Arizona Alliance for CHCs Conference · Overview –Components of an RCM Analysis ©2019...

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Arizona Alliance for CHCs Conference –Annual Finance TrainingTaking Revenue Cycle to the Next Level –Don’t Get Left Behind

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Create Opportunities

Learning ObjectivesAs we continually look for opportunities to improve revenue cycle performance, this interactive discussion will outline key technology and process improvement opportunities designed to ensure reimbursement remains healthy.• Improving Patient Access and Data Collection – Timely connecting the patient to accurate data

• Better Data Analytics to reduce denials via comparative peer data• Actively Managing Accounts Receivable through Efficient Technology Solutions

• Align revenue cycle activities, processes, data collection and performance with organizational strategic goals and direction

• Improving patient collection processes• Compliance Risk Assessment for Revenue Cycle Activities

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1. Overview – Components of an RCM Analysis

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What is Revenue Integrity• “Revenue Integrity is a journey and not a destination.”• “Google” Revenue integrity and you get 68,800,000 results.

– “As a holistic concept, revenue integrity is characterized by consistency of actions, values, methods, measures, principles, expectations and outcomes. Applied to the healthcare industry, revenue integrity is the achievement of operational efficiency, compliance, and optimal earned reimbursement.”

• “Integrity” – the state of being whole and undivided.• “System integrity” – The integrity of a system refers to the capability of performing correctly and as expected according to the original specification of the system under various adversarial conditions.

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What is Revenue Integrity• The National Association of Healthcare Revenue Integrity (NAHRI) states

that the basis of revenue integrity is to prevent recurrence of issues that can cause revenue leakage and/or compliance risks through effective, efficient, replicable processes and internal controls across the continuum of patient care, supported by the appropriate documentation and the application of sound financial practices that are able to withstand audits at any point in time.

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What is Revenue Reliability?• Revenue or Revenue Cycle Reliability is characterized by consistency of

actions, values, methods, measures, principles, expectations and outcomes. Applied to the healthcare industry, revenue reliability is the achievement of satisfied customers, operational efficiency, compliance, and optimal earned reimbursement.”– Revenue reliability includes the tenants of the NAHRI revenue integrity – as stated “is to prevent recurrence of issues that can cause revenue leakage and/or compliance risks through effective, efficient, replicable processes and internal controls across the continuum of patient care, supported by the appropriate documentation and the application of sound financial practices that are able to withstand audits at any point in time.

• Right Experience, Right People, Right Processes, Right Protocols, Right Time, Right Payment.

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Revenue Cycle Assurance Platform• Revenue Cycle Assurance Framework (RCAF) provides a set of tools that can be applied to meet the unique needs of an organization.– CLA collaborated with leaders in healthcare and revenue cycle management to develop the Revenue Cycle Assurance Framework (RCAF). RCAF is a certifiable revenue cycle assessment framework that scales according to the type, size, and regulatory requirements of an organization and its systems. RCAF enables healthcare organizations to tailor their revenue cycle control baselines to fit their specific needs.

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2. Technology

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Technology Can Make a Difference

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Functionality Technology Technology AdvantagePatient Access/Eligibility Patient Engagement Solutions

Precision Engagement software Virtual Health Coach software

Patient activation and empowerment. Using an individual's unique environmental factors, preferences, and habits to drive adoption of a recommended health approach.

POS/TOS Collections – Patient Responsibility Estimators

Patient Responsibility Estimators Patient check‐in kiosks or tablets

Enhances accuracy of eligibility verification while providing an estimation of patient responsibility and supports POS/TOS collections

Eligibility Verification Benefit Verification

Integrated Verification – PM systems Two‐sided benefits verification E‐Benefit Verification software

e‐Verification with auto‐entry into PM systems is standard. Systems that assist health plans for eBV and in parallel provides eligibility and benefits verification for providers.

Authorizations AI enhanced Authorization software AI enhanced Authorization request software can automate 90% of the authorization process and ensure required data supports the request

Documentation Efficiency and Accuracy Natural Language Processing/ Understanding – AI enhanced Voice Recognition

Integrated

NLP VR systems can capture documentation more efficiently, used to quality control documentation and alert concerns for quality reporting or authorizations

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Technology Can Make a Difference

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Functionality Technology Technology AdvantageCharge accuracy and completenessCharge slippage

Charge accuracy software Uncharged visit/service tracking

and trending System and clearinghouse edits

Documentation rules engine/ scrubbers verify accuracy and if dependent codes are billed with trending and AI. Identifies opportunities for Care Management billing

Claim Remit ReviewDenials Management

Remittance (837/835) analysis and benchmarking with integrated Smart Dashboards, KPIs and reporting.

Personalized Analysis Assistants

Analysis and benchmarking of claims data, PM and EMR scheduling, diagnoses and ordering data.

