In my first post about what a revenue cycle consultant does a few weeks ago I introduced the 4 major areas of the revenue cycle of medical entities. This time around I’m going into a bit more depth which I know will not only educate those outside of health care but inside as well… though many of them won’t willingly admit it. 🙂

Before I get into that, I want to mention two things.

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First, this article isn’t a comprehensive description of everything I’m talking about. That would take way too long and only a few people would benefit from it. This is definitely enough to give a high level of information that almost everyone should be able to understand. Also, remember that this is from an outline for a live presentation I thought I was going to be delivering to a group, so the answers below fall in step with that.

Second, not all medical entities get this deep into the process. For instance, collections is often handled by outside companies so this might not be as important to them. Some physicians and physician’s groups also hire outside companies to handle their billing. Still, every one of these is a part of the overall revenue cycle of each of them, whether they specifically do it or not.

Health Care & The Revenue Cycle Process

A. Admissions/Registration

1. This begins the entire process

Except for some emergency room services, no medical procedures are done without giving up a lot of information to the registration or admissions areas. Some facilities only ask a few demographic questions while others get really intense with the types of information they want.

2. If done properly, bills will go out automatically

There’s little “billing” done by the billing office these days, which is why the name morphs so often. If all the upfront demographic information is captured properly (not necessarily correctly) and the charge capture process and medical records gets diagnosis codes on the patients services properly then bills will automatically go out, which saves a lot of processing time and, hopefully, everyone gets paid quicker.

3. Gathers all demographic information


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Let’s start with name, address, birth date, social security number, and then move into the insurance information. People are asked for driver’s licenses, insurance cards, and sometimes social security cards. In physician’s offices and either inpatient or surgical admissions, a lot more information will be asked regarding medical condition and previous services. Not only is this information crucial to physicians but it also affects how diagnosis codes are determined, since there could be many different reasons in describing why a patient has presented for services.

Of course it’s not just getting all this information. When there’s time all insurance information needs to be verified for coverage, such as making sure it’s still valid, that the patient is actually covered under the insurance information that was given (insurance fraud is a big deal), and in some cases if an authorization was supposed to be obtained before services are provided.

a. Ties in to charge capture

The ancillary departments (some of you might have to read the first article for some of the definitions in this one) need all the previous information to make sure charges go onto the correct patient’s accounts.

b. Ties in to medical records

Medical records can’t code properly without some of the demographic information and the charges matching up. For instance, if the registration folk put in a birth date that makes a woman 75 years old and the patient came in to determine pregnancy, medical records hopefully will catch it first and send the file back for corrective action.

B. Charge Capture

1. Ancillary departments are those that capture revenue

Radiology, lab, surgery, diabetic education… if a service is provided it’s considered an ancillary, or revenue generating department. Pharmacy and materials management (supply) aren’t usually considered in the same way because most of what each of these departments do is send items to other departments, who are supposed to capture the revenue when they provide services… if it’s proper to do so. For instance, over the counter drugs aren’t billable so even if pharmacy sends these to the emergency room area, they can only be used for immediate treatment but aren’t allowed to be billed to patients.

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2. Departments capture charges pre-coded and priced via a charge master

Almost all procedures, billable pharmaceuticals and billable supply charges are coded up front so that all ancillary departments have to do is select the services provided and enter them into the computer system. There’s a bit more information on all of this below.

a. Charge Masters are the data system for procedures, supplies & pharmaceuticals

This is more than just a listing of all charges. Overall, you’ll have:

charge description;
price;
procedure code;
revenue code;
modifiers

Some charge masters add a lot more information, but for billing purposes these categories are the most important. Depending on the size of a hospital there could be as few as 2,500 charges and as many as 75,000 or even more (gasp!). This is why it’s smart to have everything coded up front.

b. They also contain general ledger codes to track department revenue

This is a major determinant in evaluating how profitable different ancillary departments (sometimes referred to as cost centers) are… or aren’t. It’s an important way for health care entities to determine where changes in revenue are occurring, to see if something is wrong or what’s going right, and hopefully make the proper decisions to address issues that show up.

3. Charges are captured either by sheets or computer access

Physicians offices and clinics are very big on charge sheets because they’re often seeing a lot of patients and it’s the easiest way to capture charges, along with adding diagnosis codes and other quick notes as needed. Some hospital departments will also use charge sheets but some departments will allow the technician who’s doing the service to enter it directly into the computer without sheets… although they still have to document what they did in some kind of record.

4. Verified by medical records; charges must match up with diagnosis codes

You wouldn’t believe how often what was performed on a patient and what they were charged doesn’t match up. Medical records is the auditor of sorts who’s supposed to catch these anomalies and get them to the proper areas to be fixed. In some hospitals medical records never sees the charges, which is when errors can occur.

