The Journal of Healthcare Contracting

Revenue Cycle Management
Can GPOs help plug the revenue drain for their members?

Editor’s Note: The participation of those in the following articles does not constitute an endorsement of the sponsor’s products or services.

Amerinet
Bob Hardy, Amerinet’s senior director of corporate business development, provided the following comments on his GPO’s approach to revenue cycle management.

"Through strategic partnerships with Affiliated Computer Services, Inc. (ACS) Healthcare Solutions (Dearborn, Mich.) and Craneware Inc. (Orlando, Fla.), Amerinet’s revenue cycle program is an integral part of its total spend management suite of executive tools. It enables healthcare providers to increase revenue and improve their operating margin without adding new service lines. "

"The Amerinet Revenue Cycle Assessment, provided in partnership with ACS Healthcare Solutions, identifies opportunities to increase revenue by comparing the healthcare provider’s current business processes and performance with national benchmarks."

"With Craneware software products, healthcare providers can manage the integrity of the chargemaster and ensure accurate coding and reimbursement. The result is increased revenue, which directly improves the operating margin and generates funds for investment in capital improvements or new programs."

"Amerinet’s contract with Craneware enables healthcare providers to save on the full suite of chargemaster and revenue cycle software, and provides access to Amerinet specialists who can match suite components to their needs."

The following responses were provided by Ross Fidler, partner, ACS Healthcare Solutions.

The Journal of Healthcare Contracting: How do you define revenue cycle management for your IDN members?

Ross Fidler: Revenue cycle management encompasses every process and procedure related to the healthcare experience, from scheduling and patient access to information management, coding and billing, and account resolution and collection.

JHC: Why is revenue cycle management important to our readers at The Journal of Healthcare Contracting? How will this impact hospital CEOs/COOs and their hospital systems?

Fidler: Billing and collections for any healthcare organization is costly, fragmented and labor-intensive. Disjointed, redundant and inefficient information systems can result in uncollected patient payments and insurance reimbursements, aged accounts, bad debts, and massive write-offs.

JHC: How do you break down the concept of revenue cycle management?

Fidler: Amerinet and ACS have the ability to break down revenue cycle management into several components:

Patient access (evaluate processes and procedures).
Information management and coding (evaluate accuracy).
Charge description master (evaluate accuracy and optimization).
Charge capture (evaluate effectiveness and lost charges).
Clean claims (minimize denials).
Emergency department (evaluate financial processes).
Workflow assessment (improve scheduling, pre-admit and pre-registration).
Demographic and insurance data capture, insurance verification, eligibility for benefits, ABN processing, coordination of benefits, and pre-authorized processes.
Processing of third-party-eligibility applications.
Business office (evaluate the effectiveness of the claims follow-up process).
Self-pay (evaluate processing of financial counseling and statement follow-up).

JHC: Are there basic categories you address with regard to revenue cycle management? What are these categories and how are they broken down?

Fidler: Our revenue cycle enhancement and cash flow solution is designed to do the following:

Identify new sources of revenue.
Improve the charge capture process.
Accelerate the conversion of bills to cash.
Reduce days in accounts receivable.
Improve operational effectiveness and productivity throughout the organization, from scheduling and registration, to charge capture, medical records, claim production and management.
Improve return on information technology investments.
Improve data integrity throughout the system to facilitate more accurate decision support reporting.
Improve employee satisfaction, morale and productivity, and increase tenure through greater opportunities to cross-train.
Gain access to the necessary working capital to fund initiatives that enhance quality of care and improve patient satisfaction.

JHC: How much more money should hospital systems be able to make by addressing revenue cycle management?

Fidler: ACS can report on results achieved at four different facilities, each of which has achieved an ROI averaging 350 to 400 percent.

JHC: What steps should CEOs or COOs take to begin addressing revenue cycle management if they do not already do so?

Fidler: They need to address the following revenue cycle departments and functional areas:

Patient access (scheduling, insurance verification, financial clearance, registration and admitting, financial counseling, and eligibility).
Health information management (documentation flow, completeness and timeliness).
Charge description master (CDM maintenance, charge capture).
Case management (observation, length of stay/avoidable days, continued stay/authorizations, and clinical appeals).
Patient financial services (claim accuracy and timeliness, accounts receivable follow-up, denials management, contract management (payment accuracy), cash posting, bad debt collections, and customer service).
Information technology (systems in place, versions).

JHC: Are members growing increasingly aware of revenue cycle management? Are more members coming on board? Please explain.

Fidler: Healthcare organizations today face an inordinate number of challenges, which are magnified when they also face insufficient cash flow. Today’s healthcare executive is responsible for ensuring that regulatory compliance is met, staff is highly skilled, ongoing training is available, technology is updated, and processes are effective. Improving revenue cycle management enables providers to be successful in meeting these challenges.

The following responses were provided by Sandra Rasmussen, vice president of operations, Craneware, Inc.

The Journal of Healthcare Contracting: How do you define revenue cycle management for your IDN members?

Sandra Rasmussen: The revenue cycle is essentially a translation of the care delivery process into the financial transactions that define the business aspect of healthcare.

JHC: Why is revenue cycle management important to our readers at The Journal of Healthcare Contracting? How will this impact hospital CEOs/COOs and their hospital systems?