Payment Accuracy Clearinghouse tools PM/ Billing or ancillary software

Compares actual payments and trends to payer fee schedules loaded into the systems

Patient Collections (Back End) Propensity to pay systems Patient payment stratifiers Smart worklist and auto‐appeals

software

Analyze patient demographics, payment histories and provides estimates of chance of payment or amount patient will pay

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3. Maximizing Revenue Cycle Performance

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Pre‐VisitPre‐Visit

Scheduling / Registration

Eligibility Verification

Prior Authorization Processing

Referral Processing

Check‐InCheck‐In

Arrive Patient

Co‐pay and Deductible collection

Patient Payment Arrangements

VisitVisit

Encounter Documentation

Provider Dx coding and charge (CPT)

selection

Post VisitPost Visit

HIM / Coder Processing

Surgical Services

Clinic Services

Hospital Based Services

Track outstanding charges

Track incomplete documentation

Track charge lag

Paper Processing / Scanning / Indexing

Claims SubmissionClaims

Submission

Claim Scrubbing / Edits

Pre‐adjudication

Claim Submission

EDI edits / management

Inbound ProcessingInbound Processing

Mail Processing

Scanning / Indexing remits

Bank Deposit

EFT/ERA Processing

Payment Posting

Revenue Allocation

A/R Management

A/R Management

Claim Status

Denial Analysis / Follow‐up

Request for Information

Appeals and Resolution

Patient Statements

Patient Calls

Collection Letters

Patient Refunds

Conveyance / Small Balance write‐off

Transition to Collections

Revenue Cycle – Key Work Functions

Maximizing Revenue Cycle PerformanceFunctional Areas

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AccountFollow‐UpAccountFollow‐Up

Back-End FunctionsFront-End Functions

AppointmentScheduling

AppointmentScheduling

Patient Check‐inPatient Check‐in

Edit Resolution/ Claims SubmissionEdit Resolution/ Claims Submission

Payment PostingPayment Posting

Time‐of‐Service (TOS) Collections

Time‐of‐Service (TOS) Collections

Charge EntryCharge Entry

Coding/ Charge Capture

Coding/ Charge Capture

• Schedule appointments

• Make reminder telephone calls

• Gather demographic information

• Obtain insurance information

• Set expectations for payment

• Authorization

• Charges recorded from EMR

• CAC logarithms

• Apply CPT and ICD‐10 codes to each encounter

• Collect co‐pays

• Collect out‐standing balances

• Collect pre‐surgical percent of payments

• Collect self‐pay payments

• Arrange financial agreements

• Enter charges

• Adjust bundled charges

• Edits/ rules engine identify errors

• Submit primary claims

• Submit secondary claims

• Rework denials for payment

• Post all payments and adjustments

• Payment accuracy

• Deposit money in the bank

• Reconcile payments

• Write‐offs

• Answer patient inquiries

• Perform denials follow‐up

• Resubmit claims

• Issue refunds

• Days in AR

• Verify demographic information

• Verify insurance information

• Verify balances owed

Revenue Cycle Functional AreasRevenue Cycle Functional Areas

Each of the sub‐functions are highlighted to visually indicate performance levels:Green = good, Yellow = caution, Red = poor performance.

Revenue Cycle – Functional Areas

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60% Impact!

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Maximizing Revenue Cycle Performance Front End

Front‐EndOperationsFront‐EndOperations

SchedulingScheduling

Arriving PatientsArriving Patients

Co‐Pay CollectionCo‐Pay

Collection

Patient Chart Access


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Arriving Patients

• Consistency of check‐in process at each practice.

• Reliance on paper processes.

• Training sites for new staff at busiest practices.

Scheduling

• Telephone triage at front desk, which interrupts other front desk tasks.

• No true open‐access scheduling.

• Lack of monitoring of no‐shows and cancellations.


• Scanning vs. manual updating of information (e.g., insurance cards).

• Access to other databases and unscanned paper charts.

• Reliability of servers.

Co‐Pay Collection

• Tracking of payments/ use of “cash drawer” function.

• Standardization and consolidation of batching process.

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Billing Model Description Advantages Disadvantages

Centralized The majority of billing functions are completed in a central

business office (CBO).

• Economies of scale.• Consistency.• Dedicated expertise.• Standardized reporting and

monitoring.• Opportunities for enhanced IT

systems/resources.

• Increased physician billing and response lag.

• Potential for “not my job” mind-set from front-end staff.

Hybrid Some functions (e.g., coding, charge capture/entry, co-pay

posting) are completed at the site of service, while remaining

functions are completed at the CBO.

Best of both worlds. Requirement of additional training and reporting/control tools.

Decentralized The majority of billing functions are completed/managed at the

site of service (i.e., each practice maintains a small business

office).

• Site-level control.• Close relationship with patients

and physicians, creating “ownership.”

• Prompt resolution of physician-driven errors.

• Disparate standards and processes.

• Staffing inefficiencies.

Outsourced Functional areas (typically back-end functions) are managed by a

third party.

