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Skills for the New Healthcare Internal Auditor

Revenue Cycle

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WELCOME TO MY WORLD!

What is the “Revenue Cycle?”It is the entire process: From scheduling, to pre-admission, to registration, to charge capture, to HIM coding, to patient financial services/business office’s claims submission, to insurance resolution, to payment in full—with or without financial counseling –or bad debt.Each component has potential for audit.. But first let’s learn some of the basics.

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Outlining The

Revenue Cycle

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Definition of basic terms

Admitting-Central Registration-Patient AccessScheduling – central scheduling vs each dept does their ownCharge capture – the process of the revenue generating departments marking charge tickets or order entry.Health Information Management/HIM – medical recordsBusiness Office – Patient Financial ServicesHold days - # of days hold before dropping off the computer (usually 4-7 after d/c. Need to wait 72 hours for all Medicare accounts.)

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More Terminology Help

CPT- procedure codes that outline what procedure was done. (updates Jan yearly) CPT=# 0-9999

HCPC – a 2nd type of procedure coding – but alphabetical. J/pharmacy; G & C/usually temporary Medicare only codes (updates April yearly)

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Health Information Management/Medical Records

All visits require an ICD/diagnosis code before the claim will be processed by the payerHIM coders take the physician dictation/notes and assign ICD as well as CPT codes, where appropriateCoding backlog occurs due to physician delays, record delays and coder shortages= cash delays.

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How are charges submitted to payers?

IT creates billing document.UB-04/837I form is for hospital charges sent to payer.1500/837P form is for physician/professional charges.Forms are sent electronically (65%) or hardcopy to payers/health plansHIPAA Transaction Sets dictated standardization

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What is an AR Day?

An indicator of how fast the cash is moving Different ways to count an AR Day:

From Final bill to paid in full From Discharge to paid in fullGross vs net days

Gross – without deductions Net – with allowance/reductions for different items: bad debt, contractuals, etc.

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Redesign Revenue Cycle Opportunities - WIN

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How Medicare’s Common Reimbursement Systems

Work

Inpatient: Diagnostic Related Groups/DRGUses Dx, procedures where an end coder groups into payment categories (1 payment/1 stay)Outpatient: Ambulatory Payment Classification/APC (Each CPT could be paid)

Uses CPT and HCPC codes to group clinically andfinancially related codes into APC payment groupsSkilled Nursing facilities – Resource Related Group (a # of days = 1 RUG payment)Home Health – Home Health Related Groupers (1 HHRG $ for each 60 day care plan)

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Reimbursement Systems

Remittances –payment document from the payersWhat type of payment arrangements are hospitals experiencing thru contracting as well as federal and state mandated:

Prospective payment systems – payment based on something besides charges: Diagnosis, CPT codes, care plans. (EX: Medicare PPS: Inpt/DRG; Outpt/APC)Fee for service – payment based on chargesPer Diem – payment based on a per day rateCapitation – payment based on covered lives, per member, per month

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Charge Description

Master Challenges

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National Issues with CDM/Charge Description

MastersCongress Sub Committee/Ways and Means -focusing on hospital charge structureUnder/Uninsured – focusing on how hospitals charge and collect

MILLION DOLLAR QUESTION—can you explain how your charges were created to your community?

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Golden Rule for Charging

Use Medicare Guidelines for all payersNo care team/charge capture staff member can even tell who the payer is for the pt.

Question: How are charges to be created?Answer: Cost plus a reasonable mark up

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The Road Ahead

MedPAC survey of hospital charge-setting practices (9-04; 6/05):CDM-lgr/complexNo systematic relationship: cost to chargeMark-ups vary by service:low cost items=higher markup; pharmacy, supplies and new services

Payer’s Bill of RightsCa Assembly Bill 1627 (eff 7-1-04)Hospitals have a written or electronic copy of their CDMs available on locationClear and Conspicuous notice required in the ER, admission and billing officeList of 25 most commonly charge services available upon requestCDM submitted to the state on an annual basis

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The Charge Description Master

Welcome to the charge master – CDMIt houses all charges that are billableIt houses all stats-only itemsIt houses all hard coded CPT codesIt houses all activity used for productivityIt requires at least yearly updating with changes in the CPT and HCPC manualsIt houses all regulatory billing requirements

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Revenue Opportunities within the CDM

Key to success is department ownershipKey to success is understandable charge descriptors. The MOM TEST!Key to success is ongoing CDM Integrity Team work in identifying revenue opportunities, changing regulations and teaching to all effected individuals.Key to success is automation for research,etc—but only with the above elements!!

“Computers are useless. They can only give you answers” Pablo Picasso

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Charge Protocol Manual

Explore how charges are being created. Who, within each department, is inputting charges? Charge tickets, order entry, bar coding?Interview staff – all 3 shifts – to determine who/how inputting of charges.Use actually billing documents – UB04 and itemized statements to ‘see’ the actual charge capture.Develop written protocol on HOW TO!

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Patient Financial

Services/Business Office

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Hot Spots Within Patient Financial Services/Business Office

Credit Policy/CP – easily understood by the patients & the staff.Communicated to the patients early and throughout the processDocumentation in the patient’s history shows CP used.If not resolved within CP and not eligible for charity, turn to bad debt.EX) Inpt/120 days from D/c; Outpt/90 days d/c

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More Uglies with PFS

Lost charges –sent to the floor, never charged for; charted, never chargedLate charges – claims dropped off IT, then charges submitted. Cost of both – if identified, adjusted bills sent to the payers.Patient receive 2 statements –from payers and facility.

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Let’s Look at the Billing Documents: UB-04s and itemized Statement

UB-04 = sent to the payers; hardcopy and electronic

Itemized statement = usually sent to the patient. Payers, on request only.Tells the story of the CDM with billable services. Roll the itemized to the UB –without manual intervention

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UB92

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Tracking and Trending

Last but not least, keep the focus:PREVENT REPEAT REWORK.PFS has a massive amount of information.

Sample: Trend late charges by dept; eligibility denials by area; Medical necessity denials by CPT code; manual ‘touching’ to the UB-92 prior to submission, etc.

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AR System’s Contact Info

Day Egusquiza, PresidentDaylee1@mindspring.com208-423-9036Free Info Line – informal updates, process ideas, etc.HAVE FUN!