MILWAUKEE REGIONAL HEALTH SYSTEM Revenue Cycle Management 1. a. Using the template given in Exhibit 30.1, add one additional overall benchmark and one defect benchmark for each of the revenue cycle functions listed. b. Describe each metric in the completed template and provide justification as to why these benchmarks were chosen over the alternatives listed in Exhibit 30.2. 2. Compare the benchmark values in your completed template with the actual MRHS metric values given in Exhibit 30.3. Discuss your results. Most important, suggest what actions might be implemented to improve revenue cycle performance. 3. a. Complete the reimbursement amount template provided in the case for CPT 73722 (MRI of the knee) and DRG 470 (major joint replacement). Discuss the fairness and efficiency of the current fragmented reimbursement system to providers, insurers, patients, and society (the ultimate bearers of healthcare costs). b. Assume that MRHSs payer mix is 46 percent Medicare, 34 percent commercial/managed care, 16 percent Medicaid, and 4 percent self-payo insurance. Calculate the average expected payment for each of the two procedures. 4. In a single paragraph, describe the revenue cycle and why good performance is so important to providers. 5. In your opinion, what are three key learning points from this case? 1. a. Using the template given in Exhibit 30.1, add one additional overall benchmark and one defect benchmark for each of the revenue cycle functions listed. b. Describe each metric in the completed template and provide justification as to why these benchmarks were chosen over the alternatives listed in Exhibit 30.2. 2. Compare the benchmark values in your completed template with the actual MRHS metric values given in Exhibit 30.3. Discuss your results. Most important, suggest what actions might be implemented to improve revenue cycle performance. 3. a. Complete the reimbursement amount template provided in the case for CPT 73722 (MRI of the knee) and DRG 470 (major joint replacement). Discuss the fairness and efficiency of the current fragmented reimbursement system to providers, insurers, patients, and society (the ultimate bearers of healthcare costs). b. Assume that MRHSs payer mix is 46 percent Medicare, 34 percent commercial/managed care, 16 percent Medicaid, and 4 percent self-payo insurance. Calculate the average expected payment for each of the two procedures. 4. In a single paragraph, describe the revenue cycle and why good performance is so important to providers. 5. In your opinion, what are three key learning points from this case?

Exhibit

BENCHMARKING METRICS TEMPLATE
				National Benchmarks			MRHS Values			Variance
Overall Metrics:				Hospital	Clinic		Hospital	Clinic		Hospital	Clinic
A/R Days				48.3	28.5		45.4	26.3		-2.9	-2.2
% of A/R greater than 90 days				29.6%	19.0%		21.5%	20.1%		-8.1%	1.1%
Cost to collect				3.5%	4.2%		2.9%	4.5%		-0.6%	0.3%
Defect Metrics:
Scheduling:
Preregistration rate				84.8%	99.1%		80.8%	99.9%		-4.0%	0.8%
Insurance verification rate				90.0%	98.7%		85.3%	100.0%		-4.7%	1.3%
Registration:
Point of service collection rate				13.4%	36.2%		8.7%	48.5%		-4.7%	12.3%
Registration quality score				98.7%	99.4%		91.6%	99.9%		-7.1%	0.5%
Case Management:
Preauthorization denial rate				1.8%	0.7%		2.4%	0.3%		0.6%	-0.4%
% of medical necessity write-offs				0.4%	0.6%		0.7%	0.2%		0.3%	-0.4%
Clinical-Charge Processing:
Charge lag days				3.6	5.1		3.2	6.8		-0.4	1.7
Late charge %				8.4%	78.6%		2.1%	86.9%		-6.3%	8.3%
Medical Records:
Days in total discharged not final billed				7.4	0.1		4.5	0.1		-2.9	0.0
Coding quality score				96.5%	93.2%		98.7%	90.2%		2.2%	-3.0%
Billing:
Initial denial rate				4.9%	8.2%		5.6%	7.8%		0.7%	-0.4%
Clean claim rate				76.8%	81.2%		72.4%	85.2%		-4.4%	4.0%
Payment Posting:
% of payments posted electronically				86.7%	83.1%		90.1%	78.9%		3.4%	-4.2%
Net days revenue in credit balance				1.9	3.2		2.5	2.3		0.6	-0.9
CHARGEMASTER PRICES VERSUS REIMBURSEMENTS TEMPLATE
					MRI of the Knee		Major Joint Replacement
Chargemaster price =					$0			$0
Medicare payment rate =					$0.00			$0.00
Medicare
Base payment rate					$0.00			$0.00
No payment denial rate @ 3 percent					0.00			0.00		No payment denial rate =		0.0%
Part A deductible of $1,184 @ 65% collections rate								(1184.00)		JR collections rate =		0.0%
Part B deductible of $140 @ 78% collections rate					(140.00)					MRI collections rate =		0.0%
Total reimbursement					($140.00)			($1,184.00)
Percent of charges					#DIV/0!			#DIV/0!
Medicaid
Rate of $284/procedure or $2,044/day					$0.00			$0.00		MRI per procedure rate =		$0.00
No payment denial rate of 0.5%					0.00			0.00		JR length of stay (LOS) =		0
Total reimbursement					$0.00			$0.00		JR per deim rate		$0.00
Percent of charges					#DIV/0!			#DIV/0!		No payment denial rate =		0.0%
Commercial/Managed Care
58% of charge					$0.00			$0.00		Payment rate =		0.0%
No payment denial rate of 12%					0.00			0.00		No payment denial rate =		0.0%
20% patient coinsurance @ 40% collection rate					0.00			0.00		Coinsurance rate =		0.0%
Total reimbursement					$0.00			$0.00		Coins collection rate =		0.0%
Percent of charges					#DIV/0!			#DIV/0!
Self Pay/No Insurance
30% discount					$0.00			$0.00		Discount rate =		0.0%
5% self pay collection rate					0.00			0.00		Self pay collection rate =		0.0%
Total reimbursement					$0.00			$0.00
Percent of charges					#DIV/0!			#DIV/0!
Average Reimbursement and Percent of Charges
					MRI of the Knee		Major Joint Replacement
					Average Collection Amount
Payer Mix:
Medicare =		0.0%			$0.00			$0.00
Medicaid =		0.0%
Comm/MC =		0.0%			Average Percent of Charges
Self-pay/No ins =		0.0%
		0.0%			#DIV/0!			#DIV/0!

