Revenue Realization: The CIO Perspective

When you walk into a bank and hand the cashier a check for $100, most people’s minimum expectation is that the cashier will pay them out $100.  We also do everything possible from a process perspective to ensure that transaction.  For instance, most people endorse the check, ensure the proper sum is listed, and do not just drive by and throw it through the door hoping for the best.  So why then do many hospitals not use the same diligence to ensure they are realizing the maximum revenue they are entitled?

As the following information will show, many of these areas are either reliant on technology or processes that a CIO can facilitate improvement in and, if properly addressed and focused on, the CIO can provide significant value. For instance, in most hospitals the revenue process starts when the patient walks through the door and is admitted in the patient registration areas.  This is one of the most overlooked revenue realization opportunities.  All too often, the insurance information or patient demographic information is not validated or is captured with errors.  These errors can lead to bad debt, unrealized co-pays, or other problems. One way this can be mitigated is by the patient registration manager working with the finance department to run daily reconciliation reports looking for trends or repeat factors causing mistakes.

Another key area of concern is the coding arena.  There are various studies that list statistics on average accuracy rates ranging from 84-92 percent. Hospitals are challenged with attracting, managing, and deploying staff with the necessary skills to improve or maintain these rates. Many hospitals have turned to business partners to provide coding services. Some of these organizations regularly guarantee 95% or higher accuracy rates. Hospitals should thoughtfully consider, as with any established service level agreement, the denominators in any such calculation. Variables that may seem mundane may have significant financial and or compliance implications for the hospital. Consider discharge status.

With the expansion of the “discharge status rule” which now covers approximately one half of all Medicare Diagnosis Related Groups (DRG), the ability to correctly bill or recover underpayment will depend on the accuracy of the assignment of discharge status. Discharge status is dependent on the discharge summary, which is dependent on the orders, documentation of the discharging physician and documentation from Social Services/Case Management staff.

Much of this data is collected electronically in many hospitals and in others still includes paper-based processes that need to be accounted for. What causes errors in the discharge status and what does that tell us about effectively limiting those errors. The answers:

• Poor data quality or data entry
• Missing or lost documentation
• Misinterpretation of documentation
• Lack of understanding about qualifications for various statuses

These four different errors have four different plans of action for correction. Also the CIO and organization should be asking: is 95% accuracy acceptable?

So what does the inaccuracy equate to — money left on the table in most cases. As shown in the above banking analogy, organizations are literally chipping away at the $100 check and accepting less. In addition to engaging firms for assistance in coding, a review of overall coding performance can pay for itself. For example, a financial modeling and coding review company I have worked with has a service whereby 100% of claims for a selected time period are reviewed. The claims are then analyzed using proprietary rule sets to identify potential breakdowns in coding and charging practice. Based on this analytical review, areas are identified for further analysis which may include clinical documentation, charge selection and entry process.

In a recent review of a 380 bed community hospital, their initial reports indicated a 92 percent accuracy rate.  The errors identified and resolved amounted to almost $10,000 per 100 charts. Working with the coders, medical staff, and nursing areas by providing education and process improvements, the error rate was able to improve to an average 95% accuracy and dollar losses reduced to approximately $500 per 100 charts.

In terms of documentation and coding, one of the departments often leaving revenue on the table is the Emergency Department. This is especially true when they do not have an automated ED system which has the capability of running bell-curve reports against the ED revenue and comparing it to other like facilities. In many cases, they find that most ED departments’ under-code their encounters because they have not captured all the data available so that the coders can correctly document the encounters.  In at least one hospital’s case this meant leaving as much as 20 percent of ED revenue annually unrealized.  EDIS systems can help mitigate this risk by forcing nurses and physicians to fully capture all clinical data points required to accurately code an encounter. In the case of at one of the leading EDIS vendors, they are willing to bet their annual maintenance against the revenue increase they predict the facility will see with their product. An EDIS system also has the intangible benefit of automating the ED encounter for ease of integration into an EMR or EHR and providing improved clinical documentation.

Other departments also miss revenue realization opportunities. In one hospital, I experienced ED patients being transferred for surgery as having process problems.  The ED thought the surgery area was capturing the encounter and surgery thought ED was. In another example, surgery and ED often miss such items as supply charges or medication not covered under a DRG or ED level charge.  There are actually numerous services outside of the ED levels that are often missed. Some include such items as sutures, nebulizers, injections/infusions, and splints.  Separate surgical services are potentially separately billable but missed at an alarming rate. Lack of understanding of the billing rules for the patient status is often the culprit leading to these missed charges.

Another example of a commonly missed revenue item is in excision of lesions of skin and/or soft tissue due to lack of specificity in documentation for location and/or size, and in the lack of specificity in inpatient documentation such as type of pneumonia or type of anemia. This is again where a good coding analysis/review partner can assist hospitals in identifying missed revenue opportunities.

With a system as complex as the U.S. medical billing model it is not hard to find areas for improvement.  As the aforementioned shows, there are numerous opportunities in most hospitals for the CIO to add value by identifying money being left on the table and developing processes to reduce the unrealized amounts.  The examples provided are by far not the only ones; others could include having poor managed care contracts, unnecessary expenses relating to poor average length of stay, secondary infections or not following care plan protocols. While EMRs and improved documentation can help coding accuracy it is also critical under the newly proposed health insurance reforms and CMS pay for performance regulations that hospitals step up to the plate and deliver best practices of care while realizing every penny they are entitled to. More than ever, the CIO is key to this survival.