section v revenue cycle – unc p&a

Section VRevenue Cycle – UNC P&A

• Summary of Recommendations• Revenue Cycle Project Approach and Methodology• Summary of Financial Opportunities [Confidential]• Revenue Cycle Overview • Revenue Cycle Organizational Structure• Pre-Arrival Services• Registration and Patient Access• Denials, Adjustments, and Write-Offs• Total Uncollectibles• Payment Variance• Cost to Collect• Charge Lag / Cycle Time• Suspended Charges / Unbilled• Aged AR• IT Systems and Functionality

Summary of Recommendations

University of North Carolina Health Care SystemSection V –

Organizational Structure• Consolidate leadership of the entire revenue cycle for physician practices to one executive. • Develop a revenue cycle training overview for clinical department administrators and managers.• Implement a comprehensive centralized Patient Access model.• Further evaluate billing and collection pilots. • Establish system-wide Patient Access Council (PAC) with representation from UNC P&A and

UNC Hospitals. Pre-Arrival Services• Standardize data elements collected during scheduling process.• Develop a centralized Pre-Arrival Unit.• Require real-time electronic insurance verification for unscheduled patients.• Verify insurance prior to time-of-service for all patient services.• Create a “no authorization, no service” policy for elective patients.• Create necessary job tools for the pre-arrival process.• Identify and track key performance metrics, expectations and targets for pre-arrival services.• Evaluate Medical Necessity/ABN software deployment to UNC P&A.



Registration and Patient Access• Scan patient identification and insurance cards at time-of-service.• For elective patients, complete MSP questionnaire during pre-arrival process.• Evaluate and implement O/P Medical Necessity software prior to or at time of registration.• Enhance efforts to collect time-of-service payments. • Review options to ensure patient interview privacy at time-of-service. • Determine if a physician order is required when changing patient status.• Continue to promote time-of-service payments and coordinate with UNCH.Registration Data Quality• Establish accountability for registration data quality.• Develop an extensive Patient Access Data Quality Improvement (DQI) initiative.• Dedicate one Trainer exclusively to Patient Access.• Create Patient Access DQI database to support the DQI program.• Continue to develop third-party payer educational opportunities in conjunction with UNCH.



Financial Counseling• Coordinate the denial and appeals process with UNC Hospitals, where appropriate.• Encourage UNC P&A and UNCH meetings with targeted third-parties for contract compliance.• Evaluate charity policy in coordination with UNCH. • Create standardized procedures to support broader access model.• Move pre-cert related responsibilities from financial counseling to the managed care specialists.• Expand current denial management approach.• Implement improved policies and processes that focus on proactively preventing denials related to

financial clearance, medical necessity, authorization for service and timely filing.• Trend denials and rejections over time by reason code and department to monitor decrease as

issues are resolved and quantify improvement.Total Uncollectibles• Reduce total uncollectibles.• Continue to enhance up-front collections process. • Continue to maximize application processes for Medicaid and other coverage alternatives. Payment Variance• Enhance internal payment variance follow-up program.



Cost to Collect • Design and implement a productivity management system within the UNC P&A revenue cycle with

particular focus on Patient Access and the business office.• Evaluate current vendor contracts, performance, cost and return. Determine if RFPs should be

submitted for competitive pricing and contract negotiations.Charge Lag / Cycle Time• Reduce average cycle time from DOS to bill date. • Evaluate handheld technology solutions that can facilitate improvement in charge processing. Suspended Charges / Unbilled• Standardize charge entry process and implement 24-hour charge capture policy.• Adopt a 48-hour policy for completing billing process once charges/encounters are completed at

point-of-service.• Continue aggressive monitoring suspended charges report; develop specific action plans to attack

identified top five reasons for suspended activity. • Work aggressively with physicians, practice managers, front-end and back-end staff to reduce

turnaround time for coding and billing.



Aged AR• Prioritize workflow activities in the business office to address high-dollar aged accounts more

aggressively. • Focus business office workflows based off no response and denial-related follow-up activities. • Reevaluate business office workflows and business rules to ensure optimal follow-up technique

and aged accounts are aggressively pursued. • Focus on cash acceleration to reduce aged invoices receivable greater than 90 days old.• Improve self-pay collections by targeting new access and financial counseling procedures.IT Systems and Functionality• Evaluate and confirm need for bi-directional query access to coding applications between UNC

Hospitals and UNC P&A. • Implement protocols for capturing and addressing revenue cycle issues.• Evaluate and implement Medical Necessity software in conjunction with UNCH.• Optimize resource scheduling tool. Evaluate enterprise-wide scheduling to be used for both UNC

P&A and UNC Hospitals for potential purchase ASAP (2005-2006). • Evaluate use of CT Vision for increased functionality.• Expand and implement Sovera aggressively across UNC P&A.• Evaluate current INVISION system purging criteria with UNC Hospitals.• Evaluate and confirm need for bi-directional query access to coding applications.


Project Approach and MethodologyAreas of Review / Focus

Our approach to revenue management improvement is focused on specific areas across the cycle. Key activities are as follows:Our approach to revenue management improvement is focused on speOur approach to revenue management improvement is focused on specific areas cific areas across the cycle. Key activities are as follows:across the cycle. Key activities are as follows:

Transaction Posting

Contract Management

Third-Party Follow-up

Rejection Avoidance

AppealsPatient Access Scheduling

& Pre-Arrival

Financial Counseling

Charge Capture

& Coding

Utilization Management

HIM

Claim Submission

NCI’s RPM®

Key Activities(1) Identify areas of net income

(revenue and expense) and balance sheet opportunity

(2) Identify recommendations, define the overall strategy and prioritize areas for improvement

(3) Set targets and assist management with execution and achievement of goals

Key Activities(1) Identify areas of net income

(revenue and expense) and balance sheet opportunity

(2) Identify recommendations, define the overall strategy and prioritize areas for improvement

(3) Set targets and assist management with execution and achievement of goals



We have evaluated the following areas during our revenue management review:We have evaluated the following areas during our revenue managemWe have evaluated the following areas during our revenue management review:ent review:

Front-EndSchedulingDemographicsInsurance VerificationEligibility CheckingFinancial Counseling

Front-EndSchedulingDemographicsInsurance VerificationEligibility CheckingFinancial Counseling

Encounter ManagementDocumentationCharge CaptureCharge Entry

Encounter ManagementDocumentationCharge CaptureCharge Entry

Back-EndEditingClaim SubmissionAccount Follow-upCustomer ServiceCash PostingContractual PostingDenials ManagementPayment Variance

Back-EndEditingClaim SubmissionAccount Follow-upCustomer ServiceCash PostingContractual PostingDenials ManagementPayment Variance

Third-Party Follow-up

Rejection Avoidance

Transaction Posting

Appeals

Contract Management

Patient Access Scheduling &

Pre-Arrival

Financial Counseling

Charge Capture

& Coding

Utilization Management

HIM

Claim Submission

NCI’s RPM®



Our assessment consisted of both qualitative and quantitative activities:Our assessment consisted of both qualitative and quantitative acOur assessment consisted of both qualitative and quantitative activities:tivities:

Completed over 40 interviews with key management and staff personnelReviewed and analyzed greater than 200 accounts and registrationsCompleted numerous detailed analyses focused on net revenue / cash opportunityEvaluated system functionality, conversion issues and process barriersAssessed productivity and resource capabilities

Primary Project Work Tasks

Patient registration, data quality and point-of-service cash collectionsBad debt / charity controls Charge capture Denials managementBusiness office process flow, performance and billing delays

Key Areas of Review / Analysis


Project Approach and MethodologyProject Objectives

Utilize NCI to assess the overall revenue cycle (front-end, encounter management and back-end) to identify opportunities for net income and balance sheet improvement.

Evaluate current revenue cycle performance, flow of key processes and information, results tracking and initiative planning.

Develop recommendations to improve the organization’s financial position by enhancing revenue cycle performance and enabling ongoing stability through process and technological improvement.

Ensure UNC P&A is positioned to implement the identified and prioritized initiatives and realize the associated net revenue and cash flow benefits.

Our understanding of your objectives for the assessment were as follows:Our understanding of your objectives for the assessment were as Our understanding of your objectives for the assessment were as follows:follows:

UNC Physicians & Associates Summary of Financial Opportunities


The following pages are confidential and have been redacted:• UNC P&A Summary of Financial Opportunities -- Net Income Impact• UNC P&A Summary of Financial Opportunities – Balance Sheet Impact


UNC P&A Key Findings & Analysis ResultsOverview – Registration & Encounter Management

Best Practice UNC Key FindingDoesn’t Meet Meets Exceeds

Insurance verification is performed electronically. Automated verification tools are utilized inconsistently and often after time-of-service.

Cash is consistently collected at or before time-of-service (co-payments).

Patient payments are made at time-of-service. Opportunity exists for improvement.

Procedures are in place to complete any missing patient information (before claim submitted).

Missing information is updated at time of patient arrival.

Charges are posted to the invoice level account within 2-5 days of DOS.

< 2 days for Outpatient, however IP (18 days) and OR/Special Procedures (11 days) needs improvement.

Charges are reconciled consistently, and late charges tracked and reported.

Basic charge reconciliation not consistently done in clinics. Charge lag is tracked and monitored.

[Portions of this Overview are confidential and have been redacted.]


UNC P&A Key Findings & Analysis ResultsOverview – Business Office


Feedback loops in place for clinics and other upstream functions. PA tracks some key data, but needs to be expanded and reporting/accountability needs to be improved.

PA system auto matches charges to minimize holds, generates control reports for mismatches, and kicks out Claims Manager andbilling rejects.

Claims cycle minimizes built-in holds and queues.

Payers are billed electronically to the extent possible. Billing and Collections submits electronic claims for approximately 88% of all claims; secondary billing is automated.

Bill edit capabilities are current and utilized to enhance claimsubmission.

Claims Manager is used for technical edits and PA programmed edits to enhance billing flows.

Claims returned from the editor/payer with errors are worked within 48 hours.

Standard is for claim representatives to resolve all edit queueswithin 24 hours (CM edits, unmatched charges, etc).

Denial reasons are standardized for all payers and posted to patient account upon receipt.

Claim denials are posted and tracked at transaction level, but not worked consistently upstream based on information fed back to departments.

Acct. follow-up conducted using payer-based and/or specialty based teams.

Teams are a mix of department (pilots) and payer/workflow. No standardized model exists.


UNC P&A Key Findings & Analysis ResultsOverview – Business Office


Follow-up is performed timely and consistent to standards w/ system notes.

Little follow-up occurring on accounts sampled outside of no response commercial. Minimal notes in system.

Follow-up accounts prioritized by automated work lists by age and high dollar accounts.

No-response workflow different from denial workflow, both can be improved.

Standardized method for performing account follow-up reviews and Q/A.

No apparent follow-up QA process in place exercised by supervisors/managers.

Accounts are transferred to a collection agency no later than 120 days from Pt Responsibility flip.

Three dunning letters are sent to patients and then transferred in parallel with collection notification.

Small balances are automatically written-off in accordance with criteria.

System automatically corrects minimum balances weekly on Wednesday nights. Current minimum threshold is $3.00.

Centralized customer service unit provides a one-stop option for inquiries.

All patient responsibility requirements are summarized on the patient statement.

Contract payment variances are tracked real-time and re-filed with appropriate payer.

Payment variance reports are run and printed to web, but are notactively worked by claim reps. Managed Care responsibility.


UNC P&A Key Findings & Analysis ResultsOrganizational Structure

Assessment• Several key revenue cycle functions currently report to the COO (refer to organizational structure

page 18).– Ambulatory Care Support provides select Patient Access services, which include:

• Financial Counselors – In clinics, make financial arrangements with patients.• Managed Care Specialists – Located centrally, obtain authorizations.• Billing and Collections.• Professional Charges and Medical Record Coding Supervision.