This model enables the organization to focus on core competencies (e.g., patient service).

• Third parties are not likely to “care” as much for your patients.

• There is a premium on billing services.

When considering physician billing, members of leadership must identify the degree to which they want to “manage” professional revenue cycle operations.

Deg

ree of Adm

inistrative Invo

lvem

ent

Maximizing Revenue Cycle PerformanceBack End and Billing

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4. Revenue Cycle Dashboards

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“What Gets Measured, Gets Managed”– Jack Welch

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Key Metrics and DashboardsManagement’s Role – DashboardA dashboard is an excellent way to follow key performance indicators and important financial benchmarks within your practice.• This will allow you to seamlessly track financial information, practice quality measures, visit information, and patient satisfaction results.

• A dashboard is designed to track important profitability metrics like patient arrivals, canceled appointments, cancellation reasons, no‐show appointments, rescheduling/retention rate, and resource utilization.

• It also shows relevant financial data, including gross charges, payments, contractual adjustments, days in accounts receivable (A/R), collections rate, and missing charges.

• Patient satisfaction data can also be incorporated into a dashboard to allow analysis against financial, appointment, referral, and demographic practice results.

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Key Metrics and DashboardsPart 1

Metric Purpose Value Calculation

Days in A/R Trending indicator of overall A/R performance.

Indicates revenue cycle efficiency.

A/R divided by averagecharges (gross or net).

A/R Over 90 Days Trending indicator ofreceivable collectability.

Indicates revenue cycle’s ability to liquidate A/R.

A/R over 90 days divided by total A/R.

Net Collection Percentage/Bad Debt Percentage

Demonstratescollectability of possible

collections.

Indicates collectible portion and bad debt.

Net collections divided byadjusted charges.

Cash Collections Trending indicator of converting charges to

cash.

Pays the bills. Total payments (all sources).

Self‐Pay/Patient‐Responsible Portion of A/R

Trending indicator of A/R portion, which is self‐pay

versus insurance.

Demonstrates self‐pay portion of total A/R.

Self‐pay A/R divided by total A/R.

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Remit Velocity is the latest in intuitive analysis to accurately finding delays in the RCM processes.

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Key Metrics and DashboardsPart 2

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Metric Purpose Value Calculation

Payor Mix Charges by payor mix. Indicates portion by payor. Each payor’s charges divided by total charges.

POS Collections Trending indicator of POS collection efforts.

Accelerates cash collections and reduces collection

costs.

POS payments divided by total payments.

Clean Claims Rate Trending indicator of claims data.

Indicates quality of data collected and reported.

Number of claims that pass edits divided by total claims

submitted.

Credit Balance Percentage

Tracking of credit balances for compliance and patient

refunds.

Indicates total credit balances.

Total credit balances dividedby total A/R.

Days in Total Discharged Not Final Billed (DNFB)

Trending indicator of claims generation process.

Indicates revenue cycle performance and can

identify performance issues impacting cash flow.

Not final billed divided by average daily charges.

Customer Service Calls Tracking calls from patients. Indicates number of calls and relation to number of

patient statements generated.

Calls taken divided by calls presented (opposite of abandonment rate).

WA

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WAJ4 I like a different definition Number of claims that are returned fully paid divided by total claims. Can we add a line for line item denial rate?Werner, Anthony J, 2/24/2019

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BI Dashboard Example

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Payment Velocity by Days

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The remittance velocity rate of 88.94% of collections in the first 90 days compared to state (94.94%) and national (93.9%) peers reflects issues in accuracy and timeliness that are causing slower collections.

Payment Velocity is a performance indicator for the effectiveness of the speed of collections, or the percent of collections in 30 day increments from the Date of Service.

62.1%

75.2%

68.7%

19.5%

16.0%

20.3%

7.3%

3.8%

4.9%

50% 60% 70% 80% 90% 100%

SMG

State

Nat.

Remittance Velocity 2018

0‐30 31‐60 61‐90

62.10%

81.62%

88.94%94.02%

96.96%98.17%

99.95%

75.21%

91.19%94.94%

96.93% 98.11%

98.86%

100.00%

68.67%

89.00%

93.90%96.23%

97.53%

98.40%

100.00%

60%

65%

70%

75%

80%

85%

90%

95%

100%

105%

110%

0‐30 31‐60 61‐90 91‐120 121‐150 151‐180 181+

Cumulative Payment Percent in Days

SMG State Nat.

Comparable data from May 2018 – July 2018 CLA Intuition RCA ‐ Titan Comparative Data.SMG = Sample Medical Group

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Revenue Cycle – Staff Processing Time (example)

The SMG staff processing time to file, is consistently slower than state and national peer rates. Payer processing times for the four largest payers (Medicare, BCBS, Medicaid & UHC) are slower than the same state and the national payers.

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Staff Processing Time (days) is from the Date of Service (DOS) to the date the claim is filed with the payer. Payer Processing Time is from the date of payer acceptance until a response is sent back by payer.

