Among the lessons learned in pilot project is the need for comprehensive revenue-cycle management systems and processes.
San Diego County’s Scripps Health (Scripps) was one of many health systems across three states taking part in a three-year recovery audit contractor (RAC) pilot project. “Scripps had a number of challenges at the start of the process,” says David Cohn, vice president, revenue cycle, for Scripps.
Among the lessons learned in pilot project is the need for comprehensive revenue-cycle management systems and processes.
San Diego County’s Scripps Health (Scripps) was one of many health systems across three states taking part in a three-year recovery audit contractor (RAC) pilot project. “Scripps had a number of challenges at the start of the process,” says David Cohn, vice president, revenue cycle, for Scripps. “This included the fact that very little concrete procedural information was supplied before the pilot RAC process began. This meant we had to remain flexible, develop communication protocols, anticipate worst-case scenario volume requests and develop internal system processes.”
“Contractors via CMS would relay basic procedural information with constant clarification changes, which required flexibility in order to respond within the RAC time frames,” adds Scripps’ Jean Fuller, corporate director of hospital information management.
The RAC program, mandated by Congress through the 2003 Medicare Modernization Act, employs contractors to analyze and audit Medicare Part A and B provider reimbursement claims for billing errors. The upcoming permanent RAC program consists of both automated claims history reviews from the Centers for Medicare and Medicaid Services (CMS) database, as well as complex clinical reviews of patient medical records.
Scripps had 1.6 million outpatient visits and 69,000 patient discharges across its four hospitals and 19 outpatient facilities in 2008. With a combined inpatient and outpatient Medicare mix of 23 percent, Scripps and other RAC pilot hospitals offer a source of lessons learned. “Chief among them is the need for comprehensive revenue-cycle management systems and processes as the cornerstone of an effective RAC strategy,” offers Cohn.
The national program will have four RAC auditing contractors, essentially dividing the country into four regions. Each contractor will concentrate specifically on claims for services they deem “not medically necessary” (or those not meeting the established CMS clinical payment criteria), non-covered services, incorrectly coded claims, duplicate services and incorrect payment amounts. Hospitals will then have to reimburse Medicare for the amount of any claim overpayment.
For Scripps, as with all hospitals, both back- and front-end functions directly affected by RAC include patient financial services (PFS), patient registration, hospital information management (HIM), case management, nurse auditors, coding and billing, collections and electronic data interchange (EDI) – receipt of claims data, payments and system posting.
Claim Reviews Often Complex
While the majority of Scripps claim reviews were complex, it received some automated reviews, according to Cohn. Requested records for the complex review included those regarding diagnosis-related groups (DRG) changes, level of care (LOC), inpatient rehabilitation services and skilled nursing (when Scripps provided that service). Several outpatient categories, such as blood transfusion and physical therapy, are examples of the automated review categories. Contractors can request up to 10 percent of a hospital’s average number of paid claims per month (number determined once per year) and 200 records within a 45-day period per provider.
Another primary challenge was establishing an internal central contact point that was routinely recognized by the assigned demonstration contractor for the region. “Initially, our contractor had a lot of difficulty with the mailing addresses that they received from CMS, and that were passed on to us, resulting in constant chasing of request information until we could get it organized,” explains Fuller.
“The interoperability between clinical, administrative and financial systems provides the cornerstone for a comprehensive RCM process. This interoperability minimizes the likelihood of future claims being flagged for review.”
“Case management was challenged with review of medical records for medical necessity because the contractors would ‘cherry pick’ clinical rationale (criteria) for justification of the level-of-care denials,” adds Mary Whitehead, Scripps’ administrative director of systemwide case management.
“The contractors denied claims across several years,” she says. “When appealing the denials for LOC, case management had to make sure they were using the (McKesson) InterQual criteria for the same year the denials were being denied.”
