Managing a healthcare organization's risk is a challenge, but doing so while the payment environment undergoes massive upheaval requires some serious forward thinking. Just ask anyone working in radiology these days and they’ll tell you it’s a tense time for their bottom lines—which makes it all the more important that they stay atop their revenue cycle by completing a regular financial risk assessment.
Diagnostic imaging has been a target for more than its share of cuts by Medicare. The government’s strategy: slash spending for imaging services by decreasing payments for the technical component of certain non-hospital advanced imaging services. Consider that in 2010, the Medicare Physician Fee Schedule final rule had adopted a 90% utilization rate for certain imaging equipment valued at more than $1 million, which included CT and MRI services. That number will change in 2011, however. The Patient Protection and Affordable Care Act will adopt a 75% utilization rate for CT, MR, nuclear medicine, and PET equipment phased in over four years.
Both inpatient and outpatient imaging centers stand to feel the hit from this decrease in reimbursement, but it’s the outpatient imaging centers—those that lack other streams of income—that will be hit the hardest. Michael Gonzales, billing operations manager for Radiological Associates of Sacramento Medical Group, Inc., knows this topic only too well, and he offered me his insights on how the 900-employee private practice approached its revenue cycle challenges.
With more than 90 providers, RAS generates more than 750,000 claims per year. Gonzales’ job is to make sure as many of those claims get paid as quickly as possible. So, he and his team did a financial risk assessment to uncover current and potential problems. They recognized the possibility of more decreases in reimbursements, but they could do little to control that.
Like so many other healthcare providers, the assessment uncovered other, preventable, revenue cycle leaks. One of the biggest was in patient eligibility—they had an eligibility denial rate of 4.3% of the monthly volume. That denial rate is not completely surprising when you consider the group saw approximately 2,000 patients per day across 23 locations. But there was more.
“Historically we’ve also had challenges with reliability and rejections. Making sure we capture data right on the front end is extremely important, but we were having issues because there were so many [different] secretaries [capturing the data],” says Gonzales.
Gonzales and his team started out by looking at a kiosk solution—software that’s intended to lower costs while maintaining a high level of interaction with customers and employees. The system they considered used patient IDs at check-in and for the insurance eligibility and co-pay estimate, however they weren’t convinced it was the best choice for their patient base. They wanted a system with real-time eligibility verification software which would also work with their existing scheduling software. They opted for the Duluth-GA-based Navicure, an Internet-based medical claims clearinghouse, which they took live at RAS as of February.
The new system runs the patient schedule three days prior to examination and determines eligibility. For walk-ins, staff is able to use a single website to check the patient’s insurance eligibility. Within the first three months of addressing the eligibility issue, RAS saw a 56% reduction in errors, Gonzales says.
“The new software only helped us accomplish 80% of our goal,” Gonzales says. “We also dug more deeply into our denials.”
That’s when their financial risk assessment really enlightened—they found another $100k in drug reimbursements that hadn’t been paid. “We run a pretty tight ship at RAS so for years we haven’t done a risk identification project as it pertains to revenue cycle,” he says. “But this is about making sure we are getting paid what is owed in our contracts.”
There are a lot of changes taking place due to healthcare reform and the economy, and many healthcare financial leaders are grappling for any way to minimize their financial exposure and that means assessing risks. As the payment environment changes in the coming years, healthcare facilities must become extremely adept at identifying, measuring, monitoring, and eliminating their risks or they may lose greatly needed revenue.
Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
