Managing the Revenue Cycle: Optimized Coding and Billing
Proper coding and billing have long been priorities of private and hospital-based radiology practices alike. Health-care reform and its accompanying reimbursement cuts, however, have created a need to optimize both functions. Efforts underway at practices across the country indicate that attention to detail in coding and billing can result in stepwise improvement in receipts.
Bill Ziemke, JD, LLM, MBA, CPA, believes that coding and billing cannot be optimized without the implementation of new strategic processes and the adjustment of existing ones. Ziemke serves as CEO of Strategic Administrative and Reimbursement Services (STARS), LLC, the billing and management company for Advanced Radiology Services, Grand Rapids, Michigan, which represents more than 100 radiologists and is one of the largest radiology practices in the United States.
The outgrowth of several radiology practice mergers, Advanced Radiology Services comprises four divisions—Grand Rapids, Kalamazoo, Grand Valley, and Lansing—that provide radiology services to six major health-care systems, including the various satellite health centers owned and operated by these health-care systems. STARS handles billing for approximately 20 hospitals and well over 100 smaller sites.
Not long ago, STARS completed a coding/billing-optimization initiative that spanned more than three years and yielded, among other enhancements, a 57% improvement in procedures billed per FTE. Ziemke says that changing the organizational behavior of the company was crucial. Implementing manufacturing processes and procedures, developed to exceed industry benchmarks, played a key role in sparking the changes. These benchmarks initially came from the RBMA and later were supplied by the Strategic Radiology practice consortium (St Paul, Minnesota) and others. 
Ziemke cites the automation of multiple operating procedures and the subsequent elimination of unnecessary steps as prime examples. STARS now employs a straight-to-bill strategy wherein automatic coding replaces manual coding in 70% of cases (compared with 0%, in the past). “Because 70% of our procedures need no manual intervention, we need 70% fewer coders,” Ziemke explains. “One could argue that we probably have one of the higher auditing-of-coding costs in the country because we devote a lot of time to this area, but the additional auditing creates opportunities to save on back-end work. The more work you do on the front end, getting a clean code into the system, the less follow-up work needs to be done.”
Other new methods have also contributed heavily to heightened efficiencies and productivity, faster collections, and (in turn) a decrease in overall billing costs. For instance, based on an analysis of customer-service calls and their content, patient statements were refined to render them easier for patients to understand, reducing the volume of calls while bolstering the rate of private payments. A solution that enables patients to pay their bills online, coupled with the automatic deposit of more than two-thirds of remittances, among other changes, has helped to reduce days elapsed in accounts receivable by 40%, from a high of 55 days to 32 days (as of June 30, 2011).
Ziemke notes, “We could probably go on and on with the list, but it would be too long. Needless to say, constant efficiency improvement is now part of our daily expectation. We have created worklists. We are not yet where we need to be, but we have the ship out of the harbor, sailing toward its proper destination.”
Real-time Data
For Desert Radiologists (Las Vegas, Nevada), a 46-physician practice that offers diagnostic-imaging and interventional radiology services, that has five outpatient locations in Las Vegas and nearby Henderson, nine Southern Nevada hospitals, one Northern Nevada hospital, and one hospital in Arizona, outsourcing and the use of third-party technology have lined the path to billing/coding optimization. The practice performs more than 1.2 million exams annually.
William Moore II, is Desert Radiologists’ CEO. He says that the decision to outsource billing and coding was made in 2008, with the objective of improving collections and accounts-receivable management while reducing costs. Prior to this time, the practice depended on a local billing company, but its services, Moore explains, were not sufficiently comprehensive to handle a practice of Desert Radiologists’ size and scope. Management subsequently opted to bring billing operations in-house, but this, too, proved troublesome; adequately posting payments to patients’ accounts was an unwieldy process, and remaining on top of accounts receivable was extremely challenging. 
Desert Radiologists contracted with a national organization with a system that enables the practice to track every exam electronically, from order entry to collection, via decision-support system. A custom software interface permits billing information from the hospitals served by the practice to be incorporated into the system, and the automated billing process begins immediately when individual procedures and services occur, with all reports electronically transmitted to the third-party billing company.
Billing volumes are accessed daily, weekly, monthly, and annually—by location, modality, carrier, and referring provider. Leveraged together, the process and the technology yield consistent billing, payment, and reporting of all charges, Moore says.
