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 Revenue Cycle Management

Rural healthcare system drops AR days and cleans up claims

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   July 2010

RCM system has led to dramatic reductions in AR days, denied claims, and billing backlogs while supporting the organization's move to a new central business office.


When the Appalachian Regional Healthcare System (ARHS) was formed in 2004, the organization's vision was to build a regional healthcare system that enhanced quality of life and resulted in healthier individuals. Likewise, Rayanna Moore, BSHM, MSOM, system director of revenue cycle, had a mission when she joined the organization in early 2008. Moore's goal was to enhance revenue cycle operations and create a healthier bottom line for ARHS.

To accomplish her objective, Moore quickly identified three important initiatives: centralize business-office functions, reduce accounts receivables (AR) days and clean up billing claims. She turned to HealthPort's revenue cycle management (RCM) system.

Today, HealthPort RCM is installed at all three hospital locations. The system has led to dramatic reductions in AR days, denied claims, and billing backlogs while supporting the organization's move to a new central business office.
At a glance: Appalachian Regional Healthcare System,
Boone, North Carolina

Facilities:
    Three hospitals across High Country
    117-bed acute-care hospital
    Two 25-bed critical-access hospitals
    Long-term care and physician practices

For decades, North Carolina's High Country healthcare was provided by three unique and independent hospitals — Blowing Rock Hospital in Blowing Rock, Charles A. Cannon Jr. Memorial Hospital in Linville and Watauga Medical Center in Boone. In recent years, the hospitals have forged relationships with one another not only to expand the services offered, but to enhance the quality of care as well.
In 2004 two of the hospitals joined to form the Appalachian Regional Healthcare System (ARHS) and the third hospital, Blowing Rock, was added in June 2007.
Challenge
When Moore arrived on the scene, she immediately faced a revenue cycle crisis. AR days were hovering in the high 70s and more than 90 percent of claims couldn't pass the first round of edits. There was an abundance of back-end claim denials and the staff was sorely lacking time for claim cleanup.
Moore
Rayanna Moore, BSHM, MSOM,
is system director of revenue cycle for Appalachian Regional Healthcare System.

From an organizational perspective, each of the three hospitals managed their own business office technology, processes and staff. Reporting tools available within the legacy revenue cycle system were obsolete and lacked any type of dashboard capabilities. And finally, only minimal data was available to support managed care contracting.

Moore's first action plan focused on evaluating current systems and identifying where the process breakdown was occurring. The core hospital information system (HIS) was first in line. Moore discovered that many of the billing rules within the HIS had not been properly defined. With the HIS billing rules brought up to date, attention was turned to the third party claims scrubber. It was here that Moore found her greatest challenge — and biggest opportunity for improvement.

System analysis revealed that the third-party scrubber wasn't scrubbing anything. More than 90 percent of claims were dirty and couldn't pass the first round of edits. In addition, the system required extensive maintenance to load updates and keep current. It was at this time that Moore decided to evaluate other claims scrubbers and revenue management technologies.

Solutions
With a clear directive to centralize business-office functions while reducing the total cost of ownership for revenue management technology, Moore decided to take a closer look at HealthPort's Web-based solution. Because the system is online, users have access to a centralized repository of billing and claim information. System updates are totally automated and available in real time with little or no staff intervention.

Moore's first action plan focused on evaluating current systems and identifying where the process breakdown was occurring.
The core hospital information system (HIS) was first in line.

According to Moore, HealthPort RCM has been a life-saver in four specific areas: integrated 3M compliance tools, flexibility to override codes, ease of use and executive dashboard capabilities.

Integrated 3M compliance: HealthPort RCM includes 3M's editing and compliance software to provide coders with both OCE and LMRP edits. Moore's prior revenue technology vendor did not provide these edits and therefore, a high volume of claims were being denied.

Flexibility to override codes: There are times when Moore's certified coders have a difference of opinion about a particular edit or code. In these situations, the system gives Moore and her team the ability to override and edit claims easily — a capability that in conjunction with the integrated 3M software has led to cleaner claims. In the past, 90 percent of claims failed edits. Now, more than 90 percent of claims are completely clean.

Ease of use: According to Moore, the learning curve was about one month with all staff very comfortable within eight to 12 weeks. System navigation is intuitive and walks billing staff through the process. As a result, staff is more efficient and productive. With a total of five full-time staff members, Moore was able to reallocate 3.5 FTEs away from the day-to-day processing of primary and secondary claims. These staff members now follow up on delayed payments from payers and handle rejected claims.

Executive dashboard capabilities: As revenue cycle director, Moore's favorite feature within RCM is the executive dashboard, which she views daily and uses on a weekly basis to create executive reports. At any time, Moore can see how much has been billed, what is on hold, and when payments are expected. "System reporting is definitely my favorite part of the system," she mentions. "I can inform my CFO of dollars expected from each payer on specific dates." This capability has helped the organization to accurately forecast revenue and predict cash flow. Staff members can also see which claims are being held, for what reason, and the specific dollar amount, with drill-down capability to view claim details.

Results
    AR days reduced by 34 days
    Over 90 percent clean claim rate
    70 percent of staff reallocated
    Eliminated back-end denials
    Real-time data for contract negotiations


Benefits
Since the installation of the RCM solution, "only a few claims error-out and our error rate is rarely over 5 percent on any day," Moore states. At the acute care facility, Watauga Medical Center, AR days have fallen from the high 70s to the low 40s on average. While Moore does not have exact "before" figures, she has seen a dramatic reduction in back-end denials — such as those associated with failed edits. Furthermore, RCM handles the reimbursement differences of ARHS's two critical-access hospitals.

All remittances come back electronically through RCM for the payers who participate. The organization's HIS did handle a few ERAs electronically, but with RCM many more payers can send them online. At any time, Moore and her team can see the status of Medicare claims, compare payers and extract real-time data to help with managed care contract negotiations.

When asked what she would change about RCM, Moore says she would like the ability to see real-time status of claims for more payers than just Medicare.

Her wish will have to wait until more payers open their doors to revenue cycle management solutions. Payer participation in real-time claims status reporting is beyond the privy of HealthPort or ARHS, at least for now.

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Tags:  Revenue Cycle Management