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Using Key Performance Indicators to Prepare for Contract Renegotiation

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Title: Using Key Performance Indicators to Prepare for Contract Renegotiation


1
Edison Club Rexford, New York Tuesday 30 June
2009
Using Key Performance Indicators to Prepare for
Contract Renegotiation
David Hammer VP, Revenue Cycle Solutions
McKesson Fort Lauderdale, Florida
2
Contents
  • KPIs Definition / Purposes / Benefits
  • Contracting Cycle Definition
  • Revenue Cycle Definition
  • Contracting KPIs
  • Level I, II, III, and IV Rev Cycle KPIs
  • Rev Cycle KPIs by Contract-Related Area

1
3
Contents
  • Denials and Underpayments
  • Information Technology
  • Operationalizing Contracts
  • Group Exercise
  • Call to Action
  • Presenters Resume

2
4
Wheres Your Focus?
3
5
Whats Going On in This Picture?
Tiger Woods Masters Golf Tournament
4
6
Even the Very Best Keep Score
  • In business, words are words, explanations are
    explanations, promises are promises, but only
    performance is reality. Harold S. Geneen
  • Former President and CEO of ITT

5
7
Even the Very Best Keep Score
  • If you cant measure it, you cant manage it.
  • Michael Bloomberg
  • Mayor of New York City and CEO of Bloomberg, Inc.

6
8
Lets Define Terms
  • Key Performance Indicators

7
9
What is a KPI?
  • Numerical factor
  • Quantitatively measures performance
  • Activities, volumes, etc.
  • Business and/or clinical processes
  • Insurance plans or payor contracts
  • Financial assets
  • Functional groups
  • Service lines
  • The entire enterprise
  • Source BearingPoint, Key Performance Indicators

8
8
10
Purposes of KPIs
  • View performance snapshots, at various levels
  • Individual / Insurance plan
  • Group / payor
  • Department / service line
  • Hospital
  • Region
  • Assess current situation and determine root
    causes of identified problem areas

9
9
11
Purposes of KPIs (cont)
  • Set goals, expectations, and financial incentives
    for any individual, group, or contract
  • Trend the performance of the selected individual,
    group, or contract over time
  • Source BearingPoint, Key Performance Indicators

10
10
12
Purposes of KPIs (cont)
  • Keep a record and tell a story
  • Benchmark against your goals and industry better
    practices
  • Identify and manage trends, not single-period
    results
  • Illustrate relationships between KPIs

11
13
Benefits of Using KPIs
  • Increase management awareness
  • Focus attention on improvement opportunities
  • Increasing Contribution Margin
  • Developing Best Practices
  • Improving / Accelerating Management Reporting
  • Monitoring Payor Performance
  • Increasing Cash Flow
  • Improving Clinical Quality
  • Reducing Costs
  • Identifying Problem Areas
  • Benchmarking
  • Illustrating Trends
  • Scoring Performance
  • Reducing Denials

12
12
Source BearingPoint, Key Performance Indicators
14
Lets Define Terms
  • Contracting Cycle

13
15
Contracting Cycle Definition
1. Provide patients 4. Pay claims
2. Treat patients 3. Submit claims
14
16
Contracting Cycle Definition
Reduce Payor Discretion
Achieve Target Margins
15
17
Contracting Cycle Definition
Analyze Service Lines
Analyze Contract Performance
Collect Accounts Post Payments
Analyze Financial Needs
Work Denials Payment Variances
Profitable Contracts
Understand Competitors Market
Submit Follow-up Claims
Understand Payors Their Reputations
Analyze Steerage vs. Discounts
Define Payors Providers Duties
Negotiate Contract Language Rates
16
18
Contracting Cycle
  • Strategy development
  • Strategy implementation
  • Contract negotiations
  • Contract evaluation
  • Forecasting and analysis
  • Contract implementation and operations
  • Performance monitoring
  • Strategic issues and planning

Source Stevenson, Paul B., Managed Care Cycle
Provides Contract Oversight, hfm, Mar 2002
17
19
Lets Define Terms
  • Revenue Cycle

