Healthcare Whitepaper    Revenue Cycle Risk Mitigation    New Strategies for Revenue Cycle Success                   ...
Table of Contents     Foreword                                                                                            ...
ForewordThe healthcare revenue cycle is now feeling the effects of consumerismas employers focus on containing healthcare ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
Revenue Cycle Risk Mitigation                                                                                             ...
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Revenue Cycle Risk Mitigation White Paper December 1 2010 Ver 1 2

  1. 1.   Healthcare Whitepaper Revenue Cycle Risk Mitigation New Strategies for Revenue Cycle Success Version 1.2 12-1-2010 Foreword written by:  Lyman Sornberger,                                                                                                            Executive Director                                                                                                            Patient Financial Services  Cleveland Clinic Health Systems                            By: Phil C. Solomon iSolutions iQ 5620 Southwyck Blvd. Toledo Ohio 43614 800-673-1987 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited.
  2. 2. Table of Contents Foreword 3 What is Revenue Risk Mitigation? 6 Background 6 Gain Best Practice Results Utilizing Operational Business Intelligence 8 Maximize Physician Charges by Leveraging Electronic Collaboration 11 Never Miss Another Medical Necessity Screening 12 Achieve Zero Registration Errors and Defects 12 Leveraging New Tools to Dramatically Increase Self-Pay and POS Collections 15 Summary 19© 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited.
  3. 3. ForewordThe healthcare revenue cycle is now feeling the effects of consumerismas employers focus on containing healthcare costs. How will providersfeel this shift in healthcare revenue cycle management or RCM? Inessence this means that today’s growing financial pressures onhealthcare organizations will continue to increase as consumers bear anincreased financial responsibility for their healthcare costs. Revenue cyclesolutions that extend the capabilities of your hospital information systemsare the key to improving access management, responding to healthcareconsumerism, enhancing cash collection, and improving payerperformance.Improving Access ManagementThe use of financial clearance solutions in your healthcare revenue cycleenables you to determine not only insurance eligibility but also the abilityand propensity to pay healthcare services. Including medical necessitychecking during scheduling and registration can reduce denials andincrease revenues and decrease audits such as RAC and MIP. Enhancedworkflow processes and enhanced validity of eligibility and estimates isthe way of the future and clearly needed to respond to a very dynamichealth care industry, consumerism, and transparency.Responding to Healthcare "Consumer Shoppers"Patient shoppers or "consumerism" is now the standard and FinancialCounseling is critical to patient satisfaction and protecting the financialstability for providers and their respective healthcare institutions. Accessto healthcare costs and patient’s out of pocket expenses are no longer a"nice to offer option" but now is a customer expectation. Allowing patientsto access healthcare costs either via portals or kiosks, scheduleappointments and provide self-registration on line, receive onlinestatements and make electronic payments are the new industry "leadingpractices".© 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited.
  4. 4. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  Enhancing Cash Collection After services are performed; electronic solutions, denial management, monitoring productivity, underpayment pursuit, and cost containment RCM techniques are critical to the financial survival of healthcare institutions large or small. The decline of reimbursement mandates that providers optimize performance and decrease expenses. Improving Payer Performance Gone are the days of "contentious" relationships with payers and collaboration between provider and insurances are critical for survival in the future of healthcare revenue cycle management. Defining the metrics to measure between both parties is essential and recognizing that measuring the payer as you do internally; is the recipe for success? Until both the provider and payer is open to sharing their challenges and recognizing the expenses associated with those flawed processes; they will continue to experience unnecessary expenses and decreased patient and employer satisfaction. Once both parties are transparent, they move to the next necessary evolution of success in this ever changing industry. The growing financial pressures on healthcare, organizations are forced to seek innovative strategies to improve RCM. Providers and Payers can no longer survive in a vacuum and nor is there any single solution. Hence, finding a business partner that will complement these demands and changes is crucial to responding and surviving to the healthcare market challenges. I encourage you to read this whitepaper and take note of the potential strategies, technologies and solutions which are currently available to you and your organization. The author, Phil C. Solomon has done an admirable job in outlining the categories of solutions which can positively improve your revenue cycle performance with limited or minimal budget repercussions. In order to compete in today’s health care environment, one must have the information to adjust, reformulate and often completely 4 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  5. 5. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  change operational directives if necessary. Currently, tools such as the ones described in this paper are available providing plenty of data as feedback for business performance. Leveraging basic data in itself is no longer enough. Knowledge is the key to improving RCM performance. The progenitor for traditional monthly operational statements and periodical reporting has given way to real time operational business intelligence, consumer analytics and multifarious cascading data mining. Knowledge is power and my recommendation is to use it to its fullest capability. Respectfully, Lyman Sornberger Executive Director Patient Financial Services Cleveland Clinic Health Systems 5 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  6. 6. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  What is Revenue Risk Mitigation? Background You may be asking yourself what is the meaning of “Revenue Risk Mitigation?” Revenue Risk Mitigation is the art of securing every dollar of revenue available through revenue cycle processes from the services provided to patients. Additionally, as a part of this mitigation strategy, it is critical to identify, categorize and quantify every dollar which is lost or not collected during the revenue cycle process, such as which accounts end The most recent up in bad debt and which accounts should be classified as charity or data indicates community benefit. that a typical mid-sized In today’s unyielding economic climate, the majority of hospitals and hospital could health systems are acutely interested in improving performance while experience embracing innovation to improve the functionality of their revenue cycle. approximate Where is the best place to start? It is much more cost effective and easier revenue leakage ranging from to improve cash collections and liquidity on current patient revenue base $4.5 million to than attempt to open new markets or drive new patients to your door. over $9 million Once you have supplied service for a patient, every dollar should be each year  collected to offset rising operating costs. This whitepaper highlights five key strategies designed to solve critical revenue cycle issues facing today’s healthcare financial executives. Current trends indicate hospitals are losing 3 percent to 5 percent of their net revenue from inadequate revenue cycle management processes and procedures. Capturing revenue from all payer sources has become of paramount importance for hospitals to thrive in our difficult economy and in some cases, stay in business. The most recent data indicates that a typical mid-sized hospital could experience approximate revenue leakage ranging from $4.5 million to over $9 million each year. (Stuller, 2010) The largest amounts of revenue losses are a direct result of poor data capture at the front end of the revenue cycle and operational inefficiencies throughout. A smaller but still significant amount of losses come from unidentified or undetected government and commercial revenue sources 6 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  7. 7. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  that end up in the self-pay financial class and eventually go uncollected. Additionally, even though some of these unidentified insurance accounts may ultimately be collected at a later date, the result of financial class misallocation of insurance coverage results in an unnecessary increase of AR days. Bad debt continues to rise as patients take greater risk by choosing higher deductable plans to reduce their overall out-of-pocket costs. Even No longer are with the advent of healthcare reform, many patients are forced to under the current “bolt on” single insure themselves or go without insurance all together. The challenges of technology collecting self-pay accounts continue to rise, as patients have become solutions more astute consumers. In some cases, patients choose hospitals that acceptable as a have the spottiest collection track record and continue a repetitive cycle of stop gap receiving services without paying for them. Aside from the collection solution in today’s complex challenges of self pay, hospitals are plagued by the rising cost and environment financial repercussions of performing revenue cycle activities such as handling insurance payment rejections and denials, identifying lost charges, delayed payments, underpayments, and the hidden cost of rework. Leading healthcare operational strategists are continually searching for tools and technologies, which offer end-to-end solutions to boost revenue and capture operational cost efficiencies across the entire revenue cycle. No longer are the current “bolt on” single technology solutions acceptable as a stopgap solution in today’s complex environment. Healthcare executives are looking for cost efficient, overarching strategies and technology solutions, which complement their current systems and processes, and provide the business and operational intelligence data needed to optimize financial and operational performance. Why are some hospitals experiencing revenue leakage? Why is it that some categories of revenue losses are quantifiable, but there is no immediate fix in site? In general terms, providers are challenged to stay up with, and consistently meet, complex and rapidly changing payer 7 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  8. 8. