How providers can maximize profits by minimizing inefficiency

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How providers can maximize
profits by minimizing inefficiency
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contents
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RCM19
The Effective Revenue Cycle
How providers can maximize cash flow by
minimizing inefficiency
New Strategies for Claims
Management
Advanced technologies helped INTEGRIS Health improve
cash flow and operational performance
From Clinical to Financial Success
West Virginia University Hospitals improves revenue flow
with its real-time eligibility and credit card processing system
Reducing Denials Leads to
Increased Revenue
Kettering Health Network addresses outpatient claim
denial problems with RMS software suite
Transparency in Pricing
NMHS improves customer service and cash flow by
providing charge estimates to patients
Reengineering the Revenue Cycle
Software reduces ViaHealth’s A/R days, improves claims
acceptance rate
Streamlining the Revenue Cycle
Memorial Hermann achieves sustained performance with
integrated technologies
What revenue cycle solutions offer
healthcare providers the greatest
opportunity to maximize profits by
minimizing inefficiencies?
Sponsored Material n Special Supplement to HealthLeaders June 2008 n RCM

The Effective
Revenue Cycle
How providers can maximize cash
flow by minimizing inefficiency
In his timeless and ultrapopular selfimprovement
book, The 7 Habits of
Highly Effective People, Stephen Covey
likens the principle of effectiveness to
Aesop’s fable about the goose that laid
the golden eggs. As we all know, the
story concerns a farmer whose goose
begins laying one golden egg each
day. The eggs provide the farmer with
unimaginable wealth, but his greed
becomes insatiable. Seeking instant
gratification, he kills his goose so as to
have all the golden eggs at once. After
opening the goose and finding none,
the farmer realizes that has destroyed
the very source of his prosperity.
Covey’s interpretation is this: True
effectiveness comes as a result of a healthy
balance between what is produced (in
this case, the golden eggs) and the ability
to produce (the goose). “If you adopt
a pattern of life that focuses on golden
eggs and neglects the goose, you will
soon be without the asset that produces
golden eggs. On the other hand, if you
only take care of the goose, with no aim
toward the golden eggs, you soon won’t
have the wherewithal to feed yourself or
the goose,” he writes.
It’s not too much of a stretch to
think of the healthcare revenue cycle in
RCM n June 2008
Sponsored Material n Special Supplement to HealthLeaders

New Strategies for
Claims Management
Advanced technologies helped INTEGRIS Health
improve cash flow and operational performance
Oklahoma City-based INTEGRIS Health is the
state’s largest Oklahoma-owned health system
with 13 hospitals, 1,900 licensed beds and more
than 2,500 physicians providing a wide range
of inpatient, outpatient and ancillary healthcare
services. Formed via merger between Oklahoma Health System
and Southwest Medical Center in 1995, the not-for-profit provider is
afforded many advantages with its size and scope. However, INTE-
GRIS realized it would need to adopt new strategies and technology
in its revenue cycle to ensure that the health system continued to
operate at the highest levels possible.
After evaluating potential solutions, INTEGRIS implemented the
ePREMIS® Claims Management and Medicare Direct Entry tools
as well as the Patient Compass Customized Statements and
Online Business Office from RelayHealth to improve financial and
operational goals and to cater to patients’ heightened expectations
for understandable, accurate and timely bills.
“Prior to deploying our solution, filing claims was very much a
manual process. We had staff dedicated to combing all the accounts
for errors before billing,” recalls Brent Grimes, corporate director of
patient financial services for INTEGRIS Health. “With our new solution,
we now have an exception-based product that requires us to
work only those claims that warrant attention, rather than touching
each one individually.”
“With our new solution, we now have
an exception-based product that
requires us to work only those claims
that warrant attention, rather than
touching each one individually.”
Among the favorable results these solutions have provided
INTEGRIS are improved resource allocation, which translates into
improved cash flow. “We found that by reorganizing our staff,
we could be significantly more productive,” according to Grimes.
“Since billing is done in a timelier manner, our accounts are turned
over much more quickly. Given our size, this amounts to millions of
dollars in savings.”
In addition, billing issues can now be resolved without involving
the patient. With the Medicare Direct Entry tool, for example,
INTEGRIS staff can quickly learn about the presence of secondary
insurance, if any, even if the patient didn’t provide this information.
The system also alerts INTEGRIS staff to any potential rejections by
Medicare, allowing them to correct errors before the claim is filed,
which has reduced rejections and improved cash flow.
Through the ePREMIS operational dashboard, INTEGRIS managers
are able to monitor daily claims management processes to
ensure that patients are receiving timely, accurate statements.
“The dashboard automatically sends email alerts to notify us of
situations needing immediate attention,” Grimes says. “The email
provides the necessary actions for the recipient to take, ensuring
that claims are not lingering unnoticed, costing us money.”
Process bottlenecks are identified through the use of desktop
“at-a-glance” gauges that monitor the real-time movement of claims
from the patient accounting system into the claims management
system and then on to the individual payers. Four color gauges let
management immediately see important cash-flow measurements:
> Unreleased claim count
> Unreleased claim dollars
> Held claims count
> Held claims dollars
With the Patient Compass Online Business Office, INTEGRIS
patients can access their current billing information and pay their
bills at their convenience 24/7 via a plug-in on the INTEGRIS Web
site. Patients also can use the site to request payment arrangements
or an itemized bill, to see information about INTEGRIS policies or to
submit a question via email. As a result, patient satisfaction with
INTEGRIS has increased, and the number of calls from patients into
the business office has decreased by 4.5 percent within the first two
months of implementation.
In addition, statements generated by Patient Compass follow
the Healthcare Financial Management Association’s PATIENT
FRIENDLY BILLING® guidelines so that patients can easily understand
the charges, insurance payments and their responsibility.
“We took many steps to streamline our internal processes and
patient financial communications,” says Greg Meyers, system vice
president of contracting and revenue cycle management. “As a
result, we have improved our financial and operational performance
while creating the foundation for delivering understandable and
timely patient statements.”
Sponsored Material n Special Supplement to HealthLeaders June 2008 n RCM

