Section XV Revenue Cycle / Hospital • Summary of Recommendations • Project Approach and Methodology • Summary of Financial Opportunities [Confidential] • Overview • Organizational Structure • Pre-Arrival Services • Registration and Patient Access • Inpatient Coding and Documentation • Outpatient Coding/APC Analysis • Charge Master Review • Charge Capture Assessment • Denials, Adjustments and Write-Offs • Total Uncollectibles • Payment Variance • Cost to Collect • Unbilled and DNFB • Cycle Time • Aged AR • IT Systems and Functionality
Transcript
Section XVRevenue Cycle / Hospital
• Summary of Recommendations• Project Approach and Methodology• Summary of Financial Opportunities [Confidential]• Overview• Organizational Structure• Pre-Arrival Services• Registration and Patient Access• Inpatient Coding and Documentation• Outpatient Coding/APC Analysis• Charge Master Review• Charge Capture Assessment• Denials, Adjustments and Write-Offs• Total Uncollectibles• Payment Variance• Cost to Collect• Unbilled and DNFB• Cycle Time• Aged AR• IT Systems and Functionality
Summary of Recommendations
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Organization Structure• Reorganize revenue cycle organizational structure.• Implement a comprehensive centralized Patient Access model.• Establish system-wide Patient Access Council (PAC) with representation from UNC Hospitals and
UNC P&A. Pre-Arrival Services• Standardize demographic, insurance, clinical data elements collected during scheduling process.• Develop a Centralized Pre-Arrival Unit. • Create a “no authorization, no service” policy for elective patients.• Identify/track key performance metrics, expectations, targets for scheduling and pre-registration.Registration and Patient Access• Refine the current proposal to create registration hubs. • Begin immediate efforts to collect time-of-service payments for UNC Hospitals.• Establish accountability for registration data quality.• Create Patient Access Data Quality Improvement database to support the DQI program.• Continue to develop third-party payer educational opportunities in conjunction with UNC P&A.• Evaluate improving the productivity of the MACs in order to impact cost to collect opportunity.• Evaluate charity policy.• Evaluate implementing a formal process in the ED for evaluating non-emergent patient liability
prior to treatment/service.
Summary of Recommendations
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Inpatient Coding and Documentation• Continue implementing concurrent review and query process and provide education and feedback
on clinical documentation issues to physicians and coding staff in real-time.• Define protocols and policies for when Case Managers and Coders will query for additional
documentation for diagnoses and procedures. Develop policies collaboratively with physician liaison(s) from service areas, and determine roles and responsibilities.
• Develop comprehensive educational strategy to address documentation opportunities.• Implement a second level review process of all records with a sign or symptom DRG, DRGs
without a CC and DRGs on the OIG focused review list.Outpatient Coding APC Analysis• Consider focused rebilling initiative for observation patients. • Review the process to identify and assign G0244 for Medicare observation.• Re-bill all claims where G0244 should have been billed.
Summary of Recommendations
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Emergency Department, Observation Infusions and Injections• Review process to bill for infusions and injections in the ED and observation setting.• Consider re-billing claims with missed charges.• Provide education to staff regarding charges for infusions/ injections in ED and observation setting.Emergency Department Levels• Provide education to ED nurses regarding the correct use of the ED facility level tool.• Review all ED facility low level charges when patient is placed in observation setting after ED visit.Charge Master Review• Conduct a comprehensive CDM Audit to identify CDM inaccuracies and revenue opportunities. • Address all issues identified by updating the codes, charges in CDM at levels below allowable fee
schedules and market rates, revenue code mismatches, and potential items missing from the CDM.Charge Capture Assessment• Initiate a focused retrospective audit on O/P services and L&D accounts to capture revenue losses
on claims with percent of charge base reimbursement. • Initiate a similar audit focused on concurrent accounts for optimization of revenue early in the
processing cycle and maximization of payer reimbursement with timely filing restrictions.• Identify and eliminate root causes for charge capture issues at a departmental level.• Expand the current Denial Management program to include all components of a robust Denial
Management Program.• Implement improved Patient Access processes that focus on proactively preventing “front-end”
denials related to financial clearance, medical necessity or authorization for service.
Summary of Recommendations
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Total Uncollectibles• Enhance upfront collections process. Establish goals for pre-service collections and design field
to capture co-pay/ deductible amounts for improved collections reporting.• Require prepayment for non-emergent, elective services.Payment Variance • Continue to focus efforts on the internal Payment Variance follow-up program. • Evaluate and enhance Siemens Contract Manager.• Improve process for implantable devices. • Increase coordination between Finance, Managed Care and Patient Financial Services (PFS).• Renegotiate to improve contracting terms and conditions around high-risk cases.• Identify and prioritize specific case types to renegotiate.• Reopen negotiations with payers, if possible.
Summary of Recommendations
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Cost to Collect• Review, redesign, and implement a productivity management system within revenue cycle.• Evaluate current vendor contracts, performance, cost and return. Determine if RFPs should be
submitted for competitive pricing and contract renegotiations.Unbilled and DNFB• Manage unbilled accounts to minimize the billing cycle from the date-of-service (DOS) to the final
bill.• Create and implement DNFB/Unbilled reports that exclude pre-bill edits to manage and monitor
this process on a daily basis.Cycle Time• Reduce average cycle time from DOS to bill date.
– When reducing cycle time from DOS, need to consider add on lab tests ordered by physicians that require time lags and reference lab testing and reporting"
• Perform detailed analysis on late charges, unmatched charges, claim scrubber edits, without sacrificing clean submission rate.
Aged AR• Prioritize workflow activities currently completed in the business office.• Focus on cash acceleration to reduce aged invoices receivable greater than 90 days old from
DOS.• Evaluate necessity of credit balance clean up project. • Implement process changes that will prevent future accounts from aging.
Summary of Recommendations
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IT Systems and Functionality• Leadership on both the revenue cycle and IT Team need to implement protocols for capturing and
addressing revenue cycle issues.• Evaluate and implement medical necessity software in conjunction with UNC P&A. • Optimize use of Resource Scheduling tool. Evaluate enterprise-wide scheduling to be used for
both UNC P&A and UNC Hospitals for potential purchase ASAP (2005-2006). • Evaluate the use of CT Vision as the denial management tracking and workflow system. • Expand the use of CT Vision and Sovera wherever possible to promote paperless revenue cycle
operations. • Evaluate current system purging criteria with UNC P&A. • Evaluate and confirm need for bi-directional query access to coding applications.
University of North Carolina Health Care SystemSection XV – Page 8
Project Approach and MethodologyAreas of Review / Focus
Our approach to revenue management improvement is focused on specific areas across the cycle. Key activities are as follows:Our approach to revenue management improvement is focused on speOur approach to revenue management improvement is focused on specific areas cific areas across the cycle. Key activities are as follows:across the cycle. Key activities are as follows:
Third-Party Follow-up
Rejection Avoidance
Transaction Posting
Appeals
Contract Management
Patient Access Scheduling
& Pre-Arrival
Financial Counseling
Charge Capture
& Coding
Utilization Management
HIM
Claim Submission
NCI’s RPM®
Key Activities:(1) Identify areas of net income
(revenue and expense) and balance sheet opportunity
(2) Identify recommendations, define the overall strategy and prioritize areas for improvement
(3) Set targets and assist management with execution and achievement of goals
Key Activities:(1) Identify areas of net income
(revenue and expense) and balance sheet opportunity
(2) Identify recommendations, define the overall strategy and prioritize areas for improvement
(3) Set targets and assist management with execution and achievement of goals
University of North Carolina Health Care SystemSection XV – Page 9
Project Approach and MethodologyAreas of Review / Focus
We have evaluated the following areas during our Revenue Management review:We have evaluated the following areas during our Revenue ManagemWe have evaluated the following areas during our Revenue Management review:ent review:
University of North Carolina Health Care SystemSection XV – Page 10
Project Approach and MethodologyAreas of Review / Focus
Our assessment consisted of both qualitative and quantitative activities:Our assessment consisted of both qualitative and quantitative acOur assessment consisted of both qualitative and quantitative activities:tivities:
Completed over 40 interviews with key management and staff personnelReviewed and analyzed greater than 200 accounts and registrationsCompleted over 15 detailed analyses focused on net revenue / cash opportunityEvaluated system functionality, conversion issues and process barriersAssessed productivity and resource capabilities
Primary Project Work Tasks
Patient registration, data quality and point-of-service cash collectionsBad debt / charity controlsClinical documentation Charge capture Denials management Business office process flow, performance and billing delays
Key Areas of Review / Analysis
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Project Approach and MethodologyProject Objectives
Our understanding of your objectives for the assessment were as follows:Our understanding of your objectives for the assessment were as Our understanding of your objectives for the assessment were as follows:follows:
• Utilize NCI to assess the overall revenue cycle (front-end, encounter management and back-end) to identify opportunities for net income and balance sheet improvement.
