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A Measure of Success Using KPIs to Accelerate Revenue
Cycle Performance
Sandy Richman, Director of Advisory Services
Daniel Bergantz, Director of Advisory Services
PNC Healthcare
March 3, 2014
1
Today’s Presentation Goals
1. Review current factors affecting the hospital industry and revenue cycle environment
2. How to be MAD about Revenue Cycle Management
3. Developing and reporting Key Performance Indicators (KPIs)
4. Calculating, defining, and interpreting the value of selected KPIs
5. Putting it all together: A hospital case study
6. Learn something new and have fun!!!
2
A FEW POINTS OF HOSPITAL ECONOMICS
Uncompensated Care Cost to Hospitals
Source: American Hospital Association, Uncompensated Hospital Care Cost Fact Sheet, (Jan 2013)
$-
$5
$10
$15
$20
$25
$30
$35
$40
$45
0%
1%
2%
3%
4%
5%
6%
7%
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Cost (Billions) % of Total
3
Hospitals Already Face Public Underfunding
Hospital Payment Shortfall Relative to Costs 1997 – 2010
Source: American Hospital Association Annual Survey data, 2010
4
Current Hospital Revenue Cycle Environment
• Over 12 billion major transactions
• Huge fragmentation
o More than 2,000 payers
o 30,000 contact points
• Cumbersome processes
• Unenforceable standards (HIPAA standardization)
• Excessive reliance on paper or proprietary gateways
• Constantly changing payment protocols
• Abnormally high and accelerating costs of billing and collections (35% of healthcare cost)
• Reimbursement and market pressures reducing resources available for overburdened and understaffed administrative functions
Source: Thomson Reuters Action OI database
45% of 45% of medium &
large community hospitals
5
NOW ADD IMPACT OF HEALTHCARE REFORM
6
7
$22.3
$42.7
$3.8
$393.4
$262.7
$111.0
$835.9
10 Yr Federal Revenue Estimates
($ billions)
PAYMENT CUTS & COST
SHIFT PROVISIONS
P4P & PENALTIES FOR POOR
PERFORMANCE PROVISIONS
GEOGRAPHIC PYMNT ADJ
PROVISIONS
TRANSPARENCY
PROVISIONS
COVERAGE EXPANSION
PROVISIONS
DELIVERY SYSTEMS
PROVISIONS
•PhRMA Tax (Ranging from $2.5B to $4.1B annually)
•Hospital Productivity Adjustments
Independent Payment Advisory Board(IPPS Hosp exempt until 2020) Medical Device Tax Medicare DSH Payment Reduction
Medicaid DSH Payment Reduction
•CMS Hospital Behavioral Offset relating to IPPS •Hospital Market Basket Reductions
•Hospital Value-Based Purchasing •Hospital Readmission Payment Reductions
•Hospital Acquired Conditions Penalties
•Hospital Wage Index •Geographic Variation Bonus
•Waste, Fraud, and Abuse Provisions for Medicare and Medicaid (RAC & MIC) •Disclosure of Standard Hosp Charges
•Comparative Effectiveness Research
•Disclosure of Industry Payments to Physicians and Teaching Hospitals
•Insurance Reforms (Pre-existing conditions for children, no annual lifetime limits, children on parents insurance until 26)
Medicaid Expansion Insurance Reforms (Pre-existing conditions for adults, premium limits Individual Mandate and Employer “Pay or Play” State Exchanges
•Center for Medicare and Medicaid Innovation
•Accountable Care Organizations
•Bundled Payments Pilot
Cadillac tax – 40% tax on employer-sponsored health plans that offer policies with generous coverage levels.
“Doughnut hole” coverage gap in Medicare prescription benefit is entirely phased out. Seniors expected to pay 25% of drug costs until the threshold for Medicare
catastrophic coverage is met.
