revenue cycle management: the foundation of physician leadership
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Revenue Cycle Management: The Foundation of Physician Leadership. HFMA Idaho December 3, 2009. Agenda. Objectives of the course Definitions Warning Signs of RCM Problems Five Key Metrics Analysis and Case Study Best Practices Questions. Objectives. - PowerPoint PPT PresentationTRANSCRIPT
Revenue Cycle Management:
The Foundation of Physician Leadership
HFMA IdahoDecember 3, 2009
Agenda
• Objectives of the course
• Definitions
• Warning Signs of RCM Problems
• Five Key Metrics Analysis and Case Study
• Best Practices
• Questions
Objectives
• Develop a new language around RCM processes
• Discuss and calculate new revolutionary RCM metrics
• Create discomfort in your current RCM process
Key Question #1?
• How do you manage a Physician?• Be available at all times• Provide a 2 inch thick monthly report• Avoid controversial issues• Change the compensation model at least annually• You cannot manage a physician
You must lead the physician relationship
Why RCM is the Foundation of a Physician Relationship?
• Increase pressure on fee schedules
• Massive expected change in the healthcare payment system
• Increase technology cost and complexity
• Increase practice operating cost
• Clinical quality, physician growth, referral management are additional heightened pressure to stay in business
• Unknown, non-traditional competition
Definitions
• Define RCM:• The technologies, processes, policies and people involved from the
creation of a healthcare transaction until the balance due on the transaction equals zero.
• What is a CPT denial?• Every zero dollar payment per CPT code received on an EOB.
• What is a CPT reject?• A CPT code that cannot be processed by the clearinghouse or payer
for payment decision.
• What is CPT code?• Every unique economic event within a healthcare transaction.
• Who is responsible for the RCM process?• All parties involved in creating and resolving a healthcare transaction.
Life of a CPT Code
RCM Trouble Signs – Beware!
• “Coding is the issue”
• “The worst payer is…”
• “Duplicate denials”
• “Lets’ auto rebill”
• “We are understaffed”
• “We are working accounts”
• “Lets work highest to lowest dollar amounts first!”
• Let’s add another A/R queue to our 145 queues!”
• “We need to change practice management systems”
• “Project”
• “Lets drop these claims to paper and meet with our insurance rep”
• “TWIP”, Temp Help, OT
• “Lets rebill insurance from patient pay”
• “Just call the billing department”
• “Mildred will do it”
Key Question #2
• What data does your billing department create?• None, all data should be created at the time of service or
by the physician/coder.
• Bill departments can only respond to data.
Traditional RCM Metrics
• The collection ratio brothers• Net • Gross
• A/R days outstanding
• Cash collections
• Overhead ratio
• Collections per case
• A/R by payer
• Annual Referral Report
Problems with Traditional RCM Metrics
• Historical view
• Not operational focused
• Subject to variation in fee schedules, payer mix, and procedure mix
• Not predictive
• Inability to compare across practice and specialties
New Revolutionary RCM Metrics
• The Five Key Metrics (Phase I) 0 - forever
• CPT/RVU analysis (Phase II) 6 months - forever• Collections per CPT code• Over the collections per Adjusted CPT (Medicaid, post op,
workers’ comp) • A/R days outstanding by CPT code• Allowable per CPT code• Primary Insurance payment as % of the Allowable• CPT worked per A/R FTE• Referring physician analysis (number of CPT codes, charge per
CPT code and payment per CPT code)
The Five Key Metrics – New Paradigm
Thomas Hierarchy of Needs™
Practice Analysis
Practice A Practice B
Charges $750,000 $2,500,000
Collections $500,000 $1,000,000
CPT codes 10,000 20,000
Visits 5,000 6,000
Five Key Metric Calculations
MetricPractice
APractice
BImpact?
