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Better Analysis of Healthcare Revenue Cycle
and Value-based Purchasing Data Improves
Bottom Line
Written by
Katy Smith
Senior Business Analyst
Health Care DataWorks
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Better Analysis of Healthcare Revenue Cycle and Value-based Purchasing Data
Improves Bottom Line
The demands on healthcare organizations – and particularly those individuals involved in the
financial aspects of hospital systems – to improve quality while reducing costs have never been
greater. These demands have increased exponentially due to internal organizational pressure
to achieve optimum savings as well as external pressures resulting from healthcare reform,
meaningful use and a host of other regulations. Time is of the essence for healthcare organizations
and their financial teams. One needs to look no further than Value-based Purchasing, which will
result in healthcare organizations being scored on a range of metrics, including patient satisfaction
and quality of care.
Failure to achieve scores within predetermined ranges will result in the withholding of millions of
dollars in Medicare reimbursements, impacting the financial wherewithal of many organizations in
immediate and possibly devastating ways. A further source of broad concern centers on the fact
that many commercial health insurers tend to pattern their reimbursement models on those
adopted by government programs such as Medicare. If that were to occur, insurers could soon
be seeking to tie their payments to similar metrics, which would only compound the Value-based
Purchasing challenge facing healthcare organizations.
From a financial standpoint, the ability to access and analyze data related to revenue cycle
performance, patient satisfaction, Value-based Purchasing and a host of other measures can
put organizations in a stronger position to achieve savings, increase revenue and preserve
Medicare reimbursements. The challenge for CFOs, financial analysts, revenue cycle directors,
payer relations staff, and others responsible for managing the finances of healthcare organizations
is how best to get their hands on the relevant information to make timely and actionable decisions.
An Enterprise Data Warehouse is the answer
Analysis of key information is critical to helping the financial team do its job. When the team has
easy and timely access to relevant data across the organization, it can do a more efficient job of
analyzing the information and helping the organization make more informed decisions. Too often,
however, gaining access to this business intelligence is difficult because data is stored in
organizational silos and disparate systems such as spreadsheets, hard copies, electronic files and
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An Enterprise Data Warehouse (EDW) is the
ideal solution for organizing, aggregating and
analyzing data. Essentially, it provides financial
planners and analysts with the organization-
wide information they need when they need it.
The EDW sits atop a data model that can be
implemented across every department.
a host of other applications and databases. In order to analyze the data, financial experts find
themselves struggling with the time-consuming process of collecting it and organizing it in a way
that makes it possible for them to analyze it. At best, this process contributes to a lack of efficiency
and delays in corrective actions and, at worst, a loss of revenue.
But it does not have to be this way. An Enterprise Data Warehouse (EDW) is the ideal solution
for organizing, aggregating and analyzing data. Essentially, it provides financial planners and
analysts with the organization-wide information they need when they need it. The EDW sits atop
a data model that can be implemented across every department. It does all the heavy lifting by
aggregating data from the disparate departments and providing easy access to relevant
information through user-friendly dashboards. Here are just a few examples of the data that
is available in near real time through an EDW:
• Denial write-offs
• Copay volume
• Transmitted claims volume
• Self-pay collections
• Total cash collections
• Gross days in AR
• Contractual adjustments
• Rejections
• Charges
The EDW enables financial departments to get, at a glance, a broad view, and then to “drill down”
into departments or key areas from a computer interface without having to dig through mountains
of documents. The benefits an EDW provides include:
• Increasing Medicare reimbursement by providing the tools to meet criteria,
such as Value-based Purchasing requirements.
• Assessing whether payers are taking longer to pay by charting how the breakdown
of AR by age has changed over time.
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Five ways an EDW can make an immediate impact with revenue cycle
1. Improves patient eligibility determination at point of registration
2. Increases the clean claim submission rate
3. Enhances contract performance and denials management
4. Increases copay and self-pay collections
5. Maximizes Value-based Purchasing
Five ways an EDW can make an immediate impact with revenue cycle
An EDW helps organizations accurately manage the front and back ends of the revenue cycle
process, from registration and patient access to charge entry, billing and follow up. Here are five
ways an EDW makes an impact on the bottom line:
1) Improves patient eligibility determination at point of registration. Getting claims
out the door quickly and accurately is critical to bringing in revenue in a timely manner.
Key components of this process are determining patient eligibility and ensuring accurate
registration. An estimated 70 percent of the information needed to submit an accurate claim
and obtain timely payment is gathered at the point of registration. But dates of birth, proper
plan information and other data is not always collected correctly or verified, leading to costly
delays in reimbursements or payments down the road.
The EDW platform developed by Health Care DataWorks incorporates a patient access
measure that helps patient access managers track the accuracy of the information entered
at registration and the frequency of eligibility verification being made by their staff. The
result is a strong foundation for the claim. In addition, the EDW contains applications that
enable financial departments to view potential problem areas so they can take corrective
action sooner rather than later. For example, if a particular team in one hospital unit
continues to have issues with patient eligibility verification or accurate registration, financial
departments would immediately be able to identify the issue early on and initiate new
training measures to ensure staff is inputting all the information needed for the claim.
