Session 5: Academic Medical Center Revenue Cycles

1. Session 5: Academic Medical Center Revenue Cycles

2. Session 5: Academic Medical Center Revenue Cycles Part 1: Sponsored Research Revenue Cycle Part 2: Patient Care Revenue Cycle Part 3: Tuition Revenue Cycle Session 4 - Financial Reporting

3. AGENDA

4. GOALS AND OBJECTIVES • Revenue Cycles • Understand the key processes that make up these revenue cycles • Understand the controls that can be instituted and monitored within the revenue cycle process • Understand potential pitfalls associated with various key processes

5. CUMC: 2003-2004 Source of Operating Funds Total = $1.2 Billion Note : Other includes gifts, endowment, patent and miscellaneous revenues

6. SPONSORED RESEARCH REVENUE CYCLE Part 1 The sponsored research funding cycle begins with a program announcement by a granting agency and ends with the final progress report and financial close-out. Investigators prepare applications which are approved by their institution and the granting agency performs peer review and scoring. A notice of grant award is issued and the principal investigator begins conducting research. Post-award activities include financial monitoring to ensure funds are spent in accordance with program goals and objectives.

7. CUMC: SPONSORED RESEARCH FUNDING

8. SPONSORED RESEARCH REVENUE CYCLE Program announcement Final Reports & Closeout Application preparation Progress Reports Institutional review Institution Request Reimbursement Application submission Post Award Functions Pre Award Functions Peer review and scoring Award Adjustment PI expends funds; Institution Monitors Notification of pending award Cost center created Award negotiation Award issued

9. SPONSORED RESEARCH REVENUE CYCLE

10. SPONSORED RESEARCH REVENUE CYCLE Pre Award Process Finding the Money • Senior Investigators • Know about announcements • Should need minimal support • Junior Investigators • Access to announcement databases (e.g. Community of Science) • Need support

11. SPONSORED RESEARCH REVENUE CYCLE Pre Award Process Application Preparation • Generally prepared by the PI • Guidance from research administration office on: • Sponsor format and forms • Necessary regulatory approvals • Sponsor due dates • Scientific content may be reviewed by senior investigator

12. SPONSORED RESEARCH REVENUE CYCLE Pre Award Process Application Preparation • Some institutions provide grant writing support and “mock” peer review • Effectiveness needs to be assessed • Grant applications generally are reviewed differently than contract applications • “Best Effort” vs. Procurement

13. SPONSORED RESEARCH REVENUE CYCLE Budgeting Considerations • Institutional policies • Program announcements • PI effort • NIH Grants Policy Statement • Modular Grants policies • Federal cost principles • OMB Circular A-21 • Cost accounting standards • Departmental budget

14. SPONSORED RESEARCH REVENUE CYCLE Award Budget Award Budget = Direct Costs + F&A Costs

15. SPONSORED RESEARCH REVENUE CYCLE Criteria for Budgeting and Charging a Direct Cost • Some simple maxims • The budget should represent the best intentions of the investigator • Direct costs charged should represent those costs necessary to meet the project’s scientific and technical requirements • The relationship between the charge and the science should • Be “clear and close” • Costs should support the project’s purpose and activity • To be charged to an award, a direct cost should be included in the awarded budget, or the cost must be permitted within rebudgeting authority granted by the sponsor • The cost must not be restricted by the sponsor

16. SPONSORED RESEARCH REVENUE CYCLE Pre Award Process Institutional Reviews • To ensure compliance requirements are met for • Human / animal subject use • Research safety and hazardous materials management • Facilities • That the budget is appropriate for research proposed • That budgets costs are consistent with institutional practices • To identify agency restrictions and cost share • That the application is complete • Provides assurance to the institutional official signing the application that the scientific and administrative requirements have been met

17. SPONSORED RESEARCH REVENUE CYCLE Pre Award Process Submission of the Application • Submission can be • Electronic • Manual • Institutional systems may have • Common database • Shared with • Central Office of Research Administration • Finance

18. SPONSORED RESEARCH REVENUE CYCLE Pre Award Process Sponsor Peer Review and Scoring • Applications are reviewed for scientific merit and the research goals of the agency • Priority scores are often used, e.g., NIH, based on: • Significance • Approach • Innovation • Investigator track record • Environment and facilities • Representation of population to be studied • Reasonableness of the proposed budget • Adequacy of proposed protection for humans, animals, and the environment

