Using Incentive Plans to Improve Revenue Cycle Results 22, Friday/Fri_H_1250p_Hughes...Initial Results Using Incentive Plans to Improve Revenue Cycle Results The RCS team saw increases

Making healthcare remarkable

Using Incentive Plans to Improve Revenue Cycle Results

Nathan Hughes, Sr. Dir. RCS Utilization Review

September 22, 2017

Agenda


▪ Novant Health Overview

▪ Quarterly Incentive Plan

▪ Monthly Cash Collections Incentive Plan

▪ Monthly Denial Prevention Incentive Plan

▪ Key Takeaways

2

MissionNovant Health exists

to improve the health

of communities, one

person at a time.

VisionWe, the Novant Health team,

will deliver the most remarkable

patient experience in every

dimension, every time.

Safety • Quality

Authentic personalized relationships

Voice & choice • Easy for me

Affordability

ValuesDiversity and Inclusion

Teamwork

Personal excellence

Courage

Compassion

Our promiseWe are making your healthcare experience remarkable. We will bring you world-class

clinicians, care and technology – when and where you need them. We are reinventing

the healthcare experience to be simpler, more convenient and more affordable, so that

you can focus on getting better and staying healthy.

Our people

We are an inclusive team of purpose-driven people inspired and united by our passion to care for each other, our patients and

our communities.

Using Incentive Plans to Improve

Revenue Cycle Results3

4


4,799

2,697

1,514

463

14

209,759

19,685

539,085

132,611

6,500

7,500

392

529

104

434,87026,532

13,308

7,571

3,781

567

49

46.7 8,769 823

394 429

4.4

677,392

MM

5Using Incentive Plans to Improve

Revenue Cycle Results

Novant Health Revenue Cycle Services Scope


The Novant Health acute RCS team directly oversees front, middle and back end revenue cycle functions.

▪ Our team includes the key areas and their subsidiary functions listed below.

▪ The acute RCS team also maintains strong relationships with other departments that impact acute care reimbursement, such as Clinical Documentation Excellence and Business Development and Sales.

6

Quarterly Incentive Plan

Implementation Date: January 2010

Quarterly Incentive Plan


In 2010 the Novant Health Revenue Cycle team implemented a new incentive plan for all team members

▪ Each department has 4 goals, with a base and stretch goal for each metric

– 2 “overarching” goals are set for the entire RCS team

▪ Ex: denial rate, cash collections, CFB

– 2 individual goals are set for each department based on their KPIs

▪ Ex: productivity, coding DNB, AR days, upfront cash collections

▪ Outcomes are measured quarterly

▪ The maximum payout is $500 per team member, per quarter

– The payout amount for each base goal is $75

– The payout amount for each stretch goal is $125

▪ The program includes team members up to and including managers

– Managers and supervisors are eligible for higher payouts

8

Initial Results


The RCS team saw increases in several KPIs after the bonus plan was implemented.

▪ Example: Upfront cash collections

– Prior to bonus plan implementation: $2M/year

– Post bonus plan implementation:

▪ However, performance began to plateau and a more aggressive approach was considered for departments who collect cash.

– A more lucrative, real-time program was proposed

9

2009 2010 2011 2012 2013 2014 2015

Upfront Collections $1,992,700 $6,652,590 $11,319,000 $11,800,000 $14,000,000 $17,311,180 $19,200,000

% of Net Revenue 0.09% 0.29% 0.49% 0.47% 0.55% 0.67% 0.68%

Cash Collections Incentive Plan

Implementation Date: January 2016

Cash Collections Incentive Plan


In January 2016 a new incentive plan was implemented that focused on cash collections

▪ The program evaluated cash collections monthly and rewarded team members with a portion of the cash collections if the goal was exceeded

– The monthly goals provided an opportunity to reward team members real-time, improving engagement and performance

▪ The new plan also incorporated team and individual goals to encourage peak performance

– Departments have to meet goals to qualify for the bonus

▪ Ex: Biometric utilization

– Individuals also have to meet their goals to qualify for the bonus

▪ Ex: Individual quality/productivity scores, no progressive discipline

11

Cash Collections Incentive Plan (Continued)


