Revenue Cycle Management Part 2

Expert Kevin Fine returns to discuss ‘playing catch up’

Editor’s note: Kevin Fine, MHA, MSM, leads the healthcare strategies advisory group for Kaufman Rossin, one of the nation’s leading accounting and advisory groups. Kevin will be assisting in the creation of numerous articles and other content related to the financial side of healthcare. Topics will include revenue cycle management, KPIs, operations improvement, assessing profitability and others.

In this installment, Fine continues his discussion of KPIs and how their proper application is the first step towards effective revenue cycle management.

When last we talked to Kevin Fine, he was hammering home some overall takeaways to KPIs, or Key Performance Indicators. A brief recap:

  • Denial Rates: Fine says that business want to see 90+ percent of their claims paid without issue on the first attempt at billing.
  • Time Elapsed: By nature, health care sees a service performed immediately, with a payment coming later. Fine emphasized the importance of having a claim out the door for reimbursement within 72 hours of services rendered.

But what to do if your organization has fallen behind? Can you recover, and if so, how? Fine says the answer lies in the data. “Understand your accounts receivable report,” he urged. “If it’s not within the metrics it should be, why is that?”

It’s just one word, and a small word at that. But it’s critical, and possibly the most important step on the road to fulfilling your KPIs—knowing the reasons why you’ve fallen behind. “One of the things I always want to understand, and I want my clients to understand, is why,” Fine stressed. “We can’t fix anything until we know why we’re in a situation.”

Proper utilization of data is absolutely vital in driving decision makers to the proper conclusions in today’s environment. After all, we’ve gone to great trouble through years of software development, analysis of countless statistics, personnel changes, and other factors to develop all the data that currently rests at our fingertips. So why aren’t we using it?

“One thing we talk about quite a bit is how do you know whether you’re getting paid based upon your specific contract?” asked Fine. “And very few [hospitals] can provide this answer. You’re getting reimbursed for a specific code, on a specific procedure, within a specific department. If you don’t have that fee schedule locked and loaded within the revenue cycle system, how do you know you’re collecting the correct fees?”

Even small mistakes have a drastic cumulative effect, as Fine illustrated. “Say you’re off by a few percent,” he offered. “You collect $100 on a claim rather than $103, which was the proper rate.

“Think about the net effect of that over a full year, based upon a hospital system that brings in $2 billion.”

That’s why Fine and other professionals emphasize getting it right every time, the first time. It’s very possible nobody will ever miss or even notice that $3 difference. But by the end of the year, you can rest assured they’ll notice $60 million missing—and they’ll want answers.

This process takes place no matter the size of the health system or office. An OB/GYN working in a stand-alone office has the same concerns, just on a different scale. The office doesn’t bring in $2 billion annually, but the percentages are the same. If you make $100,000 per year, a missing $3,000 is as damaging to your bottom line as the aforementioned $60 million would be to a $2 billion health system.

Back to the main KPIs—Fine’s gold standard of 90+ percent claims paid on the first go-round may sound daunting to any operation below that number. But he feels it’s not only realistic to attain that standard, but that there’s ultimately no excuse for falling below the number in the first place.

“Unless we’re talking about a lack of technology systems, or an undeveloped skill set or understanding,” he emphasized. “Even the smallest doctor’s office can reach 90 percent, and that’s what’s expected from the smaller private offices to the largest hospital systems.”

The key lies in understanding the process that knocked the office below that standard to begin with, and making the (sometimes unpleasant or difficult) decisions to correct the problem. “Is it the staff? Is the coding wrong? Or do you need to fix your checks and balances?” asked Fine.

What happens most often is people don’t pay attention to these reports and these KPIs for weeks or even months at a time, and a 1 percent difference from say, May–June can snowball into a double-digit figure by the end of the year without careful monitoring.

“We’ve been able to achieve some amazing success with our hospitals and our physician’s practice clients,” Fine recalled. “We had some who started out in the 70th percentile as far as first-pass submission. Unbeknownst to them, as you drill down we realized it was happening due to a [lack of] training, lack of understanding, and better software.

Sometimes you’ve got to spend money to make money. “There’s absolutely an investment in technology,” Fine acknowledged. “These organization cannot succeed if the technology is inadequate.”

The same holds true with timing. “There’s never a good reason,” Fine answered when asked why staffs can fall behind on getting claims out the door. “The second that money is in the bank, it’s working for you. We have found a significant amount of forms sitting in physicians’ coat pockets, in their cars, sitting on the corner of a desk. But somehow no one looks at it and realizes that is your money.

“It’s the same process, whether you’re a hospital system or a small, private office. That claim needs to be processed immediately. Not the next day, not two days from now, not ‘when we get to it.’ Otherwise, all it does is delay your ability to collect your money. You have no chance of getting any money until you start that process.”

In summary, Fine says that getting staff to understand the importance of revenue cycle management is a constant process of education. And by staff, he refers to everyone from administrative personnel to physicians themselves. “It’s challenging,” Fine acknowledged, before telling a story of one client where he found a number of doctors who literally had their cars stacked with claims that they (presumably) planned to get to in the future. Upon inspection of lab coats, more days-old paperwork was found in the pockets. “It’s a significant reality in the challenges of revenue cycle management.”

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