When it comes to managing the revenue cycle, David Kanzler takes a pragmatic approach-he outsources a good chunk of it. “The management of billing and collections has become so sophisticated and technical that it’s hard to justify doing it ourselves,” says Kanzler, the CEO and CFO of Hinsdale (Ill.) Orthopaedic Associates, a 25-physician group practice which provides a wide range of procedures including sports medicine, total joint replacements, hand surgery and spinal fusions.
Four years ago, Kanzler turned over all post charge-capture activities to Chicago-based Origin Healthcare Solutions. The practice codes its services, then hands over claims submission and related follow-up activities to Origin, explains Margarita Cuadra, revenue cycle director. “Billing gets more difficult every year,” Kanzler moans. “And payers come up with new and novel ways to reduce payments and deny claims. So I need to leverage the expertise of a company thinking about this 24 hours a day.”
In an industry laden with revenue cycle woes, Kanzler has plenty of company. While not everyone outsources the work to the extent Hinsdale Orthopaedic has, most providers bemoan what they describe as the growing complexity of managing the revenue cycle. The hurdles are many, from a proliferating number of payer edits-particularly from Medicare-that define the documentation required to justify payments to ever-increasing financial obligations being handed over to patients-obligations which providers must collect. Then there are disparate clinical and financial information systems.
Outsourcing the back-end of the revenue cycle is always an option. Many providers have no qualms about surrendering a chunk of their revenue to a firm well-versed in dealing with claims submissions, denials and appeals. But only so much can be outsourced. That’s why providers are increasingly revamping their workflows on the front-end of the revenue cycle to avoid downstream delays and denials. Talking with patients upfront about their financial obligations is a new segment of workflow for many, one that requires a cultural shift and newly defined staff roles.
In essence providers are taking a longitudinal approach to the revenue cycle and working more closely with the clinical departments whose documentation drives it. Some are consolidating their financial and clinical systems in an effort to streamline front-end charge capture. Others are using revenue cycle dashboards to monitor the cash flow and identify possible bottlenecks. No one finds it easy-and emerging fee-for-value payment models are adding more uncertainty to the entire revenue food chain.
Managing the revenue cycle is now front and center in the industry. But it wasn’t always that way, says Steve Matteson, vice president of Pittsburgh-based Simpler Consulting, whose services include revenue cycle analysis, workflow mapping and system implementations. “In 2009, after the financial crisis, everything changed,” he says. “Before then, faith-based providers did not want to talk about money, but today all our health care clients want to start with the revenue cycle. It can be very convoluted.”
Matteson usually spends a week just mapping out an organization’s revenue cycle workflows, documenting all the steps required and the staff involved. “The number of people, the amount of time, and the dollars involved are great,’ he says. “Clients don’t have the end-to-end view. Charge capture is a big source of leakage. CFOs worry about it, but they don’t know where the holes are.”
Orlando Health, an eight-hospital delivery system in central Florida, is among those providers taking an expanded view of the revenue cycle. “In the past we’ve focused on improvements in financial systems and processes,” says Tom Yoesle, chief operating officer, revenue management, at Orlando Health. “Now we’re looking at clinical systems and where we can improve data feeds and the numerous data elements” that drive reimbursement.
One major effort has revolved around revamping high-dollar order sets in such areas as cardiology and chemotherapy. Many claims wound up denied, and the revenue cycle staff had to focus on working the denials. Orlando Health is attempting to build in stronger medical necessity rules in its ordering process to either steer physicians to lower-cost (and covered) options or clarify the documentation needed to justify higher-cost drugs. “We are always looking at standard orders that spawn medical necessity issues, denials and appeals,” he says.
But all that work only reduces-not eliminates-the degree of difficulty, Yoesle emphasizes. “You can set up a great order set, but Medicare changes the rules on a dime,” he says, referencing the “edits’ that CMS regularly disseminates as part of its ever-changing landscape of documentation requirements and payment policies. Orlando runs an inpatient EHR from Allscripts, which feeds data to its registration and billing system from QuadraMed. Getting the systems in synch requires a high level of cooperation between clinical departments and the revenue cycle staff. “You have to bridge the knowledge gap between the revenue cycle and the clinical management,” he adds.
