October 7, 2010

It’s RIC, not RAC!

By

kbasak100RACs are only the tip of the iceberg. In the new era of healthcare reform and accountable care, successful organizations must take a much wider view-they must focus not only on defending critical dollars from RAC auditors, but also address the entire spectrum of revenue integrity and compliance (RIC) issues threatening their bottom line.

 

This article, the first in a three-part series on optimizing revenue integrity, will review the set of RIC issues affecting most hospitals and health systems, clearly outlining the steps organizations should be taking to continue to serve their patients effectively and efficiently.

Assessing Your Organization's RIC Performance


By now, most organizations are somewhat prepared for RAC audits. Most have installed tracking software and deployed teams to handle the onslaught of record requests. But the RACs represent only a small part of a larger movement in the industry. Going forward, the real test of revenue integrity performance will demand answers to the following questions:

 

How confident are you that your organization is able to:
(1) support every dollar of current revenue earned?
(2) capture all appropriate charges and correctly bill for all services provided? and
(3) prevent future losses?

 

Negative answers to these questions require focus on several critical issues.

 

Six Critical Revenue Integrity and Compliance (RIC) Issues

 

Specifically, successful organizations will pay attention to the following:

 

Efficient, low-cost acute care: Given the existing constrained payment environment and steady deterioration of payer mix, hospitals will have to run their inpatient operations much more efficiently - meaning reduced supply spending, increased labor productivity and effective revenue management. The focus and payments will continue to shift towards preventative care and avoiding readmissions and hospital acquired conditions will become increasingly important.

 

Appropriately documenting and charging for services provided: In response to thinning margins and greater scrutiny of appropriateness of payments to providers, hospitals must record all services provided and materials used accurately and in a timely manner.  Particular attention should be paid to identifying missed charges and recovering underpayments.

 

Tighter integration with physicians: Physician documentation represents the key evidence needed to ensure that services provided and materials used are billed appropriately and in compliance with all related guidelines. Clinical documentation improvement programs therefore are critical to revenue integrity and compliance. (Note also that, as a result of increased physician employment, joint payer contracting, and bundled payments under accountable care, physicians now have greater incentive to comply with documentation guidelines.)

 

Robust use of clinical IT: Successful hospitals will ramp up investment in information technology that enables tighter adherence to evidence-based guidelines, more rigorous data collection and management using performance metrics, and better transparency and exchange of patient information.

 

Greater investment in the "front end" of care: Facilities should take enhanced primary-care approaches that allow clinicians to manage chronic disease in lower-cost settings and avoid unnecessary utilization of high-end, high-cost services, thus aligning care with medical necessity while providing advantages to hospitals under accountable care.

 

Integration on the "back end" of care: Successful hospitals will seek to avoid excessive readmissions by coordinating care with post-acute providers (SNFs, LTACs, home health providers), and in many cases may choose to own those providers in order to reduce the financial risk of wide quality variability in the post-acute environment.

 

Getting Started: Five Imperatives for Early Success
With these issues in mind, the strategy that progressive organizations are taking to enact a more proactive and holistic approach to revenue integrity and compliance starts with the following steps:

 

1.   Enfranchise CDM Coordinators: Because the supplies and services listed on the charge description master (CDM) drive the majority of hospital claims reimbursements, a current and accurate charge master is critical to optimizing returns. Proper maintenance and management of the CDM reduces overpayments, automated takebacks, underpayments, fines and penalties.

 

2.   Scrutinize Your Charge Capture Processes: Implement a system to monitor and prevent charge errors on a continuing basis. We are finding that, at many organizations where a strict revenue integrity process is not in place, a significant amount of money is being left on the table due to missed charges.

 

3.   Implement a Clinical Documentation Improvement Program: Accurate and comprehensive physician documentation is key to a provider's ability to justify the appropriateness of care delivered and payment rendered. An increasing number of progressive organizations are investing in clinical documentation improvement programs to ensure the integrity of their claims.

 



 

4.   Appoint a Dedicated Physician Advisor: A dedicated physician advisor provides medical expertise and clinical judgment to improve the appropriateness, quality and cost effectiveness of patient care. The responsibilities of the role include serving the hospital through teaching, consulting and advising both the case-management department and the medical staff on matters regarding physician practice patterns, utilization of resources, medical necessity and clinical documentation improvement. The dedicated physician advisor utilizes a series of compliance reports to share with the clinical team and streamlines communication between case managers and medical staff, helping secure physician buy-in for continuing improvement efforts.

 

5.   Implement Code Scrubbing: Progressive organizations have looked into technology to eliminate conflicts between diagnosis and procedure codes on physician orders.  They rely on software to identify incorrect DRG assignments or lack of medical necessity.

 

With the changes and challenges looming on healthcare's horizon, it is important that organizations become more proactive in managing their revenue integrity and compliance as a whole. It is no longer enough merely to prepare for the possibility of one of the many audits that will likely come our way. Let's switch the focus to RIC, not RACs.

 

About the Author

 

Basak Kaya is an Associate Director at The Advisory Board Company, assisting member institutions in improving their revenue capture through business intelligence and best practices in coding, documentation and charge capture. Over the years, Basak supported over 60 hospitals, ranging from 100 bed community hospitals to multi-hospital systems, as a Revenue Cycle consultant. Prior to joining forces with providers, Basak worked as a strategy analyst for pharmaceutical companies such as Pfizer and GlaxoSmithKline. Basak received her MBA in Health Services Administration from The George Washington University and holds a Bachelor of Science degree in Economics from University of Virginia.

 

Contact the Author

 

kayab@advisory.com

 

To read article, "Over and Under-Coding: Auditing for Length of Stay," please click here

 

 

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