19. SPONSORED RESEARCH REVENUE CYCLE Pre Award Process Award Negotiation • Limited negotiation effort with federal sponsors • Generally a unilateral cut: Feds argue grants are “assistance” • Contracts require extensive cost justification • Greater negotiation effort with non-government sponsors • Indirect costs • Cost reimbursement • Intangible costs • Technology transfers, e.g., patent ownership, licensing • Coordinate with Central Office of Research Administration

20. SPONSORED RESEARCH REVENUE CYCLE Post Award Process Award Issued • About 20%-25% of applications are awarded • Renewals generally higher • Award is made to the institution, shared responsibility between Institution and PI for proper project administration • Terms and conditions are specified on the notice of grant award

21. SPONSORED RESEARCH REVENUE CYCLE Post Award Process Federal Awarding Mechanisms • Research and Training Grant • Federal assistance providing money, property, or both to an eligible entity to carry out an approved project or activity • Cooperative Agreement • Substantial federal programmatic involvement with the grantee, e.g., clinical trials or multiple site projects • Contract • Mutually binding legal relationship between the contractor and the government for procurement of goods and services • Most restrictive of all award mechanisms • Most often used by Department of Defense and NASA

22. SPONSORED RESEARCH REVENUE CYCLE Post Award Process FAS Account Created • Budgeted in accordance to expenditures of approved project • Direct expenditures • Salaries and wages of personnel • Lab supplies and materials • Equipment • F&A (Indirect) expenditures • Assigned to the project through the government negotiated overhead rate • Facilities and operations • Other administrative support

23. SPONSORED RESEARCH REVENUE CYCLE Post-Award Process Reimbursement Methods • Letter of credit • Used for federal agencies awarding grants and cooperative agreements • Vouchers • Used for federal agencies awarding contracts • Billing • Used with non-federal sponsors • May be cost reimbursement or payment for completed clinical trial study participant • Whatever mechanism is used, consideration has to be given to cash flow and monitoring receivable amounts

24. http://www.cumc.columbia.edu/research/ • CUMC Faculty and Research InformationResearch Administration, Electronic Res Admin (RASCAL), Office of Grants and Contracts, University & Campus Profiles, Faculty Profiles, Shared Equipment/Core Facilities, Campus Research Activities, Research Courses and Seminars, Publications, Policies and ProceduresResearch FundingFunding Databases, Funding Information by e-mail, Award Programs, Grant-Related Publications, Sources of Funding InformationNational and International Research ResourcesLinks to Funding Agencies: NIH, Private Agencies, and others Grant Writing Tips, Electronic Forms, Grants Management, Bio & Medical Research Ethics, Clinical Trials,  Intellectual Property/Tech Transfer, Commercial Institutions, Professional Societies

25. http://www.cumc.columbia.edu/research/faculty.htm • | Office of Research Administration/Office of Grants and Contracts || CU's Electronic Research Administration System (RASCAL) || Columbia University & Health Sciences Campus Profile || Faculty Profiles | Shared Equipment & Core Facilities Directory || Research Activity and Sponsored Projects || Courses and Seminars | Publications || University Research Policies and Procedures | • Office of Research Administration/Office of Grants & Contracts • Manual of Policies and Procedures • Research Administration FormsOffice of Grants & Contracts, IRB, IACUC, Environmental Health and Safety, Radiation Safety, Columbia Innovation Enterprise, Office of the Treasurer & Controller, Purchasing Office • Research and Grants JournalMonthly listing of funding opportunities in the biomedical and behavioral sciences; including those from federal agencies, state and local governments, voluntary health organizations, and foundations. Available in web-based and hard-copy formats.

