IDEAS & INSIGHTS

March 4, 2016

Tim Kirsch

Denied Claims, payment integrity audit, underpayment recovery

How Hospitals are Losing Millions$$$ from Underpaid Claims!

With all of the changes that are constantly taking place in healthcare it has always been difficult for administrators to keep up with the billing and collection of patient claims. Now with the transition to ICD-10 and the addition of thousands of codes and new regulations it has become even more arduous for hospitals to efficiently collect all the funds they are have so earned. Once claims have been submitted to their third party payers, this is where the losses start to pile up. hospital-money-loss

Denied claims will come back either fully or partially denied for a number of reasons such as those listed below.

Contractual misinterpretations & payments
Fee-schedule changes
Miscalculation/Errors in risk-payment reconciliations
Inappropriate denials or down-coding of claims,
Non-payments.

Even though most hospitals have a process in place to address Denied Claims there is still an Industry average of up to as much as 7% of all claims that have ended up as zero balance accounts that are actually left underpaid. That is a significant amount of revenue lost when 7 out of 100 claims submitted are left underpaid and in most cases a loss of Millions of Dollars to an average size hospital.

The reason for this is usually a staffing issue where not enough resources are available. Revenue Cycle departments have to analyze why a claim was denied, determine if you agree with the denial, research why you don’t agree, rebill those claims you found to be improperly underpaid or rejected and then follow-up and negotiate a settlement and then follow-up again to be sure the agreed to payment was made. Obviously this takes a lot of time and effort which in most cases hospitals address only the high dollar claims leaving the lower dollar claims to get to when they have more time or just zero balancing them out thus leaving revenue effectively earned as uncollected. There is also software available that does address many issues of denial claims but is not one hundred percent effective either and does of course have to be compatible with the providers billing software.
The answer to this for many hospitals is to outsource their denial claims management to a company that will work these claims to recover as much revenue as possible for a fee that is a percentage of the funds recovered. This is likely generating more revenue than committing hospital staff but the problem is the reasons for the denied claims continue on without any attention to correcting the issues that caused the underpayments.

One of the most effective programs many hospitals are now using to address the whole issue of underpaid claims is called an Underpayment Recovery Audit. There are only a few companies that have the resources and technologies available to deliver highly effective results. A thorough underpayment recovery audit will include a review of all zero balance accounts from the past 24 months. These would include all claims that have been set to a zero balance whether they were paid in full, paid partially or totally denied. The review of these claims should uncover about 6%-7% of a claims reviewed as being underpaid. Once identified as an underpaid claim, a rebilling of that claim would take place to recover those funds. The most effective companies are recovering up to 75% of the underpaid claims identified.

A big advantage moving forward is that during the audit review and collection process which could take up to two years, all current months zero balance data is also reviewed each month moving forward. Additionally the audit and review firm should be working with the hospital staff to try and correct many of the reasons for denial claims as the process is ongoing, thus reducing the amount of future denied claims. As an example of this success you might see a hospital with a Billion Dollars in annual revenue that goes through an Underpayment Recovery Audit and recovers as much as 15 Million Dollars. However not every company that claims they will provide this type of audit review is capable of providing that type of results. Oh and by the way this service should be done on consignment with no upfront fees. Payment of any fees should only come from funds recovered.

Receive a full written Presentation on the
TBS Underpayment Recovery Audit HERE!

Tags: Denied Claims, payment integrity audit, underpayment recovery

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February 19, 2016

James B. Couch, M.D., J.D., FACPE

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Physician Practice Pattern Change Management to Achieve the Overarching Goals for Patients through the NY DSRIP Program

1. The Fundamental Need for Physician Practice Pattern Modification in the Transition from Volume to Value Based Reimbursement in the NY DSRIP Program

One of the key goals of the NY Delivery System Reform Incentive Payment (DSRIP) program is to facilitate the transition to a healthcare financing system for the treatment of Medicaid patients in NY State that is at least 90% value-based by the year 2020. For this to occur, physicians (who still directly or indirectly control about 80% of healthcare expenditures) must fundamentally change their practice patterns which, for decades have stressed volume (and high expense) over demonstrable value. As critically important as these changes in physicians’ practice patterns are to the success of making this transition from volume to value based care, there are many challenges that need to be addressed and overcome. These are covered in detail in the section appearing immediately below.

