Healthcare Enterprise

Operations
MED INF 404-0
Rev Cycle

Finance Operations

Purpose

Record and report transactions that change the

value of the firm
Assist operations in setting and achieving cost
and revenue improvements
Guard assets and resources against theft,
waste, or loss
Assist governance in short and long-term
planning
Arrange capital funding to implement
governance decisions
Managing the revenue cycle

Healthcare Revenue Cycle Basics

What is the Revenue Cycle?

The people, processes and technologies that manage the
administrative flow through the patients continuum of
care to assure payment for the care provided.

Patients

Revenue Cycle Goal: Obtain accurate information in order

to receive timely payment for services.
CUSTOMER SERVICE

Care
Scheduling Registration CoordiAuthorization
nation
Verification

Charge
Entry

Medical
Records

Billing

Remit/
Collection Cash
s
Posting
Follow-up

INFORMATION SYSTEMS &

INFRASTRUCTURE

PreService

Care Delivery

Post-Service

Manage
d Care

Why is the Revenue Cycle a

priority?
Revenue cycle operations have dramatic impact on
financial results.

Patients
CUSTOMER SERVICE
Care
Scheduling Registration CoordiAuthorization
nation
Verification

Charge
Entry

Medical
Records

Billing

Remit/
Collection Cash
s
Posting
Follow-up

Manage
d Care

INFORMATION SYSTEMS &

INFRASTRUCTURE

Pre-Service

Care Delivery

Post-Service

Long-term Revenue Cycle goals include:

Minimize revenue leakage
Reduce administrative cost of revenue cycle operations
Speed cash inflow
Provide a best patient experience from scheduling to
5
account resolution

Pre-Service Patient Access

CUSTOMER SERVICE
Care
Scheduling Registration
Authorization CoordiVerification nation

Charge
Entry

Medical

Billing

Records

Remit/
Collection Cash
s
Posting
Follow-up

Manage
d Care

INFORMATION SYSTEMS &

INFRASTRUCTURE

Pre-Service

Care Delivery

Post-Service

The goal of Patient Access is to provide an effective and efficient intake

process while assisting in maximizing revenues by obtaining patient
information required for payment of services.
The challenge of Patient Access is that they have two customers with
competing priorities: Clinicians and Billing.

Patient Access Functions:

Scheduling
Bed Control
Pre-registration
Pre-admission
Insurance Verification
Pre-certification
Authorization
Referral Process/Management
Financial Counseling

Information needed:

Name and other patient identifiers:

sex, date of birth, social security
number
Address, home telephone number
occupation and employer of patient
Name, address, group number and
certificate numbers of third party
payers
Guarantor and Subscriber Information
Emergency Contact Information
Name of primary care physician (PCP)
Authorizations or pre-certifications
6

Care Delivery - Care Coordination

CUSTOMER SERVICE
Care
Scheduling Registration
CoordiAuthorization
Verification nation

Charge
Entry

Medical

Billing

Records

Remit/
Collection Cash
s
Posting
Follow-up

Manage
d Care

INFORMATION SYSTEMS &

INFRASTRUCTURE

Pre-Service

Care Delivery

Post-Service

Care coordination is a comprehensive, integrated approach to

care delivery characterized by an emphasis on risk identification;
wellness and maintenance; and appropriate, effective resource
utilization.
Care Coordination:

Manages the entire patient population and calls upon other

programs and resources as needed

Works with clinicians and payers to make sure care is medically

necessary and approved for payment
Appropriate Level of Care Identification
Concurrent Review

Care Delivery - Charge Entry

CUSTOMER SERVICE
Care
Scheduling Registration
CoordiAuthorization
Verification nation

Charge
Entry

Medical

Billing

Records

Remit/
Collection Cash
s
Posting
Follow-up

Manage
d Care

INFORMATION SYSTEMS &

INFRASTRUCTURE

Pre-Service

Care Delivery

Post-Service

Charge Entry Best Practices:

Charges for all room and ancillary services are posted

to the patient account within 24 hours of the time of
service.

Charges posted after 24 hours from time of service are

measured and monitored on a daily basis.

