Category: Clinics

Waste in the U.S. healthcare system has decreased slightly over the past eight years, but it still remains an enormous problem that consumes 25% of all healthcare dollars, a new study has found.[1]

Published in the Journal of the American Medical Association (JAMA) in October, the study estimated the full amount of healthcare waste at between $760 billion and $935 billion annually, or roughly one-quarter of all healthcare expenditures.[2] The JAMA report was produced from analysis of peer-reviewed publications, government reports and unpublished or non-commercial reports.

Six domains

While the annual percentage of waste has fallen from an estimated 30% in 2011, unnecessary spending continues to occur in a wide variety of areas. The JAMA study estimated the range of wasted expenditures across six domains:[3]

Domain	Wasted Expenditures
Pricing failure	$230.7 – $240.5 billion
Fraud and abuse	$58.5 – $83.9 billion
Administrative complexity	$265.6 billion
Failure of care delivery	$102.4 – $165.7 billion
Failure of care coordination	$27.2 – $78.2 billion
Overtreatment or low-value care	$75.7 – $101.2 billion

Zeroing in on non-clinical waste

Within each domain, waste can manifest in a variety of ways, according to the JAMA article. Among the three non-clinical areas identified in the study:

• Pricing failure can result when prices substantially deviate from ranges expected in a well-function marketplace wherein prices reflect the costs of production plus a fair profit. As an example, the study noted U.S. prices for diagnostic procedures such as MRI and CT scans are several times more than identical procedures in other countries due to a lack of transparency and the absence of competitive markets. The study incorporated research that focused on four areas of pricing: medication pricing, payer-based health services pricing, laboratory-based pricing and ambulatory pricing. The estimated total savings from interventions that address pricing failure range from $81.4 billion to $91.2 billion.[4]
• Fraud and abuse determinations were focused primarily on Medicare services. Despite the scope of the problem, the Medicare Fee-for-Service Recovery Audit Program has made significant progress in reducing fraud, waste and abuse since the initiative was launched in 2009. According to the Centers for Medicare and Medicaid Services (CMS), more than $10 billion has been recouped for Medicare over the life of the program.[5] The study estimated that $22.8 billion – $30.8 billion could be saved in this category.[6]
• Administrative complexity waste stems in part from the fragmented nature of healthcare and result from inefficient or misguided rules established by government agencies, accreditation organizations, payers and others. These requirements can include payer rules that consume limited physician time in needlessly complex billing procedures. In addition, responding to lengthy Medicare Recovery Audit Contractor (RAC) audits can require significant provider resources.

Third-party partnerships

Healthcare organizations can enlist external expertise to help reduce waste associated with pricing, fraud and abuse monitoring, and administrative complexity. ParaRev understands the convergence of forces at work in today’s market and the tools providers need to respond effectively. That’s why we’ve assembled a sophisticated array of services and technologies that collectively deliver the capabilities your organization needs to cut waste and flourish in the current marketplace.

• Rational pricing

For hospitals and health systems, a solid financial footing requires the development of a comprehensive, market-based pricing strategy built around cost, reimbursement and peer pricing data. To help you create a new pricing model, ParaRev will review your current transaction data across all revenue streams to develop a complete market position summary.

Next, we’ll assess rates charged for equivalent services by each member of your designated provider peer group. From these comparisons, you’ll be able to see exactly how your pricing lines up with specific competitors to quickly identify opportunities for increasing prices while remaining within group norms. You’ll also be able to flag any instances in which your organization is the high-priced outlier.

The net result of this effort is improved profitability through the creation of a detailed and empirically based pricing model. The model ensures you’re aligned with peer group averages while positioning you to capitalize on opportunities for optimized returns on below-market-priced items and services.

• Strengthening revenue integrity to reduce waste

Although rational pricing is essential for competitive positioning and waste reduction, a similarly refined approach to revenue cycle management is necessary to ensure an organization’s financial foundation is sound.

HFRI’s revenue integrity program is a comprehensive service that complements our pricing suite by helping ensure critical elements of the revenue cycle – coding, charge capture and claims management – are executed correctly and consistently. The objective is to reduce the administrative complexity of coding and billing, along with attendant waste, while ensuring optimal collections.

The process involves a detailed chargemaster review, onsite audits, retrospective claims analysis and automated claim audit tools to identify compliance and charge capture problems. We can also help you effectively manage RAC audits and other regulatory actions to help ensure you aren’t compelled to commit inordinate amounts of resources to the task.

• Decreasing administrative complexity through AR recovery and resolution

Although 90%[7] of denials are preventable, 65%[8] of are never corrected or resubmitted for payment. This is largely due to the labor-intensive complexity associated with working denials. ParaRev can help you reduce this burden and collect more revenue with scalable, client-specific accounts receivable (AR) resolution and recovery solutions. These services allow hospitals to systematically address problem claims across the full AR spectrum to cut compliance risk and optimize collections. Through our proprietary, intelligent automation and powerful process engineering, we’re also able to resolve all claims, regardless of size or age. Denial management is handled through the identification and categorization of toot causes, with causes ranging from contractual, registration and clinical issues to coding, coverage and utilization denial triggers. Working from category-specific, prioritized work queues, our remediation specialists expedite rework and secure resolution for both low- and high-value claims much more quickly. Our process also helps identify reoccurring problem areas to prevent denials from occurring in the first place.

A comprehensive solution

Cutting systematic waste in the areas of pricing and administrative complexity while reducing the risk of costly fraud, waste and abuse audits requires an approach grounded in empirical evidence and supported by a capable staff and advanced technologies.

ParaRev’s suite of services can help you significantly refine your pricing, coding, AR recovery and resolution, and denial management processes. The result is improved revenue capture, less waste, reduced compliance risk and better margins. Contact us today to learn more about how we can help your organization cut waste across a range of areas.