The Effective Revenue Cycle
similar terms. A hospital’s golden egg is
its patient revenue, and the producing
assets are found in its staff, technology
and processes. Effective revenue cycle
management (RCM), therefore, is a
calculated balance between the revenue
coming in and the appropriate resource
allocation to ensure positive cash flow.
Hospitals that find this equilibrium,
assisted by maturing technologies and
best practices, have the best chance for
long-term revenue cycle success.
Lingering Financial
Challenges
Two trends continue to have a negative
effect on healthcare providers’ fiscal
performance: rising healthcare costs
and shrinking reimbursement rates.
Although increases in national health
expenditures have leveled off in recent
years, the reality is that the cost to provide
healthcare continues to rise. After
topping out in 2002 with a 9.1 percent
increase, growth in healthcare spending
in the United States was 6.7 percent
in 2006, according to the Centers for
Medicare & Medicaid Services (CMS).
The agency expects relatively similar
results through 2017. In other words,
healthcare expenditures will continue to
grow faster than inflation over the next
decade, to no one’s surprise.
As a result, the cost of health insurance
is skyrocketing. And it’s not only
employers that bear the brunt of this
trend. The effect has and will continue
to be felt by consumers who are now
responsible for a greater financial portion
of their healthcare in the form of
higher copays and deductibles. In fact,
out-of-pocket healthcare expenses by
U.S. consumers have risen 25 percent
since 2002, from just over $200 billion
to approximately $250 billion. (I)
Further, uncompensated care—a
measure of the cost of care delivered for
which a provider receives no payment
from the patient or insurer—remains a
serious and growing fiscal problem. In
2005, hospitals carried approximately
$28.8 billion in uncompensated care,
or 5.6 percent of their total expenses,
according to the American Hospital
Association. This figure represents a 33
percent increase since 2000.
Meanwhile, healthcare payers,
including federal and state agencies,
are offering proportionately lower
reimbursement rates. In today’s
healthcare environment, where it
often appears that insurers hold all the
cards, providers must actively deploy
solutions to ensure they receive the
maximum compensation for the services
they provide.
According to RCM research and
consulting firm Zimmerman, hospitals
lose 4 percent of net revenues on
average from what CEO Michael Zimmerman
terms “leakage” in the form
of denied claims, delayed payments,
uncompensated care, and mis- or
underutilized personnel and technology.
And although revenue loss can be
the result of poor or nonexistent work
flow tools and processes, antiquated
RCM n June 2008
Sponsored Material n Special Supplement to HealthLeaders

From Clinical to
Financial Success
West Virginia University Hospitals improves revenue flow with
its real-time eligibility and credit card processing system
With its network of four hospitals, a cancer center,
a trauma center and several outpatient clinics,
West Virginia University Hospitals, Inc. (WVUH)
in Morgantown provides the most sophisticated
medical and surgical care in the region. WVUH
also prides itself on the national recognition it has received as a Level
One trauma center, Magnet hospital and as an employer of choice by
AARP and Working Mother magazine.
If there was one area the organization needed to improve,
however, it was patient access—scheduling, registration and
admissions. The institution’s eligibility verification was a mercifully
inefficient process, recalls Patient Access Manager Lisa Simmons.
“We were doing all our patient eligibility verification manually,
meaning that in order to verify a patient’s eligibility status, we had
to pick up the phone and call each individual payer.”
Further, WVUH knew it was losing revenue by not doing a
thorough job of receiving patient co-pays and deductibles at or
before time of service, leaving WVUH with many receivables that
went uncollected.
The organization knew that in order to continue delivering
the quality medical care its patients had come to expect while
maximizing income potential, it would need to deploy an advanced
revenue cycle management solution. After searching for the right
technology partner in 2004, WVUH selected a suite of services
from Passport Health Communications, Inc., including eligibility
verification and credit card processing through Passport One-
Source®, self-pay review through Passport BatchSource and
integrated eligibility verification through Passport’s Electronic Data
Interchange (EDI).
OneSource, which provides individual payer eligibility and
benefit data in real-time, allows WVUH front-end staff to quickly
and accurately verify patient eligibility online at the point of registration.
And with the EDI interface, this information is integrated with
the new patient accounts system. “It allows us to pull patient data
directly from their electronic record, which facilitates faster eligibility
verification,” Simmons says. “It also stops keying errors because we
do not have to enter patient information manually each time.”
The BatchSource application enables users to run a batch file
of eligibility verifications for a common payer such as Medicare or
Medicaid all at once, saving time and resources, Simmons says.
Thousands of patient records can be run in a matter of hours,
usually overnight. As many as 10 percent of those classified by
the hospital as self-pay are actually identified as having some
eligible insurance payer. “Without the self-pay review process,
those accounts are typically sent to collections and may not ever
be collected,” Simmons said.
WVUH also rolled out Passport’s credit card processing, which
facilitates transactions with all major credit card companies. This
capability enables the hospital to collect co-pay and/or deductible
amounts at or before the time of service in any department with
Internet access.
Soon after implementation, WVUH began to see results. “In
2004, we had $838,000 in unverified claims because we couldn’t
identify an insurance company to send the claim to,” Simmons
says. “With our new eligibility verification system, we were able to
bring that below $180,000 by year end 2007.”
“Since they have clients coast-tocoast,
they work with payers everywhere.
Even if it’s not an insurer we
see very often, having that resource
available saves us a lot of time and
potential additional work on the back
end. They are also very proactive in
working with us to get new payers
added all the time.”
Simmons attributes the results in large part to Passport’s
relationship with payers in West Virginia and across the country.
“Since they have clients coast-to-coast, they work with payers
everywhere. Even if it’s not an insurer we see very often, having
that resource available saves us a lot of time and potential
additional work on the back end. They are also very proactive in
working with us to get new payers added all the time.”
The new up-front payment process with Passport’s credit
card processing had a substantial impact as it was rolled out to
the pre-admissions and inpatient surgery units, hospital providerbased
clinics as well as to the emergency department. “In 2004,
we collected about $500,000 from patients at time of service,”
Simmons recalls. “By the end of 2007, we had increased that
number to $950,000.”
Sponsored Material n Special Supplement to HealthLeaders June 2008 n RCM