26. Manual ofPolicies and Procedureshttp://www.cumc.columbia.edu/research/manual/ogcm2598.htm • Columbia UniversityHealth Sciences DivisionOffice of Grants and Contracts • Manual ofPolicies and Procedures • TABLE OF CONTENTS • | 1. Introduction | 2. General Information | 3. Preparing the Application || 4. Application Submission Procedures | 5. Post-Award Administration | 6. Close-Out | • 1. Introduction • 2. General Information • 2.1 Types of Sponsored Projects • 2.1.1 Grants • 2.1.2 Contracts • 2.1.3 Research Subcontracts or Consortium Agreements • 2.1.4 Fee for Service Contracts • 2.1.5 Cooperative Agreements • 2.2 How is a Sponsored Project different From a Gift? • 3. Preparing the Application

27. Research Fundinghttp://www.cumc.columbia.edu/research/funding.htm • Research Funding•Research and Grants Journal •Research Funding Databases • •Research Funding Information by e-mail •Award Programs with a Limited No. of Allowed Applications • •Award Programs Reviewed and Funded Internally •Award Programs Specifically for Equipment • •Honorific Awards •Grant-Related Publications and Other Sources of Funding Information • •Links to Funding Agencies •Writing a Grant Proposal • Research and Grants JournalMonthly listing of funding opportunities for research, training, and service activities in the biomedical and behavioral sciences; including those from federal agencies, state and local governments, voluntary health organizations, and foundations. Funding opportunities are listed chronologically by deadline, then alphabetically by funding agency. • Word and PDF (Adobe) VersionsThese Word (PC) and PDF (Adobe) Versions of the Research and Grants Journal contain active e-mail and web links. • January 2004 Deadlines: Word (PC); PDF; Listing of Funding AgenciesFebruary 2004 Deadlines: Word (PC); PDF; Listing of Funding AgenciesMarch 2004 Deadlines: Word (PC); PDF; Listing of Funding AgenciesApril 2004 Deadlines: Word (PC); PDF; Listing of Funding AgenciesMay 2004 Deadlines: Word (PC); PDF; Listing of Funding AgenciesJune 2004 Deadlines: Word (PC); PDF; Listing of Funding AgenciesJuly 2004 Deadlines: Word (PC); PDF; Listing of Funding AgenciesAugust 2004 Deadlines: Word (PC); PDF; Listing of Funding AgenciesSeptember 2004 Deadlines: Word (PC); PDF; Listing of Funding AgenciesOctober 2004 Deadlines: Word (PC); PDF; Listing of Funding AgenciesNovember 2004 Deadlines: Word (PC); PDF; Listing of Funding AgenciesDecember 2004 Deadlines: Word (PC); PDF; Listing of Funding Agencies • Web VersionTo access: Login to Rascal, Columbia University's web-based research administration system, with your University network ID (UNI) and Password. Select “Finding Funding”, then “View Research and Grants Journals”.

28. Faculty & Research:Grants Managementhttp://www.cumc.columbia.edu/research/grants.htm • Faculty & Research:Grants Management • Columbia University • Columbia University Medical Center's Manual of Policies and Procedures • Research Administration Forms Office of Grants & Contracts, IACUC, Environmental Health and Safety, Radiation Safety, Columbia Innovation Enterprise, Office of the Treasurer & Controller, Purshasing Office • Administrative Information for Grants & Contracts Applications • Information on NIH's Modular Grant Program • Information on NIH's Non-Competing (Type 5) Grant Progress Reports • Support of Graduate Research Assistants on research grants • Subcontracts Slide presentation on Subcontracts and Subawards • Training Grants Slide presentation on Pre-award and Post-Award Management of Training Grants • Support of Graduate Research Assistants (GRAs) on Research Grants • Slide Presentation • PDF version of slides • University Research Policies and Procedures • Comprehensive Research Funding Information • Federal Policies and Regulations • Code of Federal Regulations • Travel

29. BREAK

30. COLUMBIA UNIVERSITY PATIENT CARE REVENUE CYCLE Part 2A • The patient care revenue cycle involves preparing for a patient encounter, interacting with patients during a patient encounter, capturing and recording services rendered and processing claims and managing a patient’s financial account to zero balance resolution.

31. REJECTION & DENIAL PROCESSING CONTRACT MANAGEMENT/ PROVIDER CREDENTIALING PATIENT ACCESS CYCLE BEGINS COLUMBIA UNIVERSITYPATIENT CARE REVENUE CYCLE COMPLIANCE BILLING/CODING REVIEW ENCOUNTER CHARGE CAPTURE/ CODING FINANCIAL COUNSELING CLAIM DEVELOPMENT & SUBMISSION CHECK IN / REGISTRATION PAYMENT POSTING SCHEDULING/ REFERRAL MANAGEMENT FOLLOW-UP

32. PATIENT CARE REVENUE:INTERSECTION OF PATIENT CARE AND TEACHING • Medicare Program: • Began in 1967 • Two trust funds: • Part A for hospital and other facility services (eg, nursing home) • Part B for provider and other outpatient services • Intermediary Letter (I.L.) 372 : Federal guidance for teaching providers establishing conditions under which providers can teach residents (reimbursed under Part A) and provide patient care (reimbursed under Part B) at the same time.