“With the system and its decision-support component, we see near–real-time billing information, which is the only effective way to track every aspect of the billing cycle,” Moore explains. He adds that business and contract decisions are now made based on actual reimbursement data. For example, staff can drill down and compare reimbursement for breast biopsies, by carrier, to determine whether all payors are issuing adequate reimbursements for the procedure. Should reimbursement for certain procedures be inadequate, communication can be initiated with a payor to renegotiate rates.
With the system in place, future revenue can be predicted as well. The data provide accurate gross percentages, while the decision-support component forecasts future numbers and indicates whether adjustments in charges need to be made. Consequently, Moore states, “If a certain payor mix is returning subpar reimbursements at one location, the data are analyzed and opportunities are identified to maximize reimbursement, which includes ensuring that what is due from the patient at the time of service is collected. As a result, fewer accounts are turned over to bad debt.”
Best practices implemented in-house complement procedures followed in line with the outsourcing agreement. Both the office manager and office staff have been schooled in the importance of obtaining all necessary insurance information and collecting patient copayments and deductibles at the time of service. 
“We previously were much less aggressive in this regard, but in today’s world, with the high degree of patient responsibility for charges, it is incumbent on us to be certain that we collect what is due to us,” Moore says. “If needed, we will set up payment arrangements for patients rather than turn them away, but we are being more proactive about collections.”
Recently, Desert Radiologists initiated a policy under which staff and facility managers receive feedback from the executive team on the success of collections endeavors in their particular offices. Pat Harms, MBA, CPA, FACMPE, practice CFO, says, “We track and report back, making it a friendly competition between different centers and offering rewards, such as lunches, for hitting the targets. These small incentives do work.”
The Human Factor
Bill LaDue, director of radiology and pathology at the UVM Medical Group component of Fletcher Allen Health Care in Burlington, Vermont, agrees that incentives contribute to optimized coding and, by extension, billing. LaDue holds ultimate responsibility for keeping coding/billing functions working as they should and for collecting every dollar owed; he consistently remains on top of tracking and trending collections per RVU and overall net-collections rates. As Vermont’s primary hospital and medical center, Fletcher Allen Health Care provides care at more than 30 sites and 100 outreach clinics and programs—including an inpatient facility with more than 500 beds—in Vermont and upstate New York.
UVM Medical Group’s employed radiologists know that clarity and accuracy in radiology coding depend on the clarity of their reporting, and they are 100% responsible for that, LaDue explains. “If they do not do a great job on the reporting end, it will affect coding and billing, and we will not optimize the revenue cycle,” He says. “This, in turn, will affect their incentive compensation.”
To support proper reporting, he says, UVM Medical Group provides practitioners with voice-recognition software that creates written reports. Physicians are charged with reviewing the reports for accuracy and editing them, where necessary, before releasing them as final reports.
While procedural and operational refinements clearly have had—and continue to have—a positive impact on coding and billing, so, too, do human resources and the manner in which they are harnessed. This encompasses everything from investments in additional personnel to the delegation of staff responsibilities to communication with payors and other third-party entities.
For STARS, changes to the organizational chart, including the creation of new positions and the addition of new skill sets via hiring, were as important as other steps taken in its quest to improve the overall billing picture. “We moved people out of positions into new positions, initially increasing our costs to get the proper mindset of reduction in place and focus these team members on the end game,” Ziemke says. “For us, this wasn’t just staff members in the billing department; it was everyone from finance, IT, human resources, project management, and so forth.”
A cost accountant was engaged to analyze and measure all billing data so that realistic future expectations could be set. A position for a business analyst who could bring to the table both IT and billing knowledge was created. Weekly communication meetings across all functional areas were instituted to keep all departments in the loop as new processes were instituted in line with the initiative.
Each day, the analyst conducts a comparison of all reporting information against average volume to identify any anomalies. Periodic communication between STARS team members and facilities ensures that facilities are receiving the most accurate files.
“In order to improve billing effectively, we need the most up-to-date insurance information,” Ziemke states. “For instance, say a patient shows up in the emergency department, and the hospital has old insurance and address data on file. The hospital changes the data in its system after the patient supplies the new information, but did we get the first file, with the bad information, or did we get the updated information? It’s critical to know.”
