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How providers can maximize profits by minimizing inefficiency

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contents

the effective Revenue cycle How providers can maximize cash flow by minimizing inefficiency

new stRategies foR claims management Advanced technologies helped INTEGRIS Health improve cash flow and operational performance

fRom clinical to financial successWest Virginia University Hospitals improves revenue flow with its real-time eligibility and credit card processing system

Reducing denials leads to incReased Revenue Kettering Health Network addresses outpatient claim denial problems with RMS software suite

tRanspaRency in pRicing NMHS improves customer service and cash flow by providing charge estimates to patients

ReengineeRing the Revenue cycle Software reduces ViaHealth’s A/R days, improves claims acceptance rate

stReamlining the Revenue cycle Memorial Hermann achieves sustained performance with integrated technologies

what Revenue cycle solutions offeR healthcaRe pRovideRs the gReatest oppoRtunity to maximize pRofits by minimizing inefficiencies?

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Rcm5

Rcm7

Rcm9

Rcm12

Rcm16

Rcm19

Rcm18

In his timeless and ultrapopular self-improvement book, The 7 Habits of Highly Effective People, Stephen Covey likens the principle of effectiveness to Aesop’s fable about the goose that laid the golden eggs. As we all know, the story concerns a farmer whose goose begins laying one golden egg each day. The eggs provide the farmer with

unimaginable wealth, but his greed becomes insatiable. Seeking instant gratification, he kills his goose so as to have all the golden eggs at once. After opening the goose and finding none, the farmer realizes that has destroyed the very source of his prosperity.

Covey’s interpretation is this: True effectiveness comes as a result of a healthy

balance between what is produced (in this case, the golden eggs) and the ability to produce (the goose). “If you adopt a pattern of life that focuses on golden eggs and neglects the goose, you will soon be without the asset that produces golden eggs. On the other hand, if you only take care of the goose, with no aim toward the golden eggs, you soon won’t have the wherewithal to feed yourself or the goose,” he writes.

It’s not too much of a stretch to think of the healthcare revenue cycle in

The effecTive Revenue cycle

Sponsored Material n Special Supplement to HealthLeadersRcM� n June 2008

how providers can maximize cash flow by minimizing inefficiency

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Oklahoma City-based INTEGRIS Health is the state’s largest Oklahoma-owned health system with 13 hospitals, 1,900 licensed beds and more than 2,500 physicians providing a wide range of inpatient, outpatient and ancillary healthcare

services. Formed via merger between Oklahoma Health System and Southwest Medical Center in 1995, the not-for-profit provider is afforded many advantages with its size and scope. However, INTE-GRIS realized it would need to adopt new strategies and technology in its revenue cycle to ensure that the health system continued to operate at the highest levels possible.

After evaluating potential solutions, INTEGRIS implemented the ePREMIS® Claims Management and Medicare Direct Entry tools as well as the Patient Compass™ Customized Statements and Online Business Office from RelayHealth to improve financial and operational goals and to cater to patients’ heightened expectations for understandable, accurate and timely bills.

“Prior to deploying our solution, filing claims was very much a manual process. We had staff dedicated to combing all the accounts for errors before billing,” recalls Brent Grimes, corporate director of patient financial services for INTEGRIS Health. “With our new solu-tion, we now have an exception-based product that requires us to work only those claims that warrant attention, rather than touching each one individually.”

Among the favorable results these solutions have provided INTEGRIS are improved resource allocation, which translates into improved cash flow. “We found that by reorganizing our staff, we could be significantly more productive,” according to Grimes. “Since billing is done in a timelier manner, our accounts are turned over much more quickly. Given our size, this amounts to millions of dollars in savings.”

In addition, billing issues can now be resolved without involv-ing the patient. With the Medicare Direct Entry tool, for example,

INTEGRIS staff can quickly learn about the presence of secondary insurance, if any, even if the patient didn’t provide this information. The system also alerts INTEGRIS staff to any potential rejections by Medicare, allowing them to correct errors before the claim is filed, which has reduced rejections and improved cash flow.

Through the ePREMIS operational dashboard, INTEGRIS man-agers are able to monitor daily claims management processes to ensure that patients are receiving timely, accurate statements. “The dashboard automatically sends email alerts to notify us of situations needing immediate attention,” Grimes says. “The email provides the necessary actions for the recipient to take, ensuring that claims are not lingering unnoticed, costing us money.”

Process bottlenecks are identified through the use of desktop “at-a-glance” gauges that monitor the real-time movement of claims from the patient accounting system into the claims management system and then on to the individual payers. Four color gauges let management immediately see important cash-flow measurements:

> Unreleased claim count> Unreleased claim dollars> Held claims count> Held claims dollars

With the Patient Compass Online Business Office, INTEGRIS patients can access their current billing information and pay their bills at their convenience 24/7 via a plug-in on the INTEGRIS Web site. Patients also can use the site to request payment arrangements or an itemized bill, to see information about INTEGRIS policies or to submit a question via email. As a result, patient satisfaction with INTEGRIS has increased, and the number of calls from patients into the business office has decreased by 4.5 percent within the first two months of implementation.

In addition, statements generated by Patient Compass follow the Healthcare Financial Management Association’s PATIENT FRIENDLY BILLING® guidelines so that patients can easily under-stand the charges, insurance payments and their responsibility.

“We took many steps to streamline our internal processes and patient financial communications,” says Greg Meyers, system vice president of contracting and revenue cycle management. “As a result, we have improved our financial and operational performance while creating the foundation for delivering understandable and timely patient statements.”

new stRategies foR claims management

advanced technologies helped integRis health improve cash flow and operational performance

“With our new solution, we now have an exception-based product that requires us to work only those claims that warrant attention, rather than touching each one individually.”

