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How to Prepare for Revenue Cycle Changes in 2014

January 06, 2014

Kaleida Health is readying for revenue cycle uncertainty through predictive modeling, reallocated staff, and an emphasis on clinical documentation. But the impact of HIX remains unclear.

As hospitals and health systems strive to protect and improve their revenue cycle, one of the greatest challenges they face in 2014 is uncertainty.

With all the unknowns surrounding the eventual impact of healthcare reform, health insurance exchanges, and value-based purchasing payment models, deciding on the right moves to make in order to boost collections and reduce denials isn't going to be easy.

"It's just an era of unprecedented change in the revenue cycle," says Jennifer Nichols, senior director of revenue cycle operations at Buffalo, NY-based Kaleida Health, which has $1.18 billion in annual net patient revenue and an operating margin of 1.6%.

"I haven't seen this amount of concurrent change before or the level of unpredictability of all these simultaneous changes coming together at once," she says.

Preparing with predictive modeling and more FTEs

To prepare for whatever lies ahead, Nichols and her team have done predictive modeling based on different assumptions "to create a playbook for the various scenarios and what-if situations that we can think of so we can be ready," she says.

"On the provider side, it requires us to be very diligent and methodical with the planning process," she adds. "The modeling becomes very challenging, and it requires us to be far more nimble and agile."

In addition to the extensive modeling, Kaleida is also rethinking the way it uses its staffing resources in order to strengthen its revenue cycle and to be more responsive to payer changes that impact collections.

"We are looking at how we allocate staff because … we can have all the best planning in the world, but if we don't have the resources for it, we are not going to be able to execute," Nichols says.

To date, 11 positions have been added across the revenue cycle, and FTEs have also been reallocated from other areas in a restructuring process that has been under way since June, she says. "We are increasing staffing in terms of payer analytics, compliance, payment trends, payer relations … to have people right on the forefront watching for trends."

Clinical integration is critical

Another critical piece to improving the revenue cycle, Nichols says, is integrating the finance and clinical teams—two groups that traditionally have not collaborated well within most provider organizations.

"It's so fundamental right now. We can't operate in two separate silos; they have to be interwoven," Nichols says.

To that end, Kaleida set up a clinical documentation improvement group that is part of the revenue cycle. Nichols says the organization is currently making an "enormous investment" in that team.

"We have roughly doubled the amount of staff to 20 from 11 in one year," she says. "The CDI program is currently our number one project. It touches every component of what we do as a healthcare provider. There is a financial return to better documentation, but it is also just fundamental to the care we provide."

Impact of HIX is unclear

One of the biggest question marks surrounding the revenue cycle at the moment is the potential effect of the Patient Protection and Affordable Care Act and the health insurance exchanges.

"The impact on charity care and bad debt is a bit murky," Nichols says. "It's not very clear when we model it out that the exchanges will reduce charity care because folks are still responsible for paying premiums and deductibles. It's unclear if the exchanges are truthfully going to reduce bad debt, so we've chosen not to make that assumption" in the modeling.

To try to mitigate the possible negative impact the exchanges may have on its revenue cycle, Kaleida is one of a handful of hospitals around the country that employs government grant-funded navigators to help patients enroll in HIX health plans, or to access Medicaid or charity care, if they are eligible.

Kaleida hopes that by educating patients who are newly covered through the exchanges, it can protect itself from the financial pitfalls of caring for patients who believe they have more insurance than they actually do. On average, navigators spend about an hour and a half per patient providing information on their various coverage options.

"These [patients] are not necessarily folks who have been in this environment before so it is a challenge for them to understand concepts like deductibles and premiums," Nichols says. "I am a big believer that having coverage increases the likelihood of accessing services, but the impact of that on the revenue cycle is unclear."

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