• Evaluate current revenue cycle performance, flow of key processes and information, results tracking and initiative planning.
• Develop recommendations to improve the organization’s financial position by enhancing revenue cycle performance and enabling ongoing stability through process and technological improvement.
• Ensure UNCH is positioned to implement the identified and prioritized initiatives and realize the associated net revenue and cash flow benefits.
UNC Hospitals Summary of Financial Opportunities
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The following pages are confidential and have been redacted:• UNC Hospitals Summary of Financial Opportunities -- Net Income Impact• UNC Hospitals Summary of Financial Opportunities – Balance Sheet Impact
University of North Carolina Health Care SystemSection XV – Page 13
Account follow-up conducted using payer-based and/or specialty based teams.
Denial reasons are standardized for all payers and posted to patient account upon receipt.
Claims returned from the editor/payer with errors are worked within 48 hours.
Bill edit capabilities are current and utilized to enhance claimsubmission.
Payers are billed electronically to the extent possible.
Feedback loops in place for front-end and other related areas (ancillaries).
UNCH has a 4-8 day bill hold, which is higher than industry averages of 2-3 days.
Payer-based teams perform account follow-up.
Denials are posted to the account upon receipt. Payer denial reasons are used.
Goal is to work edits within one to two business days and this is occurring based on management’s review. However, unbilled analysis shows significant cycle time opportunities.
UNCH uses SSI to scrub claims. SSI has automated bill edits which require a manual review by the billers.
Patient Financial Services submits electronic claims for approximately 94% of claim volume.
Denial information is communicated inconsistently, and accountability for addressing root cause issues is not clear. Recoveries are tracked.
Best Practice UNCH Key FindingDoesn’t Meet Meets Exceeds
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Assessment• The current revenue cycle organizational structure has some best practice components due to the
following reports to the CFO (see organizational structure on the following page):– Admitting, Outpatient Registration and ED Registration– Insurance Verification, Authorization and Medicaid Eligibility– Health Information Management– Patient Financial Services and Accounting
• Managed Care currently reports to the President.• On May 11, 2004, a proposal was endorsed by the UNCH Operations Council (IOC) to create a
Hub-based registration process whereby all hospital-based Patient Access functions would report centrally to the CFO. (Implementation target date for the model is October 4, 2004.)− The Hub-based model establishes a single management and accountability structure for
Registration by changing the reporting structure for the current decentralized areas.− The first phase of the registration Hub initiative does not include centralized scheduling or
staffing to perform pre-registration.− Concern has been expressed by a number of UNCH staff regarding a general lack of buy-in
and commitment for the Hub concept primarily due to degree of input sought and participation from key stakeholders during the design phase.
• “Leveling” of the following positions was of concern:− Medicaid Eligibility Counselor I and Medicaid Eligibility Counselor II− Patient Registration Representative and Patient Financial Services Representative
– Realign all core revenue cycle functions to report directly to the CFO (see organizational structure recommendation on the following page).
• Align Scheduling Data Collection oversight to Finance. – At minimum, Finance sets standards and holds others accountable.
• Align Insurance Verification/Authorization to Finance for all services (from Operations).• Align Registration/Admissions to Finance (from Operations).• Case Management should have a “dotted line” reporting relationship to Finance due to
the financial impact of clinical denials and pre-certification/authorization which they are accountable for. Clinical responsibilities often prevent a direct reporting relationship.
• Align Charge Capture oversight to Finance via Revenue Integrity (from Operations).– At minimum, Finance sets standards and holds others accountable.
• Implement a comprehensive centralized Patient Access model.– Re-establish commitment to Hub Registration model ensuring key stakeholders have
appropriate input into design and outcomes. Implement Hub model and roll-out.– Create a centralized Pre-Arrival unit by changing the reporting structure for the current
decentralized areas and consolidate, which will establish a single management and accountability structure for both areas.
– Create an accountability, training and monitoring process ensuring standards are applied and enforced throughout the Patient Access functions for centralized and decentralized areas.
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Align Insurance Verification/Authorization to Finance for all services (from Operations)
Align Registration/ Admissions to Finance (from Operations)
Align Charge Capture oversight to Finance via Revenue Integrity (from Operations)
Note: This organizational structure is inconsistent with that shown in the UNC P&A section because one represents the hospital and the other represents the UNC P&A.
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Recommendation• Establish system-wide Patient Access Council (PAC) with representation from UNC Hospitals and
UNC P&A. The primary purpose of the PAC is:− Discuss system policies and procedures related to Patient Access.− Create a coordinated Staff and Management Training program.− Determine technology/ tools that could be utilized across the health system.− Evaluate long-term strategic plans for coordinated Patient Access functions.
Responsibility• Chief Financial OfficerTimeframe• Second Quarter 2005 – Second Quarter 2006
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Assessment• Pre-Arrival – Organization, Structure and Staffing
– Hospital clinic and ancillary scheduling is decentralized.– Insurance verification is centralized for Hospital I/P, Day O/P Surgery, Cardiac Caths, and
high-dollar O/P procedures.• ~ 20 resources support the Insurance Verification and Authorization Unit, inclusive of 1
Lead. Three staff members are assigned to OB/Babies and one to Psychiatry.– A formal pre-arrival unit including verification, benefit validation, patient responsibility
notification, authorization/pre-certification and Case Management integration is not in place. – The Pre-Admission review function reports to PFS.– There are four review nurses covering the ED seven days per week.– Clinical Resource Management was recently reorganized, and reports to the SR VP for
Professional & Support Services. Bed Control reports to Nursing.• Pre-Arrival – Technology
– Siemens Resources Scheduling is used for all areas except the OR, which utilizes iPath.– Siemens INVISION/A2K is used for patient registration throughout UNCH.– Insurance Verifiers were recently given access to FMS (Financial Management System –
back end Siemens).– A nightly batch insurance verification process is scheduled to be implemented, using
Passport.
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– CPT codes or diagnosis codes are not required at time of ancillary scheduling.– Medical necessity is not reviewed at time of scheduling for O/P Ancillaries.– Elective patients are not routinely called by the hospital Patient Access department prior to
DOS.– A formalized/written “no authorization, no service” policy does not exist. This issue is
currently handled on a case-by-case basis driven primarily by the physician.– Real-time insurance verification is not routinely performed for unscheduled patients at time of
or prior to service.• Between August 2003 and July 2004, eligibility is the number one reason for initial
denials and accounts for 30% based on current payer balance (30,018 accounts totaling $48M).
– A formal mechanism does not exist to communicate time-of-service payments arrangements to front line registration personnel.
– Level of care is evaluated by a registered nurse prior to time of admission. • After the level of care is determined, cases are created in INVISION by the review
nurse. Initial days authorized are entered into INVISION by the review nurse.– Retrospective denials are addressed by the Pre-Admissions Manager.– Concurrent denials are appealed by Clinical Resource Management.
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Recommendation• Standardize demographic, insurance, and clinical data elements collected during scheduling
process.• Develop a Centralized Pre-Arrival Unit with the following responsibilities:
– Contact defined non-emergent patient population.– Verify insurance eligibility and benefits.– Obtain all necessary pre-certifications and authorizations.– Establish upfront time-of-service payment expectation with patient.– Integrate with Case Management.
• Require real-time electronic insurance verification for unscheduled patients.• Insurance should be verified prior to the time-of-service for all non-emergent patient services.• Create a “no authorization, no service” policy for elective patients.• Create necessary job tools for the pre-arrival process.• Identify and track key performance metrics, expectations, and targets for scheduling and pre-
registration.• Evaluate medical necessity/ABN software.Responsibility• Director, Patient Financial ServicesTimeframe• Second Quarter 2005 – Second Quarter 2006
University of North Carolina Health Care SystemSection XV – Page 24
UNC Hospitals Key Findings & Analysis ResultsRegistration and Patient Access
Assessment• Registration – Organization, Structure and Staffing
– UNC Hospitals has a total of 156 registration/clinic sites encompassing the various hospital ancillaries, hospital-based clinics and ambulatory care center responsible for ~300,000 visits annually.
– Highly decentralized reporting relationships.– Standards and expectations vary among the clinics and ancillaries.– Accountability is not clearly in place. Minimal controls over data quality and processes.
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UNC Hospitals Key Findings & Analysis ResultsCurrent Hospital Registration Model
Assessment• The following table shows the current 156 registration/clinic sites collapsed into 13 locations in the
proposed Hub-based model with corresponding estimated monthly volumes. The table also identifies the various Patient Access functions that are currently centralized.
