Healthcare News & Insights

Realizing the promise of hospital/physician integration

New payment models, mounting regulations and growing urgency around compliance have prompted hospital/physician integration as a key strategy to grow revenue and improve patient care. Case in point: The number of physicians employed by hospitals increased nearly 50% between 2012 to 2015, according to the Physician Advocacy Institute. In this guest post, Dan Ward, VP of strategy at a provider of comprehensive solutions for complex revenue cycle management (RCM), explains that in the new value-based care era, health systems and their employed physicians will need to quickly overcome the challenges of siloed data, disparate billing processes and technological fragmentation to achieve success.


At a time of razor-thin margins for many hospitals, one top-of-mind concern is a key revenue cycle activity – charge capture. Breakdowns in charge capture can include:

  • charges billed for services that differ from electronic medical records (EMR) documentation
  • incompatible or even contradictory charges between the hospital and professional claims, or
  • services that quite simply were never charged at all.

These errors pose threats to reimbursement that are too significant to overlook.

Understandably, the growing trend of hospital employed physicians may feel like a déjà vu moment. However, a key difference exists this time around – no longer are HMOs dominating the landscape with capitated arrangements that tended to diminish the importance of charge capture accuracy. Rather, in today’s world, each charge and code directly or indirectly impacts not only reimbursement dollars, but compliance concerns as well.

Even the most advanced hospital information systems (HIS) are unable to reliably identify charging and coding discrepancies across the health system. And this need has been around since 1997 when the American Health Information Management Association (AHIMA) noted a significant risk area for audits in the wake of HIPAA would be “discrepancies between the physician’s and hospital’s codes for the same patient visit.”

Revenue integrity

To illustrate just how difficult it can be to address matters of revenue integrity, consider that despite years of concerted effort and developments within the space, the Healthcare Finance Management Association (HFMA) continues to indicate that 1% to 3% of gross charges are lost due to charge capture leakage. However, that same 1% to 3% gross leakage doesn’t have the same net impact that it did a decade ago. This serves to underscore the importance of seeking out those anomalies that do impact reimbursement – identifying, for example, diagnosis-related group (DRG) assignment errors or missing diagnosis codes adversely impacting risk scores.

Interestingly, the opposite holds true in any regards within the physician space where a missing charge may matter now more than ever. As Medicare moves steadily toward a Medicare Access and CHIP Reauthorization Act (MACRA) reimbursement model, 95% of providers now qualify under the Merit-based Incentive Payment System (MIPS).

Over the next few years, comprehensive revenue integrity has the dual benefit of not only contributing to additional reimbursement today, but shoring up cost capture to positively impact MIPs payment scores of tomorrow.

Historically hospitals and health systems have addressed these challenges either reactively through manual ad-hoc charge audits or proactively utilizing a rules-based engine to flag accounts with potential revenue integrity issues. Although rules-based technologies are capable of efficiently identifying egregious errors using binary logic, they can fail to address millions in revenue leakage. Reason: This technology is static in nature. Over time, the technology doesn’t adapt to improved care delivery and charge integrity practices, and yields diminishing returns.

New solution for health systems

Implementing a new integrated, holistic approach to revenue integrity is an important step toward addressing the shortcomings of traditional approaches and effectively navigating the multi-layered complexities of charging, billing and coding faced by health systems today.

In an environment where a health system employs or contracts with a significant proportion of physicians, the most comprehensive method of ensuring enterprise-wide revenue integrity is to leverage both the hospital and physician billing data as independent yet inextricably linked sources of truth. Deploying predictive analytics and machine learning techniques across the two sets pinpoints anomalous discrepancies between the two – i.e., the notion that a hospital charged for a standard delivery and the physician for a c-section on the same encounter.

With technology identifying likely issues and intelligently surfacing those issues to the appropriate staff, that same staff is freed to focus on remedying the real charge breakdowns to address root causes and prevent future reimbursement issues. By using highly advanced technologies, such as predictive analytics systems, can identify millions in lost revenue even after a traditional rules-based engine has cleared all accounts as being error-free.

To achieve success in ever-shifting reimbursement environments, new solutions for health enterprises must:

  • Integrate seamlessly for both hospital and physician, giving each side visibility into inpatient and outpatient data
  • Identify charges missing from the account using not only rules-based technology, but statistical algorithms and machine learning techniques
  • Identify coding variances (DRG, ICD or otherwise) that impact reimbursement, and
  • Identify potential overcharges that don’t belong on the account to help prevent downstream effects such denials and audits.

Growing hospital systems need to effectively scale billing solutions as new physician groups come on board. Newly-owned physician groups need to feel confident that the health system is committed to making it easier, not harder, to fulfill growing administrative responsibilities. A revenue integrity solution physician groups can deploy and hospitals can integrate with their existing tools will help both sides deliver on the promise of hospital/physician integration – accurate reimbursement, better margins and less administrative burdens.

Dan Ward is VP of Strategy at ZirMed, a provider of comprehensive solutions for complex revenue cycle management.

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