Yoesle says revenue cycle issues span both “low-hanging fruit,” or issues that are relatively easy to fix, and “great, big audacious ones,” namely big-ticket claims that wind up getting denied. Orlando Health is tackling both, he says.
The low-hanging fruit included expensive drugs ordered as part of infusion procedures. Physicians were ordering procrit injections for anemic cancer patients and those undergoing major surgery, among others, and they’re an expensive treatment that often isn’t covered. “Physicians might have ordered it in their practice and had it covered. But it is a different requirement when you are ordering the test to take place in the hospital,” Yoesle explains.
To handle a likely denial, Orlando began monitoring the scheduling of procedures using the drug and then giving feedback to physicians about how extra documentation would be required to meet medical necessity rules for the procedure.
Controlling outlays for big-ticket chemotherapy drugs has proven to be a tougher challenge, Yoesle says. To address the problem, Orlando revamped order sets used in chemotherapy and oncology. The pharmacy staff played a big role, in writing precise, bulleted information points to add to the order sets. The bullet points clarify the documentation needed to support given drugs and also suggest lower-cost alternatives. “Laying that out in a clean order set is crucial,” Yoesle says. Many of the chemo claims wind up being denied by Medicare. In a recent month, some $256,000 was denied based on medical necessity, or about 20 percent of the chemo claims, Yoesle estimates. “We did a great job modifying chemo orders and increasing communication between pharma, case management and physicians,’ he says. “But we were still seeing denials.”
The denials stemmed from the fact that chemo therapy treatment programs often span many months, up to a year. Thus, orders that had already been placed wound up being denied. Orlando is now analyzing patients in the course of treatment and working with their physicians to bolster documentation (such as providing more precise diagnoses in pneumonia cases) or to consider lower cost, but equally effective alternatives. “For Medicare patients, physicians must understand the requirements prior to ordering a specific drug therapy,” he says. “There might have to be testing that has to be done.”
Atlantic Health System, Morristown, N.J., uses a variety of I.T. applications to assure it is meeting Medicare edit requirements. With $1.3 billion in annual net revenue, Atlantic has a payer mix that is about 45 percent Medicare, 30 percent managed care, and the rest miscellaneous commercial, Medicaid and self-pay accounts, says Nancy Kaminski, corporate director, patient financial services. “Medicare is the most challenging; its billing edits change every year,” she says. “People say you don’t need to be a rocket scientist [to work the revenue cycle], but it’s quite complicated.”
Kaminski says her top revenue cycle challenge stems from the increasing volume of services rendered as the result of adding new physicians-Atlantic Health has 600 now-without corresponding growth in the number of staff dedicated to working claims. In addition, the health system added a new hospital last year, which had to shift its I.T. portfolio to Atlantic’s platform as a result. That transition alone represented a major revenue cycle challenge, as billing staff at the acquired hospital had to move to a centralized billing office and learn entirely new processes and policies. The transition took nine months, Kaminski says.
Atlantic Health relies on a patient accounting, clinical and financial suite of products from McKesson, as well as RelayHealth, a McKesson subsidiary, for additional claims scrubbing and then clearinghouse services when claims are sent to payers. Like Orlando Health, Atlantic Health is working to get departmental involvement in its revenue cycle processes, educating the clinical departments about documentation requirements before claims enter the revenue stream.
“Our goal is to have 90 percent clean claims,” says Kaminski, meaning the majority of claims would not hit snags in either the McKesson financial claims scrubber or its down-stream RelayHealth scrubber. Atlantic falls short of the goal, as many bills are held up at the first pass before they hit the Relay claims scrubber. Atlantic uses another McKesson tool, built into its financial management system, that can push edited claims back to the department before they drop into the revenue cycle department, Kaminski says.