18
20
Revenue Cycle Definition
Collection
Pricing
Denials Payment Variance
Payor Negotiation Renegotiation
Cash Posting
Follow-up
Registration
Billing
Authorization Certification
Coding
Financial Counseling
19
21
Understanding the Processes
Upstream Processes
20
22
Understanding the Processes
Midstream Processes
21
23
Understanding the Processes
Downstream Processes
22
24
Understanding the Processes
Associated Processes
23
25
Understanding the Processes Rev Cycle Complete
Picture
24
26
Contracting KPIs
25
27
Contracting KPIs
26
28
Contracting KPIs
27
29
Contracting KPIs
Source Managed Care Forum Contracting
Checklist, HFMA Wants You to Know, 21 Apr 2004
28
30
Contracting KPIs
Source Managed Care Forum Contracting
Checklist, HFMA Wants You to Know, 21 Apr 2004
29
31
Contracting KPIs
Source Managed Care Forum Contracting
Checklist, HFMA Wants You to Know, 21 Apr 2004
30
32
Contracting KPIs
Source Managed Care Forum Contracting
Checklist, HFMA Wants You to Know, 21 Apr 2004
31
33
Contracting KPIs
Source Managed Care Forum Contracting
Checklist, HFMA Wants You to Know, 21 Apr 2004
32
34
Contracting KPIs
Source Managed Care Forum Contracting
Checklist, HFMA Wants You to Know, 21 Apr 2004
33
35
Contracting KPIs
Source 15 Questions to Ask Before Signing a
Managed Care Contract, Private Sector Advocacy,
Dec 2002
34
36
Contracting KPIs
Source 15 Questions to Ask Before Signing a
Managed Care Contract, Private Sector Advocacy,
Dec 2002
35
37
Contracting KPIs
Source Wilson, David B., 3 Steps to Profitable
Managed Care Contracts, hfm, May 2004
36
38
Contracting KPIs
Source Wilson, David B., 3 Steps to Profitable
Managed Care Contracts, hfm, May 2004
37
39
Contracting KPIs
Source Wilson, David B., 3 Steps to Profitable
Managed Care Contracts, hfm, May 2004
38
40
Contracting KPIs
Source Wilson, David B., 3 Steps to Profitable
Managed Care Contracts, hfm, May 2004
39
41
Contracting KPIs
Source Wilson, David B., 3 Steps to Profitable
Managed Care Contracts, hfm, May 2004
40
42
Contracting KPIs
Source Miller, Thomas R., Conducting a Managed
Care Contract Review, hfm, Jan 1998
41
43
Contracting KPIs
Source Miller, Thomas R., Conducting a Managed
Care Contract Review, hfm, Jan 1998
42
44
Contracting KPIs
Source Miller, Thomas R., Conducting a Managed
Care Contract Review, hfm, Jan 1998
43
45
Contracting KPIs
Source Miller, Thomas R., Conducting a Managed
Care Contract Review, hfm, Jan 1998
44
46
Contracting KPIs
Source Miller, Thomas R., Conducting a Managed
Care Contract Review, hfm, Jan 1998
45
47
Contracting KPIs
Source Managing Your Managed Care, HFMA-NC
Tarheel News
46
48
Rev Cycle KPI Hierarchy
47
49
KPI Hierarchy Level 1 Indicators
  • Cash collections
  • Gross and net receivables
  • Payor aging gt 90 days
  • Cash of net revenue
  • Cost to collect

48
50
Cash Collections 1st Level
49
51
Gross A / R 1st Level
50
52
Net A / R 1st Level
51
53
Payor Aging gt90 1st Level
52
54
Cash of Net Rev 1st Level
53
55
Cost-to-Collect 1st Level
54
56
KPI Hierarchy Level 2 Indicators
  • Net A/R days
  • Denials of gross revenue
  • Cash of collection goal
  • Point-of-service cash of goal

55
57
Net A / R Days 2nd Level
56
58
Denials of Gross Rev 2nd Level
57
59
Cash of Cash Goal 2nd Level
58
60
P-O-S Cash of Goal 2nd Level
59
61
KPI Hierarchy Level 3 Indicators
  • Credit balance receivables
  • Clean claims throughput
  • Net revenue
  • Case mix index (CMI)
  • Open accounts