DecentralizedCentralizedBothPlanned for future implementation
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UNC Hospitals Key Findings & Analysis ResultsProposed Hospital Registration Model
Assessment• The following table shows the proposed 13 registration sites and corresponding estimated monthly
volumes with changes in functional centralization.• There is significant opportunity to improve data quality and increase time-of-service collections by
implementing a centralized pre-registration unit, which is not planned in the initial phase.
*Estimated FTEs. Does not include resources needed to perform scheduling, pre-registration or insurance verificationDecentralizedCentralizedBothNot planned for first phase of HUB implementation
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UNC Hospitals Key Findings & Analysis ResultsRegistration and Patient Access
Assessment• Registration – Technology
– Sovera (imaging system) worklists are used within Patient Access. Examples include:• Patients with missing information for the Bedsiders.• Activities for the Insurance Verifiers from the bed request and scheduling queues.• Notification to Insurance Verifiers of any payer changes made by Registration.
• Registration – Process– Forms of patient identification (i.e., drivers license, work identification, etc.) are not required
at time of registration.– Patient identification cards are rarely scanned into Sovera.– Advanced Beneficiary Notices (ABNs) are not obtained at time of registration. In FY04,
medical necessity represented the primary reason for denial write-offs at 69,299 accounts valuing $3,090,102.
– Medicare Secondary Payer (MSP) forms are done consistently at time of registration.– According to the Director of Admitting, a MSP audit has not occurred within the last three
years.– Requests of patient payments at the time-of-service are not made with the exception of OB
Ultrasound and In Vitro. UNC Hospitals plans to ask for up-front payments in the near future.– A formal midnight census reconciliation process does not exist.
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UNC Hospitals Key Findings & Analysis ResultsRegistration and Patient Access
Assessment• Registration – Process
– “Bedsiders” are responsible for obtaining information from patients at bedside that was missed during the registration process. Currently, there are five “Bedsiders” during weekdays and two on weekends.
[Portions of the Assessment are confidential and have been redacted.]
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UNC Hospitals Key Findings & Analysis ResultsRegistration and Patient Access
Recommendation• Refine the current proposal to create registration Hubs.
– Quantify the financial opportunities associated with including the expansion of pre-registration in Phase I and create plan with timetables to realize benefits
– Facilitate design sessions with all key stakeholders to review and finalize hub plans to ensure the appropriate level of awareness, buy-in, and commitment.
– Create detailed implementation plans, with key activities, milestones, responsible parties…including addressing co-dependencies with UNC P&A, detailed staffing and re-allocation plans, technology requirements, retraining, etc.
• Scan patient identification and insurance cards at time-of-service.• Complete MSP Questionnaire during pre-arrival process for non-emergent patients.• Set policy and procedure regarding physician orders for changing patient status.• Evaluate and implement O/P medical necessity software prior to or at time of registration.• Begin immediate efforts to collect time-of-service payments for UNC Hospitals.
– Create procedures, train staff, implement.• Initiate a formal midnight census reconciliation process.• Review options to ensure patient interview privacy at time-of-service.Responsibility• Director, Patient Financial ServicesTimeframe• Second Quarter 2005 – Second Quarter 2006
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UNC Hospitals Key Findings & Analysis ResultsRegistration and Patient Access
Assessment• Navigant evaluated registration Data Quality by reviewing 200 accounts for specific patient
accounts for errors. The 200 accounts were inclusive of UNC Hospital and UNC P&A activity.– A total of 76 patient accounts (82% I/P and 18% emergency) were reviewed to assess
registration data quality specific to hospital-type patient activity.– Accounts reviewed had dates of service or admission date of September 30, 2004 or
October 4, 2004.– The account sample chosen was representative of the UNCH admissions/visits by financial
class for dates reviewed. – Each account was reviewed for 26 essential data elements using information from Siemens
INVISION.– Demographic and insurance information is validated in part by examining patient
identification and insurance cards.
[Portions of the Assessment are confidential and have been redacted.]
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UNC Hospitals Key Findings & Analysis ResultsRegistration and Patient Access
Assessment• Registration Data Quality
– A trainer is not dedicated to the Patient Access Department.– Registration data quality audits are not routinely performed in Patient Access with the
exception of Insurance Verification.– The formal Patient Access training process comprises two days of classroom systems-
oriented instruction.– Denial information is reported to the Director of Admitting for corrective follow-up action.– Address verification technology is not employed.– Single account creation controls have recently been implemented limiting the number of
accounts that can be created on same DOS.– Another indicator of registration data quality is return mail. NCI obtained January through
August 2004 data from UNC P&A AIS, which receives a feed from Siemens, where 20% of accounts had bad addresses.
– Predominant registration errors reported by the Manager of Insurance Verification are: • Name/Policy Number Mismatch• Middle Initial• Birthdates
[Portions of the Assessment are confidential and have been redacted.]
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UNC Hospitals Key Findings & Analysis ResultsRegistration and Patient Access
Recommendation• Establish accountability for registration data quality.• Develop an extensive Patient Access Data Quality Improvement initiative inclusive of:
– Identify departmental baseline performance.– Create comprehensive registration data quality training program.– Develop and define staff performance expectations.– Establish departmental data quality goals.– Routinely monitor and track staff data quality performance inclusive of feedback loops.– Hold Patient Access Managers and Registration staff accountable to ensure data quality
targets.• Dedicate one Trainer exclusively to the Patient Access Department.• Create Patient Access Data Quality Improvement database to support the DQI program.• Continue to develop third-party payer educational opportunities in conjunction with UNC P&A.Responsibility• Director, Patient Financial ServicesTimeframe• Second Quarter 2005 – Second Quarter 2006
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UNC Hospitals Key Findings & Analysis ResultsRegistration and Patient Access
Assessment• Financial Counseling
– A courtesy discharge process was recently initiated.– A formal process for evaluating self-pay patients for medical assistance and charity care
exists.• From July 1, 2003 to May 24, 2004, $61,674,986 of $77,059,026 self-pay dollars were
converted to Medical Assistance. This represents a conversion rate of 80%.• It was reported that there are nineteen staff members that support the Medicaid
Eligibility Unit in addition to three County Caseworkers. – There are two full-time cashiers and one part-time cashier at UNCH.– Patient receipts issued by the Cashier are manual.– Medicaid Eligibility Counselors (MACs) are assigned to the Emergency Department (ED)
with the following responsibilities:• Assess all self-pay patients.• Screen for potential eligibility.• Assist in the collection of deductibles and co-pays.• Obtain any missing information or signatures.
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UNC Hospitals Key Findings & Analysis ResultsRegistration and Patient Access
Assessment• Financial Counseling
– Based on interviews and feedback, the ED collection efforts are not significant.– Charity applications are processed by the Administrative Support Supervisor. Write-off
authority is as follows:• Below $5K – Charity Team Representatives• Above $5K – Administrative Support Supervisor or Admitting Director
– There is not a Financial Counselor in Radiology.– The Federal Poverty Level guideline for hospital charity is 200%.
• When patients are approved for charity care, all previous debt and future bills for one year qualify for write-off.
• Approved charity is written off automatically.– Patients are not consistently asked to sign waivers if authorization(s) are not obtained prior to
service.– It was stated that some managed care contracts stipulate that ancillary services must be
performed the same day as the clinic visit. – A financial clearance flag is not listed on ancillary schedules which increases the difficulty of
tracking and processing accounts that need further follow-up. – There is not a formal process in the ED for evaluating non-emergent patient liability prior to
treatment/service.
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UNC Hospitals Key Findings & Analysis ResultsRegistration and Patient Access
Assessment• Financial Counseling
– The time-of-service opportunity was calculated on average co-pay per visit in comparison with annual visits by patient type and payer mix.
– Based on NCI’s analysis, the estimated yearly goal for Patient Access time-of service payments should be approximately $4.8M.
• Time-of-service policies and processes have not been implemented across UNCH with the exception of OB Ultrasound, In Vitro, and Plastics.
• Time-of-service activities are divided among registration and financial clearance staff. • Based on our analysis, a significant opportunity exists by implementing time-of-service collection
efforts.
[Portions of the Assessment are confidential and have been redacted.]
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UNC Hospitals Key Findings & Analysis ResultsRegistration and Patient Access
Recommendation• Evaluate improving the productivity of the MACs in order to impact cost to collect opportunity.• Evaluate charity policy.
– Consider the charity write off authorization authority to include amounts over $50K to the director level and above $100K to the CFO level.
– Consider reducing charity coverage period from 12 months to 6 months.– Consider not automatically writing off amounts greater than $10K.– Clearly identify differences in how charity policy is defined between UNC P&A and UNCH.