This graph provides a comparison with state and national peers.

Comparable data from May 2018 – July 2018 CLA Intuition RCA ‐ Titan Comparative Data.

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1114

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2325

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10

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25

30

35

Days

Staff Claim Processing Time

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131518

10 1014

915

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121418

12 1016

915

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30

40

50

60

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Days

Payer Claim Processing Time

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Revenue Cycle – Staff Processing Time (example)

The net result of both slower Staff and Payer processing times are slower average Total Processing than the state and national payers. Only Humana, Tricare and Cigna have

better Total Processing Times than peers.

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Total Processing Time (days) is from the Date of Service (DOS) to the date a response is sent back by payer. This graph provides a comparison with state and national peers.

Comparable data from May 2018 – July 2018 CLA Intuition RCA ‐ Titan Comparative Data.

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35

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30 32

6065

2225

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24 2227

3336

42

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36

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31 33

42 43

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60

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MEDICARE UHC BCBS HUMANA AETNA TRICARE MEDICAID OTHER CIGNA

Total Claim Processing Time

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Accounts Receivable Summary – Example

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Targets => > 60% > 90% < 42Gross Coll Net Coll AR

BEGINNING ENDING Monthly Monthly DaysDATE A/R CHARGES PAYMENTS ADJUSTMENTS A/R % % 3 month avg

2013Jan-13 325,196 17,537 750 11 341,972 4% 4%Feb-13 341,972 98,964 13,000 6,614 421,322 13% 14%Mar-13 421,322 79,078 33,270 25,026 442,104 42% 62%Apr-13 442,104 92,857 43,726 30,465 460,770 47% 70% 153.1May-13 460,770 73,738 50,340 38,061 446,107 68% 141% 163.4Jun-13 446,107 98,019 39,135 35,770 469,221 40% 63% 159.6Jul-13 469,221 87,641 46,598 51,403 458,861 53% 129% 159.2Aug-13 458,861 107,124 41,237 25,811 498,937 38% 51% 153.4Sep-13 498,937 154,500 45,391 27,212 580,834 29% 36% 149.7Oct-13 580,834 241,850 109,203 79,470 634,011 45% 67% 113.3Nov-13 634,011 168,523 89,154 68,526 644,854 53% 89% 102.7Dec-13 644,854 173,783 103,941 63,350 651,346 60% 94% 100.42014

Jan-14 651,346 205,360 102,027 72,696 681,983 50% 77% 112.1Feb-14 681,983 171,993 72,159 51,533 730,284 42% 60% 119.3Mar-14 730,284 132,665 94,268 84,960 683,721 71% 198% 120.7Apr-14 683,721 180,066 123,636 55,925 684,226 69% 100% 127.0May-14 684,226 162,858 88,308 96,436 662,340 54% 133% 125.3Jun-14 662,340 150,064 84,281 55,641 672,482 56% 89% 122.8Jul-14 672,482 169,964 98,350 52,384 691,712 58% 84% 128.9Aug-14 691,712 238,048 139,716 83,747 706,297 59% 91% 113.9Sep-14 706,297 240,863 125,205 80,485 741,470 52% 78% 102.8Oct-14 741,470 212,365 124,301 76,657 752,877 59% 92% 98.0Nov-14 752,877 299,218 131,972 91,524 828,599 44% 64% 99.1Dec-14 828,599 281,405 136,843 75,520 897,641 49% 66% 101.92015

Jan-15 897,641 226,364 132,880 99,853 891,272 59% 105% 99.4Feb-15 891,272 276,121 165,315 100,968 901,110 60% 94% 103.5Mar-15 901,110 303,213 208,581 137,728 858,014 69% 126% 95.8Totals 325,196 4,644,181 2,443,587 1,667,776 858,014 52.6% 82.1%

12 MO AVG 759,479 228,379 129,949 83,906 774,003 56.9% 89.9% 102

3 MO AVG 896,674 268,566 168,925 112,850 883,465 62.9% 108.5% 99

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Revenue Cycle Scoreboard – Example The Practice

