HFMA-NJ’s PFS Quarterly Meeting Woodbridge Hilton – 11 January 2011 Key Performance Indicators (KPIs): Strategies for a High-Performance Revenue Cycle David Hammer – Partner Accenture Health & Public Services Practice Fort Lauderdale, FL
Jan 21, 2016
HFMA-NJ’s PFS Quarterly MeetingWoodbridge Hilton – 11 January 2011
Key Performance Indicators (KPIs):Strategies for a High-Performance
Revenue Cycle
David Hammer – PartnerAccenture Health & Public Services Practice
Fort Lauderdale, FL
1
Content and Organization
IntroductionKey Performance IndicatorsHFMA’s MAP Initiative
Organization and ManagementHFMA MAP
MAP InitiativeMAP Award
Key Performance IndicatorsPerformance Measurement ConceptsKPI HierarchyLevel I, II, III, and IV KPIs
2
Content and Organization (cont’d)
Metric-Driven Revenue CycleAppendix 1: MAP Keys – 19 DefinitionsAppendix 2: KPIs by Functional Area
Best Practice Performance StandardsBest Practice ProcessesCall to Action
3
Even the VERY BEST Keep Score!
“In business, words are words, explanations are
explanations, promises are promises, but only
performance is reality.”
Harold S. GeneenFormer President and CEO of ITT
4
“If you can’t measure it, you can’t manage it.”
Michael BloombergMayor of New York City and
CEO of Bloomberg, Inc.
Even the VERY BEST Keep Score!
5
Where’s Your Focus?
6
What is a Key Performance Indicator?Numerical factorUsed to quantitatively measure performance
Activities, volumes, etc.Business processesFinancial assetsFunctional groupsThe entire revenue cycle
SOURCE: BearingPoint, Key Performance Indicators
KPI Introduction
7
Purposes of KPIsView a snapshot of performance at an individual, group, department, hospital, or regional levelAssess the current situation and determine root causes of identified problem areasSet goals, expectations, and financial incentives for any individual or groupTrend the performance of the selected individual or group over time
SOURCE: BearingPoint, Key Performance Indicators
KPI Introduction
HFMA’s PATIENT FRIENDLY BILLING® ProjectThe KPI Connection
8
To identify revenue cycle characteristics or processes
with the most impact on value to consumers and hospitals
HFMA’s PATIENT FRIENDLY BILLING® Project Standards of Excellence: Goal
9
Organizational culture that elevates the importance of the revenue cycle
Be good at what you need to be good at
Accelerate improvements – take action and execute
“Must Haves”
10
HFMA’s PATIENT FRIENDLY BILLING® Project Standards of Excellence: Findings
11
A picture’s worth a thousand words…
12
Organization and ManagementStructure and Function
Information Technology
Customer Service
Patient Access
• Scheduling• Pre-Reg• Registration• Verification
Revenue Integrity
• Charge capture
• Coding• CDM• Contracting
Billing
• Unbilled control
• Electronic and manual billing
• Secondary billing
Follow-up
• Large-balance
• Small-balance
• 3rd-party• Self-pay
Cash Control
• Collection• Posting• Payment
analysis• Denials
manage-ment
Bad Debt
• Pre-listing• Account
placement• Agency
tracking
KPIs Reporting
• ATBs• Productivity• Unbilled• Claim
submission• Denials
reasons
REVENUE CYCLE CONTROL POINTS
SOURCE: KPMG
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CHARGECAPTURE& ENTRY
MEDICAL MANAGEMENT
REGISTRATION& POS CASH
COLLECTIONS
PRE-REG & PRE-CERT
(Authorization)
PATIENT &INSURANCE
VERIFICATION
REMITTANCE& DENIAL
MANAGEMENT
CONTRACT MANAGEMENT
CLAIMS &INVOICE
PROCESSINGFIRST &
THIRD-PARTYFOLLOW-UP
MEDICALRECORD &
CODING
SCHEDULING
(RESOURCE,PATIENT
SURGICAL,
SUPPLY)
DATAANALYSIS &REPORTING
MATERIALSMANAGEMENT
REQUESTFOR
SERVICEFINANCIALSERVICES
CLINICALCARE
Organization and ManagementStructure and Function
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Organization and ManagementStructure and Function
DENIAL &APPEAL
MGTSCHEDU-LING
1PRE-REG & PRE-CERT
2
INSVERF
3
REG + POSCOLLEC-
TIONS
4
FINANCIALCOUNS
5
CHARGECAPTURE& ENTRY
6 MEDICAL MGT
7
CLAIMSUBMIT
9
3RD PARTYFOLLOW-UP
10
PMT + ADJ POSTING
11
13
CONTRACTADMIN
14
DENIALPROCES-
SING
12
MEDICALRECORDS &
CODING
8
Revenue
InformationTechnology
SOURCE: PriceWaterhouse Coopers
PATIENTPatient
RACs &
MICs
Capital Markets
Affiliated & Employed MDs
Employers
HMOs / PPOs
O.I.G & Other Regulators
Financial Institutions
Medicare & Medicaid FIs
HEALTHCARE REFORM
COMPLIANCE
PATIENT
CASH FLOW
COST CONTAINMENT
CONSOLIDATION / STANDARDIZATION
QUALITY-DRIVEN REIMBURSEMENT
SOURCE: PriceWaterhouse Coopers 15
Organization and ManagementStructure and Function
DENIAL &APPEAL
MANAGEMENTSCHEDULING
1PRE-REG & PRE-CERT
2
INSURANCE VERIFICATION
3
FINANCIALCOUNSELING
4
REGISTRATION& POS CASH
COLLECTIONS
5
CHARGECAPTURE& ENTRY
6 MEDICAL MANAGEMENT
7
CLAIMSSUBMISSION
9
THIRD PARTYFOLLOW-UP
10
PAYMENT POSTING
11
13
CONTRACTNEGOTIATION /
ADMIN.
14
REJECTIONPROCESSING
12
MEDICALRECORDS &
CODING
8
Revenue
InformationTechnology
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What is HFMA’s MAP initiative?
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HFMA’s MAP InitiativeRevenue Cycle Excellence
MAP is a comprehensive performance-improvement strategy
Identify indicatorsTrack and improve performanceRecognize excellenceShare successful practices
18
HFMA’s MAP InitiativeWhat is MAP?
Clearly-definedMeasurableDiscerningComparable
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HFMA’s MAP InitiativeWhat are MAP Keys?
MAP Keys are provider-developed revenue cycle key performance indicators
Patient AccessRevenue IntegrityClaims AdjudicationManagement
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HFMA’s MAP InitiativeMAP Keys
MAP Keys focus on key areas of revenue cycle performance
Indicator
Purpose
Value
Calculation
Net days in A/R
Trending indicator of overall A/R performance
Indicates revenue cycle efficiency
Net A/R ÷ Net patient-service revenue
21
HFMA’s MAP InitiativeMAP Keys
Purpose | Value | CalculationExample
Manage trendsIdentify opportunitiesPrioritize opportunitiesIndentify successful practices
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HFMA’s MAP InitiativeMAP Keys
Comparing Performance
Industry trends
Performance over multiple time frames
Pre-selected peer groups
Customized peer groups
Source: HFMA’s
Bad Debt vs Charity Care as % of Revenue
Jan 09 Mar 09 May 09 Jul 09 Sep 09 Nov 09
0%
1%
3%
4%
5%
23
HFMA’s MAP InitiativeMAP Keys
Comparing Performance:Flexible comparisons for in-depth analysis
24
What is HFMA’s MAP Award?
