Forecast 2010: Revenue Management

This year will bring an evolution to revenue-cycle management, bringing the focus to the front end of the revenue cycle to patient-access management. This is one of the last areas where hospitals can save substantial amounts of money.

By moving the revenue cycle to the beginning with patient access, healthcare organizations improve their upfront collections, set patient-payment expectations, manage denials and retrieve self-pay balances before the medical procedures take place. Patient-access management increases the bottom line by reducing the cost of healthcare and increasing the dollars collected. At the same time, it leads to improved levels of patient satisfaction.

The move is driven by the intense financial and social challenges facing healthcare organizations. Revenue from investments has been hurt with the market free-fall and foundation-giving has dropped off during the recession. Margins are at an all-time low. With high unemployment, the number of self-pay patients has soared. Patient satisfaction has become increasingly important now that patients are deciding where to get their healthcare services.

Patient-access management benefits from advances in technology and data management that enable healthcare providers to quickly verify insurance, review propensity to pay, provide the patient his financial obligation and set up financial assistance or a payment plan. Patients have clear expectations and are given the opportunity to ask questions so they do not have to worry about their financial burden.

Hospitals benefit from reduced claim denials and increased point-of-service collections, including co-pays and deductibles. Having a financial obligation discussion up front results in clear expectations, fewer phone calls after the procedure and greater patient satisfaction. Healthcare organizations will increase collections, reduce bad debt, decrease the number of days collections remain in accounts receivable, avoid claims denials and reduce staff time spent chasing collections. Cash flow also is improved, as deductibles and down payments are obtained before services are rendered.

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ICD-10 in Forefront

By James M. Denny Jr., CEO, founder and president of Navicure

In a little more than three years, ICD-10-CM becomes the mandated standard for all diagnosis coding, and ICD-10-PCS will be required for all hospital procedure coding. There is no doubt that 2010 will be a pivotal year for organizations that want to set the course for smooth implementation of this far-reaching change. IT executives should begin this year to evaluate their existing clinical, administrative, automated and manual information/technology solutions and plan ahead.

The first quarter of 2010 as the ideal time for health IT leaders to start working with their vendors on conversion of both the ICD-10 code sets and the 5010 X12 standard. In fact, ICD-10 cannot be discussed without first addressing the changeover of HIPAA 4010 X12 files to the new 5010 standard.

The implementation of Version 5010 is set to occur on Jan. 1, 2012 — nearly two years prior to the Oct. 1, 2013, ICD-10 implementation date. Since the current 4010/4010A1 standard does not support ICD-10 code values, while Version 5010 does, conversion to ICD-10 cannot happen without first moving the X12 standard to Version 5010.

The interlocking nature of these two migrations means that ensuring a successful 5010 implementation is the first step toward ICD-10. Other steps that should be taken include: Create an ICD-10 committee (or, in smaller practices, designate an ICD-10 leader); identify and collaborate with the other ICD-10 stakeholders within the organization; develop a transition timeline; conduct an impact assessment; calculate high-level cost estimates; assess staff educational needs; talk with all IT vendors about their plans and timelines for both 5010 and ICD-10 transitions; build ICD-10 requirements into any technology upgrades being considered; contact payers (and clearinghouses) about their implementation timelines and testing plans; and be sure to involve the necessary legal, contracting and payment review personnel to verify any potential payer contracting changes.

Organizations engaged in strategic ICD-10 planning this year will set the stage for minimal disruptions once the compliance date hits. Practices should be able to make informed decisions regarding everything from technology updates to changes in overall business processes.

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More RCM Challenges

By D.T. Nguyen, president, revenue cycle management, MedAssets

What's ahead for revenue-cycle management departments in 2010? More pressures, more audits and more scrutiny are in the forecast, and hospital administrators will be expected to do more with even less than previous years. Healthcare providers will face a multitude of complex challenges that will place continued pressure on operating margins, including increasing bad debt and a growing volume of denials and payment delays. Increased demands for higher compensation and employment from physicians, due to decreases in reimbursement, combined with greater reductions in government reimbursements, will complicate the landscape and add to revenue challenges.

The hospital operating environment is undergoing fundamental changes, most of which will either lower overall reimbursement or make reimbursement more complex. More-efficient and effective operations will be critical.

Hospitals should assess their revenue cycle front to back to identify areas for potential improvement and tackle the ones that will yield the biggest cash impact first.

Bad debt has increased in the industry, for uninsured, underinsured and insured patients, and there will be a heightened need for preservice collections and financial-clearance tools. Those who get on board and invest in efficiencies on the front end will find themselves with substantial savings on the back end. The types of technologies that providers should be considering include those that integrate financial, clinical and administrative data to give hospitals a picture of their revenue cycle.

Now that the RAC program is going live nationwide, the audit process will become a daunting reality for those who are not prepared. Hospitals should have critical processes and tools in place to ensure clinical documentation and policies are followed consistently on every patient.

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Self-pay on the Way

By Douglas Braun, Internet Payment Exchange

In 2010, collecting self-pay payments from consumers will continue to be a challenge for healthcare providers. To grow self-pay into a robust revenue stream, today's healthcare providers should focus on three related areas: up-front financial disclosure, accepting point-of-service payments and expanding payment support services. One goal is to shift payments from post-encounter to pre-encounter because this identifies and solves problems before they show up as accounts-receivable delinquencies. Consumers also are more likely to promptly fulfill their obligations when confusion is eliminated, especially if multichannel payment options are available.

Price disclosure prior to treatment informs consumers of the total costs for specific services provided. While patient registration includes checking eligibility, it also needs to include cost disclosure, financial scoring, and a deeper examination of insurance deductibles and payment limits beyond the co-pay portions. Addressing financial issues up front can minimize or eliminate collection risks.

Point-of-service (POS) payments enable healthcare organizations to accept payments from patients in electronic form. While similar to retail checkout in concept, most healthcare POS payments handle a lower volume, so the checkout procedure, as well as the equipment needed, is less demanding and better implemented by virtual cash registers than typical hardware cash drawers.

Providing additional payment support services, including automatic payment plans, discounting and soft collections, will help prevent payment delinquency and bad-debt issues. Discounting enables patients who pay in full to realize a percentage decrease in total costs, providing an added incentive for them to pay up front.

Finally, Web site portals providing automatic payment services are a necessity today, as electronic bill presentment and payment (EBP) currently represents a large and growing percentage of consumer payments. EBP gives health consumers a greater array of payment options, including automatic payment plans, virtual cash drawers, and immediate credit, debit or check-payment services. At the same time, providers can increase their self-pay revenue streams, decrease expenses and greatly enhance internal-collection processes, while minimizing bad-debt issues.

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January 2010