Revenue Cycle Management and Healthcare Finance

1 Revenue Cycle Management and Healthcare Finance 1. Management and Use of Clinical Data in Various Payment and Reimbursement Systems Patients become part of the revenue cycle management once they engage healthcare providers, hospitals clinics, and doctors’ offices. Hospitals have incorporated technology into the revenue cycle management to remain financially stable and ensure a positive patient experience.

Technology also helps to create a patient-focused care delivery base where positive outcomes are guaranteed. Health technology establishes a solid ground for patient data collection and analysis, thus enhancing decision making. The collection of precise data is necessary for reducing errors, facilitating care coordination, tracking data over time, and improving clinical outcomes. Clinical data is also used by various payment and reimbursement systems.

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2 This data helps insurance companies to identify the healthcare services provided to individuals for appropriate reimbursement to care providers and hospitals. Below are some of the revenue cycle management elements that utilize clinical data.

Case-Mix Management Case-mix is a process through which patients are classified into different groups to improve clinical and financial management in a clinical facility. Each group comprises patients suffering from almost similar conditions. Case-mix creates a platform on which clinicians can match patient needs with nursing practice (Definitive Healthcare, LLC, 2021). It ensures that patients are provided with clinical services that can effectively address their health problems.

Case-mix is a significant indicator for clinical documentation and hospital performance. It reflects the diversity, severity, and complexity of patient illnesses treated in the facility, as highlighted by Definitive Healthcare, LLC (2021). Medicare uses the case mix index to determine reimbursement rates for hospitals and care providers.

Clinical Data Management Clinical data management describes a critical procedure in clinical research that helps generate high-quality, statistically sound, and reliable data from clinical studies. This process provides the ground for data collection and data integration, and availability at appropriate quality and cost (Nadkarni, 2016). Clinical data management’s main goal is to make healthcare decisions from research adequately supported by reliable data. Clinical data management helps improve the reimbursement process, especially for value-based models.

Reimbursement Management Reimbursement describes how government agencies and private health insurance companies pay back hospitals and healthcare providers for services provided to beneficiaries.

3 The amount reimbursed is based on a prior agreement with the insurance company or the government agency. Healthcare providers undertake various health reimbursement management processes to eradicate challenges that might affect the reimbursement process. As denoted by Casto and AHIMA (2021), some reimbursement management activities include workflow automation and resource utilization. Clinicians allocate resources to needy cases to minimize wastage and improve outcomes. They also regularly update clinical data, track payer policies to identify opportunities, and examine payment levels (Harrington, 2016). Reimbursement management helps to improve revenue cycle efficiency, payment revenue, besides optimizing healthcare reimbursement.

Prospective Payment System (PPS The PPS is a reimbursement method whereby Medicare payment is made on a predetermined, fixed amount basis. This methodology utilizes a classification system to derive the payment for specific services. The major classification system used in this method is diagnosis-related groups. The PPS is a code-based payment model that creates incentives for accurate coding and billing, as pointed out by (Abbey 2018).

Billing and Reimbursement Billing and reimbursement at various hospital inpatient and outpatient departments and physician offices are essential health finance activities. These processes constitute the backbone of the health revenue cycle as they create the base for appropriate compensation of clinical services provided to clients.

Best practices for Health Information Management Healthcare organizations can undertake several best practices for health management to improve health finances and outcomes of patients’ care. These practices include the

4 implementation of a health technology system such as the electronic health recording system.

Another best practice, as indicated by AHIMA Foundation (2021), is the identification of data elements to collect for specific capture needs. This practice involves identifying relevant data fields, definitions, and types. Providers also need to consider the expected data outputs. This practice helps to identify change patterns and initiate appropriate rectification measures (AHIMA Foundation, 2021). Another practical health information management practice is evaluating data output to determine the consistency of the results. Results analysis is also a best practice for data management since it helps identify reporting discrepancies.

