Why Hospitals Shouldn't Handle Revenue Cycle Management

Top 4 reasons hospitals shouldn’t handle revenue cycle for their ASCs

While an ambulatory surgery center (ASC) can be independently owned, managed through a management company or managed by a hospital, it is usually best for revenue cycle management (RCM) to be handled internally by the ASC or an outsourced partner. Hospitals are oftentimes looking for ways to reduce costs of operating an ASC, which could include incorporating the ASC’s RCM with the hospital’s RCM operations. However, there are many reasons why a hospital is not equipped to successfully handle revenue cycle for their ASCs.

Here are the top 4 reasons hospitals should not handle RCM for their ASCs:

1. Management information system

The management information system (MIS) is the system used to bill and collect. However, a hospital’s MIS is  not ASC-specific and therefore not configured to work well in an ASC environment. Since most MIS systems are incompatible, the hospital may need to spend additional time and resources on interfaces between the hospital system, the ASC system and peripheral applications in order to exchange vital information.

The hospital’s MIS may also not be set up to bill for a surgery center. Standard hospital systems are typically setup to bill on the UB-04 claim forms, while ASCs need to be able to bill on both the UB-04 and CMS-1500 claim forms. Additionally, hospitals may not be able to load ASC payer contracts into the system or report on ASC-specific key performance indicator (KPI) metrics that ASC leadership must monitor, such as revenue per case.

2. Billing Staff

A hospital’s billing and collections staff may not have the expertise and experience needed to understand the specifics of billing for an ASC. For example, centers often have to bill CPT codes with modifiers which help further describe a code without changing its definition.  One prime example is multi-level pain injections, which CMS only pays on a primary code and bundles subsequent codes. It’s not only a mistake to bill out bundled codes separately, but against Medicare guidelines, so the center could be fined.

 3. Attrition

Hospitals typically have very large, complex billing departments. Along those lines, a hospital’s business office staff may only have general hospital experience and not ASC-specific knowledge and expertise needed to understand the various best practices of ASC revenue cycle. Due to their size, hospitals often see a higher turnover rate with the business office employees, which may not provide the continuity needed in the smaller, ASC environment.

4. Problematic AR days

Hospitals often have higher days outstanding than ASCs. While hospitals typically hover in the 40 to 50 day range, better performing ASCs achieve less than 30 days outstanding. When a hospital is billing for both itself and an ASC, it many not devote the necessary time and resources to both. Since the hospital charges and subsequent reimbursement is substantially higher than the ASC, the hospital may be more attentive on collecting the larger amounts  as opposed to the smaller payments coming out of the ASC.  The hospital may therefore go after the ASC “low-hanging fruit” , allowing AR days to increase and collection rate trends to decline, putting a major strain on the financial health of the ASC.

An optimized revenue cycle management strategy is imperative to the financial health of an ASC. Oftentimes, the ASC and its stakeholders can benefit greatly by handling billing and collections internally or transitioning to an outsourced RCM provider.

ASC Physician looking for revenue

ICD-10: Top 3 myths and facts for ASCs

It’s no secret that the use of ICD-10, the 10th addition of the International Classification of Diseases by the World Health Organization (WHO), will commence in approximately six months, and ambulatory surgery centers should be taking the required steps to prepare for as seamless of a transition as possible.

The start of ICD-10 has been delayed more than once, and this has blurred the lines between myth and fact:

Myth 1

ASCs should continue to plan to implement ICD-10 under the assumption that the Department of Health and Human Services (HHS) will grant another extension.

Fact 1

The HSS has no plans to extend or delay the implementation of ICD-10 for all HIPAA-compliant entities, so ASCs need to continue taking the necessary steps to officially make the switch ICD-10 on October 1, 2015.

Myth 2

Since ICD-10 was actually developed and implemented around the world years ago, it’s probably out of date already.