Source: U.S. Department of Health and Human Services, PNC Healthcare Advisory Services
Changes of Healthcare Reform
Payment Cuts in Healthcare Reform
8
8
Revenue Cycle – the Tip of the Iceberg
9
Balanced Budget Act/HIPAA
Common Revenue Cycle Process Gaps
Pricing & Charge Capture Methodologies
Compliance Audit Recovery (RAC/MIC/MAC)
Payment Cuts & Cost Shifting
P4P Provisions & Poor Performance Penalties
Geographic Payment Adjustment Provisions
Transparency Provisions
Coverage Expansion Provisions
Delivery System Provisions
7-10% net revenue
2-3% net revenue
And now…a Demotivational Thought
10
And Now…
Time to get MAD about
Revenue Cycle Management!!!
11
Thomas Edison…Example of a “MAD” Man
• Many often referred to Edison as a genius.
• What was his response?
• “Genius is 1% inspiration and 99% perspiration.
• He was also noted as saying: “Genius is hard work, stick-to-it-iveness, and common sense.
• Invented the lightbulb – now a symbol synonymous with idea and inspiration.
12
Inspiration
• Your “lightbulb” moment
• Involve everyone in the “lightbulb” process
• Consider rewarding staff for coming up with their own “lightbulbs” – Texas Health Resources example
• Your lightbulb, or idea, is only the first step, next comes the real work of implementing your idea
13
The Keys to being a MAD success!
Measurement
Discipline Accountability
Patient Access
Scheduling/ Pre-registration
Ins. Verification/ Authorization
POS Collections
Financial Counseling
Registration
Revenue Integrity
Charge Capture
Clinical Documentation
Chargemaster Management
Coding
HIM Throughput
Business Office
Billing
AR Follow-up & Management
Payment Posting
Customer Service
Collections/ Agency Management
Reimbursement
3rd Party Contracting
Denials Management
Contract Management
Pricing Strategy/ Fee Schedules
Revenue Recognition
14
Measurement
• We’ve all heard it: you can’t manage what you don’t measure.
– Measurement aids in identifying problem areas.
– Sets the stage for setting goals/targets and working toward them.
• It is also a proven principle that:
– When performance is measured, performance improves. When performance is measured and reported, the rate of improvement will accelerate beyond mere measurement alone.
• Other principles to keep in mind:
– Ensure that what you are measuring is accurate and meaningful. Use a standard data source.
– Use metrics instead of just data reporting – the more standardized and widely used, the better. Examples: HARA, HFMA’s Revenue Cycle MAP Keys, PNC benchmarking initiative!
– Measure early and measure often.
– Automate the measurement process as much as possible.
15
Examples of Measurement
KPIs, Dashboards, and Graphs, oh my!
Key Performance Indicator Target
Overall pre-registration rate of scheduled patients >98%
Overall insurance verification rate of scheduled/pre-registered patients >98%
Registration accuracy rate >98%
Successful attempts for collection of elective services deposits prior to service 100%
Successful attempts for collection of inpatient self-pay deposits prior to discharge >65%
Successful attempts for collection of ED self-pay deposits prior to departure >50%
Days of gross revenue held in Discharged-not-Final-Billed status <4-6 days
Physician documentation completion deliquency greater than 30 days <5%
Final-Billed-Claim-not-Submitted backlog <1 A/R day
Billed insurance A/R >90 days from service/discharge <15-20%
Bad debt write-offs as a % of gross revenue <3%
Charity care write-offs as a % of gross revenue <3%
Total cash to net-collectible revenue (60 day average lag) ~100%
Cost to collect (HIM excluded) <2-3%
Net A/R days <45-55 days
Point-of-service collections as a % of total cash collections >2-3%
Outsourced bad debt netback ([collections-fees]/placements) >7-11%
Overall initial denials rate (% of net revenue) <4%
Clinical initial denials rate (% of net revenue) <5%
Appealed denials overturned rate 40-60%
Pati
en
t A
ccess
HIM
Pati
en
t A
cco
un
tsD
en
ials
16
Accountability
• Accountability must start with leadership.
– A waterfall without a source is just a cliff – the source of accountability must be with leadership, then it can flow to the rest of the organization.
• Establish accountability for every process of the revenue cycle.
– Ensure that every revenue cycle process reports to the right person – the “right people in the right seats on the bus” principle.
• Accountability is enhanced when coupled with measurement.
– Every metric being measured should be tied to an accountable leader.
– All staff level employees should be accountable to at least one quality and one productivity metric.
