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I.T. Putting Together the Revenue Pieces
Health Data Management Magazine, March 2007
Based on credit scores, household income, patient history of paying the delivery system in a timely manner and other factors, Orlando Regional decided to focus on its medium-risk population.
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But about one-third of patient accounts are medium-risk and worth more effort to collect, Orlando Regional has found. "We're bringing in the same cash flow from self-pay accounts but have 50% less staff in the self-pay collections area," says Keith Eggert, vice president of revenue management.
Revenue cycle management software has been around for years, but for much of that time has focused on core claims management-getting claims out the door and posting payments when they arrived.
In recent years, software vendors have introduced tools that dig deeper into revenue cycle issues, not only helping organizations understand areas where they are not getting the revenue they deserve, but also providing the data to actually do something about it.
Contract management software, for instance, analyzes actual payments from insurers against what they are contractually obligated to pay. Recovering money from underpaid claims literally is "found money" and the average hospital can recover $3 million in the first year of using the software, says Ryan Hampton, director of operations and health care services at PayStream Advisors Inc., a Charlotte, N.C.-based research and consulting firm.
"As things get tighter, every dollar counts a lot more," he adds. "The software isn't used to generate new revenue, but protect the revenue that hospitals should already be getting."
More than 70% of hospitals have at least one advanced revenue cycle management tool, Hampton estimates. "There's good ROI on all of these systems," he adds. "It's almost silly not to have one or more of these tools."
Some provider organizations have found that capacity management software not only improves patient flow and satisfaction, and boosts staff productivity, but also generates substantial amounts of new revenue (see story, this page).
Other organizations in recent years have installed software that enables clinicians to capture appropriate charge data for professional services by having the tools to enter the correct diagnosis and procedure codes at the point of care.
Some of these providers now are starting to expand on that concept by adding software that also captures "technical charges"-the charges for use of the facility, drugs and other supplies-at the time of use.
The Self-Pay Analytics software used at Orlando Regional, from Emeryville, Calif.-based MedeFinance Inc., also is helping the organization enroll patients in Medicaid and properly grant charity care to eligible patients.
Household income is part of the data set received from credit agencies and other sources via the software, making it easy to determine if a patient is eligible for Medicaid or charity care.
Previously, these accounts would roll out the door to the collections agency, says Eggert, the vice president of revenue management.
The software flags patients "who fell through the cracks" of the delivery system's program of enrolling eligible patients for Medicaid, a problem that most frequently happens in the emergency department. The hospital now is getting more revenue from Medicaid, although a formal analysis has not yet been done, Eggert says. Further, identifying more patients eligible for charity care enables the delivery system to write off the costs of that care, instead of having to categorize it as bad debt.
Checking the payments
Provider organizations implementing contract management software often find huge savings during the first year of use. That's because they can retrospectively analyze claims already paid in the past year or so, find those that were underpaid and seek the proper payment.
But significant savings can continue year after year, says Mike Caudle, assistant vice president of patient accounts at 16-hospital Carolinas HealthCare System in Charlotte, N.C. "We recovered $6 million in underpayments last year, just from managed care, non-governmental payers," he notes.
The delivery system since 1998 has used the Pathways Contract Management module from McKesson Corp. as part of its implementation of the San Francisco-based vendor's hospital information system.
When the time comes to renegotiate an insurer's contract with Carolinas HealthCare, modeling features of the software enable Caudle to enter the insurer's proposed contract terms and see the financial changes that would occur.
Further, if a payer's new proposal includes a term that wasn't consistently followed in the current contract, Caudle has the data to prove it. "If an insurer can't pay according to a contract term, you have leverage and can have it pulled."
The use of electronic data interchange technology to conduct insurance eligibility verification transactions is an "excellent" complement to contract management software, Caudle says.
Verifying eligibility helps the delivery system police its own data entry before a claim ever goes out the door, he explains. For example, a patient may be registered as being in an HMO and the provider will bill the claim as such. But the eligibility verification may show that the patient actually is in a PPO, enabling billing at a higher reimbursement rate.
