1. 8/2/2015 1 Revenue Cycle Management

2. 8/2/2015 2 Here’s What You’ll Learn Introduction to Revenue Cycle Concept Zero to Zero Departments & Functions Process Key Definition & Metrics Market Conditions Impact to Revenue Cycle Modern Day Bounty Hunters Charity Care Future with Health Care Reform

3. 8/2/2015 3 3 What is Revenue Cycle? All the administrative and clinical functions, processes, and software applications that contribute and manage the registration, charging, billing, payment and collections tasks associated with a patient encounter. Revenue Cycle is the process that begins when a patient comes into the system and includes all those activities that have occurred in order to have a zero balance In other words, think… Zero to Zero!

4. “Hospitals exist in a very uncertain time. Reimbursement risk runs high, and receiving payments from patients is not guaranteed. The ability to capture lost revenue and improve the ability to forecast actual revenue received to the budget is necessary for hospitals' and other service providers' survival and vitality.” Source: Wall Street 2010 Importance of Revenue Cycle And You…

5. REGULATIONS PROCESS CULTURE TOOLS PEOPLE The Revenue “Cycle” BILLING CDMP SCHEDULING REGISTRATION INSURANCE VERIFICATION FINANCIAL COUNSELING CASE MGMT/QUR CDM/CHARGE CAPTURE MEDICAL RECORDS CUSTOMER SERVICE THIRD PARTY FOLLOW- UP SELF PAY COLLECTIONS PROGRAM ADMINISTRATION CASH POSTING POST PAYMENT REVIEW TECHNOLOGY CUSTOMER EXPECTATIONS PAYORS POINT OF SERVICE COLLECTIONS DENIALS MANAGEMENT FINANCIAL CLEARANCE

6. Patient Access Documentation Of Services Billing Receivables Management Customer Service Hospital Scheduling Registration Pre- Registration Eligibility & Verification Financial Counseling Care Delivery Patient Discharge Transcription Charge Master Coding/ CDMP Charge Capture Payment Posting Claims Editor Customer Inquiries Bill Reconciliation Contractual Adjustments Legal Collections Issue Resolution Secondary Billing Bad Debt/ Write Offs Patient Statements Process Flow by Department Late Charges Utilization Management Discharge Planning Case Management Claims Submission Follow-Up Appeals/ Denial Mgmt Feedback

7. 8/2/2015 7 Patient Access The “Front Door” to the hospital and the first step in the revenue cycle process for the majority of patients. The important functions and information gathered in Access include: Scheduling services (surgery not included) Verifying of Insurance Obtaining Authorizations and certifications Gathering patient demographics and insurance information Pre-Services/Point of Service collections Identifying the referring physician Informing the patient on instructions for the date of service, referral process, etc. Informing patient of referral process Financial Counseling Medicaid Eligibility/Charity Care Responsible for 50% of claims data

8. 8/2/2015 8 Health Information Management (HIM) Health information management (HIM) is the practice of maintenance and care of health records by traditional and electronic means in hospitals, physician's office clinics, health departments, health insurance companies, and other facilities that provide health care The important functions and information gathered in HIM include: Providing and Managing Transcription Services Coding services documented by Physicians CPT codes (procedures) ICD-9 (diagnosis) HCPC (supplies, drugs, etc.) ASC Codes Ensure Codes accurately reflect patient services Acts as a Liaison between all areas Serves as Subject Matter Experts in HIPAA, Documentation and Coding Educates, presents, and trains on opportunities to improve Case Mix Index (CMI) Oversees and responds to Defense Audits Manages storage and retrieval of medical records Implementation of Electronic Health Record System Building the Compliant Documentation Management Program (CDMP)

9. 8/2/2015 9 Patient Financial Services (PFS) Patient Financial Services is the “cash machine” of the hospital. The important functions and information gathered in PFS include: Charge Master/Revenue Integrity Billing Overseeing Claims Edits to ensure “Clean Claim Submissions” Employing tools to ensure accuracy in charge capture Follow-Up with Insurance companies Appeals Denials Un-paid Claims Customer Service Collections Cash Posting Subject Matter Experts Government Billing Commercial and Managed Care Billing Employs and Oversees systems and vendors to enhance Services provided to patients Revenue Cost to Collect