17
Accountability
Not this… No Accountability!
Sr. Assoc. Dir.
Associate
Director
Assistant
Director
Admission
Officer
Asst. to Director
Transfer
Coordinator
Sr. HCPPA
Asst. Coor. Mgr. HCPPA Asst. Coor. Mgr HCPPA
Coord. Manager
Tour II
Coord. Manager
Tour I
Coord. Manager
Tour III
Sr. HCPPA
Admitting/ER
Clerical Assoc.
Admitting / ER
C.A.
Sr. HCPPA
Pre-Adm/
Information
Clerical Assoc.
C.A.
Sr. HCPPA
Admitting/
Discharge
PAA
Admitting
Clerical Assoc
Discharge Office
C.A.
Clerical Assoc
Admitting
C.A.
C.A.
Sr. HCPPA
ER/Bed Board
Asst. Coor.
Manager
ER
Clerical Assoc.
ER
C.A.
Sr. HCPPA
Admitting
PAA
Admitting
Asst. Coor.
Manager
ER
Clerical Assoc.
Admitting
C.A. C.A.
Systems
Analyst
Asst. Coor. Mgr.
Census / TCEs
Census Team
Clerical Assoc.
Clerical Assoc.
18
Discipline
• Process discipline = a standardized approach:
– Define each task within the revenue cycle very clearly, then stick to that definition each time the task is performed to improve overall revenue cycle performance.
• You don’t have to be a six sigma black belt to identify areas and ways in which a process can be improved and where process discipline can be implemented.
• If you talk to different employees who perform the same task and they give different answers on how the task is done, you know you have a problem.
• Develop tools such as workflows, scripts, and training sheets so staff can easily follow the standard approach.
• Identify or create a process champion – someone who performs the task (or is willing to) in the best manner and utilize him/her as an example/role model/trainer for others.
19
Workflow Example
• Workflows are a powerful tool that can be used to establish a standardized, disciplined approach to any process within the revenue cycle. Workflows are also very effective to train staff and help them visually understand how a process should work, especially when decisions have to be made during the process chain.
Pre-RegistrationDepartment schedules
patient in scheduling
system
Scheduling system data
is uploaded into NOVA
each morning
Pre-Registrars utilize
NOVA worklists to pre-
register patients
Is patient listed in
Invision?
Has patient received
services in past 30 days
within the current month?
Yes
No
Yes
No
Pre-registration packet is printed
and provided to designated
admitting area
Registration is completed &
ready for patient arrival
*Financial responsibility is collected when possible
Complete Pre-
registration Checklist in
NOVA worklist
Previous visit info is
utilized, patient is
notified of financial
responsibility*
Registration info is
obtained, and patient is
notified of financial
responsibility*
Registration is
typed and
completed
Is patient self-pay?
Refer patient to
financial
counseling
Yes
No
Able to speak with
Patient after 3
attempts?
Yes
No
Pre-registration not
completed. Complete
registration at POS
Complete Pre-
registration Checklist in
NOVA worklist
No
20
Developing KPIs
• What to measure?
– Develop indicators for each process at the department/ functional level as well as overall RCM indicators
• Develop a baseline - where are you today?
• Where have you been?
– Trending information is more valuable than one point in time
– Calculate values for the previous 12 – 18 months
– Track a 3 – 6 month rolling average
• Where do you want to be?
– Use resources such as HFMA & HARA for best practice benchmarks
– Try to find benchmarks more specific to your type of facility and geographic region
– Look for opportunities and create your “own” target
22
Gap Analysis
Current Performance
Good Performance
Better Performance
BEST PERFORMANCE
Good, Better, BEST!