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  requirements for pre-authorizations, medical necessity, and timely filing limits. This is compounded by the rise in self-pay patients and the inefficient data flow that supports the collection of these accounts. In order to operate efficiently and effectively, easy to use systems with good controls and fluid communication across the enterprise are needed. Many hospitals have made great progress developing new processes and procedures to improve and positively impact revenue cycle performance. The leading The challenge for these facilities is sustaining the financial benefits over practice trend is operating the the long haul. This is more difficult than meets the eye. It takes qualified revenue cycle and trained personnel to execute many of the complex and difficult based on manual processes which have been developed over time. Maintaining a advanced top trained workforce and managing performance over time is no easy technology, task. It takes strong leadership and minimal turnover to sustain the which delivers Operational performance gains of procedural and process oriented strategies. Business Intelligence. Gain Best Practice Results Utilizing Operational Business Intelligence Having access Providers are beginning to leverage new ideas and specific solutions to to information is only a part of for improving and maintaining peak revenue cycle performance. In short, the solution; the the leading practice trend is operating the revenue cycle based on key is affecting advanced technology, which delivers Operational Business Intelligence. positive change Having access to information is only a part of the solution; the key is with the affecting positive change with the information. information The best operational managers know where they are in terms of performance at any given moment. Having access to that level of information in a manual environment is virtually impossible. Having access to information and creating the ability to make decisions in real- time is required in today’s fast paced business and healthcare climate. New solutions are now making it possible and affordable to keep your finger on the pulse of revenue cycle metrics and KPI’s by identifying negative trends before they turn into performance issues. Relying on retrospective reports is like reading Sunday’s newspaper on Monday. You 8 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  9. 9. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  already know what has happened and it is too late to change anything. The best performing organizations know that the value of reporting is only as good as the users ability to act on the information. Unfortunately, due to constraints and inflexibility of most healthcare information systems, healthcare organizations are forced to operate in a retrospective mode rather than acting in real time before an issue becomes fully developed Keep your finger and can impact performance. on the pulse of revenue cycle With capital markets tightening and budgets continuing to constrict, metrics and KPI’s healthcare financial executives are searching for non-capital intensive by identifying solutions, which help them manage their business through sustainable negative trends before they turn technologies that are flexible and adaptable. into performance issues. Current healthcare information systems do not offer the operational or business intelligence capabilities needed to manage quality and workflow Relying on across the enterprise. Many outside vendors have attempted to solve this retrospective reports is like ongoing dilemma by providing stopgap solutions which address pieces of reading Sunday’s the puzzle; however there are minimal options for a true “end-to-end” newspaper on solution which is flexible and extendable enough to provide necessary Monday. You support – until now. already know what has IT and financial executives should look for an Operational Business happened and it is too late to Intelligence solution, which minimizes the need to add more staff to change anything. support, such as an ASP model, and a flexible role based system, which includes the easy addition, and modification of business rules which flag, track and manage accounts through a work list. This proactive approach to work flow management prioritizes key workflow elements beginning with physician orders, scheduling, pre-registration to account write off. Once Operational Business Intelligence tools are in place, revenue cycle leaders need to benchmark performance metrics continuously. Such performance based best practice comparables can be found at various resources, such as the Hospital Accounts Receivable Analysis Reports (HARA) produced by Aspen Publishers. (Petaschnick, 2007)  When benchmarking performance against national or regional data, goals must 9 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  10. 10. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  be set by considering all factors, including adjustments for unique circumstances such as varied demographics, large employer layoffs or plant closings. Stakeholders should set goals as “better than their best” but believable and aim for performance in the top 10% of all operational categories tracked. Once performance benchmarks have been established and approved by Stakeholders executive management, revenue-cycle leaders should communicate and should set publish their performance on a daily, weekly or monthly basis, regardless goals as “better of the results. When utilizing Operational Business Intelligence properly, than their best” but believable there should be no surprises regarding operational metrics. With the best and aim for of breed Operational Business Intelligence systems, performance performance in trending data is available in real time, therefore line staff, supervisors, the top 10% of managers, directors and executive leadership should have their finger on all operational the pulse of the revenue cycle at any given