1. “Waste in the US Health Care System Estimated Costs and Potential for Savings,” William H., MD Shrank, MD, MSHS; Teresa L. Rogstad, MPH; Natasha Parekh, MD, MS. JAMA. Oct. 2019.
2. Ibid
3. Ibid
4. Ibid
5. “Recovery Audits: Improvements to Protect Taxpayer Dollars and put Patients over Paperwork,” Seema Verma, Administrator, Centers for Medicare & Medicaid Services. May 2, 2019.
6. Ibid
7. Morgan Haines, “An ounce of prevention pays off: 90% of denials are preventable,” Advisory Board. Dec. 11, 2014.
8. “Optimizing the Revenue Cycle Requires a Financially Integrated Network,” HFMA. July 7, 2015.

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With the majority of hospitals and health systems struggling to achieve the full potential of their electronic health systems (EHR), many organizations are turning to outsource companies and other vendors to improve revenue cycle performance, a new survey shows.

More than 60% of healthcare executives believe the challenges associated with EHR revenue cycle management (RCM) outweighed the benefits,[1] according to analysis conducted by Navigant based on a survey done by the Healthcare Financial Management Association (HFMA). A total of 108 hospital and health system chief financial officers and revenue cycle executives responded to the survey.[2]

Unmet expectations

The survey underscores providers’ ongoing disappointment with EHR performance and the actions they’re taking to overcome those shortcomings. Historically, EHR solutions have frequently failed to deliver key RCM capabilities.

For example, most systems typically do not integrate with practice management systems to facilitate effective charge capture.[3] Ineffective charge capture can result in a significant amount of money being left on the table due to under-coding, or an increased compliance risk because of over-coding.

“It was anticipated that EHRs would be the main driver of broad performance improvement, but that has not occurred in many cases,” said Timothy Kinney, managing director of Navigant.[4]

“Instead, providers are now taking other steps, including looking outside their organizations to collaborate with external entities and leveraging advanced technology solutions, and they’re seeing successes.”

According to the survey, 46% of respondents said they were collaborating with external organizations, including outsourcing and vendor partnerships, to decrease revenue cycle costs and increase economies of scale.[5] At the same time, the survey also found that spending for staff training, business intelligence/analytics and coding all declined in 2019.

So, what does this mean for providers?

With less money being spent for training and analytics, providers must look to establish new alliances with partners that can deliver the cost-effective expertise needed to supplement a health system’s revenue cycle management resources.

Areas where outside partners can provide additional value include:

• Creation of a market-based pricing strategy
  For hospitals and health systems, a solid financial footing begins with the development of a comprehensive, market-based pricing strategy built around cost, reimbursement and peer pricing data. Most hospitals don’t have the resources to conduct in-depth competitive pricing analysis. ParaRev has the expertise to create a detailed and empirically based pricing model to ensure you’re aligned with peer group averages and simultaneously positioned to capitalize on opportunities for maximizing returns on below-market-priced items and services.
• Implementation of a revenue integrity program
  It’s vital that hospitals and healthcare systems ensure critical elements of the revenue cycle – coding, charge capture and claims management – are executed correctly and consistently. Charge master reviews can uncover where you may be either losing reimbursement or be at risk for compliance issues. On-site audits by an external partner can help spot opportunities for increased reimbursement, improved charge accuracy, more effective compliance and denial reductions. A retrospective claims analysis will compare the claim against the supporting documentation and target inconsistencies that can lead to reduced reimbursement.
• Accounts Receivable (AR) recovery and resolution
  Hospitals often don’t have the resources to work aged and/or small balance claims to recover everything they are owed from insurance claims that otherwise would have been written off. While the administrative costs of reworking denials approach $9 billion annually,[6] only about 35% of payer rejections are ever reworked and resubmitted.[7] Partnering with a qualified third-party vendor that possesses the technology and expertise required to help hospitals isolate, identify and remediate issues that result in unresolved claims can drastically improve margins and increase cash.
• Robotic Process automation (RPA)
  Significantly, the HFMA survey found that 15% of health system executives said their organizations are now targeting RPA to improve revenue cycle management. That’s up from zero in 2018.[8] “New technologies leveraging RPA, artificial intelligence, and machine learning have unlocked significant opportunities to reach previously unattainable levels of revenue cycle performance,” said Kent Ritter, director with Navigant.[9]Vendors that have already implemented RPA as well as intelligent automation can provide a more robust and powerful process for quickly and more effectively handing outstanding AR.

ParaRev can help

Armed with this data, ParaRev pricing experts work alongside the hospital’s financial management team to establish specific pricing targets and timelines based on the opportunities presented. These calculations will also take into account contractual reimbursement rates to ensure the new prices are consistent with payer policies.

Likewise, ParaRev can help develop effective strategies for areas or services that require pricing sensitivity. For example, an organization may want to keep prices at, near or even below cost for some services to remain competitive with independent, free-standing facilities.

Importantly, the pricing developed through ParaRev’s rational pricing model is competitive with peer pricing and therefore both defensible and supportive of an effective consumer-facing transparency strategy.

A comprehensive solution

ParaRev understands the pressures hospitals face today and the tools providers need to respond effectively. That’s why we’ve assembled a sophisticated array of services and technologies, including robotic process automation (RPA), that collectively deliver the capabilities your revenue cycle needs to flourish in the current marketplace.

From optimized pricing through peer analysis to comprehensive revenue cycle performance audits and technology-driven denial management and recovery, ParaRev’s services – whether accessed ala carte or as a single solution – give you the ability to perfect pricing strategies while ensuring the highest level of revenue cycle performance.

For example, ParaRev’s scalable, client-specific accounts receivable resolution and recovery solutions allow hospitals to systematically address problem claims across the full AR spectrum. Through our proprietary, intelligent automation and powerful process engineering, we’re able to resolve all claims, regardless of size or age.

Utilization of our software, the PARA Data Editor (PDE) will also provide an automated claim audit tool to identify charge capture problems, such as observation cases billed without evaluation and management (E&M) codes or chemotherapy administration charges that don’t include chemotherapy drugs on the same claim.