If the overall cash goal for the organization was met, the departmental goal was met, and the individual goal was met, the team member receives a payout

▪ For individual scores of 95-100%, team members will qualify for the base goal payout

– Payout: 0.0025% of the amount above baseline collections

▪ For individual scores greater than 100%, team members will qualify for the stretch goal payout

– Payout: 0.005% of the amount above baseline collections

▪ Self Pay Collections, Customer Service, Financial Counseling, Pre-Service Collections and Patient Access also qualify for a “kicker bonus”

– The kicker bonus is 1% of individual patient cash collections

▪ The payout maximum (including the kicker bonus) is $1,250 per team member

12

Cash Collection Incentive Plan Outcomes:Cash Collections and Bad Debt Trends

Cash collections have increased and bad debt has declined since the program was implemented in 2016


13

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

$2,200,000,000.00

$2,300,000,000.00

$2,400,000,000.00

$2,500,000,000.00

$2,600,000,000.00

$2,700,000,000.00

$2,800,000,000.00

$2,900,000,000.00

2015 2016 2017 (Projected)

Cash Collections and Bad Debt

Cash

Bad Debt % ofGross Revenue

Cash Collection Incentive Plan Outcomes: Return on Investment


14

2015 2016 2017 (Projected)

Cash Increase N/A $171,357,179 $232,152,876

Bad Debt as a % of Gross Revenue 2.16% 1.87% 1.50%

Total Bonus Expense N/A $1,285,686 $1,761,651

ROI N/A 13228% 13078%

Cash Collection Incentive Plan Outcomes: Upfront Cash Collections

Upfront cash collections have steadily increased since 2009. The implementation of the latest incentive plan model in 2016 helped the team move beyond a plateau experienced from 2014-2015.


15

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

2009 2010 2011 2012 2013 2014 2015 2016 2017*

Upfront Cash Collections

Upfront Collections

% of Net Revenue

Denial Prevention Incentive Plan

Implementation Date: July 2016

Denial Prevention Incentive Plan: Building a Business Case


Other revenue cycle departments were offered the same opportunity to implement a more lucrative incentive plan if they could prove it would increase cash

▪ The UR team proposed a new incentive program that rewarded team members “real time” for peak performance

▪ To justify a lucrative incentive plan, a metric had to be identified that:

– Has a direct impact on reimbursement

– Is “avoidable” and “controllable” by team members participating in the program

– Is available monthly to ensure optimal impact

▪ As a result, the team chose incorrect level of care and medical necessity denials

– As a next step, the team researched denial and write-off trends to determine if there was a correlation between first pass denials and write-offs for the selected denial categories

17

Denial vs. Write-Off Comparison

After researching denial and write-off trends, we were able to prove a strong correlation between the selected denial types and the corresponding adjustment codes


18

2.09%

1.78%

1.13%1.06%

0.87%

1.12%1.00%

0.30%0.24% 0.26%

0.20% 0.17%0.25%

0.16%

-0.25%

0.25%

0.75%

1.25%

1.75%

2.25%

2015-03 2015-04 2015-05 2015-06 2015-07 2015-08 2015-09

Medical Necessity and Incorrect Level of Care Denials vs. Write-Offs

Denials

Write Offs

Other Considerations


As a next step, the team evaluated historical levels of performance to set goals

▪ Outcomes were based on a rolling 3 month period to limit risk from random fluctuations in denials

▪ Denial rate was chosen rather than denied dollars to account for variations in revenue

19

Goals and Payouts


The following goals were set for the UR team:

▪ The base goal was equal to the average denial rate from the prior year

– If the base goal was met, each team member would receive a $100 payout

▪ The maximum stretch goal was equal to 15% less than the best 3 month period during the prior year

– If the max stretch goal was met, each team member would receive an additional $1,150 payout

▪ The total max payout is $1,250 per team member

▪ To justify such lucrative payouts, an extensive ROI analysis was conducted to ensure the program’s efficacy

20

Projected ROI

The final step prior to implementation was to analyze the projected ROI and present it to senior leadership for approval


21

Monthly ROI Analysis

Denial

Rate

Write-Off

Reduction

Compared to

Lowest Quarter

(1.04%)

Write-Off

Reduction

Compared to

Avg Quarter

(1.48%)