moment. Once in place, categories tracked performance metric tracking should be used as an integral part of a continuous-improvement process. Once empowered by real time Operational Business Intelligence tools, goals for the entire enterprise need to be communicated to everyone involved in the revenue-cycle process. All team members should be able to articulate their role and respective contributions to the organization. They should know exactly what their production and quality goals are and understand the specific priorities needed to meet their goals. Operational Business Intelligence tools offer simple-to-use performance dashboards so everyone on the team knows exactly where they are in terms of their performance and meeting their goals. In order to maximize Operational Business Intelligence systems and tools, revenue cycle leaders should look for integrated systems where multiple solutions or services are bundled with an Operational Business Intelligence analytics platform. By choosing a multi-faceted platform, stakeholders can reduce the number of vendors they must manage and therefore reduce the cost associated in managing them. 10 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  11. 11. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  Utilizing accurate, timely, and credible Operational Business Intelligence data, health care financial and operational executives are able to accurately benchmark key performance indicators in order to meet organizational goals. These robust technologies allow even the largest and complex enterprise to be nimble and act quickly to make the changes necessary for optimal financial outcomes. Leveraging a suitable Operational Business Intelligence technology offers the foundation and road map for sustainable revenue cycle performance. Revenue cycle leaders should Maximize Physician Charges by Leveraging Electronic Collaboration look for (CPOE) In most organizations, physician offices are directly responsible for technology, which is tied to submitting patient orders to the hospital for scheduling services. Since a an Operational physician’s primary responsibility is to focus on patient care, they may Business have taken the time or spent the money to invest in the latest technology Intelligence to communicate with the hospital. Fluid communication is key to ensuring system so there services are rendered by the preferred service provider rather than a are consistencies competitor. A typical scenario is the physician makes a diagnosis of the across the patient’s medical condition, and then orders a procedure or set of enterprise for procedures to be fulfilled at the hospital. The standard communication procedure method is to complete a patient order by hand and fax that order to the descriptions, hospital. At that point, the doctor and hospital are at risk of the patient reporting and communication  seeking services elsewhere. The best method to mitigate a loss of revenue to a competitor is to proactively ensure the patient follows through with the doctor’s orders and is registered at the hospital to receive services. The most efficient way to ensure this is to implement an electronic orders computerized physician order entry (CPOE) technology at the physician’s office and at the hospital. Revenue cycle leaders should look for (CPOE) technology, which is tied to an Operational Business Intelligence system so there are consistencies across the enterprise for procedure descriptions, reporting and communication. Hospitals looking to gain and maintain strong revenue cycle performance should avoid basic and common mistakes, such as not verifying insurance coverage in advance and placing sole 11 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  12. 12. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  responsibility for correct documentation on physicians. With a quality (CPOE) system, task management and communications improves between the physician office and the hospital resulting in better data capture and increased revenues. Never Miss Another Medical Necessity Screening The state of healthcare indicates that a substantial percentage of healthcare services provided nationally are performed on Medicare A high rate of patients, many involving high acuity of care. Billions of dollars are lost outpatient annually through lack of understanding or adherence to correct medical- denials is due to lack of necessity screening processes. consistency of the medical A high rate of outpatient denials is due to lack of consistency of the necessity medical necessity screening process. This is due to the lack of easy-to- screening use tools and the uniformity in screening for medical necessity. process. This is due to the lack New technologies are now available which simplify the process for of easy-to-use screening and automatically process advanced beneficiary notices tools and the uniformity in (ABNs) instantly at pre-registration and the point-of-service. Using new screening for technologies during scheduling or the pre-registration process allows a medical provider to quickly identify scheduled services that may not be covered by necessity Medicare. The provider can then work directly with the physician on the diagnosis or scheduled service to ensure proper reimbursement. Providers will experience immediate positive impact by significantly lowering their claim denials. Achieve Zero Registration Errors and Defects Revenue cycle financial outcomes are tied directly to the patient intake and process flow, which begins at pre-registration and follows through scheduling, registration, treatment, discharge, and collection. The typical revenue cycle strategy for health systems has been to focus the bulk of their resources at the back end of the process, on billing and collections. Most revenue cycle challenges originate at pre-registration, scheduling and registration. This is the critical time when the hospital is collecting 12 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  13. 13. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  and verifying patient information needed to ensure submission of a clean claim and receive full payment for services. How are these front-end, quality improvement initiatives currently being carried out? It is still not uncommon to see manual registration-data quality processes, which involve the use of resources such as a quality assurance analyst, spreadsheet software, and copies of face sheets and insurance cards. Using this manual process, one FTE can review approximately 100 to 150 registrations per day at most. Hospitals that Most revenue follow this method of quality assurance are truly fortunate if they are cycle actually able to review 5 percent of their total registrations. (Fleischer, & challenges originate at pre- Bertch, 2006)  This is an ineffective and costly method of performing registration, quality assurance. By the time a financial executive identifies an area for scheduling and improvement, another burning issue rises to the top of the priority list. registration. From an outsider’s perspective, it is analogous to a dog chasing its tail. This is the critical time Simple errors such as listing the incorrect format of a subscriber’s when the identification number, or listing a minor as the guarantor, inserting an hospital is incorrect address and social security number or missing a physician’s collecting and name in order entry can create catastrophic outcomes which can be the verifying patient information root cause of substantial revenue losses. needed to ensure Most health systems resort to back-end cleanup processes or special ad submission of a hoc collection projects to generate additional revenue and follow up on clean claim and lingering claims. While this strategy can be effective, these processes receive full usually occur too late for identifying and correcting the majority of the payment for most common billing errors: wrong, expired, or incomplete insurance services  information; no preauthorization; non-coverage of service; or failure to send notification. Eliminating rework has to be the most import goal for revenue cycle executives to work towards. When rework is minimized, the labor cost savings will be substantial. One of the more costly FTE’s in patient accounting is a Biller, who spends, on average, over 20% of their time following up on and reworking claims. There is a solution to increasing 13 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  14. 14. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  productivity of your expensive and well-trained billers. (Hopkins, 2005) It is Automated Registration Quality Technology. Automated Registration Quality systems play an important role in implementing effective pre- registration and registration processes which focus on obtaining all the critical information required to deliver consistent, correct and complete billing. If operating in a manual QA mode, performing these tasks at the front end often requires adding additional staff, which is never a popular option. As Reducing errors hospitals convert to the latest registration quality and cascading eligibility and registration verification technologies, they can afford to reallocate their best and defects at the brightest staff to the front end of the cycle and eliminate duplicate labor front end of the costs. revenue cycle can save The next generation registration quality tools should provide instant hospitals feedback so that registration data correction can occur before the bill millions of dollars annually drops. These tools need to have the ability to customize alerts to be by eliminating delivered to users which cover every error scenario giving management back-end FTE’s and the entire revenue cycle team the ability to control throughput and or shifting ensure registrations are performed accurately and quickly. In many resources to the hospitals throughout the nation, at least 75% of the typical revenue cycle front end to achieve even staff is dedicated to working bill hold reports, appealing denials, greater positive processing credit balances or following on billed claims. (Stuller, 2010) In results  fact, HARA reports that the typical back-office staff personnel handles over 6,000 A/R accounts in their queue at any one time. The amount of people power needed to fulfill these tasks is enormous. Current trends indicate that the average number of FTE’s involved in receivables management functions at an average sized hospital is 27. (Petaschnick, 2007)  Reducing errors and registration defects at the front end of the revenue cycle can save hospitals millions of dollars annually by eliminating back-end FTE’s or shifting resources to the front end to achieve even greater positive results. 14 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  15. 15. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  It is quite possible for an average size hospital that processes registration to see a 30% reduction of errors, and achieve at least a 30% increase in cash flow improvement, all while reducing operating costs by as much as 15%. Patient access and patient accounting personnel need to be empowered with tools that measure success of registration functions in real time, enabling them to achieve superior results. With that in mind, it is The first step to important to note that there are solutions available today that can offer collect at POS is advanced registration quality assurance solutions which cost less than a actually not fully loaded FTE on an annual basis. collecting; it’s confirming the By collaborating together, and implementing the appropriate tools, type of payment sustainable quality is achievable. The end result is more satisfied source prior to the service employees, happier patients and a healthy bottom line. being rendered. Leveraging New Tools to Dramatically Increase Self-Pay and POS New Collections technology Self-Pay patients are on the rise. In 2009, the national average for solutions now exist to search hospital’s self-pay total as percentage of gross revenue was 5.29%. for additional Outstanding A/R due from self-pay sources averages 16.65% and this payer sources trend looks to continue through 2010 and beyond. (Cheng, 2003) by manipulating the patient So, collecting from self-pay patients at the POS and afterwards should be demographic easy, right? Just ask for the money when the patient comes in for service data and finding or send them a bill. Well unfortunately it’s not that easy. While top more eligible payers revenue cycle performers understand they can dramatically improve self- pay collections by requiring payment at the time of service, they are well aware of a major limitation posed by the lack of appropriate data at point of service (POS). In today’s environment, collecting at POS is high on the financial executive’s priority list. The first step to collect at POS is actually not collecting; it’s confirming the type of payment source prior to the service being rendered. New technology solutions now exist to search for additional payer sources by 15 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  16. 16. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  manipulating the patient demographic data and finding more eligible payers. When checking eligibility for commercial and government major payers, these technology tools can perform historical cascading searches of registration data to identify possible missed opportunities to capture commercial insurance data and government sources of reimbursement. These additional payer search and insurance propensity technology tools have proven to increase cash collection as much as 20% over traditional processes. Knowing what a Within the past 12 months, in many areas of the country, the self-pay patient owes the financial segment has doubled in volume. On average, many facilities hospital for past services and have 16% or more of their accounts receivable residing in the self-pay using that financial class (including uninsured patient balances, unpaid co- knowledge to insurance, deductibles, and co-payments). If a hospital can achieve a 5% collect more to 10% increase in collections by adding a new strategy to their cash processes, the result can make a significant impact to their financial dramatically wellness. Since the average collection rate for pure self-pay balances helps meet POS collection goals  range between 2% to 3% and collecting balances after insurance tops out at approximately 35%, any incremental increase in collections drops directly to the bottom line. (Boehler, & Hansel, 2006) To improve POS collections, leading hospitals are collecting both estimated self-pay payments and estimated coinsurance amounts at the time of service. New tools are now available which enable providers to determine estimates for charges in real time prior to the patient’s visit, during the pre-schedule phase and at the point of registration. These technologies are able to calculate charges with amazing accuracy within seconds of a request at any point during the registration phase. In addition to collecting for current services, advanced data aggregator technologies enable the collection of past due balances for previous services rendered. Knowing what a patient owes the hospital for past services and using that knowledge to collect more cash dramatically helps meet POS collection goals. The best-in-class POS patient 16 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  17. 17. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  estimators provide quality information without creating an abundance of refunds on the back-end. A POS driven strategy offers numerous benefits in addition to cash collections, including real-time early classification of charity and medically indigent patients. Categorizing patients early in the registration process allows staff to focus on helping the patient by either assisting them with a government subsidy program or classifying them as non-collectible. This The best practice allows collection staff to devote their attention to collecting cash instead of algorithm for pursuing uncollectable accounts. accurately estimating A maturing trend in self-pay collections is the use of real-time analytic future payment modeling and scoring. Segmenting patients based on their payment behavior and patterns and historical payment record both within the hospital system verifying a and with outside creditors will help amplify the patient accounts which patient’s financial profile need the most collection effort and decipher which accounts need to be is only achieved accelerated to bad debt write off. Additionally, an often overlooked when the analytic tool helps financial counselors determine how much a patient can analytic output really afford to pay, thereby taking the guess work out of negotiating a is cross settlement or payment plan. At the end of the day, having access to the validated using a complex right information is powerful. No longer are the days where a single mixture of FICO® or credit score are truly helpful in determining a patient’s ability to actual patient pay. The best practice