The REVENUE INTEGRITY Survival Guide e How hospitals can thrive in today s healthcare market
T H E R E V E N U E I N T E G R I T Y S U R V I V A L G U I D E Revenue Integrity: The Key to Your Hospital s Financial Health How would you rate the financial condition of your hospital? Thriving? Or barely surviving? If you didn t say thriving, then you need to take a look at your hospital s revenue integrity. What do we mean by revenue integrity? It s a function of your revenue cycle/revenue integrity team and the processes in place to achieve 100% legitimate reimbursement year over year with minimal risk or uncertainty. Getting there is a journey that starts with a single step. While seemingly difficult, with the right team and partner, it is absolutely doable. Your journey starts by identifying the gaps between the status quo and your revenue integrity goals and taking the proper steps to close the gaps identified: Improving reimbursements the gap between what you are billing and the revenue to which you are entitled Revenue Integrity [Rev-uh-noo integ-ri-tee]: noun. The achievement of operational efficiency, compliance and legitimate reimbursement Increasing operational efficiency the gap between current processes/ systems and industry best practices to ensure your clinical and financial departments are in alignment and running efficiently Minimizing risk the gap between your current cost of non-compliance, and a reduction in recurring compliance exposure, take-backs, and underpayments Why should you care about revenue integrity? The health of your hospital and your community depends on it. And it all starts with your hospital s financial performance. If your goal is to improve your financial performance, your hospital cannot remain status quo. The simple truth is whether you turn left or right at the fork in the road could mean the difference between thriving or simply surviving. The question you must ask: What can you do to achieve revenue integrity? Is it a journey you can afford not to embark upon? 2
T H E R E V E N U E I N T E G R I T Y S U R V I V A L G U I D E Guiding Your Hospital Along the Journey Based on feedback from nearly one quarter of US hospitals, the path to enhanced revenue integrity is full of struggles: Insufficient net revenue and unpredictable cash flow Communication and data flow disconnects across the revenue cycle Spiraling costs associated with non-compliance Inadequate and stretched resources to keep up with changing payor requirements Without improved results in these areas, achieving sustained revenue integrity will always be one step forward two steps back. And this is why Craneware is sharing this survival guide: it s a thought-provoking book to assess where you are on these key areas and what to do next. Where Do You Start? This successful, 3-step approach will help you get started in closing the gap and continue moving forward on your revenue integrity journey. Analyze. Understand the nature of the problem and get to the root cause Prepare. Take action to ensure proper pricing, charging, coding, billing and staying abreast of changing payor requirements Defend. Keep what is legitimately yours with transparent and defensible data 3
T H E R SE UV ER NV UI E V EI N- T OE G- TR IHT RY I SV UE R VT IIVP A L # 1G U I D E Survive-to-Thrive Tip #1 If insufficient net revenue and unpredictable cash flow are preventing your hospital from thriving, you may be at a fork in the road. Now more than ever, hospitals are expected to increase net revenue and create a more predictable cash flow and do it in a transparent way. At the same time, reimbursements are shrinking and resources are being cut. A common result is replacing best practices with managing by exception. Missing charges from supplies and pharmacy purchases, the gap between billed amounts and actual reimbursements, and not understanding what line items and claims are being denied could be costing you millions. The impact is that hospitals financial well-being is threatened by missing revenues. Can you explain why your hospital is not being reimbursed for all the services it provides? With so many pressing revenue cycle challenges, it s tough to know where to start to prevent revenue leakage. Here are ideas on how to produce more net revenue. 4
T H E RSEUV RE VN UI VE E I-NTTOE -GTR HI TRY I VS UE R TV I VP A L # 1G U I D E Analyze Identify the gaps where your hospital is losing revenue. Q: Can you identify missing revenues? Q: What percentage of your claims are 100% accurate? Q: Can you identify patterns of late charges and where they originate? Q: Are there charges that do not pass from clinical systems to the billing system? Q: Do you live in fear of audits and take-backs? Q: What is your hospital s pattern of denials internal from claim scrubbers and external denials from payors? 5 5
T H E R SE UV ER NV UI E V EI N- T OE G- TR IHT RY I SV UE R VT IIVP A L # 1G U I D E Prepare Then determine priorities on where to focus limited resources to gain the most return. Q: How does your hospital address charge reconciliation? Are all departments held accountable? Q: What tools are most needed to capture all the reimbursements you are entitled to? Q: Are you spending more time correcting errors than preventing them? 6 6
T H E RSEUV RE VN UI VE E I-NTTOE -GTR HI TRY I VS UE R TV I VP A L # 1G U I D E Defend Create a program to keep the revenues to which you are legitimately entitled. Q: Does your hospital have an effective way to identify and address errors before a claim is denied by the payor? Q: Have you established KPIs and a reporting scorecard for viewing and managing charge capture metrics? Q: How much do you write off every year? Knowing how to effectively manage both revenue integrity and the people involved are the keys to financial survival. Having the tools to improve coordination and communication can immediately add to your hospital s bottom line. Revenue leakage is unacceptable. As margins shrink and revenue drops, there can be no leakage. Cynthia Fry, Vice President of Revenue, Catholic Health East 7 7