• On May 11, 2004, the UNCH Operations Council endorsed a proposal to create a hub-based registration process whereby all hospital-based Patient Access functions would report centrally to the CFO (implementation target date for the model: October 4, 2004).

– Concern has been expressed by a number of UNC P&A staff regarding a general lack of buy-in for the hub concept, primarily due to degree of input sought and participation from key stakeholders during the design phase. Implementation without adequate commitment will result in suboptimal revenue cycle performance.

– Currently, hospital-based clinic staff members perform support functions for both UNC Hospitals and UNC P&A. Concern has been expressed that the impact to current operations going to the hub-based model has yet to be determined.

– As part of the hub-based registration implementation, UNC P&A representatives will have to collect time-of-service payments for both UNCH and UNC P&A. UNC P&A managers have expressed concern regarding the process for collecting for both entities. Without appropriate resolution, this will adversely impact level of UNC P&A time-of-service collections.



Assessment• Member of UNC P&A management indicated that a hub-based model was needed for physician-

based programs, thereby consolidating the number of Patient Access points to increase controls. • Scheduling, pre-registration, insurance verification and registration are decentralized and report to

the respective Department/Division Chair, not to UNC P&A, which results in inconsistent commitment to and performance of essential Patient Access functions.

• There are approximately 153 UNC P&A FTEs specifically supporting Patient Access activities as of October 27, 2004. This includes scheduling, pre-registration, registration, insurance verification, authorization and financial counseling.

• Clinical Business Associates (CBA) are hired and supervised by each clinical department. The CBAs primary responsibilities are for the front desk operations in UNC P&A clinics (check-in, registration, check-out, charge entry).

• There is a current decentralization project in surgery and neurology with coders, financial counselors and claims representatives reporting to the respective department.

– The primary goal of the pilot is to improve revenue, increase communication, interaction and collaboration with physicians, clinical department administration and key functional resources, including coder, financial counselor, claims representative and reimbursement analyst.

– UNC P&A will assess the financial and operational performance of these two decentralized billing and collections pilots in first quarter FY05. No formal targets were identified for the pilots, however, management stated that both quantitative (accuracy, denials, costs) and qualitative measures (customer service, communication) will be used to evaluate the effectiveness of the pilots.



Management Systems, Controls

Management Infrastructure, Feedback LoopsSc

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Charge Acceptance &

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Reimbursement Analyst Support

Business Operations

Ambulatory Care Support

Scheduling/Referrals

Intake, Registration

Charge Capture/

Encountering

Coding (3 Departments)

ChairsNumerous

Clinical Departments

Third Party MSO

• 33 Access Site Locations• 243 Non-Hospital Based Clinics



Recommendation• Consolidate leadership of the entire revenue cycle for physician practices to one executive (refer

to organizational structure on page 20). – Align Scheduling Data Collection – Align Insurance Verification/Authorization – Align Registration/Admissions– Align Charge Capture Oversight

• Develop a revenue cycle training overview for clinical department administrators and managers to clearly define concepts, expectations, tools and supports required for patient account activities to be performed at point-of-service inclusive of:

– Scheduling and Referrals– Intake, Registration and Time-of-Service Payments– Charge Capture and Encounter Management

• Implement a comprehensive centralized Patient Access model.– Consolidate and reduce number of registration access points where possible to parallel the

hospital hub registration model. – Create a centralized Pre-Arrival unit that includes pre-registration, insurance verification,

referral/pre-certification/authorization and time-of-service guidelines. – Create an accountability, training and monitoring process ensuring standards are applied and

enforced throughout the Patient Access functions for centralized and decentralized areas.



Management Systems, Controls

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Customer Service

Billing & Collections

Payment Posting

Scheduling/Referrals

Intake, Registration

Charge Capture/

Encountering

ChairsNumerous

Clinical Departments

Changes in Alignment:Align Patient Access functions under UNC P&AAlign POS Charge Capture, Encounter Management, Coding QA & Audit functions under UNC P&AMaintain decentralized deployment of these functions in departmentsAlign all Billing & Collections to UNC P&AProvide other support services to Practices via UNC P&A where appropriate

Third Party MSO



Recommendation• The direction of the pilots does not align with Navigant’s recommended centralized front-end for

the UNC P&A. At minimum, further consideration/evaluation of departmental pilots must include:– Centralization of revenue cycle functional management within the UNC P&A.– Integration with a centralized Pre-Arrival function for UNC P&A.– Application of clearly defined scheduling standards for all departments.– Inclusion of Registration Data Quality standards routinely monitored for compliance.– Formalized ongoing training for all Patient Access personnel, inclusive of financial counselors

and managed care associates.• At minimum, evaluate pilots on the basis of comparative financial impact:

– Baseline versus pilot performance on:• Data Quality• Collections• Coding• Denials• Cost• Charge Lag

• Quantitative evaluation of pilots according to criteria above should be the determinant factors in deciding how to move forward from pilots.



Recommendation• Establish system-wide Patient Access Council (PAC) with representation from UNC P&A and

UNC Hospitals. • The primary purpose of the PAC is to:

– Discuss system policies and procedures related to Patient Access.– Create a coordinated staff and management training program.– Determine technology/ tools that could be utilized across the health system.– Evaluate long-term strategic plans for coordinated Patient Access functions.

Responsibility• UNC P&A LeadershipTimeframe• Second Quarter 2005 – Second Quarter 2006


UNC P&A Key Findings & Analysis ResultsPre-Arrival Services

Assessment• Pre-Arrival – Organization, Structure and Staffing

– Clinic and ancillary scheduling is decentralized.– A formal Pre-Arrival Unit, including verification, benefit validation, patient responsibility

notification, authorization/pre-certification and case management integration, is not in place. This negatively impacts time-of-service payments, data quality and denials.

• Pre-Arrival – Technology– Siemens Resources Scheduling is used for appointment scheduling. VIPER is being piloted

as a Windows-based tool to assist with the OR scheduling process.– Siemens INVISION/A2K is used for patient registration throughout UNC HCS.– TeleVox, an automatic patient appointment call reminder system, is being planned for

implementation.