60
62
Credit-Balance A / R 3rd Level
61
63
Clean Claim 3rd Level
62
64
Net Revenue 3rd Level
63
65
Case Mix Index 3rd Level
64
66
Total Open Accounts 3rd Level
65
67
Payor Scorecard
  • Financial Indicators
  • Cash Collections Indicators
  • Denials and Appeals Indicators

66
68
Payor Scorecard
67
69
KPI Hierarchy Level 4 Indicators
  • By Major Payor Category or Plan Code
  • of Total A/R gt60 Days
  • of A/R gt35 Days (No Pmt, No Response)
  • of A/R in Underpaid Category
  • of A/R in Appeal Status
  • of A/R in Overpaid Category

68
70
69
71
70
72
71
73
72
74
Rev Cycle KPIs by Area
73
75
Rev Cycle KPIs by Area Pre-Registration /
Pre-Authorization
74
76
Rev Cycle KPIs by Area Pre-Reg / Pre-Auth
(contd)
75
77
Rev Cycle KPIs by Area Insurance Verification
76
78
Rev Cycle KPIs by Area Insurance Verification
(contd)
77
79
Rev Cycle KPIs by Area 3rd-Party Guarantor
Follow-Up
78
80
Rev Cycle KPIs by Area 3rd-Party Guarantor F-U
(contd)
79
81
Rev Cycle KPIs by Area 3rd-Party Guarantor F-U
(contd)
80
82
KPIs by Functional Area 3rd-Party Guarantor F-U
(contd)
81
83
KPIs by Functional Area 3rd-Party Guarantor F-U
(contd)
82
84
KPIs by Functional Area Cashiering / Refunds /
Adj Posting
83
85
KPIs by Functional Area Cashiering / Refunds /
Adjs (contd)
84
86
KPIs by Functional Area Cashiering / Refunds /
Adjs (contd)
85
87
Rev Cycle KPIs by Area Denials
86
88
Rev Cycle KPIs by Area Denials (contd)
87
89
Rev Cycle KPIs by Area Denials (contd)
88
90
Rev Cycle KPIs by Area Denials (contd)
89
91
Rev Cycle KPIs by Area Denials (contd)
90
92
Dont Be in Denial About...
  • Denials

91
93
Denials Underpayments How Much is Lost Every
Year?
Total Hospital Denials (as of total hospital
cases)
Total Hospital Underpayments (as of total
hospital cases)
Total Revenue Opportunity 3.3 Million
1.7 M additional revenue
1.6 M additional revenue
Current Practice
Best Practice
Current Practice
Best Practice
Source Health Care Advisory Board
92
94
Denials Underpayments How Much is Lost Every
Year?
Self Pay Bad Debt 12
Denials 41
Underpayments 47
Source Health Care Advisory Board, Zimmerman
Associates, HFMA, and McKesson customers
experience. Based on hospitals with average
payor mix.
93
95
Denials Underpayments Sources of Denials
  • 41 - Authorization
  • 19 - Eligibility
  • 19 - Medical Necessity
  • 15 - Documentation
  • 6 - Billing

80 of errors resulting in denials occur during
the up-stream patient access processes
94
96
Denials Underpayments Good News!
Percentage of Preventable Denials
Source Health Care Advisory Board
95
97
Denials Underpayments Common Denial Problems
  • High denial rates and associated write offs
  • Slow and inefficient MD communications
  • Time-consuming manual pre-service processes
  • Rising self-pay bad debt (25 billion in 2004)

96
98
Denials Underpayments Common Denial Problems
  • Inefficient and time-consuming patient and
    insurance data collection
  • Invalid patient ID and address info returned
    mail (6 15)
  • Manual, paper based document collection and
    retrieval

97
99
Denials Underpayments Common Payor Denial
Reasons
  • Service / procedure payment reduced
  • Multiple units paid as one unit
  • Patient not covered on date of service
  • Services not covered
  • Not medically necessary
  • Not reasonable
  • Specifically excluded
  • Elective or patient convenience