T H E R SE UV ER NV UI E V EI N- T OE G- TR IHT RY I SV UE R VT IIVP A L # 2G U I D E Survive-to-Thrive Tip #2 If communication and data flow disconnects across the entire revenue cycle negatively impact your reimbursement levels, it s time to choose a different path. Getting reimbursed for what you are entitled to is complicated. It s not only because of the rules and regulations, but also because there are many opportunities for errors to occur as the data needed for reimbursement passes between disparate systems across your entire revenue cycle, including both manual and automated processes. If any data elements are missing or invalid or if a keystroke error occurs the result is no or reduced reimbursement. And with departments working in silos, the errors are perpetuated. The impact is your hospital could be missing out on tens of millions of dollars over the course of years that could be prevented. How much additional revenue could your hospital be realizing if your revenue integrity was intact? A full understanding of your hospital s complete revenue cycle, including departmental accountabilities to the entire process, will shed light onto identifying the disconnects. 8
T H E RSEUV RE VN UI VE E I-NTTOE -GTR HI TRY I VS UE R TV I VP A L # 2G U I D E Analyze Complex processes can be broken down into manageable parts. Start with identifying all the regulations, processes, systems, departments and payors that make up the revenue cycle. Q: Do you have a full understanding of the potential areas of disconnect? Q: How many department managers are actively engaged in and accountable for their department s revenue integrity? Q: How often do you sit down with department managers and review mismapped codes, miscoded claims, and invalid claim logic? 9 9
T H E R SE UV ER NV UI E V EI N- T OE G- TR IHT RY I SV UE R VT IIVP A L # 2G U I D E Prepare Strong inter-department collaboration and everyone being focused on the same goal will go a long way toward revenue integrity. The next step in strengthening the revenue cycle is putting policies and procedures in place to streamline processes that create better efficiencies and identify revenue. Q: How many departments did you set up last year and how much notice did you have to do it? Q: How do you reconcile billable pharmaceuticals and supplies that were purchased with what have been billed? Q: Are best practice strategies in writing and bought into by all departments affected? Q: Do you share denial trends, such as medical necessity, prior authorization, billing and coding issues, with clinical departments? Q: When a breakdown occurs, what are efficient and effective ways currently being used to quickly correct the error? 10 10
T H E RSEUV RE VN UI VE E I-NTTOE -GTR HI TRY I VS UE R TV I VP A L # 2G U I D E Defend Once policies and collaboration between departments are standard operating procedures, the focus can then be shifted to increasing reimbursement levels. Q: How do you determine priorities for your team to address corrective issues? Is it based on departments with highest revenue? Highest volume? Q: How do you plan to automate the manual processes that are currently in place? Q: As new departments and specialties are added, how will competitive pricing levels be determined? Chart a course to prevent disconnects so that you charge appropriately for all services your hospital provides and then receive all the reimbursements you are legitimately entitled to. Improving your hospital s financial performance is only one of the many benefits you ll receive. Collaboration between clinical and financial departments is the key to the charge capture improvement process. Our clinicians are committed to their role in making sure we re properly reimbursed. Scott D. Smith, CFO, Adams County Regional Medical Center 11 11
T H E R SE UV ER NV UI E V EI N- T OE G- TR IHT RY I SV UE R VT IIVP A L # 3G U I D E Survive-to-Thrive Tip #3 If the road you travel is fraught with the spiraling costs of noncompliance, it s time to course correct. Understanding and mitigating your hospital s compliance risks is an increasingly complex and costly endeavor. In the recent past, most compliance issues were Medicare-related. But sources have expanded dramatically to include everchanging Medicare requirements, RAC and MAC audits, state Medicaid requirements, medical necessity, a host of private payor requirements, and your own hospital policies. The status quo of managing denials and audits manually without the ability to understand and correct root causes and maintain a defensible claim process just isn t sufficient anymore. The likely impact of unmitigated compliance risk is increased denials, audits, take-backs, underpayments, and costly legal exposure to the hospital. The result is uncertainty and negative impacts on cash flow and net revenue. Of all of your hospital s compliance risks, what percentage would you be able to eliminate by understanding and eliminating the root causes with access to better data and tools? With proper systems in place, reducing your compliance risks and the costs and uncertainty they impose on your revenue integrity is both achievable and sustainable. 12
S U R V I V E - T O - T H R I V E T I P # 3 Analyze The starting point is to understand the root causes of your compliance risks. Q: How do you know the current process of managing audits and denied claims is successful? Q: Do you know what your take back exposure is, and why? Q: What are the most common departments and service types that are denied? Q: Have you trended and analyzed denials to understand the source of errors?
