A frank assessment revealed the hospital’s six pain points, but hospital leaders transformed them into six positive goals.
At Richmond University Medical Center (RUMC), a 510-bed teaching hospital on Staten Island, N.Y., leaders were proud of the institution’s quality of care—but troubled by how it managed accounts receivable (A/R).
In 2012, they made some changes. The result is an increase in cash collections from 96 percent of revenue in 2012 to 105 percent in 2015. Clinical and administrative denial write-offs went from 2.99 percent of net patient revenue in 2012 to 1.06 percent in 2014 (2015 data are not yet available). The Medicare case mix index (CMI) has increased dramatically year-over-year for four years, resulting in a four-year revenue hike of more than $10 million.
How did RUMC do it? A frank assessment revealed the hospital’s six pain points, and the administration transformed them into six positive goals.
Reliable preauthorization. “Our old preauthorization process was very inconsistent,” says Rob Ren, RUMC’s vice president of revenue cycle and managed care. “That just wasn’t sustainable. As managed care pushes patients into the outpatient setting, admission denials are more common, and authorization protocols for common procedures continually change. We needed a more airtight process to expand preauthorization of outpatient procedures.”
To achieve this, RUMC eliminated paper booking sheets. The hospital adopted new central scheduling software that requires staff to capture all key information. Today, RUMC’s preauthorization process is less time consuming and more successful.
Clean registration flow. RUMC staff were not following the hospital’s registration protocol. Patients were admitted without accurate insurance information, and insurance eligibility was not verified.
New registration software modules have improved insurance checks and helped managers observe and train staff. An Advance Beneficiary Notice (ABN) module asks for details that help identify ABN triggers. A quality assurance (QA) module checks each record for errors and creates a queue of discrepancies for employees to correct. A scorecard tells managers each employee’s percentage of error-free registrations.
A newly created QA/trainer position focuses on helping staff improve their accuracy. “Training was key in front-end success,” Ren says. “Now that we can do denial reviews, our new QA/trainer identifies problems and trains, retrains, or disciplines staff.”
Higher case mix index. Richmond’s CMI was low. Were staff members capturing all the complications and comorbidities (CCs) and major CCs (MCCs)? Was the hospital’s documentation compliant, protecting it from future audits?
“Documentation is a key driver for CMI. Coders can’t code what isn’t documented,” Ren says.
Richmond established a clinical documentation team to help the hospital capture more specific diagnoses. The team improved coding software and trained staff to recognize CCs and MCCs.
“Clinical documentation specialists should be on the floors, querying current patient case details within two days of admission,” says Ren. “Physician buy-in and education are key. We’re also continually training staff to reduce future queries.”
New technologies aid documentation as well. Physicians dictate notes into the electronic health record (EHR), which converts the words to text. Billing software reads the EHR and suggests codes, which improves accuracy, saves time, and has aided the transition to ICD-10.
Well-managed denials and appeals. Reducing clinical denials was one of RUMC’s highest priorities, but the hospital had no system in place to achieve that goal. To lay the groundwork, the hospital created a central repository for denials that makes it easy to see when appeals are filed, overturned, or denied. A new joint operating committee began reaching out to the payers with the most denials.
“It hasn’t been an easy task, but building payer relationships has been key to turning things around,” Ren says. “In face-to-face meetings, medical directors and our senior staff go case by case to determine why cases were denied.”
Finally, to ensure that DRG coding is accurate and detailed, the hospital hired three DRG validators. Targeting vulnerable and high-cost DRGs, the validators check codes before billing to reduce denials and audits.
Increased A/R. RUMC discovered two primary reasons for denial of its claims: staff entering inaccurate information and lack of communication from payers on claims denying claims for erroneous reasons.
Another efficiency is a system that allows staff to see the information they need on one screen. They can click and call a payer, and the system records the conversation. The system also flags patients who may need financial assistance or payment plans,” says Angie Brown, senior vice president of client strategy, MedAssets, Saddle River, N.J.
Administrators can view a key performance indicator (KPI) dashboard to monitor claims on hold, discharged not final billed (DNFB), and receivable over 90 days. A denial management tool delivers standardized reports by payer, reason, and responsible area within the hospital.
See related tool: KPI Dashboard, Richmond University Medical Center
To address the payer problems, RUMC formed an A/R joint operating committee. It has quarterly in-person meetings with payers, who can waive denials or escalate claims on the hospital’s behalf.
Decreased cost to collect. Five years ago, RUMC’s outsourcing was overpriced and redundant. The hospital had a long list of vendors to contract, monitor, and manage.
“We outsource collections from final bill to bad debt. It allows the hospital to access an expanded talent pool and the latest technologies. But we hadn’t been comparing longstanding vendors to current market value,” Ren says. “By initiating an RFP [request for proposal]at the end of every contract, the hospital created competition that drives down fees without affecting quality. We’ve also negotiated lower fees by consolidating vendors.”
Staff productivity in revenue cycle areas such as registration and health information management (HIM) impacts the cost to collect, too. The hospital’s analysis of these areas yielded unexpected results, says Ren. “We always thought we were understaffed. By identifying low productivity as the root causes, we’ve been able to educate staff to deliver cleaner claims and decrease premium overtime,” he says. “Small changes like this are part of a larger picture. When all of these things are working as an efficient system, our accounts receivable reflect our success. And because so much coordination and oversight are built into our process now, we’re in a position to continually improve and adapt for the future.”
Erin Murphy is a freelance writer in the Philadelphia area.
Interviewed for this article: Rob Ren is vice president of revenue cycle and managed care at Richmond University Medical Center, Staten Island, N.Y.
Angie Brown is senior vice president of client strategy at MedAssets, Saddle River, N.J.
Forum members: What do you think? Please share your thoughts in the comments section below.
- Of these six focus areas, which do you see as the biggest problem in most hospitals?
- Do you think that the changes at Richmond University Medical Center are transferable to other hospitals? Are there barriers to these changes?