Protecting your earned revenue
MARCH 6, 2019
Medicare Reimbursement Optimization
Strategies for the 21st Century
Jonathan G. Wiik, MSHA, MBAPrincipal, Healthcare Strategy
TransUnion Healthcare
© 2018 TransUnion LLC All Rights Reserved | 2
© 2018 TransUnion LLC All Rights Reserved | 3
• Understand the industry trends with uninsured and underinsured
• Understand how the uninsured and underinsured population impacts
Medicare reimbursement
• Optimize your revenue cycle through a coordinated strategy of
reimbursable bad debt, uncompensated care reimbursement, and
collection efforts to maximize revenue
• Review of a Case Study to demonstrate the impact of a coordinated
strategy between the business office and finance teams
Agenda
Traditional Revenue Cycle
Market Trends
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For the first time since 2013, uncompensated care
increased by $2.6B in 2016, and remained flat in 2017
Source: AHA Jan 2019 Uncompensated Care Report
$36.1
$38.4
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
Unin
sure
d R
ate
Uncom
pensate
d C
are
Uncompensated Care 1990-2017 ($B)
© 2018 TransUnion LLC All Rights Reserved | 6
2018 uninsured rate by state
Notes
The majority of our health coverage topics are based on analysis of the Census Bureau’s American Community Survey (ACS) by the Kaiser Family Foundation. ACS includes a 1% sample of the US population and allows for precise state-level estimates. Please
note that in the past, health coverage data posted to this site had used the Current Population Survey. We have replaced all previously-posted data, including data for previous years, with data based on ACS.
The ACS asks respondents about their health insurance coverage at the time of the survey. Respondents may report having more than one type of coverage; however, individuals are sorted into only one category of insurance coverage.
A person reporting having Medicaid coverage and another type of coverage would be categorized as having Medicaid coverage in this analysis.
Data may not sum to totals due to rounding.
© 2018 TransUnion LLC All Rights Reserved | 7
We know what uninsured is, but what is underinsured?
• Out-of-pocket costs, excluding premiums, over the prior 12 months are equal to
10 percent or more of household income; or
• Out-of-pocket costs, excluding premiums, are equal to 5 percent or more of
household income if income is under 200 percent of the federal poverty level; or
• Deductible is 5 percent or more of household income
Source: Commonwealth Fund – The problem of underinsurance and how rising deductibles make it worse
© 2018 TransUnion LLC All Rights Reserved | 8
Source: Commonwealth Fund
https://www.commonwealthfund.org/sites/default/files/documents/___media_files_publications_issue_brief_2017_oct_collins_underinsured_biennial_ib.pdf
28% of adults who were insured all year were underinsured in
2016… a 22% increase from 2014-2016.
© 2018 TransUnion LLC All Rights Reserved | 9
Uninsured versus Underinsured: A question of access and
affordability
Source: Commonwealth Fund
https://www.commonwealthfund.org/sites/default/files/documents/___media_files_publications_issue_brief_2017_oct_collins_underinsured_biennial_ib.pdf
© 2018 TransUnion LLC All Rights Reserved | 10
Source: Commonwealth Fund
https://www.commonwealthfund.org/sites/default/files/documents/___media_files_publications_issue_brief_2017_oct_collins_underinsured_biennial_ib.pdf
A migration to high deductible health plans offered by
employers is growing considerably
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Patients are The New Payer ®, and the yield of patient revenue
is at significant risk…
Sources: HFMA: https://www.hfma.org/Content.aspx?id=45784 ; Advisory Board: https://www.hfma.org/Content.aspx?id=45784; DarkDaily:https://www.darkdaily.com/because-of-expanded-numbers-of-
patients-with-high-deductible-health-plans-patients-are-now-responsible-for-30-of-hospital-revenues-920/ ; VisitPay: http://www.visitpay.com/wp-content/uploads/2017/11/visitpay-
patient_pay_crisis_whitepaper.pdf
© 2018 TransUnion LLC All Rights Reserved | 12
Revenue leakage and market impacts are staggering
Sources :HCRIS, Black Book ; Accusttream; Meddata, Rev Cycle Intelligence
HFMA, HPS, TU proprietary TransUnion data
3%-5%
Percentage
of charges
never
posted,
which
equates to
$30-$50M
additional
revenue for a
$1B
organization
$8B
In cuts to
DSH
payments at
risk from
planned
federal DSH
reductions
(currently
delayed)
25%
Percentage
of claims
that are
denied,
according to a
GAO study
$3.7B
In Medicare
Bad Debt
from patients
not paying
their
deductibles
and co-
insurance
$25B
Dollars in
Medicare
Spend
related to
payment
integrity and
cost reporting
© 2018 TransUnion LLC All Rights Reserved | 13
Underpayments
Medicare
– Combined underpayments were $68.8 billion in 2016.