HFMA’s MAP Award recognizes healthcare organizations that achieve revenue cycle excellence and serve as models for the
healthcare industry
25
HFMA’s MAP AwardRevenue Cycle Excellence
HFMA’s MAP Keys (KPIs) are the primary metrics used in the applicationBest practices identified in 2009’s PFB® research are incorporated in the MAP Award applicationAdditional criteria to evaluate patient satisfaction are also included
The MAP application evaluates HFMA’s financial-performance MAP Keys, as well as
PATIENT FRIENDLY BILLING® Project criteria
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HFMA’s MAP AwardMAP Application Data Approach
Point-of-Service CollectionsTop-25 quartile: 35%Top-10 decile: 46%
Research% of high performers that cite importance of investing in upstream technologies
% of high performers offering price estimates to patients at registration
Successful practicesUse of sample scripts
Use of dedicated Patient Access trainers
Source: HFMA’s 2010 MAP Award Data
Source: HFMA’s March 2010
POS Collections Comparable Statistics27% Median43.6% Top-Quartile Performance
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HFMA’s MAP AwardSample Insights from High-Performance Organizations
Improvement Opportunity: POS Collections
KPIMETRIC
OVERALLRANGE
TOP 25th
PERCENTILETOP 10th
PERCENTILE
Net Days in A/R 58.9 – 23.2 37.4 32.8
POS Cash Collections 0.0% – 66.0% 35.0% 46.3%
Cash Collections as a Percentage of Adjusted Net Patient-Service Revenue
100.0% – 117.8% 101.8% 104.4%
Total Bad Debt Write-off Percentage
9.47% – 0.29% 1.30% 0.90%
Days in DNFB 13.50 – 0.13 6.3 2.7
Patient Satisfaction Score 51 – 95% 78% 82%
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HFMA’s MAP AwardSummary of 2010 Results
1. Net Days in Accounts Receivable
2. Over-90 Aged A/R as a Percentage of Billed A/R
3. Point-of-Service (POS) Cash Collections
4. Cash Collections as a Percentage of Adjusted Net Patient-Service Revenue
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HFMA’s MAP AwardMAP Keys Selected for 2011
5. Total Bad Debt Write-Off Percentage
6. Total Charity Care Write-Off Percentage
7. Days in Total Discharge-Not-Final-Billed (DNFB)
8. Days in Total Final-Billed-Not-Submitted-to-Payer (FBNS)
30
HFMA’s MAP AwardMAP Keys Selected for 2011
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How should you measure performance?
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Why Use KPIs?Keep a record and tell a storyBenchmark against your goals and industry best practicesIdentify and manage trends, not single-period resultsIllustrate relationships between KPIs
Key Performance IndicatorsPerformance Measurement Concepts
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Use external, verifiable info sourcesShare the same data with everyone
BoardSenior managementPeersSubordinates
Report both “good” and “bad” results
Key Performance IndicatorsPerformance Measurement Concepts
34
Emphasize relative, not absolute KPIsEnable non-manual data extractionRemember, measures drive goal achievementMinimize “budget goal” approachEmbrace “stretch goal” approachLink incentive comp to stretch goals
Key Performance IndicatorsPerformance Measurement Concepts
35
Not all KPIs are created equal…
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Level I: Board members, senior execs, financial and clinical directors, and internal reporting for all revenue cycle managers, supervisors, and employeesLevel II: CFO, finance directors and employees, and internal reporting for all revenue cycle managers, supervisors, and employees
Key Performance IndicatorsKPI Hierarchy
37
Level III: CFO plus internal reporting for all revenue cycle managers, supervisors, and employeesLevel IV: Internal comparisons of different payors plus external reporting for third party payors
Key Performance IndicatorsKPI Hierarchy
38
Key Performance IndicatorsKPI Hierarchy ─ First-Level Indicators
Cash collectionsGross and net A/RIn-House and D-N-F-B receivables3rd-party aging % > 90 daysCash % of net revenueCost to collect %
39
Key Performance IndicatorsCash Collections ─ First Level
40
Key Performance IndicatorsCash Collections ─ First Level
KPI GOAL M-T-D %
DAYS 20 10 50%
$ $20M $11M 55%
41
Key Performance IndicatorsGross A/R ─ First Level
42
Key Performance IndicatorsNet A/R ─ First Level
43
Key Performance IndicatorsIn-House and D-N-F-B A/R ─ First Level
44
Key Performance Indicators3rd-Party Aging % > 90 Days ─ First Level
45
Key Performance IndicatorsCash % of Net Revenue ─ First Level
46
Key Performance IndicatorsCost-to-Collect % ─ First Level
47
Key Performance IndicatorsKPI Hierarchy ─ Second-Level Indicators
Net A/R daysAllowance for doubtful accountsBad debt + charity % of gross revenueDenials % of gross revenueCash % of collection goalPoint-of-service cash % of POS goal
48
Key Performance IndicatorsNet A/R Days ─ Second Level
49
Key Performance IndicatorsAllowance for Doubtful Accts ─ Second Level
50
Key Performance IndicatorsB/D + Charity % of Gross Rev ─ Second Level
51
Key Performance IndicatorsDenials % of Gross Revenue ─ Second Level
52
Key Performance IndicatorsA/R Cash % of Cash Goal ─ Second Level
53
Key Performance IndicatorsP-O-S Cash % of Goal ─ Second Level
54
Key Performance IndicatorsKPI Hierarchy ─ Third-Level Indicators
Credit balance receivables Clean claims throughput %Collection agency netback %Net revenueCase mix index (CMI)Complaints to AdministrationOpen accounts
55
Key Performance IndicatorsCredit-Balance Receivables ─ Third Level
56
Key Performance IndicatorsClean-Claim Throughput % ─ Third Level
57
Key Performance IndicatorsCollection Agency Netback % ─ Third Level
58
Key Performance IndicatorsNet Revenue ─ Third Level
59
Key Performance IndicatorsCase Mix Index (CMI) ─ Third Level
60
Key Performance IndicatorsComplaints to Administration ─ Third Level
61
Key Performance IndicatorsOpen Accounts ─ Third Level
62
Revenue Cycle KPI reporting sample for:Board of DirectorsFinance CommitteeFinance DivisionInternal reporting
System-wide reporting example MS Access databaseManaged Care “Report Cards” (letters, actually…)
Key Performance IndicatorsManaged Care Report Cards ─ Fourth Level
63
By Major Payor Category or Plan Code% of Total A/R >60 Days% of A/R >35 Days (No Pmt, No Response)% of A/R in Underpaid Category% of A/R in Appeal Status% of A/R in Overpaid Category
Key Performance IndicatorsManaged Care Report Cards ─ Fourth Level
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MEASUREMENT PEER COMPARISONS SHOWTotal A/R by month Overall A/R trend & direction % A/R >60 days Claims processing issues % A/R >35 days Promptness of payment %/$ Underpaid Contract interpretation issues %/$ Denials under appeal Denial issues %/$ Overpaid Contract interpretation issues
Key Performance IndicatorsManaged Care Report Cards ─ Fourth Level
65
Key Performance IndicatorsManaged Care Report Cards ─ Fourth Level
66
Key Performance IndicatorsManaged Care Report Cards ─ Fourth Level
67
Key Performance IndicatorsManaged Care Report Cards ─ Fourth Level
68
Key Performance IndicatorsManaged Care Report Cards ─ Fourth Level
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So… You think you want ametric-driven revenue cycle?
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Key Performance IndicatorsPlanning and Implementing – Key Thoughts
How do you start?Open the discussionTake time to define / refine KPIsGain consensus and commitment
How do you use KPIs to enact change?Understand processes that generate KPIsCreate a culture of accountability and rewardContinuously adapt and iterate
71
Key Performance IndicatorsPlanning and Implementing – Key Thoughts
Take the complexity out; simplify your workView key indicators that provide early warningsMaintain personal involvement in critical areasAccess a mix of early-warning and historical data
72
Key Performance IndicatorsPlanning and Implementing – Key Questions
Consider the following questionsHow do we enter data?How do we get reports?How do we use information to effect change?When / why are things out-of-control?What do we do?
73
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%
Key Performance IndicatorsPlanning and Implementing – Call to Action!
74
Where’s Your Focus?
