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Revenue Cycle Management 101: Impact of ICD-10 Coding in Inpatient RCM

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Revenue Cycle Management 101: Impact of ICD-10 Coding in Inpatient RCM

 

Revenue Cycle Management is a method of tracking patient care episodes from registration to final payment.  Briefly, the cycle starts with admission, then care is provided, documentation and charging for services follows, then ICD-10 coding, later billing, and finally collection.

Revenue Cycle Management

We can’t delineate this process without considering Errors & Denials and Claim Follow-up. Much of the revenue is collected on the back-end, after discharge.  Until the patient bill is paid, vendors, staff, equipment, overhead, etc. are paid through loans or bonds.  Hence, there is an incentive to code and bill efficiently, to limit the interest paid.  Revenue can also be totally lost if contractual billing deadlines are not met, or if there are limited funds available and paid on first-come first-served basis.  Don’t be last in line.

When leadership makes decisions based on the assumption that ICD-10 coding impacts the revenue cycle process while only in the coding stages of the process, opportunities to decrease DNFB (discharged, not final billed) days are missed. As consultants, we see that accurately and timely coding is not always enough. Keeping the coding staff informed of the DNFB on a daily basis, has a tremendous impact on keeping the unbilled accounts within expected dollar figures. As coded encounters go through the coding and reviewing process, coding managers and staff must be understood as essential components in the RCM process. Here is a brief overview of how ICD-10 coding can impact in various stages within the RCM process. This overview provides a good start for decision makers to assess and identify key aspects in which ICD-10 coding can improve DNFB.

Revenue Cycle

  • Clean bills avoid delays with claim rejections. If everything is correct the first time, there is no need to reprocess and rebill the claim.  Many third-party payers use DRG (diagnostic related groups) to determine payment.  This system was developed to standardize payments to hospitals for similar admissions (Pneumonia, Appendectomy, Stroke, Hip Replacements, etc.).  Encoders are available to help find the appropriate diagnosis and procedure codes and select the DRG.  They also identify age/gender edits, inappropriate principal diagnoses, and assist with sequencing of diagnoses and procedures.
  • Scrubbers are billing programs that do a final check before releasing the bill. They can find medical necessity issues, and errors in abstracting (procedure date, surgeon, and disposition).  These errors will need to be returned to coding for correction.
  • Assistance from coding may also be needed in the appeals process of claims rejected by third-party payers. There is a tendency to let these claims sit and miss deadlines for appeal, even if the cause is due to a minor technicality that can be easily corrected.
  • Retrospective Audits can be another tool to assist the revenue cycle process. They provide expertise in identifying coding and sequencing errors that can result in over or under payment.  They can provide education to the coding team, keeping them current with quarterly and annual updates.  They can also provide reassurance against major coding issues that can result in negative third-party payer or regulatory agency actions (intensified review, fines, and/or penalties).

Pay close attention to what can impact ICD-10 coding efficiency as well. ICD-10 coding can be affected by resources downtime, staffing shortage, holds for missing documentation and quality review.  Investing in reliable equipment and redundancy will limit the first item.  Staffing shortage can be managed by overtime, contract coding, and/or hiring additional staff.  Productivity should also be monitored.  Timely resolution of Holds requires Identifying the correct party to resolve the hold, and making them responsible.

End-to-end patient experience becomes top priority in today’s evolving revenue cycle

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End-to-end patient experience becomes top priority in today’s evolving revenue cycle

 

Regardless of how good the average experience of a patient has been during their time at any given healthcare system, what often determines their general memories of their experience is the financial resolution that follows after. High costs and/or a difficult payment process can tarnish a patient’s perception and greatly affect their opinion on said healthcare system as a whole. One of our own team members experienced a similar situation in which she chose not to return to one of her specialist doctors because their outpatient coder mishandled her bill, resulting in her insurance not covering the charge and her bill sitting in revision. In today’s world, you can leave a review of your experience virtually anywhere where payment is exchanged. It is because of this that health systems need to prioritize reinforcing the structure of their back end and front end financial processes to make them look, feel, and behave more like online retail or personal banking environments.