Sponsored Material n Special Supplement to HealthLeadersRcM� n June 2008

THe effecTive Revenue cycle

similar terms. A hospital’s golden egg is its patient revenue, and the producing assets are found in its staff, technology and processes. Effective revenue cycle management (RCM), therefore, is a calculated balance between the revenue coming in and the appropriate resource allocation to ensure positive cash flow. Hospitals that find this equilibrium, assisted by maturing technologies and best practices, have the best chance for long-term revenue cycle success.

lingering financial challengesTwo trends continue to have a negative effect on healthcare providers’ fiscal performance: rising healthcare costs and shrinking reimbursement rates. Although increases in national health expenditures have leveled off in recent years, the reality is that the cost to pro-vide healthcare continues to rise. After topping out in 2002 with a 9.1 percent increase, growth in healthcare spending

in the United States was 6.7 percent in 2006, according to the Centers for Medicare & Medicaid Services (CMS). The agency expects relatively similar results through 2017. In other words, healthcare expenditures will continue to grow faster than inflation over the next decade, to no one’s surprise.

As a result, the cost of health insur-ance is skyrocketing. And it’s not only employers that bear the brunt of this trend. The effect has and will continue to be felt by consumers who are now responsible for a greater financial por-tion of their healthcare in the form of higher copays and deductibles. In fact, out-of-pocket healthcare expenses by U.S. consumers have risen 25 percent since 2002, from just over $200 billion to approximately $250 billion. (I)

Further, uncompensated care—a measure of the cost of care delivered for which a provider receives no payment from the patient or insurer—remains a serious and growing fiscal problem. In 2005, hospitals carried approximately

$28.8 billion in uncompensated care, or 5.6 percent of their total expenses, according to the American Hospital Association. This figure represents a 33 percent increase since 2000.

Meanwhile, healthcare payers, including federal and state agencies, are offering proportionately lower reimbursement rates. In today’s healthcare environment, where it often appears that insurers hold all the cards, providers must actively deploy solutions to ensure they receive the maximum compensation for the ser-vices they provide.

According to RCM research and consulting firm Zimmerman, hospi-tals lose 4 percent of net revenues on average from what CEO Michael Zim-merman terms “leakage” in the form of denied claims, delayed payments, uncompensated care, and mis- or underutilized personnel and technol-ogy. And although revenue loss can be the result of poor or nonexistent work flow tools and processes, antiquated

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With its network of four hospitals, a cancer center, a trauma center and several outpatient clinics, West Virginia University Hospitals, Inc. (WVUH) in Morgantown provides the most sophisticated medical and surgical care in the region. WVUH

also prides itself on the national recognition it has received as a Level One trauma center, Magnet hospital and as an employer of choice by AARP and Working Mother magazine.

If there was one area the organization needed to improve, however, it was patient access—scheduling, registration and admissions. The institution’s eligibility verification was a mercifully inefficient process, recalls Patient Access Manager Lisa Simmons. “We were doing all our patient eligibility verification manually, meaning that in order to verify a patient’s eligibility status, we had to pick up the phone and call each individual payer.”

Further, WVUH knew it was losing revenue by not doing a thorough job of receiving patient co-pays and deductibles at or before time of service, leaving WVUH with many receivables that went uncollected.

The organization knew that in order to continue delivering the quality medical care its patients had come to expect while maximizing income potential, it would need to deploy an advanced revenue cycle management solution. After searching for the right technology partner in 2004, WVUH selected a suite of services from Passport Health Communications, Inc., including eligibility verification and credit card processing through Passport One-Source®, self-pay review through Passport BatchSource™ and integrated eligibility verification through Passport’s Electronic Data Interchange (EDI).

OneSource, which provides individual payer eligibility and benefit data in real-time, allows WVUH front-end staff to quickly and accurately verify patient eligibility online at the point of registra-tion. And with the EDI interface, this information is integrated with the new patient accounts system. “It allows us to pull patient data directly from their electronic record, which facilitates faster eligibility verification,” Simmons says. “It also stops keying errors because we do not have to enter patient information manually each time.”

The BatchSource application enables users to run a batch file of eligibility verifications for a common payer such as Medicare or Medicaid all at once, saving time and resources, Simmons says. Thousands of patient records can be run in a matter of hours, usually overnight. As many as 10 percent of those classified by

the hospital as self-pay are actually identified as having some eligible insurance payer. “Without the self-pay review process, those accounts are typically sent to collections and may not ever be collected,” Simmons said.

WVUH also rolled out Passport’s credit card processing, which facilitates transactions with all major credit card companies. This capability enables the hospital to collect co-pay and/or deductible amounts at or before the time of service in any department with Internet access.

Soon after implementation, WVUH began to see results. “In 2004, we had $838,000 in unverified claims because we couldn’t identify an insurance company to send the claim to,” Simmons says. “With our new eligibility verification system, we were able to bring that below $180,000 by year end 2007.”

Simmons attributes the results in large part to Passport’s relationship with payers in West Virginia and across the country. “Since they have clients coast-to-coast, they work with payers everywhere. Even if it’s not an insurer we see very often, hav-ing that resource available saves us a lot of time and potential additional work on the back end. They are also very proactive in working with us to get new payers added all the time.”

The new up-front payment process with Passport’s credit card processing had a substantial impact as it was rolled out to the pre-admissions and inpatient surgery units, hospital provider-based clinics as well as to the emergency department. “In 2004, we collected about $500,000 from patients at time of service,” Simmons recalls. “By the end of 2007, we had increased that number to $950,000.”

fRom clinical to financial success

west virginia university hospitals improves revenue flow with its real-time eligibility and credit card processing system

“Since they have clients coast-to-coast, they work with payers every-where. Even if it’s not an insurer we see very often, having that resource available saves us a lot of time and potential additional work on the back end. They are also very proactive in working with us to get new payers added all the time.”

technology that doesn’t support appro-priate data collection, or often it’s sim-ply the inherently convoluted regula-tory and financial nature of healthcare that has a negative financial effect on providers. “With the incredible level of detail required for providers just to get paid, it’s no wonder healthcare is such a difficult environment to operate in,” Zimmerman says.

