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Implementing IT in Healthcare Revenue Cycle Management

Author: Elizabeth Rachal James

Over a few decades, hospital expenditures have increased. As a result, there is tremendous pressure on key industry stakeholders to mitigate further growth in hospital spending and Welter. Government healthcare programs, example Medicare and Medicaid, have responded to these pressures by mandating lower increases in hospital reimbursement rates. Hospitals have mainly focused on cost management to deal with these pressures.

Hospital revenue cycle management includes all clinical and administrative functions related to the generation, management, and collection of patient care revenue. Although historically focused on backend tasks, such as billing and collections, in recent years hospital financial managers have directed more of their attention to the front end of the revenue cycle including patient scheduling and registration, insurance verification, and preauthorization as well as the core tasks of the revenue cycle including medical documentation and coding.

The reality of hospital-based physician specialty revenue is that the process from initial delivery to full payment is complex. At the very least, this often leads to a protracted delay between service provision and payment collection. In worse cases, it can result in mistakes, confusion, and unnecessary back-and-forth.

Implementing effective RCM is essential for all health systems. Each hospital service line has an RCM process.

Revenue Cycle Management software enables the providers to correctly bill the insurance and patients for the services provided, address any claim denials and implement deep analytics to find leakages in revenue generation and plug the same. ie, the integration of new applications onto lockbox platforms creates efficiency for end users (hospitals, others).

Revenue cycle management (RCM) is the financial process, utilizing medical billing software, that healthcare facilities use to track patient care episodes from registration and appointment scheduling to the final payment of a balance. The revenue cycle begins when a patient or a physician determines the need for a medical service and ends when the charges associated with the service have been resolved through the application of insurance payments, contractual allowances, write-offs, or payments by the patient. Healthcare revenue cycle management is traditionally separated by front- and back-end functions. The front end of the revenue cycle is patient-facing. Front-end staff collect information from patients, confirm insurance coverage and eligibility, and register new patients. Back-end revenue cycle management includes claims management, denials management, medical billing, and final patient financial responsibility collection.

A variety of payers including Medicare, Medicaid, and commercial insurers; state and federal regulators; and other stakeholders such as consulting clinical specialists, laboratories, blood banks, collection agencies, and other service providers.

The discipline of revenue management combines data mining and operations research with strategy, understanding of customer behavior, and partnering with the sales force.

Work of the RC is patient-focused; support transparency of information; reflect process driven, non-duplicative business practices; leverage existing and emerging technologies; demonstrate a sustainable return on investment; have standard-based architectures; are intuitive and include simplified user interfaces; and are designed with the full revenue cycle business process flow in mind.

Specific concerns focus on:  ability to gather and analyze cost data in a routine and automated fashion; knowledge of and response to internal and external factors affecting price;  administrative burden of tracking and analyzing an overwhelming amount of quality and performance metrics for the many variations of the programs they are involved in; and the challenge of exchanging an unprecedented amount of clinical and financial data across the healthcare continuum between both associated and disparate providers: an information exchange which was never contemplated when developing existing revenue cycle and communication systems.

An efficient revenue cycle is critical to ensuring timely and appropriate reimbursement for patient services. Most hospitals employ e-HIM processes and tools to perform the multiple functions that make up the revenue cycle. By integrating the IT components, organizations will enhance their ability to use data.

Many hospitals are developing automated physician query processes that can be used by case management specialists, documentation specialists, and coding specialists to clarify documentation in the record. Integrating this process with the EHR enables physicians to receive and respond to queries, which will in turn boost timeliness and response rates.

Steps involved in revenue cycle management

Patient appointment scheduling

The first stage of the revenue cycle. During which a scheduling coordinator receives physician’s referral information for a patient and schedules an outpatient procedure, test, or admission into the hospital. It may also involve verifying eligibility from the patient’s insurance company. Some hospitals have centralized scheduling in which a dedicated department handles the scheduling responsibilities for all patients, while other hospitals have distributed scheduling in which individual clinical departments handle scheduling for their patients (for example, an X-Ray laboratory that schedules patients independently). Examples of IT that can be implemented in patient appointment scheduling are  Enterprise-wide scheduling software, online patient and physician appointment request portals.

Patient Registration

Upon arrival at the hospital, the patient meets a registration clerk who collects key demographic information, including name, social security number, and insurance benefits coverage. If a patient’s record already exists in the hospital’s EMR system (because of a prior visit), the clerk verifies and updates the information. The clerk also verifies that any pre-authorizations (if required by an insurance payer) are available before accepting the patient. Upon completion of registration activities, the clerk allocates a patient account number and a patient tag that are unique to that visit. The hospital staff uses the patient account number in subsequent stages of the revenue cycle, including patient encounter, documentation, coding, and billing.

Inaccuracies in collecting patient demographics or insurance data lead to a range of issues  involving denials, unnecessary follow-ups, and missed delivered patient statements. Entering data into wrong medical record, choosing incorrect insurance, mistyping the address. Though it appears simple, the cost is $ 20 billion every year to correct and mitigate the error. Examples of IT that can be implemented in patient registration are Online insurance verification with real time responses, registration quality assurance tool, or quality assurance logic in registration system.

