Solving the revenue-cycle problem - Vantage Point - Healthcare Financial Management Association meeting - Brief Article

Healthcare Financial Management, April, 2002 by Ronald R. Long

I recently participated in a panel discussion of various aspects of the revenue cycle at an HFMA PFS Forum breakfast as part of Region 5's Dixie Institute. I was joined by three HFMA Past National Chairmen: Ronald Anspaugh, FHFMA, senior manager, Cap Gemini Ernst & Young, Atlanta, Georgia; Glenn Black, Jr., FHFMA, senior vice president and CFO, Promina Health System, Atlanta, Georgia; and Bonnie Phipps, FHFMA, CPA, president and CEO, Promina Health System, Atlanta, Georgia. Distinguished company indeed!

Although each presentation offered a different perspective, they all shared a common theme: realizing revenue in today's world of complex reimbursement schemes has become a very difficult task. So difficult, in fact, that income lost due to controllable write-offs currently is estimated to average 1 to 2 percent of gross revenues.

CFOs should be reviewing their financial reports for data related to the write-offs experienced by their business office. These data should show adjustments categorized by type so that healthcare financial managers can determine not only how long it takes their healthcare organization to be paid, but also whether they are being paid at all.

Some examples of controllable write-offs are:

* Local medical review policies;

* No precertification;

* No verification of insurance eligibility;

* Lack of medical records documentation;

* Primary insurance information missing;

* Denied days for length of stay or level of care;

* Incorrect coding;

* Carve-outs not identified properly or in a timely manner; and

* Insurance contract underpayment.

And the list goes on.

How we got here is not the important issue. The important issue is what we do to solve the problem.

The solutions must combine training, education, technology, enforced accountability and simplified contract administration. Technology solutions, in particular, are critical to the end product but are the most difficult to make work. For example, the accuracy and completeness of eligibility and precertification information can be greatly enhanced with implementation of an on-line information system connected to multiple insurers. This solution eliminates the need for staff to make telephone calls for additional information and wait for a response, and facilitates collection of the portion of the bill for which patients are responsible at the time of service.

The solution, however, is only as good as the insurance companies that subscribe to the service. For example, MedUnite, Inc., San Diego, California, has developed a consortium of national managed care insurers that have agreed to cooperate in offering a standard on-line interface product. The company offers a seamless, Internet-based healthcare transaction system that significantly reduces claim and payment processing time and lowers healthcare administrative costs. MedUnite's system is a giant first step toward providing this type of technology solution.

Other technology applications also can be employed to help solve the revenue-cycle problem. Examples of these applications include:

* Claims-editing software to screen claims for fatal errors before submission to the carrier;

* Denials-tracking software to track denied claims and assign them to the appropriate department for resolution; and

* Work-list communication systems to track claims that require further intervention and communicate them to the appropriate department for resolution.

None of these applications involve simple installations. Implementation of any of the applications requires a workflow redesign and enforcement of accountability. Without technology applications such as these, however, a solution in today's complex payment environment is not possible. Leading @ The Speed of Light will enable you to recognize those opportunities and slay the revenue-cycle monster.