23
KPIs by Functional Area
PATIENT ACCESS
REVENUE INTEGRITY CLAIMS MANAGEMENT
REIMBURSEMENT
OTHER MANAGEMENT
• Pre-Registration Rate
• Days Gross Revenue in Discharged-Not-Final-Billed (DNFB)
• Final-Billed-Not-Submitted (FBNS)
• Initial Zero Paid Denial Rate
• Cash Collections as % of Net Revenue
• Point-of-Service Collections Rate
• Discharged-Not-Submitted to Payer (DNSP)
• Clean Claim Submission Rate
• Initial Partial Paid Denial Rate
• Days Cash on Hand
• Uninsured Patient Conversion Rate
• Late Charges as % of Total Charges
• Net Days in A/R • Total Denial Write-Off as a % of Net Revenue
• Case Mix Index
• Insurance Verification Rate
• A/R Aging Distribution • Overturned Denial Rate • Bad Debt Write-offs as % of Gross Revenue
• Insurance Authorization Rate
• Billed A/R >90 Days ∙ 3rd Party >90 Days ∙ Self Pay >90Days
• Charity Care Write-offs as % of Gross Revenue
• Charity Care to Uncompensated Care
• Days Gross Revenue Held in Credit Balances
• Cost-to-Collect
24
KPI Reporting Process
• Determine how you will display and track KPIs
– Charts, graphs, dashboards, spreadsheets, etc.
• Decide which indicators will be tracked daily, weekly, monthly, quarterly
• Put someone in charge of collecting the data
– Automate data collection where possible
• Schedule regular meetings with the CFO and revenue cycle leadership team to review indicators
– Give updates on current initiatives, identify new opportunities and create action plans
– Results in common goals
• Schedule separate department meetings that includes director, managers, supervisors & leads
25
Putting it All Together
• Develop your idea – your “lightbulb”
• Identify which measurements relate to the area you are desiring to improve
• Utilize measurements to assess where you are now compared to where you want to be
– Identify gaps and quantify opportunities
• Prioritize opportunities based on financial and operational impact
• Develop standardized, disciplined approaches for each process to be improved
• Assign accountability to each measurement and process so that everything is tied to an accountable individual
• Implement changes
• Continue to measure and report to determine progress
• Celebrate successes
Current Performance
Good Performance
Better Performance
BEST PERFORMANCE
26
CASE STUDY EXAMPLE
27
Case Study: Midsize Southeastern Hospital
• Previous issues being faced:
– High bad debt – 8-10% of gross revenue
– High DNFB
– No Financial Counseling program
– Minimal POS Collections - $20-30k per month
– No standardization of processes
– Many billing issues and minimal account follow-up
– Minimal measurements, no targets or goals
– Lack of leadership engagement
28
Measurement
• Examples of measurements implemented:
– Point-of-Service Collections
– A/R >90 Days
– Net A/R Days
– Total Cash Collections
– Registration Accuracy
• All of these reviewed at Revenue Cycle Progress to Goals Meeting
$0
$100,000
$200,000
$300,000
$400,000
$500,000
OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP
Upfront Collection $s
Upfront FY11 Upfront FY12 Upfront Target
GOOD
0%
5%
10%
15%
20%
25%
OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP
A/R > 90 (%)
AR > 90 FY11 AR > 90 FY12 AR > 90 Target
GOOD
0
5
10
15
20
25
30
35
40
45
OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP
A/R Days
A/R Days FY11 A/R Days FY12 A/R Days Target
GOOD
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP
Total Cash Collections
Cash FY11 Cash FY12 Cash Target
GOOD
29
Measurement
• Office metric boards bring the principles of measurement and accountability together.
