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Revenue Cycle 101

Revenue Cycle 101. AGENDA Introduction to Revenue Cycle Definitions Cradle to Grave Process Flow Departments/Functions State of the Industry Revenue Cycle

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Revenue Cycle 101

AGENDA•Introduction to Revenue Cycle

•Definitions

•Cradle to Grave

•Process Flow

•Departments/Functions

•State of the Industry

•Revenue Cycle Ripple Effect

•Healthcare Reform

Revenue Cycle Defined

HFMA defines Revenue Cycle as: All administrative and clinical functions that contribute to

the capture, management, and collection of patient service revenue.

It pertains to the entire life of a patient account from creation to payment – Cradle to Grave

Once the patient encounters your facility, the Revenue Cycle clock starts.

 

Revenue Cycle TermsCharge Capture:Charge Capture:Documented services are manually or electronically translated into billable fees.Claim Submission:Claim Submission:Billable fees are submitted to the insurance company via a universal claim form for payment.Coding:Coding:The process of transforming descriptions of medical diagnoses and procedures into universal medical code numbers.Patient Collections:Patient Collections:Collecting patient balances, making payment arrangements.Pre-registration:Pre-registration:Collection of all registration information, including eligibility, benefits and authorizations, prior to the patient's arrival for inpatient or outpatient procedures.Registration:Registration:Collection of a comprehensive set of data elements required in establishing a Medical Record Number and satisfying regulatory, financial and clinical requirements.Remittance Processing:Remittance Processing:Posting or applying payments/adjustments to the appropriate accounts, including rejects.Third Party Follow-up:Third Party Follow-up:Pursue collections from insurers after the initial claim has been filed.Utilization Review:Utilization Review:Evaluation of the necessity, appropriateness, and efficiency of the use of medical services and facilities, which includes regular reviews of admissions, length of stay, services performed, and referrals.

Importance of Revenue Cycle

“Consumers don’t think twice to search online for the lowest possible price when it comes to buying airfare, household products, wardrobe updates or a new car, but as patients, we tend to accept whatever price is first quoted. But that’s about to change. What’s demanded and expected in the rest of the American economy is now coming to health care. There will be price competition, price transparency and accountability.” David Houle, author of Entering the Shift Age.

Source: FOX Business Report 2013

Three Distinct Revenue Cycle Components

Patient Access Mid Cycle Business Office

Scheduling Case Management BillingPre-registration Utilization Review CollectionsInsurance Verification Coding Denials MgmtRegistration Transcription FICOFICO

Revenue Cycle Process Map

Process Flow

PatientAccess

Facility HIM Billing Customer

Service A/R Mgmt

Scheduling

Pre-Reg/Registration

EligibilityVerification

FICO

CaseMgmnt

DischargePlanning

ServiceProvided

Discharge

ClaimEdits

Coding

Transcription

ChargeEntry

CDM

ExceptionReports

ClaimsSubmission

Late Charges

StatementsCollections

Legal

DenialsAppeals

AdditionalBilling

PaymentPosting

AccountResolution

FICO

PatientInquiry

Process Flow

Revenue Cycle processes flow into and affect one another.  When processes are executed correctly, the cycle performs predictably.  However, problems early in the cycle can have significant ripple effects.  The further an error travels through the revenue cycle, the more costly revenue recovery becomes.

Patient Access

Patient Access is the patients virtual access to the hospital/facility. It’s the first phase in the Revenue Cycle process – enter the Cradle.

Important functions/information gathered here include: Responsible for 50% of claims dataResponsible for 50% of claims data Medicare/ABN reviewMedicare/ABN review Scheduling of most OP servicesScheduling of most OP services Insurance VerificationInsurance Verification Customer ServiceCustomer Service Obtaining Certification and Authorizations Obtaining Certification and Authorizations Collection of patient insurance/demographicsCollection of patient insurance/demographics Attempt Point of Service collectionsAttempt Point of Service collections Financial Counseling – HCAP/Charity screeningFinancial Counseling – HCAP/Charity screening Medicaid EligibilityMedicaid Eligibility

Health Information Management

HIM maintains patient health records by hardcopy and electronic format in hospitals, physician offices, health insurance companies, government agencies and other facilities that provide health care services.

