Medicare and Medicaid Services finalized two payment reforms in August 2007 that took effect Oct. These changes could have a significant impact on your organization's accounts receivable and medical records processing. In order to lessen their impact, it is important to understand the nature of the reforms and make appropriate alterations to your internal processes.
The Inpatient Prospective Payment System applies to discharges occurring on or after Oct. 1. The Present On Admission Indicator took effect on the same day, and it requires Medicare providers to submit a POA Indicator for every diagnosis on inpatient acute-care hospital claims. Critical-access hospitals, Maryland waiver hospitals, long-term care hospitals, cancer hospitals, psychiatric hospitals, inpatient rehabilitation facilities and children's inpatient facilities are exempt from this requirement.
What to Watch For
No more than five days of revenue should be held in the accounts that are discharged-not-billed. Listed below are some key processes that should be monitored to avoid challenges. Each facility is encouraged to check these as well as hospital-specific processes.
Action Steps to Take
How to Measure DNB
Measure Days Revenue Outstanding in DNB. Divide the total dollar amount (gross) of patient accounts that are discharged but not billed by the average daily (gross) revenue. The result should not exceed five. If you are over five days revenue outstanding, you may not have cause for concern because this number can fluctuate. However, if you are consistently above 10 DRO, extraordinary measures are needed.
Measure the average age of accounts at bill time. Your ECM systems should offer a "discharge to bill time" report. Otherwise, request this report from HIS. The average discharge to bill time (measured in calendar days) should be seven days or less. This report should include at least 30 days of claims.
Avoid Common Mistakes When Calculating DNB
Paying close attention to these internal practices will help you minimize the effect of these substantial Medicare and Medicaid reforms.