2. Challenges to Address and Overcome in Changing Physician Practice Patterns to Facilitate the Transition from Volume to Value Based Reimbursement

a) Most of the Healthcare Financing System is Still Volume-Driven Fee for Service

The substantial majority of most physicians’ (and other providers’) compensation is still volume-driven based. The Physician Quality Reporting System (PQRS) and its Value Based Payment Modifier feature, the Meaningful Use of electronic health records incentives and penalties, and electronic prescribing programs, only impact most physicians’ compensation by a few percent. These efforts at value-based purchasing have not provided enough incentive to get most physicians to change their practice pattern behavior significantly for many reasons covered further below.

Over the next few years, as the PQRS and Meaningful Use are subsumed by the Merit-Based Incentive Payment System (or MIPS), this (in combination with all the other private and public sector value based purchasing initiatives) might begin to provide sufficient financial incentives for most physicians to change their practice patterns. But MIPS will not become a serious factor until 2019 and beyond. In the meantime, there need to be other substantial financial (as well as non-financial) incentive systems to motivate physicians(and other providers) towards value based care delivery.

Unique to the NY DSRIP program are substantial resources for PPSs to incent physicians’ and other providers’ transition from volume to value based care delivery. PPSs must provide sufficient financial and non-financial incentives to reward participating physicians and other providers based on their demonstrable ability to contribute measurably to each PPS’s meeting its project-based goals.

b) Physicians Have been Trained that “More Care is Better Care” & Medical Liability Implications

From their earliest days of medical school, most physicians learned that “more care is better care”. Much of that has to do with the environment in which the vast majority of physicians have been (and continue to be) taught, i.e. in academic medical centers (as opposed to community-based settings). The ready access to specialists, sub-specialists, and expensive technologies (which need to be utilized often to justify their cost) provides strong incentives to support the “more care is better care” ethos. In fact, to not utilize these readily accessible miracles of modern technology (and the specialists and sub-specialists who have trained for years and decades to use them) may label such physicians as “not team players”, or even as “intellectually lazy”. So even when there may be sufficient financial incentives for physicians and other providers to change from a volume to a value-based care delivery mindset, decades-long practice patterns, ingrained since their initial training, may prove very hard to break.

The specter of medical liability is also ever present to prod physicians (and other providers) to opt to do something (anything) even when the medical (and perhaps even financial) case for doing so is not compelling. It is still the strong perception of many physicians and other providers that doing more “to” patients (as opposed to “for” them) is the best way to protect against litigation. Part of the process of incenting physicians to change their “more care is better care” mindset must also provide credible assurances to them that they will not be risking greater medical liability exposure by changing.

c) Physicians and other Providers Don’t Have Sufficient & Readily Accessible Credible Resources to Guide Changes in their Practice Patterns to Facilitate Superior Value Care Delivery

For decades, there have been efforts by both public and private sector payers to standardize physician practice patterns to improve efficiency, cost effectiveness and predictability. Despite these efforts, there are still broad variations in physician practice patterns in the treatment of many, if not most, chronic medical conditions. Some of this resistance to change may be traced to the reasons provided in the two sections appearing immediately above. Even when physicians themselves create what are purported to be best evidence based practice guidelines, adherence to them is often less than optimal. This may be a result of insufficient financial and professional incentives to change, the fear of medical liability and/or deeply ingrained habits. It may also be due to the bias against taking a “cookie cutter” approach to medical care. Physicians claim (with good reason) that every patient is different based on his or her unique medical and social/behavioral histories, condition severities and personal preferences.

