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Next webinar: Sept 20 on cardiac arrhythmias including reviews of anatomy, pathophysiology, coding, CDI and quality implications!

What we’re discussing in the forums:
- Determining acute blood loss anemia versus dilution from IVF
- Fighting respiratory denials
- Review of neuroanatomy
- Copy/paste best practice recommendations
- Educating surgeons on encephalopathy
- Preventing lab denials
- And much more!

If you’re preparing for your CCDS, our online community is the place to be. Join here!

If you’re a physician or NPP, you’ve probably never heard of the revenue cycle (at least I hadn’t prior to about 4 years ago).

You’ll be even more confused to learn you’re in the “mid revenue cycle” space. Shouldn’t we (providing patient care) be in the beginning? So what’s before us? Heck, what’s after us? And wait… Why is there even a middle if it’s a circle?!

Spoiler alert: It’s not really a circle.

Why Does This matter?

Most physicians will openly admit they do not understand how the U.S. healthcare system really works. We are not taught the business side of things in med school or residency. We either learn by experience or must teach ourselves, but most don’t have time to learn and have little motivation to do so as employees.

But to properly navigate, make the most of, change, or critique a system, you must understand it. If you want to get through to your C-suite, you have to know what motivates them and you have to speak their language.

So let me help you out.

(And for provider educators, you need to understand most of us have zero knowledge of this stuff. If you assume we do, you’ll lose your audience in the first minute.)

What’s the Cycle?

To oversimplify it, it’s:

1. Scheduling and registering the patient.

2. Seeing the patient.

3. Getting paid.

You can see how we’re “in the middle.”

That’s it. Thanks for subscribing!

…

Just kidding! It’s way more complicated than that.

Google the revenue cycle and you’ll get a thousand different versions with different steps. But in general, they all look something like this:

In that image, we’re the “Charge Capture” step.

A more complete cycle would be something like this (from R1):

1. Front-end

   1. Scheduling

   2. Pre-registration

   3. Clearance

   4. Financial counseling

   5. Online/in-person arrival

   6. Pre-service payments

2. Mid*

   1. Level of care

   2. Case management

   3. Utilization review

   4. Charge optimization

   5. Coding

   6. Acuity Capture

3. Back-end

   1. Billing

   2. Patient payments

   3. Denials management

   4. Customer service

   5. Reconciliation

*Mid: Slang word used by the kids these days which means average or mediocre.

As you can see, that’s a LOT of steps. Meaning a LOT of steps where things can go wrong. That’s why we have “Revenue Cycle Management”: entire teams of people in your health system and an entire consultant industry based on getting this process done correctly (at least 354 companies per Becker’s Hospital Review).

The front-end is not as straightforward as you might think. A patient’s insurance can change every year and the information you have in your system may be outdated. Their name may have changed or you might accidentally spell their name wrong. In fact, “40% of face sheet information generated through the admissions office is incorrect” (per The Hospital Guide to Contemporary Utilization Review 3rd Edition).

The back-end is where things really get heated as the name of the game for insurance companies is to deny and delay. And the name of the game for hospitals is to get paid as soon as possible after they’ve provided those services. In fact, the success of a hospital’s revenue cycle management is typically tracked by “accounts receivable.” That is, how many bills have you sent out that haven’t been paid? (This is explained in more detail in Dr. Eric Bricker’s video below).

All of this determines a hospital’s cash flow and, ultimately, the number of days of cash on hand (which is how long a hospital can survive with zero revenue… More on that later).

The Mid Revenue Cycle

Simply put, the mid revenue cycle is where the care of the patient occurs, and then that care is reflected by submitted codes (ICD-10-CM, CPT, HCPCS, etc.).

As you see, “level of care” is part of the mid revenue cycle. These are things like inpatient versus observation (which I touched on here). This impacts how the hospital is going to get paid for those services, and what percentage of that bill the patient will be responsible for (among other things).