Fact 2

ICD-10 codes have been updated annually prior to a partial code freeze to stay on pace with advances in technology and the healthcare environment. The partial freeze was implemented by the ICD-9 Coordination and Maintenance Committee, and only codes capturing new technologies and diseases were added to ICD-9 and ICD-10. No ICD-9 updates will be made past October 1, 2015, and regular updates to ICD-10 will resume on October 1, 2016, according to the Centers for Medicare & Medicaid Services.

Myth 3

The increased amount of available codes will make ICD-10 more challenging to use.

Fact 3

ICD-10 will have almost five times the number of diagnostic codes and will require greater specificity and detail, but that doesn’t mean it will be necessarily more complex. Almost half of the new codes are simply to differentiate between the two sides of a patient’s body. Having a greater selection of codes will actually make it easier to find the proper code because they will be more precise. Additionally, ICD-10 will have an alphabetic index and electronic coding tools to help billing and coding staff find the correct option.

With these facts in mind, ensuring that an ASC’s billing and coding staff receive optimal training should reduce the chance of negative impact on the financial health of the center. If the staff is not as prepared as needed, it might be the time to consider outsourcing RCM to a provider whose employees have been adequately trained to handle ICD-10 efficiently.

Gabriela Alcaraz Regent RCM

Meet the Team | Gabriela Alcaraz

Over the next few months, we will be introducing the many members of our team who make Regent RCM so successful. Today, let’s meet:

Name: Gabriela Alcaraz

Hometown: Chicago

What do you do at Regent RCM? Revenue Cycle Specialist

How long have you been working at Regent RCM? 10 years

What is your favorite part about working here? Being able to perform a variety of revenue cycle functions and not just being a medical biller.

What has been your greatest professional achievement? Continuing to meet my expected goals and maintaining the same level of proficiency while assisting others to achieve their own personal goals.

What is one fun fact about yourself your co-workers don’t know? I love horses! I enjoy riding horses.

ASC Physician

Regent RCM News Round Up

This month, coding and billing news has continued to focus on the impending ICD-10 upgrade as well as the need for transparency and the growth of the revenue cycle management market.

As the healthcare industry prepares for ICD-10, WHO prepares for ICD-11

As the U.S. healthcare industry has a major focus right now on preparing for the upgrade from ICD-9 to IDC-10, set to go into effect this October, the World Healthcare Organization (WHO) is preparing for ICD-11 with an expected release date in 2017 that will be designed to increase the transition to health IT systems. Other countries have already made the switch and implemented ICD-10, while the U.S. is just beginning this process. ASC facilities must be fully prepared for the changes the new ICD-10 coding system presents and have a strong understanding of IDC-10 in order to avoid complications that will negatively affect the bottom line.

United Healthcare offers price transparency on smartphones

Insurance company United Healthcare has updated its smartphone app, Health4Me, that allows patients to pay medical bills from their smartphone, track activity and comparison shop. As part of the upgrades, the app will also help people make more educated decisions about healthcare by providing prices that have previously been hard for patients to determine on their own. Transparency such as this can help patients better plan for medical procedures, which can reduce the number of AR days and lower collection trends for ASCs.

Revenue cycle management market expected to reach more than $5 billion by 2019

A report from the Global Revenue Cycle Management System said that the RCM market was valued at more than $4 billion in 2014, and it’s estimated to climb to more than $5 billion by 2019 at a compound annual growth rate of 6.9 percent from 2014 to 2019. This growth is mainly attributed to a growing adoption of new and updated RCM solutions as well as a realization of the value in outsourcing by health organizations. The report also noted that there’s a large demand for the most up-to-date RCM solutions in healthcare, and the demand needs to be met by the initiation of new projects.

8 steps to prepare for ICD-10

WHITEPAPER: 8 Steps your ASC Must Take to Prepare for ICD-10

ICD-10 is coming, and it won’t wait for your ambulatory surgery center (ASC) to get prepared. In fact, we’ve all had ample time to prepare. But due to frequent delays in implementation, and the massive amount of time and money it would take to implement on an individual level, most of the healthcare community has put it off.

In order to get your center prepared, we have compiled insights on the 8 critical steps your ASC should take to prepare for ICD-10.

Complete the form to download the white paper: