A multi-hospital system in Illinois aims to reduce claims denials through a standardized, detailed pre-authorization process and the use of data analytics tools in its new revenue center.
As margins tighten in the face of growing CMS payment penalties and shifting reimbursement models, hospitals and health systems are analyzing their internal financial processes and looking for new strategies to prevent revenue leakage.
Advocate Health Care, a 12-hospital health system based in Downers Grove, IL, opened its shared revenue center in November 2013 with the goal of doing just that. The organization expects to protect its bottom line by centralizing and standardizing its system-wide revenue cycle.
"In the past, the hospitals were independent in managing their revenue cycle, but the business has changed so our environment has to change with it," says Richard Lyman, Advocate's vice president, revenue cycle.
Making a Smooth Transition
In total, 368 employees were moved from their decentralized locations to the new center.
Lyman acknowledges that it "was emotional for people to leave their hospital and come to the center" and says he, his team, and the human resources department spent a significant amount of time holding meetings in advance of the move to explain the reasons for the transition and to answer questions.
"We worked closely with our HR department on how we could bring everyone together and make it work," he says. "If you get bogged down in what I like to call unforced errors, you will never achieve your vision. Culture will eat vision for lunch."
"We crafted our message, and we were honest with everybody," Lyman says about the meetings. "We didn't set a time limit. We stayed as long as it took to answer all the questions we received. Some of the meetings lasted two and a half hours. … Having done this before at another organization and not being so closely aligned with HR through that process, I've been so thankful to have them involved in this transition."
Reducing Denials
One of the goals of the revenue center is to reduce claims denials through a standardized, detailed pre-authorization process and the use of data analytics tools, Lyman says.
"When we go to schedule someone for a procedure, we are going through a preregistration process to determine their insurance benefits and get a pre-certification in place," he says. "We want that done three days ahead of time. The goal is to have it so that when the patient presents for care, their insurance eligibly has been determined, and they can focus on their clinical care."
In addition to making it easier to collect from payers, Lyman says the preauthorization process allows Advocate to communicate better with patients around their financial responsibility, which increases satisfaction.
"The bottom line is we want a lifetime relationship with patients. We want them here for the long haul, so we are making sure there are no surprises for them with their billing. We try to do all that work upfront as best we can, and that way, hopefully, we will score well on things like patient satisfaction and patient experience."
By centralizing the collection of claims information, Lyman says Advocate can also operate "a very focused effort around using data to manage our patient accounts."
Lyman and his team access a daily flash report and a weekly operations report to analyze, among other areas, its commercial and managed care patient accounts.
"We make sure we are focused on what is going to drive the most benefit," Lyman says. "We go through an issues review process every week, and we use the denials reports and transaction reports to study in great detail where the true issues are… A lot of that work is an automated workflow, but I'm always looking at what the next steps are in getting that account resolved and paid."
Lyman notes that since the revenue center opened, denial rates have trended up, but he says this is a reflection of Advocate's ability to capture accurate data and not an indication of additional denials.
"The denial rate is actually going up because we can take all the transaction codes and standardize them across the organization so they will be classified correctly. Before those errors tended to be buried, and now we are uncovering them," he says.
Bringing Denials Data to Clinicians
Using data to educate clinicians about the role they play in generating denials is also vital to the organization's long-term financial health, Lyman says.
"A denial indicates that there has been a breakdown in the process someplace. We take those codes and map the denials to the responsible areas and present that group with the data to show where the breakdown is occurring, and then we put a corrective action in place. We are being proactive and going out to all the sites [with this data], and we are receiving a great deal of support around going after these denials."
For example, about 1% of Advocate's managed care claims currently result in a denial, Lyman says. "We are working those down and are doing a root cause analysis, and that program is going very well."
In many cases, preventing denials requires improving clinical documentation, Lyman says, noting that this is an area of emphasis for the revenue center.
"We are doubling down with our clinical documentation efforts," he says. "We've had a good program, but we are trying to take it to another level. … Finance has worked together a lot with physicians on rethinking how clinical care impacts reimbursements under value-based purchasing, and it's getting people to understand why this is important and how it impacts our revenue. Everybody gets it at a high level, so we were able to quickly get the docs on board with what we had to do."
Lyman believes strongly that the revenue center is a big step in the right direction as healthcare continues to evolve into a more value-driven industry and says Advocate will reap substantial benefits from taking a consistent approach to its revenue cycle across the organization.
"There are a lot of cost savings in standardization," he says. "We've been fortunate that Advocate has made substantial investments, and we have tools in place now that the hospitals would not be able to afford on their own."