– This includes a shortfall of $48.8 billion for Medicare and $20.0 billion for Medicaid.
– For every dollar spent by hospitals caring for patients in 2016, 87 and 88 cents were reimbursed under Medicaid and Medicare respectively
Commercial
– $69 billion spent nationally by providers on payer rules
– Over half (58%) of commercial claims deny initially (4% increase in denied claims from 2015-2016)
– 5% of average hospital NPR is LOST in underpayments ~ $2.5M for a mid size hospital
Sources: 1)AHA: https://www.aha.org/system/files/2018-01/medicaremedicaidunderpmt%202017.pdf, 2)Advisory Board:
https://static1.squarespace.com/static/554b97b8e4b01f8ee692d265/t/5a5947538165f53cdc4475d9/1515800410085/9.+Optimizing+AR+-+Beadle+Ryby.pdf, 3)MGMA
https://www.mgma.com/MGMA/media/files/fellowship%20papers/Prior-Authorization-Denial-Challenges-for-an-Integrated-Health-System-fellowship-paper.pdf?ext=.pdf
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Will the public option plan help Washington?
Source: https://www.inlander.com/spokane/gov-jay-inslees-public-option-plan-to-reduce-health-care-costs-is-ambitious-and-untested/Content?oid=16086068
© 2018 TransUnion LLC All Rights Reserved | 15
Will the public option plan help Washington?
Source: http://mynorthwest.com/1239973/inslee-pay-cascade-care-washington/?
“Cascade Care” has three targeted policy changes:
1. State backing: Leveraging the state’s purchasing power. The state already insures people
through its public employee program – that work can be leveraged to help Cascade Care.
2. Standardizing the plans so it’s easier for consumers to use them, which will lower out of
pocket costs. For example, the bronze, silver, and gold plans under Obamacare will
remain in effect and will be come standardized.
3. Capping rates: Having an upper limit to keep rates and costs down. The governor’s office
is proposing Medicare rates for this.
Innovative Revenue Cycle
What is working and why – Case study review
© 2018 TransUnion LLC All Rights Reserved | 17
Case Study: Memorial Healthcare
Review prior year data for missed reimbursement opportunities
Project Started
First 30 Days
Project Work:
Day 31-90
Results:
Day 91
Project Objective
Identify additional
Medicare Bad Debt
reimbursement not
previously claimed
for Memorial
Healthcare System
facilities for FYEs
2009-2013
Data Gathered
▪ Hospital Patient
Accounting System
Data
▪ Detailed Medicare
PS&R
▪ State Paid Claims Data
▪ Outside Collection Data
▪ Previous Medicare Bad
Debt Logs
Process Steps
▪ Review analytics to
identify missed
opportunity to be
claimed via re-
openings
▪ Review analytics to
identify missed
opportunities because
of process
▪ Submit reopening
request to MAC
Internal
Meeting
▪ Discuss project
results
▪ Communicate steps
to improve process to
appropriate
stakeholders in
hospital system
© 2018 TransUnion LLC All Rights Reserved | 18
Case Study: Memorial Healthcare
Project results: Over $2.7M in total gross reimbursement found
Memorial Regional Hospital(FY 2009-2013)
Memorial Hospital West(FY 2010-2013)
Memorial Hospital Pembroke(FY 2010-2013)
Memorial Hospital Miramar(FY 2013)
Total Gross Reimbursement: $2,762,897
2009 2010 2011 2012 2013
$1,530,691
$735,433
$349,158
$147,615
© 2018 TransUnion LLC All Rights Reserved | 19
Case Study: Memorial Healthcare
Project results: Reimbursement rate increased by 26%
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
Memorial Regional Hospital(FY 2009-2013)
Memorial Hospital West(FY 2010-2013)
Memorial Hospital Pembroke(FY 2010-2013)
Memorial Hospital Miramar(FY 2013)
Percentage Increase in Medicare Bad Debt Reimbursement
Initial Medicare Bad Debt Filings Increase Identified by Project
25%
33%
27%
22%
Note: These are based on gross recovery amounts.