Meeting the challenges of hospital pricing and revenue cycle management requires systematic approaches grounded in empirical evidence and a capable staff implementing proven solutions.

ParaRev’s suite of services can help you significantly refine your pricing, coding, AR recovery and resolution, and denial management processes. The result is improved revenue capture and better margins. Contact us today to learn more about how we can help your organization accelerate its financial transformation.

1. “EHRs, Consumer Self-Pay Remain Providers’ Top Revenue Cycle Challenges,” 2019 Navigant/HFMA Revenue Cycle Trends Survey, Sept. 25, 2019.
2. Ibid
3. Jacqueline LaPointe, “Hospitals Looking Beyond EHR to Improve Revenue Cycle Performance,” RevCycle Intelligence, Sept. 25, 2019.
4. “Revenue Cycle Technology Trends,” Navigant/HFMA, September 2019.
5. Ibid.
6. Philip Betbeze, “Claims Appeals Cost Hospitals Up to $8.6B Annually,” HealthLeaders, June 26, 2017.
7. Chris Wyatt, “Optimizing the Revenue Cycle Requires a Financially Integrated Network,” HFMA, July 7, 2015.
8. “EHRs, Consumer Self-Pay Remain Providers’ Top Revenue Cycle Challenges,” 019 Navigant/HFMA Revenue Cycle Trends Survey, Sept. 25, 2019.
9. “Revenue Cycle Technology Trends,” Navigant/HFMA, September 2019.

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Like it or not, pricing transparency has moved to the forefront of healthcare reform efforts. That means hospitals must be ready to make detailed price information available for consumers interested in shopping procedures and services.

Yet it’s no secret transparency is a double-edged sword. Publicizing pricing information before an organization has made sure its prices are rational, competitive and defensible can damage a hospital’s brand and undermine the bottom line.

The good news is that capabilities now exist to help hospitals develop comprehensive, market-based pricing strategies that allow them to optimize margins while remaining competitive with local and regional peer organizations. This pricing data can then be shared publicly in easy-to-use formats and harnessed to accurately convey patient payment responsibilities.

Government pressure

Price transparency has been one of the most talked-about healthcare reform objectives for a decade or more. Much of this emphasis has been fueled by the continued growth of high deductible insurance plans. Proponents say consumers need, and expect, detailed price information to be sure they’re getting the most for their hard-earned healthcare dollars. Policymakers also believe transparency will spur provider competition and help drive down costs.

But with much of the industry’s attention focused elsewhere in recent years – notably on the implementation of value-based reimbursement models – transparency has taken a back seat. In fact, the percentage of hospitals unable to provide price information increased between 2012 and 2016, from 14 percent to 44 percent.[1]

That’s likely to change, however, now that the government has signaled it’s serious about making hospital pricing information more accessible to all. In January 2019, the Centers for Medicare and Medicaid Services (CMS) announced a rule mandating that hospitals post their standard charges, or chargemaster, online.

CMS then upped the ante in July of this year with a proposed rule that would require hospitals to post not just the often-inflated numbers of the chargemaster but also typically confidential information showing actual negotiated rates by payer and plan for specific procedures and services.

Failure to comply with the rule, which is scheduled to take effect on Jan. 1, 2020, could result in civil monetary penalties of up to $300 per day. Hospitals could also be subject to audits and corrective action plans if they fail to disclose negotiated rates.[2]

Both hospital and insurance groups are vehemently opposed to the requirement that negotiated rates be made public. They argue that publicizing the information could inhibit competition, increase the administrative burden for hospitals, increase costs and reduce access to care.[3]

As a result, the rule is expected to trigger a number of legal challenges, and whether it will take effect in January remains to be seen. But if the past is any prologue, government healthcare reform efforts — regardless of their popularity — eventually find their way into the market, in one fashion or another.

Peer analysis

That’s why forward-thinking hospitals would do well to begin developing their own transparency strategies. Before this can happen, though, it’s essential that organizations are fully confident the numbers they’re prepared to share publicly make economic sense and are justifiable when it comes to peer pricing.

ParaRev has developed a comprehensive process to help hospitals create rational pricing models built around cost, reimbursement and peer pricing data. The effort begins with a review of existing pricing information across all hospital revenue streams, including room rates, emergency visits, diagnostic and therapeutic procedures, operating room, anesthesia, PACU, pharmacy and medical supplies.

Once this baseline information is established, ParaRev will compare service line and procedure prices against equivalent pricing from a designated group of peer institutions. The latter information is acquired through review of the most recent quarterly Inpatient and Outpatient Standard Analytic File (SAF) data generated by the Centers for Medicare and Medicaid Services (CMS).

Using these comparisons, hospitals can to see exactly how their pricing stacks up against specific facilities and also against averages for the entire group. Quantifying in percentage terms the extent to which the price for a particular service or product deviates from the group average enables hospitals to quickly spot opportunities for increasing prices while still remaining competitive. Conversely, ParaRev can also flag any instances in which an organization’s high prices represent over-market outliers.

The right prices

Armed with this data, ParaRev pricing experts work alongside the hospital’s financial management team to establish specific pricing targets and timelines based on the opportunities presented. These calculations will also take into account contractual reimbursement rates to ensure the new prices are consistent with payer policies.

Likewise, ParaRev can help develop effective strategies for areas or services that require pricing sensitivity. For example, an organization may want to keep prices at, near or even below cost for some services to remain competitive with independent, free-standing facilities.

Importantly, the pricing developed through ParaRev’s rational pricing model is competitive with peer pricing and therefore both defensible and supportive of an effective consumer-facing transparency strategy.

A comprehensive solution

Meeting the challenges of pricing transparency demands a systematic approach grounded in empirical evidence and a capable staff implementing proven solutions. ParaRev can help you refine your pricing to improve revenue capture and strengthen margins while remaining competitive in your market. Contact us today to learn more about how we can help your organization prepare for the transparency transformation ahead.

