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Healthcare Revenue Cycle Management Essentials
- 1. © 2018 American Health Information Management Association© 2018 American Health Information Management Association Principles of Healthcare Reimbursement Sixth Edition Anne B. Casto, RHIA, CCS
- 2. © 2018 American Health Information Management Association Chapter 9, Revenue Cycle Management • Learning Objectives – Describe the components of the revenue cycle – Identify the components of the charge description master – Explain the term revenue cycle management – Explain the importance of effective revenue cycle management for a provider’s fiscal stability – Differentiate between the different sources of revenue cycle compliance guidance – Explore methods for revenue cycle analysis 2
- 3. © 2018 American Health Information Management Association Revenue Cycle Management • Revenue cycle: Revenue is regular income, and the cycle is the regularly repeating set of events that produces it • Revenue cycle management (RCM): All administrative and clinical functions that contribute to the capture, management, and collection of patient service revenue 3
- 4. © 2018 American Health Information Management Association Revenue Cycle Components • The Revenue Cycle involves many departments and units in the healthcare facility • Each component in this graph has sub-processes and/or cycles • A key to good revenue cycle management is having all areas and units understand the entire cycle; not just the pieces or parts for which a particular unit is responsible • AND good communication and teamwork is required! 4 Pre-Claims Submission Claims Processing Accounts Receivable Claims Reconciliation and Collections
- 5. © 2018 American Health Information Management Association RC Patient Perspective 5 Revenue Cycle Patient Perspective Patient is scheduled for treatment Patient is admitted, pays cost sharing portion Treatment provided, supplies used and resources consumed Patient is discharged Patient receives explanation of benefits Patient receives bill from facility and/or physician
- 6. © 2018 American Health Information Management Association RC Facility Perspective 6 Revenue Cycle Provider Perspective Patient is scheduled and preauthorized Patient is admitted, demographic and payer information collected Services are rendered to patient, charges are captured via CDM Medical Records are reviewed and coded Claim is produced , audited (scrubbed), and corrected Claim is transmitted to Payer Accounts are managed until payments are received Payments and remittance advice are received from payer Claims corrected and financail adjustments made as warranted Outstanding cost sharing payments are collected from patient
- 7. © 2018 American Health Information Management Association Pre-claims Submission Objectives Collect the patient’s and/or responsible party’s information completely and accurately Determine the appropriate financial class or account type Educate the patient as to their ultimate financial responsibility for services rendered Obtain written waivers as warranted to support future collections Verify all data collected prior to rendering services or submitting claims 7
- 8. © 2018 American Health Information Management Association Claims Processing Activities Objectives Capture of all billable services Claim generation Claims correction 8
- 9. © 2018 American Health Information Management Association Claims Processing Activities Order Entry Helps capture the charge at the point of service delivery When an order is completed a charge is automatically added to the patient’s account Charge Description Master Database used by facilities to house billing information for all services and supplies Hard Coding – HCPCS code is added to the patient’s claim without the intervention of a coding professional Coding Professionals Soft coding – Coding professionals review medical record documentation and select the correct HCPCS code Used for complex encounters and surgical procedures 9
- 10. © 2018 American Health Information Management Association CDM Uses Claim Production Pricing Utilization Management Resource Consumption Analysis 10
- 11. © 2018 American Health Information Management Association Claims Processing Activities Auditing and Review Scrubbers used to audit claims before submission Flagged claims are returned to a coding professional for review and correction Submission of Claims HIPAA electronic transactions See table 9.1 Facility – 837I Providers – 837P 11
- 12. © 2018 American Health Information Management Association Accounts Receivable Objectives Manage outstanding patient accounts Manage insurance processing activities and queries Manage benefits statement and remittance advice 12
- 13. © 2018 American Health Information Management Association Claims Reconciliation and Collections Analyze remittance advice for rejected or denied claims or line items Reconcile accounts to ensure proper payment was received Manage claims correction and resubmission processes 13
- 14. © 2018 American Health Information Management Association CDM Structure • Each CDM is unique to the hospital or hospitals system – See table 9.3 in text • Standard data elements included in a CDM 14