T H E R SE UV ER NV UI E V EI N- T OE G- TR IHT RY I SV UE R VT IIVP A L # 3G U I D E Prepare Next, be sure you have the tools and resources in place to prevent or defend as necessary. Q: Are you able to appeal 100% of your denials in a timely manner with your current denial process? Q: How many departments do you sit down with every year and review best practices? Q: Is the ability to identify recurring issues that lead to appeal failure increasing your exposure and risk in a way that is difficult to quantify? 14
T H E RSEUV RE VN UI VE E I-NTTOE -GTR HI TRY I VS UE R TV I VP A L # 3G U I D E Defend Protecting your revenue from future denials, partial payments, and take-backs with sustainable systems is the ultimate goal. Q: Have you implemented an effective corrective action plan? Q: What percentage of your appeals do you win? Q: How can you better allocate resources currently dedicated to reworking claims on the back end once errors are being prevented on the front end? Q: Does your hospital have a pattern of denied claims that could cause you to be a target for future audits? The most effective approach to reducing denial rates and compliance risk comes from implementing a well-designed denials management program focused on root cause analysis and effective corrective action plans. A shift in focus and strategy could change everything in your favor. Compliance is a high-risk area that we simply had to address. To avoid denials, rework and financial penalties on the back end, we needed technology and process improvement to help us get things right the first time. Stephen Bowerman, CFO, Midland Memorial Hospital 15 15
T H E R SE UV ER NV UI E V EI N- T OE G- TR IHT RY I SV UE R VT IIVP A L # 4G U I D E Survive-to-Thrive Tip #4 If inadequate resources to keep up with the requirements of the rapidly-changing healthcare landscape are stopping you in your tracks, something has to change. Describing the financial systems of a hospital as complex is an understatement. Government regulations. Transitions to ICD-10. Pricing transparency. ACO accountability requirements. The myriad of private payor requirements. Managing the number of moving parts makes it a daunting task for resourceconstricted hospitals with staffs at their breaking points. And who has time to think about preparing for new healthcare initiatives on the horizon? Face it, using the traditional methods to keep current with the changing landscape and the impact it has on your financial systems is not going to get your hospital s bottom line where it needs to be. The impact of working with out-of-date or incomplete information is incorrect claims, which lead to increases in denials and costly audits, and ultimately under-reimbursement. What would it mean if you could get your pricing, charging, and coding up-to-date and under control? With the proper approach, this goal is attainable. 16
T H E RSEUV RE VN UI VE E I-NTTOE -GTR HI TRY I VS UE R TV I VP A L # 4G U I D E Analyze In order to get out from under all the chaos, start by understanding the real issue. Questions you should be asking yourself are: Q: Do you have a full understanding of your payor requirements? Q: How out of date are your coding reference sources? Q: What is your hospital s percentage of clean claims? Q: How do you communicate chargemaster and policy changes throughout your facility? 17 17
T H E R SE UV ER NV UI E V EI N- T OE G- TR IHT RY I SV UE R VT IIVP A L # 4G U I D E Prepare Next, define the steps you need to take to keep up or conversely the cost to your bottom line if you don t. Q: Do you have policies and best practice guidelines to continually support the efficiency of the revenue cycle? Q: How do you learn of CMS and private payor changes? Q: What tools do you use to manage and apply changes? Q: How well do you understand your payor contracts? 18 18