Less waiting
Eligibility verification also reduces the amount of time spent checking, for example, why a PPO payment was below contractual terms, and finding out later the patient actually is in an HMO and the lower payment was appropriate.
"We're able to resolve variances prior to a patient getting a statement in the mail," Caudle says. "That's really reduced our customer service calls. We're not sending statements with amounts that exceed the explanation of benefits that the patient got from the insurer."
Some provider organizations are veterans at using contract management software, but have turned to more advanced software offered in recent years.
Lancaster, Ohio-based Fairfield Medical Center in 2006 scrapped its existing contract management system and installed the software of Concuity, a division of Trintech Group Plc, Dallas. The system went live late in the year.
The vendor loaded initial contracts covering government and major regional insurers, and hospital staff have loaded the rest. The vendor also is analyzing a portion of claims paid on back accounts through mid-2005. "They have found opportunities for substantial recovery," says Sharon Scruggs, manager of contracts and collections at Fairfield.
In addition, staff at the hospital have found a significant number of underpayments in the first months of using the software. "When you find a pattern of underpaying by a payer, you can drill down by revenue or CPT code and identify significant underpayments," she adds. "I certainly feel Concuity will pay for itself with the first six months of full use."
Scruggs expects more savings from analysis of denials because what's learned can be leveraged when insurance contracts are renegotiated.
"This will enable us to better understand what we need to negotiate for," she explains. "We will know what loopholes are in the previous contract. As I look at line item denials and adjustments, I'll be a better negotiator."
When rehabilitation provider HealthSouth Corp. traded its legacy revenue cycle management information system for a newer model, the difference in functionality was striking.
Last November, Birmingham, Ala.-based HealthSouth completed a two-year, 107-hospital implementation of the Patcom revenue cycle management information system from Keane Healthcare, Melville, N.Y.
The system automates many processes that were manual, such as tracking and posting denied payments. Staff previously got denials in the mail or went to insurer Web sites to pull down denials, then manually posted them to patient accounts.
Now, denials automatically are tracked, posted to accounts and placed in work lists for resolution. HealthSouth doesn't have figures yet, but it is clear that denials are fewer and are resolved quicker since the new software went in, says Debra Larson, a vice president of information technology.
"The new system gives us standardization," she explains. "The software asks for certain standardized information. If a field is blank or doesn't have proper information, the system will flag it."
Declining denials
This means fewer claims are being rejected because of improper or missing information because fewer claims are going out the door with bad data.
Standardization is the foundation upon which everything else rests when going through a major revenue cycle management improvement initiative, Larson says. And a big part of standardization is in an organization's internal processes.
Organizations, for instance, must develop standard names for insurance companies and departmental classifications. Insurer UnitedHealth Group, for example, also is commonly known as UnitedHealth Care, UnitedHealth and UHC.
Standard data entry, enforced by the new software, also has compelled HealthSouth employees to "take ownership" of their daily work processes, Larson notes.
No longer, for instance, can an employee creating a claim enter a generic "John Smith" as the name of the physician.
"They can't get the data," she explains. "Now with the work lists, the person entering the data owns the data and has to find out what needs to be entered. They can't just leave a data field blank and go on."
Beyond charge capture
Lahey Clinic Medical Center since 2001 has used professional charge capture software to enable more than 450 physicians to properly code diagnoses and treatments at the point of care using PDAs. The Burlington, Mass.-based provider in February started beta tests of software to capture technical charges. Lahey Clinic, which sees more than 1 million patients annually in its ambulatory facilities and 300-bed hospital, is a developmental partner with MedAptus Inc., Boston.
Putting together the requirements to collect technical charges electronically was an 18-month process, says Linda Cagle, senior vice president of clinical services at the clinic. Right now, more than 10 full-time employees manually enter technical charges. As the electronic process is rolled out, these staff will be given new duties, such as performing reconciliation and quality control functions.
