The Real Cost of Inadequate Patient Access Processes

Presented by: Tim Raimey

Date: October 31, 2012

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• One of the largest healthcare consulting firms in North America.

• We develop strategies and deliver services that support the latest industry trends such as ICD-10 strategy, Meaningful Use, EHR implementations, ACO readiness, HIE planning, physician-hospital alignment and much more.

• We’re focused on helping healthcare leaders improve operational, clinical and financial performance, ultimately leading to increased patient safety and better outcomes.

Who is Beacon Partners?

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Many claims are denied due to

inadequate patient

registration processes

Why are claims denied?

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• Missing Social Security Numbers• Incomplete or Missing Guarantor

Information• Incomplete or Missing Employer

Information• Policy Identification number incorrect

Common Registration Errors

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• Patient not eligible• Charges are not covered in the plan• No authorization or no precertification on

file• Wrong payer identified• Benefit reached maximum allowable under

plan

Common Reasons for Denials

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Heading – Ariel 40Cost to Rework a Claim: Physician

Item CostStaff Time $10.67

Supplies $ 1.50

Interest $1.75

Overhead $1.00

TOTAL $14.92

Assumptions:- Staff Time includes 20 minutes of

billing staff time at $22 per hour, plus 10 minutes of another staff member’s time(ex: front office) valued at $20 per hour

- Supplies include telephone, paper, envelope postage

- Interest is calculated on $200 at 10%, compounded monthly for 30 days

- Overhead includes management, equipment, space and other fixed costs

Source: Walker, Woodcock, Larch, 2009

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Heading – Ariel 40Cost to Rework a Claim: Hospital

Item CostStaff Time $15.30

Supplies $ 4.50

Overhead $5.20

TOTAL $25.00

Assumptions:- Staff Time includes 30 minutes of

billing staff time at $24 per hour, plus 10 minutes of at least another staff member’s time(ex: front office) valued at $20 per hour

- Supplies include telephone, paper, envelope postage

- Overhead includes management, equipment, space and other fixed costs for hospital

Source: HFMA Executive Roundtable, Nov 2010Zimmerman and Associates 2009

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Physician Practice Stories

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• Pulmonary and Sleep Study Practice with offices in 4 locations:

;̵ Five providers seeing an average of 80 patients per day collectively;̵ Sleep studies account for about 45 of the 80 patients per day;̵ Sleep studies tend to be costly

Pulmonary and Sleep Study Practice

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• Pulmonary services for this practice typically have a 95% success rate with claims paid

• Sleep study services average 78% success rate with claims paid

Claims Payment

• Front desk staff minimally experienced

• Claims denied for sleep study are very costly to the patient, provider, and provider staff

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Heading – Ariel 40Looking at the Real Costs

A closer look at the costs of a denied sleep study claim:

Office visit $1,550, plus $1,500 for medical equipment and supplies =

$3,050

$3,050 x 10 patients(22% x 45 patients) =

$30,500

Add 40 minutes of the provider’s time explaining to an angry patient about

the claim

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Ophthalmology practice, one provider:• Averages 15 patients per

day• Patients tend to be older

population• Success rate for claims

paid in this practice 95%• Experienced front desk

staff

Ophthalmology Practice

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Heading – Ariel 40Looking at the Real Cost

A closer look at the Ophthalmology Practice:

Office visit for new patient, Level IV $225

Provider sees 15 patients per day for 4 days a week total 60 patients

On average 3 patients per week claims are denied (5% x 60)

Weekly average loss in claims(3 patients x $225) =$675 or

($2,700 per month)

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But dig a bit deeper…..• Add 2 to 3 hours of the front desk staff’s

time investigating the reason claim denied• Add 1 hour to the provider’s time

explaining the denial to his elderly patients• Add the potential of write offs• Add the potential of “he’s a good doc,

don’t worrying about paying”

Opportunity Costs

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Hospital Story

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General Hospital in Midwest with 340 beds• Emergency Department (ED) capable of providing

services for all levels of care, including critical• ED averages 65 patients per day

Hospital in the Midwest

• Patients are billed for ED services based on categories of care provided

• Category 1 (lowest) to Critical Care (highest)

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Heading – Ariel 40Looking at the Real Costs

A closer look at the costs:

Category 3 charge is $441(majority of patients)

This hospital reports the success rate for claims paid for ED charges is about

75%

Assuming 25% of 65 patients can’t or won’t pay, loss would be

(16 patients x $441) =$7,056 per day

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Let’s look even deeper….• $7,056 per day x 7 days = $49,392 a week• $49,392 x 4 weeks = $197,568 a month• Add in the hours the billing staff spend

with insurance companies, patients, and medical records staff

Additional Time and Effort

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• Reduceclaims denial

• Increasecash flow

• Improve patientexperience

• Decrease bad debt• Reduce provider and staff time spent on

discussions about why claims denied

What’s the goal?

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• Adequately train front desk staff to get registration right the first time

• Assign enough staff for registration activities

;̵ It’s better to capture the data right the first time, than to spend time investigating what was missed

• Use integrated systems to assist staff in registration and verification

• Pre-register as many patients as possible

How do we get there?

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• Pre-verify insurance eligibility, authorizations, pre-certifications

• Audit registration outcomes and processes• Track denials by payer, reason, financial

impact• Communicate denial rates back to front

end staff• Collect copayments• Collect self pay

How do we get there? (continued)

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• Error rates due to front end billing:̵; < 2%

• Time of service collections:̵; Copayments: 100%̵; All other time of service

payments: 75%

Leading Performance Indicators

Source: Walker-Keegan, Woodcock, Larch, 2009

• Number of patients cleared prior to visit:̵; 90 %

• Claim edits and denials due to registration and referrals:̵; < 2%

• Percentage of insurance verified:̵; 98%

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• Clean claim submission rate – 90%

• Medicare return to provider denial rate – 3%

• Bad debt write off as a % of gross income – 3%

• Charity write off as a % of gross income – 2%

• Overall final denial rate after appeals – 1%

Leading Claims Submissions Rates

Source: 2010 HIMSS Financial Systems Steering Committee

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If all of these processes are being addressed, then you will have one less challenge as your organization moves toward achieving Meaningful Use and preparing for ICD-10 implementation.

Healthcare Reform Impact

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Heading – Ariel 40Light at the end of the tunnel

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BOSTON · CLEVELAND · SAN FRANCISCO · TORONTO

Thank You

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Thank YouFor more information

please contact:

traimey@beaconpartners.com