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Audits are becoming a generally unpleasant fact of life for healthcare organizations, with an increasing number of entities conducting inquiries that consume valuable staff time and administrative resources by creating reactive "fire drill" situations. These organizations include federal, state and commercial programs seeking to identify over-payments and ensure compliance requirements are being satisfied.
The old adage "the best defense is a good offense" can be applied to healthcare organizations faced with defending their reimbursement against auditors and operating within tightening guidelines. Instituting proactive revenue-cycle management with robust policies, process management and internal auditing lets hospitals take a strong offensive position against reimbursement threats.
"Finding the resources to justify receiving accurate reimbursement is an administrative burden," says Cynthia Fry, vice president of revenue for Catholic Health East in Newtown Square, PA. "New strategies are needed - technology, education, collaboration and leadership - to create and sustain an integrated revenue integrity program."
Rather than ignoring the issues until the auditors come to call, and then having to take an anxiety-ridden defensive position, some top-performing hospitals are calling a time out to plan strategy and implement aggressive policies and activities that allow the team to move forward - regardless of audits - towards the goal of revenue integrity.
Establishing the Basics
The revenue integrity goal is to achieve operational efficiency, reduce compliance risk and optimize reimbursement. Attaining organizational change that is this pervasive begins with the creation of a multidisciplinary revenue integrity team to strengthen the interface between clinical and revenue programs.
This revenue integrity team is supplemented with "special teams" - thought leadership groups focused on identifying problem areas and staying abreast of changes in codes, rules and regulations. These teams take a disciplined approach to develop work plans to close the gaps between current operations and mandated or desired outcomes.
These teams have a powerful support system in the form of advanced technology. By leveraging automated solutions, they can identify, address and prevent errors that cause revenue leakage. This is a fundamental shift from quantifying return on investment (ROI) based on errors found downstream, to a more proactive process that ensures industry best practices are followed from early in the revenue cycle all the way through to the measurement of real-time transaction accuracy.
 Making a successful transition depends on a commitment to consistency, evaluation and accountability, as well as a proactive plan for achieving these best practices. Adding specialized coaching in the form of professional support services to supplement internal resources and introduce industry best practices is particularly appealing for organizations whose personnel are already working at capacity.
Tackling Reimbursement
Once a foundation with policies and process management are in place, the focus can shift to the critical issue of reimbursement. The typical U.S. hospital can easily experience an initial annual denial rate of 7 percent or higher on its claims. Avoiding revenue loss from those denials requires many staff hours to research, correct and resubmit denied claims, according to the June 2008 HFMA session Best Practices for a Denials Prevention Program, part of the Payment & Reimbursement Forum. For many organizations, such levels of unrecovered revenue can mean the difference between operating at a loss and staying in the black.
Taking the offensive in reimbursement means establishing a proactive approach to audits and compliance requirements. This begins with conducting internal pre-bill audits and back-end audits, then setting benchmarks toward increment improvement. For example, a well-performing hospital might set these goals:
• Initial denials <4 percent of charges rejected on remittance advice, measured monthly
• Rejected claims are worked within five days of receipt
• Write-offs are less than 0.4 percent of gross revenue
Aggregating denial data to find patterns that point to root cause offers hospitals an opportunity to make a significant impact on finances. Being engaged in efficient denial management practices and continuously setting new targets to increase the percentage of clean claims means any new denial activity will be immediately recognizable and can be acted upon quickly.
Achieving Financial & Regulatory Success
Focusing on compliance and detecting inaccuracies and lost charges means less adverse ROI to defend and more earned revenue retained. It also obviates areas of concern that might otherwise put you on the defensive when undergoing reimbursement audits or compliance inspections.
In today's economic and regulatory landscape, there is a growing need for healthcare executives to be proactive, especially when it comes to revenue-cycle management. Rather than taking healthcare executives' traditionally defensive stance of reacting to continually changing regulations and policy interpretations, going on the offense with organization-wide initiatives will result in decreased operating costs and burden.
Karen Bowden is Craneware InSight senior vice president.
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