algorithm for accurately estimating future payment historical behavior and verifying a patient’s financial profile is only achieved when collection data, the analytic output is cross validated using a complex mixture of actual patient demographics patient historical collection data, patient demographics and credit data. and credit data With new analytic and POS tools in place, health systems need to decide how to process self-pay accounts and where they will get their biggest bang for the buck. Utilizing leading edge outsourcing companies who offer a variety of services, including integrated analytic modeling, eligibility assistance and early out self-pay outreach programs are many times the best option to collect the high volume low dollar self-pay accounts and support the financial assistance needs of your patients. By outsourcing 17 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  18. 18. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  non-core or lower value tasks to a trusted business partner, it leaves the larger balance insurance accounts, government and other billing and follow-up work to the hospitals seasoned staff. This allows hospital revenue cycle executives to utilize their best trained staff to handle the most important and relevant tasks. With new analytic tools available, it is not prudent to make wholesale decisions such as holding all self-pay accounts in house for 45 to 60 days because of the belief that some will pay in that timeframe. Analytics now provide the data necessary to drive a With the proper segmented strategy, which will take the guesswork out of work flow self-pay collection tools design, placement timeframe decisions and overall strategies. in place, it is not unconceivable Another option is to consider partnering with financial institutions so they for a mid-size can provide loans to patients as an additional resource to collecting cash hospital to internally or outsourcing self-pay accounts. This strategy that offers reduce its drawbacks as it is not available to all patients; patients must meet financial minimum credit criteria in order to be granted a loan. Additionally, the loan assistance processing stipulations can be onerous for the hospital if they engage in a recourse expense by over arrangement with the bank. The hospital will be required to “true up” with 50%, reduce the bank if a patient defaults and reimburse the funds that were advanced statement costs to them. by 10%, reduce mail returns by The healthcare industry faces pre-service to cash challenges that no over 25% and yield an other industry faces. Managing the revenue cycle requires that a labyrinth additional of rules and regulations constantly need to be adhered to. This drives $500,000 to revenue cycle executives to actively search for breakthrough technologies $2,000,000 in and industry specific tools to help overcome the rigors of operating in a net revenue fast changing and challenging environment. With the proper self-pay annually.   collection tools in place, it is not unconceivable for a mid-size hospital to reduce its financial assistance processing expense by over 50%, reduce statement costs by 10%, reduce mail returns by over 25% and yield an additional $500,000 to $2,000,000 in net revenue annually. 18 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  19. 19. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  Summary The key factors which differentiate the best revenue cycle leaders from those who deliver mediocre results are the passion and forethought envisioning how the revenue cycle can operate more successfully and which tools are needed to accomplish peak performance. These leaders find creative ways and are not deterred by budget constraints or the status quo to perform at the highest level, continually striving to benchmark their performance against the industry’s top performing peers. The first steps that should be taken to analyze performance improvement or revenue-cycle redesign are: ‐ Assess and map the current state of the revenue cycle - Identify key challenges and the systemic causes of the challenges - Brainstorm strategic and tactical solutions to the challenges - Outline the all encompassing best practices technology, outsourcing or process redesign required to eliminate the challenges Once revenue cycle challenges are identified, the strategies outlined in this whitepaper offer solutions to mitigate revenue risk by leveraging new technologies and techniques in the areas of Business Operational Intelligence, Physician Order Communication, Medical Necessity Screening, Zero Error and Defect in Registration Quality and POS and Self-Pay Collections. The overarching benefits of implementing the latest strategies detailed above are: - Ability to track any performance metric to ensure top performance - Maintaining a seamless flow of information within the revenue cycle - Increased information accuracy - Decreased denials - Decreased manual effort to bill and collect 19 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  20. 20. