July 2009 | www.healthmgttech.com | Issue 7
Health Management Technology


Manage by Exception

Centralized physician billing office uses new revenue-cycle management technology to improve first-time clean claim rate, resolve rejections and track claims.

By Teresa Taylor

In order to maintain a proactive, progressive approach to community care and financial responsibility, Shenandoah Memorial Hospital (SMH) determined that physician billing and coding needed to be centralized across its eight practices. The first step toward creating a centralized department was to identify existing concerns and problems. During this phase of reorganization, staff uncovered two key challenges: claims paperwork and rejection backlogs.

SMH is part of Valley Health, a four-hospital integrated delivery network that includes a surgical center, rehabilitation services, several home care agencies and a large network of hospital-owned physician practices. SMH owns eight of these practices and runs a centralized billing and coding service for them. SMH began purchasing physician practices in 1992 as part of its mission to ensure quality community healthcare for residents of Shenandoah County.

“Our first-time clean claim rate has dramatically improved because the system enables billing staff and coders to work together in a timely manner,” Taylor says. “Errors are identified upfront and can be corrected before the claim is sent.”

With approximately 39,000 claims across eight practices, a plethora of paperwork was the staff’s constant companion – and nemesis. According to Teresa Taylor, director of physician billing, becoming paperless was a top priority. Documents such as acceptance reports, rejection reports and acknowledgments resulted in nearly half a ream of paper per data set each day.

“We simply did not have time to review so many reports and we wanted to be able to manage by exception with only those claims requiring attention or additional processing presented to the billing and coding staff,” says Taylor.

Additionally, rejections created a backlog of claims to be reworked, which resulted in wasted time and revenue. The department needed a new process and automated revenue-cycle management (RCM) technology. With limited capital and high claims volumes, staff also needed affordable, pay-as-you-go pricing.

SMH chose HealthPort’s revenue-cycle management system, which uses an application service provider (ASP) model. With its minimal up-front costs and low cost of ownership, the ASP model was the key to SMH’s administration’s support for the project. In addition, the system seamlessly interfaced with the existing practice-management system.

With the ASP RCM system, clean claims could be automatically transferred to payers without intervention from the billing staff, thus replacing most manual intervention. This eliminated the need to contact individual payers over the Internet or by telephone. Automated processes, such as on-demand eligibility and auto-eligibility requests, help to minimize claims denials, resulting in quicker payments, an 18-day reduction in AR days on average, and higher levels of patient satisfaction.

The RCM system enables SMR to resolve legitimate errors within the department more quickly, Taylor contends, by sending rejections directly to the appropriate staff member for claim correction and resubmission to the payer. Coding errors are automatically routed back to the coder for follow-up and correction. Claims returned for no – or invalid – insurance coverage result in prompt patient notification and follow-up. The time and tedium of searching through stacks of paper to research and remedy rejected claims is significantly reduced, she adds.

The automation that now supports coding, billing and claims-management processes has enabled the physician billing department to demonstrate an improved bottom line, Taylor says. “Overall, there has been a dramatic improvement in departmental morale and productivity, as well,” she adds. “Hours and days spent managing reams of paper and sifting through reports have been replaced with real-time access to claim information and improved payer communications. The team can truly manage by exception, and, as a result, has become more efficient and profitable.”

Once claims are sent through the clearinghouse directly to payers, they can then be viewed online and payer activity tracked. Staff has found that seeing payer activity early in the process is more efficient and enables them to view and track a claim and its history at each step throughout the process. The result – a proactive approach to revenue-cycle management, with greater efficiency for billers and coders.

Teresa Taylor is director of physician billing for Shenandoah Memorial Hospital’s owned physician practices.

For more information about HealthPort’s revenue-cycle management system, click here.