November 21, 2011
Tackling Revenue Disrupters
By Annie Macios
For The Record
Vol. 23 No. 21 P. 20
Put aside ICD-10 for a moment to consider other factors that seem determined to wreak havoc on a hospital’s financial viability.
If you’re riding down a bike path and get a flat tire, your first reaction would probably be to fix the leak and get back on course. But had you seen the snare in the road ahead of time, perhaps you could have avoided a “broken cycle” and traveled more smoothly to your destination.
For healthcare facilities navigating the uncertain terrain of healthcare reform, staying abreast of potential revenue cycle disrupters is a key to paving the way toward a brighter financial future.
Uncertainty Is the Only Certainty
Lamon Willis, CHCO, CPC-P, CPC-H, CPC-I, a healthcare consultant at Craneware, an Atlanta-based revenue integrity software company, says the many government initiatives currently in the works means coders will have to be retrained to increase their knowledge of physiology, anatomy, and other medical terminology in order to get in step with a shifting reimbursement landscape. “I liken it to when ambulatory payment classifications were put into place in fiscal year 2000. To this day, Craneware still responds to provider questions on issues related to it on a daily basis, and many times they are for basic issues,” he says.
Willis believes the problems will intensify because several initiatives are going to occur and overlap on an ongoing basis, with revenue cycles in many hospitals feeling the strain.
The expanded government focus to ferret out healthcare fraud and abuse is forcing facilities to juggle requests from several sources, with recovery audit contractor (RAC) audits becoming the norm, according to Willis. For example, it isn’t odd to have two or three audit agencies—whether they are from the government or a third party—examining a facility’s records. “A lot of responses require detailed knowledge to defend the audits. These audits are not going away but actually increasing,” Willis says.
To the surprise of some, RAC audits are targeting healthcare organizations of all sizes. “Several clients mention their assumption that the government would start doing audits at large organizations, but it seems the government is also performing RAC audits at the smaller community facilities that don’t have the same bandwidth as large facilities to manage all the work related to prebilling audits and appeals,” says Rebecca Forsyth, RHIA, vice president of product development at Pyramid Healthcare Solutions.
Audits and their associated fees and penalties limit the services hospitals are able to provide, Willis says. For example, some hospital groups are declining to treat Medicare and Medicaid patients because they can’t afford to provide the level of care people need in light of the various regulations and reimbursement issues associated with such clients.
“With all that is going on, it is amazing that facilities can get patient care done and make money doing it,” says Willis, who believes facilities are on the cusp of new issues that will affect revenue cycle management. For example, most audit organizations are currently not looking at EHR issues, but Willis expects the number to rise as implementations increase.
Affordable Care Act
The Affordable Care Act will increase insurance coverage for some individuals, but how this will fall into place and affect hospital revenue is still unknown until the legislation becomes final.
With the expansion of coverage come new challenges, including questions about whether there are enough primary care physicians to handle the expected increase in demand for care. According to Willis, the government is trying to address this issue by offering a bonus for treating Medicare and Medicaid patients. Still, even after the act’s passage, there will be approximately 23 million uninsured Americans.
“With so many initiatives still up in the air, it will seem like regulatory overload as these things hit all at once,” Willis says. “It becomes very resource intensive for healthcare practitioners and HIM personnel to do their jobs.”
Forsyth adds that the act will also likely spur an increase in the research of Medicare management registries related to patient outcomes and appropriateness of care, which in turn will inevitably increase the amount of audits.
MaryAnne Pace, vice president for Health Blueprints, Inc, an NCO Group company, says while many issues will affect revenue cycle management, one in particular supersedes the others. “What we deal with daily in managing our revenue cycle is the high levels of uncompensated care that continue to increase,” she says.
Pace notes that the current economy and a high unemployment rate play a role, but hospitals also overestimate what they will receive in reimbursement and from managed care contracts. She finds there is approximately a 70% chance that a copay or deductible won’t be collected at all if it’s not collected at the time of service. To combat this trend, Pace says hospitals must cover themselves on the front end and identify payment methods when patients present.
The emergency department (ED) is where most bad debt originates, according to Pace. Because many people don’t have coverage, they either wait to seek treatment until they are really sick and then present at the ED, or they understand hospital policies related to ED up-front cash collections. Pace says patients will often visit an ED hoping to be treated without any money being collected, thereby accessing expensive care without incurring the cost.
Some U.S. markets have seen an increase in ED closures because providers find it impossible to control the patient and financial demands it places on the organization, Pace says. “We’ve done a lot of assessment work regarding who is coming in, and 50% of most emergency room visits don’t belong [there],” she notes, adding that the key is finding a better forum to get these patients to a more appropriate level of care, a move that would have a beneficial impact on costs.
Some facilities are looking to control the proverbial ED “bleed” by adopting a more comprehensive up-front triage process to better screen patients prior to service. “If they are triaged and are found to have a nonemergent acuity level, hospitals will provide patients with options. They can remain in the ED for treatment but a deposit—usually around $150—will be collected, or they are directed to other, more appropriate venues for care, such as their general practitioner, a clinic, or the health department, which are less expensive for the patient and the hospital,” says Pace, who notes that the advent of accountable care organizations (ACOs) may provide relief to overburdened EDs.
