Troy Wasilefsky, Chief Revenue Officer, discusses Iodine Software’s recent analysis around COVID-19 and hospital reimbursement with HFMA for their Voices in Healthcare Finance podcast.
Prior to COVID-19, health systems were already operating on generally thin margins, with many finance leaders acknowledging that a significant root cause was leakage from their mid-revenue cycle and that “average performance” was still well below optimal results. Today due to COVID-19, there are several additional factors impacting hospital revenues, with health systems now facing inpatient reimbursement declines of up to 30% year-over-year:
- Patient volumes: On April 7, 2020, CMS recommended that all elective surgeries and procedures be limited to free up capacity for COVID-19 patients. Even as this restriction is removed in some states, limitations remain in effect across much of the country. Patient populations may also choose to defer elective surgeries out of fear. Given these challenges, the CARES Act’s aid to hospitals will not by itself keep hospitals and health systems afloat.
- Rising unemployment: The payer mix will further shift away from commercial coverage due to rising unemployment.
Recent analysis by the Iodine data science team found that as health systems exit the pandemic and COVID-19 admissions decrease, medical reimbursement is expected to decline. If surgical volumes do not recover, health systems could experience a second wave of financial distress.
To overcome the financial distress related to COVID-19, health systems need to explore revenue accretive solutions. The mid-revenue cycle contains significant untapped potential, with the average 250-bed hospital losing $4.7 million in mid-cycle revenue each year¹. One survey of healthcare leaders found that 84% believe clinical documentation and coding are at medium or high risk for errors leading to a negative impact on revenue². Accurate documentation results in revenue integrity, but even established CDI programs struggle to consistently capture all documentation opportunities. To realize the full potential of documentation integrity to decrease mid-cycle leakage and improve margins, CDI teams would need to review every single record continuously throughout the entire stay.
Iodine’s CognitiveML™ engine leverages proprietary artificial intelligence technology and machine learning algorithms to automatically analyze the full clinical record for each patient. Combined with a growing database of 18+ million patient admissions that covers every 1 in 7 inpatient stays and over 400,000 physicians’ behaviors, Iodine’s technology is able to identify more statistically relevant predictors of disease, helping teams quickly and accurately identify areas of potential opportunity to accelerate productivity, data accuracy, and financial return. This approach has helped 400+ hospitals realize a 75% increase in query volume.
As healthcare finance leaders seek creative solutions to slow mid-revenue cycle leakage, they should consider whether their CDI teams are armed with the right technology to be able to capture more revenue.
¹Advisory board study from 2016
The impact of COVID-19 placed financial pressure on health systems, with some now facing an unexpected reimbursement decline of up to 30% YoY (based on the Iodine Software Study from May 2020). As a result, Chief Financial Officers need to build resilience plans – not only to weather the current impact, but also enable their organizations to emerge financially and strategically stronger.
During the peak of the pandemic, increases in respiratory and infectious disease patients of 90%* and 70%*, respectively, drove the recovery of reimbursement at hospitals with high COVID-19 admissions. However, as COVID-19-related admissions decline, an immediate increase in other surgeries, which have dropped by about 12%*, is unlikely. Therefore, long-term revenue accretive projects are vital to keep hospitals afloat.
While most hospitals have stalled non-COVID-19 projects, experts from McKinsey suggest reevaluating investments and spending resources on the projects that can produce the most long-term value. To mitigate increasing downward pressures on margins and evaporating revenue streams, many hospital leaders are focused on:
- Debt collections
- Point-of-service collections
- Denial management
- Payer contract negotiations
- Managed care
The challenge with these strategies is that they all require tradeoffs between time to impact and revenue yield. The ideal components of a resilience plan are investments that deliver short- and long-term returns.
Focusing on Clinical Documentation Integrity (CDI) can drive revenue accretion for hospitals. The hospital mid-revenue cycle is plagued by uncertainty as payor mixes shift away from commercial coverage due to rising unemployment, lucrative elective surgeries have been delayed to free up capacity for COVID patients, coding guidelines have changed, and CMS regulations have been relaxed. Documentation is critical as hospitals navigate these financial challenges. CDI creates resiliency through greater integrity in the patient record, which in turn improves revenue integrity, both in times of hardship and normalcy.
As hospitals build a resilience plan, the following thoughts and questions may offer some guidance:
- Historically, revenue cycle teams have tried to review all charts to ensure no documentation opportunities (revenue or quality) are missed, and the traditional solution was to employ more clinically trained clinical documentation specialists (CDS). However, as staffing challenges are magnified during the current health crisis, are there solutions that can help ease the burden on CDI teams?
- Is your CDI team able to review every chart – not just once, but every day and for every payer – to ensure correction of all emerging documentation issues foundational to underpayment, poor quality representation, and overall documentation integrity?
- Given cash constrictions coming out of COVID, not to mention coding, reimbursement, staffing, and other challenges, are there technologies that can help CDSs select the right cases to focus on?
- How can I accurately measure uncaptured mid-cycle return at my institution?
Iodine Software has pioneered a new machine learning approach called Cognitive Emulation to help healthcare finance leaders build resilient organizations. Our approach considers the entire scope of the clinical record, patient experience, and physician intervention to predict likely conditions and identify gaps between evidence and documentation for review. For more information, email email@example.com
*Based on The Iodine Software Study from May 2020, available here.