75
Bibliography
1. “15 Questions to Ask Before Signing a Managed Care Contract,” Private Sector Advocacy, Dec 2002
2. BearingPoint, Key Performance Indicators, Catholic Health East, 20033. Canfield, David and Scott Johnston, HFMA Patient Revenue Cycle
Industry Study, © Healthcare Financial Management Association, Westchester, IL, 2002
4. “Clinical Quality Guidelines,” NEJM, 348:2635-45, June 26, 20035. Guyton, Elizabeth and Chuck Lund, “Transforming the Revenue Cycle,”
Healthcare Financial Management, Mar 20036. Harris, David, “Turning Your Revenue Cycle Into a Hot Rod Using Bolt-
On Technology,” HFMA ANI, Jun 20047. LaForge, Richard and Johnny Tureaud, “Revenue-Cycle Redesign:
Honing the Details,” Healthcare Financial Management, Jan 20038. “Managed Care Forum Contracting Checklist,” HFMA Wants You to
Know, 21 Apr 2004
76
Bibliography
9. Miller, Thomas, “Conducting a Managed Care Contract Review,” Healthcare Financial Management, Jan 1998
10. Pogue, Neil – CMS Program Office, “Medicare Policy Update,” HFMA’s Revenue Cycle Strategies Conference, San Francisco, 09 Oct 2007
11. Schneider, Robert, Sheldon Mandelbaum, Ken Braboys, and Cynthia Bailey, “Process-Centered Revenue Cycle Management Optimizes Payment Process,” Healthcare Financial Management, Jan 2001
12. Stevenson, Paul, “Managed Care Cycle Provides Contract Oversight,” Healthcare Financial Management, Mar 2002
13. Walters, Roy, “Five Steps to Great Revenue Cycle Management,” Healthcare Financial Management, May 2002
14. Wennberg, John, E. Fisher, T. Stukel and S. Sharp, “Use of Medicare Claims Data to Monitor Provider-Specific Performance Among Patients with Severe Chronic Illness,” Journal of Health Affairs, 07 Oct 2004
15. Wilson, David, “3 Steps to Profitable Managed Care Contracts,” Healthcare Financial Management, May 2004
David Hammer, Partner, AccentureMr. Hammer is a Senior Executive (Partner) in Accenture's Health and Public Services Practice, specializing in revenue cycle management and health reform. He serves many of the largest health systems, MD-led clinics, and academic medical centers in the US. Prior to joining Accenture, David was VP of enterprise revenue management at McKesson, the nation's largest healthcare IT firm, and was previously the chief revenue officer for Charter Behavioral Health, a +100-facility health system. David has over 28 years of professional experience in healthcare, including executive leadership and direction, revenue cycle transformation, information system planning / implementation, and consulting. He has worked for a variety of leading health systems, software vendors, and professional services firms.
Background and AffiliationsMr. Hammer received an MBA in Management and an MHS in Health Care Administration from the University of Florida. He also received a BBA in Accounting with a minor in Information Systems (Magna cum Laude) from the University of North Florida. 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 seven consecutive years, and is a 2007 recipient of HFMA’s Medal of Honor service award.
Recent PublicationsMr. Hammer’s most recent publication is “Health Reform: Intended and Unintended Consequences,” which appeared in the October 2010 issue of HFMA’s healthcare financial management journal (hfm). “Don’t Panic: CFOs React to the New Economic Reality,” appeared in hfm’s March 2009 issue. 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, “UPMC’s 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 hfm’sFebruary 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.
Contact InformationMr. Hammer can be reached by telephone at (954) 648-4764 and/or by e-mail at [email protected] or at [email protected]
Instructor’s Bio
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Appendices – MAP Key Definitions and Detailed KPIs
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Definitions of HFMA’s MAP Keys…
Indicator
Purpose
Value
Calculation
Net days in A/R
Trending indicator of overall A/R performance
Indicates revenue cycle efficiency
Net A/RAverage Daily Net Patient
Service Revenue
HFMA’s MAP InitiativeMAP Keys: Net Days in A/R
Purpose | Value | Calculation
80
Indicator
Purpose
Value
Calculation
Aged A/R as a percentage of Billed A/R
Trending indicator of receivables collectability
Indicates RC’s ability to liquidate A/R
>30,>60,>90,>120 daysTotal Billed A/R
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Aged A/R Percentage of Final-Billed A/R
81
Indicator
Purpose
Value
Calculation
Point-of-Service Cash Collections
Trending indicator of point-of-service collection efforts
Indicates potential exposure to bad debt, accelerates cash collections, and can reduce collection costs
POS PaymentsTotal Patient Cash Collected
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Point-of-Service Cash Collections ($)
82
Indicator
Purpose
Value
Calculation
Cost to Collect
Trending indicator of operational performance
Indicates the efficiency and productivity of RC processTotal RC Cost
Total Cash Collected
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Cost to Collect
83
Indicator
Purpose
Value
Calculation
Cash Collections as a Percentage of Adjusted Net Patient-Service Revenue
Trending indicator of propensity to convert net revenue to cash
Indicates fiscal integrity / financial health of the organization
Total Cash CollectedAverage Monthly Net Revenue
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Cash Percentage of Net Revenue
84
Indicator
Purpose
Value
Calculation
Bad DebtTrending indicator of the effectiveness
of self-pay collection efforts and financial counseling
Indicates organization’s ability to collect self-pay accounts and identify payor sources for patients unable to meet financial obligations
Bad Debt Write-OffGross Patient Service Revenue
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Bad Debt (%)
85
Indicator
Purpose
Value
Calculation
Charity Care
Trending indicator of local ability to pay
Charity Care Write-OffGross Patient Service Revenue
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Charity Care (%)
86
Indicates organization’s ability to collect self-pay accounts and identify payor sources for patients unable to meet financial obligations
Indicator
Purpose
Value
Calculation
Days in Total Discharged Not Final Billed
Trending indicator of local ability to pay
Indicates RC performance and can identify performance issues impacting cash flow
Gross Dollars in DNFB A/RAverage Daily Gross Revenue
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Days in Total DNFB
87
Indicator
Purpose
Value
Calculation
Aged A/R as a % of Billed A/R, by Payor Group
Trending indicator of receivables collectability, by payor group
Indicates RC’s ability to liquidate A/R, by specific payor group
Billed Payor Group by Aging (>30,>60,>90,>120 days)
Total Billed A/R by payor group
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Aged A/R Percentage of Billed A/R by Payor
88
Indicator
Purpose
Value
Calculation
Days in Final Billed Not Submitted to Payor (FBNS)
Trending indicator of claims delayed by payor / regulatory edits in the claims processing system
Track the impact of internal / external requirements for clean claim production, which impact cash flow
Gross Dollars in FBNSAverage Daily Gross Revenue
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Days in FBNS
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Indicator
Purpose
Value
Calculation
Days in Total Discharged Not Submitted to Payer (DNSP)
Trending indicator of total claims-generation / submission effectiveness
Indicates revenue cycle performance and can identify performance issues impacting cash flow
Gross $ in DNFB + Gross $ in FBNSAverage Daily Gross Revenue
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Days in DNSP (DNFB + FBNS)
90
Indicator
Purpose
Value
Calculation
Late Charges as % of Total ChargesMeasure of revenue-integrity
effectivenessIdentify opportunities to improve
revenue integrity, reduce avoidable costs, enhance compliance, and accelerate cash flow
Charges with posting dates greater than 3 days from final service dateTotal gross charges
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Late Charge Percentage
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Indicator
Purpose
Value
Calculation