This article dissects three general areas of the revenue cycle—patient access, data management/coding, and billing/collections—where providers have the opportunity to maximize cash flow by minimizing inefficien-cies. Each section also includes best practices organizations should consider for optimal results, courtesy of Zim-merman, LLC.

the patient- centered Revenue cycleMany industry experts would agree that patient access, including scheduling, eligibility verification, and referral man-agement, represents the area of great-est opportunity for improvement in healthcare today. Information captured before and during the time of service lays the foundation on which hospitals are able to generate revenue. Problems introduced in a patient’s financial record at this stage will directly affect the entire revenue cycle for that individual.

And although patient access for many hospitals appears to be function-ing optimally when looked at in terms of patient throughput and the number of FTEs assigned to patient processing, often this is achieved at the expense of a greater number of resources on the back end devoted to dealing with failed charges, claim edits, denials, and fol-low-up calls, says Suzanne Wentworth, managing director and national reve-nue cycle practice leader with manage-ment and technology consulting firm

BearingPoint. “Our clients report that almost 90 percent of the rework they deal with during billing and claims processing goes back to a root cause

within the patient access area.”To the greatest extent possible,

providers must shift activities that have traditionally been reserved for the back end—claims management, documentation, and cash transac-tions, for example—to the front end, Wentworth advises. “It’s imperative they place greater strategic focus on accurate and complete data capture for preservice and time-of-service activi-ties such as scheduling, financial coun-seling, and referral management.”

And with consumer-driven health-care initiatives in which patients are responsible for a greater portion of their bill, there is no better time than now for providers to improve cash flow by requiring time-of-service payments from their patients, says Polly Minugh, a principal in Deloitte’s national rev-enue cycle practice. “Collections per-formance, particularly on the front end, is becoming critical to ensuring an effective revenue cycle.”

Several tools are emerging to make up-front collections a reality, includ-ing credit card transaction process-ing and transparent pricing models that not only provide patients with more information about the true costs of their care, but also establish a base-line so providers know beforehand what they need to collect directly from their patients.

Minugh’s colleague Joel Gardiner, also a principal with Deloitte, takes it one step further, anticipating a heightened demand for front-end

demographic and credit-scoring solutions. “If it has been determined that a patient owes $1,500 to cover their share of the medical procedure, providers must be able to determine what the probability is of receiving that payment and deciphering what the best strategy is for collecting this bill,” he says. “There are a number of financial clearance tools emerging that take a very traditional consumer-finance view of credit scoring, esti-mating the likelihood of collecting payment and even offering guidance for structuring lending arrangements with a patient.”

From patient preprocessing to financial clearing, healthcare organiza-tions should consider the following best practices to improve the patient access function of their revenue cycles: (II)

n patient preprocessing. Best performers are much more likely to obtain preauthorization, precertifi-cation, and insurance verification, as well as provide financial counseling preregistration an average of three days prior to the scheduled service date.

n Registration data accura-cy. Best performers consistently capture sufficient and accurate demographic, financial, and clinical information prior to patient discharge.

n time-of-service collec-tions. Top-tier performers secure

THe effecTive Revenue cycle

Sponsored Material n Special Supplement to HealthLeadersRcM� n June 2008

“It’s imperative they place greater strategic focus on accurate and complete data capture for preservice and time-of-service activities such as scheduling, financial counseling,

and referral management.”

When Kettering Health Network set out to reengineer its outpatient revenue cycle, the organization knew it had to address an increasing rate of denials as well as find a way to capture revenue tied up in bill holds or

write-offs. At the outset, however, it wasn’t clear where to begin. “We didn’t know what we didn’t know … it was a journey,” recalls Debbie Schrubb, director of medical records for Kettering.

Schrubb suspected that inefficient coding and billing processes were causing claims errors, while problems with medical necessity review were triggering extensive rework and write-offs. “We were seeing our A/R days increase, and there was an obvious impact on revenue,” Schrubb says. “We knew that the financial health of our organization depended on fixing our outpatient claims process and getting the full reimbursement to which we were entitled.”

Based in Dayton, Ohio, the five-hospital system boasts 1,260 beds, 47,000 inpatient visits, 296,000 outpatient diagnostic proce-dures, 33,200 ambulatory surgeries, 91,500 emergency visits and a wide array of services including neuroscience, cardiology, oncol-ogy, orthopedics, sports medicine, rehabilitation and behavioral health. The organization chose the 3M™ Ambulatory Revenue Management Software (3M ARMS) from 3M Health Information Systems as a solution to its revenue cycle challenges, adding to its portfolio of solutions that includes the 3M™ APC Editing and Compliance Software with 3M™ Medical Necessity Software, 3M™ Health Record Management Software, 3M™ Coding and Reimbursement System and 3M™ Medical Necessity Online.

Kettering’s first step was to analyze existing outpatient claims processes. The project team examined each functional step of the revenue cycle, looking for process challenges such as duplication, non-value-added steps and system bottlenecks. Once problem areas were identified, 3M consultants assisted the Kettering proj-ect team in helping to expedite billing and reduce A/R days through the design of a new, streamlined workflow process that uses the advanced features of the software.

With the new outpatient revenue management software, Kettering’s coders were able to review critical edits and charges and monitor corrective actions, all at the point of coding. The solu-tion surfaces OCE, NCCI, LCD and NCD edits for all codes on the claim and allows coders to view both hardcoded chargemaster codes, including corresponding charge department codes, rev-enue codes, units and other key data elements together with the

soft-coded HCPCS/CPT® codes assigned in the HIM department.Kettering’s new solution soon yielded results: Dollars held

during rework totaled $2.4 million in the initial implementation phase; six months later, the number was $1.2 million. “The dollars we were holding before implementing the 3M software represent a significant amount of revenue,” says Susan Knight, director of patient financial services for Kettering Health Network. “After implementation, referrals fell by 50 percent, and medical necessity write-offs also saw a sharp reduction, falling from a high of more than $80,000 per month to an average of $10,000 per month after the software was up and running.”