The Effective Revenue Cycle
technology that doesn’t support appropriate
data collection, or often it’s simply
the inherently convoluted regulatory
and financial nature of healthcare
that has a negative financial effect on
providers. “With the incredible level of
detail required for providers just to get
paid, it’s no wonder healthcare is such
a difficult environment to operate in,”
Zimmerman says.
This article dissects three general
areas of the revenue cycle—patient
access, data management/coding, and
billing/collections—where providers
have the opportunity to maximize
cash flow by minimizing inefficiencies.
Each section also includes best
practices organizations should consider
for optimal results, courtesy of Zimmerman,
LLC.
The Patient-
Centered
Revenue Cycle
Many industry experts would agree that
patient access, including scheduling,
eligibility verification, and referral management,
represents the area of greatest
opportunity for improvement in
healthcare today. Information captured
before and during the time of service
lays the foundation on which hospitals
are able to generate revenue. Problems
introduced in a patient’s financial record
at this stage will directly affect the entire
revenue cycle for that individual.
And although patient access for
many hospitals appears to be functioning
optimally when looked at in terms
of patient throughput and the number
of FTEs assigned to patient processing,
often this is achieved at the expense of
a greater number of resources on the
back end devoted to dealing with failed
charges, claim edits, denials, and follow-up
calls, says Suzanne Wentworth,
managing director and national revenue
cycle practice leader with management
and technology consulting firm
BearingPoint. “Our clients report that
almost 90 percent of the rework they
deal with during billing and claims
processing goes back to a root cause
within the patient access area.”
To the greatest extent possible,
providers must shift activities that
have traditionally been reserved for
the back end—claims management,
documentation, and cash transactions,
for example—to the front end,
Wentworth advises. “It’s imperative
they place greater strategic focus on
accurate and complete data capture for
preservice and time-of-service activities
such as scheduling, financial counseling,
and referral management.”
And with consumer-driven healthcare
initiatives in which patients are
responsible for a greater portion of
their bill, there is no better time than
now for providers to improve cash flow
by requiring time-of-service payments
from their patients, says Polly Minugh,
a principal in Deloitte’s national revenue
cycle practice. “Collections performance,
particularly on the front
end, is becoming critical to ensuring
an effective revenue cycle.”
Several tools are emerging to make
up-front collections a reality, including
credit card transaction processing
and transparent pricing models
that not only provide patients with
more information about the true costs
of their care, but also establish a baseline
so providers know beforehand
what they need to collect directly
from their patients.
Minugh’s colleague Joel Gardiner,
also a principal with Deloitte, takes
it one step further, anticipating a
heightened demand for front-end
“It’s imperative they place greater strategic
focus on accurate and complete data capture
for preservice and time-of-service activities
such as scheduling, financial counseling,
and referral management.”
demographic and credit-scoring
solutions. “If it has been determined
that a patient owes $1,500 to cover
their share of the medical procedure,
providers must be able to determine
what the probability is of receiving
that payment and deciphering what
the best strategy is for collecting this
bill,” he says. “There are a number
of financial clearance tools emerging
that take a very traditional consumerfinance
view of credit scoring, estimating
the likelihood of collecting
payment and even offering guidance
for structuring lending arrangements
with a patient.”
From patient preprocessing to
financial clearing, healthcare organizations
should consider the following best
practices to improve the patient access
function of their revenue cycles: (II)
n Patient preprocessing.
Best performers are much more likely
to obtain preauthorization, precertification,
and insurance verification, as
well as provide financial counseling
preregistration an average of three days
prior to the scheduled service date.
n Registration data accuracy.
Best performers consistently capture
sufficient and accurate demographic,
financial, and clinical information prior
to patient discharge.
n Time-of-service collections.
Top-tier performers secure
RCM n June 2008
Sponsored Material n Special Supplement to HealthLeaders