98
100
Denials Underpayments Common Payor Denial
Reasons
  • Duplicate / previously paid claim
  • Bundling / unbundling error
  • Modifier not provided
  • Procedure code mismatches
  • vs. services provided
  • vs. patients gender
  • vs. modifier / place of service
  • Diagnosis vs. age / gender / procedure

99
101
Denials Underpayments Common Denial Problem
Indicators
  • Average net revenue per case declining
  • Many denials simply written off
  • No feedback loop to responsible areas
  • No ability to identify current status
  • Total denials ( and )
  • Denials by payor
  • Denials by reason

100
102
Denials Underpayments Best Practice Strategies
  • Create standard definitions (use HIPAAs)
  • Use root cause analysis
  • Apply the 80/20 rule focus on high
  • Use prospective prevention
  • Denial management task force
  • Trending and education
  • Remittance monitoring / management
  • Accountability fix where broken

101
103
Denials Underpayments Best Practice Strategies
  • Good documentation
  • Accurate procedures
  • Well-educated employees in all relevant
    departments
  • Front-end resolution / prevention

102
104
Denials Underpayments Best Practice Strategies
  • Identify coordinator for the process
  • Understand and meet deadlines
  • Build relationships at your payors
  • Analyze denials and target appeals
  • Prepare appeal letters
  • Clinicians / MDs for medical necessity
  • Managed care department for technical
  • Track results

103
105
Denials Underpayments Best Practice Strategies
  • Deploy standardized, best practice operating
    models
  • Leverage existing HIS infrastructure
  • Define performance expectations and productivity
    indicators
  • Use exception reporting for performance
    management and timely issue resolution
  • Create management- and executive-level
    performance monitoring tools and tracking reports

104
106
Denials Underpayments Best Practice Strategies
  • Integrate responsibility for achieving financial
    results
  • Instill accountability through on-going
    performance tracking and reporting
  • Align specialized resources to ensure
  • Knowledge transfer effective implementation
  • Change management
  • Focus on increasing cash and net revenue

105
107
Denials Underpayments Overall Total Solution
  • OVERALL Best Practice Model Components
  • Defined roles, responsibilities, and
    organizational structure for denial management
  • Consistent process for registration results
  • Integrated technology between clinical and
    revenue cycle process areas
  • Referral management, insurance verification,
    pre-certification, and authorization protocols
  • Access to accurate payor requirements and
    criteria
  • Knowledgeable employees regarding medical
    necessity
  • Accurate diagnosis and procedure coding
  • Standardized denial classifications and
    definitions
  • Accurate and up-to-date denial tracking and
    reporting
  • Concurrent management of inpatient denials
  • Policies and procedures for concurrent and
    retrospective denial processing
  • Active physician advisor
  • Standard protocols for appeals processing
  • Payor-specific initiatives for high volume payors
  • Consistent monitoring of write-offs and revenue
    loss due to avoidable denials
  • Defined and structured underpayment recovery
    program
  • Accountability for key performance indicators
  • Technology Enablers
  • Receivables WorkStation
  • Remittance Posting System
  • Contract Management System
  • Imaging System
  • KPI Reporting System

106
108
Denials Underpayments Patient Access Total
Solution
  • PATIENT ACCESS Best Practice Model Components
  • Defined guidelines and workflow tools for
    consistency in data capture, financial screening,
    admission, and discharge planning
  • Access to accurate payor requirements and
    criteria
  • Pre-service activities performed simultaneously,
    including pre-registration, insurance
    verification, and patient financial counseling
  • On-line/real time referrals, insurance
    verification, pre-authorization, address
    checking, and credit scoring
  • Knowledgeable employees regarding medical
    necessity, levels of care, and ABN requirements
  • Delay/deny policy for non-covered, non-emergent
    cases
  • Self pay portions identified and collected prior
    to or at time of service
  • Patient history reviewed for financial counseling
    needs
  • Standardized performance measures for each
    employee level and function
  • Quality assurance monitoring program
  • Workflow integration, on-going communication, and
    collaboration between Patient Access and Case
    Management
  • Technology Enablers
  • Scheduling System
  • Compliance System
  • Eligibility System
  • Address / Credit-Check System
  • Imaging System
  • KPI Reporting System

