Revenue Cycle Internal Audits

Transcription

1 Front, middle and back office considerations New England Healthcare Internal Auditors November 30, 2016

2 Introduction Dave Dreher, Partner Americas Health Internal Audit Leader Andy Adams, Partner Dave is a partner with over 20 years of experience with internal audit, internal controls, enterprise risk assessment and risk management. He is the coordinating partner on several large risk advisory engagements overseeing the delivery of internal audit and risk management services for our clients. He is the Northeast Region Health Care Risk Management Industry leader responsible for the development of area training events, developing content for thought leadership and facilitating the development and exchange of industry leading businesses to our professionals and clients. Dave has significant experience leading projects for his clients that focus on physician practices, claims management, denials management and revenue cycle. He has assisted several clients in developing and implementing policies and procedures for key compliance and operational areas within the business. Andy is a partner in EY s Health Advisory practice. He has over 15 years of professional services experience supporting projects that positively impact health care provider financial and operational performance. He advises hospitals, health systems, physician practices and other health care providers in the areas of finance and revenue cycle.. He led the engagement at a large academic medical center to provide pre-implementation planning for deployment of Epic Prelude, Cadence, Hospital Resolute Billing and Professional Resolute Billing applications. Activities included developing the program road map, budget, scope, detailed plan, risk mitigation strategies, governance and charter. He has supported an academic medical center and faculty group practice through revenue cycle transformation, including projects to reduce revenue cycle cost, create a patient friendly access process, centralize and standardize scheduling operations and implement a new revenue cycle management system (Epic). Page 2

3 Agenda 1 Introduction 2 Revenue cycle overview 3 Front end 4 Mid-revenue cycle 5 Back office 6 Key Performance Indicators (KPIs) 7 Summary Page 3

4 Health care providers will have no choice but to evaluate and optimize their revenue cycle management functions as they respond to rising consumerism, evolving legislation and other key market forces. excerpt from EY s Health Reimagined Blog Page 4

5 Introduction What can go wrong? Feds Recover $30mm: Claim Skilled Nursing Facilities Billed for Unnecessary Rehab Therapy September 26, 2016 California s Orange County-based North American Health Care Inc. (NAHC) has agreed to pay the U.S. government $28.5 million to resolve long-running allegations it billed Medicare and TRICARE for medically unnecessary rehabilitation therapy services in violation of federal and state False Claims Acts. NAHC s senior vice president of reimbursement analysis and chairman of the board will pay an additional $1.5 million, the Department Vibra Healthcare Info Coder Wins $4M+ Whistleblower Award in FCA Lawsuit October 9, 2016 Sylvia Daniel, a former health information coder at Vibra Hospital of Southeastern Michigan, will receive a whistleblower award of at least $4 million after filing a qui tam lawsuit alleging the hospital billed Medicare for medically unnecessary services, the Department of Justice announced Wednesday. Vibra Healthcare LLC, a Mechanicsburg Page 5

6 Introduction How does your organization stack up? 1. Eligibility verification Patient pre-registration rate of 90-98% Insurance verification rate of 90-98% 2. Claim processing Clean bill submission rate of 85% or greater Daily charges coded per coder: inpatient; outpatient/er 3. Denials days claims rebilling after denials 40-60% overturned denails rate 4. Accounts receivable 15-20% of gross A/R aged over 90 days days A/R Page 6

7 Revenue cycle overview Page 7

8 Revenue cycle overview At a glance Documentation charge capture Utilization review/ case mgmt. HIM/coding, CDI Claims editing submission Third-party collections Financial counseling Payment posting Copayment collection Denials mgmt. Registration Appeals Preregistration Contract mgmt. Scheduling Source: ICD-10 Healthcare 101 Page 8

9 INTERNAL AUDIT REVENUE CYCLE FINANCE 5 Revenue cycle risk domains Key components Financial Statement Impact 1. Revenue Integrity Are we compliantly billing for all services rendered? 2. Cash Yield Are we converting every dollar of revenue into cash that we can in compliance with contractual and legislative terms in place? 3. A/R Days Are we converting revenue into cash as quickly as we can? 4. Cost to Collect Are we converting revenue into cash using the lowest cost revenue cycle infrastructure as we can? 5. Stakeholder Engagement Are we conducting revenue cycle operations in a manner that engenders the highest possible patient experience, physician, and staff satisfaction and compliance? Pricing and charge structure (fee schedule) Charge capture and documentation Gross charges Contractual, charity, bad debt, denial and administrative adjustments Patient cash Insurance cash Unbilled A/R (In-house, not posted, not sent to payer) Billed A/R Denied A/R Self-pay A/R Vendor managed A/R Credit balanced A/R All other A/R Staffing (Org Structure, personnel costs, productivity) Vendor (Professional services, IT, other) Other (Capital) Other (Operating) Patient experience Physician and staff satisfaction Public perception Clinical quality Regulatory scrutiny INCOME STATEMENT INCOME STATEMENT BALANCE SHEET INCOME STATEMENT INCOME STATEMENT & BALANCE SHEET Page 9