Rasmussen: Especially for non-profit organizations, the ongoing funding of clinical facilities and technology relies on operating margins that are commonly less than 4 percent of total revenue. While growth in market share and new products has the potential to generate new sources of revenue, the incremental margin on each new dollar of revenue is limited. By contrast, every dollar of revenue from existing services that is not properly captured, billed or collected has a direct impact on the bottom line. Improving revenue capture through better revenue cycle processes remains significant, and is therefore a strategic imperative for any successful healthcare organization.

JHC: Are there basic categories you address with regard to revenue cycle management? What are these categories and how are they broken down?

Rasmussen: Our revenue cycle tools focus on three primary objectives:

Revenue optimization
1. Reduction of denials through accurate coding in the chargemaster.
2. Completeness of the chargemaster.
3. Completeness of charge capture process.
4. Billing proper units of service.
5. Appropriate pricing.
6. Effective engagement of revenue cycle participants at all levels across the organization.
Risk management
1. Identification of areas of exposure in proper use of billing codes.
2. Systematic and sustainable compliance education programs.
3. Appropriate and consistent pricing.
4. Clear systems of accountability, documentation and security.
5. Effective delivery of patient estimates.
Reliable and efficient workflow
1. Clear system of accountability.
2. Automation of manual tasks.
3. Documentation trails.
4. Elimination of rework and redundant tasks.
5. Standardized workflows and approval processes.
6. Prioritization of work around materiality of financial impact and compliance risk.

JHC: What software tools do you offer to address different aspects of revenue cycle management?

Rasmussen: We provide the following:

Chargemaster Toolkit® - Continuously analyzes the chargemaster for proper coding, completeness, compliance risks and pricing benchmarks while providing an automated and systematic workflow system that increases efficiency and effectiveness of the charge-description-master management process.
Physician Revenue Toolkit® - Chargemaster Toolkit’s companion product that addresses billing in physician practices.
Online Reference Toolkit® - A browser-based tool that organizes Medicare coding reference guides, regulatory guidance and fee schedule information into a user-friendly desktop resource for all stakeholders in the revenue cycle process.
Bill Analyzer - Systematically analyzes claims against expected charging patterns to identify risks for lost charges based on the probability, frequency and materiality of the financial risk.
Interface Scripting Module - Automates the transfer of chargemaster changes to the hospital’s financial system, which promotes the overall efficiency of the process and eliminates the risk of manual errors, delays and oversights.
Pharmacy ChargeLink™ - Analyzes the integrity of the CDM against the pharmacy purchase history to ensure completeness, proper pricing and accurate coding for optimal reimbursement.
Patient Charge Estimator™ - Systematically provides reliable and consistent charge estimates for inpatient and outpatient procedures based on a hospital’s historical claims data, chargemaster files, and negotiated third-party contracts, in a fraction of the time manual estimates take.
Decision Dashboard™ - Focuses management attention on key performance indicators with immediate drill-down into the details.

JHC: If reimbursement is capitated, what difference does revenue cycle management make?

Rasmussen: All capitation arrangements depend on an accurate revenue cycle to be successful for several reasons:

Proper analysis to support annual rate negotiations.
Proper billing to third-party payer partners to ensure accounting for costs against their benefit plans.
Proper adjudication of benefits for patients served under capitated arrangements.
Proper settlement of risk pools where gains or losses against the capitation are measured based on actual claims experience against a targeted cost per member per month.
Proper measurement of costs in hospital’s profitability analysis, where the capture of billable events triggers the statistical data that drives product line reporting, productivity and cost accounting systems.

JHC: How much more money should hospital systems be able to make by addressing revenue cycle management?

Rasmussen: Our anecdotal experience clearly shows that all hospitals have both systemic and random errors that occur daily in the revenue cycle, and that these errors ultimately have a financial impact. By introducing methods and tools to help manage the revenue cycle and increase efficiency, hospitals could easily see a net revenue impact of 5 percent.

JHC: What steps should CEOs or COOs take to begin addressing revenue cycle management if they do not already do so?

Rasmussen: They should seriously consider buying a chargemaster management tool, if they don’t already own one. It is impossible to avoid errors through manual management of the chargemaster with the number of regulatory coding changes that occur throughout the year. Moreover, any error in the chargemaster will become a systemic error that occurs every time an incorrect billing code is charged. It then puts not only that individual charge at risk, but often the entire claim. It also leaves an organization at risk for compliance issues surrounding that charge.

Executives should also deal with the disconnect between the supply purchasing process and the chargemaster maintenance process. As technology rapidly evolves, applications deployed throughout the purchasing process can be systematically tied to the revenue cycle. In the majority of hospitals, however, these processes occur in parallel.

Finally, they should change their pricing philosophy from a once-a-year budget exercise to a clearly stated policy and ongoing analysis with routine disclosure to the Board. Executives must make pricing transparency a mission-driven strategy. Additionally, they should recognize the exposure and need to systematically measure and collect patient out-of-pocket costs upfront to reduce the growing risk of patient bad debt.

JHC: What educational tools do you provide to help your members become more revenue cycle management savvy?

Rasmussen: In addition to our suite of software applications, we offer our clients user groups at least four times a year. These sessions include panel discussions, best-practice sharing of ideas, and general educational meetings on emerging revenue cycle topics. We offer our network a Craneware Discussion Forum, in which all of our users - from the largest, most sophisticated health systems to independent, critical-access hospitals - share ideas and information to improve their revenue cycle processes. We offer a wide range of webinars on a monthly schedule for both novice and advanced users of our tools to maximize their effective use of technology.