Jettisoning rev limiters in the race toward fiscal health

I think about revenue cycle management in the broadest possible sense: Managing the process of collecting revenue in order to achieve maximum appropriate reimbursement for the services provided. Sharing data is a good place to begin, but truly effecting change requires not just data but also a comprehensive toolbox of technology, analysis and personnel. It’s not enough to have a great charge capture solution or reporting suite, it’s critical to have the people who can analyze and adjust workflow. 

Due to the changing market dynamics, revenue cycle management needs to be viewed in a much broader sense. No longer can departments, staff and other stakeholders maintain their own processes and data. It all needs to be shared and must flow through the entire healthcare process to realize the transition into value-based care. We believe that revenue cycle management is all of these things and much more. It starts when the patient engages with their care-giver, flows through to their visit and during care, and then finishes on the back end until the payment is made. The process encompasses portals, registration, scheduling, patient care, billing, payment and even after-care.

Kathy Schwartz, Product Manager, Craneware Inc.

All of the above. Revenue cycle management is the complement of actions, process and technologies that manage revenue generation. 

The revenue cycle management process begins as a patient schedules an appointment or arrives at a hospital, and it continues after they leave, the bill is paid, and earned revenue is defended against recovery auditors from government and commercial payors as needed. At any point in this process, if coordination is lacking among responsibilities, or if breakdowns occur in communication, reporting or monitoring, then there will be inaccurate data capture and revenue leakage will occur. 

Traditional revenue cycle management is being turned on its ear by the revenue integrity movement sweeping hospitals and health systems for the past few years. Revenue integrity encompasses goals of operational efficiency, compliance risk reduction and optimal reimbursement. It is the alignment for clarity, of complex business and clinical operations. 

Maintaining common procedure pricing across all facilities; billing, claims processing, patient charge capture and payment; and minimizing the impact of reimbursement cuts and payer mix migration.

Mary Beth Lang,ScD, Vice President, Healthcare Pharmacy and Supply Chain Management Commercial Services, University of Pittsburgh Medical Center (UPMC)

In the simplest terms, the goal of revenue cycle management (RCM) is to capture all net revenue contractually owed to the provider from all payment sources for the services performed. The RCM team manages claims processing, payment and revenue generation. RCM includes every aspect of revenue potential from focusing on patient eligibility, collecting co-pays, to properly coding claims using ICD-9 (soon to be ICD-10) to avoid denied claims or missed revenue opportunities.

Trends indicate hospitals are losing three to five percent of revenue from lack of effective RCM.  Many providers are looking closely at hospital and physician billing processes through their clinical systems and EMR to improve revenue cycle management processes and procedures as they prepare for significant changes in payment restructuring to risk-based reimbursements of expanded value-based payment requirements, shared savings plans and accountable care organizations.

How will revenue cycle management have to improve under the Affordable Care Act, and what should IT’s contributions be to ensure those improvements happen?

Dragovits: It all has to do with collaboration and communication. Information must flow through the system from start to finish and there must be visibility at all points of care; not just in one solution, but in all of them. This is the only way we will be able to link quality and payments. Most IT platforms in use today are not open enough to accommodate the information and process flow from start to finish because they are coded with old technology on old platforms. New payment models and processes require flexibility and proactive monitoring, and the ability to change direction if necessary. 

The ACA ultimately encourages cooperation and interoperability between disparate legacy systems, and IT must find revenue cycle solutions that will work seamlessly with them all, especially with PMS/EHR systems.

It also sets the stage for value-based reimbursement models (risk-bearing models). Business intelligence tools will be necessary to identify the risk-to-reward ratio for your organization so that you can be prepared. 

In addition, the ACA will drive an increased growth in the number of insured patients. Organizations must prepare now with IT solutions to be ready for the influx in patients and maintain and enhance profitability.

Amy Amick, President, Revenue Cycle Management Segment, MedAssets Inc.

Of course, a lot of revenue cycle management discussion related to the Affordable Care Act centers on the fact that per-patient rate reimbursement levels are going to decrease, which is true. Making sure that the organization optimizes reimbursement due for services delivered will be more critical than ever. What’s less talked about is the budget drain that’s going to occur from the tremendous competitive pressures placed on providers – particularly in building a differentiating business model, e.g., purchasing physician offices, mergers and acquisitions – all of this business activity requires lots of capital expenditures. These unprecedented market drivers make establishing a best practice revenue cycle management (meaning doing the things we’ve done before, but doing them exceptionally well – execution, simplify workflow, improve automation) ever more critical to keeping your doors open while you carry out future strategy initiatives. Optimized cash flow for current state is going to become essential to the long-term viability of the organization. 

