From the Consultant’s Corner 8/17/11

Beyond A/R Days: An Integrated Approach To Revenue Cycle Performance Management

Many physician practices make the mistake of measuring revenue cycle performance with a single number: accounts receivable (A/R) days. While no one will argue that this is an important metric, it doesn’t tell the whole story.

For a realistic, meaningful understanding of financial performance, providers must examine multiple key performance indicators and appreciate the relationships among them. In fact, an isolated number can be worse than meaningless — it can be deceptive.

For example, A/R numbers on their own may look perfectly respectable, but if it takes three weeks to fix coding or charge entry errors so the A/R “clock” can start, your revenue cycle is really 21 days longer than your measurement shows. Similarly, a 10-day lag for a charge to make it into the system or a backlog of charges awaiting missing data also affect your overall revenue picture.

It takes an integrated approach to effectively manage and improve financial performance. Your billing report card should include a broad range of metrics and indicators, such as:

• the number of days it takes to get charges into the system;
• how long it takes to produce the claim form;
• how thorough you are at capturing charges for all services rendered.

Monitor charges on a monthly, year-to-date and annual basis and then make sure to compare them to previous years to track practice productivity. But don’t forget to consider whether charges have increased. For example, if payment is up 10% over the previous year but charges are up 50%, the picture isn’t so rosy.

Other significant numbers to track include:

• A/R days over 90 (at risk for denial based on timely filing limits).
• the number of days between the date of service and the date the charge is entered in the system (sometimes called a charge log).
• the dollar amount of charges sitting in claim edits because they’re missing data, the procedure code doesn’t match the diagnosis code, or other errors.
• claim rejection percentages.

Billing and revenue cycle directors and managers should follow these numbers daily, present them to C-level executives once a month, and be willing to educate the executive audience about their relevance and relationships.

It’s also a good idea to measure your benchmarks against those of your peers at least once or twice a year, or ideally, each quarter. Comparing your numbers relative to those of top performers will identify areas for improvement as well as deficits that warrant deeper review.

Effectiveness and efficiency both count

These measurements and analyses obviously take time, and in a busy practice it’s easy to postpone them. But just because you’re satisfied with your A/R days doesn’t mean your organization’s financial performance can’t improve.

Keep in mind that there are two distinct factors driving revenue cycle management: effectiveness and efficiency. Effectiveness is the amount of money a practice collects. Efficiency represents the cost of collecting it.

Even if you can’t move A/R days from 36 to 35, for instance, you may be able to make your revenue cycle more robust by shrinking the time to get a charge into the system, reducing claim rejections, or other cost-cutting measures.

Especially with recent government initiatives and incentives for electronic health record (EHR) adoption, regular monitoring of the revenue cycle is becoming easier and more imperative. More than ever, tracking and monitoring a robust suite of key metrics is essential to developing a realistic picture of financial performance.

Rob Culbert is founder and president of Culbert Healthcare Solutions, a professional services firm serving healthcare organizations in the areas of operations management, revenue cycle, clinical transformation and information technology.

News 8/16/11

Maine Medical Center PHO signs an agreement with athenahealth to offer athenaCollector and athenaClinicals to the PHO’s 1,000 member physicians.

Annual healthcare spending for patients served by community health centers is about 62% less than for patients served in traditional primary care settings. Some of the reason: more physicians are salaried in CHCs; federal price discounts are available to CHC patients; more comprehensive services are provided by the CHCs than by other types of care venues; and, the majority of CHC board members are health center users and thus have more accountability.

Maui Medical Center (HI) renews and extends its relationship with GroupOne Health Source to provide RCM services and eClinicalWorks EHR to its affiliated physicians.

Physician EHR adoption rates are creeping up, according to the organization hired by the ONC to measure EHR adoption and usage in medical offices. Overall adoption is up 2% since October to 40%. Practices that are owned by hospitals and health systems have the highest adoption levels (60%), which is a 6% increase since October.