107
109
Denials Underpayments D-N-F-B Management Total
Solution
  • D-N-F-B MGT Best Practice Model Components
  • Timely and accurate documentation of procedures
    and diagnoses in medical record
  • Updated Charge Description Master (CDM) for
    additions and changes to HCPCS, CPT-4, and UB-92
    revenue codes
  • Records of discharged/departed patients available
    to Health Information Management (HIM) within 24
    hours
  • Reconciliation efforts completed daily with an
    escalation process for missing records
  • A FIFO (first in, first out) workload
    distribution in place supplemented by
    prioritizing high dollar accounts during backlog
    periods
  • Clinical reports electronically available to
    coders
  • 95 of coders productive time spent on coding
    and abstracting analysis and chart completion
    are performed by non-coders
  • Documentation issues trended and addressed
    concurrently
  • Transcription turnaround time complements timely
    coding
  • Standardized performance measures in place for
    each employee level and function in HIM department
  • Technology Enablers
  • Imaging System
  • KPI Reporting System

108
110
Denials Underpayments Billing Total Solution
  • BILLING Best Practice Model Components
  • Maximum use of payor-specific and correct coding
    edits
  • Claim-edit bill holds cleared within one day
  • Properly identified covered and non-covered
    charges
  • Corrective action and resolution of identified
    billing errors
  • Standardized and automated initial, secondary,
    and tertiary billing processes
  • Standard and timely processes for obtaining
    payor-mandated attachments
  • Documentation on payor contracts terms,
    conditions, and regulations consistently updated
    and available for employee use
  • Contract management software used to net down
    A/R down to expected reimbursement amounts
  • Accountability for key performance indicators
  • Ongoing employee training and education regarding
    billing regulations
  • Communication of data collection, charge capture,
    and medical records issues
  • Technology Enablers
  • Contract Management System
  • Compliance System
  • Electronic Billing System
  • Imaging System
  • KPI Reporting System

109
111
Denials Underpayments Follow-Up Collection
Total Solution
  • FOLLOW-UP Best Practice Model Components
  • Full use of automated collector workfiles, based
    on payor-specific follow-up criteria and
    timeframes
  • On-line/real time insurance follow-up status
    checking
  • Electronic documentation of all insurance and
    responsible party interaction, in standard note
    formats
  • Tracking of documentation / medical record
    requests
  • Electronic payment and remittance posting
  • Continuous monitoring of payments received
    against payor contract terms and expected
    reimbursement
  • Ready access to all EOB, remittance, and patient
    payment documentation
  • Timely response to telephone and correspondence
    inquiries
  • Integrated denial management activities
  • Monitoring and maintaining appropriate
    authorization levels for write-offs
  • Defined and structured underpayment recovery
    program
  • Accountability for key performance indicators
  • Technology Enablers
  • Receivables WorkStation
  • Remittance Posting System
  • Contract Management System
  • Imaging System
  • KPI Reporting System

110
112
I.T. A Good Workman... Never Blames
the Tools
111
113
Information Technology Bolt-On Systems
  • According to research by PwC, providers using
    revenue cycle bolt-on technology achieve better
    results in
  • First-pass yield in billing
  • Days in accounts receivable
  • Percent of accounts greater than 90 days from
    date-of-service
  • Secondary billing speed and accuracy
  • Regulatory compliance
  • Harris, Turning Your Revenue Cycle Into a Hot Rod
    Using Bolt-On Technology, HFMA ANI 2004

112
114
Information Technology Bolt-On Systems
  • Denial management
  • Claims edits and error checking
  • Document imaging / scanning
  • Contract management
  • Automated authorization and pre-cert
  • Electronic eligibility verification
  • Utilization review tracking
  • Address and credit check
  • Pre-bill edit

113
115
Information Technology Bolt-On Systems
  • Prompt payment / interest calculation
  • Receivables workstation
  • Predictive dialer
  • Returned mail address locator
  • 3rd-party follow-up via Internet
  • Outpatient and OR scheduling
  • MPI duplicates control
  • Electronic scrip (pre-svc automation)