- 15. © 2018 American Health Information Management Association CDM Structure – Charge Code • Charge code [service code, charge description number, charge identifier] – A hospital-specific internally assigned code (usually numeric) used to identify individual items or services 15 Charge Code Depart. Number Revenue Code HCPCS Code Charge Description Charge 12345 601 360 49180 Mass, bx, surgery $535.00
- 16. © 2018 American Health Information Management Association CDM Structure – Charge Code Coordinated Distribution Straight numerical order Sections could be reserved by ancillary services 1000-1999 = PT Unique CDM Coordinator must ensure there are not duplicate charge codes Audits should be performed throughout the year 16
- 17. © 2018 American Health Information Management Association CDM Structure – Department Code • Department code [general ledger number, GL#] – A hospital-specific number which is assigned to each ancillary department that provides services to patients 17 Charge Code Depart. Code Revenue Code HCPCS Code Charge Description Charge 12345 601 360 49180 Mass, bx, surgery $535.00
- 18. © 2018 American Health Information Management Association CDM Structure – Department Code Assignment Ancillary Service Example: Speech therapy Physical Area Example: Emergency Department Combine with Charge code Method used by some facilities Table 9.4 in text 18
- 19. © 2018 American Health Information Management Association CDM Structure – Revenue Code • Revenue Code – A four digit numeric code that is required for billing on the UB04 or the 837I ETS. The revenue code is set by the DHHS and is the same at all facilities. The revenue code reported on individual claims is utilized at the end-of-year cost reporting process. Revenue code assignment is usually driven by the ancillary department or location where the service was rendered. 19 Charge Code Depart. Code Revenue Code HCPCS Code Charge Descripti on Charge 12345 601 0360 (operating room) 49180 Mass, bx, surgery $535.00
- 20. © 2018 American Health Information Management Association CDM Structure – Revenue Code Payer instructions • Transmittals and bulletins provide RC specific instructions Edits • Medicare Code Editor and Outpatient Code Editor include HCPCS code/RC edits Used in Reimbursement Methodology • Payer 1 specifies 60% billed charges for RC 610 • Medicare specifies most specific RC must be used • Payer 2 reimburses by CPT code regardless of RC 20
- 21. © 2018 American Health Information Management Association CDM Structure – HCPCS Code • HCPCS Code – The current code assigned by the AMA or CMS to be reported for individual services, procedures, and supplies rendered to the patient – Codes may be payer-specific, i.e. Medicare, Medicaid, Blue Cross, etc. CPT/HCPCS codes are not provided for all line items – Several services or supplies billed to the patient do not have associated CPT/HCPCS codes (room rates, general supplies) 21 Charge Code Depart. Code Revenue Code HCPCS Code Charge Description Charge 12345 601 360 49180 Mass, bx, surgery $535.00
- 22. © 2018 American Health Information Management Association CDM Structure – HCPCS Code Determines other line item information • RC, Department number, etc. may be based on HCPCS code Must be reported when available • Not all line items will have a HCPCS code • No HCPCS code for recovery room Vary among payer • Some payers require different HCPCS codes • See tables 9.5- 9.7 in text 22
- 23. © 2018 American Health Information Management Association CDM Structure – Charge Description • Charge description – An explanatory phrase that has been assigned to describe the procedure, service or supply rendered – The description is usually based on the official CPT/HCPCS description, but the data field is often limited by the character length allowed by the financial system so shorter descriptions are utilized at most facilities 23 Charge Code Depart. Code Revenue Code HCPCS Code Charge Description Charge 12345 601 360 49180 Mass, bx, surgery $535.00
- 24. © 2018 American Health Information Management Association CDM Structure – Charge Description AMA and CMS provide official long description for each code Descriptions typically need to be shortened to work in EHR and financial systems Must be easy for physicians and clinicians to connect descriptions to procedures and services Must be easy for patients to understand on detailed bills; See table 9.8 in text 24
- 25. © 2018 American Health Information Management Association CDM Structure - Charge • Charge – The hospital price for the item or service rendered to the patient • Charge does not equal cost! – The difference is product mark-up 25 Charge Code Depart. Code Revenue Code HCPCS Code Charge Description Charge 12345 601 360 49180 Mass, bx, surgery $535.00
- 26. © 2018 American Health Information Management Association CDM Structure – Active Indicator Indicates if line item is currently in use Allows facilities to keep all line items in the CDM to preserve history Maintain integrity of line items that may be revisited during payer audits Inactive line items should be reviewed prior to adding new line items to prevent duplication 26
