Revenue Cycle Management in a Post-ACA World

Oncology Business News®, October 2014, Volume 3, Issue 5

The Affordable Care Act (ACA) is bringing unprecedented changes to how health care is paid for in the US, and both primary care physicians and specialists need to understand how these changes will affect their revenues.

Dan Clark

The Affordable Care Act (ACA) is bringing unprecedented changes to how health care is paid for in the US, and both primary care physicians and specialists need to understand how these changes will affect their revenues. Reductions in Medicare and Medicaid payments, constraints on payer contracts and negotiations, and a fundamental change that emphasizes a risk-based and shared-savings reimbursement model have many practices scrambling to catch up.

It is unclear which reimbursement model—or which combination of models—will ultimately dominate. Further complicating revenue cycle management is that many health organizations are transitioning into being part of an Accountable Care Organization (ACO), in which caregivers are rewarded for both quality and value, rather than for volume.

It Starts in the Front Office

At its core, the ACA has expanded coverage to a formerly uninsured population through state and health information exchanges and Medicaid expansion. What does this mean for a private practice hematologist from a revenue cycle perspective?

“It means an increased focus on insurance verification and an emphasis on point of service collections,” said Dan Clark, director of revenue cycle for McGladrey, a provider of accounting, tax, and consulting services. “The pressure to determine insurance coverage and ensure accurate insurance information currently falls to the front-office staff when the patient calls or presents for the office visit,” Clark said.

Because denial of claims is a significant problem, using business intelligence software could be an option providers might consider. Clark said that he frequently works with physician practices to help them understand the denials process. McGladrey uses business intelligence software (OlikView) to augment system reporting and “pull data from the host system for detailed analysis in order to help physicians and practice managers understand where the denials are coming from.” He pointed to the front end of the patient workflow as a primary source of denials.

Value-Based Modifier

The Affordable Care Act (ACA) requires that the Centers for Medicare & Medicaid Services (CMS) implement a value-based payment modifier that would apply to Medicare fee-for-service payments starting with select physicians on January 1, 2015, and applying to all physicians and groups by January 1, 2017. The value-based modifier is intended to pay physicians differentially based on the quality and cost of their care.

According to the CMS web site, physicians in groups of 100 or more eligible professionals (EPs) who submit claims to Medicare under a single tax ID number will be subject to the value-based modifier, based on their performance in calendar year 2013. In 2013, these groups needed to self-nominate/register and choose 1 of 3 PQRS group reporting methods available in 2013: the web-interface group reporting option, a registry, or request that CMS calculate the group’s performance on quality measures from administrative claims, in order to avoid an automatic negative 1% value modifier adjustment to 2015 payment under the Medicare Physician Fee Schedule.

Groups of 100 or more EPs who self-nominated/registered for, and then participated in, any of the above-mentioned methods of reporting on clinical performance but did not elect quality tiering will have a neutral value modifier in 2015, which results in no impact on 2015 payments. In 2015, the value-based modifier will apply to both participating and nonparticipating Medicare physicians in groups of 100 or more EPs.

“Denials are often due to inaccurate demographic and coverage information or lack of authorizations for services. We are seeing more and more requirements for authorizations of services put in place, especially around managed Medicaid,” said Clark. This makes the shift to improving front-end resources and front-end education all the more important.

Medical practices should use a check sheet or script guide to be sure all pertinent information is collected at the point when the revenue cycle starts—when the patient schedules an appointment.

At the minimum, knowing the type of insurance the patient carries will help the scheduler know what information to collect. Responsibilities of the front-office staff should include informing the patient if the provider is not in the patient’s insurance network, providing information about what the patient should bring to the appointment, explaining to the patient that payment for copayments is expected at the time of the visit, and noting the arrival time of the patient if paperwork needs to be completed before the appointment.

The office practice’s financial policy should be in writing, reviewed by legal counsel, and signed by the patient. It should provide guidance to the patient about collection of copayments, accepted forms of payment, financial arrangements for unpaid balances, charity care or financial assistance arrangements, methods of payment not covered by insurance, and a description when prepayment of services is required.