Important functions/information gathered here include:

•Transcription ServicesTranscription Services•Customer ServiceCustomer Service•Coding of services provided Coding of services provided

•CPT codes (procedures) CPT codes (procedures) •ICD-9/10 (diagnosis) ICD-9/10 (diagnosis) •HCPC (supplies, drugs, etc.) HCPC (supplies, drugs, etc.) •ASC CodesASC Codes•Assists in Audit reviewsAssists in Audit reviews•Manages storage and retrieval of medical recordsManages storage and retrieval of medical records•Assists in the conversion to Electronic Health Records Assists in the conversion to Electronic Health Records

Patient Financial Services

Patient Financial Services manages the patient claim from the time it is entered into the system in scheduling/registration to the time it is adjudicated – the point in which the claim has entered the Grave.

Important functions/information gathered here include:

Charge MasterCharge Master Employing tools to ensure accuracy in charge captureEmploying tools to ensure accuracy in charge capture BillingBilling Managing Claims EditsManaging Claims Edits Follow-Up with Insurance companiesFollow-Up with Insurance companies

AppealsAppealsDenialsDenialsPending ClaimsPending Claims

Customer ServiceCustomer Service Cash PostingCash Posting Leverages vendors/systemsLeverages vendors/systems

A/R Management While A/R Management is monitoring a receivable, it can also circle back to

the very beginning of the claim being created.

Important functions/information gathered here include:

Denials/Contract ManagementDenials/Contract Management

Early Out/CollectionsEarly Out/Collections

Estate/BankruptciesEstate/Bankruptcies

HCAP/Charity HCAP/Charity

Medicaid EligibilityMedicaid Eligibility

Payor AuditsPayor Audits

Refunds/TakebacksRefunds/Takebacks

Small Balance/Other write offsSmall Balance/Other write offs

Customer Service

Need to change the way we think about Need to change the way we think about this component.this component.Customer Service is occurring during the Customer Service is occurring during the entire process.entire process.Examples of unique Customer Service Examples of unique Customer Service include valet parking, food tokens, pyxis include valet parking, food tokens, pyxis vending, billing discounts, flexible payment vending, billing discounts, flexible payment terms. Adding “value” to the entire patient terms. Adding “value” to the entire patient experience.experience.

State of the Industry

Enormous spending on IT due to regulations and MU. Enormous spending on IT due to regulations and MU.

Increase in patient portals (clinical and financial). Mobile apps and Increase in patient portals (clinical and financial). Mobile apps and technology that keep patients virtually engaged. technology that keep patients virtually engaged.

Emergence of new payment models. Now focusing on P4P, clinical Emergence of new payment models. Now focusing on P4P, clinical outcomes, shared cost savings and readmission rates.outcomes, shared cost savings and readmission rates.

Continual changes in plan pricing and benefit package designs. Continual changes in plan pricing and benefit package designs.

Engaging a more informed and educated patient who are more Engaging a more informed and educated patient who are more sensitive and aware of costs and the value related to it. Potential for sensitive and aware of costs and the value related to it. Potential for declines in utilization of services due to pricing competitions. declines in utilization of services due to pricing competitions.

Strategic alliances, mergers and acquisitions in order to capitalize Strategic alliances, mergers and acquisitions in order to capitalize on market share, group discounts, reduction in administrative on market share, group discounts, reduction in administrative burdens, etc… burdens, etc…

Information at your fingertips via dashboards and real time analytics.Information at your fingertips via dashboards and real time analytics.

State of the Industry““With the focus on value-based care, number one, hospitals have to get very strategic in With the focus on value-based care, number one, hospitals have to get very strategic in

having good information at their fingertips. What I'm talking about is a lot of times, we having good information at their fingertips. What I'm talking about is a lot of times, we find the data or analytics aren't there for hospital CFOs and executives to make find the data or analytics aren't there for hospital CFOs and executives to make real-real-time decisions about their costs, clinical outcomes, what services are profitable time decisions about their costs, clinical outcomes, what services are profitable versus what services aren't profitable, whether to acquire or partner physician versus what services aren't profitable, whether to acquire or partner physician practicespractices. Hospital executives, in a value-based care environment, have to be very . Hospital executives, in a value-based care environment, have to be very strategic about decision making, and strategic about decision making, and they have to understand their data and be able they have to understand their data and be able to take that data and translate it into useful information. They need that information to to take that data and translate it into useful information. They need that information to make good capital investment decisions and good decisions about where to spend make good capital investment decisions and good decisions about where to spend their cashtheir cash.”.”

Steven Huddleston. Senior Executive Vice President of Business Development at Parallon Business Steven Huddleston. Senior Executive Vice President of Business Development at Parallon Business Solutions. Solutions.