Reducing Denials Leads to
Increased Revenue
Kettering Health Network addresses outpatient
claim denial problem with RMS software suite
When Kettering Health Network set out to
reengineer its outpatient revenue cycle,
the organization knew it had to address an
increasing rate of denials as well as find a
way to capture revenue tied up in bill holds or
write-offs. At the outset, however, it wasn’t clear where to begin.
“We didn’t know what we didn’t know … it was a journey,” recalls
Debbie Schrubb, director of medical records for Kettering.
Schrubb suspected that inefficient coding and billing processes
were causing claims errors, while problems with medical necessity
review were triggering extensive rework and write-offs. “We were
seeing our A/R days increase, and there was an obvious impact on
revenue,” Schrubb says. “We knew that the financial health of our
organization depended on fixing our outpatient claims process and
getting the full reimbursement to which we were entitled.”
Based in Dayton, Ohio, the five-hospital system boasts 1,260
beds, 47,000 inpatient visits, 296,000 outpatient diagnostic procedures,
33,200 ambulatory surgeries, 91,500 emergency visits and
a wide array of services including neuroscience, cardiology, oncology,
orthopedics, sports medicine, rehabilitation and behavioral
health. The organization chose the 3M Ambulatory Revenue
Management Software (3M ARMS) from 3M Health Information
Systems as a solution to its revenue cycle challenges, adding to
its portfolio of solutions that includes the 3M APC Editing and
Compliance Software with 3M Medical Necessity Software,
3M Health Record Management Software, 3M Coding and
Reimbursement System and 3M Medical Necessity Online.
Kettering’s first step was to analyze existing outpatient claims
processes. The project team examined each functional step of the
revenue cycle, looking for process challenges such as duplication,
non-value-added steps and system bottlenecks. Once problem
areas were identified, 3M consultants assisted the Kettering project
team in helping to expedite billing and reduce A/R days through
the design of a new, streamlined workflow process that uses the
advanced features of the software.
With the new outpatient revenue management software,
Kettering’s coders were able to review critical edits and charges
and monitor corrective actions, all at the point of coding. The solution
surfaces OCE, NCCI, LCD and NCD edits for all codes on the
claim and allows coders to view both hardcoded chargemaster
codes, including corresponding charge department codes, revenue
codes, units and other key data elements together with the
soft-coded HCPCS/CPT® codes assigned in the HIM department.
Kettering’s new solution soon yielded results: Dollars held
during rework totaled $2.4 million in the initial implementation
phase; six months later, the number was $1.2 million. “The dollars
we were holding before implementing the 3M software represent
a significant amount of revenue,” says Susan Knight, director
of patient financial services for Kettering Health Network. “After
implementation, referrals fell by 50 percent, and medical necessity
write-offs also saw a sharp reduction, falling from a high of more
than $80,000 per month to an average of $10,000 per month after
the software was up and running.”
Through post go-live evaluations, Kettering discovered that
some services were consistently undercharged, while others
never made it onto the bill. Line item service date errors were also
a common cause of rework. “The volume of charging errors was
much greater than we realized,” Schrubb notes.
“We knew that the financial health of
our organization depended on fixing
our outpatient claims process and
getting the full reimbursement to
which we were entitled.”
Teamwork and ongoing communication are key components
of reengineering the revenue cycle. Mapping revenue codes with
CPT® codes and clinical terms provided challenges, as did fully
engaging the different departments. “There were hurdles to overcome
in terms of departmental perceptions about the program,”
says Schrubb. “When the numbers began to change dramatically,
perceptions shifted.”
Kettering’s clean claim rate (the percentage of claims that arrive
in the business office error-free) is now at 90 percent—15 percent
higher than the national average for a high-performing facility—and
expected to rise. Meanwhile, rework is substantially reduced and bill
holds average fewer than one to three accounts per day. Recovering
reimbursement at risk is up from a 62 percent recovery rate at the
start of implementation to 88 percent nine months later.
“We knew the dollars were out there,” Schrubb says. “And we
haven’t even realized the full potential. We’re still seeing gains, and
we’ll continue to see gains.”
CODE: AB2008054
Sponsored Material n Special Supplement to HealthLeaders June 2008 n RCM

The Effective Revenue Cycle
financial commitments on patients’ portion
of payments through the collection
of copays, deductibles, and prorating of
patient liability at time of service.
n In-house. Best practice providers
proactively manage the financial
relationship between the hospital, the
patient, and the payer while the patient
is in-house.
n Financial clearance. By a
wide margin, best-performing organizations
have implemented a financial
clearance process that involves screening
and probability scoring of patients
in order to determine effective collection
follow-up methods. Of those best
performers that perform this function,
60 percent of their patients are cleared
prior to discharge.
Data Quality
Affects Results
More often than not, the revenue
cycle’s Achilles’ heel is data integrity,
says RCM consultant Allan P. DeKaye,
MBA, FHFMA, who publishes the PFS
Power Rankings, a monthly benchmarking
report on hospital patient financial
service departments. “The quality of
data in the patient financial system
is largely dependent on the tools and
information available to those entering
the data. For example, if they cannot
decipher whether a payer is a PPO or
HMO either on their own or with the
help of an informational tool, this will
inevitably lead to billing problems.”
Denny Roberge, revenue operations
manager for Concord Hospital
in New Hampshire, is on a mission
to improve his organization’s revenue
cycle by improving data. A significant
percentage of claims rejected by payers
are the result of what Roberge calls
“gotcha” denials—simple mistakes
or oversights in the claim, such as a
missing comma, formatting error, or
other small, seemingly insignificant
problem. These are, nonetheless, errors
that can make the difference between a
claim being only partly paid or denied
outright by the insurer.
Concord Hospital recently implemented
a homegrown claims management
system built by Roberge and
some of his MIT friends. The system
consists of complex algorithms that
find where in the claim the denial has
occurred and map all potential reason
codes and transaction sets to the
denial’s root cause.
The hospital’s chargemaster data
is also included in the system, which
enables the revenue cycle department to
locate potential charging mistakes. “If
a claim is denied because of a charge, it
is identified and sent to the appropriate
department, showing that a charge was
made that cannot be reimbursed.”
Front-end users who are responsible
for the denial can see this information
and correct the problem so it is not
repeated in multiple claims. “It’s simply
“It’s simply a matter of funneling the
information about the root cause of the
denial to those individuals directly
involved with the claim.”
a matter of funneling the information
about the root cause of the denial to
those individuals directly involved with
the claim,” Roberge says. “It has proven
very helpful getting the financial team
and clinical leaders on the same page.”
In the six months that Roberge’s
homegrown claims management system
has been up and running, Concord
Hospital has seen a significant
decrease in denial rates. To Roberge,
who likens getting paid on a claim to
a game of cat and mouse, the system’s
most distinct characteristic is its use as
a denial management tool, uncovering
what he calls “hidden” denials.
“The wolf in sheep’s clothing for
us is when a claim has been identified
by the insurer as ‘Claim Status
1’ indicating to us they’ve paid the
claim, but in reality, certain lines in
the claim that they are contractually
obligated to pay have been denied,”
Roberge says. “Our system has identified
instances where we are only
getting paid a fraction of what we are
owed, because the payer has denied a
certain item within the claim.”
Improvements in data quality and
integrity can be achieved by adhering to
the following best practices: (III)
n Clinical service documentation.
Best performers have accurate
and timely clinical documentation processes
in place, inclusive of chart auditing
and ongoing physician education.
n Coding accuracy. Best performers
leverage work flow technology
and highly skilled coding experts to
perform a compliant and optimal coding
work function.
n Charge capture. Top-tier
performers use quality audit processes
to ensure services are ordered and
charged according to policy.
n CDM maintenance and
strategic pricing. Best-performing
facilities conduct regular and periodic
maintenance to their charge description
master, in addition to frequent
comparative rate modeling studies
to ensure that service-level pricing is
being optimized and is competitive
with the market.
n Unbilled. Best performers balance
quality and speed of billing. They
have an average system-generated bill
hold of five days, with eight days of
total open unbilled, compared to 11
days nationally.
RCM10 n June 2008
Sponsored Material n Special Supplement to HealthLeaders

