CASE 29 MILWAUKEE REGIONAL HEALTH SYSTEM: Revenue Cycle Manag 12/1/2017

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Model without Questions, Student Version

This case focuses on various aspects of revenue cycle management and differences between chargemaster
prices and the amounts actually collected from different payers. Unlike most models, this model does not hav
separate INPUT DATA, KEY OUTPUT, and MODEL-GENERATED DATA sections. Rather, the model is divid
templates that each focuses on one important aspect of the case; the top template focuses on benchmarking
and the bottom template focuses on chargemaster prices versus reimbursement rates.

This model consists of a complete case analysis--no changes need to be made. However, in the top template
students must choose which of the metrics are best suited for the case and then justify their choices.
In the bottom template, some of the cells are colored red. In the student model, these cells contain a zero or
Students must enter the appropriate value needed to complete the calculation. When this is done, any error c
will be corrected and the solution will appear.

BENCHMARKING METRICS TEMPLATE

National Benchmarks MRHS Values

Overall Metrics: Hospital Clinic Hospital Clinic
A/R Days 48.3 28.5 45.4 26.3
% of A/R greater than 90 days 29.6% 19.0% 21.5% 20.1%
Cost to collect 3.5% 4.2% 2.9% 4.5%
Net collection rate 97.0%
Defect Metrics:
Scheduling:
Preregistration rate 84.8% 99.1% 80.8% 99.9%
Insurance verification rate 90.0% 98.7% 85.3% 100.0%
Registration:
Point-of-service collection rate 13.4% 36.2% 8.7% 48.5%
Registration quality score 98.7% 99.4% 91.6% 99.9%
Case Management:
Preauthorization denial rate 1.8% 0.7% 2.4% 0.3%
% of medical necessity write-offs 0.4% 0.6% 0.7% 0.2%
Clinical-Charge Processing:
Charge lag days 3.6 5.1 3.2 6.8
Late charge % 8.4% 78.6% 2.1% 86.9%
Medical Records:
Days in total discharged not final billed 7.4 0.1 4.5 0.1
Coding quality score 96.5% 93.2% 98.7% 90.2%
 Billing:
Initial denial rate 4.9% 8.2% 5.6% 7.8%
Clean claim rate 76.8% 81.2% 72.4% 85.2%
Payment Posting:
% of payments posted electronically 86.7% 83.1% 90.1% 78.9%
Net days revenue in credit balance 1.9 3.2 2.5 2.3

CHARGEMASTER PRICES VERSUS REIMBURSEMENTS TEMPLATE

MRI of the Knee Major Joint Replacement

Chargemaster price = $2,800 $50,000
Medicare payment rate = $341.61 $17,955.00

Medicare
Base payment rate $341.61 $17,955.00
No payment denial rate @ 3 percent (10.25) (538.65)
Part A deductible of $1,184 @ 65% collections rate (414.40)
Part B deductible of $140 @ 78% collections rate (30.80)
Total reimbursement $300.56 $17,001.95
Percentage of charges 10.7% 34.0%

Medicaid
Rate of $284/procedure or $2,044/day $284.00 $8,176.00
No payment denial rate of 0.5% (1.42) (40.88)
Total reimbursement $282.58 $8,135.12
Percentage of charges 10.1% 16.3%

Commercial/Managed Care
58% of charge $1,624.00 $29,000.00
No payment denial rate of 12% (194.88) (3,480.00)
20% patient coinsurance @ 40% collection rate 129.92 2,320.00
Total reimbursement $1,559.04 $27,840.00
Percentage of charges 55.7% 55.7%

Self-Pay/No Insurance
30% discount $1,960.00 $35,000.00
5% self-pay collection rate (1,862.00) (33,250.00)
Total reimbursement $98.00 $1,750.00
Percentage of charges 3.5% 3.5%