Clinical encounter and documentation

The registration staff completes registration-related formalities and releases the patient to the clinical staff. The clinical staff then begins preparations to provide medical services to the patient. An outpatient receives the scheduled procedure (for example, an X-Ray, a CT-Scan, or a blood test) and can typically go home after a brief observation period. In case of an inpatient, a nurse transfers the patient to a private room or a general ward for treatment and observation. If needed, the inpatient may receive appropriate clinical interventions (for example, a knee surgery). Following physicians’ orders, the nursing staff transfers critical patients to an intensive care unit (ICU) and relatively stable patients to an observation ward. Once the patient recovers sufficiently, the hospital discharges the patient to home or community setting. Clinical documentation includes a physician’s orders on primary diagnosis, a physician’s notes about any associated diagnosis, nurses’ notes on procedures and treatment, and any other material relevant to billing for the medical services provided to the patient. For example, while the nurse responsible for clinical documentation includes an X-Ray (such as, for a broken bone), the application of a plaster cast may not be included in the list of services provided.  This would ultimately result in a missed charge and loss of revenue to the hospital. If a nurse identifies such cases quickly, she may amend the clinical documentation. In addition, the physician may fail to provide accurate diagnosis-related information (for example, ordering tests for diabetes without mentioning the reason) or to document such information in a timely manner.

The patient encounter occurs, during which a physician on medical staff examines the patient, conducts any scheduled procedure, or admits the patient for surgical intervention or continued observation. Clinical documentation occurs next, during which a nurse documents all the examinations, procedures, and medical services provided to the patient. Examples of IT that can be implemented in clinical encounter and documentation Electronic Medical Records system, automated alerts, case manager application, workload and productivity monitoring  system, voice-recognition system, computerized physician order entry ( CPOE)

Medical charge coding

These clinical documents could be hand-written, transcribed and printed, or available digitally in real-time in hospitals that have implemented CPOE. A coding specialist receives the documented procedures from the nurse and creates standards-based codes according to appropriate diagnosis-related grouping (referred to as DRGs). The coder reviews the documentation to identify the elements required for accurate medical coding8 by using classification standards9 approved by the Health Insurance Portability and Accountability Act of 1996 (HIPAA). In case of missed charges (for example, a patient gets an X-Ray for a broken bone, but the charge for application of plaster cast or wound dressing may be missing), the coder coordinates with the physician or nursing staff to clarify. Late or incomplete reporting of clinical documentation and errors in coding (for example, applying the wrong code for a procedure) are the most common issues. If these errors remain uncorrected, the hospital cannot claim reimbursement from the insurance payers.  Examples of IT that can be implemented in medical charge coding are Charge entry application, integrated EMR system with coding, automated reports.

Charge billing

A billing specialist collects all patient accounts that are ready for billing, generates claims, and reviews them. In case. of any edits10 (for example, missing payer information for a particular patient account), the billing specialist contacts the relevant department (in this example, registration) to seek additional information. The claims are typically bundled together and submitted to the patient’s payer. For self-pay patients, the billing occurs separately—in-house in the billing department or outsourced to an external provider. The billing department also processes denied claims, often requesting reconsideration from the payer with additional information from the physicians, coders, or registration staff. During the billing stage, a billing clerk receives the coded charges, generates claims, and sends the claims to the patient or to third-party payers such as Medicare, Medicaid, and commercial insurance companies (including for-profit and not-for-profit), as appropriate.With systems training and optimisation approach improved billling systems, order entry, and processing procedure, Examples of IT that can be implemented in billing are Online electronic billing system, interface with online Medicare-compliance system, biller-specific productivity and error reporting.

Payment posting

Payment posting involves receiving payment for all claims from various payers. It can occur through an electronic process (as in case of Medicare) or manually. A business office clerk updates patient accounts to reflect all received payments and contractual allowances (that is, pre-agreed discounts negotiated between the hospital and a payer). Payers may deny some claims for reasons such as late submission, insufficient documentation, and coding or diagnosis errors. The billing department typically reviews such cases, follows up with other departments to provide missing or additional documentation, and resubmits claims, if allowed by a particular payer The business office receives all payments from the individual and the third-party payers and posts relevant information to the patient’s account. Examples of IT that can be implemented in payment posting are Online system comparing expected vs. actual payments, bank lockbox.

Late revenue recovery

Inaccuracies in claims lead to delayed payments. Follow-up for self-pay accounts typically occur on a monthly cycle. A business office clerk may negotiate discounts or easier payment terms with some patients to encourage them to pay the balance amount. Any account becomes delinquent if it remains unpaid for a specified period (typically over 120 days), and may then be referred to an external collection agency for balance recovery. Finally, after exhausting
all attempts of revenue recovery, the business office may write off some account balances. clerk in the business office follows up with patients (or their insurance providers) for late or denied reimbursements. Examples of IT that can be implemented here are web-enabled third party payer inquiry system, online “receivables work station” system, automatic download and uploadfrom and to the HIS system, IS for information exchange with collection agencies.

Role of IT in the Revenue Cycle includes mainly Automational, Informational, Sequential, Tracking Analytical.

References

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5. Rauscher S. Revenue cycle management in the US hospital industry (Doctoral dissertation, University of Michigan).
6. https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=0CAMQw7AJahcKEwj4sOHltb38AhUAAAAAHQAAAAAQAg&url=https%3A%2F%2Frevcycleintelligence.com%2Ffeatures%2Fwhat-is-healthcare-revenue-cycle management&psig=AOvVaw1nhVelzK3OfhUHIcjhaLY7&ust=1673454456041059
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8. https://library.ahima.org/doc?oid=89114#.Y7sPHxVBy3A