114
116
Information Technology Bolt-On Systems
Compliance
  • Operates in real time to identify services not
    covered by payors
  • Produces Advance Beneficiary Notices (ABNs), or
    equivalent, for patient liability
  • Audits clinical codes before claim submission
  • Offers multi-million comprehensive local and
    national edits, with monthly updates

115
117
Information Technology Bolt-On Systems
Contract Mgt
  • Contracting module identifies denials and
    underpayments
  • Produces reports to assist with collections
  • Allows what-if analysis for new contracts
  • Offers two-way integration with core HIS systems
  • Provides national library of contract terms, to
    ensure calculations are correct / reliable

116
118
Information Technology Bolt-On Systems
Electronic Claims
  • Identifies and corrects errors on-line, providing
    clean claims
  • Flags administrative / clinical coding errors
  • Two-way integration with core HIS systems saves
    updating time, ensures data integrity
  • Electronic claim submission via central
    clearinghouses eliminates the need to maintain
    multiple payor connections

117
119
Information Technology Bolt-On Systems
Electronic Remits
  • Aids retrieval of electronic remittance files
    from payors
  • Translates payors proprietary electronic
    remittance file formats to ANSI 835 format
    required for transaction posting
  • Enables denial management follow up and reporting
    with KPIs reporting module

118
120
Information Technology Bolt-On Systems A/R
WorkStation
  • Provides single-point access for billing and
    collection follow-up activities
  • Improves productivity via management-defined work
    queues
  • Consolidates multiple sources of claim
    information
  • Reduces cost of collections and claim follow-up

119
121
Information Technology Bolt-On Systems
Denials Analysis
  • Has built-in web-based GUI reports on payors
    contract performance and denial history
  • Offers centralized repository of denial info, for
    pinpointing and quantifying denial problems
  • Normalizes data across payors
  • Measures follow-up success and tracks recoveries

120
122
Information Technology Bolt-On Systems
Decision Support
  • Consolidates financial and clinical data
  • Performs profitability analyses and what if
    scenarios to support payor negotiations
  • Supports Medicare Cost Report and state-mandated
    reporting
  • Highlights key performance measures
  • Provides web-based interactive analysis

121
123
Information Technology Bolt-On Systems Exec
Info System
  • Highlights key performance indicators
  • Provides web-based interactive analysis with
    drill-down capability
  • Consolidates financial and clinical data
  • Performs profitability analyses and what-if
    scenarios
  • Sends alerts and e-mail notifications, based on
    pre-selected criteria

122
124
Operationalizing Contracts
123
125
Operationalizing Contracts Opportunities for
Improvement
  • Denial management 50
  • Cash acceleration 25
  • Patient / guarantor collections 10
  • 3rd-party payment accuracy 10
  • Vendor contract coordination 5
  • Source Guyton Lund, Healthcare Financial
    Management, Mar 2003

124
126
Operationalizing Contracts Opportunities for
Improvement
  • Denials management 50
  • Enhance authorization and certification
  • Implement concurrent UR
  • Document care completely and timely
  • Improve registration data quality
  • Implement concurrent coding
  • Source Guyton Lund, Healthcare Financial
    Management, Mar 2003

125
127
Operationalizing Contracts Opportunities for
Improvement
  • Cash acceleration 25
  • Target large-balance accounts (leverage effect)
  • Focus on over-90 accounts (outsource or bad debt)
  • Re-deploy billers as collectors (automate claims
    submission)
  • Automate follow-up (receivables workstation)
  • Source Guyton Lund, Healthcare Financial
    Management, Mar 2003

126
128
Operationalizing Contracts Opportunities for
Improvement
  • Patient / guarantor collections 10
  • Implement point-of-service collection polices
    train employees to ask for
  • Offer patient payment options (credit cards and
    bank loan financing)
  • Accelerate self-pay follow-up process and
    statements (predictive dialer)
  • Consider outsourcing to gain technology and
    staffing leverage
  • Source Guyton Lund, Healthcare Financial
    Management, Mar 2003