Actual recoveries would be subject to Medicare reductions of 35%.
Improvements represented $2M, which
equates to $1.3M in MCBD revenue
© 2018 TransUnion LLC All Rights Reserved | 20
Case Study: Memorial Healthcare
Several key process issues were identified as root causes of missed opportunity
Issue Overview
Lack of Coordination Between
Primary/Secondary Collection
Agencies
Primary collection agency had historically not forwarded accounts to the
secondary collection agency
Not All Accounts Sent to Collection
Agency
CMS requires Hospitals to follow internal collection policies as well as
make a reasonable collection effort for all outstanding
coinsurance/deductibles
Denied Medicaid Remittances not
Addressed (Out-of-State)
CMS requires that Medicaid is billed properly until a “Paid” remittance is
returned to the Hospital
Adjustment Prior to Medicaid Remit
Date
Potential contractual adjustment change to ensure date is post Medicaid
remittance date
Erroneously Included Fee
Reimbursed Amounts
These amounts are not allowable Bad Debt and must be removed from
submitted listings
© 2018 TransUnion LLC All Rights Reserved | 21
Case Study: Memorial Healthcare
Financial impact of deficient processes was significant
Note: This represents potential improvement in future periods if issues are addressed. Amounts are gross recovery amounts. Actual recoveries would be subject to Medicare
reductions of 35%.
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
Coordination BetweenPrimary/SecondaryCollection Agencies
Never Sent to Agency Denied MedicaidRemittances
Adjustment Prior toMedicaid Remit Date
Erroneously Included FeeReimbursed Amounts
Potential Impact of Key Issues
Memorial Regional Memorial West Memorial Pembroke Memorial Miramar
$3,606,893
$3,002,401
$1,214,195 $1,150,642
$43,686
© 2018 TransUnion LLC All Rights Reserved | 22
Case Study: Memorial Healthcare
Action taken as a result of Case Study
Issue Action Taken to Improve Process
Lack of Coordination Between
Primary/Secondary Collection
Agencies
All agencies have been educated on process. A look back was
performed to ensure that all unpaid accounts placed with primary
agency were sent to secondary agency. Lastly, transfer and return
dates for all accounts were recorded in PAS.
Not All Accounts Sent to Collection
Agency
Reviewing all accounts that fit criteria to be sent to collections on regular
basis to ensure they are sent to collection agency and appropriately
returned.
Denied Medicaid Remittances not
Addressed (Out-of-State)
Analysis performed to identify cost of not being set up as a Medicaid
provider for out-of-state patients. Finance is evaluating strategy for those
states where the impact is significant.
Adjustment Prior to Medicaid Remit
Date
Instructed business office to write off accounts after Medicaid payments
are posted to the GL. Using software tool to track on an ongoing basis
as a safety net.
Erroneously Included Fee
Reimbursed Amounts
Using software tool to automatically identify and exclude fee reimbursed
revenue codes from amounts written off.