1. Tony Abraham, “No way to enforce hospital price transparency rule, CMS says,” Healthcare Dive, Jan. 11, 2019.
2. Jacqueline LaPointe, “Proposed Hospital Price Transparency Rule Faces Industry Criticism,” RevCycle Intelligence, Aug. 5, 2019.
3. Ibid.

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From flu to tetanus, vaccines are among the most common outpatient procedures providers administer on a day-to-day basis. But they can also be complex to code and bill, and undetected mistakes can result in continual underpayment for services rendered.

What makes vaccines so tricky? In most instances, coders must consider a range of factors to ensure the procedure is properly coded, and it can be easy to overlook specific details or nuances. This is especially true if multiple injections are given to a single patient during one encounter.

Some of the key variables associated with vaccine coding include:

• Patient age
• Insurance
• Route of administration
• Total number of vaccines given in the same encounter
• Physician counseling
• State vaccines programs

Q-Codes

Vaccine codes are published on a semi-annual basis, typically July 1 and January 1, by the American Medical Association (AMA). CPT® vaccine codes range from 90476 through 90749. In recent years, Medicare has created additional Q-codes for vaccines. Q-codes are reimbursed at reasonable cost to providers, and Medicare deductible and co-insurance amounts do not apply when the Q-codes are reported to Medicare.

Age-restricted vaccines

While many vaccines don’t have specific age requirements, others can be designated pediatric, adolescent or adult. As a result, it’s important for coders to confirm that the vaccine administered is appropriate for the patient’s age.

Code set administration

In most vaccine billing scenarios, practices will bill separately for the vaccine and the vaccine administration. Administration codes encompass three general categories:

• CPT® range 90471 — 90474 identifies vaccines without Counseling (over 18 years of age)
• CPT® range 90460 — 90461 identifies vaccines with Counseling (thru age 18)
• HCPCS Codes G0008, G0009 and G0010 are specific to Medicare beneficiaries

State programs

Some physician practices participate in state-sponsored Vaccines for Children (VFC) programs. Because the state generally provides the practice with the vaccines, physicians may not charge beneficiaries for the vaccines and physicians are not separately reimbursed by Medicaid or commercial carriers.

However, providers may charge patients for the administration fee associated with providing the vaccine. For vaccines provided as part of the VFC program, the CPT® code range is 90476 — 90749, with modifier SL appended in the first reporting modifier field.

Route of administration

Ensuring the correct route of administration allows the coder to select the appropriate administration code. Most vaccines are given as injections and are reported using administration codes 90471 and 90472. But there are a few oral and intra-nasal vaccines that are reported using administration codes 90473 and 90474.

Initial vaccines

If one or more vaccines are administered during an encounter, it is necessary to specify an initial administration code first. Initial administration codes include:

• 90471: Immunization administration for percutaneous, intra-dermal, subcutaneous or intramuscular injections, initial
• 90473: Immunization administration for intra-nasal or oral route, initial

Only one initial administration code is reported per encounter. If both injectable and oral/intra-nasal vaccines are performed during the same visit, providers should report 90471 as the initial administration code. Codes 90471 – 90472 have a slightly higher reimbursement than oral/intra-nasal administration.

Subsequent vaccines

If more than one vaccine is administered on the same day, a second or third administration code is required to document the additional vaccines. All subsequent vaccine codes (90472 and 90474) are classified as add-on codes and must be reported with an initial administration code. The definitions for subsequent administration codes are:

• 90472: Immunization administration for percutaneous, intra-dermal, subcutaneous or intramuscular injections, each additional vaccine
• 90474: Immunization administration for intra-nasal or oral route, each additional vaccine

When three or more vaccines are performed during an encounter, units should be applied to the administration code for each additional vaccine of the same type (injectable or oral).

Here are some examples:

• Five injectable vaccines: report 90471 X1 unit (initial) and 90472 X4 units (subsequent)
• One intra-nasal and two oral vaccines: 90473 X1 unit (initial) and 90474 X2 units (subsequent)
• Four injectable vaccines and one oral vaccine: 90471 X1 unit (initial) and 90472 X3 units (subsequent) and 90474 X1 unit (subsequent)

Keeping it all straight

Staying abreast of the latest coding directives can be a challenge, and it can be doubly so when it comes to vaccines, given all the factors that need to be accounted for to code and bill correctly. ParaRev delivers comprehensive revenue cycle services to support accurate coding, clean claims and timely and appropriate reimbursement. Contact us today to learn more about the many ways we can help your organization.

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Despite widespread industry determination to bolster healthcare information security, the number of health data cyberbreaches continues to explode nationwide, causing chaos for providers and payers and putting millions of patients at risk for identity theft.

More than 25 million patient records have already been breached in 2019, up 66 percent from the 15 million records stolen through all of 2018, and up 400 percent from the 5 million records exposed in 2017.[1]

The onslaught highlights the systemic vulnerability of the healthcare sector and reflects the value hackers place on patient information, which typically offers a trove of rich personal data for identity thieves.

Fighting on two fronts

Experts say thwarting cyberattacks requires hospitals and physician groups to fight on two fronts: Internal systems and networks must be secured, and breaches initiated through connected third parties must be prevented. The latter threats can be extensive, due to providers’ increased reliance on third parties for a wide range of support services.

Defending against third-party hazards also is problematic, since provider knowledge about the security of third- and even fourth- or fifth-party platforms is necessarily limited. Moreover, the ability to impose fixes typically is out of reach.

The good news is that momentum is building behind an industry-led effort aimed at creating the same level of security for information sharing in healthcare that has long existed across the payment processing industry.

Known as HITRUST®, the initiative provides a risk management framework, standards and guidance for systematically securing information and sharing it in compliance with HIPAA and other applicable guidelines. In essence, HITRUST offers a detailed roadmap for achieving and maintaining compliance with over 40 authoritative sources, including HIPAA.