Accountable Care Organizations
As ACOs become a reality, a challenge will be how best to share data across the continuum of care. “Under this system, the information will be fractured between entities such as the physician, hospital, home care, diagnostic imaging, and so forth, so it will be challenging to address how that information flows, the consistency and relevancy of the data, and compliance with HIPAA,” says Forsyth.
It will be imperative to set up monitoring and reporting to identify potential failure points. Consistency of coding across all entities will be essential. “But how will HIM professionals approach these issues? Will it be centralized? Decentralized? Who will manage the process? As the ACOs are still in their infancy, these questions are yet to be answered,” notes Forsyth.
Mike Nolte, vice president and general manager for GE Healthcare IT, says to manage revenue flow effectively, providers must anticipate a change in delivery models. “With the potential move toward ACOs, we are beginning to see value-based purchasing of healthcare and the rethinking of the traditional fee-for-service models. Facilities will need to look at how populations of patients are managed and how that will be funded,” he says.
Nolte cites three strategies to navigate through these changes. First, he says there will be a need for providers to take on more risk. “Many providers are not set up to see the complete financial picture. It is important to look at the patient population in regard to the quality of care and reimbursement allotted, the cost to provide care and associate it in an incremental way, and how that translates into using the best vs. current care models to put them into a better financial situation,” Nolte says.
Second, providers must “close the loop” in healthcare by examining value-based purchasing to understand the connection between financial and clinical activity and how that activity gets reconciled in regard to revenue. There must be insight into patient activity and how increased margins of care and quality affect revenue. For example, a physician may e-prescribe a medication, but a patient may never follow through with obtaining and/or taking the medication. In a value-based model, where the quality of care rather than activity is reimbursed, that may show up as both a negative clinical implication (visit to an ED after a needed medicine is not taken) and an additional, unplanned cost (the cost associated with that visit and/or a resulting hospital admission).
Nolte says that when facing uncertainty with reimbursement models, it is important that providers have a reliable revenue cycle management partner. “What we see impacting revenue cycle is often cyclical—for example, the trend toward the managed care model in the ‘80s. By having a partner with versatile solutions already in their portfolio, it can ensure that customers have a good, viable business from a financial standpoint,” he says.
In addition, Nolte says, the arrival of ACOs will trigger an increase in the number of newly insured, which may translate into different consumer behavior models. Therefore, solutions based on previous experience must differentiate between models. Providers will have to consider driving the patient experience and consumer choice instead of cash performance dictating the model.
“I believe that the industry doesn’t have all the answers on how this will play out because the level of uncertainty is high, but my advice would be to work with someone with the depth and experience, so that you can easily adapt to the changing environment,” Nolte says.
ARRA offers facilities the chance to earn incentive payments through the implementation of EHRs, e-prescribing, and quality reporting initiatives if implemented in the next several years. While this presents an opportunity for additional revenue, it also creates questions around what steps will be needed to successfully implement these projects, not to mention the large capital investment needed at the outset.
Clinically speaking, hospitals are trying to improve revenue cycle from a process perspective by examining how physicians practice. Pace says analyzing performance data is becoming more prevalent. “If two physicians have patients with the same clinical presentations and one physician’s patient had a lower length of stay, lower cost to treat, as well as excellent documentation that enables higher reimbursement, it will be evident which physician is practicing more cost-effectively,” she explains.
Forsyth adds that a lack of resources, knowledge, and time to convert to an EHR is creating an influx of physicians joining hospital groups or health systems.
“Based on client feedback, there are some situations where many physicians are joining under the umbrella of a health system. Not only are there challenges with previously independent businessmen becoming part of a corporate structure, corporate compliance challenges are also arising,” she points out. “Corporate compliance needs to extend their reviews to address physician practice documentation, coding and billing, and ensuring adherence to regulatory agencies from a physician practice perspective. There may be additional pressures for physician practices to meet organizational metrics for coding and billing submission in order to be in line with the facility’s standards to ensure revenue cycle efficiency.”
Forsyth believes the plethora of issues facing revenue cycle management provide an opportune time to reassess financial performance. For example, the impending arrival of HIPAA 5010 can be viewed as an opportunity to improve the revenue cycle.
“In order to ensure smooth transition to 5010, I recommend a technical audit coordinated between the information technology team and revenue cycle team members identifying typical failure points occurring between disparate information systems, where the interface may not be complete or contains failure points due to inconsistent HL7 [Health Level Seven International] interpretation,” she says. “This situation provides the opportunity to create a data ‘black hole.’ I advise testing with all patient types and payers to ensure the information is flowing and populating the revenue cycle applications and ultimately the claim appropriately.”
Such analysis enables facilities to identify problems or “leakage” that may impact cash flow before going live, Forsyth adds.
To stay current and facilitate changes, healthcare organizations may utilize software to make revenue cycle management easier. Workflow technology not only supports collaboration across clinical and financial staffs and leads to accurate, compliant charging, but it also helps provide the documentation necessary to defend revenues in an audit.
However, Willis notes that software must be maintained on a regular basis and is only as good as the organization that supports it. In other words, even if the technology is up to the task, it takes competent revenue cycle, IT, and HIM staff for revenue to flow successfully and with the least incident.
“So much regulatory change is going on over the next five years that it can be difficult for staff to stay on top of the skill sets needed to address them all at once,” says Willis. But to maintain an organization’s financial viability, they’ll have no other choice.
— Annie Macios is a freelance writer based in Calgary, Alberta, Canada.