Initial Denial Rate – Zero-Pay Claims
Trending indicator of percentage of claims not paid
Indicates provider’s ability to comply with payor requirements and payor’s ability to accurately pay claims
Number of zero-pay claims deniedNumber of total claims remitted
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Initial Zero-Pay Denial Rate (#)
92
Indicator
Purpose
Value
Calculation
Initial Denial Rate – Partial-Pay Claims
Trending indicator of percentage of claims partially paid (underpaid)
Indicates provider’s ability to comply with payor requirements and payor’s ability to accurately pay claims
Number of partial-pay claims deniedNumber of total claims remitted
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Initial Partial-Pay Denial Rate (#)
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Indicator
Purpose
Value
Calculation
Denials Overturned on Appeal
Trending indicator of provider’s success in managing the appeal process
Indicates opportunities for payor and provider process improvement and cash-flow improvements
Number of appealed claims paidTotal number of claims appealed and
finalized or closed
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Appeals Success Rate (#)
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Indicator
Purpose
Value
Calculation
Net Days Revenue in Credit BalancesTrending indicator to accurately report
A/R values, ensure regulatory compliance, and monitor overall A/R management effectiveness
Indicates whether credit balances are managed to appropriate levels and are compliant w/ regulatory requirements
Dollars in Credit BalancesAverage Daily Net Patient-Service
Revenue
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Net Days in A/R Credits
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Indicator
Purpose
Value
Calculation
Pre-Registration RateTrending indicator of timeliness,
accuracy, and efficiency of patient access processes
Indicates revenue cycle efficiency and effectiveness
Number of patient encounterspre-registered
Number of scheduled patientencounters
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Pre-Registration Rate
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Indicator
Purpose
Value
Calculation
Insurance Verification Rate
Indicates revenue cycle process efficiency and effectiveness
Total number of verified encountersTotal number of registered encounters
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Insurance Verification Rate
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Trending indicator of timeliness, accuracy, and efficiency of patient access processes
Indicator
Purpose
Value
Calculation
Service-Authorization Rate
Indicates revenue cycle process efficiency and effectiveness
Number of encounters authorizedNumber of encounters requiring
authorization
Purpose | Value | Calculation
HFMA’s MAP InitiativeMAP Keys: Service-Authorization Rate
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Trending indicator of timeliness, accuracy, and efficiency of patient access processes
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Let’s get down to details…
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SchedulingPre-Registration / Pre-AuthorizationInsurance VerificationPatient Access / RegistrationFinancial CounselingHealth Information ManagementCharge Entry / Revenue Protection
KPIs by Functional Area
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Billing / Claim Submission3rd-Party and Guarantor Follow-UpCashiering / Refunds / Adj PostingDenialsCustomer ServiceCollection / Outsourcing VendorsPhysician Practice ManagementManaged Care Contracting
KPIs by Functional Area
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KPIs by Functional AreaScheduling
KPI Description Standard1. Overall scheduling rate of potentially-eligible patients: 100%
Scheduling rate for elective and urgent inpatients 100%
Scheduling rate for ambulatory surgery patients 100%
Scheduling rate for hi-$ outpatient diagnostic patients 100%
2. Scheduled patients’ pre-registration rate 98%
103
KPI Description Process
1. Use on-line scheduling software house-wide? Yes
2. Have central scheduling unit? Yes
3. Central scheduling answers to Chief Revenue Officer? Yes
4. Surgery uses same scheduling software as other depts? Yes
5. Scheduling system integrated with registration system? Yes
6. Use on-line OP medical necessity system prior to service? Yes
7. Pre-certification requirements shared with MDs’ offices? Yes
KPIs by Functional AreaScheduling
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KPI Description Process
8. MDs and patients able to make on-line appt requests? Yes
9. Non-emergency services scheduled 12+ hours in advance? Yes
10. Process and IT integrated between scheduling and pre-reg? Yes
11. Services postponed if not pre-authorized in advance? Yes
12. Financial counseling part of scheduling process? Yes
Patient balances and payment obligations discussed? Yes
Hospital policy for point-of-service payment explained? Yes
Reminder to bring required payment & insurance cards given? Yes
KPIs by Functional AreaScheduling
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KPIs by Functional AreaPre-Registration / Pre-Authorization
KPI Description Standard1. Overall pre-registration rate of scheduled patients ≥ 98%
2. Overall insurance verification rate of pre-registered patients ≥ 98%
3. Deposit request rate for co-pays and deductibles ≥ 98%
4. Deposit request rate for elective admissions / procedures ≥ 100%
5. Deposit request rate for prior unpaid balances ≥ 98%
6. Data quality compared to pre-established dept standards ≥ 99%
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KPIs by Functional AreaPre-Registration / Pre-Authorization
KPI Description Process
1. Have dedicated pre-registration / pre-authorization unit? Yes
2. Process and IT integrated between scheduling and pre-reg? Yes
3. Services postponed if not pre-authorized in advance? Yes
4. Financial counseling part of pre-reg / pre-auth process? Yes
Patient balances and payment obligations discussed? Yes
Hospital policy for point-of-service payment explained? Yes
Reminder to bring required payment & insurance cards given? Yes
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KPIs by Functional AreaInsurance Verification
KPI Description Standard
1. Overall insurance verification rate of scheduled patients ≥ 98%
2. Overall ins verification rate of pre-registered patients ≥ 98%
3. Ins verf rate of unscheduled IPs w/in one day ≥ 98%
4. Ins verf rate of unscheduled hi-$ OPs w/in one day ≥ 98%
5. Data quality compared to pre-established dept standards ≥ 99%
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KPI Description Process
1. Have dedicated insurance verification unit? Yes
2. Process and IT integrated between ins verf / patient access? Yes
3. Use on-line insurance verification system? Yes
4. Financial counseling part of insurance verification process? Yes
Alternate arrangements for non-covered patients explored? Yes
Hospital policy for point-of-service payment explained? Yes
Reminder to bring required payment & insurance cards given? Yes
KPIs by Functional AreaInsurance Verification
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KPIs by Functional AreaPatient Access / Registration
KPI Description Standard
1. Average registration interview duration ≤ 10 min
2. Average patient wait time ≤ 10 min
3. Average IP registrations per registrar / per shift 35
4. Average OP registrations per registrar / per shift 40
5. Average ER registrations per registrar / per shift 40
6. Data quality compared to pre-established dept standards ≥ 99%
7. ABNs / MSPQs obtained when required 100%
8. MPI duplicates created daily as a % of total registrations ≤ 1%
110
KPIs by Functional AreaPatient Access / Registration
KPI Description Process
1. Patient Access reports to Chief Revenue Officer? Yes
2. All registrars report to Patient Access or within rev cycle? Yes
3. Use on-line document imaging system? Yes
4. Financial counseling part of patient access process? Yes
Patient balances and other payment obligations collected? Yes
Policy for payment alternatives explained (credit cards, etc.)? Yes
Copies of required payment & insurance cards obtained? Yes
111
KPI Description Process