Weak links

The avalanche of breach events so far in 2019 underscores just how vulnerable providers are to cyberattacks originating outside their walls. Three of the five largest healthcare breaches this year, in fact, involved third parties:[2]

• A billing vendor, American Medical Collection Agency, was hacked for eight months straight between August 2018 and March 2019. Patient data from at least six covered entities was affected. So far, it is believed a least 25 million patient files were exposed, including approximately 12 million from lab giant Quest Diagnostics and 7.7 million from competitor LabCorp.
• Insurer Dominion National experienced ongoing hacking for nine years before the breach was spotted and sealed in April of this year. Data on an estimated 2.9 million patients was potentially exposed.
• A ransomware attack on Wolverine Solutions Group, a company providing multiple outsourced business services to healthcare companies, is believed to have compromised information on more than 600,000 patients. Many providers and payers in Michigan were especially hard hit.

HITRUST certification

To limit third-party breaches, the HITRUST process focuses on the HITRUST CSF, which synthesizes multiple compliance standards and guidelines, including HIPAA, PCI, ISO/27001 and ISO/27002, and NIST SP 800-53.[3][4] In addition to strengthening vendor security, certification creates what is, in effect, a Good-Housekeeping-like seal of approval for vendors that allows them to quantify their security competencies to existing or potential customers.

The CSF addresses 19 different domains–from third party security and network protection to mobile device security–and requires readiness assessments against 135 specific controls.[5] HITRUST offers three progressive levels or degrees of assurance, from a HITRUST-issued CSF Self-Assessment Report to CSF-Validated and finally CSF-Certified. The latter may take up to three months to complete.[6]

For vendors and providers, ensuring HITRUST certification represents a significant improvement over traditional, “take your word for it” business agreements between vendors and covered entities that relied primarily on self-attesting compliance with HIPAA.[7]

An active defense

Beyond requiring HITRUST certification from vendors as a condition for doing business, providers can also boost third-party security through efforts in four key areas, according to the Healthcare Information and Management Systems Society (HIMSS).

These include:[8]

• Conducting thorough vendor due diligence
• Classifying the level of risk associated with each vendor function and relationship
• Ensuring ongoing communications with vendors about emerging security concerns
• Exploring cyber-liability insurance to mitigate the cost of potential breaches

Practicing what you preach

A leader in accounts receivable recovery and resolution, several of ParaRev’s key systems are HITRUST CSF® certified to help ensure the highest level of security for protected health information.

1. Jessica Davis, “The 10 Biggest Healthcare Data Breaches of 2019, So Far,” Health IT Security, July 23, 2019.
2. Ibid.
3. Travis Good, “What is HITRUST?,” Datica.com, May 10, 2018.
4. “Comparing the CSF, ISO/IEC 27001 and NIST SP 800-53,” HITRUST. June 2014.
5. Ibid.
6. Ibid
7. Rob Pierce, “What is HITRUST? A Practical Guide to Certification,” Linford & Company LLP, September 26, 2018.
8. Ronald Hirsch, MD, “Vendor Security Risk Management for Healthcare Organizations,” HIMSS Privacy and Security Committee Brief, 2015.

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Overall cost reduction and efficiency are some of the top financial priorities for today’s health system CEOs and CFOs. Faced with problems like shrinking revenue and increasing expenses, executives should start employing technological solutions, such as intelligent automation, to handle claims, increase efficiency and expedite insurance recovery.

Read more at Becker’s Hospital Review.

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Difficult and sometimes treacherous for ships at sea, navigating in the dark can be equally perilous for hospitals struggling to comply with Medicare’s murky two-midnight inpatient admissions rule.

The rule was created by the Centers for Medicare and Medicaid Services (CMS) five years ago as means of assisting hospitals in determining whether patients should be admitted as in-patients or placed in observation as outpatients, if ordered by the physician. CMS’ goals were to reduce unnecessary admissions and help ensure patients received quality care at the appropriate time and place.

But despite the passage of time and multiple rule modifications, confusion continues to surround the regulation for many. This uncertainty has translated into a substantial risk of denials for inpatient admissions CMS does not consider justified. It also can lead to lost revenue on legitimate inpatient admissions down-coded as observational.

To minimize two-midnight denials and optimize collections, hospitals must ensure that both clinicians and utilization management staff have a concise understanding of how the rule works. As part of this effort, they need to be sure all relevant medical necessity documentation is provided to support the clinician’s inpatient determination.

Replaced severity and intensity of service

Developed as part of the 2014 Inpatient Prospective Payment System Final Rule, the two-midnight rule states that a hospital admission is generally considered reasonable and necessary if the physician or qualified practitioner orders the admission based on the expectation that the patient will require medically necessary hospital care that spans at least two midnights.

Patients that aren’t expected to require a stay extending through two or more midnights are classified as outpatients receiving observation services (OBS) and the hospital is reimbursed at outpatient rates. If, however, care for patients in OBS status extends toward a second midnight, they may be formally admitted as inpatients. The rule replaced previous inpatient guidelines that were based on severity of illness and intensity of service.

Since the rule was implemented, some hospitals have continued to rely primarily on severity and service intensity as the key factors in deciding whether or not to admit. Others erroneously have assumed that the shift to a time-based admission calculus means that documenting medical necessity is no longer necessary.