Similar to many hospitals around the country, Scripps utilizes a best-of-breed health-information technology approach to admit/discharge/transfer (ADT), HIM, case management and clinical systems across all hospitals. To counter this disparity of vendor systems and create a unified approach to revenue-cycle management (RCM), Scripps chose a single vendor (Eclipsys) for all PFS, registration and billing.
“Multisite hospitals without interoperable revenue-cycle systems will be particularly vulnerable to RAC audit challenges and slowdowns, due to the need for claim data aggregation from multiple sites,” Cohn advises. “With more than 1,000 people working on the Eclipsys system daily, we decided long ago to make it the foundation for all systems, allowing for data integrity via one source feeding all systems.
The vendor’s solutions are integrated across the entire enterprise of four hospitals on five campuses, giving them unified access to all information across the enterprise. “The interoperability between clinical, administrative and financial systems provides the cornerstone for a comprehensive RCM process,” Cohn says. “Additionally, this interoperability simplifies data aggregation for the review process and minimizes the likelihood of future claims being flagged for review.”
To maximize the effectiveness of this system integration, Scripps implemented extensive education for HIM, case management and all PFS personnel before integration into their respective departments. This training is augmented by annual testing on the coding process and systems, as well as case criteria review for nursing staff. The ongoing education program is not only part of a comprehensive RCM strategy, but dovetails into RAC preparedness and other emerging circumstances and issues.
Committee Guides Implementation
To ensure that Scripps could address the challenges presented by the RAC pilot efficiently and comprehensively, the system established a RAC steering committee, including a subset of leaders from its systemwide revenue-cycle steering committee. The RAC committee included PFS, HIM, audit and compliance, nursing, and finance leadership. The committee then appointed Fuller as the RAC contact person, followed by development of a RAC request response strategy and a system for gathering the requested data. A centralized enterprise RCM and business office functionality allowed Scripps to have a single point from which all RAC efforts and strategies radiated. This ultimately alleviated confusion and delays between hospitals.
“A combination of enterprise-level and site-specific nurses were recruited for the review process and appeals determination,” Cohn explains. “To help advance enterprise communication, we created a RAC executive summary for upper management and compliance leadership. This allowed everyone to obtain the same information on a timely basis.”
A centralized records database was created, from which all records and pertinent data were drawn to send to the contractor. Designated staff under Fuller’s supervision ensured records were complete and for the right patient, claim and time period. As the primary internal RAC contact, Fuller oversaw bidirectional transfer of the requests and records from contractor to each hospital, further streamlining communication.
All requests went into the centralized database, along with demographic and financial information, with the lion’s share sourced from the enterprise’s registration, patient accounting and billing systems. These systems became the way in which Scripps accessed actual charges, LOS and recorded user comments, which made them key to all functions in the revenue cycle, as well as the RAC process. Scripps senior RAC committee personnel cited the centralized database and integrated front- and back-end systems as key to lessening the burden of the process.
“The four-year process meant retrieving records from off-site storage, making for a tedious and laborious task,” Cohn says. “To maximize the power of the PFS systems, we worked with the vendor on the best way to link the records and the vital data stored in the systems in the most efficient way.”
The RAC demonstration process required all hospitals to send the actual hard copy of the records, which increased the difficulty for Scripps, as it has a completely paperless back-end process. Going forward, the national RAC program will accept CDs, but this will still require hospitals to have multiple copies of each record moving through the appeals process.
While only a fraction of claims make it to the fifth and final appeal stage, each has specialized requirements and logistics to keep track of claims. According to the American Hospital Association, the cost to a provider to file an appeal can be as much as $7,000 per claim. The labor and cost of the appeals process will directly influence whether hospitals will want to dispute a finding for each claim. Ultimately, these decisions require hospitals to involve a mix of both clinical and financial staff members on their RAC team from the outset of strategy planning.
“Though experienced from the RAC pilot, we will deal with a different contractor in the permanent RAC program,” says Cohn. “This means implementing the lessons of anticipating communication paths, centralizing contact points and creating a clear path of accountability will best serve the enterprise as it moves forward.”
From the Catalog
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September 2009