5. Registrars’ incentive compensation tied to quality indicators? Yes
6. Registration system integrated / interfaced to PFS system? Yes
7. Use on-line / web-enabled patient self-registration system? Yes
8. Use on-line OP medical necessity system prior to service? Yes
9. Use on-line registration data quality tracking system? Yes
10. Have on-line interface to owned MDs’ registration system? Yes
KPIs by Functional AreaPatient Access / Registration
112
KPIs by Functional AreaFinancial Counseling
KPI Description Standard
1. Collection of elective services deposits prior to service 100%
2. Collection of IP patient-pay balances prior to discharge ≥ 65%
3. Collection of OP patient-pay balances prior to service ≥ 75%
4. Collection of ER patient-pay balances prior to departure ≥ 50%
5. Screening of uninsured IPs and hi-bal OPs for fin assist ≥ 98%
6. Pmt arrangements for non-charity eligible IPs / hi-bal OPs ≥ 98%
7. Prompt-payment discount percentage(s) 05 – 20%
113
KPIs by Functional AreaFinancial Counseling
KPI Description Process
1. Financial counseling reports to Chief Revenue Officer? Yes
2. Uninsured IPs and high-balance OPs screened for fin assist? Yes
Medicaid eligibility? Yes
State, local, and hospital charity programs? Yes
Grants / studies, etc.? Yes
3. Financial counselors interview patients in their rooms? Yes
4. Prompt payment discounts offered? Yes
114
KPIs by Functional AreaFinancial Counseling
KPI Description Process
5. Fin counselors’ incentive compensation tied to collections? Yes
6. Discuss pmt alternatives w/ non-charity eligible patients? Yes
Credit cards? Yes
Bank-loan financing? Yes
Interest-bearing hospital-funded payment arrangements? Yes
7. All IPs cleared thru financial counselors before discharge? Yes
8. Proof of income / assets obtained from charity applicants? Yes
115
KPIs by Functional AreaHealth Information Management
KPI Description Standard1. IP charts coded per coder / per day 20 - 24
2. OBSV charts coded per coder / per day 32 - 36
3. AMB SURG charts coded per coder / per day 32 – 36
4. OP charts coded per coder / per day 130 – 210
5. ER charts coded per coder / per day 130 - 210
6. Chart delinquency greater than 30 days ≤ 5%
7. Total chart delinquency ≤ 10%
116
KPIs by Functional AreaHealth Information Management
KPI Description Standard
8. HIM “DRG development” hold greater than late charge hold ≤ 2 A/R days
9. Copies of medical records pursuant to payors’ requests ≤ 2 work days
10. Transcription rate per line 08 – 12¢
11. Transcription backlog ≤ 1 work day
12. Chart retrieval pursuant to MDs’ requests ≤ 90 minutes
13. MPI duplicates as a % of total MPI entries ≤ .5%
14. PEPPER1 potential “over-codes” beyond 75th percentile ≤ 2%
15. PEPPER potential “under-codes” below 10th percentile ≤ 2%
1 Program for Evaluation Payment Patterns Electronic Report
117
KPIs by Functional AreaHealth Information Management
KPI Description Process
1. Health Info Management reports to Chief Revenue Officer? Yes
2. Use on-line DRG and APC groupers? Yes
3. Use on-line, bar-code enabled chart location system? Yes
4. Use on-line, scanning-enabled HIM records imaging system? Yes
5. Use on-line and/or voice-recognition transcription system? Yes
6. Use on-line clinical abstracting system ? Yes
7. MDs able to view and/or e-sign records outside the hospital? Yes
118
KPIs by Functional AreaHealth Information Management
KPI Description Process
8. Storage / retrieval / release of records HIPAA-compliant? Yes
9. Use on-line, up-to-date coding compliance system? Yes
10. All coding done by employees reporting to HIM Director? Yes
11. All coding done by certified coders who are retrained often? Yes
12. All coding done in descending balance order, not FIFO ? Yes
13. All coding done in “best payor” order (FFS, MCR, HMO)? Yes
14. All coding done when info is sufficient, not 100% complete? Yes
119
KPIs by Functional AreaHealth Information Management
KPI Description Process
15. Receive and discuss denials info provided by PFS or others? Yes
16. Provide and discuss denials / delinquency info with MDs? Yes
17. Have effective tracking system to locate missing records? Yes
18. Have appropriate staffing to prevent process backlogs? Yes
19. Consistently monitor / control D-N-F-B A/R due to HIM? Yes
20. Perform internal quality-control audits at least quarterly? Yes
21. Have external quality-control audits done at least annually? Yes
120
KPIs by Functional AreaHealth Information Management
KPI Description Process
22. Review PEPPER to compare MCR pmts w/ state & nat’l avgs? Yes
23. Use PEPPER to identify problem-prone DRGs? Yes
24. Use PEPPER / OIG Work Plans to focus internal reviews? Yes
25. Track / trend all outside record-audit requests? Yes
26. Self-review all charts selected for audit by RACs / others? Yes
27. Submit all self-reviews w/ “Things Done Right” cover letters? Yes
121
KPIs by Functional AreaCharge Entry / Revenue Integrity
KPI Description Standard
1. Late charge hold period 2 – 4 days
2. Late charges as a % of total charges ≤ 2%
3. Lost charges as a % of total charges ≤ 1%
4. CDM duplicate items 0
5. CDM incorrect / missing HCPCS / CPT-4 codes 0
6. CDM incorrect / invalid revenue codes 0
7. CDM revenue code lacks necessary HCPCS / CPT-4 code 0
122
KPIs by Functional AreaCharge Entry / Revenue Integrity
KPI Description Standard
8. CDM item has invalid / incorrect modifier 0
9. CDM item has missing modifier 0
10. CDM item price less than HOPPS APC rate 0
11. CDM item price is $0 0
12. CDM item description is “Miscellaneous” 0
13. CDM item description / price is editable on-line 0
123
KPIs by Functional AreaCharge Entry / Revenue Integrity
KPI Description Process
1. CDM Coordinator reports to Chief Revenue Officer? Yes
2. Have formal CDM change management process? Yes
3. Have formal annual CDM review process with clinical depts? Yes
4. Modifiers “static coded” in CDM; chosen via order-entry sys? Yes
5. All charge items ordered via on-line order-entry system? Yes
6. Late / lost charge perf stds in dept mgrs’ job descriptions? Yes
7. Annual HCPCS / CPT-4 changes in place by Jan each year? Yes
124
KPIs by Functional AreaCharge Entry / Revenue Integrity
KPI Description Process
8. Surgery HCPCS / CPT-4 appear in UB-04 form locator 44? Yes
9. Surgery lab / X-ray charges properly unbundled? Yes
10. CDM pricing methodology standardized / defensible? Yes
11. Depts understand difference between “billable” / “payable?” Yes
12. CDM items have Patient Friendly Billing® descriptions? Yes
13. Have formal annual charge sheet / ticket review process? Yes
14. Receive / review CPT-4 manual / Addendum B annually? Yes
125
KPIs by Functional AreaCharge Entry / Revenue Integrity
KPI Description Process
15. Nursing procedures (CPR, infusion, etc.) built into CDM? Yes
16. HIM assigns interventional / surgical procedure codes? Yes
17. ER Nursing levels match Medicare descriptions? Yes
18. MDs’ OP orders received with requisite CPT-4 code(s)? Yes
19. Order entry items map accurately to service codes? Yes
20. Charge tickets, etc. map accurately to service codes? Yes
21. Appropriate charge in CDM for all services delivered? Yes
126
KPIs by Functional AreaCharge Entry / Revenue Integrity
KPI Description Process
22. Charge data flow reliably from points of service to claims? Yes
23. Modifiers are conveyed correctly / reliably to claims? Yes
24. CCI edit conflicts controlled by correct reg / charge entry? Yes
25. Units of service accurate / flow reliably to claims? Yes
26. Clinical depts’ “charge awareness” monitored / enhanced? Yes
127
KPIs by Functional AreaBilling / Claim Submission
KPI Description Standard
1. HIPAA-compliant electronic claim submission rate 100%
2. Final-billed / claim not submitted backlog ≤ 1 A/R day
3. Medicare supplement ins billing following adjudication ≤ 2 bus days
4. Non-Medicare COB-2 ins billing following COB-1 payment ≤ 2 bus days
5. Medicare RTP (Return To Provider) denials rate ≤ 3%
6. Outsourced guar stmt cost to produce / mail (w/out stamp) 20 - 25¢
128
KPIs by Functional AreaBilling / Claim Submission
KPI Description Process
1. Primary / secondary billing completed by dedicated team? Yes
2. Staffing sufficient to minimize / prevent billing backlogs? Yes
3. Quantity / quality perf stds part of billers’ job descriptions? Yes
