Optimizing Performance in the Mid-Cycle of the Revenue Cycle

July 9, 2018 | Article

By Rachel Pugliano

The revenue cycle is a complex system that involves multiple departments and personnel. Patient Access (front-end) processes and Denials Management (back-end) processes are important functions that make up the revenue cycle as a whole. We have historically given much attention to these areas while oftentimes leaving the middle functions of the cycle neglected.

Mid-cycle functions typically include the delivery of the clinical service, the documentation of that clinical encounter, charge capture, coding, billing and claims processing. Each of these functions look different and are uniquely designed for each organization.

Mid-Cycle Functions Explained
The clinical service may be delivered in an outpatient hospital setting that is either a scheduled visit, such as an outpatient surgery, or it can be unscheduled, such as those visits in the emergency department. Each setting can then dictate how the other pieces of the mid-cycle will function.

The clinical documentation that is required for the service may find its way into the medical record differently depending on the setting. In some instances, documentation will occur in real time, like when a lab test is resulted or a medication is documented in the Medication Administration Record (MAR). In other cases, the documentation will be captured throughout the patient’s visit and by a variety of providers such as in the emergency department and outpatient observation services. Retrospective documentation is still the norm in a setting such as ambulatory surgery (operative notes) and outpatient therapy services (PT/OT/Speech).

Charge capture is a function that can look very different from organization to organization and even from department to department within the same organization. We now have the capability to capture charges electronically within our electronic medical record systems. Other types of charges are still more accurately captured using a manual process, as the electronic systems are still being developed. For instance, a radiologic exam charge may be captured electronically upon completion of the exam but an infusion service may be captured via a manual method because some systems are not set up to capture these types of charges accurately. We may find that a combination of an electronic method and a manual method are utilized. An example may be in the emergency department where the facility calculator tool in the EMR will charge for the ED facility fee but a coder in HIM will review the record to ensure the charge is correct.

Coding plays a critical role in the mid-cycle. Coders are the experts in documentation review, code assignment and appropriate code description interpretation. Coders are trained to take the medical record documentation and determine which code describes the services performed accurately. Coders will typically assign the procedure codes for surgical procedures and all diagnosis codes. Many codes are hard-coded in the charge description master and are assigned to the claim based on the charge code that is selected at the departmental level. Even though these charges and codes are not reviewed by coding, it is essential that a coder’s expertise is consulted when setting up the Charge Description Master (CDM) to ensure the accuracy and appropriateness of the codes.

Once the coding is complete, the business office will begin the processing of the claims. Edits are set up internally for the organization and externally by the clearinghouse. It’s important to know the history behind the setup of internal edits to ensure they are still valid and useful to the organization. Those who work the claim edits should be well trained in how to properly address both internal and external edits so that claims are processed accurately.

Other considerations within the mid-cycle will include modifier assignment. The organization should have a policy in place that outlines who is responsible for modifier assignment and who has this capability. EMR and system interfaces should also be understood and reviewed on a regular basis. Don’t assume that interfaces are working properly—test them to ensure charges are passing through accordingly.

Set for Success
The organization’s leadership is responsible for setting the expectation around these revenue cycle functions. The clinical departments, coding areas and billing functions all have different and defined roles. Clear communication will result in better understanding of these roles.

A driver of financial success is a high functioning revenue cycle. To reach this level of success, all involved in the process need to be equipped with the proper tools/reports/dashboards to maintain checks and balances. Assess the reporting functions within your current systems. Provide data which is simple yet useful to the departments. A simple revenue and usage report can be very helpful paired with an expectation of how to utilize this report. Identifying common goals among clinicians, coders, billers and finance professionals may at times pose challenges. However, all involved want their organization to be successful both financially and clinically with the ultimate goal of ensuring quality care was provided to their patients.

Another great resource is a chargemaster coordinator or analyst. This individual collaborating with outpatient coders, with their expertise around code usage and descriptions, can go a long way, especially when the annual CPT code updates are issued.  Another resource some organizations have is a nurse audit function. This individual(s) may be embedded within the departments or within the compliance department.

For the charges to continually be accurate, an update of the chargemaster must be conducted annually for the new CPT codes. In addition, an overall CDM review should be conducted every three years to ensure all charges in the CDM are appropriate, included in the correct department, have the correct revenue code mapped to them, accurate descriptions and pricing is set up per the organization’s policy. Not only does the CDM need to be reviewed but a review of the charge capture processes for each department should be conducted. The chargemaster may be set up perfectly, but if the charge capture process is broken or there are misunderstandings on how to utilize the charges, the potential exists for missed charges and charge inaccuracies. Be sure to also update paper and electronic charge tickets as changes to the CDM are made.

We want to be clear that clinicians are not expected to be coders or finance experts. But understanding how the clinical pieces impact the organization’s bottom line is key in relating the clinical with the financial. Many departments genuinely want to know how the pricing for their area is determined. In addition, it’s helpful to hear the clinical perspective when setting a price to gain an understanding of the work and resources required to perform that service.

When codes are changed or services are bundled, the number of charges for a particular service may be decreased. It’s important to explain this change to the clinicians and also adjust the pricing so the change is budget-neutral. Sometimes the CDM charge codes are used for department budgeting and staffing for the upcoming year. Taking these sorts of CPT/charge changes into account will assist with this process.

We don’t want to forget about compliance when evaluating and assessing revenue cycle functions. Compliance is operating in the background during all of these areas of the cycle. We automatically think of compliance when we think of code assignment. But compliance plays a role in documentation, chargemaster set-up, proper charge capture and claims processing as well.

Ensure the organization has policies and procedures that outline the organization’s commitment to compliance, as well as policies describing revenue cycle functions. Identify a compliance officer for the organization. For smaller entities, this person may also perform other roles but the organization should make it known that this role exists and is available to support the departments.

Annual assessments in the form of internal or external audits should be incorporated in the audit plan. When issues are identified, education should follow with ongoing monitoring. The OIG work plan is a good source for identifying areas to audit within the organization.

Typical areas to focus on for compliance will be the assessment of the outpatient Clinical Documentation Improvement (CDI) program which will identify areas of opportunity for the providers. Annual coding audits and charge capture audits will highlight areas where charges are either missed or assigned inaccurately. Denial reports will also point to areas where education and monitoring efforts should be focused.

The bottom line: We recommend a clear understanding of expectations and roles regarding these mid-cycle functions be outlined in writing and communicated to key individuals. Don’t assume that once a policy is written or a system is implemented, all is functioning accurately. Validate that these systems and processes are working as expected. Highlight that finance is a partner with the clinical areas in this endeavor to capture charges, be in compliance and ultimately, achieve success across the organization.

Questions? Please contact an Eide Bailly representative today—we can help you through this process!

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