Moreover, to optimize communication between Advanced Radiology Services and the hospitals it serves, a single STARS team member was assigned to review billing reports daily for accuracy. This individual investigates the origin of billing issues, ascertaining that their roots lie in the hospital in question (rather than with the practice itself). Taking such a step, instead of contacting the hospital first, not only reduces unnecessary expense from the billing process, but also bolsters Advanced Radiology Services’ credibility among hospitals, Ziemke says.
STARS has also brought on board several relationship managers who meet regularly with hospitals to iron out billing and other issues; their responsibilities include serving as liaisons with senior hospital executives, should there be a need, as Ziemke puts it, to go to a higher authority for assistance.
Out of Sight, not Mind
Contrary to what one might assume, Desert Radiologists’ philosophy holds that outsourcing billing functions does not exempt partners and employees from the responsibilities inherent in optimizing billing and coding. At the highest level, Harms holds ultimate responsibility for the financial side; Moore, for the operational side. Members of the billing department report up through Harms, who monitors the practice’s financial performance and communicates with the client services director assigned to Desert Radiologists by the billing company.
States Harms, “My role here involves constant communication, not sporadic communication. We’re looking at various aspects of revenue-cycle management daily, weekly, and monthly. Otherwise, it wouldn’t work.”
Reinforcing this communication, the billing company’s client services director works closely with Desert Radiologists’ administrative group and physician board of directors. The agenda includes monthly face-to-face meetings with the practice’s finance committee, supplemented by conference calls—and always focused on detailed data analysis.
Individuals from the billing company partner with the staff to ensure that effective charge capture and billing are occurring regularly and that all necessary steps required for collecting charges promptly, reprocessing denied claims, and ascertaining that bills do not (as Harms put it) fall back into a black hole are executed. A Desert Radiologists billing manager also acts as a liaison with the third-party company, keeping schedulers, front-desk personnel, and physicians abreast of any changes that pertain to charge capture or coding.
UVM Medical Group has designated three specialty coders—3.5 FTEs—to handle only the coding of radiology procedures. Its rationale for this setup—and for handling coding and billing in-house, according to LaDue—is that radiology, more than other medical disciplines, not only is highly specialized, but involves an unusual volume of minutiae. Assigning radiology coding to general hospital coding staff would widen the margin for error.
“These coders are highly trained and experienced; one has 35 years of experience; another, 30 years; and the third, 20 years,” LaDue observes. Consequently, they can identify subtle discrepancies between procedures that were scheduled and those that were actually performed—differences that their generalist counterparts might overlook. As an example, LaDue cites an MRI exam with contrast that is being billed as an MRI exam without contrast.
“Last fiscal year, we had 188,000 work RVUs, and we perform about 280,000 imaging procedures per year,” LaDue concludes. “Our coding error rate is very, very low, in large part because of this human-resource structure.” Keeping those errors to a minimum is at least half the billing/coding-optimization battle, LaDue says. Julie Ritzer Ross is a contributing writer for Radiology Business Journal.
Ziemke cites the automation of multiple operating procedures and the subsequent elimination of unnecessary steps as prime examples. STARS now employs a straight-to-bill strategy wherein automatic coding replaces manual coding in 70% of cases (compared with 0%, in the past). “Because 70% of our procedures need no manual intervention, we need 70% fewer coders,” Ziemke explains. “One could argue that we probably have one of the higher auditing-of-coding costs in the country because we devote a lot of time to this area, but the additional auditing creates opportunities to save on back-end work. The more work you do on the front end, getting a clean code into the system, the less follow-up work needs to be done.”
Other new methods have also contributed heavily to heightened efficiencies and productivity, faster collections, and (in turn) a decrease in overall billing costs. For instance, based on an analysis of customer-service calls and their content, patient statements were refined to render them easier for patients to understand, reducing the volume of calls while bolstering the rate of private payments. A solution that enables patients to pay their bills online, coupled with the automatic deposit of more than two-thirds of remittances, among other changes, has helped to reduce days elapsed in accounts receivable by 40%, from a high of 55 days to 32 days (as of June 30, 2011).
Ziemke notes, “We could probably go on and on with the list, but it would be too long. Needless to say, constant efficiency improvement is now part of our daily expectation. We have created worklists. We are not yet where we need to be, but we have the ship out of the harbor, sailing toward its proper destination.”
