Healthcare Revenue Assurance… The Deming Way

Edwards Deming is widely acknowledged as the leading management thinker in the field of quality. He was a statistician and business consultant whose methods helped hasten Japan’s recovery after World War II and later he was instrumental in bringing total quality management to the U.S. auto industry. While Deming is most renowned for applying quality management to manufacturing, his approaches have since been applied across all industries and business functions including healthcare revenue cycle management.

The Healthcare Financial Management Association (HFMA) defines revenue cycle management as “all administrative and clinical functions that contribute to the capture, management, and collection of patient service revenue.”  In other words, RCM spans the entire life of a patient account from creation to payment. The objective of RCM is to streamline processes allowing charges to flow through to revenue with minimal friction.

Revenue Assurance is a Revenue Mid-Cycle charge capture function that identifies missed, misplaced or miscoded charges that have leaked out of the RCM work stream.  Revenue Assurance’s focus is to recognize how, when and where leakage occurs and return charges to the top of the RCM funnel. HFMA estimates that 3 – 5% of all patient charges are never posted which in manufacturing terms would be considered “waste”.  Applying Deming’s Total Quality Management approach to RCM, Revenue Management professionals own the responsibility for capturing all patient charges by minimizing the waste of missed, misplaced or miscoded charges.

The implied charter of any Revenue Cycle Management or Revenue Integrity team is to “optimize” the company’s revenues consistent with the patient care services that are delivered.  In other words, to get paid for all the patient care that has been delivered.  To only collect “some of the revenue” and disregard the “waste” of missed charges is a disservice to our caregivers and falls short of our fiduciary responsibilities to properly manage the company’s revenue stream.  RCM and RA are complementary and essential functions that must be architected into the Total Quality Management of revenue because Revenue Cycle Management without Revenue Assurance ≠ optimization.

Six Sigma

Deming’s Total Quality Management approach and statistical concepts later lead to Lean Management and Six Sigma quality management methodologies that are now common place across the healthcare industry. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects, driving toward six standard deviations of the mean at which an organization would be performing at 3.4 defects per million opportunities.  If HFMA’s estimated 3 – 5% of charges never posted rings true, we’re looking at a Revenue Management defect rate as much as 10,000 times greater than expected at a Six Sigma level!

On the path to Six Sigma performance levels, it is common practice for companies to set targets related to the achievement of a “sigma level” or a “10-fold improvement”.  Assuming HFMA’s high-end estimated 5% charge capture defect rate, a 10-fold improvement would yield a 99.5% charge capture accuracy target; a goal readily achievable via a Revenue Assurance Program.

The revenue recouped through Revenue Assurance goes directly to a company’s net income and has the potential to add percentage points to a provider organization’s profit margin since the expense of patient care has already hit your books.  More importantly, the ability to identify the who, what, where, when and why of revenue leakage allows you to patch holes in your charge capture processes and make permanent fixes that will pay long-term dividends.  Deming would remind us all that the ability to measure leakage is the critical initial step in being able to manage waste out of your system.

Mid Revenue Cycle Leakage… What You Don’t Measure, You Can’t Manage

Since the 2009 passage of the American Recovery and Reinvestment Act (ARRA) and the corresponding HITECH Act, the adoption of Enterprise Electronic Health Records (EHR) has become main stream among America’s leading health systems.  Government funding for EHR adoption touted the promise of better patient care coordination, disease management, reduced medical errors and increased productivity while also providing the technical underpinnings to support essential business processes such as Revenue Cycle Management (RCM) to unify all the administrative and clinical functions that contribute to the capture, management and collection of patient service revenue. As the documentation intermediary between the delivery of patient care and the resulting patient service revenue, EHRs are critical to managing the Mid Revenue Cycle (MRC) which is defined as the phase between patient access and the care provider’s business office where care delivery, clinical documentation, charge capture and coding occurs.

While RCM has historically focused on process inefficiencies to reduce the friction and expedite the flow of charges through the Revenue Cycle, EHR adoption has enabled an increased focus on charge capture and the data analytics that identify and avert revenue leakage enabling providers to turn waste into wealth.  In an industry that is renowned for being “data rich but information poor”, there is increasing evidence that shows we have a paucity of data AND information aimed at Mid-Revenue Cycle leakage that is not being addressed by your EHR.

To that point, PwC’s Health Industries Advisory Group recently presented best practice recommendations with a specific focus on Revenue Cycle Management challenges and financial implications of an Epic EMR conversion.  PwC LeakageTheir findings suggested that the sophistication and complexity of an EMR is fraught with opportunities for revenue leakage and EMR reporting capabilities are less than helpful in identifying, quantifying and resolving leakage.  The use of static reports is seldom “actionable” meaning that it is simply information for the sake of information with a wide chasm between the presentation of data and enacting process improvements. Specifically, ad hoc reports lack in their ability to trace the root causes for revenue leakage and the required actions needed to solve it.  PwC further remarked that the summarized reporting lacks the ability to drill down to detailed findings via the aggregated views which inhibits users’ ability to isolate leakage, compare leakage across locations, specialties, departments or physicians.  Simply put, EMRs are just too big and unwieldy to provide end-users or Revenue Cycle leaders the granular analytics needed to provide insights and take action.

