Mitch Mitchell, Consultant
T.T. Mitchell Consulting Inc., Liverpool, NY
These days many hospitals are trying to figure out ways to increase both their revenue and their cash. 30 years in healthcare; consulting and my position as the President of Mid York Medical Management Association, which is affiliated with the American Association of Healthcare Administrative Management, has given me the knowledge to find additional revenue which is often overlooked.
What happens is that over time hospitals have one of two things happen:
- One: the process of capturing charges gets watered down because it’s up to someone in the department to show the new person what they did and the overall process gets passed on and on.
The problem of course is that without written policies you’re never quite sure what is being passed on. Remember the experiment you did in elementary school where the teacher told the first student something and by the time it got to the 20th student the message was different?
- Two: because no one looks at the overall charge master all that often (the average is between three and seven years), there are things missed that no one picks up on, since only large facilities seem to have someone who’s tasked with the job that actually understands it.
Here are five tips that might help find missing or legitimate revenue:
- Usually, one of the first things I do is go through a charge description master (CDM) to see what items there are that don’t have prices associated with them. Some hospitals use charges to help denote certain non-chargeable services, so that’s to be expected.
Often I’ll find true charges without prices. When I talk to the departments they’ll either say they didn’t know they were allowed to charge for these items but still wanted to track them, or else they didn’t know they weren’t priced because it wasn’t their responsibility to do so; that and they never see prices.
Many years ago I was at a hospital that sent patients to an outside MRI service. They were billed so they could send claims to insurance companies. However, they forgot to price the services, which mean they not only never recorded revenue but never got paid for any of those items… for five years.
- Many hospitals send pathology and other lab tests to outside labs for processing. Once again, the hospitals are allowed to bill insurance companies for the service, since the labs will send a bill to the hospital for the service they provided.
What I often see is that the hospitals act in one of two ways.
One, they create a charge based on the bill they’re sent from the outside lab instead of having their own prices based on reimbursement.
Why is this bad? Because, two, most hospitals aren’t actually charging for the services that were provided. For instance, at one hospital the report showed an initial code with the price the lab was billing the hospital for and that’s what the hospital created.
If the report had been looked at more thoroughly they’d have noticed that not only had that test been processed more than once, but there were multiple lab tests done, each with its own code that was listed and many of those were done multiple times as well. A quick estimate was this department was missing between $5 and $8 million a year in reimbursable revenue.
- Let’s stick with lab for now. Many hospitals miss potential revenue from drug testing items. I often use drug testing codes for something like allergies with little activity associated with it.
What has to be recognized is that most times when drug testing is performed the request calls for testing of many different procedures at the same time. This means that one code could actually have upwards of 70 or more procedures that a person’s being tested for and should be charged for each individual test (i.e., 70 times).
The code should only show up on the bill once, but the number of tests performed should be 70. There are quite a few lab tests this is true for, but somewhere along the way many hospitals got the idea that they could only show one service per CPT code.
- I was at one hospital where they’d shut down their physical therapy department a few months before I got there. When I asked why, I was told it wasn’t generating enough revenue to keep it open.
After looking at the activity, I came to the conclusion that they hadn’t set up many of their charges for extended time capture. For instance, a code such as 97530, which basically stands for therapeutic activities, is based on 15-minute increments. Therapy could be performed on one patient upwards of one or two hours.
This means that service could be charged anywhere from one to eight times during a session. If no one knows this is the criteria for charging increments of time for services, both revenue and reimbursement suffer drastically.
- If your hospital performs orthopedic surgery, you’re probably dealing with a lot of screws. Some hospitals use the charge master as a way to track inventory and if you’re doing that with screws, you’re probably missing out on capturing some revenue.
The reason revenue goes missing here is that there are often way too many screws of different types and sizes to categorize. The person who has to try to capture all those screws is at a loss because of so many options to select from. Sometimes it’s an item skipped during the procedure on the charge sheet because a physician might have to try multiple screw sizes before getting the right one.
I’ve always believed that hospitals need to make charge capture easy, and obviously this includes the surgery department. A reality is that there are groups of screws that are the same exact price, or maybe within a few dollars of each other.
It’s much easier if sizes are grouped together on a charge sheet, along with the material they’re made of, based on relative prices. So, if you only have small, medium and large for each type of screw and based on relative price they’re separated by estimated "French" sizes, you set up a cleaner charge sheet where someone only has to write the number of screws in instead of trying to select each specific screw.
Not only will you increase your revenue, but if you have in your contract a special reimbursement rate for items given the 278 revenue code, your cash will also increase.
The revenue recovery strategies I’ve outlined offer specific ways to help hospitals increase revenue and cash flow. The tactics designed to find missing revenue are relatively easy to initiate. If your internal staff has the expertise to find and recover revenue for the areas I’ve highlighted, your organization should be well on its way towards eliminating segments of revenue leakage. If there is not an available resource internally with the expertise required, you can contract with a knowledgeable consultant who has a successful track record finding hidden revenue.
In today’s healthcare marketplace, to remain competitive and thrive it is no longer an option to ignore any revenue generation opportunity. No financial strategy or tactic designed to recoup lost revenue is too small or insignificant to ignore.