Sometimes, the healthcare revenue cycle seems like a set of Matryoshka dolls – those Russian nesting dolls (originally from Japan) that fit inside one another. The large doll pops apart in the middle to reveal a smaller doll within, and so forth until you get to a very tiny little figure.
How does that relate to healthcare finance? Here’s how I think of it:
- The largest doll: What we plan to do as a care-giving entity.
- Next: What we actually do.
- Next: How we document what we do.
- Next: How we code for what we document.
- Next: How we bill for what we code.
- Smallest: How we collect for what we bill.
By the time we get to the smallest doll, we realize that it’s not so small after all! How can we plan care, and deliver care, if we can’t receive enough revenue to hire people, buy supplies, and maintain our facilities?
Often when we look for savings, we concentrate on that smallest doll, because it seems so important to build the rest of the revenue model. However, just like the Matryoshka dolls, the larger dolls on the outside should capture our attention first.
Are we planning effective, efficient, and patient-centered care? And we following the plan as the patient condition permits? These dolls are outside of the world of healthcare finance, however, without good timely care we are not fulfilling our mission!
Third Doll First
The first place we should look from a Revenue Cycle perspective is that third doll. This is accurate documentation of the work, which is the key to the following steps, so in an improvement effort I suggest using that as the starting point.
- Is documentation captured in real time (for example, in the Electronic Health Record system?)
- If documentation is captured manually or at a later time, can the accuracy be improved?
- Has there been an audit for accuracy of documentation?
- Is accurate and timely documentation a part of on-boarding and annual education for the healthcare team members who are responsible for documentation?
Here are some questions for the next smaller doll or portion of the process:
- Are the proper diagnosis and procedure codes being applied to the documented activities?
- Are the codes updated on an annual basis when the revisions are published? Are departments and business units educated in the changes?
- Is the coding audited to ensure accuracy and consistency?
- Do retrospective audits show any opportunities for improvement? If so, are action plans developed and followed?
Once we are satisfied with our documenting and coding procedures, we can look at the billing process.
- Are clean bills ready and submitted within a timely manner? (benchmark: 4 – 9 days after the service is provided or concluded, depending on the scope of services: Best Practices in Revenue Cycle Management, AHIMA, 2005)
- If the bill is not ready by this time, is problem-solving escalated?
- Are trends tracked so that repetitive issues can be identified and resolved?
And then, we can look at our collections process.
- If insurance is a payor, is the time to payment tracked against a target, and are outliers followed up promptly?
- If the patient is a payor, or balance-billed, is the process timely, efficient, and patient-friendly?
- Is there an effective process in place for handling payments past due? Is the past-due backlog kept to a minimum?
- Is the process of moving to a collections agency well-documented with specific parameters and targets?
Some hospitals, feeling that there’s money that can be gained by a better billing or collections process, will start improvement efforts at the back end. It can be more rewarding, financially speaking, to start at the point of documentation before working on down to the smallest doll. You will be surprised, as I was, on how much Revenue Cycle staff time is spent on searching for information and correcting mistakes! If we can provide accurate input from the documentation, our output of a timely collection of payments will be a welcome outcome.
-Sue Kozlowski is senior director at Lean Healthcare Solutions, TechSolve Inc. in Cincinnati, Ohio.
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