• Initiate system generated receipts at time-of-service.• Establish Hospital Financial Counseling presence in Radiology.• Evaluate implementing a formal process in the ED for evaluating non-emergent patient liability
prior to treatment/service.Responsibility• Director, Patient Financial ServicesTimeframe• Second Quarter 2005 – Second Quarter 2006
University of North Carolina Health Care SystemSection XV – Page 37
UNC Hospitals Key Findings & Analysis ResultsInpatient Coding and Documentation
Assessment• NCI performed a Case Mix Index/DRG benchmarking analysis in order to:
– Analyze Case Mix Index and impacts resulting from physician documentation and/or coding outputs for I/P accounts.
– Compare UNCH DRG data and related reimbursement for the care that is provided to national MedPar data for comparison purposes.
• Comparative hospital case mix benchmarking (at 80th percentile nationally) indicates limited opportunity in improving documentation (CMI and CC Capture).
– Medical CMI (excluding Vents) of 1.0975 is above the 80th percentile benchmark of 1.0304 (UNCH is second nationally in Medicare medical CMI of hospitals with >500 beds).
– Medical CC Capture rate of 89.5% is above the 80th percentile benchmark of 86.6%.– Surgical CMI (excluding Trachs and Transplants) is below the benchmark of 2.6958.– Surgical CC Capture rate of 77.5% is slightly below the benchmark of 77.9%.
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UNC Hospitals Key Findings & Analysis ResultsInpatient Coding and Documentation
Assessment• In March 2004, UNCH implemented a concurrent clinical documentation improvement process
with the assistance of DRG Review Inc., training and utilizing case managers to query physicians concurrently.
– HIM reports initial improvement in physician documentation and decline in retrospective queries as a result of program.
– In July, due to reassignment of staff and resulting drop-off in concurrent review, HIM reported a significant increase in retrospective queries.
– Analysis of Medicare case mix during this period shows insignificant increase/decrease in case mix indicators since the reorganization.
[Portions of the Assessment are confidential and have been redacted.]
University of North Carolina Health Care SystemSection XV – Page 39
UNC Hospitals Key Findings & Analysis ResultsInpatient Coding and Documentation
Assessment• Inpatient Coding and Documentation – Healthgrades.com Sample
– Accurate and complete representation of all documentation components (diagnoses, procedures, co-morbidities, complications, patient conditions, etc.) contribute to the quality profiles for physician and hospital performance.
– Third-party organizations, such as Healthgrades.com, publish and make available quality/ outcome data that can misrepresent true quality performance if all documentation is not accurately and completely captured.
– Navigant has completed a summary ranking provided on the following page of UNCH versus other local area hospitals on ten specific procedures based on publicly available information from Healthgrades.com.
– Ongoing attention should be focused on quality/outcome profile in order to continuously review and monitor coding and documentation performance.
[Portions of the Assessment are confidential and have been redacted.]
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UNC Hospitals Key Findings & Analysis ResultsInpatient Coding and Documentation
Assessment• Inpatient Coding and Documentation – Healthgrades.com Sample
Aspiration Pneumonia
Back and Neck Surgery (except Spinal Fusion) Back and Neck Surgery (Spinal Fusion)
University of North Carolina Health Care SystemSection XV – Page 41
UNC Hospitals Key Findings & Analysis ResultsInpatient Coding and Documentation
Recommendation• Continue efforts on implementing concurrent review and query process to continually assess
areas for documentation improvement, and provide education and feedback on clinical documentation issues to physicians and coding staff in real-time.
• Define protocols and policies for when case managers and coders will query for additional documentation for diagnoses and procedures. Develop policies collaboratively with physician liaison(s) from service areas, and determine roles and responsibilities.
• Develop comprehensive educational strategy to address documentation opportunities in specific target areas highlighted in the assessment and subsequent coding validation studies.
• Monitor queries for appropriateness and provide feedback on a case by case basis (e.g., no leading questions, documentation support already present, etc.).
• Implement a second level review process of all records with a sign or symptom DRG, DRGswithout a CC and DRGs on the OIG focused review list.
• Continue with implementing physician liaisons for the facility to gain support and utilize as a resource for education and guideline efforts.
• Enhance performance tracking tools and establish greater accountability for documentation.• Research UNC quality/outcome profiles in order to identify areas for opportunity in coding
improvement. Responsibility• Director, Medical Information ManagementTimeframe• Second Quarter 2005 – Second Quarter 2006
University of North Carolina Health Care SystemSection XV – Page 42
Assessment• UNC 2003 MedPar data was run through NCI’s proprietary editor to identify potential opportunities
based on historical claims processing errors. • NCI identified between $531,027 to $1,062,049 of missed annual reimbursement. • The outcome of the analysis is provided below for the eight edit groups specific to UNC
that may have contained errors. – NCI conservatively estimates a potential based on rebilling opportunities. – Our estimate is conservative because upon further investigation, claims may not be an error
due to documentation issues or the cost benefit to recoup the claims are prohibitive. – The potential missed opportunity of $1M can be fully realized if processes are corrected.
Edit Group Volume Potential 65% Realization 50% Realization
Assessment• To further validate the potential APC assignment opportunity, NCI conducted a detailed chart
review of 65 random charts in order to identify the root cause issues with the APC assignment process, billing process, and charge capture process.
• Observation– Management indicated the billing department adds the Medicare observation code G0244 to
the bill when all criteria for the three reimbursable diagnoses of asthma, chest pain and congestive heart failure are met.
– Based on reviewed Remittance Advice, UNCH is paid $365.45 per claim for these covered observation services when G0244 is billed.
• Of the 14 observation charts reviewed, six met Medicare observation criteria.• Only three were coded correctly with G0244, resulting in a 50% error rate.• Missed reimbursement opportunity is $1,093, based on charts reviewed.
[Portions of the Assessment are confidential and have been redacted.]Recommendation• Consider focused rebilling initiative for observation patients. • Review the process to identify and assign G0244 for Medicare observation.• Re-bill all claims where G0244 should have been billed.Responsibility• Chief Financial OfficerTimeframe• Second Quarter 2005
University of North Carolina Health Care SystemSection XV – Page 44
– NCI did not identify any claims where venipuncture code G0001 was billed.– Current Medicare reimbursement is $3.00 per venipuncture.– 2003 MedPar data indicates 6,915 claims lacked the venipuncture code.– Potential missed reimbursement is $20,745 based on the 6,915 claims, which is significantly
underestimated.Recommendation• Add venipuncture code G0001 to the laboratory charge master.• Develop a link between the venipuncture code and any blood draw.• Add an edit to only bill G0001 daily for all Medicare claims.• Begin billing for venipunctures on Medicare claims.• Determine if the commercial payer venipuncture code, 36415, is billed for commercial payers who
allow this charge. [Portions of the Recommendation are confidential and have been redacted.]
Responsibility• Director, Laboratory• Director, Patient Financial ServicesTimeframe• Second Quarter 2005
University of North Carolina Health Care SystemSection XV – Page 45
Assessment• ED, Observation Infusions and Injections
– Intravenous infusions, push medications, and injections were not billed in ED and observation.
– In the ED, the nurse is tasked to enter the charge.– We did not identify staff tasked to enter the charge for observation patients.– Of the nineteen ED and/or observation charts reviewed, we identified missed charges in
thirteen or 68% of the charts.– Total missed reimbursement for these13 charts is $1,999 or an average of $154 per chart.
Recommendation• Review the process to bill for infusions and injections in the ED and observation setting.• Consider re-billing claims with missed charges.• Provide education to identified staff regarding the process to charge for infusions and injections in
the ED and observation setting.• This opportunity applies to other payers. Responsibility• Chief Financial Officer• Director of NursingTimeframe• Second Quarter 2005
University of North Carolina Health Care SystemSection XV – Page 46
– NCI performed an analysis using Medicare national reimbursement to calculate the projected financial impact when the percentage of visits for each UNCH level listed is changed to match the Medicare National benchmark percentages.
• The following table provides the estimated opportunity:
– This is a conservative estimate. Similar opportunities exist for other payers. Recommendation• Provide education to the ED nurses regarding the correct use of the ED facility level tool.• Review all ED facility low level charges when the patient is placed in the observation setting
following the ED visit.Responsibility• Chief Financial Officer, ED DirectorTimeframe• Second Quarter 2005
Medicare ER Levels UNC National Difference
Projected Financial Impact
Low Level 61% 39% 22% ($103,077)
Mid Level 29% 36% -7% $62,492
High Level 10% 25% -15% $204,123
Total $163,538
University of North Carolina Health Care SystemSection XV – Page 48
– Intravenous push non-chemotherapy medications were not billed in the Chemotherapy Clinic.– The nurse is tasked to enter the charge.– Of the five charts reviewed, we identified missed charges in two or 40% of the charts.– Total missed reimbursement for these two charts is $218 or an average of $109 per chart.