33. WHO BILLS FOR WHAT?HOSPITAL vs. PROVIDER SERVICES • Hospital Services (billed by NYPH) • Inpatient hospitalizations • Ambulatory surgeries • Outpatient diagnostic testing (facility, supplies, equipment and support staff costs) • Outpatient physical, occupational and speech therapy • Outpatient clinics (facility, supplies, equipment and support staff costs) • Emergency room services (facility • Skilled nursing and home health services • Provider Services (billed by CUMC) • Daily provider visits and consults to hospitalized patients • Surgeries and administration of anesthesia • Office visits and office consults • Office-based diagnostic testing (eg, EKGs) • Provider interpretation of diagnostic tests performed in a hospital • Provider diagnostic and treatment services for patients seen in the hospital outpatient clinic, emergency room or skilled nursing facility Hospital Claim Provider Claim

34. CONTRACT MANAGEMENT • Objectives • Provider establishes contracts with their significant payers to determine claims processing, payment and rejection terms and conditions • This often requires the establishment of rates for particular services • Providers must regularly evaluate the reimbursement rates to ensure that they are being reimbursed appropriately

35. PROVIDER CREDENTIALING AND RECREDENTIALING • Objectives • Evaluate credentials of potential or existing providers to ensure that appropriate licenses and certifications are accurate and up to date • Valid state license to practice and prior sanctions against licensure • Education and Training Board Certification • Drug Enforcement Agency (DEA) Certification • Verification of clinical privileges • Malpractice coverage and malpractice history • National Practitioner Database Query • Medicare/Medicaid Sanctions • Application processing for Medicare, Medicaid, Blue Cross/Blue Shield, and other insurance companies • Re-credentialing typically occurs ever 2 years at CU

36. SCHEDULING/REFERRAL MANAGEMENT • Objectives of Scheduling/Referral Management • Appropriately identifying the service to be rendered • Determining a provider who can provide the service (based on that person’s treatment schedule, insurance enrollment status, and qualifications) • Initiating a pre-registration process by obtaining a minimum data set of patient demographic information • Communication with patient’s regarding payment expectations and referral requirements • Columbia Best Practice: • Use IDXtend (institutional billing system) for scheduling of appointments • Collect minimum data set of demographic and insurance information for pre-visit insurance verification

37. INSURANCE VERIFICATION…A CRITICAL PRACTICE • Objectives • Obtaining and verifying coverage prior to rendering services • Minimizing bad debt by contacting the patient prior to service to address any problems or limitations with coverage • Improving patient satisfaction by • Minimizing the amount of time spent registering patients “on the spot”, therefore reducing patient wait times and increasing patient satisfaction • Managing patient expectations regarding their out-of-pocket obligations

38. INSURANCE VERIFICATION • Verification of coverage • Effective date of coverage • Types of benefits available • Coverage Limits – Yearly/lifetime • Authorization requirements • Provider participation status • Billing address • Patient responsibility (deductible and/or co-payments) • Types of verification procedures • Phone call • Internet • Electronic system eligibility check (Medicaid) • Columbia Best Practice: Centralized Insurance Verification Unit

39. CHECK IN • Objectives: • Beginning or completing registering of a patient • Identifying missing information • Obtaining provider referrals from patient • Collecting co-payments and deductibles • Administering Advance Beneficiary Notices (ABNs) • Administering assignment of benefits • Provide patient privacy notice

40. FINANCIAL COUNSELING • Objectives: • Discussing, in advance, how patients will pay for their out-of-pocket responsibilities. • Payment plans • Discounts based on financial need • Helping patients work through some eligibility/coverage issues in order to ensure that the services to be provided are covered • Pre-existing conditions issues • COBRA • Lack of authorization • Out of network services

