Coding and Billing

Sept. 24, 2009

Transform Hospital’s Billing Process

For most hospitals, there are three main areas in the coding and billing process that represent the biggest opportunities to increase cash flow and reduce revenue variability: medical necessity, claims compliance and denials analysis.

Best practices abound for improving performance in each, says Karen Bowden, RHIA, president of consulting services at ClaimTrust. “Most hospitals and their vendors, however, tend to take a relatively superficial approach to these in the context of new IT or process changes that seek to improve the revenue cycle from end-to-end. Experience has shown that diving deeper in these three areas, in particular, will yield the greatest positive impact on cash and predictability.”

Medical necessity requirements can change frequently, and differ significantly from payer to payer and plan to plan, she says. “Rapid access to highly accurate and up-to-date medical necessity data is essential to multiple functions within the hospital, including admissions, coding and medical records.”

Bowden explains that a high-performance medical necessity process should include the following elements:

  • up-to-date medical necessity information easily available to staff, including establishing a process for regularly checking on and updating requirements for all payers and all plans, not just Medicare;
  • a central repository for this data that is easily accessed, preferably via the Web for speed and to support remote workers; and
  • robust medical necessity profiles for each patient at intake for scheduling, registration and billing.

Every hospital has a claims scrubber of some kind that runs claims through basic demographic checks and maybe even OCE/CCI edits. Most hospitals, however, still rarely achieve a clean claims rate above 75 or 80 percent, according to Bowden. “A near-100 percent first-pass pay rate is achievable and represents a major incremental revenue opportunity,” she says. Black belt-level claims compliance goes beyond traditional scrubbing in the following ways:

  • It should include the most up-to-date payment rules for all payers, including: new rules that have yet to be published and distributed, fiscal intermediary-level edits for Medicare rules that refer to that level and plan-level edits for commercial payers (these edits can change on a weekly or even daily basis and require frequent checking for maximum compliance).
  • It requires a flexible process that can change and quickly incorporate the new rules discovered in the process described above and in remittance data analysis, and handle claims for many different patients and primary and secondary insurance combinations.
  • It should include a process for finding missing charges. “There are many missing charges that can be deduced by skilled staff or sufficiently intelligent software,” Bowden says.

“If you do the rest well, there will be relatively few denials to deal with and, for the most part, you will either have solid documentation for appeal, or a red flag for an internal process that needs to be fixed,” she adds. “There will be those denials that defy explanation, and there are some edits that the payers themselves could not tell you exactly where they apply.”

A best-in-class denials-management process should deal with these issues by:

  • creating a culture of accountability and continuous improvement that supports finding and eliminating internal inefficiencies;
  • applying solid analytics to 835 remittance data to categorize and analyze denials, as well as under and over payments, and track back to root causes to prevent chronic errors; and
  • reverse engineering unknown edits from the remittance data and then either incorporating it into the compliance process or fighting it with the payer.

Health Plans

How Plans Use Risk Assessments

Determined to bring medical costs under control, health plans use health risk assessments (HRAs) to inform interventions aimed at changing members’ health status. In a recent survey of nine health plans, research firm Forrester found little consistency in how plans collect and use HRA data. Plans differ in how much information they collect, where they source their HRA solutions and what other data they combine with HRA results.

All reported the key to getting members to complete an HRA is finding the right incentives and that the HRA is only the beginning of a broader member conversation. “To keep the conversation going, health plan customer-experience professionals should focus on measuring plans and marketing programs, while establishing the right channel mix to meet the needs of their members,” says Forrester analyst Elizabeth Boehm.

To understand how health plans typically collect and use member information captured in HRAs, Forrester surveyed four national, two regional and three state-based health plans. HRAs were found to differ in many ways, including:

All of the health plans surveyed offer their HRAs over the Internet, and all but one offer paper versions. Only four of the nine respondents, however, use phone-based solutions. In addition, one plan collects data in person, typically at employer-based health fairs. All but one plan indicated that the majority of members take the HRA online.

Although all of the health plans surveyed offer Internet-based versions of their HRAs, only five of the nine include branching logic in their HRA designs. Branching logic makes future questions conditional on past responses, allowing firms to drill into potential problem areas and eliminate irrelevant questions based on previous answers.

Seven of the nine health plans surveyed purchase their HRAs from third-party vendors – two from Healthways, two from the University of Michigan, one from Matria, one from WebMD, and one from both Health Dialog and TRALE.

“The plans we surveyed showed high variability in what they do with the data that HRAs produce,” Boehm offers. “On one end of the spectrum, plans view HRAs as simple benchmarking tools to evaluate how other programs are working. At the other end, plans view HRA data as an integral part of a broader health communication.”


Aligning the Nature and Management of Health Care by Richard M. J. Bohmer, outlines an approach to healthcare design and management that enables organizations to deliver proven medical treatments more effectively, and capture valuable clinical learning.