Recommendation• Review the process to bill for non-chemotherapy intravenous push medications.• Consider re-billing claims with missed charges.• Provide education to identified staff regarding the process to charge for non chemotherapy
Assessment• NCI conducted a high level review of the Charge Description Master (CDM) provided by UNC
Hospitals of all active line items including revenue and usage data in order to: – Identify areas that may represent potential revenue enhancement opportunities.– Perform a line-by-line electronic review of CPT/HCPCS, Revenue Codes, Descriptions and
Volume.– There may be “behind the scenes” edits within the Patient Accounting system which address
the issues identified. However, this could not be confirmed by the high-level review of the CDM. Therefore, additional follow-up should be initiated by UNCH to ensure all Revenue and Compliance have been addressed.
• UNCH’s last CDM review was performed by 3M in the second quarter of FY04. 3M also conducted a strategic pricing review. UNCH implemented a strategic pricing increase of 7% on July 1, 2004.
• NCI analyzed UNCH CDM using our proprietary charge master analysis tool. • NCI will share detailed findings of the charge master review with the CFO or his designee.• Our review of UNCH charge master file indicated the following potential issues:
– Invalid CPTs = 2 (one of these CPTs appears to be a typographic error). No invalid CPTs for Medicare CPT/HCPCS Analyzed.
– Invalid Modifiers = 7. Related to the use of the bilateral modifier (50) for Default CPT/HCPCS. No invalid modifiers found when Medicare CPT/HCPCS analyzed.
University of North Carolina Health Care SystemSection XV – Page 50
Assessment– CPT codes with replacements for 2004 = 1 No Medicare CPT/HCPCS code replacements
found.
– Possible Reimbursables (HCPCS codes describing drugs, devices, and blood products that are typically associated with the described service, yet are not identified within your CDM. These items are assigned status indicator “G”, “H”, or “K” and are separately reimbursed by CMS when mapped to the appropriate HCPCS code.) = 83. No additional reimbursablesuncovered from MC CPT/HCPCS analysis.
– Possible Add-on Codes (All line items mapped to HCPCS codes for which a code describing an associated or supplemental procedure is not contained within the same department, either a primary code without an add-on code, or an add-on code without a primary code.) = 13. None identified when compared to MC CPT/HCPCS codes.
– Required Alternate Codes OPPS (All line items that are mapped to CPT codes not recognized by OPPS alternate code(s) may be appropriate.) = 55. For both Default and MC assessment.
– Revenue Code Issues (Match between CPT and Default revenue code is not correct). = 63. No revenue code issues determined when compared to Medicare CPT/HCPCS analyzed
– Non-Reportable Items = 19. Two of these items total over $40,000 (CDM # 2410318, 2410320) This is based on the default code assessment. No items were uncovered in the Medicare CPT/HCPCS code review.
University of North Carolina Health Care SystemSection XV – Page 51
Assessment• NCI’s CDM file review indicated that UNC is using Medicare/APC guidelines exclusively to drive
charging and billing activity, thereby not taking into consideration third-party payers. Further analysis may reveal additional revenue opportunity.
• The following potential revenue opportunities were identified in the analysis: – 19 line items are listed as non-reportable in their current state for the Default CPT/HCPCS.
• Many of these items relate to blood processing line items. Revenue codes are determined by payer contracts for non-MC. See CDM 2020170.
– 13 items are identified as possible add-on procedures to incorporate into the CDM.• Many items flow from GL 350 and impact cardiac procedures. An example is CDM#
3500274, which reports an add-on code. The initial Atherectomy x-ray exam should be reported (CPT 75995).
– 51 possible Reimbursable HCPCS codes not in the CDM including blood products, radiological isotopes and other pass thru codes.
– Chemotherapy Drugs do not have ‘J’ HCPCS assigned via CDM. All of the ‘636’ revenue coded items (drugs which require detailed coding) require HCPCS, which were not listed in the CDM file received.
• All of the ‘636’ revenue coded items (drugs which require detailed coding) require HCPCS, which were not listed in the CDM file received. CDM #3780037 (Trastuzumab, 10mg) should have HCPCS J9355 listed.
University of North Carolina Health Care SystemSection XV – Page 52
– IV Infusion therapy line items need to be reviewed and corrected for line-item descriptions, coding and fees. There seem to be missing CPT/HCPCs codes, sometimes using the wrong ones, and there are multiple fees associated with the same codes.
• Q0081 can only be charged with 90780 not 90781. Medicare rolls up infusion charges into one unit billing Q0081. So add-on code of 90781 is not necessary.
• Q0081 should not be broken down into time increments in the CDM with different fees relating to infusion time. There are about 20 different line items ranging in price from $237 to $520.
• The IV infusion charge for 90780 and Q0081 have different prices in the CDM $235 for 90780 and $237 to $520 for Q0081.
• Q0081 is described many different ways in the CDM and the AMA approved description reads ‘Infusion therapy, using other than chemotherapeutic drugs, per visit’.
– Emergency Department Procedures• No procedures have been established for reporting in the ED. Only injections have
been created. All procedures performed in the ED should be reported for potential increased reimbursement (additional APC payment). If other line items are used for reporting ED services, the revenue code must reflect ‘450’ to allocate revenue to the place of service revenue code.
University of North Carolina Health Care SystemSection XV – Page 53
– Chemotherapy Administration can be reported with multiple CPT/HCPCS codes, which are not listed in the existing CDM information received.
• HCPCS Q0083, Q0084, and Q0085 should be reported for Medicare Chemotherapy Administration. The HCPCS are selected by the type of administration provided per visit.
• CPT Codes 96400 – 96425 reflect the CPT coding of similar scenarios based on time. The CDM must be set up to ensure accurate HCPCS/CPT reporting based on payer, time requirements for reporting and type of infusion provided.
• Revenue codes 331 – 335 identify chemotherapy administration services – appropriate HCPCS/CPT codes should be identified in each category.
• Chemotherapy IV infusion, per hour should be reported as revenue code 335 with CPT 96410 for the 1st hour for some non-Medicare payers and HCPCS Q0084 per visit for Medicare.
– Low number of supplies in the CDM• Only 937 supply line items were reported in the ‘active’ charge master provided which
appears to be low. None of these items were coded for potential pass-through status. All supply charges should be reported to payers to ensure accurate calculation of charges. Even in the Medicare PPS, accurately submitting all charges for supplies provides important feedback to the facility for accurate pricing of supplies.
University of North Carolina Health Care SystemSection XV – Page 54
Assessment• The following potential compliance items were identified and should be followed up on by UNCH
staff: – ‘G’ Codes for Vaccine Administration
• Three separate vaccine administration codes exist for Medicare vaccine reporting. These codes (Influenza, Pneumococcal and Hepatitis B) are G0008 – G0010. Specific diagnostic coding must also be combined on these claims.
– Modifiers and CPT codes for Rehabilitation Services• Rehabilitation services require provider of service modifiers for Medicare O/P reporting.
No modifiers or CPT codes were found on PT and OT line items.– NCI reviewed the ED visit levels based on the revenue and usage data. It appears that Level
I assignments are too high and Level III, IV, and V assignments are too low (consistent with the APC Review). ED visit levels should be evaluated to assure compliance with internal standards, which should be evaluated as well.
ED Level Volume % of VolumeLevel I 24,537 58%Level II 9,618 23%Level III 6,342 15%Level IV 1,497 4%Level V 422 1%Total 42,416
University of North Carolina Health Care SystemSection XV – Page 55
Assessment• Potential compliance items identified and needing follow up by UNCH staff.
– Revenue codes ‘920’ and ‘940’ are assigned to 185 line items in the CDM received. These two revenue codes are not appropriate for Medicare reporting in the OPPS environment. Line items with these revenue codes should be assessed to ensure they are not reported to Medicare if another, more accurate revenue code exists. (These revenue codes may be “housed” in other payer revenue code fields within the CDM, however, we wish to alert UNCH to this potential issue).
• CDM 24404329 (Arterial Puncture) should be revenue “coded” to the place of service. Currently in CDM as revenue code ‘920.’
• CDM 35600444 (Therapeutic Injection, SQ/IM) has revenue codes ‘940’, ‘949’, and ‘260’. None of these codes identify the place of service location for the revenue in the OPPS setting.
University of North Carolina Health Care SystemSection XV – Page 56
Recommendation• NCI will review the detailed assessment findings with the Chief Financial Officer or his designee.• Conduct a comprehensive CDM Audit to identify CDM inaccuracies and revenue opportunities.