41. ENCOUNTER CHARGE CAPTURE/CODING • Objectives: • Provider must complete charge capture forms for each service rendered which includes the patient’s name, medical record number, billing account number, identification of procedure codes that should describe services rendered and diagnosis information that should describe the patient’s diagnosis • Staff enters charges accurately, timely and to the correct account so that services are billed and reimbursed appropriately • Columbia University Best Practice: • 24-48 hours within date of service

42. COMPLIANCE BILLING/CODING REVIEW • Objectives: • Control mechanism to ensure that billing information is supported by documentation in the medical record • Comparing clinician documentation in the medical record to the procedure and diagnosis codes assigned by the clinicians/coders • Performed prospectively and retrospectively • Random selection of certain areas, 100% review in other areas

43. CLAIM DEVELOPMENT & SUBMISSION • Objectives • Scanning data through a series of pre-defined edits to identify coding and billing discrepancies or missing information that would prevent a claim from passing claim edits • Reviewing and resolving edit reports of claims that contain errors. • Review the lists and resolving any errors. • Submitting “clean claims” to third party payers for processing • Reviewing and reconciling clearinghouse reports which then forwards electronic claims to appropriate third party payers • Reviewing electronic acknowledgements that claims were received • Columbia Best Practice: Department responsibility for the weekly evaluation of claim edit reports and “working” claims to get them to pass claim edits.

44. PAYMENT POSTING • Objectives • Posting of payments to patient accounts after payment has been made is vital to ensuring an accurate accounts receivable • Payment is posted timely, accurately, to the correct account to reduce A/R follow up • Payments may include zero payments and the posting of a rejection/denial code • Payments may include self-pay as well as insurance payments • Electronic as well as manual payment posting processes • Posting contractual allowances in concert with payments • Ensure that allowance codes are utilized appropriately • Columbia University Best Practice • 1-2 days of receipt of payment

45. FOLLOW UP • Objectives • In person, phone, and written communication with patient, the “responsible party", or insurance companies regarding unpaid patient account balances • Determination that claim was sent to correct insurance company and that it is being processed • Each claim may have multiple payors - primary and secondary insurance companies, patient • If internal collection efforts fail, the account may be outsourced to a collection agency • Credit balances are resolved by issuing refunds to patients and insurance companies

46. REJECTION & DENIAL PROCESSING • Objectives • Evaluating claims that have been rejected or denied. • Discussions with the clinician that rendered the service • Reviewing billing system claim information to determine whether incorrect information was entered (either demographic, insurance, procedure code or diagnosis information) • Determining whether appropriate pre-authorization was obtained prior to the service being rendered. If the service was authorized, was the authorization number submitted with the claim • Rebilling the claim with corrected information or contacting the insurance company to resolve or appeal the claim. • Evaluating accounts for potential administrative write-offs (e.g. late filing, unauthorized service)

47. QUANTIFYING THE OPPORTUNITY:EXAMPLE OF DENIAL DISTRIBUTION BY REASON Total Denials $1.6M 4% 13% 20% 5% 2% By Volume 11% 36% 9% Registration Data Collection Benefit Verification Related/Included Coding Related Provider Enrollment Claim Issue Other * Hypothetical example

48. BREAK

49. Part 2B • COLUMBIA UNIVERSITY PATIENT CARE REVENUE CYCLE

50. HISTORICAL INFORMATION ABOUT COLUMBIA FACULTY PRACTICE REVENUE CYCLE • 575,000 Annual Faculty Practice Outpatient Visits; 55,000 Inpatient Admissions • 30 years ago, most CUMC physicians managed patient revenue independently and “owned” the economics • Over time CU departments developed faculty practice plans with their own full-time faculty: • Practice plans promoted program collaboration across departments; • Clinical revenue generated supports academic mission & research initiatives • Up until 1993 departments billed and collected on a multitude of billing systems • In 1993, IDX was installed as the enterprise-wide billing system that became a common platform for faculty across CU clinical departments • Common billing system more efficiently manages revenue cycle in ways such as: • Interfacing with other CUMC information technology systems; • Providing shared information for better monitoring of managed care contract compliance • Scrubbing and submitting cleaner claims for faster payment turnaround and lower percentage of claim denials • Future IDX enhancements also being developed, such as: • Electronic patient eligibility • Payor contract module • Web based software version