4. Perform regular quality control reviews of billers’ work? Yes
5. All billers finish CMS’s Medicare billing training? Yes
6. All billers receive annual Medicare compliance training? Yes
7. Billers cross-trained on more than one payor type? Yes
129
KPIs by Functional AreaBilling / Claim Submission
KPI Description Process8. Use on-line electronic billing system? Yes
Easy to add new billing edits? Yes
Automatic daily downloads from PFS system? Yes
Provides final-bill download reconciliation reports? Yes
Provides biller-specific worklists? Yes
Major-payor edits supplied / supported by vendor? Yes
Claim-submit notice automatically uploaded to PFS system? Yes
Claim corrections automatically uploaded to PFS system? Yes
130
KPIs by Functional AreaBilling / Claim Submission
KPI Description Process
8. Use on-line electronic billing system (con’t)? Yes
All claims (paper + electronic) editable? Yes
Standard errors automatically corrected? Yes
Provides biller-specific productivity and error reporting? Yes
Provides clinical department-specific error reporting? Yes
Automates Medicare-supplement / COB-2 claim submission? Yes
Interfaces with on-line Medicare-compliance system? Yes
131
KPIs by Functional AreaBilling / Claim Submission
KPI Description Process
9. Use Patient Friendly Billing® concepts for guarantor billing? Yes
10. Use proration to bill ins and guarantor simultaneously? Yes
11. Guarantor stmts include credit card option? Yes
12. Guarantor stmts clearly communicate payment policies? Yes
13. Guarantor stmts provide customer service phone number? Yes
14. Guarantor stmts provide customer service web address? Yes
15. Guarantor billing cycle designed to optimize collections? Yes
132
KPIs by Functional Area3rd-Party and Guarantor Follow-Up
KPI Description Standard
1. Ins A/R aged more than 90 days from service / discharge ≤ 15 - 20%
2. Ins A/R aged more than 180 days from service / discharge ≤ 5%
3. Ins A/R aged more than 365 days from service / discharge ≤ 2%
4. Bad debt write-offs as a % of gross revenue ≤ 3%
5. Charity write-offs as a % of gross revenue ≤ 3%
6. Cost-to-collect ([PA + PFS + agency expenses] ÷ cash) ≤ 3%
7. A/R cash as a % of net revenue ≥ 100%
133
KPIs by Functional Area3rd-Party and Guarantor Follow-Up
KPI Description Standard
8. In-House A/R days ≤ ALOS
9. D-N-F-B A/R days ≤ 4 – 6 A/R days
10. Net A/R days ≤ 50 A/R days
11. A/R cash as a % of cash goal ≥ 100%
12. Total point-of-service cash as a % of cash goal ≥ 2 - 3%
134
KPIs by Functional Area3rd-Party and Guarantor Follow-Up
KPI Description Process
1. High-balance follow-up completed by dedicated team? Yes
2. Staffing sufficient to minimize / prevent aged A/R build-up? Yes
3. Quantity / quality perf stds part of collectors’ job descriptions? Yes
4. Perform regular quality control reviews of collectors’ work? Yes
5. All collectors finish CMS’s Medicare billing module? Yes
6. All collectors receive annual Medicare compliance training? Yes
7. Collectors cross-trained on more than one payor type? Yes
135
KPIs by Functional Area3rd-Party and Guarantor Follow-Up
KPI Description Process8. Use on-line “receivables work station” system? Yes
Easy to add new collector assignments? Yes
Automatic daily downloads from PFS system? Yes
Provides download reconciliation reports? Yes
Full interface for collection notes, etc. to PFS system? Yes
Provides collector-specific worklists? Yes
Worklists presented in descending-balance order? Yes
Next activity date automatically uploaded to PFS system? Yes
136
KPIs by Functional Area3rd-Party and Guarantor Follow-Up
KPI Description Process
9. Use on-line, web-enabled 3rd-party payor inquiry system(s)? Yes
10. Guarantor follow-up outsourced or on predictive dialer? Yes
11. Collectors receive 3rd-party / guarantor follow-up training? Yes
12. Collectors use 3rd-party / guarantor follow-up scripts? Yes
13. Collectors have no competing duties (customer svc, etc)? Yes
14. Collectors receive performance-based incentive comp? Yes
137
KPIs by Functional AreaCashiering / Refunds / Adjustment Posting
KPI Description Standard
1. HIPAA-compliant electronic payment posting % 100%
2. Transaction posting backlog (during the month) ≤ 1 bus day
3. Transaction posting backlog (end of the month) 0 bus days
4. Credit-balance A/R days (gross) ≤ 2 A/R days
5. Medicare credit-balance report submission timeliness ≤ due date
138
KPIs by Functional AreaCashiering / Refunds / Adjustment Posting
KPI Description Process
1. Cashiering completed by dedicated team w/ no other duties? Yes
2. Refunds completed by dedicated team w/ no other duties? Yes
3. Quantity / quality perf stds part of cashiers’ job descriptions? Yes
4. Perform regular quality control reviews of cashiers’ work? Yes
5. All cashiers receive annual Medicare compliance training? Yes
6. Cashiers cross-trained on more than one payor type? Yes
139
KPIs by Functional AreaCashiering / Refunds / Adjustment Posting
KPI Description Process
8. Use lockbox for non-electronic / non-EDI payments? Yes
9. Lockbox remits payment data electronically / EDI / OCR / 835? Yes
10. Denial transaction codes entered to facilitate follow-up? Yes
11. Use on-line system to compare expected vs. actual pmts? Yes
12. Post contractual adjustments at time of final billing? Yes
140
KPIs by Functional AreaDenials / Underpayments
KPI Description Standard
1. Overall initial denials rate (% of gross revenue) ≤ 4%
2. Clinical initial denials rate (% of gross revenue) ≤ 5%
3. Technical initial denials rate (% of gross revenue) ≤ 3%
4. Underpayments additional collection rate ≥ 75%
5. Appealed denials overturned rate 40 – 60%
141
KPIs by Functional AreaDenials / Underpayments
KPI Description Standard
6. Electronic eligibility rate ≥ 75%
7. Physician pre-certification double-check rate 100%
8. Case managers’ time spent securing authorizations rate ≤ 20%
9. Total denial reason codes ≤ 25
142
KPIs by Functional AreaDenials / Underpayments
KPI Description Process
1. Denials tracked by payor, reason, financial consequence? Yes
2. Denials distinguished between technical and clinical? Yes
3. Denials tracked by physician, DRG, and department? Yes
4. Contractual allowances increasing slower than gross rev? Yes
5. Dedicated denials unit w/ payor-specific appeals experience? Yes
6. Respond to clinical documentation requests w/ in 14 days? Yes
7. Use on-line system to compare expected vs. actual pmts? Yes
143
KPIs by Functional AreaDenials / Underpayments
KPI Description Process
8. Use on-line payment tracking software? Yes
9. Use on-line contract management software? Yes
10. Maintain denials database; self-developed or purchased? Yes
11. Use on-line OP med necessity system prior to billing or svc? Yes
12. All denial reason codes actionable? Yes
13. OBSV and IP authorizations tracked separately? Yes
14. Pre-cert, auth, and re-cert functions in a single department? Yes
144
KPIs by Functional AreaDenials / Underpayments
KPI Description Process
15. Pre-certification requirements shared with MDs’ offices? Yes
16. Provide MDs with regular feedback on clinical denials rates? Yes
17. Hold regular payor meetings to discuss denials issues? Yes
18. Contract terms regularly distributed to rev cycle employees? Yes
19. Rev cycle employees learn of contract changes in advance? Yes
20. Structured feedback between rev cycle and mgd care depts? Yes
21. Non-emergency services scheduled 12+ hours in advance? Yes
145
KPIs by Functional AreaCustomer Service
KPI Description Standard
1. Correspondence backlog ≤ 1 bus day
2. Walk-in patients’ wait time ≤ 5 min
3. ACD system average hold time ≤ 2 min
4. ACD system abandoned call % (calls on hold ≥ 30 seconds) ≤ 2%
5. ACD system % of calls answered in ≤ 20 seconds ≥ 75%
6. ACD system % of calls resolved in ≤ 5 minutes ≥ 85%
7. ACD system % of calls not resolved in ≥ 10 minutes ≤ 5%
8. Calls resolved in unit, w/out complaint / referral to Dir PFS ≥ 95%
146
KPIs by Functional AreaCustomer Service
KPI Description Process
1. Cust service handled by dedicated team w/ no other duties? Yes
2. CS unit responsible for walk-ins, phone calls, mail, & e-mail? Yes
3. Quantity / quality perf stds part of CS reps’ job descriptions? Yes
4. Perform regular quality control reviews of CS reps’ work? Yes
5. All CS reps receive annual Medicare compliance training? Yes