Through post go-live evaluations, Kettering discovered that some services were consistently undercharged, while others never made it onto the bill. Line item service date errors were also a common cause of rework. “The volume of charging errors was much greater than we realized,” Schrubb notes.

Teamwork and ongoing communication are key components of reengineering the revenue cycle. Mapping revenue codes with CPT® codes and clinical terms provided challenges, as did fully engaging the different departments. “There were hurdles to over-come in terms of departmental perceptions about the program,” says Schrubb. “When the numbers began to change dramatically, perceptions shifted.”

Kettering’s clean claim rate (the percentage of claims that arrive in the business office error-free) is now at 90 percent—15 percent higher than the national average for a high-performing facility—and expected to rise. Meanwhile, rework is substantially reduced and bill holds average fewer than one to three accounts per day. Recovering reimbursement at risk is up from a 62 percent recovery rate at the start of implementation to 88 percent nine months later.

“We knew the dollars were out there,” Schrubb says. “And we haven’t even realized the full potential. We’re still seeing gains, and we’ll continue to see gains.”

CODE: AB2008054

Reducing denials leads to incReased Revenue

Kettering health network addresses outpatient claim denial problem with Rms software suite

“We knew that the financial health of our organization depended on fixing our outpatient claims process and getting the full reimbursement to which we were entitled.”

Sponsored Material n Special Supplement to HealthLeaders June 2008 n RcM�

financial commitments on patients’ por-tion of payments through the collection of copays, deductibles, and prorating of patient liability at time of service.

n in-house. Best practice pro-viders proactively manage the financial relationship between the hospital, the patient, and the payer while the patient is in-house.

n financial clearance. By a wide margin, best-performing organi-zations have implemented a financial clearance process that involves screen-ing and probability scoring of patients in order to determine effective collec-tion follow-up methods. Of those best performers that perform this function, 60 percent of their patients are cleared prior to discharge.

data Quality affects Results More often than not, the revenue cycle’s Achilles’ heel is data integrity, says RCM consultant Allan P. DeKaye, MBA, FHFMA, who publishes the PFS Power Rankings, a monthly benchmark-ing report on hospital patient financial service departments. “The quality of data in the patient financial system is largely dependent on the tools and

information available to those entering the data. For example, if they cannot decipher whether a payer is a PPO or HMO either on their own or with the help of an informational tool, this will inevitably lead to billing problems.”

Denny Roberge, revenue opera-tions manager for Concord Hospital in New Hampshire, is on a mission to improve his organization’s revenue

cycle by improving data. A significant percentage of claims rejected by payers are the result of what Roberge calls “gotcha” denials—simple mistakes or oversights in the claim, such as a missing comma, formatting error, or other small, seemingly insignificant problem. These are, nonetheless, errors that can make the difference between a claim being only partly paid or denied outright by the insurer.

Concord Hospital recently imple-mented a homegrown claims manage-ment system built by Roberge and some of his MIT friends. The system consists of complex algorithms that find where in the claim the denial has occurred and map all potential rea-son codes and transaction sets to the denial’s root cause.

The hospital’s chargemaster data is also included in the system, which enables the revenue cycle department to locate potential charging mistakes. “If a claim is denied because of a charge, it is identified and sent to the appropriate department, showing that a charge was made that cannot be reimbursed.”

Front-end users who are responsible for the denial can see this information and correct the problem so it is not repeated in multiple claims. “It’s simply

a matter of funneling the information about the root cause of the denial to those individuals directly involved with the claim,” Roberge says. “It has proven very helpful getting the financial team and clinical leaders on the same page.”

In the six months that Roberge’s homegrown claims management sys-tem has been up and running, Con-cord Hospital has seen a significant

decrease in denial rates. To Roberge, who likens getting paid on a claim to a game of cat and mouse, the system’s most distinct characteristic is its use as a denial management tool, uncovering what he calls “hidden” denials.

“The wolf in sheep’s clothing for us is when a claim has been identi-fied by the insurer as ‘Claim Status 1’ indicating to us they’ve paid the claim, but in reality, certain lines in the claim that they are contractually obligated to pay have been denied,” Roberge says. “Our system has iden-tified instances where we are only getting paid a fraction of what we are owed, because the payer has denied a certain item within the claim.”

Improvements in data quality and integrity can be achieved by adhering to the following best practices: (III)

n clinical service documen-tation. Best performers have accurate and timely clinical documentation pro-cesses in place, inclusive of chart audit-ing and ongoing physician education.

n coding accuracy. Best per-formers leverage work flow technology and highly skilled coding experts to perform a compliant and optimal cod-ing work function.

n charge capture. Top-tier performers use quality audit process-es to ensure services are ordered and charged according to policy.

n cdm maintenance and strategic pricing. Best-performing facilities conduct regular and periodic maintenance to their charge descrip-tion master, in addition to frequent comparative rate modeling studies to ensure that service-level pricing is being optimized and is competitive with the market.

n unbilled. Best performers bal-ance quality and speed of billing. They have an average system-generated bill hold of five days, with eight days of total open unbilled, compared to 11 days nationally.

Sponsored Material n Special Supplement to HealthLeadersRcM10 n June 2008

THe effecTive Revenue cycle

“It’s simply a matter of funneling the information about the root cause of the

denial to those individuals directly involved with the claim.”