Transparency in Pricing
NMHS improves customer service and cash flow
by providing charge estimates to patients
“Our business office staff can now
generate accurate estimates quickly
and easily, and our patients consider
this a service that allows them to
make informed decisions. This results
in improved business office processes,
increased financial stability
and enhanced patient satisfaction.”
The vision of Omaha-based Nebraska Methodist
Health System (NMHS) is to be the region’s preferred
integrated healthcare provider as measured
by customer satisfaction, clinical performance and
financial performance. Providing patients with accurate,
up-front cost estimates is central to that vision.
NMHS operates two hospitals with 491 beds and $863 million
in revenue, as well as a physician clinic with 475,000 annual
patient visits and $112 million in revenue. Like other providers,
NMHS faces several high-profile trends driving the need for pricing
transparency:
> Patients with higher co-pays and deductibles
> Focus on customer satisfaction
> Public and media attention to hospital prices
> Increased bad debt
> Legislation requiring all Nebraska healthcare facilities to
provide a written estimate of the “average charges” for
health services
The manual process NMHS used to estimate prices in advance
was slow, susceptible to error and provided only a snapshot of
total charges. Based solely on chargemaster data, it failed to take
insurance benefits into account, often prompting sticker shock in
patients. Furthermore, the healthcare provider did not have a process
in place to verify insurance coverage prior to service, resulting
in frequent denials, delayed collections and rising bad debt.
Seeing an opportunity to enhance customer service while
accelerating the revenue cycle, NMHS revamped its business
office processes, establishing a dedicated team to perform insurance
verification and provide upfront estimates using Accuro
CarePricer®, a Web-based pricing tool. Drawing on data from
managed care contracts, the software generates estimates in half
the time of NMHS’s manual process. As a result, denials, billing
errors and returned mail have declined while payment time and
accuracy has accelerated.
After just four months using its new pricing tool, NMHS had
identified nearly $2.5 million in patient liability before care was
provided. And while NMHS has yet to implement a system-wide
upfront collection initiative, a pilot program at its outpatient diagnostic
facility resulted in the collection of nearly 50 percent of the
patient liability prior to care, suggesting the potential for significant
financial impact if leveraged across the system.
In addition to providing estimates prior to scheduled procedures,
NMHS, which also uses Accuro’s Contract Manager and
MyMentor products to identify underpayments and increase
collections, allows patients to request estimates of their out-ofpocket
liability by phone or via the Internet at the NMHS homepage
(www.bestcare.org). A financial counselor follows up with every
patient to explain the estimate, answer questions and discuss
payment arrangements.
As a result, the system has experienced an accelerated revenue
cycle and improved operational efficiencies. Prior to implementing
Accuro CarePricer, patients did not receive an estimate
of their financial obligation until they received an explanation of
benefits 30 to 40 days after their procedure, which added to payment
delays.
“By moving what used to be a back-end function to the front
of the revenue cycle, we’re now able to engage the patient in the
medical decision-making and payment process earlier,” says
Bob Wagner, director of patient accounts at NMHS. “In addition,
we can identify services not covered by insurance up front, saving
time and reducing unnecessary denials. Pre-verification also
allows us to more accurately anticipate reimbursement since we
know exactly what we should be paid according to the terms of
our contract.”
In addition to enhanced financial performance, NMHS has found
that customer satisfaction is improved when patients know their
financial obligations in advance and can make arrangements to fulfill
them. “The system has transformed our estimating process for both
staff and patients,” Wagner says. “Our business office staff can now
generate accurate estimates quickly and easily, and our patients
consider this a service that allows them to make informed decisions.
This results in improved business office processes, increased
financial stability and enhanced patient satisfaction.”
RCM12 n June 2008
Sponsored Material n Special Supplement to HealthLeaders