– This audit should include review of outdated CPT codes, code mismatches, pass-through (and separately reimbursed) HCPCS/CPT codes not assigned in the CDM, Physician only CPT codes.
– This audit needs to also address what appear to be “missing” supply charges. Even though Medicare only reimburses separately for pass-through supplies/biologicals, all supplies should be billed to all payers. First, because Medicare needs actual cost data to ensure accurate adjustments are made to APC groups as applicable. Second, because other payers reimburse as a percentage of charges. If the charges are not listed on the claim, then they will not be used to calculate the overall reimbursement percentage.
• Address all issues identified during the assessment by updating the codes, charges in CDM at levels below allowable fee schedules and market rates, revenue code mismatches, and potential items missing from the CDM.
medical record documentation to corresponding billed charges in conjunction with adherence to hospital specific charging protocols and practices was performed in order to:
– Identify services and equipment that were provided but not billed (“Omitted Charges”).
– Identify services included on billing statement that were not substantiated in the medical record (“Overcharges”).
• NCI identified an annual financial opportunity between $328K and $394K (net of potential plan contingency fee) by improving the charge capture process for O/P services.
Pharmacy 23%
Cardiology 22%
Anesthesia 14%
Emergency Department 10%
Labor & Delivery 10%
Recovery Room 6%
Chemotherapy 6%
• A service mix sampling of 85 total accounts with total charges of $894,533 from various departments were reviewed and audited.
– 4.3% of the total charges audited had omitted charges valuing $38,977.
– 2.2% of the total charges audited had overcharges valuing $19,539.
• Seven departments listed below account for 91% of omitted charges:
University of North Carolina Health Care SystemSection XV – Page 58
– The majority of Pharmacy charging errors resulted from Surgery and Obstetric accounts associated with Anesthesia medications.
– Anesthesia time on surgery accounts was inaccurately calculated on three C-section I/P accounts, two O/P Surgery accounts, one I/P Surgery and one Cardiovascular Surgery account.
– Documentation in three ED accounts reflected a higher level of acuity in comparison to ED levels charged consistent with ED level adjustments. ED levels were calculated using UNCH ED acuity protocols. These results consistent with results found in APC findings.
– In the ED, therapeutic injection administration charges were omitted on 23 occasions and IV Infusion charges were omitted on four instances. These results consistent with results found in APC findings.
– Recovery Room time was completely omitted on nine I/P C-Section accounts. This charging protocol was verified with the department manager who validated the omissions.
– Recovery Room time was inaccurately calculated on two I/P and five O/P Surgery accounts. – O/P accounts with the most significant charge issues are related to oncology medications,
anesthesia and recovery room time, cardiac cath procedures, and ED therapeutic injection fees.
• NCI will provide the detailed findings of charge capture review with the CFO or his designee.
University of North Carolina Health Care SystemSection XV – Page 59
Recommendation• Consider a comprehensive CDM audit to further investigate these issues, CDM inaccuracies and
potential revenue opportunities. • NCI and UNCH to review detailed findings. • Initiate a focused retrospective audit on O/P services and L&D accounts to capture revenue
losses on claims with percent of charge base reimbursement. • Initiate a similar audit focused on concurrent accounts for optimization of revenue early in the
processing cycle and maximization of payer reimbursement with timely filing restrictions.• Identify and eliminate root causes for charge capture issues at a departmental level.Responsibility• Chief Financial OfficerTimeframe• Second Quarter 2005 – Second Quarter 2006
University of North Carolina Health Care SystemSection XV – Page 60
UNC Hospitals Key Findings & Analysis ResultsDenials, Adjustments, and Write-Offs
Assessment• UNCH utilizes CT Vision for its denial management tracking system as well as its denial
management workflow processes.• PFS routes denials to the appropriate operational departments, Health Information Management,
or PFS’ denials team through CT vision. – Departments are inconsistently working and resolving denials routed by PFS.– Departments are not held accountable for denial management and root cause prevention. – UNCH used to have a formal denial management workgroup that met monthly but the
infrastructure was lacking to accomplish resolving the root causes. • The payer denial reason codes are tracked and then categorized into PFS specific denial
categories including eligibility, no authorization, medical necessity, duplicate claims, coding issue, information request, timely filing, etc.
• The amount denied is captured by the account balance at time of denial by payer. • The largest opportunities for addressing controllable denials is to focus on the implementation of a
medical necessity software as well as the creation of better controls, redesign targeted operational processes, and establishment of greater accountability in the Patient Access areas.
[Portions of the Assessment are confidential and have been redacted.]
University of North Carolina Health Care SystemSection XV – Page 61
UNC Hospitals Key Findings & Analysis ResultsDenials, Adjustments, and Write-Offs
Assessment• NCI analyzed denials, adjustments, and write-offs using two different methods. • NCI performed a detailed analysis of transaction-level adjustments and write-offs to determine net
revenue improvement opportunities.– A 12-month transaction-level file (July 2003-June 2004) was assessed to identify the
financial opportunities associated with controllable denials and adjustments.– Adjustments were analyzed and summarized by reason code and an estimated improvement
opportunity was applied to identify a net revenue improvement factor.
University of North Carolina Health Care SystemSection XV – Page 62
UNC Hospitals Key Findings & Analysis ResultsDenials, Adjustments, and Write-Offs
Assessment• The following table provides the output of transaction-level adjustments by reason-code.
• Late charges are higher than anticipated due to protocols on automatic late charge write-offs.• NCI identified a range of $3.1M to $6.9M in annual improvement opportunity by reducing
controllable adjustments, denials, and write-offs.• The higher estimated range includes the opportunity of denials and adjustments that are currently
inappropriately categorized as contractual adjustments.
Number of AdjustmentAdjustments Amount Low High Low High
University of North Carolina Health Care SystemSection XV – Page 63
UNC Hospitals Key Findings & Analysis ResultsDenials, Adjustments, and Write-Offs
Assessment• NCI performed another analysis on denials using UNCH internal denial reports. • Based on the Denial Tracking Report from 8/1/03 to 7/31/04, initial denials totaled $159,783,041
(based on current payer balance at time of denial) for 72,824 accounts. – Eligibility is the number one reason for initial denials and accounts for 30% based on current
payer balance (30,018 accounts totaling $48,258,289). – Front-end denial reasons including eligibility, services not covered, authorization penalty,
maximum benefit reached, and medical necessity account for 48% of initial denials totaling $76,652,504 for 42,623 claims.
• According to the Siemens A/R Transaction Summary and Avoidable Losses Monthly Tracking Reports for FY04 (7/1/03 to 6/30/04), final denial write-offs were $7,256,146 for 76,502 accounts.
– Among the denial write-offs in FY04, 57% were due to front-end reasons including medical necessity, lack of authorization, and pre-certification penalty.
• Medical necessity is the primary reason for denials written off for 69,299 accounts valuing $3,090,102.
• Insufficient documentation resulted in the second highest denial write-off reason at $1039,280 for 1,843 accounts.
• The third highest reason for denial write-offs is lack of authorization and pre-certification penalty resulting in a write-off of $1,015,844 for 1,283 accounts.
University of North Carolina Health Care SystemSection XV – Page 64
UNC Hospitals Key Findings & Analysis ResultsDenials, Adjustments, and Write-Offs
Assessment• The below table provides the summary of NCI’s detailed analysis using the avoidable losses for
FY04 report maintained by PFS. – Actual avoidable loss adjustment data was obtained, analyzed, and reviewed to identify an
overall transaction denial rate and areas of improvement.– Denials were analyzed and summarized by reason code.– The results from this assessment coincide with the analysis of the transaction-level accounts
which had an estimated financial opportunity between $3.1M and $6.9M.
University of North Carolina Health Care SystemSection XV – Page 65
UNC Hospitals Key Findings & Analysis ResultsDenials, Adjustments, and Write-Offs
Recommendation• Expand the current Denial Management program to include all components of a robust Denial
Management Program:– Continue the current retrospective appeal process.– Work with departments to modify current denial reporting packages to provide monthly
feedback by reason code and by payer. – Reinstate monthly denial management meetings with departments and/or cross-functional
teams to attack common reason-codes and root-causes.– Create action plans with departments to address major root causes that are preventable. – Assign accountability to individuals at the departmental level.
• Implement improved Patient Access processes that focus on proactively preventing “front-end”denials related to financial clearance, medical necessity, or authorization for service.
– Implement tools to assist patient registration in avoiding rejections, including contract rules, and tools to assist with selection of correct insurance plan code by payer by product line.