There may be potential for increased revenue when technical charges are done at the time services are rendered, Cagle says. "For instance, drug charges can be high, and that's something you want to capture." Further, a nurse-only visit can't be assessed a professional charge, but it can be assessed a technical charge.
Lahey Clinic units that initially will test technical charge capture include neurosurgery and nephrology, says Cynthia Trapp, director of professional coding.
The organization will start measuring its return on investment immediately and collect three months of data. "We're not just looking for potential revenue, but elimination of forms and improved workflow," Trapp says.
Once users and administrators are comfortable that the software works well, it will start to be rolled out enterprisewide.
Support for expanding charge capture to the technical side is strong, Trapp says. "Our physicians today can't even imagine going back to paper on the professional side."
Using the revenue cycle management and claims clearinghouse services of Duluth, Ga.-based Navicure Inc. since 2004 has brought new efficiencies and increased revenue to HeartPlace, a 70-physician, 21-site cardiology group practice with headquarters in Dallas.
But if a user in the claims management module wanted to pull up corresponding electronic remittance advice, it wasn't a one-step process. The user had to open the ERA module and run a search for the document.
That's why HeartPlace in late 2006 served as a pilot site for Navicure's new ERA Matching functionality, which was introduced in January.
Married modules
The new functionality marries the claims and ERA modules, enabling a user in the claims application to click on a tab and immediately access the remittance data.
Doing so speeds administrative time and cuts frustration, says Kimberly Ridl, business systems analyst at HeartPlace. But pulling up remittance with the claim at the same time also enables staff to quickly spot patterns, such as an unusual number of claims submitted during the same time period to a particular insurer that don't have accompanying remittance advice.
That means the claims may have been pended and because adjudication hasn't yet happened, the payer hasn't transmitted electronic remittance advice through Navicure's clearinghouse to HeartPlace.
Checking for remittance advice regularly through ERA Matching enables HeartPlace to find potential problems with submitted claims within a week or so, rather than waiting for monthly reports that would show the problems.
It's too soon to know if the goal of using ERA Matching to get payments in the door faster is working, Ridl says. But the practice has seen quicker payment of secondary claims since using the vendor's EOB Manager software to manage explanation of benefits data.
EOB Manager enables HeartPlace to send secondary claims with attached explanation of benefits data from the primary insurer. The EOB data set is stripped of non-relevant patient information to protect privacy. "It's taken away a lot of our manual work to prepare secondary claims," Ridl says.
When implementing new revenue cycle management tools, ongoing training and monitoring is needed to ensure employees don't return to old, familiar routines, Ridl says. "Some people don't want to change the way they do things and you have to show them the benefits."
To make sure staff didn't fall back, once HeartPlace started receiving electronic remittance on all its claims sent to particular payers, it eliminated the paper remittance, forcing everyone to use the electronic version.
As vendors continue to improve the functionality of their products, provider organizations should embrace the changes, Ridl says. "Take advantage of these things, don't pretend they don't exist."
Sidebar
Capacity management = more revenue
Multi-campus Lehigh Valley Hospital in Allentown, Pa., used to have an average delay of 74 minutes from the time a patient was discharged until housekeepers and other staff were notified. Then it took an average of 210 minutes to turn over the bed and have it ready for another patient.
This prevented quick admissions to the hospital from the emergency department, keeping needed beds occupied in the ED. The hospital also was hitting 1,300 minutes a month in operating hold times. Those delays meant some surgeries couldn't be started because patients ready to leave the recovery room didn't have an inpatient bed available to them, so there weren't beds opening up in recovery.
After the hospital had an admissions increase of 1.5% in 2002, it implemented bed management software the following year from TeleTracking Technologies Inc. of Pittsburgh.
It now takes an average of 60 minutes at all three hospitals to turn a bed around-often half that time at the two smaller facilities. Operating holds have been cut by 87%. And the hospital has seen an increase in admissions during the past three years of 6.2%, 5.3% and 8.4%, respectively. "We grew almost 20% in admissions without the addition of beds," says Lisa Romano, administrator for patient logistics and access.