2. The Applications and Processes for Chargemaster and Claims Management Chargemaster management is the process of connecting systems and workflows to bring data into one view. A chargemaster is the hospital’s charge description master, which tracks services, volume, and revenues. It acts as the basis for billing patients and payers. The chargemaster captures the prices of services and procedures provided in the hospital. It also contains the prices of diagnostic tests, prescription drugs, room charges, and equipment fees (Lapointe, 2018). The first step in the chargemaster is to document a patient encounter in the health records to enable management staff to assign codes for reporting and claim submission.

Coder use capture to translate codes and documentation through the chargemaster (Lapointe, 2018). The hospital uses the charges to bill patients and creates claims for payers.

Providers can undertake several activities to manage the chargemaster. These activities include confirmation of charges to ensure they are reasonable and defensible, reduce inappropriate charges, and ensure coding facilitates accurate billing and payment of services.

Chargemaster Management ensures that data and processes are transparent and optimally efficient. Importantly, chargemaster management corrects errors at their sources, increasing

5 productivity and keeping hospitals and providers confidently compliant. Effective chargemaster management supersedes the setting up of new charge codes.

3. Implementing Provider Querying Techniques A provider query is a communication tool used in hospitals to clarify information in the health records. A query is used for upholding documentation integrity and assigning accurate codes for individual encounters in healthcare settings. A query is generated by coders and targeted to physicians. Queries require physicians to offer solid explanations for inconsistencies in the documentation of the services provided to a patient (Hess, STAT! Ref, & Teton Data Systems, 2015). A query can be written or verbal. The querying process involves establishing the common situations that require querying, determining if querying will be done after discharge or during a patient’s hospital stay, and designating the person to initiate queries. The person initiating a query uses a generic query form to clarify the issues (Green, 2018). The coders can email the query form to the physician or request him/her to visit the medical records department to complete it. Doctors, who complete the query form on a timely basis, should be complimented to establish a culture of competency. The coders need to incorporate the information provided by physicians in the query form into the medical records.

4. Methods to Manage Clinical Documentation Improvement (CDI) Components Clinical documentation is a crucial process in healthcare that determines the reimbursement and payments to hospitals and physicians. Clinical data is usually translated into alphanumeric codes, which are then submitted in claims. This data is subjected to critical analysis to generate results on care quality and clinical outcome measures. Providers and payers engage in different clinical documentation improvement practices to advocate for completeness,

6 validity, and precision of provider documentation. Providers can employ various methodologies to manage clinical data improvement components.

One of these methodologies is the present on admission (POA) indicator. This indicator highlights the conditions that were present at the point of patient admission to the hospital. It helps differentiate conditions that develop during hospitalization from those present at admission (Ghazvinian et al., 2019). Conditions that occur during the patient encounter are referred to as hospital-acquired conditions (HACs). These conditions affect health finance since government agencies like Medicare impose penalties on specific HACs scores. Hospitals use technology to reduce medical errors, subsequently eradicating the risk of HACs. Providers also use the clinical documentation integrity metrics to manage clinical documentation. These metrics include the case mix index, the review rate, response rate, and the response time. The Case-mix index shows the severity of sickness among patients in the hospital, whereas the review rate indicates the number of reviews performed by the CDI team (AHIMA, 2016).

The best practices for reporting CDI processes are the concurrent and prospective approaches to coding. Concurrent coding involves the review and coding of current and prebilled records. It also involves coding all diagnoses and procedures in ICD-9 and ICD-10 and computing the MS-DRG for each case. On the other hand, the retrospective approach involves the review of ICD-9 coded post-billed records (Savarise & Senkowski, 2017). These records are then recoded in ICD-10. Retrospective coding improves coding accuracy and consistency for critical cases.