T H E RSEUV RE VN UI VE E I-NTTOE -GTR HI TRY I VS UE R TV I VP A L # 4G U I D E Defend Then, once you are current, define and implement a strategy to stay that way. Q: How do you train your employees on new coding requirements? Q: Is your pricing competitive with comparable hospitals? Q: If called into question, could you defend your prices? Q: How do you incorporate year-end OPPS changes in real time? Q: Are you conducting an annual audit done by a consultant rather than manage it yourself? Are you aware of the trade-offs? Rapid change is inevitable. Identify your trusted data sources that will keep you current and have a best practice strategy that leverages your resources. We could not see the big picture of our revenue cycle. There was no way to be sure that changes were being properly implemented and that people were being educated. We had no ongoing maintenance of the chargemaster and no idea how much revenue we were missing. David Pries, Director of Revenue Integrity, HealthEast Care System 19 19
T H E R E V E N U E I N T E G R I T Y S U R V I V A L G U I D E Institute a Comprehensive Revenue Integrity Program While each hospital travels a different path along the journey to revenue integrity, all of you are pointed in the same direction to stay financially healthy to continue to provide quality care to patients. Every journey is about identifying the gap between the status quo and achieving 100% revenue integrity the gap between billings and reimbursements, the gap between clinical and financial departments, and the gap between increased audits and denials and minimizing compliance exposure. Reach out to Craneware for help in creating a comprehensive revenue integrity program: 1. Receive hard-hitting complementary materials from our Best Practices Library on the topic that interests you most 2. Attend our Best Practice Webinars hosted throughout the year, both live and on-demand to fit your tight schedule 3. Visit stoptheleakage.com, a blog discussing revenue integrity and providing a forum to share your thoughts with peers 4. Request a private briefing or demonstration that is tailored specifically to your hospital 5. Attend a Craneware User Group meeting, a collaborative forum to learn from Craneware experts, industry speakers and your peers 20
T H E R E V E N U E I N T E G R I T Y S U R V I V A L G U I D E To achieve revenue integrity, you ll need an expert guide. That expert is Craneware. One in four of all registered US hospitals trust Craneware We pioneered the chargemaster solution market Ranked #1 in KLAS eight years running* Craneware is the original company to achieve HFMA Peer Review status Commitment to serving our clients: User Group meetings, Advisory Council, discussion forums We blaze trails for hospital best practices every day 96% of clients who reviewed Craneware s offerings as a part of KLAS surveys said they would buy Craneware products again and would recommend them to their colleagues. No matter your starting point, continue to move forward on your revenue integrity journey! Craneware revenue integrity expert guides can be reached at: 1-877-624-2792 www.craneware.com *Chargemaster Toolkit is ranked No. 1 in the Revenue Cycle Chargemaster Management market category for the eighth year in a row (2006 2013), and Bill Analyzer is ranked No. 1 in the Revenue Cycle Charge Capture market category for the third year in a row (2011 2013). 2013 Best in KLAS Awards: Software & Services report, published January 2014. Data 2014 KLAS Enterprises, LLC. All rights reserved. www. research.com Healthcare Financial Management Association staff and volunteers determined that Craneware s Chargemaster Toolkit, Chargemaster Corporate Toolkit, Bill Analyzer, Online Reference Toolkit, and Interface Scripting Module have met specific criteria developed under the HFMA Peer Review Process. HFMA does not endorse or guarantee the use of these products. 21
T H E R E V E N U E I N T E G R I T Y S U R V I V A L G U I D E Partner With Craneware to Improve and Sustain Strong Financial Performance Craneware provides the solutions for its customers to be financially healthy so you can continue to provide quality care to your patients. Together, we will take a look into your processes and help you find where you can optimize your legitimate reimbursement, improve operational efficiency, and minimize compliance risk. Revenue Cycle Chargemaster Toolkit Physician Revenue Toolkit Bill Analyzer Supply Management Pharmacy ChargeLink Supplies ChargeLink Audit & Revenue Recovery InSight Denials InSight Audit InSight Payment Variance Analyzer Access Management & Strategic Pricing Patient Charge Estimator Pricing Analyzer InSight Medical Necessity Download valuable resources and join the movement to prevent revenue leakage stoptheleakage.com 22
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