Edits usually occur, she explains, when the diagnosis code does not support the medical necessity of the service. Other edits hold up claims for what Kaminski describes as “medically unlikely services,” such as two of the same lab test. “That would require a modifier attached to the charge,” she says. “That requires department input. The folks in the revenue cycle area don’t know if the patient should have had two of those tests.”
Educating staff across the continuum at a hospital-or even a group practice-is a common part of any revenue cycle overhaul. “There is not one part of the hospital that the revenue cycle doesn’t impact,” says Jill Stroot, director of patient access at Quincy, Ill.-based Blessing Health System, which runs a 350-bed acute care facility plus a critical access hospital in nearby Pittsfield. Blessing recently consolidated its clinical and financial systems, retiring a 17-year-old legacy financial system in favor of a single EHR and financial management package from Allscripts (prior to the consolidation, Blessing had just used Allscripts’ clinical documentation package).
The consolidation offered several workflow advantages, primarily by eliminating workarounds and manual data entry, says Stroot. The legacy financial system had not been updated substantially during its long run, adds Pam Shepherd, business informatics analyst. As a result, over the years, it became increasingly difficult to train new employees on the system, because they were accustomed to a Windows-environment with drop down menus. The legacy system was DOS-based, and required toggling between screens.
Now, the consolidated Allscripts system captures much more data automatically, such as observation hours, which flow directly from the clinical to the financial system. In the old set-up, observation hours-a key component of billing for some services-had to be calculated manually and then entered by hand, Stroot recalls. Observation hours calculations were error-prone, she adds, potentially resulting in both under- and over-payments, she adds.
A difficult task
The Allscripts system works in conjunction with an eligibility checker and cost estimator application from Passport. At the same time it consolidated its clinical and financial systems, Blessing implemented enterprise-wide changes in its approach to patient collections, looking to collect prior to visits for outpatient services and during visits for the ED. “The majority of patients want to know what a service will cost and if you have that conversation up front, it places them at ease,” Stroot says. “But it’s so difficult to calculate.”
The Passport cost estimator has helped, Stroot says. Blessing uses the tool primarily for a limited number of well-defined tests or procedures requiring a one-day stay only, such as a CT scan. The Passport application checks registration accuracy, secures eligibility information and reports back patient co-pays or, in the case of outpatient procedures, deductibles remaining to be met, says Stroot. Patients are informed of their obligations prior to the visit, an important workflow enhancement that leads to better patient relationships, she says. “We don’t want to let patients know they have a $2,000 deductible when they get here,” she explains. “That would only increase their anxiety.”
But for more complicated multi-day procedures, such as surgeries or hip replacements, trying to predict patient cost is all but impossible, Stroot adds. “There are too many variables and you don’t know what will happen during the procedure. But patients still want to know the cost.”
Sometimes outsourcing revenue cycle functions is the most cost-effective approach. Hinsdale Orthopaedic Associates had a major financial shock after its outsourced its billing and collections to Origin Healthcare Solutions: Turns out that several of its payers were not honoring the terms of their contracts. “We recovered over $2 million in underpayments,” says Kanzler the CEO/CFO, acknowledging he “did not have a sense” of the leakage.
The payers had loaded the wrong fee schedule in their claims systems, a mistake that Origin discovered upon analysis of the payments it was processing on behalf of the practice. Kanzler says the practice was forced to sue for settlements from two payers involved while a third payer admitted the error-but still took 18 months to ante up. The underpayments spanned two years’ of services, Kanzler says.
Capital Women’s Care, which offers obstetrics and gynecology services in Maryland, Virgina, and the District of Columbia, has also outsourced many revenue cycle functions. Based in Silver Spring, Md., the practice-which includes 143 physicians, nurse practitioners and midwives-runs a hybrid EHR/practice management system, from NextGen. Its billing partner, Practice Solutions, is a NextGen subsidiary. But Practice Solutions does more than claims submissions, follow-ups and appeals. It also manages Capital Women’s Care I.T. shop, providing help desk, training, implementations and upgrades. “They are our CIO,” says Redd. “We don’t want to be an I.T. shop. We want to focus on growth.”
