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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. MedAssets The following responses were provided by Kate Banks, senior vice president, MedAssets Net Revenue Systems; and Ann Diamond, executive vice president, Xactimed, a MedAssets company. The Journal of Healthcare Contracting: How do you define revenue cycle management for your IDN members? Kate Banks/Ann Diamond: It is the process by which hospitals are paid for the services they provide. This begins when the patient chooses the facility for treatment based on costs/quality/insurance eligibility or other factors, and ends when the patient claim is paid in full or is closed. JHC: Why is revenue cycle management important to our readers at The Journal of Healthcare Contracting? Banks/Diamond: Supply costs are the second largest expense in most hospitals. Ensuring proper reimbursement for supplies used in patient care is essential to a hospital’s financial health. Materials management and revenue cycle can no longer operate in silos; they must come together to understand how they each contribute to the success of the other. JHC: How will revenue cycle management impact hospital CEOs/COOs and their hospital systems? Banks/Diamond: CEO/COOs must lead the charge to bring disparate people and systems together and foster communication between them to increase data integrity and transparency in supply charging. JHC: How do you break down the concept of revenue cycle management? Are there basic categories you address with regard to revenue cycle management? What are these categories and how are they broken down? Banks/Diamond: We break down our members’ workflow into three segments. At the front end are scheduling, pre-registration and patient access. Activities undertaken at the front end include bill estimation and point-of-service/cash collection. In the middle are charging, coding and utilization management. Activities in this segment include charge capture, coding and documentation, and case management utilization review. At the back end are collections, accounts-receivable management, and remittance processing. Activities in this segment include claims management and electronic billing, expected reimbursement contract management, denials and remittance management, and collection and accounts-receivable management. JHC: What tools do you offer to help IDNs address different aspects of revenue cycle management? Banks/Diamond: We offer:
Banks/Diamond: Regardless of who the payer is, submitting an accurate and complete claim or bill is key to being reimbursed fully and in a timely manner. Every patient needs to understand the services provided, and his or her financial responsibility for these services. MedAssets has tools to help providers establish consistent and compliant charging policies such that prices are defensible. JHC: If reimbursement is capitated, what difference does revenue cycle management make? Banks/Diamond: Even if reimbursement is capitated, it is important for hospitals to have consistent processes for all services provided. MedAssets has cost accounting and contract management tools to help providers access the profitability of every payer contract. JHC: How much more money should hospital systems be able to make by addressing revenue cycle management? Banks/Diamond: Every hospital system is different. There is a very big opportunity to increase cash flow by improving the revenue cycle; however, the goal is to receive the correct amount of reimbursement. Often times, with the use of technology or by improving processes, net revenue will increase. However, there are other times when implementing technology and new processes can decrease net revenue, because a hospital may have been unknowingly overcharging for services. It is equally important to address these instances. MedAssets estimates a 1 to 3 percent increase in net revenue by using our tools and services. JHC: What steps should CEOs or COOs take to begin addressing revenue cycle management if they do not already do so? Banks/Diamond: A CEO/COO must understand that the revenue cycle begins well before the patient even comes through the door, and ends long after the patient is discharged. The C-suite should empower those in charge of the revenue cycle to find the tools needed to provide the patient with a great financial experience. This includes helping patients make informed decisions before entering the facility, ensuring proper coding by clinical staff, and providing an accurate bill/claim to facilitate timely payment from the patient and third-party payers. JHC: What educational tools do you provide to help your members become more revenue cycle management savvy? Banks/Diamond: We host the Performance Forum at the Healthcare Business Summit in Las Vegas each year. We also offer product training and compliance training throughout the year to revenue cycle customers (who may or may not be a GPO customer). JHC: Are members growing increasingly aware of revenue cycle management? Are more members coming on board? Please explain. Banks/Diamond: There is a growing understanding of the supply chain’s impact on reimbursement among our GPO customers, as well as industrywide. We believe we have helped make this connection with our CrossWalk software – a technology that links the revenue cycle with the supply chain. JHC: What is the future of revenue cycle management? Do you anticipate that more sophisticated tools will continue to be developed, and that revenue cycle management will become more sophisticated in years to come? Banks/Diamond: Consumerism will probably drive the most change in the coming years. Consumers will demand that hospitals have the ability to estimate the cost of care, so that consumers can choose where to receive treatment. Further efficiencies and improvements will be forthcoming. JHC: What will revenue cycle management mean to your members in five years? Do you anticipate that this will become a major part of running a hospital system? Banks/Diamond: Revenue cycle management is already the lifeline of the hospital. It’s how the hospital gets paid. Sidebar: Knowing your finances MedAssets addresses IDNs’ need for greater transparency into hospital finances. When Memorial Hermann Healthcare System (Houston, Texas) first tried to link its charge data with supply cost data to ensure that charges covered acquisition costs of supplies, the 10-acute care hospital system discovered the process was more than it bargained for. On the supply chain side of operations, the IDN faced an extensive item master comprised of over 80,000 line items, including duplicate items, ineffective naming conventions and inaccurate acquisition costs. From a revenue cycle management perspective, the chargemaster contained over 16,500 supply items, with duplicate entries and inconsistent charges for the same items. Correcting any duplications and inconsistencies seemed nearly impossible. The IDN had to consider an insurmountable number of data relationships and types. In addition, it did not always have accurate acquisition costs. Even if Memorial Hermann could accurately link the databases, it realized that daily operations would almost immediately outdate the linkage. Phoenix, Ariz.-based Maricopa Medical Center faced a similar predicament. When the facility’s director of revenue cycle management compared charges for supplies with the actual costs, she knew the two were not in synch. In part, this was due to a large number of non-item-file purchases and special ordering by the clinical staff, which circumvented normal purchasing processes. Without a connection between supply information and the chargemaster, the facility had to rely on verbal updates of costs. But, it appeared there was little communication between the purchasing and revenue cycle departments when these charges occurred. This resulted in a chargemaster filled with low charges on the one hand and items priced above the set markup on the other. Memorial Hermann and Maricopa have not been alone in their struggle to connect supply costs and charges. Hospital systems today have increasingly come to rely on the ability to do this. But, without the right tools to accomplish this, they may find themselves saddled with unwieldy, outdated item masters and chargemasters, and disgruntled patients. Transparency into finances As more patients demand justification of cost markups, and hospital administrators face additional pressure to work more efficiently, hospital systems must be run like fine-tuned businesses. MedAssets first addressed this need in 2005 with the introduction of CrossWalk®. Since then, the GPO continues to refine this solution to afford hospital systems greater transparency into their finances. Today, CrossWalk automatically and continuously connects hospital supply cost data to charge data, ensuring that charges reflect accurate costs and reasonable markups, according to MedAssets. The company’s most recent software enhancements permit administrators to simulate the impact of actual or anticipated costs on revenue. In turn, they may incorporate anticipated cost increases when constructing their markup strategies using CrossWalk Markup Matrix Simulator. The latest version of CrossWalk (version 2.6) enables hospital administrators to improve coding compliance. A newly created chargemaster restructuring report is designed to help hospitals restructure their CDM to facilitate best practice recommendations for charging all items within the supply item file. The program’s cost variance report function helps hospital administrators identify supply items, which may be rolled up under a single charge code with a wide cost variance. This report is designed to help identify generic charge codes. Features available through CrossWalk include the following: Supply-revenue integrity. This function ensures that all chargeable supplies are accurately represented in the chargemaster.
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