127
129
Operationalizing Contracts Opportunities for
Improvement
  • 3rd-party payment accuracy 10
  • Implement contract management system
  • Deploy specialized underpayment collectors
  • Simplify contract terms
  • Define thresholds of materiality for
    underpayments (IP vs. OP)
  • Source Guyton Lund, Healthcare Financial
    Management, Mar 2003

128
130
Operationalizing Contracts Opportunities for
Improvement
  • Vendor contract coordination 5
  • Evaluate outpartner contract terms
  • Enhance / intensify contract management and
    performance evaluation
  • Coordinate RFP process to ensure optimum pricing
    and service levels
  • Improve or implement technology integration
  • Source Guyton Lund, Healthcare Financial
    Management, Mar 2003

129
131
Operationalizing Contracts Guiding Principles
for Improvement
  • Reduced variability
  • Implement common infrastructure and management
  • Monitor registration data quality address
    variances that result in denials
  • Proactively challenge payment denials and
    underpayments
  • Measure and monitor back-end operations
  • Source Guyton Lund, Healthcare Financial
    Management, Mar 2003

130
132
Operationalizing Contracts Guiding Principles
for Improvement
  • Better information management
  • Aggressively maintain CDM, MPI, contract matrix,
    and insurance master
  • Ensure adequate and complete clinical and
    collection documentation, to support payment
  • Leverage knowledge, insight, and clinical results
    in scheduling, authorization, and
    pre-certification processes
  • Source Guyton Lund, Healthcare Financial
    Management, Mar 2003

131
133
Operationalizing Contracts Guiding Principles
for Improvement
  • Comprehensive integration
  • Maintain and enforce common policies and
    processes
  • Implement technology to automate workflow and
    accelerate productivity
  • Leverage outpartner relationships and align
    common incentives
  • Source Guyton Lund, Healthcare Financial
    Management, Mar 2003

132
134
Operationalizing Contracts Guiding Principles
for Improvement
  • Pre-certification / pre-authorization
  • On-line LMRP / CCI / medical necessity screening
  • Process for obtaining ED / observation
    authorizations
  • Fax server and/or on-line payor linkages
  • Seven day per week operations
  • Source Guyton Lund, Healthcare Financial
    Management, Mar 2003

133
135
Operationalizing Contracts Guiding Principles
for Improvement
  • Insurance Eligibility Verification
  • Payor-specific protocols
  • Detailed, on-line insurance matrix
  • Contract terms, exclusions , etc.
  • Verification, certification, billing info
  • Eligibility red-flag questionnaires
  • On-line verification tools
  • Source Guyton Lund, Healthcare Financial
    Management, Mar 2003

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136
Operationalizing Contracts Guiding Principles
for Improvement
  • Continued-stay certification / UR
  • Dedicated employees trained about revenue cycle
    implications
  • Coordinated communication about payor criteria
    and/or denials with MDs
  • Automated certification renewal alerts
  • Continuous monitoring of observation patients
  • Seven day per week operations
  • Source Guyton Lund, Healthcare Financial
    Management, Mar 2003

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Operationalizing Contracts Guiding Principles
for Improvement
  • Claim submission / billing
  • Automated payor-specific and correct-coding edits
  • Maximization of electronic submission
  • Automated secondary / supplemental claim
    submission
  • Standard and timely submission of payor-mandated
    claim attachments
  • Source Guyton Lund, Healthcare Financial
    Management, Mar 2003

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Operationalizing Contracts Guiding Principles
for Improvement
  • Denials management cross-functional
  • Maximizing denials reversal rates
  • Automated managed care management system,
    integrated with host patient accounting system
  • Denials management database
  • Dedicated unit with no competing duties
  • Source Healthcare Advisory Board, 2001

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Operationalizing Contracts Guiding Principles
for Improvement
  • Denials management cross-functional (cont)
  • Hardwiring verification / authorization
  • Eligibility red flags questionnaires
  • Physician authorization protocols
  • Daily pre-certification fax notification to
    high-volume payors
  • Dedicated authorization clerk(s)
  • Source Healthcare Advisory Board, 2001

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Operationalizing Contracts Guiding Principles
for Improvement
  • Denials management cross-functional (cont)
  • Ensuring correct clinical documentation
  • Real-time medical necessity software
  • Medical-necessity DRG help sheets
  • One-page CCs checklists in charts
  • MD clinical documentation advisors
  • Minimizing payor discretion through comprehensive
    contract review
  • Source Healthcare Advisory Board, 2001

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Wheres Your Focus?
140
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Group-Work Exercise
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Group Exercise Things to Do
  • Compare your contracting KPI standards and
    processes to those on pages 25 - 44
  • Do you even measure most of these KPIs?
  • If so, how do you compare to these standards?