10 Front end Page 10

11 Front end is focused on registration, eligibility and financial clearance Documentation charge capture Utilization review/ case mgmt. HIM/coding, CDI Claims editing submission Third-party collections Financial counseling Payment posting Copayment collection Denials mgmt. Registration Appeals Preregistration Contract mgmt. Scheduling Source: ICD-10 Healthcare 101 Page 11

12 Front end Traditional patient access pathway Scheduling Registration Eligibility / Pre-certification Financial clearance Check-in Days or months in advance 1-2 weeks in advance 1 week in advance In advance or day of visit Day of visit Appointment is scheduled by physician office or patient Key data points captured Scheduling information used to set up or register accounts Patients contacted to verify account information prior to services, which include: Demographic Insurance information Patient s insurance coverage and benefits verified by checking payer databases via computer or phone Referrals, authorizations, and/or pre-certifications obtained Financial assistance opportunities identified for patients in need: Charity care Deposits Payment plans Alternative payment options Patients are checked in upon arrival Eligibility, benefits & auths. completed Financial responsibility collected, such as co-pays This is the traditional pathway; timeframes may not be representative of all situations or clinic environments Page 12

13 Front end Key challenges and considerations for IA Eligibility verification Evaluate methods and procedures in place to verify eligibility Assess use of eligibility software, verification via insurance plan websites and telephone calls to insurers Out-of-pocket estimates Copays are increasing and cost of care continues to rise Important to prepare patients for costs that will not be covered Advance Beneficiary Notice (ABN) may be required for Medicare patients Pre-service payments Likelihood of collection significantly decreases over time, while cost to collect increases Evaluate process and identify instances where co-pays are billed to the patient rather than paid up front The goal to strive for: verify every patient! Page 13

14 Front end Importance of up-front collection efforts Cost to collect Increased cost for resources and time (internally) Increased cost for collection agencies Write off amount Debt determined worthless and uncollectable Debt is written off and reported as a % of gross revenue Reported earnings Increases losses Reduces margins The market is heading towards aggressive pre-service collections, patient financial status identification tools and analytics, focusing on trending and prevention. Page 14

15 Mid-revenue cycle Page 15

16 Mid-revenue cycle is comprised of care delivery, documentation, and coding Documentation charge capture Utilization review/ case mgmt. HIM/coding, CDI Claims editing submission Third-party collections Financial counseling Payment posting Copayment collection Denials mgmt. Registration Appeals Preregistration Scheduling Contract mgmt. Source: ICD-10 Healthcare 101 Page 16

17 Mid-revenue cycle Charge capture, documentation and coding Charge Capture and Pricing Clinical Documentation Coding / Third-Party Reimbursement Charge structure Charge capture Reconciliation Rate setting Managed care pricing/ contracting Managed care prompt pay penalties and underpayment recoveries Inpatient documentation Outpatient documentation Medical records assembly process QA functions DNFB reduction ICD-10 coding HCPCS coding Charge structure APC process improvement DRG assignment Cost report review Physician coding Page 17

18 Mid-revenue cycle Primary objectives and areas of focus Gross and net revenue enhancement How can we defend our prices, while also meeting budgetary needs? Are we leaving money on the table anywhere across our revenue cycle? Administrative efficiency for clinical staff / shortened billing cycle time Are we charging appropriately for the care being delivered? We need to be able to manage our hospitals as a system. Promote transparency from both a revenue and documentation perspective Are we getting the most value out of our EMR (e.g., meaningful use)? Patient statements should look the same for the same service across our system. From a clinical perspective, the main focus of the mid-revenue cycle is caring for patients, but many business objectives need attention at this time as well in order to ensure that care is appropriately reimbursed Page 18

19 Mid-revenue cycle Key challenges and considerations for IA Commercial payers aligning reimbursement scheme with Medicare Changes focus from chargeable to reimbursable Fixed payments (e.g., DRGs, APCs, per diems) reduce financial benefit of price increases. Consumer/Industry demand for transparency of charges A shift of more financial responsibility to patients requires more transparency High deductibles and co-insurance increase visibility of charges May lead to a more consumer-driven industry Reimbursement schemes moving from FFS to value-based models Approaches being tested (e.g., ACOs, population health management and bundled payments) Charge capture, pricing and CDMs need to be revisited under new lens New care delivery models are challenging the status quo Stand-alone imaging centers, surgical hospitals and independent labs Many services can now be bought piecemeal at rates hospitals cannot compete against Increased/changing regulatory requirements Meaningful Use CMS core quality measures RAC, (Recovery Audit Contractor) audits HAC, (Hospital Acquired Conditions) and POA, (present on admission indicators) Page 19