Real-time Data
For Desert Radiologists (Las Vegas, Nevada), a 46-physician practice that offers diagnostic-imaging and interventional radiology services, that has five outpatient locations in Las Vegas and nearby Henderson, nine Southern Nevada hospitals, one Northern Nevada hospital, and one hospital in Arizona, outsourcing and the use of third-party technology have lined the path to billing/coding optimization. The practice performs more than 1.2 million exams annually.
William Moore II, is Desert Radiologists’ CEO. He says that the decision to outsource billing and coding was made in 2008, with the objective of improving collections and accounts-receivable management while reducing costs. Prior to this time, the practice depended on a local billing company, but its services, Moore explains, were not sufficiently comprehensive to handle a practice of Desert Radiologists’ size and scope. Management subsequently opted to bring billing operations in-house, but this, too, proved troublesome; adequately posting payments to patients’ accounts was an unwieldy process, and remaining on top of accounts receivable was extremely challenging. Desert Radiologists contracted with a national organization with a system that enables the practice to track every exam electronically, from order entry to collection, via decision-support system. A custom software interface permits billing information from the hospitals served by the practice to be incorporated into the system, and the automated billing process begins immediately when individual procedures and services occur, with all reports electronically transmitted to the third-party billing company.
Billing volumes are accessed daily, weekly, monthly, and annually—by location, modality, carrier, and referring provider. Leveraged together, the process and the technology yield consistent billing, payment, and reporting of all charges, Moore says.
“With the system and its decision-support component, we see near–real-time billing information, which is the only effective way to track every aspect of the billing cycle,” Moore explains. He adds that business and contract decisions are now made based on actual reimbursement data. For example, staff can drill down and compare reimbursement for breast biopsies, by carrier, to determine whether all payors are issuing adequate reimbursements for the procedure. Should reimbursement for certain procedures be inadequate, communication can be initiated with a payor to renegotiate rates.
With the system in place, future revenue can be predicted as well. The data provide accurate gross percentages, while the decision-support component forecasts future numbers and indicates whether adjustments in charges need to be made. Consequently, Moore states, “If a certain payor mix is returning subpar reimbursements at one location, the data are analyzed and opportunities are identified to maximize reimbursement, which includes ensuring that what is due from the patient at the time of service is collected. As a result, fewer accounts are turned over to bad debt.”
Best practices implemented in-house complement procedures followed in line with the outsourcing agreement. Both the office manager and office staff have been schooled in the importance of obtaining all necessary insurance information and collecting patient copayments and deductibles at the time of service. “We previously were much less aggressive in this regard, but in today’s world, with the high degree of patient responsibility for charges, it is incumbent on us to be certain that we collect what is due to us,” Moore says. “If needed, we will set up payment arrangements for patients rather than turn them away, but we are being more proactive about collections.”
Recently, Desert Radiologists initiated a policy under which staff and facility managers receive feedback from the executive team on the success of collections endeavors in their particular offices. Pat Harms, MBA, CPA, FACMPE, practice CFO, says, “We track and report back, making it a friendly competition between different centers and offering rewards, such as lunches, for hitting the targets. These small incentives do work.”
The Human Factor
Bill LaDue, director of radiology and pathology at the UVM Medical Group component of Fletcher Allen Health Care in Burlington, Vermont, agrees that incentives contribute to optimized coding and, by extension, billing. LaDue holds ultimate responsibility for keeping coding/billing functions working as they should and for collecting every dollar owed; he consistently remains on top of tracking and trending collections per RVU and overall net-collections rates. As Vermont’s primary hospital and medical center, Fletcher Allen Health Care provides care at more than 30 sites and 100 outreach clinics and programs—including an inpatient facility with more than 500 beds—in Vermont and upstate New York.
UVM Medical Group’s employed radiologists know that clarity and accuracy in radiology coding depend on the clarity of their reporting, and they are 100% responsible for that, LaDue explains. “If they do not do a great job on the reporting end, it will affect coding and billing, and we will not optimize the revenue cycle,” He says. “This, in turn, will affect their incentive compensation.”
To support proper reporting, he says, UVM Medical Group provides practitioners with voice-recognition software that creates written reports. Physicians are charged with reviewing the reports for accuracy and editing them, where necessary, before releasing them as final reports.