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The vision of Omaha-based Nebraska Methodist Health System (NMHS) is to be the region’s pre-ferred integrated healthcare provider as measured by customer satisfaction, clinical performance and financial performance. Providing patients with accu-

rate, up-front cost estimates is central to that vision.NMHS operates two hospitals with 491 beds and $863 mil-

lion in revenue, as well as a physician clinic with 475,000 annual patient visits and $112 million in revenue. Like other providers, NMHS faces several high-profile trends driving the need for pricing transparency:

> Patients with higher co-pays and deductibles > Focus on customer satisfaction> Public and media attention to hospital prices> Increased bad debt> Legislation requiring all Nebraska healthcare facilities to

provide a written estimate of the “average charges” for health services

The manual process NMHS used to estimate prices in advance was slow, susceptible to error and provided only a snapshot of total charges. Based solely on chargemaster data, it failed to take insurance benefits into account, often prompting sticker shock in patients. Furthermore, the healthcare provider did not have a pro-

cess in place to verify insurance coverage prior to service, resulting in frequent denials, delayed collections and rising bad debt.

Seeing an opportunity to enhance customer service while accelerating the revenue cycle, NMHS revamped its business office processes, establishing a dedicated team to perform insur-ance verification and provide upfront estimates using Accuro CarePricer®, a Web-based pricing tool. Drawing on data from

managed care contracts, the software generates estimates in half the time of NMHS’s manual process. As a result, denials, billing errors and returned mail have declined while payment time and accuracy has accelerated.

After just four months using its new pricing tool, NMHS had identified nearly $2.5 million in patient liability before care was provided. And while NMHS has yet to implement a system-wide upfront collection initiative, a pilot program at its outpatient diag-nostic facility resulted in the collection of nearly 50 percent of the patient liability prior to care, suggesting the potential for significant financial impact if leveraged across the system.

In addition to providing estimates prior to scheduled proce-dures, NMHS, which also uses Accuro’s Contract Manager and MyMentor™ products to identify underpayments and increase collections, allows patients to request estimates of their out-of-pocket liability by phone or via the Internet at the NMHS homepage (www.bestcare.org). A financial counselor follows up with every patient to explain the estimate, answer questions and discuss payment arrangements.

As a result, the system has experienced an accelerated rev-enue cycle and improved operational efficiencies. Prior to imple-menting Accuro CarePricer, patients did not receive an estimate of their financial obligation until they received an explanation of benefits 30 to 40 days after their procedure, which added to pay-ment delays.

“By moving what used to be a back-end function to the front of the revenue cycle, we’re now able to engage the patient in the medical decision-making and payment process earlier,” says Bob Wagner, director of patient accounts at NMHS. “In addition, we can identify services not covered by insurance up front, sav-ing time and reducing unnecessary denials. Pre-verification also allows us to more accurately anticipate reimbursement since we know exactly what we should be paid according to the terms of our contract.”

In addition to enhanced financial performance, NMHS has found that customer satisfaction is improved when patients know their financial obligations in advance and can make arrangements to fulfill them. “The system has transformed our estimating process for both staff and patients,” Wagner says. “Our business office staff can now generate accurate estimates quickly and easily, and our patients consider this a service that allows them to make informed deci-sions. This results in improved business office processes, increased financial stability and enhanced patient satisfaction.”

tRanspaRency in pRicingnmhs improves customer service and cash flow

by providing charge estimates to patients

“Our business office staff can now generate accurate estimates quickly and easily, and our patients consider this a service that allows them to make informed decisions. This re-sults in improved business office pro-cesses, increased financial stability and enhanced patient satisfaction.”

Sponsored Material n Special Supplement to HealthLeaders June 2008 n RcM1�

THe effecTive Revenue cycle

don’t Just manage denials, prevent themIndustrywide estimates place net rev-enues lost to third-party claim discrep-ancies in the 1%–3% range, although for many providers, that number is much higher. There are very effective solutions available today that can help healthcare providers recover much of this revenue lost to denials.

In order for healthcare organizations to have a truly effective revenue cycle going forward, however, the industry must begin to view denials not simply as something to be managed, but as something to be avoided, DeKaye says. “Oftentimes providers spend more time and effort getting a handle on denials than proactively preventing them.”

According to DeKaye, the top administrative reasons claims are denied—patient is ineligible, carrier provided is not the primary insurer, patient is not a member on date of ser-vice—all tie into the information that is entered on the front end. “It’s critical that patient access staff have the correct training, tools, and support that will

enable them to make correct decisions and input accurate and timely data that will ensure the claim goes out clean,” DeKaye says.

Adding to the billing and collections burden is the cost to collect payments, “typically reported between 2 and 3 per-cent for the business office,” according to the Healthcare Financial Manage-ment Association’s (HFMA’s) research paper Understanding your True Cost to Collect. “However, the fully loaded cost to collect may be much higher from strictly a business office perspective,

cesses that either require highly technical talent or represent economically strong relationships (better, faster, cheaper).

focus on solutionsThe level of complexity in the rev-enue cycle is steadily rising. Without the proper technical and operational tools, healthcare providers risk losing even more revenue to “leakage” than the 4%–5% that is common today. The old adage that you need to spend money to make money, while clichéd, applies wholeheartedly to the RCM.

“Implementing operational improvements in areas such as collec-tion rate and denial prevention typically yields in the neighborhood of 2% of net patient service revenue improvement,” Minugh reports. “Further, incorportat-ing modernized technology to the equa-tion yields a return on investment in the five-to-one or higher range.”

Unfortunately, many organizations have failed to make adequate invest-ments in their revenue cycle. “If you look at the technology spend over the last five to 10 years, it has really been focused on core clinical information systems,” says Deloitte’s Gardiner. “Also, revenue cycle technology gener-ally has not kept pace with the com-plexity of the contracts governing how hospitals are supposed to get paid.”

The good news, according to Gar-diner, is that with a maturing of the electronic medical record, healthcare providers are realizing the need to deploy current revenue cycle tech-nology, while vendors are delivering more advanced solutions all the time. “The next wave of technology invest-ment appears to be focused on patient accounting systems,” he says.