The other IT piece is ensuring your revenue cycle management technology and data analysis capabilities enable assessing and making informed decisions on higher-risk reimbursement models like ACOs, bundled payments or patient-centered medical home – analytics to support looking at the underlying cost drivers before taking on reimbursement risk – which contracts, which service lines. Revenue cycle management will need to have technology and services in place to help the organization transition from fee for service and direct which is the right path among a number of different ways to move – whether it’s a simple bundled payment or taking on population risk.  

Having the necessary IT budget and technical resources will be essential to enabling these new technologies and in the sharing of databases between billing, accounts payable, clinical EHR/EMR, revenue cycle and supply chain across the entire health system.

England: Revenue cycle management must have the ability to adapt to frequent and rapid changes in federal, local and payer requirements. Additionally, the need to access real-time data regarding performance, process and volume remains critical. IT should be able to respond to the needs of the organization while responding quickly and with reasonable requirements for updates or enhancements, whether mandated or requested by the team. 

Jeffery Rose, M.D., CMIO, TriZetto Corp.

The RCM process for providers should give them access to real-time information about the cost of medications, interventions or tests. This should happen regardless of reimbursements so providers can pick the most cost-effective and appropriate action. The IT department should share information from the revenue cycle to the EMR to the claims process in real time so all the players have information about precisely what is being done, how much it costs and how much will be reimbursed.

Campbell: The ACA’s first impact to the revenue cycle will be increases in volume for a host of primary care and sub-acute environments. The secondary impact will be the continued tightening of reimbursements and general risk shifting to providers via ACOs and other population-based models. 

In this context, it’s critical for HIT to provide tools that help the operational team track and accrue all appropriate revenue. It’s also important to provide deep analytical capabilities to give management actionable procedure – and payer-specific intelligence. And finally, being able to reconcile not just with opportunities but with other charge data is critical. Payers are looking for billing discontinuities and providers should too. 

Schwartz: It is urgent that healthcare organizations develop revenue cycle management practices that proactively address rising payer scrutiny (Medicare/Medicaid and commercial) and the related compliance concerns that have a direct impact on revenue. Strong revenue cycle management practices are the key to maintaining the organization’s overall financial health. By leveraging defined policies and procedures to govern the revenue cycle process, staff is better aware of what the expectations are, which allows them to better meet rising demands in this regard. Technologies that help to document and validate data accuracy are essential. 

Having a strong revenue cycle also influences the outcome of various patient accounts. Making sure medical records are correctly capturing and collecting the proper information that will later be translated into a code can lead to the supporting documentation needed to validate the accuracy of related charges. 

Strong revenue cycle management practices improve patient engagement by allowing them to be involved earlier. This ultimately allows the patient to be active in determining how they will meet their financial obligations, and what resources may be available to assist them. When the process is managed effectively, then bad debts are lower, financial assistance is correctly given and cash flow meets expectations in a timely way. It’s important to keep the patient’s perspective, along with the future of healthcare, in mind. When there are a lot of billing issues and unexpected bills for the patient, there can be a high level of frustration. There are going to be reductions in payment structures, starting with Medicare reductions. To be able to get some of those dollars back, hospitals must perform well on quality indicators.

Revenue cycle management IT needs to adjust course accordingly. Supply chain will need to move from a pure cost-management focus toward a thoughtful and deliberate revenue integrity strategy. Successful organizations will engage patients, their clinicians, revenue integrity and supply chain pros together with innovative executives to share in delivering cost-effective quality care. Clinicians must retain the feeling of empowerment yet have firm direction on delivering custom quality care. Too often, the data that drives these strategies is unilaterally interfaced – meaning that information flows out of the hospital through complicated one-way interfaces but is not looped back into the system for integrative analysis and data integrity to support organizational strategies.

Lang: The focus of revenue cycle management will extend beyond affecting overall productivity to determine reimbursement parameters that include cost, quality and outcomes data captured in the provider electronic health record and regional health information exchanges. These data will be used in the risk-based payments of Medicare and commercial insurers that now withhold reimbursement without proof of quality. These data will also be used for accountable care organizations to collect financial and quality data that can populate the necessary reports or predictive analytics that will scorecard the ACO’s ability to provide superior care at lower costs. 

Having just a revenue cycle management program is not enough. Providers are finding they need to connect data sets across numerous systems to yield clean, comprehensive results that can support comparative effectiveness and predictive analytics. The industry uses the term “Big Data.”

UPMC created a data governance program in October 2012 because data is one of the most valuable assets UPMC has. The initial focus of the program was to populate our enterprise analytics with high-quality, well-defined data. This was a massive undertaking as our executive leadership had the vision of establishing a “shared” stewardship of our data assets and data management decisions across the business and IT. They wanted key business leaders to become the information owners to elevate the “data analytics” abilities of UPMC staff beyond IT. Through the effort to name and empower decision makers assigned with specific rights and accountabilities, we will be able to capture data definitions, business rules and metadata in tools to enable broad self-service access to information and transparency.

