As healthcare providers strive to gain additional cost savings from business operations, a fresh look at the basics can often help achieve stronger financial results.
The Phoenix, Ariz.-based Maricopa Medical Center—a 449-bed and 20,000 inpatient admission health system—is a major component of the larger Maricopa Integrated Health System (MIHS) that provides healthcare for all citizens in Arizona’s Valley of the Sun. As the primary healthcare “safety net” for residents of the Phoenix area, a teaching hospital, and home to a Level One trauma center and the nation’s second-largest burn center, Maricopa Medical Center faces financial and operating challenges as diverse as the communities it serves.
Additionally, according to Siobhan Mee, director of the revenue cycle management (RCM) division at Maricopa, the organization’s patient accounting system has long been tied to the Verona, Wis.-based vendor Epic, which provides Maricopa with a fully-integrated electronic health record (EHR). Maricopa initially installed Epic in its outpatient environment, and then went live three years ago in its inpatient environment, says Mee, adding that while “it is a great tool, it needs support when it comes to revenue cycle functions.”
To move forward with this support, Maricopa has recently renewed its long-term agreement with the Alpharetta, Ga.-based healthcare performance improvement company MedAssets for its charge integrity, revenue capture, contract management, denials management, and patient access tools to improve the health system’s revenue capture, cash flow, and reimbursement. Using these web-based revenue cycle solutions, MedAssets has helped MIHS achieve financial improvement of $17.5 million over a six-year period.
In a recent interview with Healthcare Informatics Assistant Editor Rajiv Leventhal, Mee and Maricopa’s vice president of the RCM division, Mary Lee Decoster, discuss the partnership with MedAssets, the pressures brought on by healthcare reform, ICD-10 readiness, and the most pressing issues they face in the RCM division. Below are excerpts from that interview.
How does the software your health system is using specifically help with your RCM needs?
Mary Lee Decoster: The Contract Management tool (from MedAssets) supports two primary functions: first, our ability to model the contract, so when we’re in negotiations with a payer, we can model what the suggested changes to reimbursements or to rates may be. But we can also use that tool to audit the incoming patients coming from the payers to ensure they are compliant with the terms of the contract. On an annual basis, we discover up to $7 million on underpayments. And using the tool, we’re able to go back and collect about 50 percent of that.
One of the reasons we benefit from MedAssets’ applications is that we can send a single file every day, which populates all of the downstream applications we are using. So now, we don’t have to do multiple extracts at multiple times of the day to send different files for different purposes. It’s one extract and one file. It’s a fully integrated suite of solutions. Many vendors don’t have that integration, and the result is that clients have to run a number extracts, causing you to be out of sync.
As healthcare reform-related reimbursement pressures continue to intensify, how critical has it become to execute a thorough and efficient RCM system?
Decoster: It is critical now more than ever. We are the public safety net system in Maricopa County in Phoenix, so we are serving an underserved population. We have a disproportionate share of both uninsured self pay as well as Medicaid recipients. The cutbacks in reimbursements from all government payers have hurt us terribly, along with the dramatic increase in self pay/uninsured. We have an expectation that the rollout of the Affordable Care Act (ACA) in January will offset some of the losses we have incurred in the recent months, but of course, the media is full of articles about the rocky start with that already. We have seen an uptick in getting uninsured people back on to Arizona’s version of expanded Medicaid, and we are going to be able to put childless adults back into that program. And we are going all out to get the uninsured to go through one of the doors—either Medicaid or the marketplaces.
What are some of the other big issues Maricopa faces?
Decoster: A big issue is the accurate contractual adjustment process so we are not overstating or understating the amounts that are due to us from either the qualified health plan or from the patient. So we have an uninsured population that will start to achieve insurance (assuming the marketplaces start to work pretty soon), and we believe there is a challenge associated with healthcare financial literacy. This is not a population that knows how to read the information on their membership card, let alone deductibles, cost share, co pays, etc. We need to provide education, and that’s a burden because we don’t have a software application that can support that need—it’s a byproduct.
Mee: Another big issue, in regards to ICD-10, is clinical documentation. In fact, that remains our biggest challenge. We are well under way to being fully prepared for ICD-10, and we begin testing in January across the board. We have partnered with vendors as far as trying to run our financials and predict what the impact of ICD-9 versus ICD-10 will be in reimbursement. I think from an overall preparedness, we are probably ahead of schedule by a little bit. From my standpoint, getting physicians to update how they document and how they engage within the medical record is the challenge, though—we have issues with ICD-9, which require much less specificity than ICD-10. Monitoring those records, engaging the physicians, and correcting how they do things present the biggest concerns. They will be the most fluid challenges as ICD-10 goes live.
What were some things you strongly considered when choosing vendor partners for your RCM needs?
Mee: One of our core principles was that we had to have a fully-integrated system. If we didn’t, it simply wouldn’t be efficient, and it would require more people, which lead to more inaccuracies. So before we went to Epic, we spoke to many health systems about their experience going to that vendor. One of the conversations centered on the need to continually audit. They said their processes were very automated, but they would have to audit constantly to make sure revenue capture is being achieved appropriately. Now, many hospitals have two to three times as many auditors as us, and that is because of our electronic tools. Our largest expense is labor—I have half to one-third of the amount of people that many smaller systems have, largely because of the automation we have. That is extremely compelling.
Decoster: Relationships should be a partnership with confidence, trust, and respect in one another. Things won’t go perfectly every day; there are hiccups you need to address, and that’s normal. But with our vendors, we know that we can bring things to the table, and they will be resolved. You need to know the pieces that each side own. It has all the nuances as a friendship or a marriage, and it’s the people that develop that trust over time.
Where do you see the RCM market going in the future, and how will Maricopa position itself within that future?
Decoster: Well, we’re seeing an overall reinvention of healthcare, where we need to look at cost from every perspective. We have to get cost down—that is the bottom line. Labor is the biggest expense, so we look to solutions to help us automate manual steps. We had a vacancy in our billings department, and because of our automation, we don’t have to post and refill that vacancy now. We’re also working on a value-added task force initiative where we are looking at reducing our overall spending. Are there services we are purchasing that can be done from the inside? The goal for this taskforce is $8 million for this fiscal year (July-June). It’s about more efficient management with existing resources. We’re not looking at layoffs; instead we will use tools to maximize efficiency.