Emdeon announces its support for the DEA’s quicker-to-market option for the e-prescribing of controlled substances. This option, which has been referred to in the industry as “Option 2,”  requires the transmission of a flag from the prescriber to the pharmacy indicating that a controlled substance prescription has ben sent using a two-factor authentication method.  “Option 1” requires more complex technology, would require more standards to be developed, and ultimately would take longer for pharmacies and providers to adopt.

Kyle Swarts joins Culbert Healthcare Solutions as a regional sales executive,  responsible for the business development of Culbert’s strategic planning, revenue cycle, and IT services. 

The GAO advises CMS to improve its physician quality reporting and to survey physicians on how to make its reports more  meaningful, actionable, and reliable. Among  the GAO’s recommendations: CMS should evaluate why so few physicians access their electronic feedback reports and should develop better methodology for distributing its reports.

Telehealth is gaining in popularity and acceptance, at least in Minnesota. A local paper reports that the number of practices statewide offering electronic visits has grown from 13% at the end of 2010 to about 25% today. Health insurers like UnitedHealth Group and Blue Cross, along with health systems, are driving the trend.

E-mail Inga.

Practice Wise 8/13/11

What’s In an Upgrade?

There is much excitement in the community. EHR software vendors are rolling out their long awaited Meaningful Use product upgrades. There has been so much anticipation for the new features and functionality, as well as standardization across platforms. 

It’s hard to imagine that this process could be painful. In your excitement, are you considering the scope of the upgrade and impact it will have on your practice?

In the ambulatory practice setting, these upgrades should be treated with the same respect and degree of planning as a new software implementation. The phenomenon I am seeing in the community we serve is that many practices are assuming that since they are already users of the software, they can get by the upgrade process with little extra effort.

A few recommendations from the trenches:

1. Recognize the scope of the upgrade and share this with everyone in the practice, providers and staff alike.
2. Set appropriate expectations for everyone.
3. Take full advantage of any and all upgrade training provided by your vendor. Reading a release notes document will not suffice.
4. Plan as if you were getting new software.  Assign an internal project manager or point person to coordinate upgrade expectations with your vendor’s project manager. Document your contingency plan, so when things don’t go according to plan, you are still able to see patients. Print schedules and progress notes for the day of and day after upgrade. Reduce your schedules for the day of/after upgrade. Plan to have vendor support on site for day of/after upgrade if possible, even if it costs you money. It’s more costly to try and figure it out on your own or on the phone with 1-800helpme support when things are going wrong.
5. Coordinate the upgrade with your IT team. If that is an external party who will not be performing the upgrade itself, they still need to be part of the process to ensure that your hardware and network are up to spec and be on hand or on call for any IT issues that arise out of the upgrade or that could prevent the upgrade from completing successfully.
6. Communicate with your patients. If they know that you are in the process of upgrading prior to or on arrival for their visit, they will be less intolerant when there are delays. Let them know that you have taken all the steps possible to anticipate their needs and make their visit as smooth as possible.
7. Breathe! Try to keep your sanity as you move through the changes of your software and adapt your processes. Just like with a new software implementation, it can be difficult to master the new functionality at first, but in time, you will gain proficiency and a sense of normalcy.

If you are fortunate enough to have purchased software from a vendor that continually develops their product, then upgrade planning and implementation will be an ongoing part of your business processes. Work with your vendor to develop an estimated frequency for upgrades and plan and budget for these events so that they are not dreaded disruptions, but rather the valued improvements they are intended to be.

Julie McGovern is CEO of Practice Wise, LLC.

Bowtie Confidential: ACOs –What We Know from the Demonstration Project 8/12/11

One of the few advantages of flying 200,000 miles a year (other than being able to win momentary gratitude from your teenagers when you give them a free ticket or an upgrade) is that you get to see a lot of different organizations. Therefore, you can more easily answer the oft-asked question, “Where have you seen this done before?”

The question that I am now most frequently asked relates to ACOs. The stream of questions usually follows this order:

• Is an ACO right for this organization?
• Where have you seen it work?
• How much will it cost?
• What will we have to do to make it work?

Stopping to take a breath, the inquisitor then continues, but with more specificity about the CMS ACO set of regulations. People are concerned. They feel that they have to make decisions on a new concept that has not been proven. And this is mostly true.