6. CS reps cross-trained on more than one responsibility? Yes
147
KPIs by Functional AreaCustomer Service
KPI Description Process
7. CS reps cross-trained on most / all PFS system functions? Yes
8. Use voice-mail sys so patients can request basic info / IBs? Yes
9. Use ACD (Automated Call Distribution) system? Yes
10. ACD system automatically maintains unit / rep statistics? Yes
148
KPIs by Functional AreaCollection / Outsourcing Vendors
KPI Description Standard
1. Bad debt netback ([collections – fees] ÷ placements) % 7 – 11%
2. Bad debt fee % 15 – 18%
3. 3rd-party EBO (Extended Bus Ofc) fee % (IP + OP + ER blend) 6 - 10%
4. Self-pay EBO fee % (IP + OP + ER blend) 10 – 12%
5. Legal collections fee % 20 – 30%
6. Medicaid eligibility assistance fee % 12 – 18%
149
KPIs by Functional AreaCollection / Outsourcing Vendors
KPI Description Process
1. Use two or more bad debt agencies? Yes
2. Use different agencies for bad debt and EBO? Yes
3. Write off long-term payment accts / use agency to monitor? Yes
4. Apply Medicare bad debt “120 days” rule to all fin classes? Yes
5. Agencies / outsource vendors accept referrals electronically? Yes
6. EBO vendor able to “mirror” PFS system to get notes, etc.? Yes
7. Medicaid elig vendor have good relations w/ State agencies? Yes
150
KPIs by Functional AreaCollection / Outsourcing Vendors
KPI Description Process
8. Agencies remit gross payments / submit invoices for fees? Yes
9. Agencies willing to put own support FTEs on-site? Yes
10. Agencies willing to assign dedicated FTEs to your accounts? Yes
151
KPIs by Functional AreaPhysician Practice Management
KPI Description Standard
1. Visits w/out charges as % of total visits 0%
2. Co-pay collections as % of total co-pay office visits ≥ 95%
3. EDI claims as % of total claims ≥ 90%
4. Charge-entry lag period ≤ 1 bus day
5. Claims passing claim edits as % of total claims ≥ 98%
6. Appointment no-show rate ≤ 2 - 3%
152
KPIs by Functional AreaPhysician Practice Management
KPI Description Standard
7. Appointment bumped rate ≤ 2 - 3%
8. Net A/R days (non-specialty practices) ≤ 40 days
9. Collections as % of net revenue ≥ 100%
10. Collections as % of gross revenue (non-specialty practices) ≥ 60%
11. 3rd-Party A/R aging > 90 days from service date ≤ 10%
12. Denials as % of net revenue (including “incidental to” svcs) ≤ 2%
153
KPIs by Functional AreaPhysician Practice Management
KPI Description Standard
13. Claims w/ no activity > 90 days from last activity date 0%
14. Credit balances ≤ 2 A/R days
15. Average patient wait time after office arrival ≤ 15 minutes
154
KPIs by Functional AreaPhysician Practice Management
KPI Description Process
1. Send voice and mail reminders for regular annual visits? Yes
2. Send voice and mail reminders for other scheduled visits? Yes
3. Use “open scheduling” Yes
to increase walk-in capacity? Yes
to minimize appointment bumping? Yes
to increase patient satisfaction? Yes
to reduce nursing callbacks? Yes
155
KPIs by Functional AreaPhysician Practice Management
KPI Description Process
4. Calculate net revenue and net receivables? Yes
5. Use dedicated billing / follow-up FTEs w/ no other duties? Yes
6. Use collection agencies? Yes
Let’s pause and define terms...Contracting Cycle
156
157
1. Provide patients
4. Pay claims
2. Treat patients
3. Submit claims
KPIs by Functional AreaContracting Cycle Definition
158
Reduce Payor Discretion
Achieve Target Margins
KPIs by Functional AreaContracting Cycle Definition
159
AnalyzeService Lines
Understand Payors & Their Reputations
Analyze Steerage vs.
Discounts
Submit & Follow-up
Claims
Work Denials &Payment Variances
Collect Accounts & Post Payments
Analyze Financial
Needs
Define Payor’s & Provider’s Duties
Understand Competitors
& Market
Negotiate Contract Language & Rates
Analyze Contract
Performance
KPIs by Functional AreaContracting Cycle Definition
160
Strategy developmentStrategy implementationContract negotiationsContract evaluationForecasting and analysisContract implementation and operationsPerformance monitoringStrategic issues and planning
SOURCE: Stevenson, “Managed Care Cycle Provides Contract Oversight,” hfm
KPIs by Functional AreaContracting Cycle Definition
161
KPI Description Standard1. Rate increases compared to CPI medical-care component ≥ CPI MCC
2. Outlier $ fraction of total contract revenue ± 5%
3. Contract profitability compared to IRR “hurdle rate” ≥ IRR HR
4. Eligibility / authorization / certification availability 24 / 7 / 365
5. Retro review / timely filing periods (keep in balance) 90 – 120 days
6. Termination notification period (without cause) 90 days
7. Renegotiation planning begins prior to renewal date 6 months
8. Optimal contract term 2 – 3 years
KPIs by Functional AreaManaged Care Contracting
162
KPI Description Process1. Contract contains automatic renewal clause? Yes
2. Contract contains inflation index? Yes
3. All hospital services included / specific exclusions defined? Yes
4. Termination notification period = 90 days? Yes
5. Duties for on-going patient care / pmt at termination defined? Yes
6. ABN or equivalent acceptable for non-covered services? Yes7. Provider authorized to bill guarantor for non-covered svcs? Yes8. Hospital-based MDs use hospital-obtained authorizations? Yes
SOURCE: “Managed Care Forum Contracting Checklist,” HFMA Wants You to Know
KPIs by Functional AreaManaged Care Contracting
163
KPI Description Process9. Provider authorized to collect deposits for non-covered svcs? Yes
10. Contract discloses all sub-contracting relationships? Yes
11. Contract contains an independent contractor clause? Yes
12. Contract excludes “most favored nation” provisions? Yes
13. Contract start date clearly defined (to prevent A/R build up)? Yes
14. Contract stipulates all parties pay own legal fees? Yes
15. Definition / criteria for all key terms clearly stipulated? Yes
Medical necessity? Yes
Emergency condition / emergency admission? Yes
SOURCE: “Managed Care Forum Contracting Checklist,” HFMA Wants You to Know
KPIs by Functional AreaManaged Care Contracting
164
KPI Description Process15. Definition / criteria for all key terms clearly stipulated (con’t)? Yes
Trauma / trauma services / trauma team? Yes
Covered services? Yes
Material breach? Yes
Prompt payment? Yes
Stop-loss / outlier? YesCarve-out? Yes
Medicare rate? (should include pass-throughs) Yes
SOURCE: “Managed Care Forum Contracting Checklist,” HFMA Wants You to Know
KPIs by Functional AreaManaged Care Contracting
165
KPI Description Process15. Definition / criteria for all key terms clearly stipulated (con’t)? Yes
Sentinel event(s)? Yes
Medical-loss ratio? Yes
Silent PPO? Yes
Clean claim? Yes
Timely notification / timely filing? YesAuthorization / certification? Yes
SOURCE: “Managed Care Forum Contracting Checklist,” HFMA Wants You to Know
KPIs by Functional AreaManaged Care Contracting
166
KPI Description Process15. Definition / criteria for all key terms clearly stipulated (con’t)? Yes
Service level(s)? Yes
Denial / rejection / null event? Yes
Negotiation / mediation / arbitration? Yes
Plan agreement? Yes
Inpatient / outpatient / emergency patient / obsv patient? Yes
Substantial impact? Yes
Member / insured / dependent? Yes
SOURCE: “Managed Care Forum Contracting Checklist,” HFMA Wants You to Know
KPIs by Functional AreaManaged Care Contracting
167
KPI Description Process16. Advance notice time for contract changes clearly stipulated? Yes
Payment / reimbursement rates? YesCovered services / procedures? Yes
Plan documents / requirements? Yes
Major employer groups? Yes
17. Contract includes warranty of HIPAA compliance? Yes
18. Contract forbids reassignment without mutual consent? Yes
19. Payor’s reporting requirement duties clearly stipulated? Yes
SOURCE: “Managed Care Forum Contracting Checklist,” HFMA Wants You to Know
KPIs by Functional AreaManaged Care Contracting
168
KPI Description Process20. Contract clearly material to provider’s revenue stream? Yes21. Eligibility verification process clearly stipulated? Yes22. Medical necessity verification process clearly stipulated? Yes
23. Prior authorization process clearly stipulated? Yes
24. Payor provides all customers’ contract / policy manuals? Yes
25. Payor provides copies of all administrative / policy manuals? Yes
