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Memo to the new CFO: Focus on the ED

Caral Edelberg, for HealthLeaders Media, August 15, 2008

You are the new CFO. You've just been appointed at a hospital with significant revenue concerns, and you are eager to jump in and stabilize the institution. Your predecessor, try as he did, could not get the P&L statement to cooperate. Where can you search for some potentially overlooked revenue?

Consider the emergency department.

The ED is often wrongly considered an unavoidable drain on hospital revenue and resources. Factors such as increasing volumes of indigent and uninsured patients, difficult managed care contracts and pervasive caregiver shortages can leave hospital administrators feeling frustrated—and understandably so. However, the ED can be a great place to start a revenue cleanup because of its influence throughout the hospital. The ED accesses a great number of hospital resources, including radiology, pharmacy, lab and central supply, and it interacts closely with almost all of a hospital's outpatient services. Due to its far-reaching influence, improvements in the ED can spread to other departments.

As with any revenue enhancement project, lasting change can require a concerted effort. Before you commit, take a quick scan of your ED using the following five actions. All hospitals are different, and no hard-and-fast rules are guaranteed to improve ED financial performance. However, these tools can give you a general idea of the opportunity in your ED before you commit to the project.

  1. Examine the frequency of your ED billing levels If your ED bills on a five-level system and the majority of patient visits are billed at levels one, two, and three, your billing is probably "left of center." You may have unclear definitions of your levels, or your coding staff may not understand how to apply the coding criteria. Accurately capturing payment for higher acuity patients is an essential component of ED financial success. In addition, coding and billing data may be your only method to evaluate your ED patient acuity patterns, which can be valuable information. Higher acuity may require higher resources, particularly during night shifts when volume decreases but acuity increases.
  2. Determine if levels are appropriately tiered Do they accurately reflect patient care from lowest acuity to highest? In general, patients with the lowest acuity receive no diagnostic tests or treatments other than simple bandages and ointments. Mid-level visits often consist of one or two diagnostic studies, injection of medication and simple nursing support. High-level visits may involve longer, more resource-intensive stays for complicated procedures—these patients may be admitted or require follow-up. If your ED coding reflects a different pattern, take a closer look.
  3. Find out if nurses and coders participated in criteria development Ask around. Medicare allows individual hospitals to design their own ED evaluation and management criteria. If clinicians weren't involved in this process, a disconnect may exist between caregiver documentation and the coding process. If nurses are unclear what documentation is necessary, services rendered may not match services billed. Coders need to understand how various nursing services reflect resources that can only be captured in the coding of the appropriate ED level.
  4. Investigate billing for the clinical decision unit/observation unit (if you have one) Observation is a time-intensive process, and if clinical staff members don't understand the amount and type of documentation that needs to be recorded, billing and compliance can be compromised. In fact, coding observation services requires such detailed documentation that you may wish to utilize a dedicated form. Documentation needs to include the time the patient was admitted to observation care, progress notes throughout, the time the patient was discharged from observation care, discharge notes, and other items. Correct payment also depends on whether the patient was first seen in the ED or clinic or received critical care, regardless of where they were first seen. Services such as EKG interpretations and breathing treatments can be billed separately but are sometimes overlooked. Unless you have a designated form for capturing all of these services, your nurses and physicians may find it difficult to meet the documentation requirements.
  5. Ensure every service performed in the ED is listed on the chargemaster Services should be listed even if Medicare does not reimburse the service. Other payers might reimburse and, in fact, Medicare requires that certain services be listed regardless of payment. Ask nurses and ED physicians to take a close look. As a general rule, if you have fewer than 300 E/M levels, surgical, and diagnostic procedures on your ED chargemaster, you may be missing some valuable services.

Addressing ED coding, billing, and compliance often requires a concerted effort, but the returns can be significant. In addition, revenue and compliance goals can be achieved in a timely manner when pieces fall into place. Educating clinical staff jump-starts documentation improvements, and chargemaster cleanup can identify lost revenue in short order. Then, as CFO, you can take comfort that lasting change is within reach.


Caral Edelberg is a senior vice president with TeamHealth, a provider of hospital-based clinical outsourcing and administrative services. She can be reached at Caral_Edelberg@teamhealth.com .
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