© 2018 TransUnion LLC All Rights Reserved | 23
HiMSS TransUnion Press Release
© 2018 TransUnion LLC All Rights Reserved | 24
• The study showed an increase Medicare Bad Debts recoveries for dual-eligible patients by as
much as 10% per year (according to TU data )
• Approximately $500k over a 3 year period for an average size community hospital:
• $375k from Medicaid Secondary
• $125k from Medicare Bad Debt
• 63% of all Medicare Bad Debt recoveries are tied to dual-eligible Medicare/Medicaid
patients (according to Healthcare Cost Report Information System data)
• Given Medicaid expansion, it’s imperative to actively identify patients who are Medicaid eligible
• Identifying Medicaid eligibility increases both Medicaid Secondary and Medicare Bad Debt
Recoveries – an area often overlooked in finance
• Deploying aligned tools and processes helps coordinate across functions and increase recoveries
Study highlights…
Preventing Revenue Leakage
Strategies to protect your earned revenue
© 2018 TransUnion LLC All Rights Reserved | 26
SOURCE: JPM Key trends in healthcare patient payments
Industry trends…
• Often, providers also are calculating a propensity to pay score whether the patient
is insured or not
• High pre-service patient balances (i.e. Deductibles) or self-pay patients are key
areas to focus
• Transactions like credit score, mortgage balance inquiry, and more can help:
➢ Determine a patient’s propensity to pay
➢ Give insight into payment options
➢ Determine if a patient is a candidate for payment plans or charity care
© 2018 TransUnion LLC All Rights Reserved | 27
Stratifying patient risk and payments
Identity Verification
▪ Prevent fraud
▪ Verify identity and protect PHI
▪ Validate address and demographic information
Insurance Discovery / Presumptive Charity
▪ Establish Coverage
▪ Balance their bad debt portfolio
▪ Re-classify accounts as charity
Propensity to Pay
▪ Prioritize high balance accounts
▪ Increase POS collections and cash flow
▪ Help patients truly in need and collect from those who can pay
Bad Debt
Payment
Charity
COLLECTIONS
Rapidly determine
© 2018 TransUnion LLC All Rights Reserved | 28
The Bottom Line
30%
SELF-PAY ACCOUNTS
80% OF
COLLECTED
CASH
Critical to rapidly identify the accounts that will pay
— from both the patient and the payer
1-5% of self-pay accounts* written off to bad debt have billable
insurance coverage unknown to the
hospital or its vendors
30% of self-pay accounts will generate over 80% of cash collected*
*Transunion Proprietary Data
© 2018 TransUnion LLC All Rights Reserved | 29
Getting the patients engaged as a consumer…
of healthcare providers are having trouble providing sufficient price
transparency for patients facing a growing financial responsibility
Three steps:
1. Assess eligibility to determine coverage and benefits
2. Educate the patient to the financial policy, payment options and financial
assistance programs
3. Offer cost estimates and push for full price transparency - increasing price
transparency can improve patient satisfaction and help patients with bill pay.
“By ensuring patients fully understand their financial responsibility, they can
better equip them to make decisions about care access. Ultimately, this may help
more patients get access to care that they can afford…
Healthcare organizations need to invest more time with patients in the front office,
estimating their cost of care and payment options in order to reduce questions and
delays in collecting post service”
Source: Porter research, Waystar. https://patientengagementhit.com/news/providers-struggle-with-patient-price-transparency-responsibility
63%
© 2018 TransUnion LLC All Rights Reserved | 30
Example Workflow – Self-Pay / High BAI After Discharge
Sample Self Pay / Patient High PBAI Workflow
SE
LF
-PA
Y /
HIG
H B
AI
Coverage
Found?
Patient Payment
collected?
NO
Done
Credit info
returned?
Probability of
financial aid?
Patient ability to
pay bills?
NO
Cascade to
Alternative Data
Model
YES
Probability of financial
aid? Propensity to
pay bills?
