How rural Atlantic General Hospital became a leader in revenue cycle

Maryland hospital has turned heads in the industry for its approach to revenue cycle and has consistently hit high benchmarks in patient access, revenue integrity, claims adjudication and management.

Revenue cycle management is a complex discipline, and it’s only becoming more so as the U.S. healthcare system undergoes dramatic change.

With a larger percentage of revenue coming directly from patients, hospitals must enhance both the patient experience and their own collections processes. At the same time, many hospitals must come to terms with the move toward value-based payments and away from fee-for-service models. In the midst of all this, payment denials and underpayments from Medicare and commercial payers continue to affect institutions’ ability to efficiently realize revenue.  

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A challenging time indeed, but Atlantic General Hospital and Health System – a small, rural, independent facility in Berlin, Maryland – seems to have it figured out. The organization has turned heads in the industry for its approach to revenue cycle and has consistently hit high benchmarks in patient access, revenue integrity, claims adjudication and management.

The Atlantic story

Atlantic’s revenue cycle focus positioned it to weather changes to the state’s Medicare waiver that was launched in January of 2014. Maryland is the last state to operate as a rate-regulated state, with a waiver in place since the early 1970s exempting it from Medicare’s standard form of reimbursement in favor of an all-payer charges system. Under that system, every payer – private, government or self-pay – charged the same fee for services.

Under the new Medicare plan, hospitals can operate on Global Budget Revenue or Total Patient Revenue models, said Atlantic’s chief financial officer Cheryl Nottingham. Atlantic is working under the GBR model, “and the result is that we are under a fixed [annual] revenue amount,” she said. “No matter how many patients we see or how many tests we do, we receive the same amount in total all-payer payment.”

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If Atlantic General goes beyond the cap for one year, it will be penalized by having to reduce its rates for all payers the following year. If it stays under the cap, however, it will be able to keep the difference between the maximum revenue cap and what it actually charged payers.

“That’s how you move from the old charging-for-volume model to putting the emphasis on value,” she said. “It requires you to think about how to keep costs low and reduce non-valuable services, like unnecessary readmissions and potentially preventable complications.”

The fixed-revenue model also limits some of the opportunities that Atlantic General previously could leverage to make up for payment losses – such as building bad debt protection into its rates – since it can’t exceed the Medicare revenue cap. Atlantic General still gets some bad debt and charity care protection in regulated rates, but the amount has been reduced because there is an expectation that patient access to the insurance exchanges and Medicaid expansion will reduce the need for bad debt and charity care in Maryland hospitals.

Revenue cycle 2.0

Fortunately, revenue cycle performance enhancements that it already had undertaken are helping the organization stay on solid footing even under the new constraints, and in the context of overall industry trends.

“Everyone is seeing an increase in required authorizations and in patient payment responsibilities, and that’s impacted how and where we have to focus our efforts,” said Atlantic General’s patient accounting manager Jacob Stumpf.

For example, Atlantic put in place new processes to reduce denial of payment write-offs, including the hits it took for services and procedures for which no authorization had been obtained. The hospital saw a denials spike near the end of 2012 into the start of 2013, said Bonnie Bradshaw, patient financial services collection manager. “We wanted to capture that revenue that we were losing,” she said.

To do that, Atlantic instituted a process for financial counselors to streamline their authorization workflows and customized its revenue cycle management system to automatically alert staffers when a payer requires advance authorization for a particular service, she said.

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This approach required cross-department collaboration with clinical leaders, Nottingham said, since no-authorization problems sometimes start at the physician level. Fixing that problem required that patterns of practice be addressed. For example, one physician was ordering many CT scans that were subsequently denied. The information was shared with clinical leaders in the case management division with the help of the Medicare Recovery Audit nurse, so they could talk with the physician about the issue. “They were truly partners with us in helping reduce those denials,” Nottingham said.

Ultimately, Atlantic General far exceeded its goal of reducing payment denials by 30 percent, and realized a 75 percent reduction in write-offs, said Stumpf. “We established ways to catch a no-authorization issue well before the bill went out the door, which was very helpful,” Bradshaw said.

Reducing late charges was also a focus of the revenue cycle team, as rebilling patients to account for missed charges wastes hospital resources and indicates a gap in revenue capture efficiency. Records analysis revealed that issues with emergency department billing workflows, and issues with the ER system itself, led to a high-volume of late charges. Once discovered, the problems were corrected.

Good for patients and the bottom line

Another area in which Atlantic General has made strides is enhancing the patient experience. The hospital regularly conducts open forums with patients, clinicians, operations and revenue cycle management staff to learn what is, and isn’t, working well for clients and how processes might improve. It’s another example of inter-departmental revenue cycle management collaboration, Nottingham said, and one of the results of such efforts is the “Wayfaring” card.

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Patients get this card during registration, and it includes all the information they need about how to navigate the various departments they are visiting that particular day for services.

“We have the opportunity to set their initial expectations high and make their experience at the hospital pleasant, to show them we care,” said Stumpf. “We had about a 90 to 93 percent approval rating surveying patients a couple of weeks after implementing the cards.”

Patient satisfaction with this – and other aspects of the revenue cycle – can help Atlantic General improve its Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) scores, which has an impact on bonus payments.

“Even though the Wayfaring card may not initially sound like it is something that has a financial impact, it does because of its connection to our being reimbursed for providing patients with satisfactory care,” said Nottingham.

Ensuring that billing operates smoothly from the patient’s perspective is especially important, given the consumer’s growing responsibilities for healthcare costs. According to the 2014 Connance Consumer Impact Study, 74 percent of patients fully satisfied with billing processes pay their bills in full, while the same is true for only 33 percent who are unsatisfied with billing. Atlantic General has tried to improve the patient billing experience by modifying its revenue cycle system to automatically check service eligibility, file claims electronically and accept electronic payments, said Bradshaw.

According to Stumpf, the hospital has further maximized its system by generating reports to identify potential billing issues “so we can correct claims and make sure they are clean when we send them out the door the first time.”

More to do

Atlantic General has not completed optimizing its billing and collections process, Nottingham said. The organization intends to improve revenue cycle operations by focusing harder on point of service collection. The benchmark for high POS performance is about 36 percent of collections at point of service, said Nottingham. “We are at about 5 percent organization-wide, so we set an internal goal of 18 percent.”

The hospital is currently working with a new systems vendor to improve its ability to identify upfront what the patient responsibility will be, from copays to deductibles statuses, and then to conduct financial transactions with patients.

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Nottingham, Stumpf and Bradshaw are proud of the achievements Atlantic has made in revenue cycle. A hospital’s financial operations don’t often get recognized publicly for high performance, at least not to the degree clinical quality does. But the work of the Atlantic General finance team has led to broader support from top management for revenue cycle operations.

“Getting recognition at a national level as a high-performing hospital really puts things in perspective for management,” Nottingham said. “They are confident that when you make investments you will deliver results.”