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Improve your revenue cycle performance through standard metrics, peer comparison, and successful practices.
By Christine Fontaine
Denials have been endlessly discussed among revenue cycle leaders and continue to be a cause of revenue leakage for healthcare organizations. Industry statistics indicate that providers write off 3 percent to 5 percent of net revenue to denials. High-performing revenue cycle teams realize that they cannot continue to "manage" denials but must change processes throughout their organizations to prevent denials from occurring.
In 2009, Shore Health System, a two-hospital system in Maryland, had a denial rate of 1.2 percent-well below the current industry benchmark of 2 percent. Yet we were able to reduce that rate to 0.5 percent over the course of a year by digging into the causes of our denials and implementing process changes to prevent future denials.
This is a sample article from HFMA's Revenue Cycle Forum, a subscription-based discussion community that encourages networking and discussion among revenue cycle leaders.
Learn more and join the Revenue Cycle Forum
Before you can tackle your denials problem, you need to be able to clearly and accurately define what your initial and final denial write-off rates are, and categorize your denials by types. With more than 250 American National Standards Institute remittance codes and manually posted payments-not to mention a lack of standardization-providers must roll up denials into specific categories, such as "no authorization," "no medical necessity," and "timely filing." Providers can then intelligently workflow these denials to the right person and aggregate patterns or trends across the revenue cycle.
If you don't have defensible data, then you won't be able to change processes. For example, when I was the director of revenue cycle operations at Shore Health System, the lab was a big part of our denials. The lab staff asked me how much we were losing in denials, and all I could say was "a lot" because I didn't have specific data to point to. As you can imagine, that approach got me nowhere. Due to the high volume/low dollars in our lab area, we had not invested in the resources or technology that would allow us to communicate with the lab about each denied account-so those dollars continued to be lost.
However, when we deployed denial analytics technology that clearly showed how much we were losing in denials due to lab and other issues, it allowed us to easily refer denied accounts to the lab to resolve. We then were able to work with the lab to put processes into place that would prevent those denials in the first place.
For example, some physicians were ordering a T4 and a TSH at the same time, but these could not be reimbursed because one could only be ordered based on the results of the other. Once we identified the root cause, quantified the dollars, and identified the physicians primarily ordering these tests, education and outreach resulted in this denial being reduced by more than 75 percent.
When working with specific departments or individuals to reduce denials, you need to ensure that you are reporting the actual loss, not the total dollars billed. So it is important that you have the 835 data and host transactions and adjustment codes. If you do not, someone can poke holes in the information you give them, and you will lose credibility and erode your ability to impact change throughout your organization.
Effective denial prevention requires a committed team approach that is enterprisewide, including the clinical areas. At Shore Health, we had a denial prevention team that evolved over time. Once our approach became more granular-and aimed at root cause analysis-we became the "Revenue Defense Team." The team-which included representatives from patient accounting, case management, medical records, coding, contracting, compliance, and patient access-set a hospitalwide goal of "zero tolerance" for revenue leakage.
The team's primary responsibilities were to review all first-pass rejections, denials, and final denial write-offs, as well as to identify the process improvement initiative that was deployed to reduce the rework, inefficiencies, and lost revenue to the organization.
When developing a Revenue Defense Team, you need to have adequate resources and follow a systematic approach. A program plan, or charter, should be established. This should define the purpose of the project, how it will be structured, and how it will be measured for success. The plan should also include the team's vision, objectives, scope, and deliverables, as well as the roles and responsibilities of stakeholders.
This is not a one-time, isolated initiative; this is a long-term commitment and an ongoing process that combines departmental efforts and tracks success against key performance indicators (KPIs). (For examples of revenue cycle KPIs, see the key indicators identified by HFMA's MAP project.)
Industry statistics indicate that 10 percent of denials are not preventable, but couldn't we say that all denials are preventable if we really dig into the true root cause and ensure they don't happen again?
Trending the reasons for denials and digging into the root causes are critical to your denial prevention efforts. A root cause analysis should be performed for all denials and categories to avoid erroneous assumptions about contributing factors of individual denials.
The coded reason on a remittance advice does not help providers identify the true cause of a denial-it is too generic and used inconsistently. For example, if you receive a denial for "no authorization," do you immediately presume that an authorization was not obtained and that there is a problem with your financial clearance process? I have made this assumption in the past. However, on reviewing such a denial at Shore Health, we identified that we did obtain authorization, but on the day of service, radiology either changed the original order or "added on" a test. Once we were able to identify the true root cause and quantify it into dollars lost, we worked with radiology to ensure that our financial clearance team is now notified when orders are changed. We can then modify the authorizations that day, resulting in limited denials moving forward.
When reviewing denials, you also need to have an action plan that quantifies the dollars lost, the root cause, and the results once process changes are made. It doesn't have to be complicated, but it must track your results and your recoveries so you can celebrate your successes and continue with your process improvement approach.
All denials require a similar level of scrutiny, and providers must be able to report these by location, physician, category, type, root cause, recommended resolution, and outcomes of your efforts.
By following these practices, our Revenue Defense Team at Shore Health System decreased first-pass denials by more than 70 percent, reduced the denial rate from 1.2 percent to 0.5 percent, and saved just under $1 million.
