• June 2008 FEATURE ARTICLES •
Claims and Coding: Case History
Many Happy Returns
Two Colorado practices join forces on revenue cycle management to achieve new levels of revenue.
By Bette Warn
When two medical practices in Lakewood, Colo.,
began comparing notes in 2006, they discovered similar financial
and operational challenges. In an increasingly competitive
healthcare environment where costs were escalating while the
pool of reimbursement resources diminished, leadership at each
practice recognized the need for a re-engineered approach to
revenue cycle management (RCM).
The innovative solution that the practices
devised was to establish a common independent billing company —
ATD Resources — that would focus solely on improving cash flow
and performance. To support its efforts, ATD Resources would
invest in claims management technology capable of providing the
business intelligence necessary for streamlining workflow,
improving productivity and bolstering the bottom line.
The Problem
It was two years ago that a critical
care/pulmonary practice and an emergency medicine group in
Colorado began to investigate strategies for improving claims
management. Physicians from each practice had privileges at the
same hospital, used the same billing company and, not
surprisingly, shared the same frustrations regarding revenue
generation.
Both practices believed that their current
billing company and clearinghouse were not equipped to help them
optimize revenue. Outstanding claims languished in accounts
receivable (A/R) and many were rejected during adjudication.
Even more disappointing however, was the fact that the practices
were not getting the feedback necessary to effectively appeal
rejections or make internal changes to correct error patterns.
Leadership recognized that effective reporting and analysis
could be used to train physicians and staff in order to
eliminate problems that slowed reimbursement or resulted in
non-payment altogether.
With both practices harboring similar
complaints, these physician leaders began to ask themselves if
they might not achieve better results on their own. If they were
directly involved with RCM, they could ensure that their
practices had systems and solutions in place to minimize
problems and maximize income. And so, ATD Resources was born.
The Solution
As ATD Resources, we operate as an internal
billing department for the two founding practices. Although our
original plan was not to position ourselves as a billing company
or seek new clients, we were recently approached by two
additional practices and have taken on their billing as well.
After incorporation, we employed a staff of
21 — all of whom had experience in RCM processes and procedures.
ATD Resources also made the move to a new clearinghouse, which
ultimately proved to be a disappointment. Claims were falling
into a black hole, and we had no way of monitoring them or
finding out if problems could be fixed. During the first few
months after the transition, our days in A/R actually rose.
The straw that broke the camel’s back came
when we discovered that a large number of claims had been
submitted with transposed digits in one provider’s
identification number. The clearinghouse hadn’t notified us that
all of these claims could not be processed, so we had no idea
why we were not being reimbursed. It would have been a very easy
error to fix, but we were not given the information that would
have allowed us to do so.
About this time, we attended a conference and
were introduced to the Navicure Claims Management solution.
Because the solution is Web-based, staff would be able to
monitor claims status in real time. Likewise, the vendor offered
a wide array of reporting and analysis features, which we knew
would help us make better management decisions.
Implementation and Training
As Executive Director, I worked with ATD
Resources’ director of operations to evaluate the technology
more closely. Navicure came onsite to present a more extensive
demonstration, and we conducted a thorough cost analysis. We
recognized that making this change would cost us more on a
monthly basis. However, we anticipated it would ensure that
cleaner claims would be sent to payers, which in turn would
result in fewer rejections and faster payment. In addition, we
believed we would be able to reduce staff devoted to billing and
follow-up. It was clear that the solution would more than pay
for itself via improved efficiency and cash flow.
There was no need to invest in any hardware
or software, since the application is Web-based. To get started,
we simply provided vendor representatives with our provider ID
numbers and a list of payers to whom we submitted claims. They
set the system up and established the connectivity necessary for
the flow of data.
ATD Resources staff received online training,
which was completed in just a couple of hours. It consisted of
walking through the solution’s functionality, and gaining
familiarity with the dashboards, scoreboards and reporting
capabilities.
During this period, we also re-aligned
individual staff members to better support our new approach to
RCM. More work was being done on the front end (before claims
were actually submitted to the payer), which meant fewer staff
hours were needed for follow-up or re-working rejected claims.
The Process
Claims would leave our billing system where
they had initially been scrubbed against standard payer edits.
They would then hit the external edits engine, which is
continually updated to reflect national and regional policies.
We would automatically be notified about any problems before the
claim was forwarded to the payer.
We assigned staff members on a payer-by-payer
basis to monitor claims status. If the system identified a
problem with an individual claim or batch of claims, the
assigned staff member would immediately gather more information
and make necessary corrections. All of this was done online and
often completed in a matter of hours, rather than the weeks or
months that might elapse while waiting for explanation of
benefits (EOB) forms to arrive.
We likewise were able to dedicate a patient
account representative to follow-up on outstanding balances.
This is a vital function since 34 percent of our patient base is
self-pay. We prioritize payments due by value, which means the
staffer can invest more time on accounts that will yield greater
amounts of revenue, rather than being submerged by large numbers
of small balances.
Results
We immediately began to see very positive
results after the 2006 implementation with the emergency
medicine practice experiencing a reduction of 19 days for A/R,
while days for the critical care/pulmonary practice were trimmed
by ten. Additionally, we saw a $1 million increase in self-pay
collections within the first year. Because we now dedicate a
patient account representative to our self-pay patient base, the
volume of accounts forwarded to collections has decreased by 57
percent. Likewise, we enjoy 99.35 percent net collections from
insurers (after contract rate adjustments, bad debt write-offs
and self-pay billing).
Electronic remittance advice allows us to
receive reimbursement electronically, which speeds payment and
reduces paper-based processes. As a result, we were able to cut
two FTEs in billing through natural attrition and re-assignment.
Since implementing our RCM solution, cost for billing services
for both founding practices is only 7.9 percent of net
collections.
We have increased the number of secondary
claims we submit, which yields even more revenue. We extract
select information from primary payer EOBs and create a
secondary claim that can be forwarded to the appropriate
insurer. This eliminates a significant amount of manual labor
and allows us to pursue balances we may have written off in the
past.
Data Leads the Way
Qualitative improvements have also been
realized. Available data allows us to analyze and pinpoint
recurring errors. We initiated in-house training to reduce
specific coding and billing problems, and include physicians in
this continuing education so they have a better understanding of
coding and reimbursement policies to subsequently improve
documentation efforts.
Data availability also allows us to assess
staff performance and productivity. Leadership is able to
monitor where individual staff members spend their time, and how
quickly they address and resolve problem claims assigned to
them. We have instituted a program whereby staff members review
each other’s claims after they have been entered into the
practice management system, but before they are sent on. Because
they know their colleagues will see any errors, staff members
are highly motivated to be as accurate and concise as possible
from the very beginning of the process.
Leadership at both practices is extremely
pleased with our two-pronged approach to improving RCM. The
establishment of a shared billing company has allowed claims to
be managed more efficiently, while the implementation of
advanced technology has maximized revenue and improved cash
flow. We expect to continue strengthening the bottom line by
further refining our workflow and expanding our reliance on
automation. Our next step, in fact, is to integrate electronic
posting with our practice management system to eliminate manual
entry and allow us to purse outstanding balances in a timelier
manner.
Bette Warn is executive director of ATD
Resources. Contact her at
bettew@atdresources.com.