30
Accountability
• Leadership Engagement – starting from the top
– EPIC - Performance Improvement Culture
– Revenue Cycle Progress to Goals Meetings
• Empowering the Employee: educator positions, ongoing training, tools, resources
• Clear and defined roles of responsibility
– Identified the need to more clearly define the role of systems/software management
• Goals, Targets, Audits, and Incentive Plan – the link between measurement and accountability
• Communication: Huddles & Staff Meetings
31
Accountability
• Example of Audit Form
Acct Number Audit Item Point Value Earned Auditor
Payment dispositioned correctly; notes accurate for partial pmts;
Duplicate accts posted correctly; pmt reversals identified and
posted correctly; ABN/SA drug amounts written off if MCR;
money moved to pt as appropriate ; transaction codes
Coinsurance, Deductible, Co-pay, Pt Resp, Adjustments figured
and entered correctly
MCR takeback and repay with add'l ca's; C and F 5 5 LH
MCR split claim; rev system ca and posted remit ca's; C and F 5 5 LH
MCR takeback and repay with FB for diff; keyed ca's should not
have because created a large credit 5 0 LH
MCR split claim only one pd; no system ca to rev; keyed remit ca;
split non cvrd; ABN adj for part; C 5 5 LH
MCR sec part of split bill pd; rev system ca; posted remit ca; F 5 5 LH
MCR split claim; 3 parts; all pd; system ca reversed; remit ca's
posted; C C F 5 5 LHMCR takeback and repay with non cvrd; corre ca's posted; note for
non cvrd on repay; C P 5 5 LH
MCR MSP - zero pmt; correct CA posted 5 5 LH
MCR takeback with no repay; ca already reversed; note and P 5 5 LH
MCR takeback/repay with add'l non cvrd; correct ca's posted; note
for non cvrd; C P 5 5 LH
MCR w/valid ABN on file for non cvrd; amount moved to pt; FC
changed 5 5 LH
BC/BA in system as BC; reversed BC ca and posted remit ca for
HMO; F - manually posted entry; orig PUA 5 5 LH
BC on rej report for non cvrd but pd on employee remit; did not
work rej because paying on same remit 5 5 LH
BC had to key remit ca because system ca had been reversed 5 5 LH
BC BOB acct; rev system CA and posted remit ca 5 5 LH
BC; acct posted PUA manually posted to WC ins; posted add'l ca 5 5 LH
BC rej for coverage termed; rev system ca and keyed F 5 5 LH
BC rej for non coverd; rev system ca and keyed F 5 5 LH
UHC rej for no coverage; rev system ca and keyed F 5 5 LH
3 pmts on 3 claims for Psy MCR 1500; correct codes and
dispostions used 5 5 LH
Total Points 100 95
32
Accountability
• Team Huddles
33
Process Discipline
• Creating a standardized approach
– Many hours spent to review processes and identify best approaches
• Documented processes with easy access for staff
– Standard account follow-up process
– Registration Checklist
• Leader Standard Work
• GEMBA Walks
34
Process Discipline
• Checklist for Registration
Location Code: Procedure:
Please answer each question by initialing each block.
DO NOT USE CHECK MARKS. Pt Type: Pt Type Changed:
Patient Name: Account #: Date of Service:
SELF PAY/PATIENT RESPONSIBILITY
Spoke with Pt/Verified Demo __________ Collection Notes Entered __________
Self Pay Price Quote Procedure:_____________________
90 day Recreated __________ Orders Recieved __________ _________________________________________________
Clergy/Opt Out __________ Orders Scanned __________ Self Pay 45% Price Quote Amount: ____________
Accident/Occurrence Code __________ ID Scanned/Pulled __________
Current Visit Amount (Copay/Ded): ____________
Privacy Notice Received __________ Ins card(s) Scanned/Pulled __________
Previous Balance(s): ____________
Encounter Set __________ Consent Form Signed __________
Total Amount Due at Time of Service: ____________
BCBS/COMMERCIAL/HMO PRIMARY MEDICARE/MEDICARE HMO
Verified: Verified: Amount Collected: ____________
Deductible $____________ ____ Part A Only _____Part B Only _____Full Coverage □Cash □Check □CC/Debit □Payroll Ded □Payment Plan
Co-Pay $____________
Co-Insurance % $____________ MSP Form Completed ___________ Financial Counselor Contacted: _____Y _____N
In/Out of Network In_____ Out_____ MSP Expiration Date ___________
CareMedic Completed ___________ Comments:
Pre-Certification Required _____Yes _____ No ABN Completed/Printed ___________
Pre-Cert #___________________________ ABN Signed & Dated ___________
Important Medicare Message ___________
Pre-Notification Required _____Yes______No In/Out of Network In_____ Out_____
BCBS/COMMERCIAL/HMO SECONDARY MEDICAID WORKERS COMP/THIRD PARTY
Verified: Verified: Verified:
Deductible $____________ Worker's Comp Form ________
Co-Pay $____________ Coverage for Today's Service _____Yes _____No Alabama Breast/Cervical ________
Co-Insurance % $____________ Pregnancy Only_____Yes - Family Planning ____Yes Employee Mammo/Dexa Scan ________
In/Out of Network In_____ Out_____ (If Family Planning Only, complete Self Pay section) EAMC Foundation ________
PNC $35 ________
Pre-Certification Required _____Yes_____No PT 1 Referral Required _____Yes _____No Auburn Atheletic Dept ________
Pre-Cert #_______________________________ PT 1 Referral Obtained _____Yes _____No Others___________________ ________
Pre-Notification Required _____Yes_____No Pre-Authorization Required _____Yes _____No Please remember to fill out any needed forms.