Assessment• Pre-Arrival – Process

– Making systematic changes to scheduling templates is not centrally managed.– UNC P&A divisions have inconsistent scheduling/referral processes.– Many clinics require physician referral for appointments.– Referral process is highly manual, making management of this process difficult to control. – MedConnect is used to obtain and manage referrals.– Scheduled patients are not routinely called by Patient Access prior to date-of-service.– A formalized, written “no authorization, no service” policy does not exist. This issue is

currently handled on a case-by-case basis, driven primarily by the physician.– Medical necessity is not reviewed at time of scheduling for O/P Ancillaries. This increases

risk of denials due to lack of medical necessity.– Insurance is not consistently verified prior to time of visit, which significantly impacts eligibility

denials.



Recommendation• Standardize data elements collected during scheduling process.• Develop a centralized Pre-Arrival Unit with the following responsibilities:

– Contact defined non-emergent patient population.– Verify insurance eligibility and benefits.– Obtain all necessary authorizations.– Establish up-front time-of-service payment expectations with patient.

• Create a “no authorization, no service” policy for elective patients.• Identify and track key performance metrics, expectations and targets for pre-arrival services.• Evaluate Medical Necessity/ABN software deployment to UNC P&A.• Create necessary job tools for the pre-arrival process.• Require real-time electronic insurance verification for unscheduled patients and verify insurance

prior to the time-of-service for all patient services.Responsibility• UNC P&A Leadership: Standardize data, develop Pre-Arrival Unit, create policy for

elective patients, identify key performance metrics and evaluateMedical Necessity/ABN software

• CFO and/or Director of Billing: Create job tools and require real-time patient verificationTimeframe• Second Quarter 2005 – Second Quarter 2006


UNC P&A Key Findings & Analysis ResultsRegistration and Patient Access

Assessment• Registration – Organization, Structure and Staffing

– CBAs are responsible for check-in, time-of-service payments, check-out and charge entry in the UNC P&A clinics.

– Registration reports to each clinical department.– There are 33 UNC P&A registration locations supporting 243 UNC P&A non-hospital based

clinics.• Registration – Technology

– Medical Necessity software is not used during the registration process.• Registration – Process

– Forms of patient identification (i.e., drivers license, work identification, etc.) are not required at time of registration. Lack of identification standards adversely impacts data quality.

– Patient identification cards are rarely scanned into Sovera, the document imaging system, but plans exist for expansion.

– Advanced Beneficiary Notices (ABNs) are not obtained at time of registration. This increases denials due to medical necessity.

– Medicare Secondary Payer (MSP) forms are done at time of registration.



Assessment• Registration – Process

– Requests of patient payments for UNC P&A services are made at the time-of-service. When facility charges are incurred, payments are not requested for hospital charges.

– Patients are checked in using SMS and checked out using the UNC P&A system.– During interviews, it was reported that the UNC P&A insurance master file is in need of

frequent updates as a result of changes in SMS master files and at times are not in sync. – Patient privacy in several clinic registration areas appears to be compromised.– CBAs enter clinic charges and are held responsible for follow-up of encounters processed

without charges by the UNC P&A.– Hospital-based encounter forms are completed by clinic nurses. All other encounter forms

are completed by a physician.– Computer operators are registering Lab non-patient accounts.

[Portions of the Assessment are confidential and have been redacted.]



Recommendation• Scan patient identification and insurance cards at time-of-service.• For non-emergent patients, complete MSP questionnaire during pre-arrival process.• Evaluate and implement an O/P Medical Necessity software prior to or at time of registration.• Enhance efforts to collect time-of-service payments. • Review options to ensure patient interview privacy at time-of-service. • Determine if a physician order is required when changing patient status.• Continue to promote time-of-service payments. With the implementation of the hospital hubs,

time-of-service payments will need to be coordinated with UNCH.Responsibility• CFO and/or Director of Billing: Scan patient ID, complete questionnaire, evaluate Medical

Necessity software, enhance efforts to collect at time-of-service and review options to ensure interview privacy

• UNC P&A Leadership: Determine if physician order is required; continue to promote time-of-service payments

Timeframe• Second Quarter 2005 – Second Quarter 2006



Assessment• Registration Data Quality

– A total of 124 patient accounts were reviewed to assess registration data quality.• UNC P&A and UNC Hospitals use the same registration system.• Patients are frequently served by both UNC P&A and UNCH.• Data is used and often times updated by UNC P&A and UNCH.

– Accounts reviewed had dates of service or admission date of September 30, 2004 or October 4, 2004.

– The account sample chosen was representative of the visits by financial class for dates reviewed.

– Each account was reviewed for 26 essential data elements using information from Siemens INVISION.




Assessment• Registration Data Quality

– A formal training process for the financial counselors and managed care associates no longer exists. This promotes inconsistent front-line revenue cycle performance.

– Formal UNC P&A Patient Access training, StartRight, comprises approximately three to four weeks of formal instruction.

– CBAs are hired within each division and trained by UNC P&A through the StartRight program.

– Extensive written registration and appointment scheduling standards exist. It was reported that there is no monitoring, enforcement or accountability related to these standards.

– UNC P&A colleagues reported during interviews that there is inadequate amount of supervision of the staff entering data.

– Registration data quality audits are not routinely performed. This adversely effects data quality.

– Denial information is reported to the divisional managers for corrective follow-up action. Follow-up is typically performed by managed care specialists.

– Address verification technology is not employed on the front end.– Single account creation controls have recently been implemented limiting the number of

accounts that can be created on same date-of-service.– Another indicator of registration data quality is return mail. NCI obtained January through

August 2004 data from UNC P&A AIS, which receives a feed from Siemens, where 20% of accounts had bad addresses.