The Effective Revenue Cycle
Don’t Just
Manage Denials,
Prevent Them
Industrywide estimates place net revenues
lost to third-party claim discrepancies
in the 1%–3% range, although
for many providers, that number is
much higher. There are very effective
solutions available today that can help
healthcare providers recover much of
this revenue lost to denials.
In order for healthcare organizations
to have a truly effective revenue cycle
going forward, however, the industry
must begin to view denials not simply
as something to be managed, but as
something to be avoided, DeKaye says.
“Oftentimes providers spend more time
and effort getting a handle on denials
than proactively preventing them.”
According to DeKaye, the top
administrative reasons claims are
denied—patient is ineligible, carrier
provided is not the primary insurer,
patient is not a member on date of service—all
tie into the information that
is entered on the front end. “It’s critical
that patient access staff have the correct
training, tools, and support that will
enable them to make correct decisions
and input accurate and timely data that
will ensure the claim goes out clean,”
DeKaye says.
Adding to the billing and collections
burden is the cost to collect payments,
“typically reported between 2 and 3 percent
for the business office,” according
to the Healthcare Financial Management
Association’s (HFMA’s) research
paper Understanding your True Cost to
Collect. “However, the fully loaded cost
to collect may be much higher from
strictly a business office perspective,
“If you look at the technology spend over the
last five to 10 years, it has really been focused
on core clinical information systems.”
not including any other revenue cycle
departmental cost.”
One way providers can reduce their
exposure to overdue accounts harkens
back to the discussion of up-front collections.
A chart that indicates what payers
will cover for procedures vs. the patient’s
financial responsibility, for example, is a
useful tool for the patient access department.
Further, many technology vendors
and consultants specialize in work
flow solutions that can inject efficiency
into the collections process.
Additional best practices hospitals
should consider for their billing and
collections efforts include: (IV)
n Electronic billing and
clean-claim submission. Best
performers have a much higher percentage
of claims electronically submitted to
third-party payers. Also, they are much
more likely to automate secondary billing.
Lastly, best performers average an
87 percent clean-claim submission rate,
which is a direct result of good up-front
data accuracy processes.
n Receivable stratification.
The best performers use prioritized
collection follow-up efforts that are
mostly high-dollar stratification techniques.
Furthermore, their collection
follow-up efforts are early in the process—typically
15 to 20 days from
discharge date.
n Denial and underpayment
management. Top performers have
denial and underpayment units dedicated
to appeal, recovery, and preventive
feedback reporting loops to appropriate
clinical, administrative, and managed
care contracting departments.
n Outsourcing. Best performers
limit and aggressively manage outsourcing
relationships for specialized subpro-
cesses that either require highly technical
talent or represent economically strong
relationships (better, faster, cheaper).
Focus on Solutions
The level of complexity in the revenue
cycle is steadily rising. Without
the proper technical and operational
tools, healthcare providers risk losing
even more revenue to “leakage” than
the 4%–5% that is common today.
The old adage that you need to spend
money to make money, while clichéd,
applies wholeheartedly to the RCM.
“Implementing operational
improvements in areas such as collection
rate and denial prevention typically
yields in the neighborhood of 2% of net
patient service revenue improvement,”
Minugh reports. “Further, incorportating
modernized technology to the equation
yields a return on investment in the
five-to-one or higher range.”
Unfortunately, many organizations
have failed to make adequate investments
in their revenue cycle. “If you
look at the technology spend over the
last five to 10 years, it has really been
focused on core clinical information
systems,” says Deloitte’s Gardiner.
“Also, revenue cycle technology generally
has not kept pace with the complexity
of the contracts governing how
hospitals are supposed to get paid.”
The good news, according to Gardiner,
is that with a maturing of the
electronic medical record, healthcare
providers are realizing the need to
deploy current revenue cycle technology,
while vendors are delivering
more advanced solutions all the time.
“The next wave of technology investment
appears to be focused on patient
accounting systems,” he says.
And while healthcare organizations
must consider how to prioritize
additional assets on front-end patient
access activities, it shouldn’t come
at the expense of critical back-end
Sponsored Material n Special Supplement to HealthLeaders June 2008 n RCM13

INHALE
REVENUE.
EXHALE THE
INACCURACIES.

Please visit us at
HFMA’s ANI, Booth #1118,
June 23-26.
With our expanded offerings, MedAssets gives you
something that’s as vital as oxygen — revenue integrity
to help you get paid accurately and in a timely manner
for patient services rendered. Our integrated suite
of products, including the best claims management
technology, * will help you transform your revenue cycle
processes to improve net patient revenue and cash
collections. From pre-admission, charge capture, case
management and clinical documentation review to
contract management, claims processing, and denial
and accounts receivable management, we’ll help you
not only achieve revenue integrity but also sustain it.
Wondering what this all means to you? How about
a 1-3 percent increase in your net revenue. Now,
that’s a breath of fresh air.
For more information, please call us at 1-888-883-6332,
or visit us online at www.medassets.com.
* MedAssets Ranked #1 in KLAS Market Category for Claims Management - KLAS Enterprises, LLC 2007, 2006
MedAssets ® is a registered trademark of MedAssets, Inc. © MedAssets 2005, 2007. All rights reserved.

The Effective Revenue Cycle
resources such as primary and secondary
billing, claims appeals, and A/R
improvement efforts. In fact, lessons
from efficient back-end processes can
be applied to enhancements on the
front end, BearingPoint’s Wentworth
believes. “Back-end systems typically
incorporate good work flow, which is
often missing on the front end.”
Finally, providers that apply the
following work flow, patient satisfaction,
benchmarking, and leadership best
practices will realize the greatest overall
benefits to their revenue cycle: (V)
n Bolt-on technology. Best
performers use “high-impact” work
flow technologies that bolt on to platform
patient accounting systems. Such
technologies include (but are not limited
to) patient and payer verification,
contract management, denial management,
and receivable workstations.
n Patient satisfaction. Best
performers have integrated best practice
work processes with patient satisfaction
requirements in functions such as billing,
time-of-service collections, and registration.
In addition, top performers constantly
survey and measure the patient
experience in revenue cycle functions.
n Performance management,
benchmarking,
and accountability. Top-tier
performers use and insist on real-time
information management tools to track
revenue cycle key performance indicators
to allow for proactive management
and accountability.
n Training. Best practice providers
tend to use a formal combination
of technical- and strategic-based
curriculum training programs (as
opposed to purely using job shadow
training efforts).
n Incentive plans. Top performers
have incentive programs for
executives, managers, and front-line staff
that strategically align with the desired
financial outcomes of the organization
(net revenue optimization, for instance).
n CEO-board relationships.
Best-performer status
has been tied to revenue-cycle–educated
CEOs and board members.
This allows them to have clear visibility
in their revenue cycle process
through appropriate and meaningful
performance management metrics
and associated benchmarks. n
I. AHA TrendWatch Chartbook 2008 (based on data from
the Centers for Medicare & Medicaid Services), American
Hospital Association, Chicago, April 2008.
II. Revenue Cycle Management: Industry Key performance
Indicators 2004, 2003 Best Practice of Revenue Cycle Operations
Report, and 2004 Best Practice of Revenue Cycle Operations
Report, Zimmerman, Hales Corners, Wis.
III. Zimmerman
IV. Zimmerman
V. Zimmerman
Reengineering the
Revenue Cycle
Software reduces ViaHealth’s A/R days
and improves its claims acceptance rate
ViaHealth (Rochester, N.Y.) is a nonprofit, multihospital
healthcare system with approximately 710 acute
hospital beds, 550 long-term care beds and 200
employed physicians. The institution, which processes
approximately 175,000 hospital and physician
claims per month, was faced with a $75 million loss at the beginning
of 2001 and had only nine days of operating cash on hand.
The problems were attributed in large part to ViaHealth’s current
billing system, which had difficulty filing accurate claims. The
facility’s A/R days were at approximately 64 and the initial acceptance
rate of claims was under 40 percent. As a result, ViaHealth
had $50 million in bills that were past due, and the organization
was forced to write off a substantial number of accounts.
In February 2001, ViaHealth brought on John Midolo as vice
president of patient financial services to reengineer the organization’s
revenue cycle. Midolo soon began searching for an electronic
billing vendor that could help ViaHealth reduce the number
of claims being denied by payers. The healthcare provider selected
The SSI Group’s (SSI) Direct ClickON billing and ClickON automated
secondary billing software as its long-term financial solution.
With its new software, ViaHealth could see all denial data up
front before the claim left the facility, which allowed the facility to
correct claims in the ClickON product, according to Midolo. It also
allowed ViaHealth to organize denials and correct the processes
up front prior to claims production.
After only the first year with its new solution, ViaHealth was able
to reduce its A/R days to 50.5 and improve the claims acceptance
rate to approximately 95 percent. “The SSI software allowed us to
restructure the billing staff so that we had a dedicated team to work
on claim issues, freeing the rest of the staff to work on follow-up
issues,” Midolo says. “Eventually, all claims will run through SSI’s
products, enabling us to better track claims and predict cash flow.”
RCM16 n June 2008
Sponsored Material n Special Supplement to HealthLeaders