Knee replacement confusion

Although uncertainty surrounds the interpretation of the two-midnight rule across a range of procedures and morbidities, CMS policies regarding total knee arthroplasty (TKA) have resulted in confusion. Effective Jan. 1, 2018, CMS removed TKA from the Impatient Only List (IPO) and assigned the procedure an Ambulatory Payment Classification. But even though removal from the IPO means the procedure is paid as an outpatient service, it still must be performed in a hospital.[1]

At the same time, CMS has noted that shifting to the IPO “does not require the procedure to be performed only on an outpatient basis.” Yet the agency provided no guidance on how hospitals should determine which cases can be performed inpatient.[2]

A good first step in resolving this dilemma is to review the historical length of stay for TKA patients to determine if the two-midnight rule is met. Even with this information, however, the rules can be tricky: According to published reports, if physicians routinely have kept patients over two midnights in the past, that doesn’t mean they automatically are meeting medical necessity requirements for inpatient level of care now.[3]

Adding to the uncertainty, CMS will allow cases with less than two midnights to be paid at inpatient rates if the admitting physician indicates a need for inpatient hospital care in the documentation.[4]

To ease the confusion, experts recommend that orthopedic surgeons and health system utilization management staff create detailed protocols for designating inpatient and outpatient procedures immediately after the fact. These rules should consider pre-operative history and comorbidities, signs and symptoms severity, anesthesia risks, as well as unanticipated surgical events and any post-procedure complications.[5]

Proposed changes in the 2020 OPPS Proposed Rule

CMS has proposed the removal of total hip arthroplasty, CPT code 27130, from the IPO list and has requested public comment by September 27 on the potential removal of the following procedures from the IPO list:

Table 23: IPO List of CPT Codes to be Potentially Removed from the IPO List [6]

CPT Code	Long Descriptor
22633	Arthrodesis, combined posterior or posterolateral technique with posterior interbody technique including laminectomy and/or discectomy sufficient to prepare interspace (other than for decompression), single interspace and segment; lumbar;
22634	Arthrodesis, combined posterior or posterolateral technique with posterior interbody technique including laminectomy and/or discectomy sufficient to prepare interspace (other than for decompression), single interspace and segment; lumbar; each additional interspace and segment
22635	Laminectomy for excision or evacuation of intraspinal lesion other than neoplasm, extradural; cervical
22636	Laminectomy for excision or evacuation of intraspinal lesion other than neoplasm, extradural; thoracic
22637	Laminectomy for excision or evacuation of intraspinal lesion other than neoplasm, extradural; lumbar
22638	Laminectomy for excision or evacuation of intraspinal lesion other than neoplasm, extradural; sacral

CMS is also “proposing to establish a 1-year exemption from Beneficiary and Family-Centered Care Quality Improvement Organizations (BFCC-QIOs) referrals to Recovery Audit Contractors (RACs) and RAC reviews for “patient status” (that is, site-of-service) for procedures that are removed from the inpatient only (IPO) list under the OPPS beginning on January 1, 2020.”[7]

Utilization management must take the lead

Regardless of the illness or procedure, it’s essential that clinicians provide detailed documentation surrounding the initial assumption that the patient will likely require a minimum of 24-to-48 hours of care, depending on the time of admission.

Utilization management should take the lead in ensuring that clinicians are aware of their responsibilities with respect to appropriate documentation. They should also make it a priority to keep up with the latest interpretations of the two-midnight rule, and immediately convey this guidance to clinical staff. Additionally, all admissions should be reviewed during or after discharge to confirm that inpatient admission was justified, based on documented risks, complications, need for therapy or need for inpatient skilled nursing care.[8]

When inpatient admission cannot be justified, hospitals can attempt to change the claim to outpatient status by following the condition code 44 process. Or they can simply self-deny and rebill as an outpatient service. In these cases, the patient and physician must be notified.[9]

Your AR specialists

ParaRev specializes in accounts receivable recovery and resolution and serves as a virtual extension of your hospital central billing office to help you quickly resolve and collect more of your insurance accounts receivable.

We utilize proprietary intelligent automation and staff specialization to efficiently process all claims regardless of size or age. In addition to our resolution capabilities, ParaRev also can provide denial management assistance by conducting root cause analysis and recommend process improvements to help decrease aged and denied claims going forward.

Contact ParaRev today to learn more about how we can help you with your hospital’s accounts receivable management.

1. Debbie Sconce, “Total knee arthroplasty – No longer inpatient only,” Becker’s Hospital Review, April 17, 2018.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid.
6. “Medicare Program: Proposed Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs,” ederal Register 84 FR 39398. Aug. 9, 2019.
7. Ibid
8. Ronald Hirsch, MD, “Two-midnight Rule Remains Confusing; Total Knee Replacements Frustrating to Many,” RACmonitor, May 16, 2018.
9. Ibid.

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For physicians, being forced to obtain insurance company prior authorization (PA) before providing or ordering a specific treatment or drug probably feels a lot like needing a permission slip from your parents in high school. Not only does the process cause frustration and resentment, it can also lead to treatment delays and substandard care.

A 2018 physician survey by the American Medical Association (AMA) highlighted the negative impact PAs can have on the practice of medicine. According to the survey, 91 percent of responding physicians said PAs delayed access to necessary treatment, with 65 percent saying they waited, on average, one business day for PA approval and 26 percent reporting they waited at least three days.[1]

More critically, 28 percent of physicians said the PA process had led to a serious adverse event (e.g., death, hospitalization, disability/permanent bodily damage, or other life-threatening event) for a patient under their care.[2] More than 90 percent said PAs had a significantly negative or somewhat negative impact on clinical outcomes, and 75 percent said the PA process had resulted in patients abandoning their recommended course of treatment.[3]

According to the survey, practices are required to complete 31 PAs per physician, per week, on average, and nearly 40 percent of practices have staff working exclusively on authorizations.[4] Beyond adding to administrative overhead, PAs can have a significant impact on provider cash flow if a claim for a service requiring prior authorization is denied or delayed.

Legislative relief coming?

In releasing the survey results earlier this spring, the AMA decried insurers’ “foot-dragging and opposition” around implementation of proposed PA process advances developed through a consensus effort involving the AMA and other national groups representing hospitals, medical groups, pharmacists and health plans.[5]

The good news is that the five areas of improvement identified and articulated in the groups’ consensus statement have now formed the basis for newly proposed federal legislation that would streamline the PA process for Medicare Advantage (MA) plans.