5. Financial Management in the Health Information Department

7 Financial management in healthcare describes the process of evaluating the financial efficacy and overall operations of the organization. This process generates information that allows the organization to make solid plans. It also enables creates t base on which to generate more revenue and minimize expenses. The key elements of financial management are planning, controlling, decision-making and organizing and directing (Nowicki, 2018). Planning involves identifying organizational objectives and the steps necessary to accomplish the objectives.

On the other hand, controlling aims to ensure that all areas of operation adhere to the established plans. Organizing and directing entails determining the resources necessary to accomplish certain tasks (Nowicki, 2018). The decision-making process allows the manager to make rational choices among available alternatives. Budgeting is an integral process of health finance management. It ensures that resources are allocated to priority services. The budget process involves determining the total budget, identifying priorities, establishing emergencies, and identifying alternatives (Nowicki, 2018). The budget is conducted in line with accounting principles such as the expense principle and the matching principle. These principles help finance managers to allocate resources to activities that promise positive returns.

6. Basic Accounting Principles Associated with Cost-Benefit Analysis Accounting Principles The three basic principles of accounting associated with resource planning and allocation are the expense principle, the cost principle, and the matching principle. The revenue principle dictates that an organization earns revenue at the point of sale (Gitman et al., 2018). This implies that revenue occurs once a service is performed or the purchaser takes legal possession of goods.

Per the expense principle, expenses occur when goods are delivered, or services are provided regardless of when billing was done. On the other hand, the matching principle has it that each

8 item of revenue should be matched with the expense (Wallace, 2020). In healthcare, the cost of care is considered the expense of all services provided to the patient. An organization that applies the matching, expense, and revenue principles operate under the accrual account ting system.

Cost-Benefit Analysis Cost-benefit analysis is the systematic process utilized by organizations to analyze different practices to determine the ones to retain and forego. This process involves the calculation of potential rewards and subtracting the costs associated with taking certain actions.

In healthcare, cost-benefit analysis involves expressing interventions and their consequences in monetary terms and comparing them (Gitman et al., 2018). Cost-benefit analysis is a beneficial practice that enables organizations to understand unpredictable situations. It also enables the organization to identify practices that benefit health finance, and those cost more than the benefits (Wallace, 2020). Cost-benefit analysis helps leaders decide whether to engage in some profitable initiatives such as outsourcing and acquisition.

Outsourcing Outsourcing is a business venture whereby a third party performs job functions for the organization. Outsourcing is beneficial since it helps organizations reduce overhead costs.

Wallace (2020) noted that it also increases efficiency, focuses on core competencies, and flexibility to meet changing business needs. Organizations this initiative have greater access to skills and resources.

Acquisition The acquisition is how an organization purchases another company’s shares to have control over that company. This process helps the acquiring company capture synergies and capitalize on the target company's strengths (IT-Shades (2021). Acquisitions provide the

9 acquiring company with greater access to the market by eradicating entry barriers. The organization also gains a competitive edge in the market.

10 References Abbey, D. C. (2018). Prospective payment systems. CRC Press.

AHIMA (February 2016). Understanding CDI Metrics. https://journal.ahima.org/understandingcdi-metrics/ AHIMA Foundation. (2021). Health information management. https://perspectives.ahima.org/health-information-management-best-practices-for-qualityhealth-data-during-the-covid-19-global-pandemic/ Casto, A. B., & American Health Information Management Association. (2021). Principles of healthcare reimbursement and revenue cycle management. AHIMA Press Definitive Healthcare, LLC. (2021). Case Mix Index. https://www.definitivehc.com/resources/glossary/case-mix-index Ghazvinian, R., White, R. H., Gage, B. F., Fang, M. C., Saeed, R., & Khanna, R. R. (2019).

Predictive value of the present-on-admission indicator for hospital-associated hemorrhage. Thrombosis Research, 180, 20-24. https://dx.doi.org/10.1016%2Fj.thromres.2019.05.014 Gitman, L. J., McDaniel, C., Shah, A. J., Reece, M., Koffel, L., Talsma, B., Hyatt, J. C., ...

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