While procedural and operational refinements clearly have had—and continue to have—a positive impact on coding and billing, so, too, do human resources and the manner in which they are harnessed. This encompasses everything from investments in additional personnel to the delegation of staff responsibilities to communication with payors and other third-party entities.
For STARS, changes to the organizational chart, including the creation of new positions and the addition of new skill sets via hiring, were as important as other steps taken in its quest to improve the overall billing picture. “We moved people out of positions into new positions, initially increasing our costs to get the proper mindset of reduction in place and focus these team members on the end game,” Ziemke says. “For us, this wasn’t just staff members in the billing department; it was everyone from finance, IT, human resources, project management, and so forth.”
A cost accountant was engaged to analyze and measure all billing data so that realistic future expectations could be set. A position for a business analyst who could bring to the table both IT and billing knowledge was created. Weekly communication meetings across all functional areas were instituted to keep all departments in the loop as new processes were instituted in line with the initiative.
Each day, the analyst conducts a comparison of all reporting information against average volume to identify any anomalies. Periodic communication between STARS team members and facilities ensures that facilities are receiving the most accurate files.
“In order to improve billing effectively, we need the most up-to-date insurance information,” Ziemke states. “For instance, say a patient shows up in the emergency department, and the hospital has old insurance and address data on file. The hospital changes the data in its system after the patient supplies the new information, but did we get the first file, with the bad information, or did we get the updated information? It’s critical to know.”
Moreover, to optimize communication between Advanced Radiology Services and the hospitals it serves, a single STARS team member was assigned to review billing reports daily for accuracy. This individual investigates the origin of billing issues, ascertaining that their roots lie in the hospital in question (rather than with the practice itself). Taking such a step, instead of contacting the hospital first, not only reduces unnecessary expense from the billing process, but also bolsters Advanced Radiology Services’ credibility among hospitals, Ziemke says.
STARS has also brought on board several relationship managers who meet regularly with hospitals to iron out billing and other issues; their responsibilities include serving as liaisons with senior hospital executives, should there be a need, as Ziemke puts it, to go to a higher authority for assistance.
Out of Sight, not Mind
Contrary to what one might assume, Desert Radiologists’ philosophy holds that outsourcing billing functions does not exempt partners and employees from the responsibilities inherent in optimizing billing and coding. At the highest level, Harms holds ultimate responsibility for the financial side; Moore, for the operational side. Members of the billing department report up through Harms, who monitors the practice’s financial performance and communicates with the client services director assigned to Desert Radiologists by the billing company.
States Harms, “My role here involves constant communication, not sporadic communication. We’re looking at various aspects of revenue-cycle management daily, weekly, and monthly. Otherwise, it wouldn’t work.”
Reinforcing this communication, the billing company’s client services director works closely with Desert Radiologists’ administrative group and physician board of directors. The agenda includes monthly face-to-face meetings with the practice’s finance committee, supplemented by conference calls—and always focused on detailed data analysis.
Individuals from the billing company partner with the staff to ensure that effective charge capture and billing are occurring regularly and that all necessary steps required for collecting charges promptly, reprocessing denied claims, and ascertaining that bills do not (as Harms put it) fall back into a black hole are executed. A Desert Radiologists billing manager also acts as a liaison with the third-party company, keeping schedulers, front-desk personnel, and physicians abreast of any changes that pertain to charge capture or coding.
UVM Medical Group has designated three specialty coders—3.5 FTEs—to handle only the coding of radiology procedures. Its rationale for this setup—and for handling coding and billing in-house, according to LaDue—is that radiology, more than other medical disciplines, not only is highly specialized, but involves an unusual volume of minutiae. Assigning radiology coding to general hospital coding staff would widen the margin for error.
“These coders are highly trained and experienced; one has 35 years of experience; another, 30 years; and the third, 20 years,” LaDue observes. Consequently, they can identify subtle discrepancies between procedures that were scheduled and those that were actually performed—differences that their generalist counterparts might overlook. As an example, LaDue cites an MRI exam with contrast that is being billed as an MRI exam without contrast.
“Last fiscal year, we had 188,000 work RVUs, and we perform about 280,000 imaging procedures per year,” LaDue concludes. “Our coding error rate is very, very low, in large part because of this human-resource structure.” Keeping those errors to a minimum is at least half the billing/coding-optimization battle, LaDue says. Julie Ritzer Ross is a contributing writer for Radiology Business Journal.