University of North Carolina Health Care SystemSection XV – Page 66
UNC Hospitals Key Findings & Analysis ResultsDenials, Adjustments, and Write-Offs
Recommendation• Establish “no authorization, no service” policy for elective patients.• Implement tools to eliminate controllable denials.
– Redesign process workflows, procedures and/or implement solutions to prevent root causes.– Create training for stakeholders and train employees on new procedures.
• Trend rejections over time to monitor decrease as issues are resolved, in order to quantify prospective avoidance improvement.
Responsibility• Director, Patient Financial ServicesTimeframe• Second Quarter 2005 – Second Quarter 2006
University of North Carolina Health Care SystemSection XV – Page 67
Assessment• NCI performed a detailed analysis of FY2004 hospital bad debt and charity adjustments to
determine any improvement opportunities.– Total uncollectibles for UNCH are 7.30% of gross revenue. – Total Charity is 3.48% of Total Gross Revenue.– Total Bad Debt is 3.83% of Total Gross Revenue.
• Based on comparisons against internal UNC goals and revised NCI benchmarks, a net opportunity for total uncollectibles ranges between $1.6M and $3.5M.
Benchmark – Average Benchmark – Better Practice
Total Uncollectibles $71,746,276Total Gross Patient Revenue $982,382,787% Total Charity to Total Gross Revenue 7.30%Benchmark 5.50%Opportunity 1.80%
Total Gross Patient Revenue Opportunity $17,715,223
Total Uncollectibles ‐ As of FY04Total Uncollectibles $71,746,276Total Gross Patient Revenue $982,382,787% Total Charity to Total Gross Revenue 7.30%Benchmark 6.50%Opportunity 0.80%
Total Gross Patient Revenue Opportunity $7,891,395
Recommendation• Enhance the upfront collections process. Establish goals for pre-service collections, including
emphasis on prior patient balances. Design field to capture co-pay/ deductible amounts for improved collections reporting.
• Require prepayment for elective services.• Evaluate implementing a formal process in the ED for evaluating non-emergent patient liability
prior to treatment/service.• Maximize self-pay payment option for patients, taking into consideration a patient’s financial
position.• Continue to maximize application processes for Medicaid and other coverage alternatives.Responsibility• Director, Patient Financial ServicesTimeframe• Second Quarter 2005 – Second Quarter 2006
University of North Carolina Health Care SystemSection XV – Page 69
Assessment • NCI performed a detailed analysis of hospital payment variances in order to determine if there is
opportunity in improving payment variance collection performance.– A transaction-level download of accounts that have closed in the past 12 months was
obtained from Siemens.– Data contained expected reimbursement per Siemens Contract Manager, and actual
payments posted, with variance calculated as the difference. A variety of statistical analyses were performed on the dataset in order to understand the overall payment variance population and potential opportunities.
• UNCH utilizes the Siemens’ Contract Manager to monitor expected and actual payments.– The majority of accounts, except I/P Medicare and I/P Medicaid, are maintained at gross until
time of payment.– Approximately 60 contracts are loaded into the Contract Management system.
• NCI identified an opportunity ranging from $1.2M to $1.4M.
[Portions of the Assessment are confidential and have been redacted.]
University of North Carolina Health Care SystemSection XV – Page 70
Assessment• Based on our interviews, the Siemens Contract Management system may have significant
limitations and data integrity issues regarding the accuracy of complex contract modeling around outliers, stop-losses, and implantable devices.
• Significant process opportunities exist to improve implantable device follow-up. – Intense retrospective billing and follow up activity occurs for several contracts to process
implantable billing. • Several members of management indicated that UNCH is researching and considering
purchasing the Concuity system to assist in the contract management and payment variance monitoring.
[Portions of the Assessment are confidential and have been redacted.]
University of North Carolina Health Care SystemSection XV – Page 71
Recommendation• Continue to focus efforts on the internal payment variance follow-up program that was started in
fourth quarter FY04. Analyze the team’s progress over the last six months by completing the following and making revisions as necessary:
– Review established dollar threshold for prioritizing and pursuing underpayments.– Review protocols for approaching specific payers on individual accounts and/or unfavorable
variance trends against contracted reimbursement rates.– Continue to develop communication channels to address payment variance issues/trends
with UNCH’s largest payers on an ongoing basis.– Review policy and procedures for re-billing and/or batching variances below follow-up
thresholds and submitting to appropriate payers.– Review staffing guidelines and job descriptions for internal payment variance team.– Review protocols between payment variance team and current Contract collectors working
accounts within Ontario.– Review contract language to reduce administrative errors.
• Evaluate and enhance Siemens Contract Manager.– Review and refine current payer-specific reimbursement “rule sets” for loaded payers to
improve accuracy of expected reimbursement calculation.– Evaluate loading additional payers where possible/feasible.
University of North Carolina Health Care SystemSection XV – Page 72
• Increase coordination between Finance, Managed Care, and PFS regarding contract implementation issues/challenges, especially for high-risk cases.
• Renegotiate to improve contracting terms and conditions around high-risk cases that lead to highest and most difficult payment variances:
– Trauma rates– Transplants– Exclusions
• Identify and prioritize specific case types to renegotiate.• Reopen negotiations with payers, if possible.Responsibility• SR VP, Managed Care Administration and Payer ContractingTimeframe• Second Quarter 2005 – Fourth Quarter 2005
University of North Carolina Health Care SystemSection XV – Page 73
UNC Hospitals Key Findings & Analysis ResultsCost to Collect
Assessment• UNCH Admitting and Patient Accounting costs were compared to YTD cash collections to
evaluate the overall cost-to-collect ratio. Through August 2004, costs do not compare favorably to an industry average benchmark (HARA) of $0.0170.
• No net change is anticipated due to the restructuring of the Bed Management Center (Department 7509) into three cost centers and the new O/P Hub Registration cost center.
• The projected FY05 annual expense for outsourced agencies is budgeted at $2,576,200. Of this $2.6M, $1.3M is budgeted for PFS, a vendor functioning as an extended business office since March 2004. 30 PFS staff are dedicated to supporting UNCH billing and collections operations.
Actual 2004 YTD Expense (including benefits and collection fees) $2,315,2192004 YTD Cash Collections - August 31, 2004 $85,259,508
Average Better PracticeCost to Collect: Benchmark 0.0170 0.0145 Cost to Collect Ratio: UNC 0.0272 0.0272 Variance 0.0102 0.0127 Costs @ NCI Best Practice Benchmark 1,449,412 1,236,263 Opportunity @ NCI Best Practice Benchmark 865,807 1,078,956
Cost Information (FYTD as of August 2004)
University of North Carolina Health Care SystemSection XV – Page 74
UNC Hospitals Key Findings & Analysis ResultsCost to Collect
Recommendation• Review, redesign, and implement a productivity management system within the revenue cycle
with particular focus on Patient Access and the Business Office.– Validate work team and individual standards for all applicable positions within the revenue
cycle:• Develop and set production standards per resource.• Develop and set overall production standards at the team level.• Redefine expected staffing levels based on overall AR management strategy and
standards.– Educate management and staff on appropriate deployment and use of productivity
information.– Train supervisors and managers on proper implementation and use of productivity
information.– Incorporate/enforce productivity information into periodic employee reviews and HR process.
• Evaluate current vendor contracts, performance, cost, and return. Determine if RFPs should be submitted for competitive pricing and contract renegotiations.
Responsibility• Director, Patient Financial ServicesTimeframe• Second Quarter 2005 – Second Quarter 2006
University of North Carolina Health Care SystemSection XV – Page 75
UNC Hospitals Key Findings & Analysis ResultsUnbilled and DNFB
Assessment• NCI performed an analysis of Hospital Discharged Not Final Billed and Unbilled data comparing
UNCH to industry benchmarks to determine if backlogs existed in revenue cycle functions/ departments and productive receivables were delayed in unproductive queues.
– I/P DNFB in the amount of $23M shows an opportunity of 7.48 to 8.48 days with a net financial opportunity of $7.5 to $8.5M.
– O/P Unbilled in the amount of $13M shows an opportunity of 7.57 to 8.57 days with a net financial opportunity of $3.7 to $4.2M.
• UNC has implemented a philosophy and approach that attempts to maximize clean claim rates. This is a contributing factor for why the average unbilled days are so high.
– The average clean claim rate from SSI for FY04 is 69%.
Net Collection PercentageBenchmark Variance Average Daily
Revenue
Gross Financial
OpportunityPatient Type Category Total Unbilled Average Daily
RevenueAverage Days
Not Billed
University of North Carolina Health Care SystemSection XV – Page 76
UNC Hospitals Key Findings & Analysis ResultsUnbilled and DNFB
Assessment• Due to the registration errors occurring on the front-end, seven Billing and Collections staff
members inclusive of a lead perform insurance verification on the back-end for all payers. – The seven Billing and Collections Representatives verify, add and revise account insurance
information prior to a bill being generated. • An enterprise-wide order entry policy of entering charges within 24 hours of DOS does not exist.