Admission Planning Registration Representative Point of Service Registration Representative Discharge Registration Representative
_______________________________________________ _____________________________________________ ______________________________________________
35
Process Discipline – The “Leader Standard Work” approach
36
Results
• Staff have training and tools they need:
– How to verify insurance
– How to follow-up and collect
• Standardized processes
• Point of Service Collections: consistently above 2% of total collections annually and occasionally near 3% per month
• Net A/R Days: consistently hovering at 35 days
• 3rd Party A/R >90 Days: consistently below 15%
• Significant decreases in ABN medical necessity write-offs
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
3rd Party Billed A/R >90 Days
Good
Better
Best
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
POS Collections as a % of Total Cash Collections
Good
Better
Best
37
Our Message to Hospitals: Don’t Keep Doing The Same Old Thing!
38
Contact Info
Dan Bergantz - Director
801-755-4628
©2013 The PNC Financial Services Group, Inc. All rights reserved.
Sandy Richman - Director
801-300-0221
39
Speaker Biography
• Sandy Richman has over 13 years of combined clinical, financial, and consulting experience in the healthcare industry. In his current role as Director of Advisory Services for PNC Healthcare, he specializes in revenue cycle process improvement. Prior to joining PNC, Sandy was Manager of ARUP Laboratories’ Consultative Services Division where he and his team worked closely with hospitals nationwide to develop or expand their laboratory outreach operations. Sandy also has extensive experience in ED improvement, strategic planning, financial analysis, strategic pricing, operations improvement, and market research. He holds an MBA degree from the University of Utah, and is an active member of the Utah HFMA chapter.
40
Speaker Biography
• Dan Bergantz has 15 years of combined research, financial, and consulting experience in the healthcare industry. He currently serves as Director of Advisory Services for PNC Healthcare specializing in revenue cycle process improvement, and also has extensive experience in strategic planning, labor management and productivity, strategic pricing, and physician productivity. Prior to joining PNC, Dan developed his expertise and passion for the healthcare industry working for organizations including the Premier Healthcare Alliance, Phase 2 Consulting, GE Healthcare, and the Utah Medical Education Council. Dan earned his MBA in Health Administration from the Eccles School of Business at the University of Utah, and is an active member of HFMA’s Utah Chapter.
41
APPENDIX
42
Patient Access KPIs
Indicator Calculation Things to Consider Target
• Pre-Registration Rate of Scheduled Patients
Number of patient
encounters pre-registered
Number of scheduled
patient encounters
All scheduled encounters pre-registered prior to date of service. A scheduled encounter is considered prior to day of service.
90-98%
• Point-of-Service (POS) Collections Rate
POS Payments
Total Cash Collected
Defined as patient payments collected prior to or up to seven days after discharge/date of service for the current encounter only.
1.5 - 3%
• Inpatient Uninsured Patient Conversion Rate
Number of uninsured patients converted to a
payer source
Total number of uninsured patients
Payer source can include COBRA, Medicaid, workers comp, other insurances such as motor vehicle, and other government programs.
10-20%
43
Patient Access KPIs
Indicator Calculation Things to Consider Target/Best Practice
• Insurance Verification Rate
Total number of verified encounters
Total number of
registered encounters
All scheduled patient encounters where eligibility/insurance is verified prior to date of service and non-scheduled encounters verified within one day of service/admission date.
90-98%
• Insurance Authorization Rate
Number of encounters authorized
Number of encounters requiring authorization
Authorization is defined as required approval from the 3rd party payer for the services ordered.