Recommendation• Establish accountability for registration data quality.• Develop an extensive Patient Access Data Quality Improvement initiative inclusive of:

– Identify departmental baseline performance.– Create comprehensive registration data quality training program.– Develop and define staff performance expectations.– Establish departmental data quality goals.– Routinely monitor and track staff data quality performance inclusive of feedback loops.– Hold Patient Access managers and registration staff accountable to ensure data quality

targets.– Include training for financial counselors and managed care associates.

• Dedicate one trainer exclusively to Patient Access.• Create Patient Access DQI database to support the DQI program.• Continue to develop third-party payer educational opportunities in conjunction with UNCH.Responsibility• UNC P&A LeadershipTimeframe• Second Quarter 2005 – Second Quarter 2006



Assessment• Financial Counseling – Organization, Staffing and Technology

– There are 21 financial counselors located in the clinics. Fourteen report to UNC P&A and seven report to departments. The financial counselors complete the following:

• Evaluate patients without insurance.• Review PIC list for bad addresses, delinquent accounts and more information needed.• Obtain pre-certification for surgical cases.

– There are ten managed care specialists located at University Square with primary responsibilities to obtain authorizations for patient visits. Two of the ten managed care specialists work denials.

– HDX and Blue-E are used as the primary electronic insurance verification tools.– The internet is used to access other commercial insurance web sites.



Assessment• Financial Counseling – Process

– Self-pay and uninsured patients are referred to financial counselors.– If criteria is met, clinic self-pay patients are referred to the hospital MACs for evaluation for

medical assistance.– Approximately one-third of annual denials are eligibility related.– The denial and appeal process is not fully coordinated with UNC Hospitals. This results in

duplication of effort and can impact ability to overturn denials timely. Further, lack of coordination results in inefficiency and reduces opportunity to improve cost to collect.

– When patients have delinquent accounts for both UNCH and/or the UNC P&A, financial counselors tend to resolve only the UNC P&A delinquent accounts. This inconsistent practice adversely impacts overall collections.

– Electronic patient receipts are issued.




Recommendation• Coordinate the denial and appeals process with UNC Hospitals, where appropriate.• Encourage UNC P&A and UNCH coordinated meetings with targeted third-parties for contract

compliance.• Evaluate charity policy in coordination with UNCH to promote health system efficiency and

continuity. Areas to evaluate should include:– Charity write-off authorization authority to specify amounts by level (manager, director, CFO

level).– Coverage period should be the same as the hospital.– Write-offs above an identified ceiling should be evaluated by appropriate level of

management.• Create standardized procedures to support broader access model:

– Pre-Certification– Benefits and Eligibility– Referrals and Approvals

• Move pre-cert related responsibilities from financial counseling to the managed care specialists.Responsibility• UNC P&A LeadershipTimeframe• Second Quarter 2005 – Second Quarter 2006


UNC P&A Key Findings & Analysis ResultsDenials, Adjustments, and Write-Offs

Assessment• NCI performed a detailed analysis of denials, adjustments and write-offs to determine net revenue

improvement opportunities.– A 12-month transaction-level file was obtained, analyzed and reviewed to identify an overall

transaction denial rate and areas of improvement.– Adjustments were analyzed and summarized by reason code.

• NCI also performed a detailed analysis of the primary claims denials by reason and primary sponsor for July through September 2004 maintained by billing and collections.

– Actual denial data was obtained, analyzed and reviewed to identify an overall transaction denial rate and areas of improvement.

• Based on the analysis, UNC P&A is experiencing an 18.5% transaction denial rate on all claims submitted (excluding duplicate denials).




Assessment• The primary denial reason is the carrier requesting additional information.

– UNC P&A have developed new status codes to improve faster resolution of these denials by identifying the specific carrier needs including modifiers, diagnosis, demographic patient information, etc.

• The second most common denial reason is due to invalid Insurance information on the patient’s account.

• The third highest denial reason is due to the failure of not obtaining the proper authorization prior to the procedure.

• The fourth most common denial reason is non-covered services that cannot be billed to the patient without a completed waiver or ABN on file.

• Front-end eligibility, authorization, and medical necessity issues accounted for 45% of the denials and 38% of the denial dollars from July to September 2004.




Recommendation• Expand the current denial management approach to include all components of a robust program:

– Enhance process for tracking, reporting and feedback of all UNC P&A denials for all reason codes.

– Establish and/or enhance accountability for denial performance at department/functional levels.

• Redesign workflows, procedures and/or implement solutions to prevent root causes.• Create training for stakeholders and train employees on new procedures.

– Establish a denial committee to manage and determine root cause denial issues across UNC P&A.

• Consider a Denial Management “coordinator” role whose sole focus is to monitor denials and assist with root-cause identification and prevention.

– Continue the current retrospective appeal process.



Recommendation• Implement improved policies and processes that focus on proactively preventing denials related to

financial clearance, medical necessity, authorization for service and timely filing.– Implement tools to communicate contract rules, and aid in the selection of correct insurance

plan code by payer by product line.– Evaluate Medical Necessity software for UNC P&A. – Establish “no authorization, no service” policy for elective patients.– Tools to avoid governmental denials and alerts that track receivables against payer defined

timely filing limits.• Trend denials and rejections over time by reason code and department to monitor decreases as

issues are resolved, and quantify improvement.Responsibility• Director, Billing and Collections, UNC P&A LeadershipTimeframe• Second Quarter 2005 – Second Quarter 2006


UNC P&A Key Findings & Analysis ResultsTotal Uncollectibles

Assessment[The Assessment is confidential and has been redacted.]

Recommendation• Reduce total uncollectibles by instituting improved data collections, insurance verification, financial

screening and co-pay/patient responsibility collections.– Conduct a comprehensive analysis of bad debt and determine the following:

• Determine the individual percentage of bad debt for each of the practices.• Identify the practices with the highest percentage of bad debt. • Conduct an internal benchmarking analysis to identify “better practicing” practices in

relation to bad debt percentages. – This comparison should also factor differences in payer mix between the practices.

• Set targets by practice based on payer mix and other constraints that may affect actual achievability.

• Prioritize financial counseling and front-end process controls based on practices experiencing highest percentage of bad debt.