Capital Women’s records some $100 million in annual collections, a chunk of which goes to Practice Solutions for managing the revenue cycle and I.T. operations. The outsourcing arrangement is very appealing to private practices looking to merge with Capital, Redd says. “They are tired of managing revenue cycle issues on their own. It is a challenge to find people and staff. They want to practice medicine-not spend time on administrative work. And you can’t generate money if you are not seeing patients.”
When a new group joins the practice, they receive EHR training and hand over their billing chores. A new group can be up and running, and getting paid within 30 to 60 days of joining, Redd says. Physicians and their staff are responsible for clinical documentation and charge capture, at which point, the outsourced firm takes over. A denial management system is part of the configuration. If documentation is missing, a task bar alerts the local practice administrator that something is missing. AR days remain under 20 for the practice-well below historic highs of 160 that predate the outsourcing arrangement, Redd says.
Aspen (Colorado) Valley Hospital has outsourced its billing and collections, but even so, the 25-bed critical access hospital-which serves many tourists-has been mindful of its revenue cycle operations on the front end, says Debby Essex, director of admissions. The hospital’s I.T. line-up includes a Meditech system for financial transactions, a document imaging system for clinical records, from TSG (called Galactica), and patient access tools from InstaMed. InstaMed’s suite includes an eligibility checker, a patient cost estimator, credit card transactions, and an online patient portal for payments.
Since 2007, Aspen Valley has made great strides in increasing the amount it collects from patients at the front end. In 2012, the hospital collected $3.7 million on the front end, compared with $1.5 million in 2007. “We are trying to collect patient payments upfront so the back office does not have to work that after the fact,” Essex says. In addition, the hospital revamped its discharge workflows, adding a financial counseling session before a patient leaves.
Revenue cycle staffers circulate the hospital, armed with iPads. As part of the discharge process, they review the patient’s bill and outstanding obligations, and set up a payment plan if needed, Essex says. The staff toggle back and forth between the Meditech system and the InstaMed screens to review pending charges and their anticipated insurance coverage. “We are trying to increase customer service,” Essex says. “Not have somebody with a hatchet trying to collect.” In 2012, the hospital collected some $400,000 through its portal, primarily post-discharge collections set up via patient payment plans through InstaMed.
Changing the culture around patient obligations has been challenging, Essex says. Collecting patient liabilities prior to service is a new workflow-and also a new experience for patients, she points out. “We are trying to educate staff so they can handle the conversation with every patient every time,” she says.
The ability to set up a payment plan for patients is a real plus for many providers-particularly in the era of expanding patient co-pays and deductibles. At Newark, N.J.-based Suburban Orthopaedic Medical Center, about one-fourth of the patients are on a payment plan, says Franco Rizzolo, practice administrator. The practice’s revenue cycle application arsenal includes software from Optum, which handles eligibility checks, tracks visits and charges, and handles clinical documentation. The Optum suite works in conjunction with InstaMed, its claims clearinghouse. The practice began using InstaMed 18 months ago, says Rizzolo. Prior to that, setting up payment plans was a headache. “We sent patients bills and then you chase them,” he says. “You can take a credit card number over the phone, but you can’t hold onto it.”
InstaMed has the necessary financial security clearances that enable it to hold and process credit card transactions, which the practice could not legally do, Rizzolo says. Now, patients give their credit card information via a portal link, and set up automatic deductions per their plan. “We are giving patients flexibility on how to pay-and they love that,” Rizzolo says.
Dashboards Keep Revenue Cycle in Focus-to a Point
When it comes to reporting revenue cycle metrics, Debby Essex adopts a proactive approach. Essex, the director of admissions at 25-bed Aspen (Col.) Valley Hospital, distributes a daily report to a wide variety of staff involved in the revenue cycle. These include people with responsibilities in scheduling, pre-certification, registration, discharge and billing. The idea, says Essex, is to reinforce the idea that the revenue cycle belongs to more people than just back-end billing staff. That’s especially true since Aspen Valley began five years ago a push to increasing patient collections at the point of service-rather until waiting after they had been discharged. “We are always trying to collect patient payment at the front end so the back office is not having to work that,’ she says.