And while healthcare organiza-tions must consider how to prioritize additional assets on front-end patient access activities, it shouldn’t come at the expense of critical back-end

not including any other revenue cycle departmental cost.”

One way providers can reduce their exposure to overdue accounts harkens back to the discussion of up-front collec-tions. A chart that indicates what payers will cover for procedures vs. the patient’s financial responsibility, for example, is a useful tool for the patient access depart-ment. Further, many technology ven-dors and consultants specialize in work flow solutions that can inject efficiency into the collections process.

Additional best practices hospitals should consider for their billing and collections efforts include: (IV)

n electronic billing and clean-claim submission. Best performers have a much higher percent-age of claims electronically submitted to third-party payers. Also, they are much more likely to automate secondary bill-ing. Lastly, best performers average an 87 percent clean-claim submission rate, which is a direct result of good up-front data accuracy processes.

n Receivable stratification. The best performers use prioritized collection follow-up efforts that are mostly high-dollar stratification tech-

niques. Furthermore, their collection follow-up efforts are early in the pro-cess—typically 15 to 20 days from discharge date.

n denial and underpayment management. Top performers have denial and underpayment units dedicat-ed to appeal, recovery, and preventive feedback reporting loops to appropriate clinical, administrative, and managed care contracting departments.

n outsourcing. Best performers limit and aggressively manage outsourc-ing relationships for specialized subpro-

“If you look at the technology spend over the last five to 10 years, it has really been focused

on core clinical information systems.”

EXHALE THEINACCURACIES.

INHALEREVENUE.

With our expanded o� erings, MedAssets gives you something that’s as vital as oxygen — revenue integrity to help you get paid accurately and in a timely manner for patient services rendered. Our integrated suite of products, including the best claims management technology,* will help you transform your revenue cycle processes to improve net patient revenue and cash collections. From pre-admission, charge capture, case management and clinical documentation review to contract management, claims processing, and denial and accounts receivable management, we’ll help you not only achieve revenue integrity but also sustain it. Wondering what this all means to you? How about a 1-3 percent increase in your net revenue. Now, that’s a breath of fresh air.

* MedAssets Ranked #1 in KLAS Market Category for Claims Management - KLAS Enterprises, LLC 2007, 2006 MedAssets® is a registered trademark of MedAssets, Inc. © MedAssets 2005, 2007. All rights reserved.

For more information, please call us at 1-888-883-6332, or visit us online at www.medassets.com.

Please visit us at

HFMA’s ANI, Booth #1118,

June 23-26.

EXHALE THEINACCURACIES.

INHALEREVENUE.

With our expanded o� erings, MedAssets gives you something that’s as vital as oxygen — revenue integrity to help you get paid accurately and in a timely manner for patient services rendered. Our integrated suite of products, including the best claims management technology,* will help you transform your revenue cycle processes to improve net patient revenue and cash collections. From pre-admission, charge capture, case management and clinical documentation review to contract management, claims processing, and denial and accounts receivable management, we’ll help you not only achieve revenue integrity but also sustain it. Wondering what this all means to you? How about a 1-3 percent increase in your net revenue. Now, that’s a breath of fresh air.

* MedAssets Ranked #1 in KLAS Market Category for Claims Management - KLAS Enterprises, LLC 2007, 2006 MedAssets® is a registered trademark of MedAssets, Inc. © MedAssets 2005, 2007. All rights reserved.

For more information, please call us at 1-888-883-6332, or visit us online at www.medassets.com.

Please visit us at

HFMA’s ANI, Booth #1118,

June 23-26.

Sponsored Material n Special Supplement to HealthLeadersRcM1� n June 2008

THe effecTive Revenue cycle

resources such as primary and second-ary billing, claims appeals, and A/R improvement efforts. In fact, lessons from efficient back-end processes can be applied to enhancements on the front end, BearingPoint’s Wentworth believes. “Back-end systems typically incorporate good work flow, which is often missing on the front end.”

Finally, providers that apply the following work flow, patient satisfac-tion, benchmarking, and leadership best practices will realize the greatest overall benefits to their revenue cycle: (V)

n bolt-on technology. Best performers use “high-impact” work flow technologies that bolt on to plat-form patient accounting systems. Such technologies include (but are not lim-ited to) patient and payer verification, contract management, denial manage-ment, and receivable workstations.

n patient satisfaction. Best performers have integrated best practice work processes with patient satisfaction requirements in functions such as billing, time-of-service collections, and registra-tion. In addition, top performers con-stantly survey and measure the patient experience in revenue cycle functions.

n performance man-agement, benchmarking, and accountability. Top-tier performers use and insist on real-time information management tools to track revenue cycle key performance indica-tors to allow for proactive management and accountability.

n training. Best practice pro-viders tend to use a formal combina-tion of technical- and strategic-based curriculum training programs (as opposed to purely using job shadow training efforts).

n incentive plans. Top per-formers have incentive programs for executives, managers, and front-line staff that strategically align with the desired financial outcomes of the organization (net revenue optimization, for instance).

n ceo-board relation-ships. Best-performer status has been tied to revenue-cycle–edu-cated CEOs and board members. This allows them to have clear vis-ibility in their revenue cycle process through appropriate and meaningful performance management metrics and associated benchmarks. n

I. AHA TrendWatch Chartbook 2008 (based on data from the Centers for Medicare & Medicaid Services), American Hospital Association, Chicago, April 2008.II. Revenue Cycle Management: Industry Key performance Indicators 2004, 2003 Best Practice of Revenue Cycle Operations Report, and 2004 Best Practice of Revenue Cycle Operations Report, Zimmerman, Hales Corners, Wis.III. ZimmermanIV. Zimmerman

V. Zimmerman

ViaHealth (Rochester, N.Y.) is a nonprofit, multihospital healthcare system with approximately 710 acute hospital beds, 550 long-term care beds and 200 employed physicians. The institution, which pro-cesses approximately 175,000 hospital and physician

claims per month, was faced with a $75 million loss at the beginning of 2001 and had only nine days of operating cash on hand.