YES
No FA application required,
collection zero; write off account
to charity
Collect FA application, attempt to
collect any payment based on
sliding scale, or AGB
Collect 100% of payment, or
seek alternative care or payment
recovery options
Collect first payment and
establish payment plan over time
for 2-3 year term
MAYBE: Charity
Potential: FAP
FPL 201%-350%
LOW Score – Low
collections probability
YES: 100% Charity
No FA required: PE
FPL < 200%
Lowest Account Score
No collections
probability
NO: Not eligible for Charity
FPL > 500%
HIGH Recovery Score
Ask for full payment
NOT LIKELY:
Possible Charity
FPL 351%-500%
MODERATE Score
Partial Payments
NOYES
*Example provided for illustrative purposes and organizations should follow their unique Financial Assistance Policy(s)
© 2018 TransUnion LLC All Rights Reserved | 31
CollectionEstimationVerificationEligibility
• Matrix
• Estimator
• P2P
• FPL
Proceed / document
Stop / escalate
• Insured /
Self Pay
• 270/271 EMR
• 3rd party
• Benefits
• Auth /
Referral /
Notification
• Med nec
• Insurance
Discovery
• Revenue
Assurance
• Insurance
and Patient
Payment
Optimization
Checklists and gates
© 2018 TransUnion LLC All Rights Reserved | 32
Bridging the gap to higher reimbursement
Identify/ Quantify
Opportunity
Determine Root Cause
Develop Solutions
Establish Controls and
Measures
Align KPIs to Objectives
© 2018 TransUnion LLC All Rights Reserved | 33
Benchmarking against peers
Understand potential opportunity by
comparing the percentage of Medicare
co-insurance and deductible dollars
claimed as bad debt vs. your hospital’s
Supplemental Security Income ratio
Benchmark your performance
against state averages,
indexed to another proxy
specific to the hospital’s
indigent patient mix to gauge
performance of your internal
team or your external
consultants
© 2018 TransUnion LLC All Rights Reserved | 34
How is Your Underpayment Review?
1. Identifying difficult, hard-to-find correct insurers & policy numbers
2. Managing timing delays & changes in payer eligibility databases
3. Identifying correct payer for a specific service
4. Unique Medicare billing challenges
5. Accounts with no “meaningful” activity due to information gaps
6. Unique, atypical billing requirements
7. Zero balance accounts – either “paid” or written off to free care/charity allowances
8. Bad debt accounts for deductibles and copays – no activity but have secondary payer
9. Determining correct OP primary payer when multiple coverage exists
10. Billing system setup issues – incorrectly or not billing claims
© 2018 TransUnion LLC All Rights Reserved | 35
Organizational challenges to best practices
Project-driven
Different environments produce conflicting goals and misaligned strategies
Process-driven
Chief Financial Officer
Director of PFS
Manager of Patient Accounts/Collections
Billing Staff and Collectors
Director of Reimbursement
Reimbursement Analysts
Business Office Finance Dept.
© 2018 TransUnion LLC All Rights Reserved | 36
Achieving best practices requires partnership
Sell the opportunity
Use data to ensure buy-in
Collaborate with Business
Office to realize
opportunity
Finance
Quantify the available
opportunity:
Train staff on best
practices
Revise key processes
and KPIs
Enact controls and
measurement process
Business Office
Realize the available
opportunity:
CFO must drive departmental objectives, gain buy-in,
establish goals and KPIs, and demand accountability
© 2018 TransUnion LLC All Rights Reserved | 37
Integrating Medicare Bad Debt into the strategy to maximize
revenue
“Must Haves”
▪ Defined best practices for collection
efforts
▪ Updated best practices for
accounting to ensure bad debts are
properly written off
▪ Commitment from all levels within
the organization
▪ Strong interdepartmental
communication and alignment
▪ Shared strategy for implementation
of updated bad debt procedures
▪ Strong Q&A process to ensure
quality
“New Thinking”
▪ Business Office Processes must
align with Medicare bad debt
requirements
▪ Utilizing analytics to identify gaps in
reimbursement
▪ Bridging the communication gap
between business office and
finance
▪ Slowed payment by snail mail
▪ Inquiry Payments
(how much can you afford)?
Revenue Cycle in the 21st Century
What to expect in a data and consumer-driven
collections culture
© 2018 TransUnion LLC All Rights Reserved | 39
RCM Initiatives for 2020
3
9
Denials
POS Collections
Centralize Patient Access
Patient Financial Experience
Payer Scorecards
CDI
Productivity/Labor
Recruitment/Retention RCM
Charge Capture
CDM / Transparency
Bundled Payments
Insourcing (from 3rd party)
HBI: Top Revenue Cycle Priority?
Revenue Integrity
CDI
BI/Analytics
E.H.R. Workflow/reports
Self pay management
Coding
Productivity Labor
Recruitment/Retention RCM
HFMA: Which RCM capability is your organization most focused on next year?