90-98%
• Charity Care to Uncompensated Care
Charity care write-off
Total uncompensated care
(charity care + bad debt)
44
Revenue Integrity KPIs
Indicator Calculation Things to Consider Target/Best Practice
• Days Gross Revenue in Discharged-Not-Final-Billed (DNFB)
Gross dollars in A/R not final billed
Average daily gross
patient service revenue
Include inpatient and outpatient, and exclude in-house claims.
4 – 6 Days
• Discharged-Not-Submitted to Payer (DNSP)
Gross dollars in DNFB + gross dollars in FBNS
Average daily gross
patient service revenue
5 – 8 Days
• Late Charges as % of Total Charges
Charges with post date >3 days from last
service date
Total gross charges
< 2%
45
Claims Management KPIs
Indicator Calculation Things to Consider Target/Best Practice
• Final-Billed-Not-Submitted to Payer (FBNS)
Gross dollars in FBNS
Average daily gross patient service revenue
1-2
• Clean Claim Submission Rate
Number of claims that pass edits requiring no manual intervention
Total claims accepted in
to billing scrubber for editing
> 85%
• Net Days in A/R Net A/R
Average daily net patient service revenue
Should exclude credit balance accounts and any non-patient service A/R
45 – 55 Days
©2013 The PNC Financial Services Group, Inc. All rights reserved.
46
Claims Management KPIs
Indicator Calculation Purpose Target/Best Practice
• Billed A/R >90 Days ∙ 3rd Party >90 Days ∙ Self Pay >90 Days
Billed A/R > 90 days
Total billed A/R
Should only include debit balance accounts aged from discharge date.
15 – 20 %
• Days Net Revenue Held in Credit Balances
Dollars in credit balance
Average daily net
patient service revenue
Should not include accounts in pre-admit or in-house status.
1.5 – 2 Days
47
Reimbursement KPIs
Indicator Calculation Things to Consider Target/Best
Practice
• Initial Zero Paid Denial Rate
Number of zero paid claims denied
Number of claims
remitted
Total number of zero pay claims received from 3rd party payers with a denial code on the remittance advice.
< 4 %
• Initial Partial Paid Denial Rate
Number of partially paid claims denied
Number of claims
remitted
Total number of partial pay claims received from 3rd party payers with a denial code on the remittance advice.
• Total Denial Rate Denial write-off amount
Net patient service revenue
Should include all net account balances written off within the month resulting from un-appealable denials. Do not include contractual allowances.
2-3 %
• Overturned Denial Rate
Number of appealed claims paid
Number of claims
appealed and finalized or closed
Should include all appealed claims (in response to a denial or take-back) that were closed/finalized within the month due to a receipt of payment.
40 – 60%
48
Other Management KPIs Indicator Calculation Things to Consider Target/Best
Practice
• Cash Collections as a % of Net Revenue
Total cash collected
Average net patient service revenue
Total cash collected from patient service accounts. Exclude any non-patient service cash.
> 100%
• Days Cash on Hand (Cash on hand + market securities)
[(Total operating
expense - depreciation
expense)/365]
Include all cash and other liquid assets as reported on the balance sheet.
150
• Case Mix Index ∙ Total ∙ Medicare
Sum of relative weights of all DRGs
billed
Total number of DRGs billed
Trending indicator that reflects the diversity, clinical complexity and the needs for resources in the population of patients in a hospital
Monitor for significant change
49
Other Management KPIs
Indicator Calculation Things to Consider Target/Best Practice
• Bad Debt Write-offs as % of Gross Revenue
Bad debt write-off
Gross patient service revenue
<2.5 -3.5 %
• Charity Care Write-offs as % of Gross Revenue
Charity care write-off
Gross patient service revenue
<2.5 -3.5 %
• Cost-to-Collect Total revenue cycle cost (patient access, patient
accounts)
Total cash collected
Should include all Patient Access departments’ costs, including the functions of: scheduling, pre-registration, eligibility/insurance verification, admissions, registration, and financial counseling. Include all Business Office departments’ costs, including the following functions: billing, A/R follow up & collections, cash posting, customer service, and denials/underpayments management. Include costs for any outsourced functions.
<1.5 –3 %
50