Many providers believe that denials are just part of the status quo-but they don't have to be. Denials can be prevented by using technology that can automate workflow and provide robust analytics, establishing a collaborative team approach to reduce denial rates, and determining the true root cause to improve processes.
Christine Fontaine, CHFP, CPAM, is vice president, revenue cycle solutions, OptumInsight, Eden Prairie, Minn., the former director of revenue cycle operations, Shore Health System, Easton, Md., and a member of HFMA's Maryland Chapter (email@example.com).
Publication Date: Wednesday, September 07, 2011
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Patient financial engagement is more challenging than ever – and more critical. With patient responsibility as a percentage of revenue on the rise, providers have seen their billing-related costs and accounts receivable levels increase. If increasing collection yield and reducing costs are a priority for your organization, the metrics outlined in this presentation will provide the framework you need to understand what’s working and what’s not, in order to guide your overall patient financial engagement initiatives and optimize results.
In this business profile, Doug Polasky, executive vice president at Xtend Healthcare, explains the importance of having sound workflow processes in a consolidated business office to ensure optimal performance and reduce costs.
No two patients are the same. Each has a very personal healthcare experience, and each has distinct financial needs and preferences that have an impact on how, when and if they chose to pay their healthcare bill. It’s no longer effective to apply static billing techniques to solve the complex challenge of collecting balances from patients. The need to tailor financial conversations and payment options to individual needs and preferences is critical. This presentation provides 10 recommendations that will not only help you improve payment performance through a more tailored approach, but take control of rising collection costs.
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Before launching an energy-efficiency initiative, it’s important to build a solid business case and understand the funding options and potential incentives that are available. Healthcare leaders should consider taking the steps outlined in the whitepaper to ease the process of gaining approval, piloting, implementing, and supporting sustainability projects. You will find that investing in sustainability and energy efficiency helps hospitals add cash to their bottom line. Discover how hospitals and health systems have various options for funding energy-efficient and renewable-energy initiatives, depending on their current financial structure and strategy.
Health care is a dynamic mergers and acquisitions market with numerous hospitals and health systems contemplating or pursuing formal arrangements with other entities. These relationships often pose a strategic benefit, such as enhancing competencies across the continuum, facilitating economies of scale, or giving the participants a competitive advantage in a crowded market. Underpinning any profitable acquisition is a robust capital planning strategy that ensures an organization reserves sufficient funds and efficiently onboards partners that advance the enterprise mission and values.
The success of healthcare mergers, acquisitions, and other affiliations is predicated in part on available capital, and the need for and sources of funding are considerations present throughout the partnering process, from choosing a partner to evaluating an arrangement’s capital needs to selecting an integration model to finding the right money source to finance the deal. This whitepaper offers several strategies that health system leaders have used to assess and manage capital needs for their growing networks.
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Yuma Regional Medical Center (YRMC) is a not-for-profit hospital serving a population of roughly 200,000 in Yuma and the surrounding communities.
Before becoming a ZirMed client, Yuma was attempting to manually monitor hundreds of thousands of charges which led to significant charge capture leakage. Learn how Yuma & ZirMed worked together to address underlying collections issues at the front end, thus increasing Yuma’s overall bottom line.
Kindred Hospital Rehabilitation Services works with partners to audit the market and the facility’s role in that market to identify opportunities for improvement. This approach leads to successes; Kindred’s clinical rehab and management expertise complements our partners’ strengths. Every facility and challenge is unique, and requires a full objective analysis.
As the critical link between patient care and reimbursement, health information enables more complete and accurate revenue capture. This 5-Minute White Paper Briefing shares how to achieve cost-effective revenue integrity by your optimizing HIM systems.
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How Lucile Packard Children’s Hospital Stanford increased payments received within 45 days by 20% and reduced paper submission claims by 70% by using ZirMed solutions.
The reasons claims are denied are so varied that managing denials can feel like chasing a thousand different tails. This situation is not surprising given that a hypothetical denial rate of just 5 percent translates to tens of thousands of denied claims per year for large hospitals—where real‐world denial rates often range from 12 to 22 percent. Read about how predictive modeling can detect meaningful correlations across claims denials data.
Emergency Mobile Health Care (EMHC) was founded to be and remains an exclusively locally owned and operated emergency medical service organization; today EMHC serves a population of more than a million people in and around Memphis, answering 75,000 calls each year.
Since the Physician Quality Reporting Initiative (PQRI) introduction, CMS has paid more than $100 million in bonus payments to participants. However, these bonuses ended in 2015; providers who successfully meet the reporting requirements in 2016 will avoid the 2% negative payment adjustment in 2018, so now is the time to act! Included in this whitepaper are implications of increasing patient responsibility, collections best practices, and collections and internal control solutions.
Getting paid what your physician deserves—that’s the goal of every biller. Yet even for the best billers, achieving that success can be elusive when denials stand in the way of success, presenting challenges at every turn. Denials aren’t going away, but you can learn techniques to manage and even prevent them.Join practice management expert Elizabeth W. Woodcock, MBA, FACMPE, CPC, to: Discover methods to translate denial data into business intelligence to improve your bottom line, determine staff productivity benchmarks for billers, and recognize common mistakes in denial management.
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Drive down costs while improving quality in a reform environment.
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Copyright 2016, Healthcare Financial Management Association.
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