Fall Seminar Series in either of two convenient locations: Hilton Head from Nov. 18-20 or Chicago from Dec. 8-11. Both series offer sessions on Patient Financial Services and Revenue Cycle Improvement.
Visit HFMA's web site www.hfma.org for more answers to pressing healthcare business questions.
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If you have questions or comments about HFMA Wants You to Know, contact editor Robert Fromberg at rfromberg@hfma.org.