– It was reported that the standard is to post charges prior to the claim drop to avoid being defined as a late charge.
– While a late charge report by department is posted weekly, there appears to be no effective follow up activity and an opportunity for greater accountability exists.
• An enterprise-wide daily charge reconciliation policy also does not exist. The process for charge reconciliation varies among departments with some departments not performing at all.
• For I/P accounts discharged in August, the average time lag from discharge to final coding by Health Information Management (HIM) is 4.84 days. For the five weeks in August, the time lag from discharge to coding ranged from 3.8 days to 5.24 days.
– NCI I/P coding standards are no more than two to three days. • For August O/P accounts, the average time lag from discharge to final coding is 7.58 days. In
August, the lowest time lag is 6.72 days and the highest time lag is 8.64 days. – NCI O/P coding standards are no more than one to two days.
University of North Carolina Health Care SystemSection XV – Page 77
UNC Hospitals Key Findings & Analysis ResultsUnbilled and DNFB
Assessment• Ten departments account for over 75% of the total unbilled/DNFB dollars.
[Portions of the Assessment are confidential and have been redacted.]
EMERGENCY DEPARTMENT $12,319,144 35.24%DAY OP SURGERY $6,214,366 17.78%ON-LINE REFERRAL CASE $3,490,352 9.98%PEDIATRIC SCREENING $922,484 2.64%LABOR & DELIVERY - OPD $661,075 1.89%CARDIAC CATH $629,174 1.80%URGENT CARE $579,610 1.66%AIR AMBULANCE $568,128 1.63%LINAC TXS $541,524 1.55%CHEMOTHERAPY TREATMENT GRND $531,527 1.52%SUB-TOTAL $26,457,384 75.69%OTHER $8,498,931 24.31%TOTAL $34,956,315 100.00%
Percent of Total Denials
Total Unbilled DollarsDepartment
University of North Carolina Health Care SystemSection XV – Page 78
UNC Hospitals Key Findings & Analysis ResultsUnbilled and DNFB
Recommendation• Manage unbilled accounts to minimize the billing cycle from the DOS to the final bill.
− Develop departmental protocol to enter all charges within 24-hours of DOS to enable final coding and timely billing of accounts.
• Create and implement DNFB/Unbilled reports that exclude pre-bill edits to manage and monitor this process on a daily basis.
University of North Carolina Health Care SystemSection XV – Page 79
UNC Hospitals Key Findings & Analysis ResultsCycle Time
Assessment• A transaction level data extract of accounts that closed in the past 12 months was analyzed to
determine current billing cycle time performance. Due to the system conversion in October 2002, all accounts with dates-of-service prior to October 2002 were excluded from the analysis.
• The data was utilized to calculate elapsed time between the date-of-discharge to initial bill date for I/Ps and between the DOS and the most recent bill date for O/Ps.
– Siemens Invision retains the initial bill date in the Final Bill date for I/Ps but replaces this initial bill date for O/P accounts when supplemental bills are dropped from the system.
• The average time span from date-of-discharge to the initial bill date is 24.1 days for I/P and 21.6days for O/P claims.
[Portions of the Assessment are confidential and have been redacted.]
University of North Carolina Health Care SystemSection XV – Page 81
UNC Hospitals Key Findings & Analysis ResultsCycle Time
Recommendation• Reduce average cycle time from DOS to bill date.
− Adopt a 24-hour charge capture policy for IP and OP services.− Establish a standard requiring all documentation to be delivered to Health Information
Management within 24 hours of discharge.− Aggressively track and communicate late charges based on new standards prior to reducing
bill-hold days.− Work aggressively with Health Information Management and other Ancillary transcription
services (Radiology, Pathology) to reduce turnaround time of dictated reports (set 24 hour turnaround time policy).
− Aggressively track and communicate transcription turnaround times prior to reducing hold days to encourage behavioral change.
− Perform detailed analysis on late charges, unmatched charges, claim scrubber edits, without sacrificing clean submission rate.
Responsibility• Director, Patient Financial Services• Director, Health Information ManagementTimeframe• Second Quarter 2005 – Second Quarter 2006
University of North Carolina Health Care SystemSection XV – Page 82
UNC Hospitals Key Findings & Analysis ResultsAged AR
Assessment• NCI reviewed a detailed transaction download of open accounts for August 13, 2004, and
compared the volume of aged accounts to industry and internal benchmarks. The analysis focused specifically on aged AR >90 days, which represent the most “at-risk” age cohorts in converting receivables to cash.
• Current performance of 28.69% of AR >90 days is 2.32% higher than the average benchmark and 4.75% above the better practice benchmark.
• This represents a net cash opportunity ranging from $1.4 to $2.8M.
[Portions of the Assessment are confidential and have been redacted.]
AR Over 90 Amount 28.69%Benchmark 23.94%AR Aging Opportunity % 4.75%Total AR $167,865,933 AR Aging Opportunity % 4.75%Financial Opportunity $7,973,632 Average Collection Rate 35.00%Total Financial Opportunity $2,790,771
AR Over 90 Amount 28.69%Benchmark 26.37%AR Aging Opportunity % 2.32%Total AR $167,865,933 AR Aging Opportunity % 2.32%Financial Opportunity $3,894,490 Average Collection Rate 35.00%Total Financial Opportunity $1,363,071
University of North Carolina Health Care SystemSection XV – Page 83
UNC Hospitals Key Findings & Analysis ResultsAged AR
Recommendation• Prioritize workflow activities currently completed in the business office.• Focus on cash acceleration to reduce aged invoices receivable greater than 90 days old from
DOS.− Adopt more aggressive AR management approach by deploying a team approach on specific
aged invoices over 90 days old.− Define labor activity and follow-up efforts required to work these accounts, and perform
cost/benefit analysis of working these accounts with existing staff complement (with overtime) or supplement existing collections staff with temporary resources to clean-up these outstanding accounts.
− Liquidate and/or write-off unproductive AR that is deemed uncollectible.− Define and measure performance/progress on this specific set of accounts separately in
order to manage financial risk.• Evaluate necessity of credit balance clean up project. • Implement process changes that will prevent future accounts from aging.Responsibility• Director, Patient Financial ServicesTimeframe• Second Quarter 2005 – Fourth Quarter 2005
University of North Carolina Health Care SystemSection XV – Page 84
UNC Hospitals Key Findings & Analysis ResultsIT Systems and Functionality
Assessment• Technology
– Several IT issues relevant to the revenue cycle require attention including: • Notification to physicians of incomplete documentation is automated for O/P but manual for I/P.• The system does not currently track operative notes for second surgeons properly.• Limitations with Webcis exist related to missing physician, Medical Record number, or procedure
information. Current re-direct functionality does not fulfill process needs related to preventing inaccurate physician suspension.
• Non-providers cannot dictate to meet documentation requirements checked-in but not seen by a physician.
– An opportunity exists to implement medical necessity software.– The following were reported during UNCH interviews:
• General dissatisfaction with current scheduling software (Siemens Resources Scheduling), which is utilized for all areas except the OR.
• Intensive manual work-arounds with the current scheduling process. – The purging criteria for INVISION/CMS appears to be shorter than industry practice.– CT vision is currently used as the denial management tracking and workflow system.– Evaluate and confirm need for bi-directional query access to coding applications between Hospital and
UNC P&A. • This process may assist the coders during the coding process, where applicable. • Area of focus by OIG – when comparing professional and facility codes.
– UNC P&A is unable to access CT Vision. The clinics are currently being granted access to Sovera.
University of North Carolina Health Care SystemSection XV – Page 85
UNC Hospitals Key Findings & Analysis ResultsIT Systems and Functionality
Recommendation• Leadership on both the revenue cycle and IT Team need to implement protocols for capturing and
addressing revenue cycle issues.• Evaluate and implement medical necessity software in conjunction with UNC P&A. • Optimize use of Resource Scheduling tool. Evaluate enterprise-wide scheduling to be used for
both UNC P&A and UNC Hospitals for potential purchase ASAP (2005-2006). • Evaluate the use of CT Vision as the denial management tracking and workflow system. • Expand the use of CT Vision and Sovera wherever possible to promote paperless revenue cycle
operations. • Evaluate current system purging criteria with UNC P&A. • Evaluate and confirm need for bi-directional query access to coding applications.Responsibility• Vice President, Information Services• Chief Financial OfficerTimeframe• Second Quarter 2005 – Second Quarter 2006