This is why “utilization review” is there in the middle with us. Among other things, they’re ensuring the level of care is correct because not only do we not want to deal with a level of care denial by an insurance company on the back end, but also insurances are involved while the patient is still in the hospital. For example, insurances may only approve a few days of care in the hospital. If the patient is still in the hospital after that number of days, then they may perform a review to see if the documentation supports why the patient needs to remain in the hospital (or they seek more information from a Utilization Management Physician Advisor.)

And then there’s coding! That’s what CDI (Clinical Documentation Integrity) professionals like me work to optimize. Two things:

1. I said CDI, not coding, professionals. Coding is ultimately based on documentation.

2. I said optimize, not upcode. Codes should reflect the patient as completely and specifically as possible so that reimbursement falls where it should.

Your hospital employs (or contracts with) coders who convert your documentation into ICD-10-CM codes. These codes determine which DRG that hospitalization falls into, which then determines how much the hospital is paid.

Get ready. This next paragraph is a doozy.

Insurances can review the documentation and disagree with the code and DRG assignment, assigning a different (lower-paying) DRG. They notify the hospital of that re-assignment with a denial letter. If the hospital disagrees, the hospital can appeal that denial by sending an appeal letter. Yes, these are often actual physical letters sent via snail mail. These denials can be, and often are, from the previous year(s). If the insurance isn’t convinced by the hospital’s appeal letter, they can uphold their denial with (you guessed it!) another letter. The hospital can decide if they want to continue to fight it or not, moving the process to higher levels of review, which can escalate to peer-to-peer calls and ultimately an administrative law judge review.

Remember the name of the game for insurances is to deny and delay? And that hospitals track their “account receivable days?” You can see why this process is important and how it gets out of hand.

A Break in the Chain

Because of recent events, I must mention clearing houses. All of this information is submitted as a claim to insurance companies via “clearing houses,” which are “institutions that facilitate the exchange of payments.” Change Healthcare is a clearing house and was hacked on February 21, 2024 - arguably the most significant cyber attack in U.S. history. For any institution that used Change Healthcare to submit claims, the back end of the revenue cycle came to a screeching halt.

Remember I mentioned days cash on hand? Yeah. Suddenly having zero revenue overnight is not an unimaginable thing.

Final Thoughts

So, if you work in healthcare, you must understand this process.
And you must understand where you fit into this process.
And you must understand how you can positively or negatively impact this process.
And hopefully this newsletter helps you understand how your C-suite thinks.

And if you’re thinking of burying your head in the sand: think again.

Our next live webinar will be September 20 on arrhythmias (including anatomy, pathophysiology, coding and quality lessons). Don’t miss out, and join our online community “The CDI and Coding Village” here.

That’s all for now. Don’t hesitate to ask questions as they help inspire future issues!

Cheers,

Robert

Thanks to Laura Samson, RN BSN CCDS, and my wife Kara (for grammar) for editing this newsletter!

When you’re ready, there are 3 ways I can help you:

1. Join our CDI and Coding Village online community! It’s impossible to know it all, it takes a village! What you’ll get:

• Learn from me and other experienced professionals (perfect for new coders / CDI’s and those pivoting their career)

• Participate in monthly interactive webinars hosted by me, and anatomy and physiology reviews not found anywhere else

• Share ideas & solutions to new problems with peers in real-time discussions

2. Check out The Practical Guide to Attending Documentation video course.

• Stop underbilling your hard work & MASTER the new billing rules

• Get 3.5 hours of CME credit! (Use your CME funds!)

• Stop feeling guilty about writing shorter notes

• Use notes to PREVENT getting sued

3. Check out The Resident Guide to Clinical Documentation video course. The course that helps you:

• Impress your attendings and improve your evaluations.

• Prepare for real-world productivity pressures

• Gain the confidence to write shorter yet more effective notes.

• Use notes to make you a better, more prepared physician

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