Charge master is reviewed and updated on an annual

basis.
If the charge was not entered, the service didnt happen.
Missing charges impact budgeting, clinic revenue,
future growth.
8

Post-Service - Medical Records

CUSTOMER SERVICE
Care
Scheduling Registration
CoordiAuthorization
Verification nation

Charge
Entry

Medical

Billing

Records

Remit/
Collection Cash
s
Posting
Follow-up

Manage
d Care

INFORMATION SYSTEMS &

INFRASTRUCTURE

Pre-Service

Care Delivery

Post-Service

Custodian of the medical record, the legal document in

which a patients care is recorded and documented
The primary source for the clinical data required for
reimbursement by Medicare, primary insurance, or other
payers
Activities:

Transcribe physician dictation including histories and physicals (H&Ps),

operative reports (Op Reports), and discharge summaries
Perform chart assembly and analysis
Perform coding and abstracting
Monitor completion of medical record documentation
Answer requests for medical record documentation 9

Post-Service - Billing
CUSTOMER SERVICE
Care
Scheduling Registration
Authorization CoordiVerification nation

Charge
Entry

Medical

Billing

Records

Remit/
Collection Cash
s
Posting
Follow-up

Manage
d Care

INFORMATION SYSTEMS &

INFRASTRUCTURE

Pre-Service

UB-04s are used for billing in- and outpatient hospital, skilled nursing facility and
home health services
HCFA 1500s are used primarily for billing physician services
Many services have both a professional and a technical bill (For example, surgery)

Claim forms contain in individual locator fields:

Post-Service

Billing refers to the activity of sending a bill to the patient and a

claim form to the third party payer

Care Delivery

Provider information (provider number, signature of biller)

Demographic information (patient and guarantor)
Clinical information (diagnoses, procedures)
Financial information (UB revenue codes, COB)

Electronic billing is the goal

Best Practice: Before a bill is sent, it must go through a billscrubbing process
10

Post-Service - Collections
CUSTOMER SERVICE
Care
Scheduling Registration
Authorization CoordiVerification nation

Charge
Entry

Medical

Billing

Records

Remit/
Collection Cash
s
Posting
Follow-up

Manage
d Care

INFORMATION SYSTEMS &

INFRASTRUCTURE

Pre-Service

Care Delivery

Post-Service

To generate cash flow and maintain standard of outstanding patient

service consistent with management objectives
Receivables are like dead fish they dont age well.
Techniques Used for Successful Collection Efforts:
Insurance accounts not paid within 30 days are immediately followed up.
Patients are clearly informed of the status of their account on a regular basis.
Personnel are organized by payor type. Accounts are prioritized in
descending dollar order for follow-up.
Self-pay follow-up is principally in the form of a letter series or referred to an
external vendor for active account follow-up.
Automatic ticklers are in place to support the prompt completion of the
required action steps.
Electronic Claims Statusing
11

Post-Service - Cash Posting

CUSTOMER SERVICE
Care
Scheduling Registration
CoordiAuthorization
Verification nation

Charge
Entry

Medical

Billing

Records

Remit/
Collection Cash
s
Posting
Follow-up

Manage
d Care

INFORMATION SYSTEMS &

INFRASTRUCTURE

Pre-Service

Care Delivery

Post-Service

Best Practices for Cash Posting/Applications:

Contractual adjustments are computed accurately and posted to the

account at the time of billing for all payers.
Payment remittances are received and posted electronically for all
applicable payers
Detailed reports supporting denial volumes and dollar values can be
produced by denial type, by payer, by service line, etc.
Payments are directed to a bank lockbox for immediate deposit. Lock box
receipts are electronically summarized and uploaded into the patient
accounting system.
Accounts are automatically flagged for possible underpayments.

12

Post-Service Managed Care

CUSTOMER SERVICE
Care
Scheduling Registration
CoordiAuthorization
Verification nation

Charge
Entry

Medical

Billing

Records

Remit/
Collection Cash
s
Posting
Follow-up

Manage
d Care

INFORMATION SYSTEMS &

INFRASTRUCTURE

Pre-Service

Care Delivery

Post-Service

In charge of contract between payer and hospital.

Contract outlines

Payment rates
Payer discounts
Payment timeframes
Whether or not authorization, notification, or referrals are required
for services
When the patient can be billed

Best Practice works closely with revenue cycle staff to

understand payer problems and assists with resolution.
Ensures payments are received within contract timeframe.
Payments outside of timeframe include a payment penalty.
13

What are the Process Breakdowns?