The front-office staffer should be someone who is “capable of speaking to your patients about their responsibilities on deductibles, copayments, or coinsurance,” said Clark. “In my experience, physician practices have been slow to adopt the approach of collecting from patients when they present, but this responsible approach will become increasingly important to improve revenue and reduce expenses related to collections as higher deductible plans take effect. I estimate that thirty to forty percent of revenues in physician practices will be collected directly from patient responsibility.”

In this age of health reform, the responsibilities of the patient have changed as well. “It really is up to practices and to the medical industry to educate patients about their responsibility,” said Clark. And with the ACA and qualified health plans, it’s possible that many new patients will be enrolled in ‘bronze’ plans, which carry lower premiums but high deductibles and copayments that the physician office will be expected to collect. According to Clark, he has not met an oncologist who wouldn’t see a patient for lack of payment, but he emphasized that there is increased responsibility on the patient side and the physician needs to be aware of it.

Pulling Out the Value Metrics

Under health reform, the physician payment model is moving towards value-based payments and away from fee-for-service payments. This transition requires a number of changes, said Clark, including adequate information technology (IT) and the use of integrated electronic health records (EHRs).

“We have to be certain that EHRs are capable of handling things like ICD-10,” Clark said of the revision of the ICD-9-CM system, which physicians and other providers now use to code all diagnoses, symptoms, and procedures recorded in hospitals and physician practices. The ICD-10-CM revision has more than 68,000 diagnostic codes, compared to the 13,000 found in ICD-9-CM, according to CMS. Looking ahead, Clark said to keep in mind that “the value-based modifier will be here in 2016 and 2017 from the Centers for Medicare & Medicaid Services (CMS).” Actually, the modifier starts in 2015 for “providers in large groups of more than 100 physicians,” he said. (See Value-Based Modifier in the sidebar.)

Practices that are considering an EHR should make sure the system can identify and report on the physician reporting quality metrics that will be required in order to receive incentive payments and avoid penalties.

“You have to be able to report on these quality metrics to participate in these programs that the ACA is mandating,” said Clark. Some physicians have been less aggressive in investing in technology or adopting new technology. “If your system can’t pull that information out and you can’t report on it, your practice will be subject to future CMS payment penalties,” Clark warned.

But investing in any new technology must have a return on investment. How do practices make sure that what they purchase is not obsolete in 6 months?

“I would look to the Meaningful Use and Physician Quality Reporting System (PQRS) requirements,” said Clark, referring to a reporting program that uses a combination of incentive payments and payment adjustments to promote reporting of quality information by eligible professionals. The requirements are available on the CMS web site.

Clark said practice managers should be aware of the eventual roll out of a merit-based incentive payment system called MIPS. “It is going to be a combination of EHR, meaningful use dollars, the PQRS, physician quality reporting system dollars, and the value-based modifier dollars,” Clark explained.

Hardware Needed

To gain this actionable insight, practices need tools that can help them manage their networks and patient populations, regardless of the payment model. A traditional data warehouse or static health information exchange (HIE) can’t deliver this insight. What is required is an application that harmonizes data from multiple systems (EHRs, practice management, claims) and turns it into insight that can then become action directly in an organization’s existing workflows. By converting information into action, organizations can align providers to achieve clinical and financial integration.

As part of this overall strategy, revenue cycle management applications should provide features such as:

  • Consolidated network revenue cycle and productivity data
  • Analytical tools that display information clearly and accessibly
  • Actionable insight into collections, referrals, denials, etc.
  • The ability to easily slice and dice data and share performance results
  • Key performance information data filtered by location, department, or role
  • Benchmark tracking and performance comparison by practice, specialty, or geography

The ACA has contributed complexities to revenue cycle operations, but it also presents an opportunity for providers to improve, excel, and differentiate. Providers who can adapt their revenue cycle management processes to take advantage of the current post-reform, consumer-driven environment will be in a position to benefit. Physicians should discuss these issues with their revenue cycle management vendor to ensure that their system can run more sophisticated reports to comply with evolving reimbursement requirements.