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  - Better accuracy and communication between referring physician offices and the hospital - Improved patient satisfaction ratings The costs of inadequate revenue-cycle process execution permeate far beyond the financial ramifications. Poor performance creates a cloud across the entire organization. Successful application of leading revenue cycle strategies requires the involvement and acceptance of departments outside of patient access and patient accounting. Revenue cycle quality and performance require the buy-in from cross-functional groups to support the new systems and technologies needed to sustain high performing revenue-cycle output. It is paramount that the focus on revenue cycle activities becomes an operational priority across the industry. Every specialty, large or small facilities and for-profit and not-for- profit organization need to make revenue cycle performance a top priority. Money isnt the only factor to consider in evaluating revenue cycle performance. Patient satisfaction goes hand in hand with operational performance. Even if you don’t have the data to support the assumption, more often than not, if you have a revenue cycle performance problem, you have a patient satisfaction problem. Works Cited Stuller, E. (2010, August 26). Top 10 revenue cycle mistakes. Retrieved from http://findarticles.com/p/articles/mi_m3257/is_1_59/ai_n8700915/?tag=content;co l1 Petaschnick, J. (2007). Hara. Report on 4th Quarter 2007, 22(1), Retrieved from http://www.aspenpublishers.com/PDF/SS10788123.pdf Fleischer, R, & Bertch, D. (2006, March). Trouble at the back end? look at the front end. HFMA, Retrieved from http://www.ahisoftware.com/wp- content/themes/AHI/media/hfma-article.pdf 20 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  21. 21. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  Hopkins , S. (2005, October 1). Benchmarking your business for now and later. Retrieved from http://homecaremag.com/mag/medical_benchmarking_business Boehler, A, & Hansel, J. (2006, January 1). Innovative strategies for self-pay segmentation. Retrieved from http://www.allbusiness.com/banking- finance/banking-lending-credit/10579823-1.html Cheng, T. (2003). Taiwan’s new national health. Health Affairs, 22(3), Retrieved from http://www.populationmedicine.org/content/pdf%5CCheng%20TM%20Taiwans% 20new%20national%20health%20insurance%20program.....%20Health%20Aff% 202003.pdf About the Author Phil C. Solomon is the Chief ROI Officer of iSolutions iQ, the healthcare industry’s most innovative operational business intelligence firm proving technology and services solutions to providers nationally. Phil oversees all aspects of the firm’s activities and operations including the development of the overall strategy, product development and vital mission and roadmap of the organization. Phil and the company’s business and technical leaders are focused on continuing iSolutions iQ’s innovation, leadership and deepening relationships with their most important business partners. Phil’s 19 year track record of success has been focused exclusively in technology solutions, services outsourcing, collections, customer care and call center applications. Previously, he was the CEO of a Fast Tech 50, call center performance improvement technology firm, and a principal executive at an INC Magazine American top 500 Fastest Growing Private Company. In addition, he managed the Healthcare vertical market for one of the largest global outsourcing and receivable management companies in the world. He is an active member of the HFMA, NAHAM, MGMA and AAHAM and is frequently featured as a speaker at industry trade conferences and educational seminars. Phil resides in Atlanta, Georgia and holds a B.A. degree from San Diego State University. About iSolutions iQ Founded in 2006, privately-held and headquartered in Toledo, Ohio; iSolutions iQ is a leading healthcare revenue cycle performance improvement and analytics company – leveraging business operational intelligence and specialized analytics to improve operational and financial performance for large and small health systems, hospitals and large physician clinic’s and groups. iSolutions iQ’s mission is to evaluate, measure and decipher key performance indicators, then provide the tools necessary to manage revenue cycle activities with peak performance. 21 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 
  22. 22. Revenue Cycle Risk Mitigation All Rights Reserved © iSolutions iQ  iSolutions iQ’s technology delivers analytical data in real-time, increasing the visibility of business information for faster, informed decisions improving performance and increasing operating margins. For information, visit www.isolutionsiq.com or call 800-673-1987. Foreword written by: Lyman G. Sornberger, Executive Director, Patient Financial Services, Cleveland Clinic Health Systems Lyman Sornberger joined Cleveland Clinic Health Systems in 2006 and is the Executive Director of Patient Financial Services for the Cleveland Clinic Health System (CCHS). Prior to his affiliation with CCHS he was with the University of Pittsburgh Medical Center [UPMC] for twenty two years as a leader in the revenue cycle management. His role at Cleveland Clinic Health Systems is comprised of the Revenue Cycle Management for all 10 Cleveland Clinic Health System Hospitals and Foundation Physicians. In addition, he is responsible for the management of Weston, Florida Technical and Professional billing. Lyman is responsible for all CCHS billing for the main and regions, patient access for the East and West nine hospitals, and Medical Records, Coding, and transcription for their Main Campus. In total there are 1100 employees under his direction with a model that is both centrally and de-centrally dispersed. In parallel in the past twelve years he is proud to have served as a consultant and advisor with various practices nationally. He has authored numerous articles for HFMA, AHAM, and other leaders in the Revenue Cycle arena. Mr. Sornberger earned his BS and Masters at the University of Pittsburgh and served as a Medic in the US Army prior to joining the Health Care private sector. 22 © 2010. iSolutions iQ. All Rights Reserved. Reproduction and distribution without prior written permission from iSolutions iQ is prohibited. 

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