Unfortunately, unless these hospitals have what’s known as claim scrubbers that look for things like this that don’t match up properly, if everyone did what they were supposed to as far as processes go, even if they got something wrong, bills will go out and need to be fixed on the back end… sometimes weeks later.

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C. Billing/Patient Accounting/Business Office

1. Billing is kind of a misnomer; almost no billing takes place anymore

As mentioned above, very little billing takes place in the billing area anymore since the overwhelming majority of claims go out electronically, which is why they’re often referred to as patient accounting or patient representatives.

2. Basic job is following up on unpaid claims

Even the best run area will have errors, like mentioned above. If a hospital has at least a 96% success rate in getting claims paid the first time out then they’re probably doing pretty well. Still, large facilities with an error rate of 4% can amass a large number of claims that need to be worked for all types of errors that aren’t always necessarily internal (as in, it’s not always the medical providers fault).

3. Intermediary between all the other departments

Why is this job so hard to do? One reason is training; there’s a lot to learn. Another reason is because there are literally a few hundred reasons why claims might not get paid, and insurance companies don’t always give enough information to know what they’re trying to tell you.

It’s worse when dealing with one’s internal departments though… or trying to figure out if it’s an internal problem or not. Sometimes the demographic information is incorrect and someone has to contact the registration area. Sometimes charges aren’t captured properly; sometimes medical records hasn’t coded properly. Sometimes it’s a combination of two departments; it’s not pretty.

These are the folks that every medical organization in the world is most dependent upon because they’re bringing in the money. It’s the reason why I always say that the last group of people you want to downsize is the area that brings in the money. Deciding that you can get the same production as it concerns your money with fewer people is a desperate move that I’ve never seen a single hospital ever benefit from… never! Sometimes it’s overstaffed, but it takes a real good evaluation to make that determination, and I’ve rarely seen it dome properly; if you have questions about this one, go ahead and ask me why.

4. Deal with most customer calls/complaints

When patients have problems with their bills they’re going to call this department because their phone number is on the bill. Some facilities have certain people who take these calls, while others have the phones rotate so everyone gets a turn.

Not all calls are easy to answer without doing some research, thus the most important thing to teach is that if the person taking the call doesn’t know the answer with conviction, get as much information about the concern as possible and either take the time to research it or go to a supervisor or director for assistance. Customer service should always be a priority.

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D. Collections

1. Last line of revenue “defense”

The patient accounting area is the toughest because of processes. Collections is the toughest because at least half the people who call them, or who they have to call, aren’t going to be all that nice. That’s because these are folk who owe out of pocket money… and sometimes they don’t know it beforehand. If it’s taken a long time to get a final determination or payment from the insurance company, or the insurance company hasn’t send a statement of paid/denied benefits to the household… or even if they have, people are either going to be mad or upset.

2. Tries to get payments after the fact for remaining patient balances

Health care is the only business where you try to get money out of people after they’ve had services… and they often don’t know up front how much those services cost (though they should). This means it’s an adversarial relationship from the beginning. Luckily, sometimes it ends well.

3. Must follow federal regulations

It would be nice if all anyone had to do was send a bill to patients, and if it isn’t paid within a week to 10 days you sent it to a collection agency and got on with life. Because of Medicare, most medical providers are actually stuck with following their guideline of at least 90 to 120 days of trying “in good faith” to get payment from patients before sending outstanding claims to agencies. In some states like New York, if it turns out that patient had Medicaid, or if you thought up front that the patient had Medicaid but you didn’t verify the information while they were in your facility, you can’t charge them at all… and almost all of these patients know that rule.

4. Area that helps set up payment arrangements or Charity Care

Actually, if this can be done before patients have services provided everything works better, but most of the time neither registration or patients are paying attention to their own signs, which are supposed to be displayed in prominent places, talking about setting up payment arrangements or applying for charity care. This means the collections department has to walk a fine line in trying to negotiate monthly payment arrangements or bringing up the possibility of seeing whether patients quality for discounted services or Medicaid.

Even without talking to patients, this is the department that ends up making the final determination as to what gets written off to bad debt early or goes to a collection agency to determine, after even more time goes by, what should be considered as bad debt. For instance, hospitals might determine that it’s not in their best interest to send accounts under $25 to collection agencies, which aren’t going to give it their best effort (no matter what they say) because there’s too many small dollar claims to deal with. They might have one patient who owes hundreds of dollars because they never pay any of their deductibles or copays and thus will send those claims to an agency because the dollars have compiled into an account worth pursuing. In any case, it’s important to have a consistent written policy for dealing with things such as this so that decisions aren’t arbitrarily made and to keep everyone honest.

As high level as all of this was, it’s still a pretty long article to get through. Would you believe there’s still a lot more to cover, based on my original outline? We’ll get to it after a couple more weeks. Any questions or comments, please go ahead and ask. Just another reason why bringing a revenue cycle consultant in to help look at processes could be the best decision your facility makes.
 

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