Here’s How Revenue Cycle Management Boosts Hospitals’ Bottom Line

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When case managers have access to high-quality continuing education, cash flow improves

As a case management consultant, Mindy Owen, RN, MSN, CCM, knows the difference a well-trained case management team can make for a hospital’s cash flow. To demonstrate the effectiveness of highly trained case managers, she tells a story about one assignment she had as a case manager consultant to a hospital six years ago.

In 2010, Owen, a principal with Phoenix Healthcare Associates, LLC, in Coral Springs, Fla., was asked to consult with the case management staff at a large Level 1 trauma and academic medical center in the Southwest. A specialist in educating and developing case management teams, Owen has traveled across the country teaching case managers about best practices and turning-around underperforming case management departments.

Educating Staff

This particular engagement, however, was a significant challenge. On her first day, the hospital CFO explained that two of the state’s largest health insurers had not paid over $2 million in claims submitted more than a year earlier. The CFO asked Owen, “Could case management help retrospectively to assess the clinical denials and prospectively to implement a process to reduce such losses going forward?”

To address the shortfall and correct deficiencies in the claims-submission processes, Owen suggested establishing a joint operating counsel (JOC) to review what appeared to be lost revenue in the millions of dollars. A JOC is a team of managers and administrators from the payers and provider who identify ways to improve processes and outcomes. Such teams can be effective in developing a collaborative process for care management to overturn denials, improve communication and capture lost revenue.

Over the next several weeks, Owen met with the claims payment staff at each of the health plans to review the unpaid bills. Both insurers had the same complaint: the claims were incomplete, lacked the proper documentation supporting care and, in some cases, the claims were for medically unnecessary or duplicative interventions.

With this information, Owen saw an opportunity to educate the case management staff to ensure they followed clinically sound utilization management practices and best practices when patients transitioned from the hospital to home or to another facility. Also, she had the care management team work closely with the hospital’s clinical documentation specialists and coding department to improve the timeliness and quality of documentation and coding for claims going to the health insurers. The goal was to ensure all claims were well documented and error-free going forward.

Owen also asked case managers to review patient records for pending claims to ensure claim forms could be corrected, health insurers would confirm authorization of services and medical center would be paid. Within a number of weeks, the accounts payable departments at each of the insurers called Owen to say most of the previously denied claims would be paid. Instead of waiting to get the checks in the mail, she drove to the offices of each health plan and collected the checks, one for $1.2 million and the other for $800,000. Then she returned to the hospital to present the checks to the CFO and the vice president of contracting.

Importance of Case Management

The CFO’s reaction? He asked if he could hire her on the spot. Being a consultant, Owen declined but she had clearly demonstrated the value of educating case managers about revenue cycle management (RCM) and driven home the lesson that when case managers are well trained and understand the nuances behind RCM, they can improve the bottom line. The lesson was clear: case management is one of the few departments in any health system that walks the fine line of managing clinical responsibility and fiscal sustainability.

Today, Owen supervises the Care Management Series for Athena Forum, an online education company that develops workforce performance programs for case managers, social workers and other health care professionals in hospitals nationwide.

She’s also a driving force behind Athena Forum’s eight-module RCM course, designed to improve the utilization and case management processes and boost revenue for health systems. Each of the eight modules in the course covers a different aspect of RCM. The modules address operating revenues, the terms hospital administrators use when discussing the revenue cycle, the influence of case management on operating revenue, Medicare and Medicaid reimbursement and performance, commercial reimbursement, denials and appeals, and cross-sector interventions.

In developing the course, Owen sought to give case managers a deep understanding of the connection between coordinated, appropriate levels of care and reimbursement from public and private payers. As private health plans and public payers, such as Medicare and Medicaid, continue to cut hospital payments as they shift from volume-based to value-based reimbursements, case managers need to understand how to manage care appropriately while ensuring hospitals get paid for the care they deliver.

“Case managers need to coordinate care with a healthcare reimbursement system that doesn’t pay for every hospital visit or intervention,” Owen explained. “Instead, all payers, particularly Medicare, are seeking to reward hospitals for improving patient outcomes, reducing readmissions and streamlining processes. Case managers can do that only if they understand how the delivery and documentation of care affects hospital payments.”

Ronald L. Hirsch, MD, FACP, CHCQM, the RCM course director, explained that when case managers fail to understand what each payer wants from its hospitals under contract, the result is unpaid claims or long delays for payment or both.

“All patients should receive excellent medical care, but being payer-agnostic can have devastating clinical effects on the patient and financial effects on the provider and hospital,” Hirsch said. “These effects can extend to the post-acute setting with the patient-centered medical homes, limited provider networks, restricted medication formularies and bundling initiatives that link post-acute spending to the ultimate reimbursement for the hospital care.” Hirsch is a vice president for Accretive Health, in Chicago.

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About Author

Thomas Rasmussen
Thomas Rasmussen

CEO and publisher of Athena Forum, which produces online continuing education courses for case managers, social workers and other healthcare professionals, in Rockville, Md.