July 30, 2003
The level of revenue losses due to unsuccessful outpatient prospective payment system (OPPS) revenue cycle management can be staggering. A new report by 3M Health Information Systems and HFMA outlines the challenges facing providers who wish to successfully integrate outpatient PPS into their revenue cycle.
Most hospital managers underestimate the magnitude of OPPS claims problems. A 2002 analysis by 3M Health Information Systems Consulting Services of 1 million pre-scrubbed OPPS claims from 80 hospitals had error rates ranging from 8 percent to 30 percent. Eighty percent of the hospitals reviewed had significant incidence of compliance or cash-flow problems. Major problems identified were:
o HCPCS errors: 86 percent of coding errors
§ The charge description master was the source of 79 percent of HCPCS errors
§ The health information management department was the source of 21 percent of HCPCS errors
o ICD-9 errors: 14 percent of coding errors
The fact that losses can be spread out across so many bills and claims often makes it difficult for hospital executives to acknowledge the problem and commit the necessary resources to solve it. A hospital might readily write off a loss of less than $50, but such a loss could be occurring a thousand times a month. An accounts receivable manager could be working diligently to reduce the volume of suspended claims, often resolving the same issue day after day, without addressing the root cause of the claims' suspension. Many hospitals do not have the information processes in place to track these losses.
System Integration is Key
Financial managers may have difficulty identifying and resolving process problems when these problems originate outside the financial area. The amount the average hospital spends on reworking claims and managing denials averages $75-$125 per claim, not including the potential lost reimbursement for a denied claim.
Hospitals are working hard to integrate the systems they currently have, linking the electronic medical record, if they have deployed it, with claims and billing systems, admitting/discharge systems, medical eligibility and authorization systems, and finance/reporting/analysis systems. In many hospitals, however, some of these systems, especially eligibility and authorization, are still paper-based and fragmented.
Additional challenges include obtaining capital for information systems development and upgrades, determining return on investment for systems development, and finding satisfactory financial analysis software in the current information systems market.
Tips for OPPS Success
A number of hospitals have moved with some success toward managing the outpatient revenue cycle. Although there is no single, overarching solution in this key area, some practices that yield success are now emerging. For example:a
- Appoint an APC or revenue cycle management coordinator to be responsible for the organization staying up to date on the frequent OPPS changes.
- Appoint a manager to take charge of maintaining the CDM to reflect all OPPS changes.
- Carefully review your organization's billing processes and take any necessary steps to ensure that errors are caught and fixed before claims are submitted.
- Bill for late charges, using an adjusted claim submitted to the payer in a timely fashion.
- Invest in information systems that perform editing, grouping, and payment-estimating functions specific to OPPS. The systems should include decision support tools that can analyze performance under OPPS.
- Review remittance advices religiously to ascertain why items are rejected. Don't be afraid to call the fiscal intermediaries for clarification of denials.
Conclusion
Hospital finance leaders nationwide are working to address the myriad issues associated with outpatient revenue cycle management. Successful managers will need to invest in developing people, resources, and process and system improvements. As more services move toward the outpatient sector and more revenues fall under the OPPS reimbursement system, the need to capture reimbursement and mitigate compliance exposure will become ever more pressing.
Footnote
aFee, David N., "Success with APCs," Healthcare Financial Management, September 2002, pp. 68-72.
SOURCE:
Issues in Outpatient PPS: Keys to Successful Revenue Cycle Management, a special educational supplement published with the July hfm. Developed collaboratively by HFMA and 3M Health Information Systems.
ADDITIONAL RESOURCES:
- HFMA Resource Center: Medicare Payment Focus Area
- HFMA Resource Center: Revenue Cycle Focus Area
- "Understanding The OCE Is Key to Successful Outpatient PPS Payments," HFMA Wants You To Know, January 15, 2003
- APC Assistant, a web-based outpatient revenue cycle management tool offered through a a partnership between HFMA and HSS, Inc.
If you have questions or comments about HFMA Wants You to Know, contact editor Laura Noble.
HFMA Wants You to Know ISSN: 1540-0697. Volume II, Issue 15. Copyright 2003, Healthcare Financial Management Association. All rights reserved.