Florida-based medical center reduces its claims denial rate by 70 percent.
“Leaving money on the table” seems to be this year’s catch phrase. But when you’re not collecting $1 million or more per month that is owed you because of claims denials, that translates to Big Money.
That was the case for West Florida Medical Center Clinic (WFMCC) of Pensacola, FL, with its 145 physicians and 13 satellite facilities in Florida and Alabama. With almost 50 percent of its patients covered by Medicare, ongoing denial of claims by Medicare posed a serious cash flow problem.
“As we got further into lower reimbursements, insurance companies and the federal government created more hoops for us to jump through to get paid for services. One of our challenges was to identify covered diagnosis- and carrier-specific rules related to coding so we could prevent claims denials,” says Lin Dworshak, associate administrator for business services at WFMCC.
Do the Math
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With the clinic generating between $13 million and $15 million in charges every month, the 10 percent of claims consistently denied by carriers for coding issues amounted to substantial uncollected revenues. “Denials came from diagnostic errors, procedure code incompatibility, unbundling and inclusive denials,” Dworshak says, noting that West Florida Medical officials had begun tracking the denial rate as early as 1998, in the days when most reimbursements flowed more freely than today.
Income due but not received was bad enough. But it was the correction process itself that steadily depleted the medical center’s resources. The process of correcting coding errors after the fact–after a physician determined a diagnosis code, after the claim was submitted and denied, after the WFMCC staff had to investigate, correct the codes and resubmit the claims–kept five FTE staff very busy and just as frustrated.
“We wanted to move the entire process back to the point of service,” Dworshak says, “back to the point of the physician or nurse who was making the decision about codes–and who would know, as those charges were entered at the point of service, whether or not those services were likely to be paid. Big bang happens at the point of service.”
While there were companies with batch programs that loaded the charges into accounts receivable (AR) and could identify the errors on a report, most solutions available at the time were still back-end solutions, Dworshak says.
Dovetailing Advances
“Making error corrections on your AR is a nightmare to deal with. You want to make as few corrections as possible to keep your AR as clean as possible,” she says. “We had the vision in 1998 to move the decision-making process back to the point of service, to the physician’s office where that charge originates.”
With few options available for front-end editing with a point-of-care focus, Dworshak and her colleagues were intrigued by the Claims Editor Professional (CEP) from ADP Context of Westmont, IL. It was one of the few that could take charges at the point of service, transaction by transaction, online and in a paperless process–while also determining, on the front end, whether the charges would be paid. Choosing ADP Context’s CEP product was a risk for West Florida Medical since the company was relatively new.
Because West Florida Medical was then upgrading its practice management system from a mainframe system to a UNIX-based product with true Windows, installing CEP at the same time seemed a good opportunity to dovetail two necessary technology advances into one action step.
The clinic made its purchasing decision soon after the vendor showed them proof. “They ran a batch of claims we had already filed through the editing product and proved that their edits would have stopped these claims prior to submission. In each case, it would have fixed the incorrect data and sent the claim through as clean–allowing us to be paid after the first submission.”
Installation and Beyond
In times past, Dworshak says, reimbursements were higher and rules were fewer. Cash flow was generally good, and although healthcare organizations did experience claims denials, they didn’t have to pay nearly as much attention as they are forced to today. “With greater emphasis on coding rules and with lower reimbursements, institutions are driven to get it right the first time to keep cash flow up.”
In addition to reducing the rate of claims denials, the clinic had three objectives in selecting the CEP solution:
1 reduce FTEs in the business office;
2 increase accountability with physician offices;
3 integrate the interface of the product with the clinic’s own practice management system.
“Throwing FTEs at a problem never solved the problem,” Dworshak says. More importantly, the business office continued to fix mistakes that were created in physician offices with very little feedback to those offices to prevent further occurrences.
CEP is client-server technology, which affords West Florida Medical more flexibility in customizing the product to the needs of the practice management system. Instead of keying into the AR system, “we keyed directly into CEP,” says Dworshak. “We would use that as our transaction entry product, have it scrub the claims online, review them for errors, fix those errors and then move them to our AR as clean claims–knowing they will be paid correctly the first time.”