Revenue Cycle Scorebored

2017 Jan. Feb, March April May June July Aug. Sept. Oct. Nov. Dec.Charges 519,480$ 662,676$ 568,614$ 470,575$ 525,880$ 482,428$ 483,260$ 455,224$ 532,442$ 499,123$ 505,212$ 441,332$ Collections 375,161$ 372,012$ 392,814$ 321,128$ 302,726$ 320,591$ 300,878$ 306,121$ 320,227$ 345,896$ 321,327$ 329,114$ Adjustments 234,661$ 181,840$ 255,680$ 283,664$ 241,424$ 221,100$ 222,798$ 215,662$ 208,473$ 249,079$ 233,077$ 255,081$ Receipt Adjustments (Refunds) 4,844$ 5,450$ (12,548)$ 6,038$ 5,232$ 3,283$ 2,043$ 3,308$ 2,051$ 3,908$ 2,323$ 3,309$ Net Change to A/R (85,497)$ 114,274$ (92,428)$ (128,179)$ (13,039)$ (55,980)$ (38,373)$ (63,251)$ 5,793$ (91,944)$ (46,869)$ (139,554)$ Gross Collection Percentage 72% 56% 69% 68% 58% 66% 62% 67% 60% 69% 64% 75%Net Collection Percentage 117% 84% 114% 129% 103% 112% 108% 115% 99% 119% 110% 132%Total Scans 4,234 4,472 4,272 3,812 4,102 3,923 3,798 3,771 4,256 3,899 3,921 3,724Net Revenue/Scan $88.61 $83.19 $91.95 $84.24 $73.80 $81.72 $79.22 $81.18 $75.24 $88.71 $81.95 $88.38Total A/R 1,067,314$ 1,181,588$ 1,089,160$ 960,981$ 947,942$ 891,962$ 853,590$ 790,339$ 796,132$ 704,188$ 657,319$ 517,765$ Credit Balances (190,745)$ (190,745)$ (190,745)$ (190,745)$ (174,802)$ (173,442)$ (175,876)$ (182,003)$ (165,833)$ (161,324)$ (160,332)$ (154,923)$ Corrected A/R (With Credit Bal Added) 1,258,059$ 1,372,332$ 1,279,905$ 1,151,726$ 1,122,744$ 1,065,404$ 1,029,466$ 972,342$ 961,965$ 865,512$ 817,651$ 672,688$ Total A/R – Over 120 Days 654,343$ 592,302$ 572,323$ 555,232$ 534,498$ 476,341$ 488,874$ 375,023$ 277,923$ 253,434$ 233,454$ 171,192$ Total A/R – Over 120 Days Percentage 52.0% 43.2% 44.7% 48.2% 47.6% 44.7% 47.5% 38.6% 28.9% 29.3% 28.6% 25.4%Days in A/R 74 63 68 74 65 67 65 65 55 53 49 46Denials – # 124 110 99 101 79 144 100 75 89 91 79 85Elect. Filing Success Rate 94% 97% 98% 99% 99% 99% 99% 99% 99% 99% 99% 99%Elect. Claims Percentage 97% 98% 98% 96% 97% 97% 99% 98% 96% 99% 97% 99%Self-Pay Collection Percentage 21% 22% 22% 20% 21% 21% 23% 22% 20% 23% 21% 23%Coding Lag Time 1 Day 1 Day 1 Day 2 Days 1 Day 1 Day 1 Day 2 Days 1 Day 1 Day 1 Day 1 DayBilling Lag Time 5 Days 5 Days 5.7 Days 5 Days 5 Days 5 Days 5.5 Days 5 Days 5 Days 5 Days 4.5 Days 5 Days

This is a simple example of a scoreboard that can be used to create monthly accountability.

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4. Denial Tracking Case Study

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Denial Tracking Why We Track Denials

• Tracking denials helps identify trends within the practice.– Find system issues that need to be resolved.– Identify concerns regarding payors trends and reimbursement.– Provide educational opportunities for both providers and staff.

• Tracking denials from various sources will offer different representations regarding the claims.– EDI (system scrubber, clearinghouse, and payor) denials.– Payment posting.– Insurance specialists (follow‐up).

• It is important to provide feedback to staff and providers with education regarding denials.

In reviewing a practice’s EOBs, there are always denials for patient eligibility, medical necessity, diagnosis coding, etc.

Improving the clean claim percentage can save significant time in the revenue cycle process.

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WAJ5

Slide 28

WAJ5 I believe we should state line item denials vs claim denials.Werner, Anthony J, 2/24/2019

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Overall Denial Rate Comparison

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The current denial rate represents approximately $26,262,000 of denied charges out of $352,457,513 of total billed for Aug 2017 through Jul 2018.

Comparable data from August 2017 to July 2018 CLA Intuition RCA ‐ Titan Comparative Data.

6.03%

12.64% 12.90%

0%

2%

4%

6%

8%

10%

12%

14%

SMG State National

Denial Rate

SMG State National

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Denial Tracking Insurance Denial Definitions• Referral/Pre‐Authorization – This denial is for managed care plans that require

a referral or surgeries/services that require a pre‐authorization, yet one was not obtained.

• Untimely Filing – This denial usually occurs when a claim is filed past the insurance company’s filing deadline (the cause should be identified).

• CLIA/Notes Required – This denial refers to the CLIA number required on Medicare claims for lab services. This would be a system issue and needs to be addressed. Notes required means that post‐op notes or office notes need to be submitted before payment will be made.

• Bundled/Modifier/Global – A bundled service is when one code is part of another service; correct coding for that claim needs to be researched. “Modifier” notes that the modifier may be missing or incorrect. “Global” means a service is performed during the global period and needs to be researched.

• Units/Description – Units are incorrect or missing. A description is needed for the service.