- 27. © 2018 American Health Information Management Association CDM Structure - Modifier • Modifier – Used to flag a service that has been modified in some way or to provide more specific information about the procedure or service • CPT modifiers • HCPCS Level II modifiers • Hard coding is rare – If used, the modifier is placed on the bill EVERY TIME the charge code is activated in the order entry process – If used, must consider all the compliance implications 27
- 28. © 2018 American Health Information Management Association CDM Structure – Payer Identifier • Payer identifier – Codes that are used to differentiate among payers that may have specific or special billing protocol • Each time a payer contract is revised, the CDM team must determine if changes in payer identifier assignment are warranted 28
- 29. © 2018 American Health Information Management Association CDM Maintenance Maintenance Plan • Team approach • Project plan • Policies and procedures must be followed Working with Hospital Departments • Primary focus of ancillary departments is patient care • Engage the clinical areas • Be respective of clinical staff’s time • Effectively communicate due dates and explain ramifications of failure to update the CDM 29
- 30. © 2018 American Health Information Management Association CDM Maintenance Understanding Services • Clinicians can explain services, service components and delivery techniques needed to establish line items and charge Understanding the CDM • CDM staff explains compliance and billing implications • Easier to get buy-in when employees understand the reasoning behind a process or protocol 30
- 31. © 2018 American Health Information Management Association CDM Maintenance Components of Maintenance Plan Scope is critical; mapping out all tasks that need to be completed will force reviewers to complete all planned activities Technical activities include: statistics review, code review RC review, charge review Ongoing Maintenance Maintenance happens throughout the year OPPS Addendum B is updated quarterly Payer instructions are updated at different times during the year 31
- 32. © 2018 American Health Information Management Association CDM Maintenance CPT Updates • New codes effective January 1 • Update CDM and order entry systems HCPCS Level II Updates • Permanent codes updated January 1 • Temporary codes updated quarterly PPS Updates • Each PPS has an update schedule (CY, RY, FY) • Ensure final rules are reviewed for impact of CDM 32
- 33. © 2018 American Health Information Management Association CDM Maintenance Policy Alerts • Issued by payers throughout the year Payer Updates • Have a payer schedule • Most update in alignment with their FY 33
- 34. © 2018 American Health Information Management Association CDM Maintenance Monitoring Rejections and Denials “Putting out fires” Develop plan and scope for the review Human Errors We all make mistakes! See table 9.10 in text Develop a procedure to follow for human errors System Errors in Claim Production or Transmission Include a CDM representative in system testing Ensure that claims are properly generated 34
- 35. © 2018 American Health Information Management Association Automation of CDM Maintenance • Help identify issues surrounding – Revenue code – HCPCS code – Compliance issues • Most products include Medicare regulations – but what about your payer specific rules? – How does the CDM Coordinator ensure that the software does not auto update the customized line items? 35
- 36. © 2018 American Health Information Management Association Revenue Cycle Management • Sample Objectives – Identify issues to improve accounts receivable – Communicate issues with appropriate areas – Develop educational materials; such as revenue cycle manual – Create a map or blueprint for bringing up new services – Discuss denials, the appeal process and successes – Discuss key performance indicators (KPI) and measures 36
- 37. © 2018 American Health Information Management Association Key Performance Indicators Days in total discharge not final billed (DNFB) Measures efficiency of the claims generation process Clean claim rate Measures the quality of data that is collected and incorporated into claims Denial rate Measures how well a facility or practice complies with billing rules and regulations for all payers Case mix index (CMI) Measures performance of clinical documentation and coding programs as well as the acuity of the patient mix KPI Impacted by HIM processes 37
- 38. © 2018 American Health Information Management Association Integrated Revenue Cycle • When hospitals or systems purchase other facilities or provider practices they integrate the revenue cycles 38 Benefits Reduced cost to collect Performance consistency Coordinated strategic goals Difficulties Different payment systems Physician resistance