UNC P&A Key Findings & Analysis ResultsTotal Uncollectibles

Recommendation• Continue with plans to enhance the up-front collections process. Establish goals for pre-service

collections, including emphasis on prior patient balances. Design field to capture copay/deductible amounts for improved collections reporting.

– Maximize self-pay payment option for patients, taking into consideration a patient’s financial position.

• Continue to maximize application processes for Medicaid and other coverage alternatives. – Explore additional coordination opportunities regarding Medicaid eligibility with UNC

Hospitals. Responsibility• Director, Billing and Collections, UNC P&A LeadershipTimeframe• Second Quarter 2005 – Second Quarter 2006


UNC P&A Key Findings & Analysis ResultsPayment Variance

Assessment• Current procedure is for cash posters to flag suspicious EOBs at the time of posting if they appear

to be underpayments for further investigation by claim reps.– Cash posters are to make a copy of the remittance and have capability to do online notes for

claim reps to follow-up.– No specific underpayment workflow has been created for claim reps to work these invoices

electronically. They rely on cash posters to manually draw attention to these accounts.• Monthly payment variance reports are run and made available to managed care and

reimbursement analysts for further follow-up and investigation.



UNC P&A Key Findings & Analysis ResultsPayment Variance

Recommendation• Enhance internal payment variance follow-up program.

– Review established dollar threshold for prioritizing and pursuing underpayments.– Review protocols for approaching specific payers on individual accounts and/or unfavorable

variance trends against contracted reimbursement rates.– Continue to develop communication channels to address payment variance issues/trends

with UNC P&A largest payers on an ongoing basis.• Coordinate payment variance issue resolution efforts with UNCH where

possible/practical.– Consolidate payment variance follow-up activities within billing and collection department.

• Automate payment variance worklists so claim reps do not have to rely on manual efforts from payment posters.

– Review policy and procedures for re-billing and/or batching variances below follow-up thresholds and submitting to appropriate payers.

Responsibility• Director, Billing and Collections, Director, Managed CareTimeframe• Second Quarter 2005 – Second Quarter 2006


UNC P&A Key Findings & Analysis ResultsCost to Collect

Assessment• UNC P&A billing and collections costs for labor and benefits were compared to YTD cash

collections to evaluate the overall cost-to-collect ratio. Through September 2004, UNC is performing slightly below the median and should work towards achieving the 25th percentile, according to an industry benchmark (MGMA) of $0.0232.

• Expenses exclude O/P Support, Account 314025, which encompasses financial counselors and managed care specialists. This department was recently moved from Ambulatory Care Administration (ACA) to billing and collections.

Actual 2004 YTD Expense (including only labor and benefit fees) $1,464,1802004 YTD Cash Collections - September 30, 2004 $36,637,364

Average Better PracticeCost to Collect: Benchmark 0.0300 0.0232Cost to Collect Ratio: UNC 0.0400 0.0400Variance 0.0100 0.0168Costs @ NCI Best Practice Benchmark 1,099,121 849,987Opportunity @ NCI Best Practice Benchmark 365,059 614,193

Cost Information (FYTD as of September 2004)


UNC P&A Key Findings & Analysis ResultsCost to Collect

Recommendation• Design and implement a productivity management system within the UNC P&A revenue cycle with

particular focus on Patient Access and the business office.– Define work team and individual standards for all applicable positions within the revenue

cycle:• Develop and set production standards per resource.• Develop and set overall production standards at the team level.

– Educate management and staff on appropriate deployment and use of productivity information.

– Train supervisors and managers on proper implementation and use of productivity information.

– Incorporate/enforce productivity information into periodic employee reviews and HR process.• Evaluate current vendor contracts, performance, cost and return. Determine if RFPs should be

submitted for competitive pricing and contract negotiations.Responsibility• Director, Billing and Collections, UNC P&A LeadershipTimeframe• Second Quarter 2005 – Second Quarter 2006


UNC P&A Key Findings & Analysis ResultsCharge Lag / Cycle Time

Assessment• NCI reviewed and analyzed the charge lag performance according to the Summary of Billing and

Collections Activities Report through September 2004. • The average I/P and O/P charge lags have both decreased compared to the same time last year. • Charge lag opportunity was determined by comparing current charge lag performance versus NCI

benchmarks.• Data source is I/P/O/P Charge Lag Report by Department/Division through September 30, 2004.

• O/P charge lag is close to standard at 2.0 days, minimal opportunity exists. • I/P charge lag at 18 days has significant opportunity.• OR Special Procedures charge lag is currently at 11.2 days per internal reports. The benchmark

should be at minimum five days and, at best, two days. Additional opportunity exists in this sub-set of accounts. Data limitations prohibited specific quantification.

• Based on our analysis, the overall charge lag opportunity identified is approximately $2.0M to $2.6M. This is likely a conservative number, given to the exclusion of procedure data in the analysis.

Charge Lag Statistics Opportunity Analysis

Outpatient Charge Lag 85,940 221,432 1.9 1.5 1.0 92,681 203,397

Total Charge Lag Performance 2,024,939 2,594,203

BenchmarkHigh Days Low Days

Inpatient Charge Lag 429,979 152,849 17.6 5.0 2.0 1,932,258 2,390,806

LowOpportunity

HighOpportunity

Total Aged Days

Average Daily Net Revenue

AverageAged Days



Assessment• A transaction level data extract of accounts that closed in the past 12 months was also analyzed

to determine current billing cycle time performance. • Based on this analysis, it appears that the charge entry and billing lag times have steadily

improved throughout the past twelve months.

