High Value Revenue Cycle Audits

High Value Revenue Cycle High Value Revenue Cycle AuditsAudits

AHIA 2009 Annual Conference

September 1, 2009

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SpeakersSpeakers

Richard WilliamsRichard is a Director in Protiviti’s Dallas office and a key leader in Protiviti’s Healthcare Revenue Risk Solutions practice. Richard has more than 11 years professional experience providing operational, financial, and regulatory consulting and internal audit services to the healthcare industry. Prior to joining Protiviti, Richard was a Project Manager at Arthur Andersen focusing on healthcare internal audit and risk consulting.

Don BillingsleyDon is a Senior Manager in Protiviti’s Dallas office and a key leader in Protiviti’s national healthcare practice. Don has more than 16 years experience working in the healthcare industry and has worked with numerous healthcare providers to assess and improve their revenue cycle operations and processes. Prior to joining Protiviti, Don worked as a revenue cycle consultant at Arthur Andersen and held a position as a care manager and compliance auditor for one of the largest diversified specialty healthcare management organizations.

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AgendaAgenda

• Obtain an understanding of the key activities performed, risks and typical deficiencies that exist within the following revenue cycle components:

– Access & Utilization Review

– Charge Capture

– Billing / Collections & Denials Management

• Discuss audit methodology, approach, and scope setting considerations.

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Obtain an Understanding Obtain an Understanding of Key Revenue Cycle of Key Revenue Cycle Components and RisksComponents and Risks

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The Revenue CycleThe Revenue Cycle

Healthcare providers typically fail to realize as much as five percent in net revenue due to a lack of effective internal controls mitigating financial, regulatory and operational risks.

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Key ChallengesKey Challenges

• Information is traditionally managed in isolation by different departments with very little integration

• Multiple points of patient entry

• Numerous managed care contracts and lack of familiarity with requirements

• Legacy technology solutions and workflow limitations

• Multiple constituencies require consensus and tend to resist change

• Adequacy of training programs

• Payer stall tactics and decreasing reimbursement

• Poor auditing, reconciliation, and monitoring processes

• Unequal priority for administrative responsibilities as that placed on patient care

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Access & Utilization ReviewAccess & Utilization Review

• Scheduling – gathering patient information to schedule a patient’s test, procedure or stay

• Admissions/Registration – verifying benefits to validate insurance coverage, obtaining pre-treatment authorizations and any remaining information not captured during scheduling/pre-admission process

• Utilization Review – the managing of admission reviews, pre-certification reviews, medical necessity reviews, continued stay reviews, patient care reviews and retrospective reviews

Patient access is one of the most important areas that impact patient satisfaction and hospital reimbursement. Ineffective processes typically result in patient dissatisfaction, billing problems, excessive insurance denials, and extensive rework activity.

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Charge CaptureCharge Capture

• Charge Capture – documentation, posting and reconciliation of charges for services rendered

• Chargemaster – listing of charges for procedures, medications, supplies and services rendered

• Charge Validation / Integrity – ensuring charges posted are complete and accurate

On average, organizations are losing one percent of revenue to errors in the chargemaster and/or charge capture and many hospitals are not aware of the degree to which they may be missing charges.

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Billing / Collections & Denials Billing / Collections & Denials

• Billing – sending a bill to a patient and/or a claim to a third-party payer for reimbursement

• Collections / Cash Posting – verifying the status of outstanding claims and posting payments received

• Denials / Underpayments Management – the process of collecting, tracking, reporting, trending, forecasting, measuring and managing denied or underpaid claims

“One of the best indicators to help determine the effectiveness of a provider’s revenue cycle is to look at denied claims.”

As much as 25% - 30% of all claims are rejected or denied at some point in the collection process with 5% - 9% of net revenue being directly impacted, a large portion of which is lost and never recovered. At least 90% of all denials considered unrecoverable can be prevented with improved controls.

Methodology and Scope Methodology and Scope ConsiderationsConsiderations

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MethodologyMethodology

The ‘Protiviti Key’ represents our overarching Methodology that we apply to every engagement in order to ‘unlock value’ and ingrains concepts of problem solving and benchmarking.

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MethodologyMethodology

We commonly use the Six Elements of Infrastructure for categorizing operational practices, potential issues, understanding where problems either exist or may occur within the organization, and drawing conclusions to form the basis for recommendations.Six Key Elements of Infrastructure must be linked by design:

Risk if element is deficient:

MethodologiesManagement

ReportsPeople and

OrganizationBusiness

ProcessesBusinessPolicies

Systemsand Data

People lack the knowledge and experience to

perform process

Reports do not provide information

for effective management

Methodologies do not adequately

analyze data and information

Information is not available for

analysis and reporting

Process does not carry out established

policies or achieve intended result

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Audit ObjectiveAudit Objective

The primary objective of performing a revenue cycle audit should be to evaluate the effectiveness of internal controls surrounding existing revenue cycle processes in order to identify business process and/or system improvement opportunities within existing operations that, when implemented, would lead to enhanced profitability and strengthened compliance practices. In addition, an entity and process level view should be considered.

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Audit ApproachAudit Approach

The approach should be designed to gain an understanding of the business as a means to identify, source and measure risk at both the entity and process level.

– What are the key business risks that impact the process?

– How and how well are those risks being controlled?

– What key measures are used to monitor the process and are they the right ones and reliable?

– How efficient is the process in operation?

– How can the process be improved to bring its performance closer to leading standards?

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Control Framework ExampleControl Framework Example

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Scoping ConsiderationsScoping Considerations

• Design Review vs. Operating Effectiveness Testing

• Documentation Review vs. Observations

• Regulatory Compliance

• Revenue Cycle Systems and Application Controls

• New System Implementations

• Net vs. Gross Revenue Impact

• Data Analysis / Sampling

• Indicators of Need / Benchmarking

• Revenue Cycle Diagnostic

• Frameworks / Tools

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Please feel free to contact us if you have additional questions. Thank you again for your time!

Richard WilliamsProtiviti Director and Healthcare Revenue Risk Solutions LeaderDirect: 469.374.2469Email: [email protected]

Don BillingsleyProtiviti Senior Manager and Healthcare Revenue Risk Solutions LeaderDirect: 469.374.2519Email: [email protected]