Patient Experience

“Patient payment behavior is changing the revenue cycle. Rising insurance deductibles and higher out-of-pocket medical expenses mean up to 30% of a health system’s revenue is now derived from the patient-as-payer population” (Visitpay.com, 2019). The revenue cycle of today has drastically changed from that of the past few decades and is only continuing to evolve as technology continues to advance, enabling patients to have a greater role in the process. As with many processes in the healthcare industry, revenue cycle has turned into a hybrid of the old structures and guidelines and new methodology. The way in which patients pay their bills has continued to change as well. “Rising insurance deductibles and higher out-of-pocket medical expenses mean up to 30% of a health system’s revenue is now derived from the patient-as-payer population.” (Visitpay.com, 2019).

Segmentation

An answer and stand-out solution to the question of what can be done to bridge the gap between patient and provider, improving the end-to-end patient experience, is segmentation. Market segmentation in regard to the healthcare industry is a process by which medical services are designed and targeted to meet the specific needs of a particular group of customers. Utilizing this technique can help revenue cycle teams engage patients more meaningfully. It is obvious that the patient to provider ratio is staggered, meaning that you can’t engage with every patient as an individual. But in using market segmentations, health systems gain a way to address the needs of different groups of patients who exhibit similar characteristics.

Segmentation

The technique of segmenting, or breaking down a huge audience into smaller, more personalized groups is one that is used across all industries. Sales, hospitality, and retail along with numerous other “consumer-facing” industries make use of segmentation in order to personalize their approach and mold their information in a way that gives the consumer reassurance in feeling like their needs are being met, while not taking on the impossible task of reaching out to each one individually. Providing patient-tailored and consistent financial information throughout the care process is the answer to connecting with and meeting the patient’s needs and giving them peace of mind, while avoiding the confusion and stress that can result from the financial experience that follows.

Value-Based Care: Trends and Challenges in Revenue Cycle Management

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Value-Based Care: Trends and Challenges in Revenue Cycle Management

The effectiveness of value-based care models is measured based on how this type of reimbursement can improve the quality of a patient’s overall health. Reducing hospital readmissions and improvement in preventive care are good examples of critical factors to assess the effectiveness of these models. U.S. legislation is clearly moving towards the adoption of value-based care models; in 2015, the Medicare Access and CHIP Reauthorization Act (MACRA) put into place multiple quality programs under the new merit based incentive payments system (MIPS). The Health & Human Services Department (HHS) established the objective to convert 30% of Medicare charges into value-added payment models by the end of 2016. By 2018, the Agency’s objective was to make a transition to 50 percent of conventional payments.

Future Trends

Revenue Cycle Management (RCM) systems will eventually assist the industry in transitioning from fee-for-service to value-based reimbursement. The analytics of many of these RCM systems enable payers and providers to look at their patient population in more detail, such as the number of chronic disorders in their patients, allowing payors and providers to monitor claims data and identify potential abnormalities.

Revenue cycle managers are betting on data analytics to try to improve every phase in the revenue cycle process, in order to eventually obtain more cash flow from each phase. Information is being consolidated and evaluated to drive business process changes across the revenue cycle process, from scheduling appointments to claims denials. RCM systems will in due course, streamline routine processes such as claims processing and payer denials prevention.

Future Challenges

Challenge One: Lack of integration

Revenue cycle managers work with historical data from differing financial and clinical information systems. However, many hospitals and health systems have not been integrated to this level. The number of disparate information systems can continue to increase when hospitals merge and purchase physician practices and other healthcare entities. The incorporation of data from external sources can also contribute to the challenges of standardization. Large-scale analytics is still a considerable challenge, resulting in a lack of an all-inclusive view of a patient’s record.

Challenge two: Lack of preventive education

Many reimbursement problems arise from human errors, such as incorrect coding, missing items on a patient’s account, and problems with insurance eligibility. Health organizations that proactively promote appropriate coding techniques, comprehensive chart documentation, and financial policy reinforcement, have consistently reduced turnover and medical errors, which results in a reduced amount of denied claims.

Value Based Care

 

Challenge three: Lack of visibility and control on claim submission-denial process

Following up on a claim throughout its lifetime is another major challenge for healthcare revenue management. Healthcare professionals should closely monitor claims processes to identify errors. Revenue may be lost unless providers can identify where problems arise and quickly resolve mistakes. Providers can usually receive automated alerts or have a dedicated data analysis resource to produce custom and automated reporting, with the objective of identifying why payers deny claims for certain methods or codes routinely.

 

YES HIM Consulting, Inc. Largo, Fl.
Office: (727) 531-3839       Fax: (727) 240-4592