The opportunity cost of not managing Mid Revenue Cycle leakage is highly significant.  PwC Leakage2While charge capture will always be vulnerable to human error, systemic leakage (i.e., process inadequacies that cause recurrent problems) and technology gaps are far more devastating.  Case-in-point, PwC highlights the experience of an 800-bed Academic Medical Center which, by their estimate, had leaked $66M in revenue in just the first 45 days post-go-live!  Similar phenomena occurs with every EHR upgrade as well as all the upgrades, patches, etc. that accompany the peripheral systems that are integrated or feed information back into the EHR.  This represents dozens of technology-related points of failure annually for a health system.

Peter Drucker’s adage “if you can’t measure it, you can’t improve it” has been morphed over the years into “you can’t manage what you don’t measure”.  In that regard, Mid Revenue Cycle leakage has been the forgotten soldier in the war on revenue.

Many healthcare organizations ASSUME that somewhere in their Accounts Receivable report packages they must be collecting revenue leakage performance metrics and therefore it’s just a matter of mining the data they’re currently collecting. Think you’re one of them?  Ask yourself these three questions that serve as a litmus test regarding your ability to measure and manage leakage…

  1. Do you believe your organization incurs leakage? If so…
  2. Can you accurately identify where the leakage occurs (i.e., by location, department, specialty area or practitioner) and quantify its financial impact?
  3. Do you have an accountability structure within your Revenue Integrity area that has a defined “owner” responsible for managing leakage and the resulting financial results and process improvements?

Honest answers to the above questions will tell you whether you have a problem worth solving, whether you have the means for measuring the problem, establishing goals and tracking performance, and whether you have an accountability culture specific to revenue leakage.

PwC Leakage 3

PwC highlighted three critical success factors for Revenue Cycle professionals to consider pre- and post-implementation of an Epic EMR – (1) understand the key differences and considerations around the migration from a legacy system to Epic’s EMR, (2) look for process improvement opportunities post-go-live, and (3) acknowledge the need for value-add next gen analytics to lend revenue integrity insights. Opportunities to specifically mitigate Mid Revenue Cycle leakage include…

  1. Work Queue Management – Epic Work Queues tend to fragment the RC workflow and disperse accounts into multiple silos that if unmanaged, eventually lead to revenue leakage due to Timely Filing limits.  Without a revenue assurance program that is constantly monitoring leakage, hospitals will incur leakage due to “misplaced” charges.
  2. Charge Volume Monitoring – Charge integrity is compromised in every EHR conversion and the ensuing charge leakage spikes from pre- to post-implementation.  This is the predictable surprise that coincides with every EHR conversion AND each and every EHR upgrade.  Pre/post volume alignment reviews are largely designed as a check and balance to detect technology gaps associated with the conversion but they don’t provide the specificity to identify the root causes of the systemic leakage, pin-point where the problems are occurring and make NO EFFORT to track and recoup the associated revenue.
  1. Business Intelligence – EHRs do not provide RCM-specific standard reports and custom EHR reporting is challenging as well as expensive. Third party RC Analytics from niche solution providers can add new, advanced insights that provide the depth and breadth of analytics that EHR reporting simply does not deliver.   PwC suggested that providers strongly consider bolt-on technologies that drive new business intelligence insights and data-driven problem solving.

RCM analytics is a relatively new Business Intelligence frontier and as a result, RCM data analytics are relatively low in adoption amongst healthcare providers.  A recent survey by Navicure noted that  55% of respondents did not have an RCM reporting solution yet 45% were actively looking for one.  Chief concerns amongst respondents in leveraging analytics showed that while resources availability was their top concern, 44% felt they lacked in benchmark information and actionable information that is readily usable.  In short, the results imply that customers want concise, actionable information with benchmarks for what good looks like without a lot of time, effort, or resources committed to data mining.

All indications point to the fact that EHR solutions do not provide the native reporting capabilities required to manage MRC effectively and each conversion/upgrade is a slippery technology slope prone to incurring significant revenue leakage.  Leading health systems have recently reported budgeting for 1-2% dip in annual revenue associated with their EMR conversions.   Niche solution providers such as AcuStream and its Revenue Assurance Program are rapidly gaining market acceptance as essential bolt-on technologies and services in the war on revenue leakage as complements to both EHR solutions and Revenue Cycle Management best practices process efficiencies providing health systems with the specific ability to measure, manage and recover revenue leakage.

About AcuStream

AcuStream is a Revenue Assurance specialty company dedicated to the healthcare industry. AcuStream provides automated charge capture auditing technology solutions, value-add professional coding expertise, and decision support tools to the country’s leading healthcare providers enabling our clients to find missed revenue around charges they didn’t know were missing. We are the only organization with proprietary algorithms and custom client specific rules, that can correlate both the hospital data and physician data. This in conjunction with our world class workflow, allows us to find and track missed, miscoded, and misplaced charges.

AcuStream identifies and quantifies missed reimbursable charges for both Physician Organizations and Health Systems. REVBUILDER™’s automated post-bill auditing solution identifies omitted charges while REVREVIEW™ auditors validate charges against your own EMR documentation and payer contracts to ensure you get paid for the services provided.

AcuStream has been privileged to work with one-third of the academic medical centers on the U.S. News and World Report “Honor Roll of Best Hospitals,” seven of the 50 largest integrated health systems, twenty percent of the 20 largest not-for-profit health systems, and 10 of the nation’s largest physician group practices providing immediate financial lift/profitability, management insights and process improvements surrounding Revenue Management.Acustream currently processes over 100,000 doctor’s data on a monthly basis, thanks to our client base of top hospitals and physician organizations in the US. The result of our solution is improved net profit, decreased revenue erosion, and a clear view into departmental efficiencies.

We help you identify the missing pieces to your revenue puzzle, BEFORE you even start to put the puzzle together.