Physicians will not change their deeply ingrained practice patterns unless they are convinced of the unimpeachable credibility of the message and the messenger convincing them to do so. That is why most computerized physician order entry (CPOE) and clinical decision support systems have not enjoyed nearly the success their designers had envisioned. A lot of this has been the fault of these systems’ rather clunky and often cumbersome, error-prone designs. However, there often has not been sufficient education of physicians and other providers about much more sophisticated, cloud-based decision support systems. These are able to account for millions of unique patient condition data points in real time to facilitate best evidence based practices that are superior to what even the best physicians could identify in the absence of such technological assistance. Of course, any best evidence based decision support system must be populated with complete real time data about patients from providers, past and present, and overcome the other barriers to effective physician practice pattern modification referenced above.

Receive a full written presentation on the
TBS Practice Pattern Change Management Program HERE!
For Physician Practices, Physician Groups and ACO’s.

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November 24, 2014

Tim Kirsch

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Failing to Plan is Planning to Fail!

Of course you must have heard this expression many times before but none the less many organizations just don’t know how to plan. However planning improperly is not much better than no plan at all. Planning should actually take a scientific approach. Whether you are planning a new business or a new segment of a business, or re-engineering your existing business processes, planning needs to be strategic and measurable.

When an organization decides to reach outside their staffs abilities for help in the planning process, that might be the best strategic move they make. Most organizations usually do not have the expertise to properly evaluate what needs be done to plan for an expansion or re-engineering of their current business processes. Consultants are many times hired for the purpose of evaluating those needs and then scientifically determining the best approach to gain measurable results in route to the ultimate goals of the organization.

If you are not familiar with a scientific planning approach this will be a good information for you to research. One of the more popular planning methodologies used by business practitioners is that of the Strategy Map and Balanced Scorecard. These management approaches are well known and have been developed by Professor Robert Kaplan and Dr. David Norton beginning in the late 1980’s. Together they have published many books on the subject. There is an abundance of information available on the internet on this topic. Here is a brief overview of Strategy Based Planning.

The Balanced Scorecard Strategy Map is a powerful framework. At the highest conceptual level, it helps organizations translate strategy into a set of linked operational objectives that drive both behavior and performance. It articulates strategy on a single page across four balanced perspectives – financial, customer, internal processes, and people and technology – and validates whether those objectives tell a coherent story. The Strategy Map is the blueprint that guides users through the process of developing the right set of strategic initiatives, measures, and targets, and communicates the strategy simply and powerfully to your organization and to your stakeholders. In short, it is the single document around which your strategy management system will revolve. An effective strategy-focused organization cannot afford to be without one.

Any organization that gets involved with this type of strategic planning effort for the first time will view this as a real benefit and a great tool to continually move toward attaining the goals they have established for themselves. Without a scientific strategy with measurements in place, rarely will you see an organization succeed to the level of success that they are capable of.

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September 2, 2014

Tim Kirsch

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What Type of Consulting Firm Makes More Sense?

A subject-matter expert is a person who is an authority in a particular area or topic. In the consulting world there are firms that specialize in a particular industry or vertical as well as firms that consult in business practice on a broader basis. Those types of firms are also still capable of drilling down to the specific needs of an organization because of certain members on their team, or because organizations that they are aligned with, in which they outsource for specific subject matter expertise..

As an example there are consulting firms that deal specifically for instance in the healthcare space and that is all they do, which would lead you to believe that they would be the best subject matter experts in most areas of the healthcare space. In contrast a competing firm in the Healthcare space may also deal in multiple verticals such as Finance and Banking, Distribution, Transportation, Media, Education as well as Healthcare. A general consulting firm and that aligns themselves with experts that are more specific to the drilled down needs of a Healthcare organization may be better suited to provide solutions than the firm the specializes in just Healthcare. Additionally the firm that deals in multiple industries may be more well rounded from a business perspective and quite possibly could use knowledge gained from experiences in other verticals that would also be a best practice solution in the industry they are working in.

There really is no answer to this question as it depends on the issues facing an organization and their ability to determine which consulting firm best fits those needs. The reasoning behind raising this point is that there are subject matter experts that may be more qualified outside of a consulting firm to address certain needs that their staff is not a qualified to address. A good consulting firm will utilize these experts when the level of expertise is beyond their capabilities. Delivering the results needed to solve the issues facing the client is all that really matters in the end.