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Denial Tracking Insurance Denial Definitions (continued)• Not Medically Necessary – The practice or provider did not follow the

insurance company’s guidelines for payment. The payor’s policy needs to be accessed, and the patient’s diagnosis needs to be reviewed.

• Insurance Needs Information or Insurance Incorrect – The insurance company needs more information to process the claim. Insurance is incorrect, was terminated, or was not effective for that date of service.

• Primary EOB – A copy of the primary EOB needs to be sent.• UPIN/NPI Number or Provider Number – The UPIN/NPI number or provider

number is missing or incorrect.• Posting Errors – These include any posting error that caused the claim to be

rejected or denied.• No Record of Claim – The insurance company denies receiving a previous claim

or has no record of receiving a claim.• Incorrect CPT, Place of Service (POS), Type of Service (TOS), or Diagnosis (DX)

– An incorrect CPT (procedure code), POS, TOS, or DX was used on a claim.31

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Denial Tracking Gaps and Potential Solutions

Claim denials occur due to numerous

breakdowns within the revenue cycle.

Claim denials occur due to numerous

breakdowns within the revenue cycle.

Claim denials harm key financial performance

metrics.

Claim denials harm key financial performance

metrics.

Organizations can improve profitability

by lowering denial rates.

Organizations can improve profitability

by lowering denial rates.

Each denied claim costs an organization an average of $25 to $30. Minimizing denials and then focusing on the correct denials is imperative to maximize financial capabilities.

IT solutions are available to help organizations improve denials management.

• Ineffective front‐end processes, including authorization and demographic/ insurance information collection.

• Inaccurate or untimely coding processes.• Continual changes in payor requirements.

• Increase days in A/R.• Decrease gross/net collection rates.• Increase costs associated with billing and collections.

• Decrease overall denial volume.• Identify insurance underpayments and errors.

• Improve denial collection yield.

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Denial Tracking Gaps and Potential Solutions (continued)

Function Overview Vendors

Claim Scrubbing

• Rules-based software is designed to identify claim errors before sending them for processing.

• Claims needing additional attention are identified and placed in a work queue for further processing.

• NOTE: Many PM solutions contain scrubbing capabilities. However, solutions must be actively managed/optimized to ensure effective claims editing.

• Ingenix (now Optuminsight).

• AllegianceMD.• NueMD.• Various PM solutions.

Contract Management

• There are products designed to identify payor underpayments by comparing the expected value against the paid value.

• These allow organizations to seamlessly monitor payor compliance against contract terms.– Tables are configured within the solution to compare payor contracts against the

adjudicated claim.• NOTE: PM products typically offer capabilities to identify underpayments.

• Experian.• Optum Insight.• MPV.• Various PM solutions.

Denials Prioritization

• Software is designed to help staff arrange, prioritize, and monitor claim denials.• Products offer structured work queues to isolate common payors and denial reason

codes.• Software is used to streamline insurance follow-up work flows.

• Epic.• Allscripts.• Greenway.• NextGen.

Organizations manage denials by focusing on various components within the revenue cycle, including reducing denials volume and continually optimizing collections practices.

Although products exist to offer assistance with minimizing claim denials and streamlining follow‐up, most PM solutions will possess similar capabilities if implemented effectively.

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5. Findings

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Revenue Cycle – Unexpected Denials

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SMG benchmarks slightly better than the CLA Orthopedic group average and substantially better than the State and National all group averages. The comparison shows opportunity remains for SMG.


4.23%

5.85% 6.03% 6.18%7.28%

12.19% 12.64% 12.90%13.90%

16.40%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Orthopedic Group Unexpected Denials

D J SMG Avg C M St. Nat. F R

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Reviewing unexpected (avoidable) denials, by denial type, provides insight to specific causes of delayed payment or even non‐payment.

3.2%

Coding, 18.2%

Credentialing, 10.5%

Eligibility, 19.1%

3.5%

Missing Info, 31.8% 4.7%

3.1%

Percent of Denials by Category (Count)

COB Medical Necessity Process Timeliness

3.3%

Coding, 22.1%

Credentialing, 8.1%

Eligibility, 18.2%

3.0%Missing Info, 29.1% 5.6% 4.0%

Percent of Denials by Category ($$)

Authorization Medical Necessity Process Timeliness

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Although SMG’s overall denial rate is substantially lower than state peers, comparing SMG to state peers by denial category provides a view to opportunities.