• Streamlining processes from initial point of service to final bill.
• Focus on tools to help provide up-front visibility to patient collectability and transparency to costs as patients play a stronger role in their healthcare decisions.
• System focuses on automation and data validation up front – emphasis on mistake- proofing data transactions; human focus on exceptions only.
• Stronger standards will need to be developed among the industry in regard to data 
• transfers – exceptions need to be removed.

The ACA will reduce the number of self-pay patients and emergency room visits. Self-pay patients are extremely costly to an organization as they require a great deal of work to confirm their status as well as producing a collection rate typically under 10 percent across the financial class.

Emergency room visits are the most expensive place to receive care. By increasing the number of insured patients, patients will be more inclined to seek treatment before their situation is emergent.

If you define revenue cycle around the transactional function of charge capture in the Charge Data Master (CDM), then how much sense does it make for IT to link the CDM with Supply Chain’s Item Master file (IMF) of devices, products, services and supplies brought into the organization and why?

DeAngelo: This would not necessarily change the reimbursement for revenue cycle. However, it would allow for timely procurement of ancillary products/services that may cause delays in being able to provide services to the patients if the supplies, devices, etc., are unavailable, therefore causing delays in when services can be rendered and billed.

Dragovits: As we move toward value-based payments, there will be the need to see the entire cost of a procedure or service. That includes devices, products, services and supplies. Only when we know the complete picture will we know what the outcome is versus the cost. That is critical for value-based care as well as reducing the overall cost of care.  

Amick: Linking your item master to your chargemaster makes all the sense in the world as it’s really the one way to give you a complete picture of your pricing strategy in action – which is another critical change in the post-reform era – the patient is going to become an increasingly advocate consumer of goods. Linking these two technology database “types” (chargemaster supplies, materials management item master, internal invoice files, internal markup schedules and manufacturer information) is a way to get what are have been traditionally siloed functions – revenue cycle and supply chain/procurement – on the same page to achieve the same goals and will improve charging processes, minimize revenue leakage and improve revenue capture. 

Creating a defensible pricing strategy requires analyzing your acquisition costs against target markups and actual charges. The comparison should include billable and non-billable items, along with supplies and pharmaceuticals. 

This organizational linkage will help to improve cost-to-charge transparency and accuracy to capture all chargeable supplies appropriately. It also will play an important role in understanding and controlling cost drivers, which will be critical in surveying the episode of care and bundled payment reimbursement environment.

England: From a supply chain and data integrity perspective, it does make sense to link the CDM and IMF. By showing utilization and standardization throughout the organization, trends in both the expense and revenue aspects can be proactively managed and addressed.   

Rose: It depends on the depth and breadth of the linkage. Core sets of data elements should be tied together so charges and resource use can be analyzed. But since systems are so different in their functionality and in the standards they use for coding, to integrate them within a hospital is extremely difficult. Not only that, but to integrate them across hospitals and different environments and systems is nearly impossible. It is important to link specific elements of resource and device use from the IMF file with the CDM.

Campbell: Tighter linkage up and down the chain is very valuable to management and not just between the CDM and the IMF for cost analysis and near-time inventory management. It’s also important in OPPS settings to link CDM entries to the appropriate CPT codes. Auditors are looking for discontinuity between documentation, professional fees and technical fees. Being able to link and reconcile all three is increasingly important. 

Magnuson: Greater synchronization with the supply chain is a necessary optimization. Not only do organizations spend an extraordinary amount of their operational budgets on supply, but those supplies need to be appropriately billed.

Schwartz: Linking the chargemaster to the item master provides the key foundational data needed to gain insight into procedure costs and quality metrics. Identifying how items are captured in the item master and defined in the chargemaster is the first step toward being able to analyze how to capture and improve outcomes in conjunction with tactical reimbursement plans. If items (implants and devices) are not clearly defined in the chargemaster, then the data cannot provide the foundation needed for charge capture, clinical effectiveness and compliant reimbursement. On the other hand, supply chain must focus on consignment inventory, which represents a large percentage of implant and device expense. Without clarity around implant purchase activity and usage, true cost management and revenue integrity get lost behind the data.

Lang: Providers are operating under multiple payment models: Fee for service for outpatient and physician reimbursement, procedure-based flat fees and value-based purchasing payments.

Under the shift from volume to value, providers must take multiple approaches to connect data. 

There is a race to get the IMF cost information complete, consistent and tied to the CDM to afford providers with access to the highest reimbursement and the lowest withholding based on their cost/quality profile compared to other institutions.