Projected

Write-Offs

Write-Off $$

Savings

Compared to Avg

Individual

Payout Team Payout ROI

1.35% 0% 9% $ 774,083.80 $ 74,541.40 $ 100.00 $ 4,900.00 $ 69,641.40 1421%

1.02% 2% 31% $ 584,404.60 $ 264,220.60 $ 253.33 $ 8,000.00 $ 256,220.60 3203%

1.01% 3% 32% $ 578,441.28 $ 270,183.92 $ 330.00 $ 12,000.00 $ 258,183.92 2152%

0.99% 5% 33% $ 566,514.66 $ 282,110.54 $ 483.33 $ 20,000.00 $ 262,110.54 1311%

0.97% 7% 35% $ 554,588.04 $ 294,037.16 $ 636.67 $ 28,000.00 $ 266,037.16 950%

0.94% 10% 37% $ 536,698.10 $ 311,927.10 $ 866.67 $ 40,000.00 $ 271,927.10 680%

0.88% 15% (Max Payout) 40% $ 506,881.54 $ 341,743.66 $ 1,250.00 $ 60,000.00 $ 281,743.66 470%

0.83% 20% 44% $ 477,064.98 $ 371,560.22 $ 1,250.00 $ 60,000.00 $ 311,560.22 519%

0.78% 25% 47% $ 447,248.42 $ 401,376.78 $ 1,250.00 $ 60,000.00 $ 341,376.78 569%

0.73% 30% 51% $ 417,431.86 $ 431,193.34 $ 1,250.00 $ 60,000.00 $ 371,193.34 619%

0.68% 35% 54% $ 387,615.29 $ 461,009.91 $ 1,250.00 $ 60,000.00 $ 401,009.91 668%

0.62% 40% 58% $ 357,798.73 $ 490,826.47 $ 1,250.00 $ 60,000.00 $ 430,826.47 718%

Denial Outcomes

After the new incentive plan was introduced in July 2016, denials were consistently lower than the prior year average. The team achieved stretch goal 8 out of the first 11 months.


22

1.04%

2.03%

1.34%

0.76%

1.39%

0.99%

0.73%0.67% 0.71%

0.44%

0.92%

1.25%

-0.25%

0.25%

0.75%

1.25%

1.75%

2.25%

2016-06 2016-07 2016-08 2016-09 2016-10 2016-11 2016-12 2017-01 2017-02 2017-03 2017-04 2017-05

Incorrect Level of Care/Medical Necessity Denials

Current Month

Base Goal

Stretch Goal

Return on Investment


Write-offs have also declined since the implementation of the program, providing an ROI of 475%.

23

Pre-Bonus Write-Offs

Baseline $ 10,667,695.25

Post Bonus Implementation $ 7,818,100.91

Difference $ 2,849,594.34

Cost $ 495,905.00

Return on Investment 475%

Next Steps


The UR incentive plan is being updated in the 4Q of 2017

▪ Authorization denials will be added to the goal

▪ Insurance verification team members are being incorporated into the program

▪ Goals will be updated to be based on a rolling 12 month period

24

Key Takeaways

Key Takeaways


Well structured incentive plans can motivate team members to achieve results they may not have been able to otherwise attain. However, as programs are developed the following items are vital to your success:

▪ Select goals that the team can impact and have a strong ROI if met

▪ Exhaust all other avenues for performance improvement

– Be prepared to answer this question: “Why can’t you achieve these same results without the additional investment?”

▪ Develop a clear communication plan

– Team members must be aware of goals, how they impact them, and how the team is performing in relation to the goals at all times

– Determine how to communicate with team members in other departments who may not participate in the incentive plan

26

Key Takeaways (Continued)


▪ Re-evaluate and adjust goals on a regular basis to ensure they are lofty but attainable

– Raise the bar and/or select new goal(s) if the team is consistently hitting the goal

– Lower the bar if the goal seems unattainable

▪ Re-visit the ROI at predetermined intervals

27

Thank You


28

Documents

Using Incentive Plans to Improve Revenue Cycle Results 22, Friday/Fri_H_1250p_Hughes...Initial Results Using Incentive Plans to Improve Revenue Cycle Results The RCS team saw increases