Denial Count Totals Denied Billed Sum of Rework Cost Denied Count @ St. Rate Denied Dollars @ St. RateAuthorization 1,643 $1,388,897 $41,075 1,701 $1,530,675

COB 2,732 $993,872 $68,300 2,434 $857,961

Coding 14,883 $5,237,137 $372,075 13,632 $4,198,074

Credentialing 5,462 $993,410 $136,550 5,265 $1,001,971

Documentation 151 $52,864 $3,775 168 $59,613

Eligibility 9,693 $2,359,409 $242,325 7,719 $1,812,487

Experimental 372 $354,994 $9,300 394 $376,934

Medical Necessity 1,675 $2,195,651 $41,875 1,644 $2,123,461

Missing Info 17,850 $7,554,713 $446,250 17,214 $7,035,273

Process 6,184 $1,222,883 $154,600 3,072 $726,331

Timeliness 2,081 $1,213,841 $52,025 2,213 $1,199,764

Grand Total 62,726 $23,567,670 $1,568,150 55,456 $20,922,545


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Reviewing unexpected (avoidable) denials, by denial type, provides insight to specific causes of delayed payment or even non‐payment.

Authorization, $745,649

Eligibility, $520,750

Coding, $269,459

Missing Info, $643,208

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

0 50 100 150 200 250 300

Bille

d & Den

ied

Denial Count

Authorization COB Medical Necessity Process Timeliness Experimental MUE

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Although SMG’s overall denial rate is substantially lower than state peers, reducing denials to state peer rates for Coding, Eligibility Missing Info and Process would generate $1 million of additional collections.


Denial Count

Totals Denied Billed

Sum of Rework Cost

Denied Count @ St. Rate

Denied Dollars @ St. Rate

Additional Collections

Rework Cost Difference

Authorization 1,643 $1,388,897 $41,075 1,701 $1,530,675

COB 2,732 $993,872 $68,300 2,434 $857,961 $10,688 $7,449

Coding 14,883 $5,237,137 $372,075 13,632 $4,198,074 $408,560 $31,277

Credentialing 5,462 $993,410 $136,550 5,265 $1,001,971 $4,916

Documentation 151 $52,864 $3,775 168 $59,613

Eligibility 9,693 $2,359,409 $242,325 7,719 $1,812,487 $215,050 $49,347

Experimental 372 $354,994 $9,300 394 $376,934Medical Necessity 1,675 $2,195,651 $41,875 1,644 $2,123,461 $779

Missing Info 17,850 $7,554,713 $446,250 17,214 $7,035,273 $204,244 $15,908

Process 6,184 $1,222,883 $154,600 3,072 $726,331 $195,244 $77,789

Timeliness 2,081 $1,213,841 $52,025 2,213 $1,199,764

Grand Total 62,726 $23,567,670 $1,568,150 55,456 $20,922,545 $1,033,785 $181,746

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Revenue Cycle – Denial Percentage by Specialization

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0%

5%

10%

15%

20%

25%

CLAOC Denial Rate State Denied Rate National Denied Rate

SMG’s overall denial rate is substantially lower than state peers for every specialty.

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Revenue Cycle – Denial Percentage by Specialization

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0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

OC Denied Rate

State Denied Rate

National Denied Rate

SMG Denial Rate

SMG’s largest service is Orthopedic Surgery at $172 Million total billed. With only 6.49% of all claims being denied SMG is preventing over $6 Million of denials when compared to the State rate.

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6. Patient Collections

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0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2007 2010 2012 2014 2017

12%

20%

30%

37%

42%

Patient Responsibility as a Percent of Total Revenues

Source: MGMA Practice Perspectives on Payments

Patient CollectionsGrowing Patient Balances

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Patient Balances – March 31, 2019

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Medical/Legal, 32.6%

Patient/Self‐pay, 16.3%

Medicare, 12.7%

Worker's Comp, 9.6%

BCBS, 8.3%

Medical Assistance, 7.3%

Health Partners, 5.8%

Commercial, 4.0% Medica, 3.4%

$188,364$211,596

$451,839

$84,707

$697,052

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

Current 31‐60 days 61‐90 days 91‐120 days 120+ days

Patient Accounts ReceivableMarch 31, 2018

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1* 31DAYS

Stmt1

RECOMMENDATIONS1. High Deductible and Private Pay sent first

statement as soon as balance indicated by the business office.

2. 30 Day Cycle utilizing cycle billing (4 cycles)3. Past Due Letters (Consistently after 2

statements)4. Patient Calls (utilize AR Reps) in Days 61-755. Turn over to Collections until after 2nd call6. Patients restricted from future services

once they are sent to collections

95% 75% 45% 25% <20%

Prior Collection Timeline Issues

*Day one is the first patient statement sent, Private Pay usually sent with next statement run after visit.

Stmt 2

Patient Collection Process Should Be:

Day 1 Statement 1

Day 31 Statement 2

Day 51 Letter 1

Days 61‐75 Patient Calls

Day 75 Patient Sent to Collections

61

Patient Calls

Private Pay and Patients with High Deductible Plans

15* 75

Stmt 1 Stmt 3

ProposedCurrent

Letter

51

45

45

Stmt 2

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Patient CollectionsBest Practices

• Understand the profile of the patient• Appropriately work with consumer‐directed healthcare and utilize text and web‐based collection efforts

• Set clear expectations• Ask for the money• Improve your statement process/patient portal• Go to the next level

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Patient CollectionsSet Clear Expectations

• Provision of financial policy – on Web site, in writing, etc.• Initial scheduling of visit, procedure, or surgery.• Collect an amount due toward the service provided. • Insurance verification and then following through.• Connecting the dots – Ability to know “all of the amounts due” by a patient.