- 39. © 2018 American Health Information Management Association HIMS in Revenue Cycle Management Coding Management CMI Monitored because coding directly impacts MS- DRG assignment PEPPER Program for Evaluating Payment Patterns Electronic Report Discharges vulnerable to improper payments Audits – internal and external Determine focus reviews based on compliance guidance and published vulnerabilities 39 Clinical Documentation Improvement Initiate concurrent and retrospective reviews of medical records to improve the quality of provider documentation Started in the inpatient setting, but programs have spread to several outpatient settings including physician offices and home health AHIMA Clinical Documentation Improvement Toolkit & Ethical Standards for Clinical Documentation Improvement (CDI) Professionals, 2016
- 40. © 2018 American Health Information Management Association Compliance Plan • Every facility has a compliance plan – The CDM unit’s policies and procedures must be in alignment with the facility's compliance plan – Coding and billing impact reimbursement • Highly regulated area – CDM establish protocols that ensure compliance with the laws, regulations and requirements for all payers 40
- 41. © 2018 American Health Information Management Association Revenue Cycle Compliance Medicare Claims Processing Manual • CMS on-line manual 100-04 • Provides day-to-day operating instructions, policies and procedures based on statutes, regulations, guidelines, models and directives CMS Program Transmittals • Used by CMS to communicate policies and procedures for various PPS program manuals 41
- 42. © 2018 American Health Information Management Association Revenue Cycle Compliance 42 Law Rule (Federal Register) Program Transmittal Medicare Claims Processing Manual
- 43. © 2018 American Health Information Management Association Revenue Cycle Compliance National Coverage Determinations (NCD) Describe circumstances under which specific services and items are covered by Medicare Manual #100-03 Nationwide rules Binding for all MACs, DMERCs, QIOs, ZPICs, etc. If absolute words are used in NCD then contractors cannot deviate “Never” or “Only if” Local Coverage Determinations (LCD) Specify the circumstances under which a service or item is medically necessary Also see Medicare Program Integrity Manual #100-08 Determined by each MAC – not consistent nationwide Often use ICD-10-CM codes to establish medical necessity 43
- 44. © 2018 American Health Information Management Association Revenue Cycle Compliance • National Correct Coding Initiative (NCCI) – Began 1996 – Two sets • Physician • Facility • Endure proper HCPCS coding • Published quarterly • NCCI Policy Manual available on-line 44 PTP • Procedure to Procedure • Comprehensive code edits (unbundling) • Mutually exclusive code edits MUE • Medically Unlikely Edits • Unit of service limits
- 45. © 2018 American Health Information Management Association Revenue Cycle Compliance Outpatient Code Editor (OCE) • Software designed to process data for OPPS; audit facility claims • See table 9.12 for sample edits and table 9.13 for edit dispositions Payer-Specific Edits • All payer edits must be included in RC • Can be added to facility scrubber 45
- 46. © 2018 American Health Information Management Association Revenue Cycle Analysis • CMI – beginning phase for assessing the quality of coding and billing practices for inpatient admissions – Is the CMI steady? – Does it increase steadily or drastically? – Is there a sharp or sudden decline? • Begin with overall CMI – Drill down to CMI at MDC level – Analyze medical CMI versus surgical CMI • Review Example 9.2 in textbook 46
- 47. © 2018 American Health Information Management Association Revenue Cycle Analysis • MS-DRG Relationship Analysis – MS-DRG families were discussed in chapter 6 – Review what percent of cases are assigned to the severity levels in the MS-DRG family • Does your facility have more MS-DRGs with MCCs or CCs than other facilities? • Has the percent of admissions with MCC or CC drastically increased? • Has the percent of admissions with MCC or CC significantly decreased? – See Example 9.3 in textbook 47
- 48. © 2018 American Health Information Management Association Revenue Cycle Analysis • Site of Service Analysis – Major focus of improper payment reviews – Should an inpatient admission have been and outpatient admission? – Were admission criteria met? – Are inpatient LOS consistently below average LOS for the applicable MS-DRG? • See Example 9.4 in textbook 48
- 49. © 2018 American Health Information Management Association Revenue Cycle Analysis • Evaluation and Management Facility Coding in the Emergency Department – Each facility develops ED E/M level criteria • National criteria levels have not be established by CMS – Does your facility’s distribution of ED encounters reflect the resource intensity? • See Example 9.5 in textbook 49
- 50. © 2018 American Health Information Management Association Revenue Cycle Analysis • OCE Review for Hospital Outpatient Services – Important to analyze encounters that are activating OCE edits – Improve RC processes and correct coding and CDM errors • See Example 9.6 in textbook – Walks through three different edits 50
- 51. © 2018 American Health Information Management Association Revenue Cycle Analysis • These four areas are just the beginning of topics for analysis – Data mining is critical to the health of the RC – HIM professionals are excellent candidates for data analysis careers • Combine IT skills, coding knowledge, RC knowledge and management experience 51