The problems were attributed in large part to ViaHealth’s cur-rent billing system, which had difficulty filing accurate claims. The facility’s A/R days were at approximately 64 and the initial accep-tance rate of claims was under 40 percent. As a result, ViaHealth had $50 million in bills that were past due, and the organization was forced to write off a substantial number of accounts.

In February 2001, ViaHealth brought on John Midolo as vice president of patient financial services to reengineer the organi-zation’s revenue cycle. Midolo soon began searching for an elec-

tronic billing vendor that could help ViaHealth reduce the number of claims being denied by payers. The healthcare provider selected The SSI Group’s (SSI) Direct ClickON billing and ClickON automated secondary billing software as its long-term financial solution.

With its new software, ViaHealth could see all denial data up front before the claim left the facility, which allowed the facility to correct claims in the ClickON product, according to Midolo. It also allowed ViaHealth to organize denials and correct the processes up front prior to claims production.

After only the first year with its new solution, ViaHealth was able to reduce its A/R days to 50.5 and improve the claims acceptance rate to approximately 95 percent. “The SSI software allowed us to restructure the billing staff so that we had a dedicated team to work on claim issues, freeing the rest of the staff to work on follow-up issues,” Midolo says. “Eventually, all claims will run through SSI’s products, enabling us to better track claims and predict cash flow.”

ReengineeRing the Revenue cycle

software reduces viahealth’s a/R days and improves its claims acceptance rate

SOME THINGS COME AND GO

OTHERS STAND THE TEST OF TIME

www.thessigroup.com / 800-881-2739

The Great Pyramid of Giza - 4567 years old

In 20 short years, The SSI Group, Inc. has built itself from a small healthcare software company

into an industry leader in the revenue cycle management arena. Our customers trust us as a single-

source provider - from insurance eligibility data and real-time claims status reporting to document

management and business office services. We provide an extensive suite of products, to help our

customers develop right along with us. Let us create a custmoized revenue cycle recovery solution

for you. Celebrating success, our customers and 20 years!

Sponsored Material n Special Supplement to HealthLeadersRcM1� n June 2008

The increased demand for services and the high percentage of uninsured patients, coupled with the intense scrutiny of government payers and the expanded role of the patient as a consumer, are some of the challenges making it more difficult for hospitals

to collect accurate and prompt payment for the services provided. Realizing the magnitude of addressing these issues consis-

tently across the health system, Memorial Hermann Healthcare System in Houston, Texas, began strategically implementing technology to achieve its revenue integrity goals and ultimately enhance its financial performance.

The provider has implemented numerous technologies over the last several years to improve performance and financial results, such as a standardized chargemaster for consistent charging and defen-sible pricing. Several years ago, however, Memorial Hermann real-ized that there was significant revenue loss due to lack of integrity between the item master for supply costs, invoices for implants and the chargemaster. Memorial Hermann wanted to improve pricing accuracy by ensuring charges were aligned with supply acquisition costs and sought a partner to provide the solution.

Memorial Hermann selected MedAssets’ CrossWalk® product, which automatically and continuously links the hospital’s supply information with the chargemaster to ensure charges are in line with costs plus a defined mark-up. The organization selected technology from MedAssets due to the company’s broad experience with all aspects of chargemaster and pricing management, according to Helen Powers, system executive - revenue operations, decision sup-port and Medicare profitability for Memorial Hermann. “They worked closely with us to migrate our chargemasters to be defensible and price competitive to position us successfully for transparency and increased consumerism in elective procedures.”

The implementation was rolled out in three phases with the last phase involving the replacement of “open-price” charges with fixed-price charges to eliminate variability in the system. Phases one and two involved the linkage of more than 16,000 supply items to more than 6,000 charges, which are now updated based on cost, using a standard and defensible markup for supplies. As a result of the accuracy improvements, Memorial Hermann has seen increases in patient and payer satisfaction levels: Patients question charges less often, and payers process claims more efficiently.

To ensure that all gaps in potential revenue capture were addressed, Memorial Hermann also implemented the Charge Cap-ture Audit capability from MedAssets. The system performs an auto-

mated review of all itemized bills to identify potential missing charges based on the services performed. This provides a more accurate and complete bill to the payer, eliminating the need to re-bill due to late charges and improving revenue capture and net revenue results.

Additionally, Memorial Hermann sought a new claims man-agement vendor to improve its billing processes and net revenue performance and selected XactiMed®, a MedAssets company. Memorial Hermann’s objectives included addressing its first-pass percentage rate of claims, improving process workflow and reduc-ing accounts receivable days.

“Its revenue cycle solutions made immediate and substantial impacts for Memorial Hermann,” says Michael Bennett, assistant vice president of operations finance/patient billing services. “Finan-cially, the improvement in our days in accounts receivable yielded tremendous cash infusion. Operationally, our revenue cycle manag-ers have a broader scope to work with, and as a result, a greater sense of accountability throughout the entire revenue cycle.”

Six months after implementation, Memorial Hermann realized a 17 percent reduction in accounts receivable days while their clean claim percentage increased to 73 percent from virtually zero percent. Memorial Hermann recently implemented Medicare Direct Claims Management capabilities and expects to improve the accu-racy of Medicare processing, accelerate Medicare cash flow and improve the audit trail and accountability for Medicare processing.

“The integration of MedAssets’ services helps streamline our revenue cycle operations, improves revenue integrity and provides additional efficiencies, integrated workflow, better reporting, and positive financial results,” Jeff Brownawell, chief revenue officer for Memorial Hermann says. “They continue to provide innovative solutions and are a key partner for Memorial Hermann.” Trademark language—MedAssets®, CrossWalk® and Xac-tiMed® are registered trademarks of MedAssets, Inc. © MedAs-sets 2005, 2007. All rights reserved.

stReamlining the Revenue cycle

memorial hermann achieves sustained performance with integrated technologies

“They worked closely with us to migrate our chargemasters to be defensible and price competitive to position us successfully for transpar-ency and increased consumerism in elective procedures.”