SOME THINGS COME AND GO
The Great Pyramid of Giza - 4567 years old
OTHERS STAND THE TEST OF TIME
In 20 short years, The SSI Group, Inc. has built itself from a small healthcare software company
into an industry leader in the revenue cycle management arena. Our customers trust us as a singlesource
provider - from insurance eligibility data and real-time claims status reporting to document
management and business office services. We provide an extensive suite of products, to help our
customers develop right along with us. Let us create a custmoized revenue cycle recovery solution
for you. Celebrating success, our customers and 20 years!
www.thessigroup.com / 800-881-2739

Streamlining the
Revenue Cycle
Memorial Hermann achieves sustained performance
with integrated technologies
The increased demand for services and the high
percentage of uninsured patients, coupled with
the intense scrutiny of government payers and the
expanded role of the patient as a consumer, are some
of the challenges making it more difficult for hospitals
to collect accurate and prompt payment for the services provided.
Realizing the magnitude of addressing these issues consistently
across the health system, Memorial Hermann Healthcare
System in Houston, Texas, began strategically implementing
technology to achieve its revenue integrity goals and ultimately
enhance its financial performance.
The provider has implemented numerous technologies over the
last several years to improve performance and financial results, such
as a standardized chargemaster for consistent charging and defensible
pricing. Several years ago, however, Memorial Hermann realized
that there was significant revenue loss due to lack of integrity
between the item master for supply costs, invoices for implants and
the chargemaster. Memorial Hermann wanted to improve pricing
accuracy by ensuring charges were aligned with supply acquisition
costs and sought a partner to provide the solution.
Memorial Hermann selected MedAssets’ CrossWalk® product,
which automatically and continuously links the hospital’s supply
information with the chargemaster to ensure charges are in line with
costs plus a defined mark-up. The organization selected technology
from MedAssets due to the company’s broad experience with all
aspects of chargemaster and pricing management, according to
Helen Powers, system executive - revenue operations, decision support
and Medicare profitability for Memorial Hermann. “They worked
closely with us to migrate our chargemasters to be defensible and
price competitive to position us successfully for transparency and
increased consumerism in elective procedures.”
The implementation was rolled out in three phases with the
last phase involving the replacement of “open-price” charges with
fixed-price charges to eliminate variability in the system. Phases
one and two involved the linkage of more than 16,000 supply
items to more than 6,000 charges, which are now updated based
on cost, using a standard and defensible markup for supplies. As a
result of the accuracy improvements, Memorial Hermann has seen
increases in patient and payer satisfaction levels: Patients question
charges less often, and payers process claims more efficiently.
To ensure that all gaps in potential revenue capture were
addressed, Memorial Hermann also implemented the Charge Capture
Audit capability from MedAssets. The system performs an automated
review of all itemized bills to identify potential missing charges
based on the services performed. This provides a more accurate and
complete bill to the payer, eliminating the need to re-bill due to late
charges and improving revenue capture and net revenue results.
Additionally, Memorial Hermann sought a new claims management
vendor to improve its billing processes and net revenue
performance and selected XactiMed®, a MedAssets company.
Memorial Hermann’s objectives included addressing its first-pass
percentage rate of claims, improving process workflow and reducing
accounts receivable days.
“Its revenue cycle solutions made immediate and substantial
impacts for Memorial Hermann,” says Michael Bennett, assistant
vice president of operations finance/patient billing services. “Financially,
the improvement in our days in accounts receivable yielded
tremendous cash infusion. Operationally, our revenue cycle managers
have a broader scope to work with, and as a result, a greater
sense of accountability throughout the entire revenue cycle.”
“They worked closely with us to
migrate our chargemasters to be
defensible and price competitive to
position us successfully for transparency
and increased consumerism in
elective procedures.”
Six months after implementation, Memorial Hermann realized
a 17 percent reduction in accounts receivable days while their
clean claim percentage increased to 73 percent from virtually zero
percent. Memorial Hermann recently implemented Medicare Direct
Claims Management capabilities and expects to improve the accuracy
of Medicare processing, accelerate Medicare cash flow and
improve the audit trail and accountability for Medicare processing.
“The integration of MedAssets’ services helps streamline our
revenue cycle operations, improves revenue integrity and provides
additional efficiencies, integrated workflow, better reporting, and
positive financial results,” Jeff Brownawell, chief revenue officer
for Memorial Hermann says. “They continue to provide innovative
solutions and are a key partner for Memorial Hermann.”
Trademark language—MedAssets®, CrossWalk® and XactiMed®
are registered trademarks of MedAssets, Inc. © MedAssets
2005, 2007. All rights reserved.
RCM18 n June 2008
Sponsored Material n Special Supplement to HealthLeaders