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2) Increases the clean claim submission rate. The EDW tracks clean claim submission
rates. This metric is critically important when you consider that it costs $25 on average to
resubmit a claim. Those dollars add up quickly. The EDW provides a variety of options for
analyzing and isolating clean claim submission rates, including by department and by payer,
to give you both a clinical and a financial view of trends. When causes of clean claim
denials can be identified, steps can be taken to rectify the problem without having to literally
pull and review each claim. A clean claim denial is a controllable denial. If staff is trained
properly in submitting clean claims and has the applications to identify clean claim denial
trends in nearly real time, the resubmission rates will drop, leading to timely receipts of
revenue and lowering overall resubmission costs.
3) Enhances contract performance and denials management. Healthcare organizations
must be sure they are getting paid what they are owed under their insurer contracts. To do
so, they need to ensure that payers are meeting their contractual obligations. Monitoring
payer performance, including timeliness and accuracy of payment as well as active denials
management, can lead to more timely payment and minimize payment errors that can lead
to lost revenue. The reality is that errors in what organizations are paid – or are not paid –
from insurers happen more often than realized. Many organizations seek to identify and
correct such errors by conducting time-consuming and lengthy audits, and then resubmitting
claims after the fact. It is not unusual for such audits to be conducted up to a year after the
initial claim errors have occurred, resulting in auditors having to reconstruct and review
mountains of claim information. It is much more efficient to address claim payment errors as
soon as possible after they occur. An EDW provides a view of claims as they are submitted
and paid, enabling organizations to identify payer payment errors to address them efficiently
and quickly for correction. With the denials management application, staff can review
denials by payer, by department or even by physician to determine the contributing factors,
such as failure to secure pre-certification for procedures or medications. As a result,
proactive corrective measures or training can be put into place to increase claims
payments and reduce denials.
4) Increases copay and self-pay collections. Two forces are at work: Patient liability
(copayments, coinsurance and deductibles) under many health plans are increasing, and
the number of patients who are self-pay is rising at a high rate. This means more money
is at risk of not being collected from patients. The EDW’s revenue cycle dashboard gives
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access to copay and self-pay information by department and even at point-of-entry
registration. The copay collection rate can be tracked in near real time, as can the self-pay
trends. It always is more difficult to collect copays and self-pay bills on the back end than
upfront. This application can be used to identify where copays and self-payments are
not being collected to their fullest potential, and empowers organizations to take steps
to increase upfront payments through better training, new procedures and the like. For
example, establishing or verifying alternative means of payment by self-pay patients and
putting them in touch with a financial counselor at the initial point of entry has been a
proven method of increasing collections in many hospital settings.
5) Maximizes Value-based Purchasing. Medicare reimbursements are a substantial portion
of revenue for many hospitals. Under the Value-based Purchasing program that took effect
in 2012, healthcare organizations stand to have a minimum of 1 percent of their Medicare
payments withheld until they can demonstrate improvements with 20 pre-determined
measures. These metrics focus on performance rather than reporting, and range from
scores on quality of patient care to patient satisfaction rates. Health Care DataWorks offers
a Value-based Purchasing application that enables organizations to be proactive, thereby
putting them in a better position to recoup their full reimbursement and potentially receive
even more as a reward for scoring higher in key metrics. Some of the features include:
• A calculator to determine how much will be withheld and how much can be made
back if performance rises.
• “What if” scenario modeling to determine how much they will lose or gain if they
perform better or worse in certain categories. For example, a 1 percent improvement
in a metric could lead to $1 million in revenue.
• Root cause analysis to identify and isolate problems or issues that are dragging
down scores so the organization can take steps to improve a specific metric.
The EDW by Health Care DataWorks is an organization-wide solution that can be implemented in
stages with an initial focus on the financial side. The underlying data model provides financial
teams with credible and reliable business intelligence to address the challenges and issues they
face within their areas of responsibility. As a result, the bottom lines of hospital and healthcare
organizations become the primary beneficiaries of the actionable and proactive decision making
that comes from the analysis of this comprehensive data.
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About the Author
Katy Smith is Senior Business Analyst at Health Care DataWorks, where she designs dashboards
and reports for the Product Development Department. Her focus is on the financial aspects of
health care. She provides consultation from a business perspective on revenue cycle processes
in hospital systems. Katy is a former Payer Contract Manager at Nationwide Children’s Hospital,
where she was the key point of contact for Patient Access and Patient Financial Services, served
on the Revenue Cycle Enhancement team and was a business lead for implementation of its
Enterprise Data Warehouse.
About Health Care DataWorks
Health Care DataWorks, Inc., a leading provider of business intelligence solutions, empowers
healthcare organizations to improve their quality of care and reduce costs. Through its pioneering
KnowledgeEdge™ product suite, including its enterprise data model, analytic dashboards,
applications, and reports, Health Care DataWorks delivers an Enterprise Data Warehouse
necessary for hospitals and health systems to effectively and efficiently gain deeper insights
into their operations. For more information, visit www.hcdataworks.com.