Better bed management is directly related to an undisclosed but substantial hike in revenue for Lehigh Valley, Romano says. "There's no doubt that when you reduce the OR hold you give yourself increased revenue opportunities," she explains. "We're also no longer turning patients away because we didn't think we had a bed available. The key is turning beds over at the peak of the day and truly being able to meet demand."
To cap it off, staff productivity also increased with better bed management. "As you chop the bed turnover delay time, you can chop non-productive work, such as three 'bed meetings' a day," Romano says. "It's unbelievable the salary time spent doing functions that can be completely stopped."
Since the bed management software went in, Lehigh Valley has not had to cancel a surgery or keep the recovery room open all night due to inpatient beds being unavailable, Romano says.
TeleTracking and the American College of Emergency Physicians in December surveyed more than 200 hospitals on capacity management issues. Sixty percent of respondents reported diverting patients to another emergency room in the past year because of overcrowding or patient flow problems. Further, 28% of respondents reported canceling or delaying surgeries because of bed shortages.
At Lehigh Valley, redesigning processes were just as important to improving patient flow and bed management as the software, Romano says. "We have a team of central dischargers who do nothing but discharge patients and turn over rooms."
Patient transport management software from TeleTracking integrated with the bed management software enables a fast start to the discharge process. That's because transportation of a patient to the lobby is recognized as a discharge. That turns the bed's color to brown on the bulletin board, signaling it is ready for turnover, and a housekeeper is automatically paged.
Sidebar
The rules of contract management
Some provider organizations using contract management software to check for underpaid claims see a change in behavior of insurers once it's clear the providers are monitoring payment rules.
Use of the software has a "policing" effect, notes Michael Caudle, assistant vice president of patient accounts at Carolinas HealthCare System in Charlotte, N.C. "But underpayments have not dropped to a level where it's no longer worthwhile to monitor them."
Different codes in the software enable providers to see underpayments per payer and the amount recovered, he adds. "Putting that information in front of payers is pretty powerful."
Appealing underpaid claims also gets easier, contends Ryan Hampton, director of operations and health care services at PayStream Advisors Inc., a Charlotte-based research and consulting firm.
"As you put payers on the spot and have the data to back it up, you find they're a lot easier to deal with and may make changes on the spot," he adds. "Things get a lot better. You see a lot fewer underpayments."
In part, Hampton notes, fewer underpayments result because insurers have become aware of improper coding on their payment systems and have fixed the errors.
How it works
When implementing the software, vendors often load an initial set of contracts into the contract management system.
This typically includes government payers and a client's top three to five commercial payers. However, vendors-for an additional fee-will load all the contracts a provider wants.
A client typically will mail or fax contracts to the vendor, which scans and uploads the contracts into the client's contracts management database. The vendor then extracts and codes specific terms of the contract into the rules engine.
Some providers are comfortable loading and coding at least some of their contracts. "They believe the people who actually put together the contracts are better at extracting relevant data for coding," Hampton explains. "The first part is interpreting the contract, and the next part is taking that interpretation and plugging it into the coding."
Loading data to drop-down rule menus is doable for provider staff with minimal computer skills, says Sharon Scruggs, manager of contracts and collections at Fairfield Medical Center in Lancaster, Ohio.
The 222-bed facility uses contract management software from the Concuity division of Trintech Group Plc, Dallas. Staff members responsible for payer relations are ready to start working their work lists with minimal training, using templated correspondence at the desktop, she adds.
Ideally, Hampton believes, this is a job for both the vendor and client-the client extracts data and the vendor codes and enters it.
Most contract management software is offered via the application service provider computing model and costs $50,000 to $250,000 a year, Hampton says. "To get 10 times return on investment for years one through three is not uncommon."
PayStream Advisors recently released a report titled "Leaving Money on the Table: A Buyer's Guide to Contract Management and Payment Review Solutions." The a 67-page report explains how these software applications work, gives a detailed analysis of products from five vendors, and provides additional information to assist in comparing vendors and solutions. The report is available free at www.paystreamhealth.com.
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