The Effective Revenue Cycle
What revenue cycle solutions offer healthcare
providers the greatest opportunity to maximize profits
by minimizing inefficiencies?
Jerry Kolosky
Vice President
Medical Necessity & Compliance
3M Health Information Systems
“With healthcare costs rapidly outpacing increases in payment rates, providers must
find new ways to efficiently administer care and optimize appropriate reimbursement
for services rendered. A critical challenge to this objective is the complexity of
accurately validating all applicable medical necessity requirements and commercial payer utilization rules both prior to and after
providing care. In today’s rapidly changing healthcare reimbursement environment, healthcare professionals require integrated
solutions that enable compliance with complex utilization policies at every stage of the revenue cycle and promote the efficient
communication of accurate, fully coded billing information to public and private payers. Our solutions ensure accurate coding and
documentation, enable medical necessity validation throughout the revenue cycle, optimize reimbursement, and offer a positive
return on investment.” 3M Health Information Systems, Salt Lake City, 800-367-2447, 3mhis.com
“A multifaceted approach to the revenue cycle is essential to help providers maximize profits and
minimize inefficiencies. Coding intelligence must be built into virtually all systems to reduce errors, aid
in compliance, and provide easily accessible information. Denials management should be incorporated
into contract management and repricing functionality to point to denials with the greatest revenue
impact. The use of a single-source vendor for revenue management solutions logically leverages
common data sets and intelligence as well as technology cost efficiencies. Providers can uncover millions of dollars in
underpayments with contract management and denial solutions, collect millions more up-front by providing accurate patient
estimates, and substantially improve the efficiency and effectiveness of their own staff with results-driven online coaching.”
Accuro Healthcare Solutions, Dallas, 877-321-0500, www.accurohealth.com
Brent McCarty
President and COO
Accuro Healthcare Solutions
Dan James
President
MedAssets
“Revenue cycle is a linear process with sequential steps, each of which impacts steps downstream
affecting overall compliance, cash collection relative to amount entitled to collect, and timeliness
of payments. By focusing on the overall process, and driving revenue integrity, our comprehensive
solutions ensure compliance and maximum revenue capture at every step for optimum reimbursement. With improved automation,
providers can increase the accuracy of registration, documentation, coding, charge and billing for all services provided. Through
integration, workflow, and a single data source for payer expected reimbursement calculations, our revenue integrity solutions help
ensure providers can collect all monies owed, reduce denials and improve identification and recovery of underpayments, providing
reimbursement in less time. Our service offerings, which provide product solutions and know-how, deliver the potential to increase
a typical health system’s net patient revenue by 1 to 3 percent and decrease supply expense by 3 to 10 percent.” MedAssets,
Atlanta, 866-323-6332, www.medassets.com
“Providers require tools to verify patient insurance and demographic data at the earliest point of patient
contact. Integrated solutions customized to an individual provider’s operating rules can automatically
retrieve real-time information about a patient’s benefits (copay, deductible, etc.), address, and even
his or her credit history. Providers must be able to quickly and consistently determine how much they
are owed and by whom and provide multiple options for collecting payment from the patient prior to
or at the point of care. Services such as claim status generation can help increase cash flow on the back end by identifying which
claims are scheduled for payment and which need follow-up to avoid going 60 or 90 days without being paid.” Passport Health
Communications, Franklin, TN., 888-661-5657, www.passporthealth.com
Jeff Drake
Chief Sales and Marketing Officer
Passport Health Communications
Dave Mason
Vice President
and General Manager
RelayHealth
“The shift to more patient financial responsibility for their own healthcare places
hospitals at greater financial risk. When patients assume greater and greater personal
financial obligation for their healthcare, hospitals need to implement new technologies
on the front end of the revenue cycle to expedite self-pay collections. These tools will enable healthcare organizations to
efficiently manage their self-pay, charity, and uninsured patients before services are rendered. Our solutions include eligibility
and demographic verification, registration data quality assurance, assessment of the patient’s ability and propensity to pay,
point-of-service collections, bill estimation, and financial aid qualification packages. By melding these tools on the front end with
proven post-service claims management systems, hospitals can revolutionize their entire revenue cycle for improved financial
and operational results.” RelayHealth, Atlanta, 800-778-6711, www.relayhealth.com
“Solutions that accelerate the revenue cycle by streamlining work flow, reducing A/R days,
and enabling two-way integration with hospital information systems are critical for healthcare
providers looking to maximize profits and improve efficiency. Our healthcare EDI software is
designed to improve revenue cycle efficiencies while reducing staffing requirements. Specifically, it helps manage payer
denials through timely identification of any non- or short-paid claim, which allows providers to take immediate action to
resolve the situation. These technologies and robust dashboard intelligence provide business-critical information and facilitate
a healthcare enterprise’s ability to quickly identify and act on denial problems before the payment cycle is complete, which
improves operational efficiency and cash flow.” The SSI Group, Inc., Mobile, AL., 800-881-2739, www.thessigroup.com
Doug Bilbrey
Executive Vice President of Sales
and Marketing
The SSI Group, Inc.
Sponsored Material n Special Supplement to HealthLeaders June 2008 n RCM19

Improvements needed.
Improvements made.
Improvements sustained.
Humanly Possible
Balance financial stability and quality with
3M Health Information Systems
With hospitals working harder than ever to maximize appropriate reimbursement while
enhancing the patient experience, 3M can help improve financial performance. We provide
the power to reduce payment denials and rework while helping you reach new standards in
compliance and efficiency. With more than 25 years experience in healthcare performance
management, 3M can help you make and sustain needed improvements.
Find out what is Humanly Possible.
Visit us at HFMA ANI 2008, booth 618.
© 3M 2008. All rights reserved. DB2008063