10. 8/2/2015 10 Charge Master A comprehensive listing of hospital charges The Revenue Integrity team are a critical component to billing compliance and charge capture and is often considered the "life blood" to a Hospital's Revenue Cycle by touching almost every department within the facility. Standardization of charge master Department level review of all processes and charges with management staff to ensure all billable charges are represented on the CDM CDM reviews and updates to ensure compliance for all payors Market pricing, transparency and defensibility strategies Revenue cycle system mapping to ensure charge capture and compliant billing Acuity-based charging methodology development and implementation Maintenance strategies, controls and tools for maintaining an accurate and compliant CDM Educational and training tools

11. 8/2/2015 11 The Importance of Charge Capture A key part of the Revenue Cycle but does not report to Revenue Cycle “Bill what you do” – the process where services provided are entered into the system; charges and expected reimbursements are calculated The important functions and information gathered in Charge Processing include: Keyers and coders enter data automatically from a charge master or manually input Claims Manager software scrubs entries for correctness Problems sent to department work file for processing or corrections Reconciliation performed to insure all entries received and entered into the system Accuracy of service and charge Appropriate edits to scrub data Charge entered timely for prompt payment Daily Charge Logs Reviewed

12. Process Flow: For Real?

13. Process Flow Overview

14. Required Billing Elements - Where do they come from? 50% - Patient Access, Registration 15% - Charge Entry Areas 15% - Medical Records20% - Billing Patient Demographic Data  Patients last name, first name, and middle initial  Patient address  Birth date  Male (M) or Female (F)  Marital Status  Admission date or start of care date Encounter Specific  Hour patient was admitted for inpatient or outpatient care  Occurrence Codes  Code indicating the priority of admission--1 indicates emergency; 2 urgent; 3 elective; 4 newborn; and 9 information not available.  Code indicating the source of admission or outpatient service  Provider has patient signature on file permitting release of data (Y or N)  Principal Diagnostic Coding (ICD-9-CM code)  Admitting Diagnostic Coding (ICD-9-CM code) Insurance Information  The name and number identifying each payer that payment is expected  Assignment of benefits (Y) yes; (N) no  The name of the patient or insured individual  Relationship of the insured (person having insurance) to the patient  Insured’s identification number assigned by the payer organization  The group name/plan through which the insurance coverage is provided  The insurance group number  Employment status code  Employer’s name and address Required Elements: Revenue Cycle – Where Does the Information Come From?

15. 8/2/2015 15 Access: Metrics Registration accuracy rate Denials No Authorization Not Eligible Telephone Statistics Hold Times Abandonment Rates Other Point of Service Collections “Red Flags” – Incorrect Claim Demographics

16. 8/2/2015 16 HIM: Metrics Discharges Not Final Billed (DNFB) Turnaround Times Dictation/Transcription Record Requests & TAT CDMP Queries Rate Response Rate Agreement Rate RAC Audits & Timeliness Responses

17. 8/2/2015 17 PFS: Metrics Cash Expected Reports Days in A/R Aging Analysis by Payer Unbilled Accounts Receivable Late Charge Postings by Service Area Claim Denial Volumes / Amounts / Types Bad Debt / Bad Debt Recovery Levels Cost to Collect

18. Top Issues Influencing Health Care Industry Record spending on health information technology Significant changes in benefit plan design, plan pricing and the health plan landscape New risks and opportunities may emerge as payment models shift from fee-for-service to new models that focus on performance, health outcomes and shared cost savings Health organizations may feel the trickle down effect of decreased utilization by price sensitive consumers. A further uptick in merger and acquisition activity to share administrative burdens and IT investments, gain market share and fill strategic gaps. Pharmaceutical companies see an opportunity to increase their visibility with consumers, influence health outcomes and reduce healthcare costs while increasing revenue using digital strategies and technology. The use of mobile health and wireless technologies by all health organizations is expected to continue to surge. Source: PwC 2010 18

19. Source: OHA 2010 19 Revenue Stream Where the Money Comes from...

20. Insurance by Percentage Enrolled 20 Source: Kaiser Family Foundation 2010

21. 21 Average Health Insurance Premiums and Worker Contributions for Family Coverage, 1999-2009 Note: The average worker contribution and the average employer contribution may not add to the average total premium due to rounding. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009. $5,791 128% Worker Contribution Increase 131% Premium Increase $13,375