“A multifaceted approach to the revenue cycle is essential to help providers maximize profits and minimize inefficiencies. Coding intelligence must be built into virtually all systems to reduce errors, aid in compliance, and provide easily accessible information. Denials management should be incorporated into contract management and repricing functionality to point to denials with the greatest revenue impact. The use of a single-source vendor for revenue management solutions logically leverages

common data sets and intelligence as well as technology cost efficiencies. Providers can uncover millions of dollars in underpayments with contract management and denial solutions, collect millions more up-front by providing accurate patient estimates, and substantially improve the efficiency and effectiveness of their own staff with results-driven online coaching.” Accuro Healthcare Solutions, Dallas, 877-321-0500, www.accurohealth.com

Brent McCartyPresident and COOAccuro Healthcare Solutions

Sponsored Material n Special Supplement to HealthLeaders June 2008 n RcM1�

THe effecTive Revenue cycle

“With healthcare costs rapidly outpacing increases in payment rates, providers must find new ways to efficiently administer care and optimize appropriate reimburse-ment for services rendered. A critical challenge to this objective is the complexity of

accurately validating all applicable medical necessity requirements and commercial payer utilization rules both prior to and after providing care. In today’s rapidly changing healthcare reimbursement environment, healthcare professionals require integrated solutions that enable compliance with complex utilization policies at every stage of the revenue cycle and promote the efficient communication of accurate, fully coded billing information to public and private payers. Our solutions ensure accurate coding and documentation, enable medical necessity validation throughout the revenue cycle, optimize reimbursement, and offer a positive return on investment.” 3M Health Information Systems, Salt Lake City, 800-367-2447, 3mhis.com

Jerry Kolosky Vice President Medical Necessity & Compliance 3M Health Information Systems

“Providers require tools to verify patient insurance and demographic data at the earliest point of patient contact. Integrated solutions customized to an individual provider’s operating rules can automatically retrieve real-time information about a patient’s benefits (copay, deductible, etc.), address, and even his or her credit history. Providers must be able to quickly and consistently determine how much they are owed and by whom and provide multiple options for collecting payment from the patient prior to

or at the point of care. Services such as claim status generation can help increase cash flow on the back end by identifying which claims are scheduled for payment and which need follow-up to avoid going 60 or 90 days without being paid.” Passport Health Communications, Franklin, TN., 888-661-5657, www.passporthealth.com

“Revenue cycle is a linear process with sequential steps, each of which impacts steps downstream affecting overall compliance, cash collection relative to amount entitled to collect, and timeliness of payments. By focusing on the overall process, and driving revenue integrity, our comprehensive

solutions ensure compliance and maximum revenue capture at every step for optimum reimbursement. With improved automation, providers can increase the accuracy of registration, documentation, coding, charge and billing for all services provided. Through integration, workflow, and a single data source for payer expected reimbursement calculations, our revenue integrity solutions help ensure providers can collect all monies owed, reduce denials and improve identification and recovery of underpayments, providing reimbursement in less time. Our service offerings, which provide product solutions and know-how, deliver the potential to increase a typical health system’s net patient revenue by 1 to 3 percent and decrease supply expense by 3 to 10 percent.” MedAssets, Atlanta, 866-323-6332, www.medassets.com

Dan James PresidentMedAssets

Jeff DrakeChief Sales and Marketing OfficerPassport Health Communications

“Solutions that accelerate the revenue cycle by streamlining work flow, reducing A/R days, and enabling two-way integration with hospital information systems are critical for healthcare providers looking to maximize profits and improve efficiency. Our healthcare EDI software is

designed to improve revenue cycle efficiencies while reducing staffing requirements. Specifically, it helps manage payer denials through timely identification of any non- or short-paid claim, which allows providers to take immediate action to resolve the situation. These technologies and robust dashboard intelligence provide business-critical information and facilitate a healthcare enterprise’s ability to quickly identify and act on denial problems before the payment cycle is complete, which improves operational efficiency and cash flow.” The SSI Group, Inc., Mobile, AL., 800-881-2739, www.thessigroup.com

Doug BilbreyExecutive Vice President of Sales and MarketingThe SSI Group, Inc.

“The shift to more patient financial responsibility for their own healthcare places hospitals at greater financial risk. When patients assume greater and greater personal financial obligation for their healthcare, hospitals need to implement new technolo-

gies on the front end of the revenue cycle to expedite self-pay collections. These tools will enable healthcare organizations to efficiently manage their self-pay, charity, and uninsured patients before services are rendered. Our solutions include eligibility and demographic verification, registration data quality assurance, assessment of the patient’s ability and propensity to pay, point-of-service collections, bill estimation, and financial aid qualification packages. By melding these tools on the front end with proven post-service claims management systems, hospitals can revolutionize their entire revenue cycle for improved financial and operational results.” RelayHealth, Atlanta, 800-778-6711, www.relayhealth.com

Dave Mason Vice President and General ManagerRelayHealth

What revenue cycle solutions offer healthcare providers the greatest opportunity to maximize profits

by minimizing inefficiencies?

© 3M 2008. All rights reserved. DB2008063

Humanly Possible

Balance financial stability and quality with 3M Health Information Systems

With hospitals working harder than ever to maximize appropriate reimbursement while

enhancing the patient experience, 3M can help improve financial performance. We provide

the power to reduce payment denials and rework while helping you reach new standards in

compliance and efficiency. With more than 25 years experience in healthcare performance

management, 3M can help you make and sustain needed improvements.

Find out what is Humanly Possible.

V isit us at HFMA ANI 2008, booth 618.

Improvements made.Improvements needed.

Improvements sustained.