DOS:DOCE (days)
2 10
Unreconciled Appointments (number)
10 20
Reject Rate 5% 10%
Denial Rate 8% 10%
Pass Through Rate
5% 12%
Case Study – Client A
• Large specialty group, multiple locations
• New practice management system purchased and implemented to solve problems
• High turnover in billing department staff
• Physician compensation has a productivity requirement
• High overtime and temporary help
• New physicians added to group
Green, Yellow, Red RCM Metrics
Green Yellow Red
Pass Through % < 5% 5-8% > 8%
1st Pass Denial - Actionable < 10% 10-15% > 15%
Pre-Bill Reject Rate < 5% 5-10% > 10%
Unreconciled Visits < 1% 1-2% > 2%
DOS:DOCE (Days) < 3 3.0-4.0 > 4.0
AR Days < 50 50 - 60 > 60
AR% > 90 Days < 15% 15% - 25% > 25%
Client A – The Five Key MetricsPractice A Metrics Pre-GoLive Dec-08 Mar-09 Jun-09 Sep-09
Charges Posted $15,487,371 $5,645,221 $6,269,649 $6,001,565 $5,850,831
Payments Posted $2,928,120 $2,104,823 $2,475,231 $2,293,061 $2,004,332
Charge / CPT $175.18 $166.65 $177.98 $202.49 $205.62
Payment / CPT $33.12 $62.13 $70.27 $77.37 $70.44
Payment / RVU ? $37.07 $37.63 $37.04 $33.28
OTC Posting (dollars) $89,814 $110,073 $118,767 $126,421
OTC Avg Per Visit $7.86 $10.10 $11.35
Pass Through (dollars) $493,018 $221,268 $223,695
Pass Through % 7.19% 7.99% 3.68% 3.89%
1st Pass Denial - Actionable 7.20% 10.00% 9.93% 8.68%
Pre-Bill Reject Rate 7.70% 8.86% 7.35% 9.75%
Unreconciled Visits 308 visits 4.26% 7.01% 0.76% 0.39%
DOS:DOCE (Days) 7.07 8.31 4.63 2.79 2.17
AR Days 42.49 54.14 53.57 52.55 50.02
AR% > 90 Days 3.35% 18.40% 29.00% 36.85% 32.00%
A/R Outstanding (dollars) $7,730,818 $9,550,847 $11,015,012 $10,535,705 $9,587,076
Credit Balance (dollars) ($89,031) ($263,747) ($323,403) ($336,979) ($419,714)
PIR Outstanding (line items) 10,288 9,226 5,348 1,290
PIR Outstanding (dollars) $2,511,036 $2,327,344 $1,233,459 $297,264
Charges vs. Payments
Charges vs. Payments
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09
Charges Posted Payments Posted
Chg/CPT vs. Pmt/CPT
Chg/CPT vs. Pmt/CPT
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09
Charge / CPT Payment / CPT Linear (Payment / CPT) Linear (Charge / CPT)
Pmt/CPT vs. Pmt/RVU
Pmt/CPT vs. Pmt/RVU
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09
Payment / CPT Payment / RVU Linear (Payment / CPT) Linear (Payment / RVU)
Unreconciled Appts vs. DOS_DOCE
Unreconciled Appts vs. DOS_DOCE
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-090
1
2
3
4
5
6
7
8
9
Unreconciled Visits DOS:DOCE (Days)
Denial/Reject % vs Chg Count
Denial/Reject % vs Chg Count
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1st Pass Denial - Actionable Pre-Bill Reject Rate Charge count
Patient Information Request
Patient Information Request (PIR)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
PIR Outstanding (line items) PIR Outstanding (dollars)
OTC/Visit vs. Pass Through $
OTC/Visit vs. Pass Through $
$0
$2
$4
$6
$8
$10
$12
$14
Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
OTC Avg Per Visit Pass Through (dollars)
Best Practices
• Recognize the warning signs of RCM problems• Convert dollar analysis to unit analysis• Perform a CBO assessment to determine the starting point• The Key Metrics Impact
• Implement The Five Key Metrics across the entire organization• Move denials out to the practice staff by ranking physicians and
offices on The Five Key Metrics• Provide a metric driven, quarterly incentive plan on The Five Key
Metrics for all practice staff• Provide a consistent and transparent monthly reporting book
focused upon The Five Key Metrics• Focus CBO effort on current denials
• Analyze and move A/R greater than 90 days to a special group focused upon calling and getting a true denial rate
• Measure CBO productivity on first pass and second pass denials per FTE
Summary
• A physician relationship cannot be managed; it must be led.
• RCM is the foundation of the physician relationship.
• RCM must be accountable, consistent, transparent, predictive and operational in addition to financial.
• The future of healthcare payments will not allow increased cost of collection to continue despite increased complexity and technology requirements.
• Historical RCM metrics miss the mark today; new RCM metrics are available to account for the Life of the Claim based upon unitized analytics
Questions?
Revenue Cycle Management:
The Foundation of Physician Leadership
HFMA IdahoDecember 3, 2009