Number Of Average Days Average DaysClaims To Entry To Bill

Inpatient 215,836 23.4 32Outpatient 447,960 13.6 19.8Totals: 663,796 16.8 23.8

Accounts with DOS from 7/1/03 to 12/31/03

Patient Type CategoryNumber Of Average Days Average DaysClaims To Entry To Bill

Inpatient 162,296 17.7 22.6Outpatient 371,157 10.1 12.5Totals: 533,453 12.4 15.6


Patient Type Category


Inpatient 1,146 8.4 8.9Outpatient 6,564 4.5 4.8Totals: 7,710 5.1 5.4

Accounts with DOS of 7/1/2004 to 7/31/04

Patient Type CategoryNumber Of Average Days Average DaysClaims To Entry To Bill

Inpatient 39,037 13.9 16Outpatient 100,051 8 8.8Totals: 139,088 9.6 10.8

Accounts with DOS of 5/1/2004 to 7/31/04



Inpatient 378,132 21 27.9Outpatient 819,117 12 16.5Totals: 1,197,249 14.8 20.1





Assessment• The Departments of Dermatology, Family

Medicine and Psychiatry represent the highest cycle time lags for closed I/P accounts with DOS between 7/1/03 and 7/31/04.

• Optical Shop, Emergency Department and Allied Health Services represent the highest cycle time lags for closed O/P accounts with DOS between 7/1/03 and 7/31/04.

Outpatient

ALLIED HEALTH SCIENCES 5,284 7.7 35.8ANESTHESIOLOGY 17,374 15.6 18.4CENTER - DEV & LEARNING 1,542 8.5 8.3DERMATOLOGY 21,174 8 10.8EMERGENCY MEDICINE 40,365 34.4 39.7FAMILY MEDICINE 44,159 6.8 10.8MEDICINE 158,375 9.1 13.8NEUROLOGY 22,848 6.6 10.8NURSE ANESTHETISTS 1,254 15.8 19.4OBSTETRICS-GYNECOLOGY 76,531 12.8 17.1OPHTHALMOLOGY 29,174 6.8 9.2OPTICAL SHOP 2,577 16.3 41.8ORTHOPAEDICS 23,757 6.9 11.4OTO - HEAD & NECK SURGERY 35,307 8 10.2PATHOLOGY 28,281 20.5 24.9PEDIATRICS 50,667 11 11PHARMACY BILLING 26,876 7.9 10.1PHYSICAL MEDICINE/REHAB 5,307 7 13.1PSYCHIATRY 20,890 11 22.1RADIATION ONCOLOGY 12,359 14.4 21.3RADIOLOGY 138,112 15.6 20.7RECOVERY OF ADMIN COSTS 421 2.8 4.5SURGERY 56,483 7.7 12.6OUTPATIENT TOTAL 819,117 12 16.5

Number Of Claims

Average Days to Entry

Average Days to

BillDepartment


ANESTHESIOLOGY 22,491 19 23.7DERMATOLOGY 490 61.8 66.3FAMILY MEDICINE 5,844 34.2 47.8MEDICINE 99,744 22.1 27.6NEUROLOGY 10,779 18.3 24.1NURSE ANESTHETISTS 1,192 16 20.7OBSTETRICS-GYNECOLOGY 10,675 14.7 20.3OPHTHALMOLOGY 992 18.5 25.4ORTHOPAEDICS 3,056 18.3 22.9OTO - HEAD & NECK SURGERY 2,698 25 29.2PATHOLOGY 13,695 14.8 21.4PEDIATRICS 47,191 14.5 21.5PHYSICAL MEDICINE/REHAB 7,017 14.2 23.3PSYCHIATRY 18,910 34.6 41.2RADIATION ONCOLOGY 1,318 21.3 32.1RADIOLOGY 98,012 19.3 28.6SURGERY 34,028 29.2 35.3INPATIENT TOTAL 378,132 21 27.9

Number Of Claims

Average Days to Entry

Average Days to

BillDepartment

Inpatient


UNC P&A Key Findings & Analysis Results Charge Lag / Cycle Time

Recommendation• Reduce average cycle time from DOS to bill date.

− Adopt a 24-hour charge capture policy for I/P and O/P services.− Establish a standard requiring all documentation be delivered to coding within 24 hours of

discharge.− Aggressively track and communicate charge lag by department based on new standards.− Work aggressively with departments to reduce turnaround time of dictated reports where

needed (set 24 hour turnaround time policy).− Aggressively track and communicate transcription turnaround times where appropriate.

• Evaluate handheld technology solutions that can facilitate improvement in charge processing. − Investigate and pilot potential hand-held solutions with select departments and/or physicians

to test effectiveness and adoptability of concept. Responsibility• Director, Billing and CollectionsTimeframe• Second Quarter 2005 – Second Quarter 2006


UNC P&A Key Findings & Analysis ResultsSuspended Charges / Unbilled

• Assessment• NCI performed an analysis of suspended charges/unbilled data comparing UNC P&A to industry

benchmarks to determine if backlogs existed in revenue cycle functions/departments and productive receivables were delayed in unproductive queues.

– Highest reason for suspended activity: Ancillary charges missing a diagnosis resulting in 35%.– I/P unbilled for $1.2M shows opportunity of 0.8 to 1.8 days with net financial opportunity of

$0.6M to $1.3M. – O/P unbilled for $1.8M shows opportunity of 1.32 to 2.32 days with net financial opportunity of

$481K to $845K.Suspended Charges/Unbilled Assessment – Low Opportunity

Industry Benchmark – High Opportunity


UNC P&A Key Findings & Analysis ResultsSuspended Charges / Unbilled

Recommendation• Standardize charge entry process and implement 24-hour charge capture policy to encourage

timely submission of charges into transaction system(s).• Adopt a 48-hour policy for completing the billing process once charges/encounters are completed

at the point-of-service.– Communication mechanisms (and response times) between the business office and the

practices should be expedited such that the inquiries relating to the billing process receive prompt response.

– Monitoring can occur through similar transaction level analyses to identify any problematic practices and/or payers for business office attention.

• Continue aggressive monitoring of suspended charges report and develop specific action plans to attack identified top five reasons for suspended activity.

• Work aggressively with physicians, practice managers, front-end and back-end staff to reduce turnaround time for coding and billing.