Known as the Improving Seniors’ Timely Access to Care Act (HR 3107), the bill was introduced in early June in the House of Representatives with sponsorship from two Democrats and two Republicans.[6]

Under the act, the Centers for Medicare and Medicaid Services (CMS) would foster greater transparency around the PA process by requiring MA plans to report to CMS a list of all items and services that are subject to PA, the percentage of PA requests approved during the previous plan year by service and/or prescription, and the average amount of time elapsed between the PA request and final determination.[7]

In addition, HR 3107 would reduce the administrative burden of PAs by requiring that plans accelerate the development of an electronic process to replace the primarily phone-and-fax-driven approach currently used in most instances.

Finally, the act would require that PAs adhere to evidence-based guidelines and are developed in consultation with physicians. MA plans would likewise be required to conduct annual reviews of items and services for which PAs are mandated. The reviews would reflect input from physicians as well as an analysis of past PA requests and current clinical criteria.[8]

CORE recommendations

The introduction of HR 3107 follows the release in May of parallel guidelines developed by the Council of Affordable Quality Healthcare (CAQH) CORE aimed at strengthening the accuracy and consistency of the PA process.

Noting that 88 percent of prior authorizations currently are conducted either by phone or fax, the CORE recommendations are designed to standardize data shared between plans and providers, eliminate unnecessary back-and-forth and accelerate adjudication timeframes. According to CAQH, full adoption of a standardized electronic prior authorization process could result in savings of 70 percent per transaction.[9]

CAQH CORE is an industry-led consortium that supports the creation and adoption of healthcare operating rules that support standards, accelerate interoperability and align administrative and clinical activities among providers, payers and consumers.

PA denial expertise

As new regulations are enacted to streamline the PA process, it will still be important to understand the reason behind PA denials. ParaRev works with a range of provider clients to identify and mitigate denial root causes for emergent, inpatient, outpatient and ancillary services. From this experience, we’ve determined that failure to obtain PAs represents one of the most common reason for denials.

Overcoming PA denials requires that hospitals be well-versed in an insurance company’s clinical policy bulletins, which describe what the carrier will and will not cover, what they consider to be medical necessity, and the treatments and drugs that require prior authorization.

In addition to helping providers identify and mitigate denials, ParaRev relies on trained personnel, including RNs and registered health information technicians (RHITs), to assist with denial appeals. Contact ParaRev today to learn more about how we can help you identify the source of your PA denials and develop a process to help prevent them from happening again.

1. “2018 AMA Prior Authorization Physicians Survey,” American Medical Association, 2019.
2. Ibid.
3. Ibid.
4. Ibid.
5. “Health insurance industry slow to adopt prior authorization reforms,” American Medical Association press release, March 12, 2019.
6. “Legislation introduced to streamline prior authorization in Medicare Advantage,” Gastro.org, June 5, 2019.
7. Ibid.
8. Ibid.
9. “CAQH CORE Releases Operating Rules to Promote Automation for Prior Authorization,” CAQH press release, May 5, 2019.

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Because clinical laboratory claims typically are low-dollar amounts generated in large volume, many hospitals have concluded it’s simply not cost-effective to aggressively pursue laboratory denials when they occur, given the resources required to work them and the nominal returns resolution can produce. This results in an often-significant number of write-offs.

However, hospitals that shift their thinking and no longer view laboratories as simply cost centers can generate a substantial source of new or “found” revenue by taking a more aggressive and systematic approach to lab denials. Strong denial management programs are especially important for hospitals that seek to expand their outreach business and transform the lab into a profit center.

Comprehensive lab denial management includes intelligent automation processes that can resolve the simplest denials without human intervention while supporting detailed analysis and identification of denial root causes.

Healthcare Financial Resources (HFRI) partners with hospitals to address denials and identify denial root causes for emergent, inpatient, outpatient, laboratory and other ancillary services. From this experience, we’ve determined that the failure to obtain prior authorizations and medical necessity confirmations, as well as inaccurate or incomplete documentation, represent the most common reasons for laboratory denials.

Verifying prior authorizations

Because prior authorizations typically are the responsibility of either the referring physician practice, the emergency department or the hospital’s precertification department, making sure authorizations are obtained is usually beyond the control of the pathology group and laboratory. But unless the testing is conducted during emergent care, it is probable that the test is pre-scheduled. Therefore, pre-authorization can and should take place when the lab work is scheduled.

It admittedly can be difficult for the laboratory or hospital staff to keep track of the many and varied insurance company pre-authorization guidelines. But most carriers provide links on their websites that identify the procedures or tests requiring pre-authorization, and hospitals should be able to consolidate these links for easy access or create their own documents for internal use.

In any case, laboratories should develop their own pre-authorization check systems to confirm decisions from the referring physicians. They should avoid simply relying on oral assurances from the referring doctors, particularly if the physician practice has been a significant source of denials in the past.

Like the failure to secure prior authorizations for commercially insured patients, neglecting to document medical necessity or submitting claims without specific or appropriate diagnosis codes can have a major impact on reimbursement.

Documentation

Toxicology tests is another category that continues to generate significant numbers of denials. According to the Centers for Medicare & Medicaid Services (CMS), the majority of the denials for the category of “Laboratory Tests – Other,” which includes urine drug screenings, are due to insufficient documentation.[1]
Specifically, denials in this category are triggered by:

• Insufficient or no documentation to support the intent to order the test
• Insufficient or no documentation to support the medical necessity for the test of the individual patient
• Unsigned medical record documentation by the treating physician or non-physician practitioner

LCD, NCD criteria

A combination of local coverage determinations (LCDs) and national coverage determinations (NCDs) usually will enable staff to determine medical necessity criteria for specific diagnosis codes and tests. The most current information is available online and should be checked by referring staff before exams are ordered, especially for those tests that have historically high denial rates. In addition, providers should build rules into the EHR system to identify diagnoses and reduce manual follow-up.