20 Back office Page 20

21 Back office focused on claim submission, payment/collection and denials management Documentation charge capture Utilization review/ case mgmt. HIM/coding, CDI Claims editing submission Third-party collections Financial counseling Payment posting Copayment collection Denials mgmt. Registration Appeals Preregistration Contract mgmt. Scheduling Source: ICD-10 Healthcare 101 Page 21

22 Back office After the patient is discharged Claim preparation and scrubbing Payer remit and payment posting Payment validation Collections Denial and underpayment recovery 4-10 days post discharge days after bill sent Upon receipt of payment days if no activity Ongoing Claims reviewed and submitted electronically (may be sent through clearinghouse) or manually; self-pay bills sent to patients Various systems scrub claims to identify missing elements Billers correct and submit incomplete claims Payments, denials and communications from payers are received via electronic or paper remits Patient payments received Electronic systems or staff post payments to accounts Expected commercial and government payment is calculated and compared to actual payment Payer performance is monitored and fed to contracting group Collector staff identify aged uncollected accounts through queues or reports and contact payers or patients to request payment Claims corrected, documentation sent or denials identified Denials are reviewed, then appealed or written off Identified underpayments are collected from payers These functions may occur through focused roles or be a part of regular collection work Page 22

23 Back office Key considerations for IA Personnel/ training Are departments adequately staffed and responsibilities allocated appropriately? Is there ongoing education on recent trends / regulatory requirements? Policies and procedures Do job-level procedures exist and tie to organizational policies? Are responsibilities clearly outlined across functions? Do process flows exist documenting key handoffs? Technology concerns Is technology used efficiently and effectively (e.g., billing system, scrubbing software) Performance linked to quantity, not quality Often based on number of cases billed in a time period Do performance metrics track quality/accuracy of billing? Page 23

24 Back office Red flags Backlogs due to insufficient staffing or productivity High A/R Low clean claim rate Complicated workflow or non-automated workflows Few automated bill edits/insufficient bill editor No central repository of information Lack of data exchange/integrity between systems Manual billing of secondary payers Paper claims submitted without verification of receipt increases payer never received the bill response Coordination of benefits High denial rates with no functionality to monitor and follow-up on denials Accounts not worked with superior process high level of minimal value activity (i.e., rebilling) does not produce desired resolution Page 24

25 Back office Where do denials originate? Underpayment identification & follow-up 3% Patient registration 18% Patient registration issues: Incorrect plan/id No verification of eligibility/benefits No pre-authorization Benefits exhausted Initial claims follow-up 25% Utilization management 18% UM issues: Insufficient authorization Length of stay Level of care Service Initial claims followup issues: Requested (reasonably necessary) documents not submitted Contract management 15% Claims submission 16% Documentation and coding 3% Charge capture 2% Claim submission issues: Insufficient bill edits Claims sent to wrong address/unit Claim not submitted timely Page 25

26 Back office Proposed denials management audit approach Identify top denial reasons Trend initial denial rate, final denial rate Trend them by payer and perform root cause analysis (identify the point of origination, find patterns and determine reasons for occurrence) Review dashboards / scorecards that highlight relevant key performance indicators for denials Evaluate root cause analysis and corrective action monitoring reports Assess oversight and governance of denials management processes, including assignment of responsibility and accountability Page 26

27 Back office Promoting effectiveness An effective denials management program should not only aim at resolving denied accounts, but also prevention of future denials Objectives should be: Maximize the clean claim paid rate (reduce initial denial rate) Accelerate the resolution of existing denied accounts Minimize the administrative write offs due to non-collectible denials Steps include: Capture Aggregate Report Analyze Improve Ensure remittance advice transaction details are captured and stored in the system of record. Aggregate all denial information into a single repository (e.g., denial database) Standard multi-layered denial reporting package and ad hoc reporting capabilities Standard reporting package is designed to highlight problem areas, and ad hoc reporting provides functionality to do root cause research. Cross functional team meets regularly to review denial trends, recommend process changes and drive overall program results. Page 27

28 Back office Increasing efficiency Less efficient Number of accounts and touches Treat all accounts the same Segment accounts by balance and age; work higher balance accounts in older aging buckets first Segment accounts by payer, balance and age; work accounts by payer by balance by age Identify negative trends (underpayments and denials) in account types and proactively follow-up using collection specialists Use payment forecasting and contract management tools to segment out exceptions and potential variances Use automation to reduce repetitive tasks and workflow tools: prioritize accounts for follow-up Work list/queue specificity More efficient Page 28