22. On the Rise… Group Health Plan premiums up 9% with expectations of 6% in 2012 High Deductible Health Plans continue to rise Deductibles and Out of Pockets Increasing 22% Charity Care, Government Payors Increasing 1.3 Million Uninsured equivalent to the population of Columbus 22

23. 8/2/2015 23 Adults Living in Poverty

24. 8/2/2015 24 Market Conditions State budget issues continue Traditional Medicaid/Medicaid Managed Care wanting relief More Ohio residents live below the poverty level High Penetration of Self-Insured Employers Shifts of health care costs to Consumers Increases in Deductibles Increases in Co-Pays But, still coverage offered from employers Most markets are dominated by few payors Smaller Payors being closed out of the Market Aggressive Managed Care payors Movements to more complicated contracts

25. 8/2/2015 25 Market Conditions Reimbursement Variances Commercial Payors Continue to Subsidize Government Payors High Deductible Health Plans Increase Deductibles increasing too Quality Scores tied to Contract Increases/Consumerism Hospitals Physicians Multi-Year Contracts with Payors Transparency Growing

26. 8/2/2015 26 Charges, Payments, and Cost Charges are the amount the hospital lists as the price for services. Very few pay this “sticker price.” Payment or Reimbursement is the amount the hospital actually receives in cash for its services. Private insurers, public insurers, Self Pay and the uninsured all pay different amounts for the same services. Payment can be either more or less than what it costs the hospital to provide a given service. Cost is what it actually costs the hospital to provide the services.

27. 8/2/2015 27 8/2/2015 27 Reimbursement Methodologies Hospitals Percent of Charge Per Diems Case Rate Payment Diagnosis Related Groups (DRGs) Medical Severity (MS) DRGs Globals Ambulatory Patient Groupings (APGs) Ambulatory Payment Classifications (APCs) Other Carve-Outs Professional Services Fee For Service discounts Fee Schedules Payment based on Resource Based Relative Value Based System (RBRVS) Capitation Withholds Pools Case Rates

28. Cost Government Reimbursement Charge Commercial Reimbursement Subsidies and Payor Mix Note: Solid lines are status quo; dashes represent future state with costs, reimbursement, and charges shifting.

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31. Contracted Fee Schedule Match Source: AMA 2011 National Insurer Report Card 31

32. 8/2/2015 32 Administrative Costs Pre-Authorizations Complex Benefit Designs Limitations of Network Denials Coordination of Benefits Audits

33. 8/2/2015 33 Importance of POS Collections Recent Studies on the “Tipping Point” – Financial Hardship Limit – found that when the total amount billed to the patient reached 3.5% of the family's gross income, the likelihood of paying the bill dropped dramatically. Source: TransUnion/NorthShore LIJ Study

34. 8/2/2015 34 Modern-Day Bounty Hunters RAC: Recovery Audit Contractors Medicare MAC: Medicare Administrative Contractors The new Fiscal Intermediary MIC: Medicaid Integrity Contractors Medicaid Managed Care Audits

35. 8/2/2015 35 RACs Findings

36. 3-7 percent of revenue on a variety of community benefit and charity care activities is likely adequate. An IRS study found that 9 percent of revenue was spent on community benefit. Nearly 60 percent of the hospitals surveyed provided less than or equal to 5 percent of revenue on uncompensated care Twenty percent of hospitals surveyed reported total community benefit spending of less than 2 percent of revenue. Source: Kaiser Daily Health Policy Report Feb 2009 Charity 9 8 7 6 5 4 3 2 1

37. 8/2/2015 37 Revenue Cycle Management Strategies A CFO’s Focus on Revenue Cycle  Vendor Management  Denials Management  Technology Optimization  Point of Service Collections  Strategic Pricing  Contract Management  Compliance Documentation/Coding. Source: Interview with: Vince Schmitz, Senior Vice President & CFO, MultiCare Health System.

38. Expanded Coverage Payment CutsNew Coverage Requirements New Economic Incentives Eligibility Processes Denials Prevention Charity Care Policies & Processes ICD-10 C2CRational PricingDocumentation & Coding Physician Integration ACO/Bundled Payments Revenue Cycle & Health Care Reform Positioning for the Future Revenue Cycle improvements

39. QUESTIONS