Finally, providers should make sure all patients are provided with, and sign, an Advanced Beneficiary Notice of Non-Coverage (ABN) before treatment. This ensures that the pathology group or lab will be able to bill the patient directly if the service is not payable by Medicare.

Your denial specialists

ParaRev specializes in AR recovery and resolution and serves as a virtual extension of your hospital central billing office to help you quickly resolve and collect more of your insurance accounts receivable. We’ll help improve operating margins through a seamless and collaborative partnership with your internal team.

To expedite the capture of revenue for large-volume, low-dollar claim denials, we utilize intelligent automation technology that reduces the human touches necessary to isolate the root causes of payment delays, underpayments and denials. These systems also can resolve the simplest denials or payment delays with no human intervention whatsoever. The net effect of these breakthrough capabilities is that claims resolution is accelerated, write-offs are reduced and hospital cash flow is improved.

Contact HFRI today to learn more about how we can help you identify the source of your laboratory denials and develop a process to help prevent them from happening again.

1. Provider Compliance Tips for Laboratory Tests – Other-Urine Drug Screening,” CMS Medicare Learning Network, September 2016.

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Radiologists face unique challenges when it comes to getting paid. Coding for imaging is complex and multi-faceted, and documentation must be thorough and precise. In addition, unlike most other specialists, radiologists are usually dependent on the referring physician’s office or emergency department to document medical necessity or ensure that any required prior authorizations are obtained.

Given these challenges, it is not unusual for a large portion of hospital denials to originate in the radiology department. That’s why attacking the problem is essential for stabilizing cash flow and improving collections.

Ultimately, reducing radiology denials hinges on accurate demographic and insurance eligibility information, appropriate coding, complete documentation, and the creation of systems that can ensure prior authorizations and medical necessity confirmations are obtained before the imaging exam is conducted.

Root cause analysis

Reducing denials begins by developing a comprehensive understanding of the root causes of previously denied claims. This can be accomplished through a careful analysis of denial reports and should highlight where, when and why denials are occurring. Radiology denials generally fall into four categories:

• Patient eligibility problems
• Failure to obtain prior authorization for the procedure
• Failure to document medical necessity for the exam
• Inaccurate or incomplete coding and documentation

1. Eligibility

Patient eligibility is an issue that plagues not just radiology, but most physician practices to a greater or lesser extent. Given the financial risks associate with denials, it is important to ensure that accurate information about the patient’s insurance coverage, or lack thereof, is obtained as quickly as possible. Ideally this should occur before the exam is performed and certainly before any claim is submitted.

Practices can implement edits in their billing systems to block claims from dropping if there is no active insurance. Staff likewise needs to be trained in the appropriate steps to take if patients present without active coverage. Too often, personnel submit claims to the insurance company on record, even if automated rejections in the radiology information or billing systems already have indicated the insurance is no longer in force.

Eligibility problems also can be triggered by listing the incorrect site of service or by inaccurate patient demographic information. For those reasons, systems should be established to double-check each detail relating to the patient’s information, their coverage and the location and nature of the exam.

2. Prior authorization

An increasing number of commercial insurance companies in recent years have required prior authorization for imaging exams, particularly for more expensive procedures like MRI, CT and PET imaging.

Healthcare Financial Resources (HFRI) works with a range of provider clients to identify and mitigate denial root causes for emergent, inpatient, outpatient and ancillary services. From this experience, we’ve determined that failure to obtain prior authorizations represents the most common reason for radiology denials.

Because prior authorizations typically are the responsibility of either the referring physician practice or the hospital’s precertification department, making sure they are obtained is usually beyond the control of the radiologist. But unless the exam is conducted during emergent care, it is probable the procedure is a pre-scheduled service. Therefore, the pre-authorization can and should take place when the exam is scheduled.

It admittedly can be difficult for physician or hospital staff to keep track of the many and varied insurance company pre-authorization guidelines. But most carriers provide links on their websites regarding what requires pre-authorization, and hospitals should be able to consolidate these links for easy access or create their own documents for internal use.

To underscore the impact that failure to obtain pre-authorizations can have, radiology groups should list pre-authorization denials by type of procedure, carrier, referring physician and dollar value, and then convey this information to the physician practice, hospital pre-authorization office, and if necessary, hospital administrators. Educating those further upstream about the impact of their actions (or inactions) ultimately is the most effective way to reduce pre-authorization denials.

3. Medical necessity

Failure to prove and document medical necessity can have a major impact on radiology reimbursement when it comes to commercial payers as well as Medicare and Medicaid.

In addition to confirming medical necessity based on the initial diagnosis, groups should build rules engines that identify imaging services that Medicare will not reimburse. Frequently, these services can be identified through NCDs and LCDs. Similarly, many commercial payers publish experiential clinical policy bulletins that identify services they will not reimburse. Rules can also be created to flag these procedures to reduce unnecessary follow-up, balance bill the patient or write off the balance if no other option exists.

4. Coding and documentation

Because coding and documentation requirements for many imaging procedures are becoming more complex, it is important that processes be established to help ensure both clinicians and coding staff remain current on the latest guidelines. For example, failure to add modifiers that reflect the appropriate chronology of the imaging studies often will lead to denials.

Omitting essential details in the imaging report can also prevent coders from submitting complete and accurate claims. According to the American College of Radiology, all imaging reports must have the following:

• Exam name
• Clinical indication
• Description of exam, sequences and/or technique
• Comparison studies if applicable
• Finds
• Conclusion and recommendations, if indicated
• Physician signature

Your denial specialists

ParaRev specializes in AR recovery and resolution. We work as a virtual extension of your hospital central billing office to help you resolve and collect more of your insurance accounts receivable faster and improve operating margins through a seamless and collaborative partnership with your internal team.

In addition to our resolution capabilities, ParaRev also can provide denial management assistance by conducting root cause analysis and recommending process improvements to help decrease aged and denied claims going forward.

Contact HFRI today to learn more about how we can help you identify the source of your radiology denials and develop a process to help prevent them from happening again.

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