29 Key Performance Indicators (KPIs) Page 29

30 KPIs provide accountability throughout the revenue cycle Patient access Documentation and charge capture Contract management Key metrics % of patients pre-registered % Authorizations received prior to treatment for scheduled procedures Authorizations received as % of total authorizations required # Actual days per claim vs. # authorized days per claim % of patients where eligibility was verified % Patients pre-registered $ POS cash collections (ED, IP, OP, self-pay, other) # Patients enrolled in Medicaid, charity care, or COBRA due to financial counseling intervention Key metrics Case mix index % Charts timely completion # Actual days per claim vs. # authorized days per claim Length of stay $ Total charges (gross and/or net) $ Total late charges (gross and/or net) Charge variation for like procedures % Late charges billed $ Total charges by financial class (by type) (gross and/or net) # of daily charge tickets $ DNFB # and $ accounts in MR % Uncodeable accounts Key metrics $ Gross revenues per payer $ Contractuals per payer $ Denials per payer $ ALC and underpayments per payer $ Appealed charges $ Appealed as % of denied Leading practice institutions monitor key metrics in each area of the revenue cycle Page 30

31 KPIs provide accountability throughout the revenue cycle Billing and collections Total A/R, $ and days, gross and net $ Aged A/R (0-30, 31-60, 61-90, , >120) Aged A/R as % of total A/R $ Total cash collections $ Total collections as % of A/R $ Collections as % net revenue First pass yield $ Denials (by reason codes and linked to rejected claims) % Charges rejected due to claim scrubber and code scrubber Write-offs as % of total charges (gross) % Write-offs breakdown (by reason code) $ Write-offs classified as statutory vs. those sent to collections Underpayments as % of managed care (net) charges Collections agency efficacy (% of assigned dollars collected) $ Total underpayments Underpayments as % of managed care (net) charges # of open accounts per collector Page 31

32 Key Performance Indicators (KPIs) Helpful tools Aged Trial Balance (ATB) Report 35% One of the tools used in following unpaid claims is the ATB report. A typical ATB would list all of the accounts and separate them into categories depending upon the length of time that has passed from a predetermined date. 12% 8% 6% 14% 0-30 days days days days >120 days Key elements: Uses the date that an account is billed (or the patient s discharge date) as a starting point Sorts all account receivables into aging categories of 0-30, 31-60, Since the report ages the accounts, it is relatively easy to see which of the unpaid accounts are the oldest. ATB reports can help to identify certain groups of outstanding accounts that require action. Another popular ATB report is one that sorts and lists the accounts in descending dollar value. This report is often referred to as a high-low report. Page 32

33 Key Performance Indicators (KPIs) Helpful tools Bill Hold Analysis The bill hold is the timeframe from a patient s discharge or date of service until the claim is produced It is important to monitor the accounts that are accumulated during this time to determine why the claim has not been produced Generally, there are a minimum number of days that an account would be held prior to billing to allow for: All charges to be input into the financial system Medical records to complete their processing Insurance verification/authorization to be obtained Once a claim has aged beyond the average bill hold timeframe, reports should be generated to the specific departments indicating their deficient accounts. Typical hospital accounts receivable analysis standard bill hold is four days. Page 33

34 Key Performance Indicators (KPIs) Reporting on KPIs Layered reporting package structure Align goals and metrics at the strategic, operational and tactical level Analyze monthly trends for past 12 months Operating margins Net patient service revenue Operating cost Strategic goals and metrics Cash flow A/R days Strategic goals and metrics Operational denials goals and metrics Margin drivers Initial denial rate Final denial rate Denial overturn rate Operational goals and metrics Cash flow drivers % A/R aged > 90 days Initial denial rate Denial overturn rate Tactical denials goals and metrics Tactical goals and metrics Initial and final denial rate Productivity & workload reports By denial reason Denials worked/day By payer Denial overturn rate/staff By location Quality audit score/staff By primary diagnosis code # of denials in ATB/staff By procedure code By patient type Page 34

35 Summary Front end controls should strive to verify every patient and collect preservice payments whenever possible Future reimbursement models will continue to drive the need for strong mid-revenue cycle controls Evaluating back office controls provides IA with a consolidated view of operations across clinical departments IA can perform data analytics and review KPIs to identify trends and potential problem areas Expectation should be that the organization is using dashboards to report on KPIs and facilitate continuous monitoring Why start with back office? Understanding what went wrong through back office analysis can help determine where to focus efforts during review of front end and midrevenue cycle processes. Page 35

36 Traditional approaches to managing the revenue cycle will need to evolve to serve the needs of US health care providers as they adapt to changing economic conditions where the lines between financial and clinical goals are blurred. excerpt from EY whitepaper, Transforming revenue cycle management Page 36

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