Everyone involved in the revenue cycle is an important part of the process
AM controls crucial first step, but there’s more to impacting the bottom line
Whether your hospital has embraced the methodology associated with the term "revenue cycle management," chances are you’ve heard the words bandied about. Certainly the crucial importance of accurate and efficient front-end operations to a health care provider’s bottom line is emphasized whenever there is a gathering of health care industry leaders.
What may not have crossed your radar screen, however, is the equally vital second phase, the part of the cycle that comes after the access department has performed the scheduling, precertification, insurance verification, preregistration, and registration functions that start the process.
"Charge capture" and "charge description master" are the operative terms for that second piece, explains Joe Denney, CHAM, director of revenue management at The Ohio State University Health System (OSUHS) in Columbus, an organization recognized for being on the cutting edge in its implementation of revenue cycle management.
Denney will do a presentation on the subject for his colleagues at the University Hospital Consortium’s (UHC) Management and Supply Services Forum, scheduled for Feb. 23-25 in Scottsdale, AZ. OSUHS has been designated by UHC as having "best practice for reduction of late charges."
"We put a program together where we reduced late charges from over $3 million a month to less than $100,000 a month within the past 18 months," he says. The lower figure represents less than 1% of the organization’s gross revenues, Denney adds.
OSUHS also received the best practice designation for denial management, he notes. It’s important for access managers "to understand that everybody involved [in the revenue cycle] has an extremely important piece of the process," says Denney, who gained extensive experience in access management and patient accounting before assuming his current position. The full name of the area in which he works, he points out, is department of access and revenue management, which gives special emphasis to the importance of the front end.
"[Access managers], who have responsibility for scheduling, preregistration and registration, and maybe precertification, need to understand how that fits in with the rest of the revenue cycle," he says. "It’s not business office accounts receivable management anymore." Instead, Denney adds, the process extends from scheduling through charge capture and denial management. "We all have to work together as a team."
Below, he highlights the different steps in the revenue cycle, as exemplified at OSUHS.
The role of the access department
"Traditionally, when you think accounts receivable management,’ you think business office," Denney says, "but the key as we’ve learned over the years is that a lot of the responsibility of getting the claim out faster is on doing a good job upfront in collecting data. That absolutely starts with scheduling."
The object of that first telephone call — probably from a physician needing to schedule a patient for a procedure — is to get just enough information to go to the second step, Denney says. That "minimum data set," as it is known at OSUHS, would be the information necessary to contact the patient, he adds.
The second step, then, in securing payment for the hospital, is for access staff to call the patient to get insurance and guarantor information so that insurance verification and, if necessary, precertification or authorization can be done on the account, Denney says.
OSUHS is considering changing the process so that the physician simply faxes the order for the procedure to the hospital, and the patient calls at his or her convenience to do the preregistration, he notes. "The key there is they have to send the order to us in the first place."
The OSUHS computer system has the capability of running an Advance Beneficiary Notice (ABN) check on the case to see if the diagnosis the physician provided will stand up to Medicare scrutiny, Denney points out. "When the [access employee] is on the phone with the patient, [the employee] can let the patient know that the test or diagnosis is not supported."
"The important piece is not to have a surprise for the patients when they show up," he adds. "If we can let the patient know up front that the test may not be paid for, then we have all the bases covered. What happens on the day of service is just verifying, getting the consents signed, and making sure we meet HIPAA [Health Insurance Portability and Accountability Act] requirements."
The upfront notification also prevents the waste of a scheduling slot, should the patient decide not to have the procedure after discovering it is not covered by Medicare, Denney says.
OSUHS has ordered a new ABN checker that also includes an on-line requisitioning system, he notes. The new product will be stand-alone initially, Denney adds, but eventually will be integrated with the patient management and patient accounting system.
"There are two components [to the new product]," Denney says. "One is the ABN checker. You put in the ICD-9 diagnosis code and the test or procedure, and it searches for the local medical review policy to see if the diagnosis is a valid reason for the test. If not — and this is true just for Medicare patients — the system prints an ABN that the registrar can present to the patient."
With the second component, the on-line requisitioning system, a physician can — instead of writing by hand a consult for an X-ray — fill out an on-line requisition from his or her office, he explains. "[The physician] can say, Here’s the diagnosis, here’s my electronic signature,’ click a button, and the people in radiology will have the order."
If the physician desires, he or she can initiate the ABN checker as well, determining the validity of the order before sending it, Denney adds.
At this point the process leaves the purview of the access staff and moves into Denney’s area of supervision. As director of revenue management, he oversees the "charge capture" and "charge description master" mentioned above. He and his staff "work directly with [the health system’s] 200-plus revenue-producing centers to make sure they have all of the charges necessary in order to properly bill for the services they provide," he explains.
"If there’s a new supply or a new procedure, they contact us and we do research and set up a charge for that supply or procedure," he says. "We collect the cost information and then determine a proper price."
Within the charge description master, Denney says, there not only is a charge code for each item, but a related revenue code and CPT code. "This is all part of the Centers for Medicare & Medicaid Services Correct Coding Initiative."
A mismatch in those codes or a charge master that is not properly maintained so that there are accurate descriptions of procedures can result in bills being rejected, he adds.
One of the things Denney did to facilitate charge capture was to lead a grass-roots effort to bring the various cost centers into ownership of the process. He educated lead people, who in turn worked with their centers to discover opportunities for increasing revenue, explains Donna Madlener, manager of the apheresis unit at the system’s James Cancer Hospital.
"It was decided at the management level that we should know more about charges that were getting lost, about anything we were not capturing," she adds.
Rejection and denial management
If all of the above steps have gone well, the result will be a clean claim, Denney notes, which can pass all the edits in the electronic billing system without being caught and without a biller having to touch the account.
"If this all happens properly," he adds, "the claim can go out the door and remittance will come in the door. If it all didn’t happen correctly, you have another major piece of the revenue cycle." That piece begins, Denney notes, when the insurance company rejects a claim for one reason or another.
"We have a process that we are fully automating so that when a rejection comes into the business office, [the system] will sort it by activity code," he says. "It will say, for example, that the claim was rejected because it was not precertified or that there was no medical necessity for performing the service, or maybe that we billed too late."
Depending on the reason for the rejection, the business office immediately will notify the appropriate department, Denney says, and that department will research the account. "We will determine if we can submit a letter to explain [to the insurance company] what went wrong and if we can turn the rejections around."
If the reason given for the denial was lack of precertification, for example, Denney’s counterpart in access will have his or her staff investigate the matter, he adds. "Maybe they’ll find that we did get a precert and the insurance company is wrong. If so, they’ll issue a letter of appeal, and then log what has happened with the account into our electronic system."
Work lists in the system allow staff to see if it’s been 30 days, for instance, and the hospital hasn’t heard back from the insurance company, Denney notes. Revenue Management Workstation, the denial management piece of Malvern, PA-based computer vendor SMS’s admission/discharge/ transfer system, gives OSUHS this electronic method of generating and using work lists, he adds.
"If we hear from [the insurance company] that a procedure is not medically necessary, [the information] gets fired off to the medical information management staff, who look through the records and see if they can get more documentation, he explains. "Then they will send a message back to the business office and say, Resubmit it.’ There are no more manual work lists."
[Editor’s note: Joe Denney can be reached at (614) 293-2132 or by e-mail at email@example.com.]
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