Recent feedback from CFO’s and financial industry executives revealed these areas as Revenue Cycle priorities:Contract/Denials ManagementContract/Denials ManagementVendor RelationsVendor RelationsLeverage TechnologyLeverage TechnologyPOS CollectionsPOS CollectionsCompetitive Pricing Competitive Pricing

Source: Beckers Hospital CFO publication – July 2013Source: Beckers Hospital CFO publication – July 2013

Managing The Ripple Effect

A ripple effect is the continuing and spreading results A ripple effect is the continuing and spreading results of an event or action. of an event or action.

*Note – it’s not always a “bad” thing to have a *Note – it’s not always a “bad” thing to have a ripple effect. ripple effect.

Potential Areas to Focus On

Rising Self Pay/HDHP'sRising Self Pay/HDHP's*Propensity to Pay models, POS initiatives*Propensity to Pay models, POS initiatives

ICD 10ICD 10*Testing, Top 10 ICD 9 codes, Payor readiness*Testing, Top 10 ICD 9 codes, Payor readiness

Rise in Exchange products Rise in Exchange products *How do you plan to manage this?*How do you plan to manage this?

Taking full advantage of IT/EHR/EDITaking full advantage of IT/EHR/EDI*Low hanging fruit, portals, interfacing notes*Low hanging fruit, portals, interfacing notes

Staff education/trainingStaff education/training*Critical for progress and morale*Critical for progress and morale

KPI's and dashboardsKPI's and dashboards *Analytics is the hot button now*Analytics is the hot button now

AuditsAudits

Healthcare Reform

The ACA rolls out this year. What does that mean?The ACA rolls out this year. What does that mean?Millions of Americans will gain health insurance because of ACA Millions of Americans will gain health insurance because of ACA provisions intended to make coverage mandatory for most provisions intended to make coverage mandatory for most residents, make it more accessible and affordable, and end residents, make it more accessible and affordable, and end discriminatory practices. discriminatory practices. However, it's worth noting that a few of the law's original 2014 However, it's worth noting that a few of the law's original 2014

provisions have been postponed. Namely:provisions have been postponed. Namely:The employer mandate The employer mandate has been delayedhas been delayed by a year; by a year;Individuals whose plans Individuals whose plans were canceledwere canceled because they were not  because they were not compliant with the ACA requirements for 2014 can be sold for an compliant with the ACA requirements for 2014 can be sold for an additional year;additional year;Individuals whose plans Individuals whose plans were canceledwere canceled may be exempt from the  may be exempt from the individual mandate;individual mandate;The launch of the website for the small-business exchange The launch of the website for the small-business exchange has been has been postponedpostponedby one year;by one year;The limit on out-of-pocket expenses The limit on out-of-pocket expenses has been delayedhas been delayed by one year. by one year.

Healthcare ReformWhat else changes for hospitals?What else changes for hospitals?

2014 isn't just about the ACA's coverage expansion.2014 isn't just about the ACA's coverage expansion.For one, Medicare penalties for quality are about to get tougher:For one, Medicare penalties for quality are about to get tougher:The Value-Based Purchasing Program.The Value-Based Purchasing Program.  Maximum penalties for the program Maximum penalties for the program will increase to 1.5% of Medicare base payments starting on Oct. 1, 2014. will increase to 1.5% of Medicare base payments starting on Oct. 1, 2014. The Hospital Readmissions Reductions Program.The Hospital Readmissions Reductions Program.  Maximum penalties for Maximum penalties for the program will increase to 3% starting on Oct. 1, 2014. Also, the the program will increase to 3% starting on Oct. 1, 2014. Also, the program program will expandwill expand the number of conditions for which readmissions are  the number of conditions for which readmissions are penalized to include chronic lung disease and elective hip and knee penalized to include chronic lung disease and elective hip and knee replacements.replacements.The Hospital-Acquired Condition Reduction Program. The Hospital-Acquired Condition Reduction Program. The third—and The third—and final—penalty program launches. It will reduce FY 2015 Medicare payments final—penalty program launches. It will reduce FY 2015 Medicare payments by up to 1% for hospitals that perform poorly on measures of adverse by up to 1% for hospitals that perform poorly on measures of adverse events, including pressure ulcers and health care-associated infections.events, including pressure ulcers and health care-associated infections.Another major health industry change this year will keep every hospital's IT Another major health industry change this year will keep every hospital's IT department busy for months. On Oct. 1, ICD-10 is department busy for months. On Oct. 1, ICD-10 is slated to roll outslated to roll out. The new . The new codes were initially scheduled to roll out on Oct. 1, 2013, but CMS moved codes were initially scheduled to roll out on Oct. 1, 2013, but CMS moved the implementation amid concerns that providers would not be ready.the implementation amid concerns that providers would not be ready.

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