79%OF THESE AREAS
INVOLVE (OR ARE
ENABLED BY)
TECHNOLOGY
7/10OF THESE AREAS
APPEARED ON
BOTH SURVEYS
Sources: HBI, HFMA
© 2018 TransUnion Healthcare, Inc. All Rights Reserved | 40
Source: HFMA https://www.hfma.org/Content.aspx?id=55353
Financial ClearanceRobots can be positioned to verify / flag the necessary financial clearance-related tasks for a
patient and then access a variety of websites or applications to complete them
Credit BalancesCredit balance reversal through automated transaction posting can eliminate thousands of
transactions over time, helping to reduce costs and reallocate staff to higher value activities
Accounts PayableRPA affords automation and streamlined workflows by managing the receipt, accrual and
payment according to contract terms
Claims / Denials ManagementRobotic programming can be prepared in accordance with COB/ Eligibility rules to replicate the
human resolution process
Robotic Process Automation applications to revenue cycle
© 2018 TransUnion Healthcare, Inc. All Rights Reserved | 41
SOURCES: 1) HFMA https://www.triple-tree.com/strategic-insights/2018/june/hfma-highlighting-rcms-next-round-of-innovation/ l 2) https://www.mdconnectinc.com/medical-marketing-insights/voice-
search-improve-healthcare-patients-providers 3) HFN https://www.healthcarefinancenews.com/news/us-bank-optum360-partner-solution-streamline-boost-revenue-cycle-management
Mobile and voice2
The fastest growing technology will enable patients to check wait times, pay bills, book appointments and
arrangement for transport. For staff, theit entire workflow could come from asking a question. Think for patients -
“Alexa…I hurt my arm” or for staff - “Hey Siri…what are the unpaid claims for today? ”.
Banking hits the healthcare beachfront3
Banking capabilities will help hospitals and providers automate tasks for patient financing, denial management
workflows, paper and electronic receivables, primarily claim payments from insurers, and identifying root causes
and accelerating revenue recoupment.
Healthcare catches up to technology1
AI, RPA, MLE will afford automation and streamlined workflows to repetitive tasks of payment review, invoicing,
payment, billing, and collections. A new competency around intelligently extracting data, analyzing that data with
context, and delivering actionable intelligence into the workflows to the providers’ staff will become norm.
Analysts will replace Billers and hospitals and payers may finally be on level ground.
Patient Access and acceleration of patient pay1
Transparency and personalized engagement plans will drive the patient to be more likely to pay, and they will
have a better experience with higher levels of satisfaction and loyalty to the provider
Where is RCM going?
© 2018 TransUnion LLC All Rights Reserved | 42
$
Underinsured
Patient
Balance After
Insurance
Denials
Medical
Necessity,
Eligibility,
Authorization,
out of
network,
OOTF etc.
Uninsured
Self Pay
Bad Debt
Medicare
Under-
payments
(TDRG,
IME/GME, etc.)
Claims
Management
Commercial
contractual
Under-
payments
Payer and Patient Revenue
Revenue Leakage
Denials
Prevention
Medicare
Payment
Recovery
Optimization
Increased
insurance
yield
Increased
Claims
throughput
and
productivity
✓ Eligibility
✓ Estimation
✓ Payment/Financing
✓ Insurance
Discovery
✓ Charity
Determination
$ $ $ $ $ $
✓ Authorization
✓ Medical Necessity
✓ Predictive
Analytics
✓ Contract Modeling
✓ Denial and
appeals workflow
✓ Automated audits and
retrospective payment reviews
✓ Resubmitted Claims
✓ Increased Medicare Payment
Yield for TDRG, IME/GME,
DSH and Medicare Beneficiary
Bad Debt
✓ Claim Status
Inquiry
✓ Resubmittal of
assumed $0
claims
✓ Revenue
Assurance
✓ Insurance
Discovery
✓ Corrected Claims
✓ TPL/SUBRO
Resolution
REVENUE
PROTECTION
Revenue Protection
THANK YOU!
Jonathan G. Wiik, MSHA, MBAPrincipal, Healthcare Strategy
TransUnion Healthcare
QUESTIONS