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144
Group Exercise Things to Do
  • Consider the following questions
  • How hard would it be to obtain this info in your
    organization?
  • How would you use the info, if you had it?
  • Do you have to pull info, or is it pushed to
    users?

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Group Exercise Things to Do
  • Do the best you can in the available time
  • If youre a consultant (you know who you are),
    use redacted (anonymous) client data
  • Be creative think outside the box
  • Expect to have fun and meet new colleagues

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In Conclusion, A Call to Action!
145
147
A Call to Action!
  • How do you start?
  • Open the discussion
  • Take time to define / refine KPIs
  • Gain consensus and commitment

146
148
A Call to Action!
  • How do you use KPIs to enact change?
  • Understand processes that generate KPIs
  • Create a culture of accountability and reward
  • Continuously adapt and iterate

147
149
A Call to Action!
  • Reduce complexity simplify your work
  • View key indicators that provide early warnings
  • Maintain personal involvement in critical areas
  • Access a mix of early-warning and historical data

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150
A Call to Action!
  • How do we enter data?
  • How do we get reports?
  • How do we use information to evaluate and
    renegotiate contracts?
  • When / why are things out-of-control?
  • What do we do next?

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A Call to Action!
  • Open / frame the discussion 5
  • Define / refine KPIs 50
  • Gain consensus / commitment 10
  • Demand accountability / reward results 25
  • Continuously adapt and iterate 10
  • Achieve results! 100

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Presenters Resume
David Hammer, Vice President, McKesson Mr. Hammer
is a Vice President in McKessons Business
Performance Solutions group. He focuses on
revenue cycle, consumer-directed health care, and
pay for performance issues for hospitals, health
systems, and related entities. In his more than
23 years of industry experience, Mr. Hammer has
held a variety of positions with leading health
systems, Big-4 consulting firms, I. T. vendors,
and revenue cycle outsourcing companies. Backgroun
d and Affiliations Mr. Hammer received an MBA in
Management and an MHS in Health Care
Administration from the University of Florida in
1987. He also received a BBA in Accounting with
a minor in Information Systems (Magna cum Laude)
from the University of North Florida in 1985.
Mr. Hammer is certified by HFMA as a Fellow
(FHFMA) and as a Certified Healthcare Finance
Professional (CHFP). He has been named an HFMA
Distinguished Speaker for five consecutive years,
and has received HFMAs Gold, Silver and Bronze
service awards. Recent Publications Mr. Hammers
most recent publication is Dont Panic CFOs
React to the New Economic Reality, which
appeared in the March 2009 issue of HFMAs
healthcare financial management journal (hfm).
Mr. Hammer authored the February 2008 cover story
in hfm, entitled Beyond Bolt-Ons Breakthroughs
in Revenue Cycle Information Systems. He also
wrote the July 2007 cover story, called The Next
Generation of Revenue Cycle Management, as well
as the July 2005 hfm cover story, entitled
Performance is Reality Is Your Revenue Cycle
Holding Up? Another one of his articles,
UPMCs Metric-Driven Revenue Cycle, appeared in
the September 2007 issue of hfm, and Data and
Dollars How CDHC is Driving the Convergence of
Banking and Health Care was published in hfms
February 2007 issue. His article Black Space
Versus White Space The New Revenue Cycle
Battleground appeared in the January 2007 issue,
and Customer Service Adapts to CDHC appeared in
the September 2006 issue. He also publishes
regularly in McKesson Provider Technologies
Answers magazine. Contact Information Mr. Hammer
can be reached by telephone at (954) 648-4764
and/or by e-mail at david.hammer_at_mckesson.com.
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