Average Reimbursement and Percentage of Charges

MRI of the Knee Major Joint Replacement
 Average Collection Amount
Payer Mix:
Medicare = 46.0% $717.46 $18,658.12
Medicaid = 16.0%
Comm/MC = 34.0% Average Percentage of Charges
Self-pay/No ins = 4.0%
100.0% 25.6% 37.3%
en chargemaster
odel does not have
the model is divided into two
on benchmarking metrics

n the top template,

choices.
contain a zero or hyphen.
done, any error cells

Variance
Hospital Clinic
-2.9 -2.2 ↓ The arrows indicate the
-8.1% 1.1% ↓ sign of a favorable
variance. For example,
-0.6% 0.3% ↓ a down arrow indicates
that a negative value is
good--an up arrow
indicates that a postive
variance is good.
-4.0% 0.8% ↑
-4.7% 1.3% ↑

-4.7% 12.3% ↑
-7.1% 0.5% ↑

0.6% -0.4% ↓
0.3% -0.4% ↓

-0.4 1.7 ↓
-6.3% 8.3% ↓

-2.9 0.0 ↓
2.2% -3.0% ↑
 0.7% -0.4% ↓
-4.4% 4.0% ↑

3.4% -4.2% ↑
0.6 -0.9 ↓

No payment denial rate = 3.0%

JR collections rate = 65.0%
MRI collections rate = 78.0%

MRI per procedure rate = $284.00

JR length of stay (LOS) = 4
JR per diem rate $2,044.00
No payment denial rate = 0.5%

Payment rate = 58.0%

No payment denial rate = 12.0%
Coinsurance rate = 20.0%
Coins collection rate = 40.0%

Discount rate = 30.0%

Self-pay collection rate = 5.0%
END
 Metric Description Benchmark

Net Payments/ By
Overall Metrics: Net collection rate Charges x 100 97%

The number of days

between the
scheduling date and
appointment date, on
Average Time to New average, across all
Scheduling: Patient Appointment appointments 24 days

The time from the

moment a patient
begins the process of
providing and/or
validating his or her
information and
signing all necessary
Registration: Registration time documents. 15 min

Percent of
inappropriate
admissions/
procedures that were
% of denials based on deemed not medically
Case Management: medical necessity necessary 27%
Clinical-Charge
how many claims had
Processing:
to be edited due to
being incomplete,
% of charge related edits denied, or paid late
Codes fail to capture
Medical Records: % under-coded all work performed
Paid claims/ total
Billing: Resolve Rate claims 96%

total number of
successful (approved)
transactions/ the total
number of attempted
transactions over a
Payment Posting: Transaction success rate given time period 100%
 Clinical-Charge Processing:
Charge lag days
Late charge %
Medical Records:
Days in total discharged not final billed
Coding quality score
Billing:
Initial denial rate
Clean claim rate
Payment Posting:
% of payments posted electronically
Net days revenue in credit balance

Preregistration rate
Insurance verification rate
Registration:
Point-of-service collection rate
Registration quality score
Case Management:
Preauthorization denial rate
% of medical necessity write-offs

https://www.mgma.com/event-registration/mgma18-the-operations-conference/session-handouts/con301_
Justification
Shows an organization its revenue cycle
efficiency- is a measure of a medical
practice’s effectiveness in collecting
reimbursement dollars/how much is being
collected versus what is eligible for collection

Longer wait times increase the risk of losing

patients and therefore losing patient revenue

identify the areas with the greatest

opportunities for improvement to increase
patient through put

This demonstrates how effective your case

managers are at determing what is medically
necessary based on insurance guidelines

Comphrensive look at claims to capture how

well your clinical documentation of services
provided is translated to line-item charges
Uncoded bills means lose of revenue that
should be generated by the hospital
The amount of claims that are sucessfully
resolved or paid beyond

measure of how many payments are

approved and hwo important that is
ference/session-handouts/con301_davis-scott-sagarra_making-bank-managing-an
 National Benchmarks MRHS Values
Overall Metrics: Hospital Clinic Hospital
A/R Days 48.3 28.5 45.4
% of A/R greater than 90 days 29.6% 19.0% 21.5%
Cost to collect 3.5% 4.2% 2.9%
Net collection rate 97.0%
Defect Metrics:
Scheduling:
Preregistration rate 84.8% 99.1% 80.8%
Insurance verification rate 90.0% 98.7% 85.3%
Registration:
Point-of-service collection rate 13.4% 36.2% 8.7%
Registration quality score 98.7% 99.4% 91.6%
Case Management:
Preauthorization denial rate 1.8% 0.7% 2.4%
% of medical necessity write-offs 0.4% 0.6% 0.7%
Clinical-Charge Processing:
Charge lag days 3.6 5.1 3.2
Late charge % 8.4% 78.6% 2.1%
Medical Records:
Days in total discharged not final billed 7.4 0.1 4.5
Coding quality score 96.5% 93.2% 98.7%
Billing:
Initial denial rate 4.9% 8.2% 5.6%
Clean claim rate 76.8% 81.2% 72.4%
Payment Posting:
% of payments posted electronically 86.7% 83.1% 90.1%
Net days revenue in credit balance 1.9 3.2 2.5
MRHS Values Variance
Clinic Hospital Clinic
26.3 -2.9 -2.2 ↓
20.1% -0.081 0.011 ↓
4.5% -0.006 0.003 ↓

99.9% -0.04 0.008 ↑

100.0% -0.047 0.013 ↑

48.5% -0.047 0.123 ↑

99.9% -0.071 0.005 ↑

0.3% 0.006 -0.004 ↓

0.2% 0.003 -0.004 ↓

6.8 -0.4 1.7 ↓

86.9% -0.063 0.083 ↓

0.1 -2.9 0.016 ↓

90.2% 0.022 -0.03 ↑

7.8% 0.007 -0.004 ↓

85.2% -0.044 0.04 ↑

78.9% 0.034 -0.042 ↑

2.3 0.6 -0.9 ↓
 Metric Description Benchmark Justification
Shows an organization its
revenue cycle efficiency- is
a measure of a medical
Net Payments/ By practice’s effectiveness in
Overall Metrics: Net collection rate 97%
Charges x 100 collecting reimbursement
dollars/how much is being
collected versus what is
eligible for collection

The number of
days between the
Longer wait times increase
Average Time to scheduling date
the risk of losing patients
Scheduling: New Patient and appointment 24 days
and therefore losing patient
Appointment date, on average,
revenue
across all
appointments

The time from the

moment a patient
begins the process
identify the areas with the
of providing and/or
greatest opportunities for
Registration: Registration time validating his or her 15 min
improvement to increase
information and
patient through put
signing all
necessary
documents.

Percent of
This demonstrates how
inappropriate
effective your case
% of denials based admissions/
Case managers are at determing
on medical procedures that 27%
Management: what is medically
necessity were deemed not
necessary based on
medically
insurance guidelines
necessary

Comphrensive look at
how many claims
claims to capture how well
Clinical- had to be edited
% of charge related your clinical documentation
Charge due to being
edits of services provided is
Processing: incomplete, denied,
translated to line-item
or paid late
charges
Codes fail to Uncoded bills means lose
Medical
% under-coded capture all work 33% of revenue that should be
Records:
performed generated by the hospital
The amount of claims that
Paid claims/ total
Billing: Resolve Rate 96% are sucessfully resolved or
claims
paid beyond
 total number of
successful
(approved) measure of how many
Payment Transaction transactions/ the payments are approved
100%
Posting: success rate total number of based on total number
attempted attempted
transactions over a
given time period

Clinical-Charge Processing:
Charge lag days
Late charge %
Medical Records:
Days in total discharged not final billed
Coding quality score
Billing:
Initial denial rate
Clean claim rate
Payment Posting:
% of payments posted electronically
Net days revenue in credit balance

Preregistration rate
Insurance verification rate
Registration:
Point-of-service collection rate
Registration quality score
Case Management:
Preauthorization denial rate
% of medical necessity write-offs

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