Responsibility• Director, Billing and CollectionsTimeframe• Second Quarter 2005 – Second Quarter 2006


UNC P&A Key Findings & Analysis ResultsAged AR

• Assessment• NCI reviewed a detailed transaction download of open accounts for July 31, 2004 and compared

the volume of aged accounts to industry and internal benchmarks. The analysis focused specifically on aged A/R from Charge Post Date >90 days, which represent the most “at-risk” age cohorts in converting receivables to cash.

• Current performance of 29.67% of A/R >90 days is 2.89% higher than the average benchmark (MGMA 50th Percentile) and 11.46% above the better practice benchmark (MGMA 25th Percentile). This represents a net cash opportunity ranging from $422K to $1.7M.

# $ # $ # $ # $ # $ # $ # $P&A 167,354 $35,964,800 34,564 $5,125,671 26,969 $4,191,787 33,423 $5,450,299 25,291 $4,770,592 15,757 $2,918,459 303,358 $58,421,607 Totals: 167,354 $35,964,800 34,564 $5,125,671 26,969 $4,191,787 33,423 $5,450,299 25,291 $4,770,592 15,757 $2,918,459 303,358 $58,421,607

0 - 60 61 - 90 91 - 120 121 - 180 181 - 360 360 + Total AR

AR Over 90 Amount 29.67%Benchmark 18.21%AR Aging Opportunity % 11.46%

Total AR $58,421,607 AR Aging Opportunity % 11.46%Financial Opportunity $6,695,116 Average Collection Rate 25.00%Total Financial Opportunity $1,673,779

AR Over 90 Amount 29.67%Benchmark 26.78%AR Aging Opportunity % 2.89%

Total AR $58,421,607 AR Aging Opportunity % 2.89%Financial Opportunity $1,688,384 Average Collection Rate 25.00%

Total Financial Opportunity $422,096



Assessment• UNC P&A currently has ~$265K in credit balances.• 56% of the total credits are greater than 90 days old and 13% are greater than 360 days old.• Current credit performance is within better practice with a range of one to two days in net AR.


Recommendation• Prioritize workflow activities in the business office to address high-dollar aged accounts more

aggressively. • Continue to focus business office workflows based off no response and denial-related follow-up

activities.

# $ # $ # $ # $ # $ # $ # $Inpatient 163 ($37,336) 72 ($9,564) 40 ($4,079) 57 ($10,629) 101 ($12,898) 85 ($13,657) 518 ($88,164)Outpatient 538 ($51,755) 209 ($18,462) 155 ($16,944) 153 ($36,806) 176 ($32,352) 128 ($20,761) 1,359 ($177,079)Totals: 701 ($89,091) 281 ($28,026) 195 ($21,023) 210 ($47,435) 277 ($45,250) 213 ($34,418) 1,877 ($265,243)

Total Discharged ARPatient Type

0 ‐ 60 61 ‐ 90 91 ‐ 120 121 ‐ 180 181 ‐ 360 360 +



Recommendation• Reevaluate business office workflows and business rules to ensure optimal follow-up technique

and aged accounts are aggressively pursued. • Focus on cash acceleration to reduce aged invoices receivable greater than 90 days old.

– Perform cost benefit analysis of an overtime/special project campaign versus supplemental staffing or outsourcing targeted to these problem invoices.

– Define and measure performance/progress on this specific set of accounts separately in order to manage financial risk and improve performance.

• Improve self-pay collections by targeting new access and financial counseling procedures.– Seek to identify/route to financial counseling more self-pay patients prior to services provided.– Implement new eligibility or discounting procedures to increase probability of some payment

and reduce likelihood of bad-debt write-off.Responsibility• Director, Billing and CollectionsTimeframe• Second Quarter 2005 – Fourth Quarter 2006


UNC P&A Key Findings & Analysis ResultsIT Systems and Functionality

Assessment• Technology

– Several IT issues relevant to the revenue cycle require attention including: • Notification to physicians of incomplete documentation is automated for O/P but manual

for I/P.• The system does not currently track operative notes for second surgeons properly.• Limitations with Webcis exist related to missing physician, medical record number, or

procedure information. Current re-direct functionality does not fulfill process needs related to preventing inaccurate physician suspension.

• Non-providers cannot dictate to meet documentation requirements checked-in but not seen by a physician.

– An opportunity exists to implement Medical Necessity software.– The following were reported during UNC P&A interviews:

• General dissatisfaction with current scheduling software (Siemens Resources Scheduling), which is utilized for all areas except the OR.

• Intensive manual work-arounds with the current scheduling process. – The purging criteria for INVISION/CMS appears to be shorter than industry practice.


UNC P&A Key Findings & Analysis Results IT Systems and Functionality

Assessment• Technology

– Evaluate and confirm need for bi-directional query access to coding applications between UNC Hospitals and UNC P&A.

• This process may assist the coders during the coding process, where applicable. • Area of focus by OIG – when comparing professional and facility codes.

– UNC P&A is unable to access CT Vision, although there has been some discussion about rolling-out CT Vision to the UNC P&A. The clinics are currently being granted access to Sovera.

– In general, no significant shortcomings/limitations were noted by UNC P&A management regarding the UNC P&A AIS (Patient Accounts) system.


UNC P&A Key Findings & Analysis Results IT Systems and Functionality

Recommendation• Leadership on both the revenue cycle and IT Team need to implement protocols for capturing and

addressing revenue cycle issues.• Evaluate and implement Medical Necessity software in conjunction with UNCH.• Optimize use of resource scheduling tool. Evaluate enterprise-wide scheduling to be used for

both UNC P&A and UNC Hospitals for potential purchase ASAP (2005-2006). • Evaluate the use of CT Vision for increased functionality, e.g., denial management tracking and

collections workflow within the UNC P&A.• Sovera should be expanded and implemented aggressively across the UNC P&A to aid Patient

Access, denial management and paperless business office workflows and operations.• Evaluate current INVISION system purging criteria with UNC Hospitals.• Evaluate and confirm need for bi-directional query access to coding applications.Responsibility• Director, Billing and CollectionsTimeframe• Second Quarter 2005 – Second Quarter 2006

section v revenue cycle – unc p&a

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