DO YOU REALLY KNOW WHAT YOU ARE BEING PAID?

835 PAYMENT ANALYSIS: DIAGNOSTICS AND CHECKUPS

So do you really know what you are being paid?  That is the burning question for many health care executives and revenue cycle leaders. You’re seeing that magic number each month in terms of what your net revenue is in total or across service lines, and how it fluctuates accordingly. Your team processes payments and/or writes off denials, but what does it really mean?  Are your payments reflecting your contracted terms with your commercial payors? Are your claims being submitted, processed, and paid in a timely manner?

835 Data: Uncover Payment & Denial Trends

In today’s environment of rising costs and declining reimbursement, it is important to have a commanding handle on the dynamics of your payments and denials, and the ability to address critical questions such as:  What revenue cycle issues may be impeding accurate payments to your facility?; How do you measure and correct breakdowns in the charge capture, coding, and billing processes?; Is it time to reevaluate your payor contracts?  Diving into the detail of your 835 payment files can help you answer these questions by measuring your current performance, creating a report card of where you’re performing well and where there is opportunity for improvement, and developing a succinct roadmap of where you need to go and what actions need to be taken to achieve the greatest improvement to your bottom line.

So where do you begin? Your 835 payment files may seem like a daunting source of information.  However, by applying the appropriate tools and tactics to succinctly parse this data, these large payment files can be turned into a useful diagnostic tool and roadmap for where you need to go to achieve improvements to your bottom line.  Furthermore, they can become a checkup device on an ongoing basis enabling continued process and financial improvements for your revenue cycle.

Set Goals

Before embarking on the steps to the 835 analysis, it is important to approach the process with set goals in mind.  These are key things you want to be able to accomplish:

• Analyze Payment Data
• Identify Payment Trends
• Target Areas for Performance Improvement
• Identify Revenue Leakage
• Illustrate Key Payment Indicators
• Quantify Denials by Category & Reason Code
• Isolate Payor Trends
• Build Baseline and Roadmap for Improvements

Tapping Into Your 835 Data

The analysis process begins with asking for, obtaining, and effectively parsing the right data.  A good starting point is selecting your top 5 payors and concentrating on a finite time period.  Three months of your most current paid claims for your top payors can provide a wealth of information, yet is manageable from a data processing and analysis perspective

The Analysis Process: Payment Data and Key Indicators

The analysis process begins with classifying and validating your payor mix information and summarizing key elements: charge, payment, zero payment, and patient responsibility data to see if any payment variances, patterns, or other trends emerge.  These data elements can be compared across payors to discern performance strengths and weaknesses, as well as any payment anomalies that may require further investigation.  This information is also the basis for the essential payment and performance indicators [see Exhibit 1] that are calculated and provide the baseline foundation for telling the story of how your facility is really performing by payor, by time period, and in whole.  Analyzing comparative payment periods (e.g., quarter to quarter) serves as a “check-up” in gaging improvements, setbacks, and provides the roadmap for where you need to go.

Exhibit 1: Essential Payment and Performance Indicators

• Average Charge/Claim
• Average Payment/Claim
• Claim Counts
• Days Accounts Receivable Outstanding
• Average Time to Bill
• Average Time to Pay
• Percent Gross Revenue Collectible

The Analysis Process: 835 Denials Analysis

The second part of the analysis focuses on those Zero Dollar Payments and the specific categorical areas where you are not being paid: 835 Denials Analysis.  The hundreds of claims adjustment reason codes are compiled and mapped into appropriate Claims Adjustment Denial Categories.  The focus is on reason codes that you can act upon and these main Claims Adjustment Denial Categories are shown in Exhibit 2. 

Exhibit 2: Claims Adjustment Denial Categories

• Authorization
• CDM/Charge Capture
• Claims Submission
• Claims Follow-Up
• Insurance Verification
• Diagnosis/Documentation
• Non-Coverage

This level of analysis gives you a snapshot of your performance. It can pinpoint where denials have increased or decreased in dollar value and/or claim volume, as well as by payor and facility for a multi-hospital health system which is very valuable when comparing quarter-to-quarter or specific time periods of payment.  The level of detail garnered from the denials analysis forms the foundation for prioritizing performance improvement initiatives and achieving improvements in your bottom line. 

The Output: Dashboard Reporting

Use of Tableau Reader enables packaging, tabulating, and graphically displaying the entire analysis: Payment Data, Key Indicators, and Denials Analysis.  It provides all you need in a user-friendly, “point and click” fashion, to drill down in key areas that are identified for performance improvement and optimizing your revenue flow.

Conclusion

Monitoring payments and denials is paramount to survival in the healthcare industry today. The 835 Payment Analysis provides an automated mechanism to identify concrete findings related to your payments and denials, and the ability to trend on a go-forward, comparative payment period basis.  The resulting analytics enable the development of a prioritized roadmap for process changes and implementing performance improvement initiatives to improve your bottom line and revenue stream.

About MedCom Solutions

MedCom Solutions creates patented technology and state-of-the-art software to help medical service providers meet rapidly escalating and changing medical billing demands. Our Chargemaster, Pricing, and Compliance solutions have yielded hundreds of millions in net revenue for healthcare providers across the country.

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