However, let’s talk about what we DO know about ACOs. In CMS’s five-year demonstration project (Physician Group Practice Project), which included 10 leading organizations ended a little more than a year ago, these results were reported: *

• The percentage of quality goals obtained were in the mid-90s.
• All 10 organizations were able to meet or exceed 29 of the 32 quality goals.
• Out of the 40 eligible shared-savings periods (four years), participants only received payments 15 times.

*Additional details can be found in the New England Journal of Medicine (December 22, 2010).

What does this show? To me, it demonstrates that organizations considered to be thought leaders with strong infrastructure STILL could not qualify for payments based on the formula utilized in the demonstration project.

It cautions me against moving too quickly into a CMS contract. It causes me to ask myself if I have the necessary pieces in place (IT systems, good relationship with all the participating providers, a large enough network, a process for case management, a qualified board, enough financial predictive modeling) to feel comfortable accepting risk at that level.

Unfortunately, most organizations will be forced to say no. I say “unfortunately” because I make my living as a consultant.

However, there is a light at the end of the tunnel for organizations considering ACOs: the commercial ACO, which offers many of the benefits of the CMS ACO, but with far fewer regulations, risk ,and other types of restrictions. I will discuss commercial ACOs next month.

Don Michaels, PhD is vice president, strategic and advisory services, for Hayes Management Consulting and teaches healthcare IT for the Harvard School of Public Health.

News 8/11/11

Two legislators introduce a bill that would allow physician assistants and nurse practitioners to qualify for Meaningful Use incentives. PAs and NPs could qualify for EHR incentive payments if Medicaid beneficiaries account for at least 30% of their patient load.

Aprima Medical Software acquires the Richardson, TX-based Health Care Strategies, an RCM provider and Aprima reseller.

CORHIO and the Colorado REC partners with BridgeFront to offer providers discounted pricing for its HIPAA education tools and online education.

eClinicalWorks client Primary Health Medical Group (ID) becomes the first practice in Idaho to attest and certify for Meaningful Use of its EHR.

The NYeC REC reports that it is nearing its capacity for helping primary care providers progress toward Meaningful Use, with 2,857 providers signed on. NYeC is offering its services for free through the end of August for providers already live on EHR and for $750 per provider for practices on paper records. Prices will increase to $4,000 -$5,750 as of September 1.

Epocrates releases its Q2 financials: net sales of $27.9 million, up 10% from 2010; net income of $3.4 million compared to last year’s $0.8 million.

The AMA and 81 other physician organizations request that CMS allow providers to review their data for accuracy before making it public and to standardize the process for developing the public reports and the type of information they will include.

Last month I mentioned a few highlights from AAFP’s 2011 EHR User Satisfaction survey. Surprisingly, AAFP has now made the report available without a subscription (hurry and take a peek just in case it is some sort of mistake!) In addition to providing ratings on 30 EHRs, AAFP offers some insight into physicians’ perceptions of EHRs. For example:

• Only 39% of respondents agreed that they would purchase their current system a second time.
• The lowest-ranking category was vendor support and training.
• Only 49% expressed overall satisfaction with their system.
• Respondents ranked the ability to customize their EHR system at the top of their satisfaction list; 78% said they were satisfied with this aspect of their system. The next highest priorities were electronic prescribing (70%) and electronic messaging  (69%).

I signed up for Google+ a few weeks ago, but  haven’t invested much time figuring out what it could offer me that I didn’t already have with Facebook, Twitter, LinkedIn, and other social networking sites. However, a couple of physicians offer good insight into why Google+ might be a great solution for doctors. Physicians who want an online social presence may find it difficult to  balance their personal and professional online identities. (I know a lot about managing multiple identities, but that is another story.) Google+ allows you to establish multiple circles of acquaintances, such as family, friends, colleagues, and patients. That means a physician could set up a single Google+ account and control the content viewed by his/her connection, based on the connection’s designated circle. It’s an alternative that certainly seems less time-consuming and easier to maintain that having multiple Facebook accounts to handle professional versus personal relationships.

E-mail Inga.