Optimize The Revenue Cycle To Achieve Savings

Edited by Erin Harris, Editor, Health IT Outcomes

By implementing a revenue cycle management (RCM) solution, Conway Medical Center reduced its downtime to almost zero, and maintenance concerns no longer plague the IT staff.

The revenue cycle is a complex system that offers community hospitals several opportunities for creating efficiencies and cost-savings. Conway Medical Center is a private, non-profit 210-bed healthcare facility located in Conway, SC. Conway Medical Center processes about 400 claims per day with about 70% falling into Medicare and Medicaid. The patient accounting billing staff is made up of eight members, who also have responsibility for secondary billing and self pay. Frank Grella, director of patient financial services, explains the importance of improving the revenue cycle and gives some tips on how to take advantage of cost-saving opportunities.

Q: What challenges did Conway Medical Center face that drove the RCM implementation?

Grella: First, we are a disproportionate share hospital (DSH), and, therefore, we treat a large number of lowincome patients even though the tourist destination of Myrtle Beach is 8 miles away. Also, South Carolina is unique in a few ways. First, we had very limited options for the claims processing company we could use. In fact, the company we had to use was a subsidiary of Blue Cross of South Carolina. In the past, Blue Cross actually stopped paying hospitals as leverage to ensure use of its claims processing company. But things changed as a result of HIPAA. When HIPAA went into effect, we were able to research other RCM solutions that would actually help us.

Second, we treat many retirees who have moved into the area but who may not have Medicare yet. These people have different insurers from across the United States. We also treat retirees who have Medicare as well as supplemental insurance from former employers. Our emergency room treats countless tourists, so we accept out-of-state insurances. Therefore we wanted a vendor — specifically a claims processing company — that could deal with nationwide plans.

Third, we always felt disadvantaged because the claims company we used was part of South Carolina Blue Cross. For example, even though the claims company swore to us that they did not keep tabs on our claims utilization, every time we conducted contract negotiations with them, they seemed to know exactly how many Medicare and Medicaid claims we had. It was important for us to part ways with this company so that they wouldn’t know how much leverage they had on us in terms of the patient population they were providing to us. Because Medicare and Medicaid underpay, we don’t make any money on these claims. The claims company can use this information as negotiating leverage because they know that if you don’t contract with them, the hospital can go out of business.

Finally, the claims processing tool was functionally antiquated and cumbersome to use. The user had to view multiple screens to clear a claim. We had a constant battle with editing codes. It was nearly impossible to get the codes to match the actual uniform billing code.

Q: How were your revenue challenges different than those of larger hospitals?

Grella: We do not have the resources that a large facility has. We do not have a strong IT department due to location and our inability to pay competitive salaries. Our area is still agriculturally-based on cotton and tobacco. Many people do not have college degrees. The largest employers are related to tourism. All of our solutions had to be ASPbased and located off site so that we could rely on thirdparty vendors to provide software and hardware support. We also don’t have a great deal of leverage when it comes to negotiating with payers (i.e. Aetna, United, Blue Cross).

Q: What technologies did you choose to alleviate these issues?

Grella: We selected ClickON Claim Status Module from SSI Group because of their large national presence. I wanted a company that was already working with and doing a large volume with the payers. They have a good record with Medicare, which is our largest payer by far. Also, the company has a good record with Medicaid, Aetna, and United Healthcare — payers we deal with frequently.

SSI Group has a direct connection to these payers. In other words, claims are not sent through a clearinghouse but directly to the insurance. Because of their relationship with the payers, SSI Group knows what edits are required to clean up a claim or have it go out clean the first time. They also supply us with their eligibility product, which we’re now using in our pre-scheduling area and our scheduling area so that we can validate patient data before they come in.

We also use their accelerated secondary billing program, which is a program that bills secondary claims.

Also, the company keeps all of our data on file for the maximum amount of time that we need and that is required by law. We provide very little IT involvement, as we access everything via the Web. Training is minimal.

Q: Who uses the tool?

Grella: The patient access and scheduling staffs use the eligibility tool. Patient account representatives use the bill scrubbing tool. The Medicare billers use the DDE (direct data entry) and the accelerated secondary claims program. It currently does not integrate with any other solution.

Q: What are some of the RCM best practices that you would recommend to other community hospitals?

Grella: Focus on the front end. Focus on eligibility and on authorizations because unless you've checked your eligibility and gotten authorization for whatever the patient is coming in for, everything is going to be denied. Whatever you do on the front end is going to pay dividends on the back end.

Also, have people on-site who can provide help with the uninsured population. Find a program that they can fit into (e.g. Medicaid) to help your hospital get paid.

Q: What RCM pitfalls would you advise other community hospitals to avoid?

Grella: When it comes to choosing an RCM vendor, do your homework — attend trade shows. The largest organization for people in my position is the Healthcare Financial Management Association (HFMA). They have an annual institute every year, but each chapter in each state has its own meetings as well. More than 2,000 vendors exhibit at the large annual show. Research each company, because some vendors overpromise and underdeliver. Investigate whether vendors outsource their processing to offshore countries, because that's an issue when it comes to privacy and data.

Also, you must know and understand your payer mix. Know the population for your area, because one solution does not fit all even if it caters to nationwide payers.

Q: What measurable results has Conway Medical Center realized as a result of the RCM implementation?

Grella: Conducting eligibility and authorizations up front enabled us to lower our denial rates to less than 3%. The other benefit is reduction of days in AR. When I got here we were over 80 days in AR. Now, we are at 43 days. That number can be reduced, but we decided that we are not going to send a bill until six days after discharge so we don't have any late charge issues. Also, we want to ensure that all the coding is correct.

Another great benefit we've experienced is an increase in cash on hand. Most hospitals prefer to have a specific amount of cash on hand in case something happens. Most strive for 200 days of cash on hand so that if something goes terribly wrong, the hospital can operate for 200 days. We have more than 400 days of cash on hand, which is something we're very pleased with.

Finally, as a result of the RCM implementation, we have experienced almost zero downtime, and our IT team no longer worries about RCM maintenance issues.