MILWAUKEE REGIONAL HEALTH SYSTEM REVENUE CYCLE MANAGEMENT ANDREW MAE HAS recently been hired as the vice president of Revenue Cycle Management for the Milwaukee Regional Health Sys- tem (MRHS), an integrated system with approximately $2.5 billion in annual revenues. Located in the Milwaukee metropolitan area, MRHS consists of an academic medical center, two community hospitals, and 30 outpatient primary and specialty care clinics. Annually, the hospitals collectively see more than 40,000 admissions, approximately 100,000 emergency room visits, and nearly 1 million outpatient encounters while the clinics receive more than 1.6 million visits. The vice president of Revenue Cycle Management is a newly cre- ated position at MRHS. In that role, Andrew will oversee the merger of the currently separate hospital and physician revenue cycle depart- ments. Andrew has been directed by MRHS's CEO to accomplish two primary goals: (1) lower the overall costs of revenue cycle management and (2) improve the revenue cycle process. (For more information on revenue cycle management, see the Healthcare Financial Management Association tment Association website at www.mgma.com. Search the term revenue cycle at either or both websites.) website at www.hfma.org or the Medical Group Manage- Andrew understands that the first step in merging MRHS's sepa- rate revenue cycle departments is to alter the current perception that Hospital and physician practice revenue cycles are inherently different. dns goal in this regard is to illustrate the similarities between and inter- dependencies among the revenue cycle processes to highlight what he of revenue cycle success: (1) the His heves to be the true determinants 203 is prohibited MILWAUKEE REGIONAL HEALTH SYSTEM REVENUE CYCLE MANAGEMENT ANDREW MAE HAS recently been hired as the vice president of Revenue Cycle Management for the Milwaukee Regional Health Sys- tem (MRHS), an integrated system with approximately $2.5 billion in annual revenues. Located in the Milwaukee metropolitan area, MRHS consists of an academic medical center, two community hospitals, and 30 outpatient primary and specialty care clinics. Annually, the hospitals collectively see more than 40,000 admissions, approximately 100,000 emergency room visits, and nearly 1 million outpatient encounters while the clinics receive more than 1.6 million visits. The vice president of Revenue Cycle Management is a newly cre- ated position at MRHS. In that role, Andrew will oversee the merger of the currently separate hospital and physician revenue cycle depart- ments. Andrew has been directed by MRHS's CEO to accomplish two primary goals: (1) lower the overall costs of revenue cycle management and (2) improve the revenue cycle process. (For more information on revenue cycle management, see the Healthcare Financial Management Association tment Association website at www.mgma.com. Search the term revenue cycle at either or both websites.) website at www.hfma.org or the Medical Group Manage- Andrew understands that the first step in merging MRHS's sepa- rate revenue cycle departments is to alter the current perception that Hospital and physician practice revenue cycles are inherently different. dns goal in this regard is to illustrate the similarities between and inter- dependencies among the revenue cycle processes to highlight what he of revenue cycle success: (1) the His heves to be the true determinants 203 is prohibited