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7. Internal Compliance

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Compliance Risk Assessment Outline• HIPAA• Documentation and Coding• Health Information Technology and HIT Security• Referral Risk ‐ Payers and systems continue to develop “narrow” or system specific health care plans that exclude providers not in the system

• Self‐Referral Risk• Reputational Risk• Unidentified Payments• Refunds• Segregation of Duties• Cost to Perform CBO Services

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Compliance Issues and Recommendations – Example

• Reduce patient opportunity to view screens where patient information is held – All clinical monitors should be examined from all perspectives to prevent patients from see

other PHI– Retrain staff to logout every time when stepping away from a computer that is in a hallway or

exam room– Front desk and check out desk have room for patients to view the EHR from multiple angles

• Patients checkout fee tickets should be monitored more closely by all staff– Risk of patients not been given or losing a checkout ticket which results in payments and

charges not being recorded – Patients setting a checkout ticket down and another patient picking it up is a risk of

unintentionally spreading PHI– Unassigned patient balances must be addressed and prevented by posting payments to patients

charts the moment they are collected

• Reduce patient identifiers being spoken in front of other patients by asking for a picture identification card

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Compliance – Segregation of Duties

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Segregation of duties is an important concept when it comes to internal controls. The concept focuses on having more than one person required to complete a task to prevent fraud and error.

Most business functions can be categorized into four types, which can be incompatible at times:

1. Authorization

2. Custody

3. Record Keeping

4. Reconciliation

Potentially Incompatible

Potentially Incompatible

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Risk Grid – ExampleHow does RCM impact Risk?

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Risk Type Probability Magnitude Risk Score NotesHIPAA Patient Confidentiality High Medium 6 Unsecure Terminals, PHI at Checkout

Reputational Risk Low High 5Document & Coding Compliance Coding Denials

High High 7 Higher level of coding related denials that expected, peers or CLA benchmarks

Financial Multiple Factors that can negatively impact the financial bottom line.

High Medium 6 Combination of factors as listed below including unmatched payments

Self Referral Referral to ancillary OC services like MRI and DME

Medium Low 4 Anti‐Kickback and self referral legislation continues to challenge practices

Physical Therapy Continuation of Services

Continuing PT services without a Re‐Evaluation or updated physician plan

of care and ordersLow Medium 5

Observation and data indicates a very low ratio re‐evals to initial evals and continuation of services

Referral Risk Referral Sources

High High 9

There is a high likelihood that the two main large system referrers may create their own Musculoskeletal Service Line and refer inside the system

Cost to perform functions High level of manual labor, paper processes and work arounds to

perform ciritical tasksHigh Low 3

Pre‐authorization, as an example requires substantial labor, while there are systems that automate 90%+ of the process

Refunds Not completing Insurance and Patient Refunds in a Timely Manner

High High 8 Not completing Insurance and Patient Refunds in a Timely Manner

Health Information Technology Multiple systems interfaced togetherMedium High 7

Multiple systems interfaced together and not able to provide the sophistication level required for SMG

HIT Security Many systems and "add on" ancillary systems from outside vendors High High 8

Many systems and "add on" ancillary systems from outside vendors increases the risk of external penetration

Have you evaluated your risk lately?

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Compliance – Strengths and Potential Risks (Example)

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Key Strengths Potential Risks & Opportunities1. Cash Collection & Reconciliation:

A. Strong daily controls and reconciliationprocess in place for both the front desk and business office

B. Cash is collected in cash drawers with receipts administered to each patient

C. All transactions are entered into Practice Management Software

2. Patient Health Information:A. Collection of patient information is done via

secure collection methods and verified at check‐in

B. Phone schedules are incentivized to prevent duplicate patient files

3. Eligibility Check & Payment Estimators:A. Patient estimators and eligibility checks are

used to collect charges at the time of service B. Patients are asked to pay balances and

charges every visit

1. Cash Receipts & Reconciliation:A. Segregation of duties between posting of cash receipts

and physical custodyB. Front desk employees should physically bring the

receipts they count to the business office2. Patient Health Information:

A. At Check‐out patient’s identity should verified before entering any information to the PM or EMR

B. Monthly checks should be conducted for duplicate patients and missing information

C. Patients should not be given a checkout ticket but instead be walked to checkout to prevent loss and self editing

3. Eligibility Check & Payment Estimators:A. Patients insurance card needs to be presented at every

visit to verify eligibilityB. Lack of system integrations are creating unassigned

payments C. When collecting payments after visits patients need to

present identity to each staff member

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CLAconnect.com

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Curtis Mayse, MBA, FACMPE, Principal(314) 406‐[email protected]

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