Tools from InstaMed, which enable eligibility checking, liability estimations, and online payment plans, are part of the mix. Essex draws the report from both InstaMed and Meditech, the hospital’s financial information system. The report summarizes the number of procedures booked, month to date collections, projected collections, and similar data.
About 18 months ago, Essex broke down the numbers, not only by department, but by responsible staff within them. “The report shows everybody who touches a patient account in a non-clinical manner,” she says. The scorecard is completely transparent, meaning that every person on it can see the performance of every other person. That transparency, Essex says, creates friendly competition among the staff. In addition, the CFO sees the reports and often responds to them, calling out top performers by name.
“How often does the CFO pay attention to what someone at the front desk is doing?” she asks. “That person can feel like they make a difference.”
Dashboards can also offer insight into revenue dips and trends. Hinsdale (Ill.) Orthopaedic Associates, a 25-surgeon group practice, circulates a revenue cycle scorecard via its physician dashboard, says David Kanzler, CEO and CFO. The dashboard is provided by Origin Healthcare Solutions, a local company to which Kanzler outsourced much of the revenue cycle tasks to. The dashboard shows charges, payments, RVUs, AR days, procedure mix, payer mix, and collections versus budget, with breakdowns by physician. Physicians get monthly updates, Kanzler says.
Recently, one physician noticed that his revenue figures seemed off. Kanzler analyzed the situation, learning that a physician assistant had not been entering the billing charges correctly. The bill was going out under the assistant, not the physician, and the billing department would not know anything was amiss, since physician assistants do bill for some services. In this case, the physician was missing out on an office visit charge, Kanzler says. “Having the data allows things to be caught that would not necessarily trigger a red flag,” he says.
But analytics have their limits. At Orlando Health, an eight-hospital system in Florida, Tom Yoesle, chief operating officer, revenue management, has a number of financial dashboards at his disposal. One metric shows instances of patients in the “DNFB” category, discharged not final billed. These are patients who have left the hospital, but for various reasons have not had any claims filed. “The bills hold for various reasons,” Yoesle says. “Physician documentation, late charges, lack of insurance authorization. Understanding what an acceptable level of DNFB is is hard. We correct it every day, but we need a better prevention system.”
Yoesle says that the 200 FTEs in the central billing office do a good jump of jumping on claims that are excessively late. “But I am fearful that they are fixing the problem in 50 different ways. We need to address the systemic issues and use a consistent methodology. We need analytics to tell us what do next to fix the problem.”
The Revenue Cycle Uncertainty of the ACO Model
Debbie Redd wrestles with one big future tense financial question mark: bundled payments and other accountable care payment models. Redd, the CEO of Capital Women’s Care, says the group practice has made major headway in streamlining its revenue cycle workflows, thanks largely to an outsourcing arrangement with its EHR/practice management system vendor, NextGen. Based in Silver Spring, Maryland, the OB-GYN practice has a diverse payer mix, with nearly half of patients under a Blue Cross plan, with United, Aetna, and Cigna in the mix as well. The practice collects some $100 million annually, and keeps its AR days below 20.
But Redd is nervous about what the world of accountable care may hold. “No one really knows what will happen,” she says, adding that the practice has no performance-based contracts as yet. But it is part of a national alliance of women’s care clinics, the USA Women’s Health Alliance, which is in preliminary talks with some payers about fee-for-value reimbursement plans. “The ACO model could upend the revenue cycle,” Redd says. “Maybe hospitals will start hiring people away from us. If they form an ACO and get a bundled payment, guess who gets to keep the money? They do.”
At the same time, Redd envisions a day when a large group practice such as Capital Women’s Care could essentially supplant health plans, and negotiate directly with employer groups for services. “Maybe we should get the premium,” she muses. “We could make it work.”