Inadequate
training and
accountability
of patient
access
personnel

Not being managed with

a revenue maximization
and denial avoidance
mentality

Uncoded
backlogs
building up delayed billings

Inadequate
relationships
with payors

Bad
Information
CUSTOMER SERVICE
Care
Scheduling Registration CoordiAuthorization
nation
Verification

Charge
Entry

Medical
Records

Billing

Remit/
Collection Cash
s
Posting
Follow-up

Manage
d Care

INFORMATION SYSTEMS &

INFRASTRUCTURE

Inadequate
insurance and
patient follow-up
creates cash flow
difficulties

Rework
Information
systems personnel
who do not
understand patient
accounting

Chargemaster not
updated to address
billing errors and
payor specific

Billers not
retrained to
function like
collectors

14

Future Revenue Cycle Technology

Vision
Scheduling/Registration

Billing

Multiple schedule & registration entry

points.

Common front-end for registration and

scheduling.

Integration with authorization &

verification process. I.e. Gather
necessary insurance and demographic
information at the point of entry.

Remittance / Cash Posting

Real-time billing integrated

with collection upon patient
checkout.

Predicted collectability of
individual bills.

Edit for claim accuracy &

completeness prior to
posting.

Online payment via credit card.

Automatic re-submission of
denied claims.

Real-time claim adjudication.

Automated appointment confirmation.

CUSTOMER SERVICE

Care
Scheduling Registration CoordiAuthorization
nation
Verification

Charge
Entry

Medical
Records

Remit/
Collection Cash
s
Posting
Follow-up

Billing

Manage
d Care

INFORMATION SYSTEMS &

INFRASTRUCTURE

Authorization / Verification

Online and real-time systems to

confirm: eligibility, precertification, authorization,
verification, referrals.
Online, real-time, verification of
benefit plan coverage and
limitations.
Automatic confirmation of
insurance information and
expected out-of-pocket

Charge Entry

Integration of order and

charge entry (no dual entry),
including edits for
completeness and
accurateness of billing
information.

Collections/Follow-up
Prioritize collection based
on amount and ability to
pay.

Customer Service (call

center)

Tracking system to
categorize correspondence
in order to create
automation tools.

New telephony system to

15

Examples

CDI PROGRAM BY THE NUMBERS

Bottom Line Improvement:
Concurrent Reviews:
Average CDI CMI: 1.2363
Average CDI Improvement: .41
Additional Expected Reimbursement: $172,808
Back-end Reviews:
Avg. CMI Increase in Re-Billed Acts: .94
Additional Expected Reimbursement: $49,026
7 Week Total:
$49,026 + $172,808
= $221,834 Total Expected Additional
Reimbursement Secured Through the CDI Team
Review
*

IL APR DRG AND EAPG UPDATE

On July 1, 2014, the Illinois Dept. of Healthcare

and Family Services (HFS) will begin using the All
Patient Refined Diagnosis Related Groups (APR
DRGs) and Enhanced Ambulatory Patient Groups
(EAPGs) methodologies from 3M to process
Medicaid inpatient and outpatient claims.

IL APR DRG AND EAPG UPDATE

IL APR DRG AND EAPG UPDATE

IL APR DRG AND EAPG UPDATE

IL APR DRG AND EAPG UPDATE

Sample Financial dashboard

Source

Revenue Cycle

Feb

Mar

Cash Collections

Meditech

Days in AR

Meditech

Discharged Not Final Billed

Meditech

Denials

Meditech

Delinquent Medical Records

Meditech

Operational Efficiency

Productive Hours/Patient Day

ADP

Premium Hours/Patient Day

ADP

Staffing Costs/Discharge

Meditech

Care Management

Discharge Patients Average Length of Stay

Meditech

Acute Patients Average Length of Stay

Case Mix Index

Finance

Net Income

Meditech

Days Cash on Hand

Meditech

Debt Service Coverage Ratio

Meditech

Revenue Cycle Common

Terms
Patient vs. Subscriber vs. Guarantor

Patient The person receiving services

Subscriber The person who pays for the insurance policy
Guarantor The person that is ultimately responsible for the bill

Gross vs. net revenue

Gross Dollar amount that is billed

Net Dollar amount that is collected

Contractual Adjustment

Amount written off based on payers contract for services.

Contractual Adjustment = Total billed insurance payment patient liability

Governmental Payers

Medicare and Medicaid

Self Pay

Payment for services made by the guarantor for the patients care

Capitation payment

A pre-determined fixed fee paid by a health plan to a professional caregiver

on behalf of its members regardless of whether care or what care was
provided

Days in A/R

Net (or gross) receivables / Net (or gross) revenues for last 3 months

# of days in 3 month period

Best Practice is Gross Days under 50

24

Thank you!