26. Appeal / independent review processes clearly stipulated? Yes
27. Payor precluded from changing reimbursement unilaterally ? Yes
SOURCE: “15 Questions to Ask Before Signing a Managed Care Contract,” Private Sector Advocacy
KPIs by Functional AreaManaged Care Contracting
169
KPI Description Process28. Payor’s prompt payment duty clearly stipulated? Yes29. Payor agrees to pay interest on late payments? Yes30. Contract complies with statutory processing / pmt duties? Yes
31. Payor precluded from “takebacks” / “offsets”? Yes
32. “Retro review” period balanced to “timely filing” period? Yes
33. Contract precludes participating in / enabling “Silent PPOs”? Yes
34. Termination provisions / timing clearly stipulated? Yes
35. Contract terms supersede provisions in Provider Manual? Yes
SOURCE: “15 Questions to Ask Before Signing a Managed Care Contract,” Private Sector Advocacy
KPIs by Functional AreaManaged Care Contracting
170
KPI Description Process36. Perform annual “internal” analysis of all contracts? Yes
Contractual discounts balanced to gross volumes / net rev? YesUse analysis to identify renegotiation / termination targets? Yes
Compare all contracts to Medicare fee schedule? Yes
Calculate relative profitability using payor-specific costs? Yes
All contracts cover their direct costs, at minimum? Yes
Use relative profitability for leverage during renegotiation? Yes
Recognize internal review cannot I.D. below-mkt contracts? Yes
Recognize internal review silent on case mix/stop-loss/etc.? Yes
SOURCE: Wilson, David et al, “3 Steps to Profitable Managed Care Contracts,” hfm
KPIs by Functional AreaManaged Care Contracting
171
KPI Description Process37. Perform annual “external” analysis of all contracts? Yes
Compare (legally) your rates to those of similar providers? YesUse outside firms / databases to obtain comparative info? Yes
Challenge data’s age / geographic relevance before using? Yes
Compare specific service lines, as well as overall rates? Yes
Target biggest upside opportunities during renegotiation? Yes
Compare pmt structures (charge % / DRGs) + overall rates? Yes
Understand impact of I/P stop-loss / O/P max-pay clauses? Yes
Try to end all “cost-plus” pmts in favor of % of charges? Yes
SOURCE: Wilson, David et al, “3 Steps to Profitable Managed Care Contracts,” hfm
KPIs by Functional AreaManaged Care Contracting
172
KPI Description Process37. Perform annual “external” analysis of all contracts (con’t)? Yes
Review contract language, especially key terms / clauses? YesClaim submission and payment Yes
Protection against catastrophic cases Yes
Procedure-based carve-out payments Yes
Stop-loss payment structures Yes
Pmts for implants / prosthetics / orthotics / high-$ drugs Yes
Cut-off date for timely filing / retro review / refunds / etc. Yes
Utilization review process Yes
New services / technologies Yes
SOURCE: Wilson, David et al, “3 Steps to Profitable Managed Care Contracts,” hfm
KPIs by Functional AreaManaged Care Contracting
173
KPI Description Process37. Perform annual “external” analysis of all contracts (con’t)? Yes
Compare payment levels to premium increases? YesEnsure rate trends mirror premium increase trends? Yes
Compare payors’ relative profitability trends? Yes
Compare rate trends to medical-care component of CPI? Yes
SOURCE: Wilson, David et al, “3 Steps to Profitable Managed Care Contracts,” hfm
KPIs by Functional AreaManaged Care Contracting
174
KPI Description Process38. Conduct annual “pmt performance” analysis of all contracts? Yes
Contracts comply with statutory processing / pmt regs? YesReport habitual violators to Insurance Commissioner? Yes
Compare payors’ denial / pmt discrepancy trends, by group? Yes
Insurance plan? Yes
Patient type? Yes
Service line? Yes
Reason code? Yes
Physician? Yes
SOURCE: Wilson, David et al, “3 Steps to Profitable Managed Care Contracts,” hfm
KPIs by Functional AreaManaged Care Contracting
175
KPI Description Process39. Contract defines documentation req’d to prove timely filing? Yes40. Contract reviewed by attorney before renewal? Yes41. “Soft” contract provisions (“quality” / “affordable”) avoided? Yes
42. “Reasonable efforts” term used to define providers’ duties? Yes
43. Both parties agree not to disclose negotiated rates? Yes
44. Supplemental documents included by reference / attached? Yes
45. Amendments required in writing with mutual signatures? Yes
46. Participating corporations / entities clearly stipulated? Yes
47. Assignment clauses clearly stipulated / require signatures? Yes
SOURCE: Miller, Thomas, “Conducting a Managed Care Contract Review,” Healthcare Financial Management
KPIs by Functional AreaManaged Care Contracting
176
KPI Description Process48. “Start up” payors post security deposit / letter of credit / etc? Yes49. Contract parties independent and able to compete? Yes50. Provider listed as “participating” in directories / websites? Yes51. Complete list of covered services attached to contract? Yes
52. Provider can reduce malpractice ins to state law minimums? Yes
53. Ambiguous service descriptions avoided? Yes
Avoid “services including but not limited to” Yes
Avoid “services customarily provided” Yes
Avoid “services covered by the plan” Yes
SOURCE: Miller, Thomas, “Conducting a Managed Care Contract Review,” Healthcare Financial Management
KPIs by Functional AreaManaged Care Contracting
177
KPI Description Process54. Services not directly provided defined / contracted in adv? Yes
Out-of-area services YesHospital-based physician services Yes
55. Capitation rates / benefits design (if any) clearly stipulated? Yes
56. Flat-rate contracts w/ payors known for excessive bundling? Yes
57. Licensing / JCAHO standards adequate for credentialing? Yes
58. Provider not required to report “in accordance with HEDIS?” Yes
59. Contract / payment terms administratively feasible? Yes
60. Current HIS adequate to handle contract terms / A/R needs? Yes
SOURCE: Miller, Thomas, “Conducting a Managed Care Contract Review,” Healthcare Financial Management
KPIs by Functional AreaManaged Care Contracting
178
KPI Description Process61. Mutual information requirements clearly stipulated? Yes
Specific information / reports described? Yes“Information including but not limited to” avoided? Yes
Provider’s confidential / proprietary information protected? Yes
Provider’s duty to provide info to payor strictly limited? Yes
Payor obligated to reimburse costs of providing records? Yes
SOURCE: Miller, Thomas, “Conducting a Managed Care Contract Review,” Healthcare Financial Management
KPIs by Functional AreaManaged Care Contracting
179
KPI Description Process62. Mutual duties regarding care reviews clearly stipulated? Yes63. Provider’s duty to notify payor re: adverse events limited? Yes
No duty re: patient complaints? Yes
No duty re: risk management incidents? Yes
No duty re: physician malpractice suits? Yes
No duty re: physician status changes? Yes
No duty re: medical staff disciplinary actions? Yes
Notify only when sued by members at time of event? Yes
Notify only on intent to report adverse event to regulators? Yes
SOURCE: Miller, Thomas, “Conducting a Managed Care Contract Review,” Healthcare Financial Management
KPIs by Functional AreaManaged Care Contracting
180
KPI Description Standard1. P4P Demonstration Project percentile ranking ≥ 80%
2. P4P Demonstration Project bonus achievement ≥ 1%
3. Length of stay, by DRG ≤ DRG avg
4. Readmission rate, by DRG ≤ DRG avg
5. Adherence to quality indicators, by condition ≥ 80%
6. Adherence to quality indicators, by mode ≥ 80%
7. Overall P4P program ROI ≥ 0%
KPIs by Functional AreaP4P: Clinical Decision Support / Finance
181
KPI Description Process1. Use advanced clinical systems to support patient care? Yes
2. Use electronic medical record system to support patient care? Yes
3. Use advanced decision support / performance mgt system? Yes
4. Use executive information (scorecard) system? Yes
5. Use “data warehouse” to support DSS / EIS capabilities? Yes
6. Participate in CMS Demonstration Project, if eligible? Yes
7. Have clinical improvement teams in data-enabled depts? Yes
8. Target greatest cost / quality improvement areas first? Yes
9. Use “root cause analysis” to focus improvement efforts? Yes
KPIs by Functional AreaP4P: Clinical Decision Support / Finance