C O L L A B O R A T I V E C A S E M A N A G E M E N T

Hospital Revenue Cycle and Case Management • Part I of II

By Val Kraus, MBA

Case management in the acute care setting requires an ability to credibly speak the language of several different hospital functional areas. Case
managers are often involved in discussions that intermingle, for example, clinical procedures and treatments, psychosocial and family dynamics,
legal and regulatory requirements, data analysis and trending, and hospital finance. Case managers and their leaders often gain, through
education, experience and on the job training, a level of understanding in most areas, but many lack a full understanding of financial concepts
and “financial speak.”

The level to which case management is involved in financial • Billing – Charges for the patient visit are finalized and
discussions varies. Nineteen percent of case management departments communicated to the payer(s) and/or patient
report to the Chief Financial Officer (or Vice President for Finance)1. This • Collections activities – Efforts to receive full allowable
reporting structure will lead to case management’s increased involvement payment, including denial appeals and self-pay collections or
in financial discussions and outcomes. Fundamental to financial payment planning
discussions is the concept of revenue cycle, and a practical understanding
of this concept is critical for credibility and productive collaboration.
Boulder Community Hospital (BCH) is a 265-bed facility in Estimated Profit (Loss) by Day for Medicare CHF Patient
Boulder, Colorado. The case management department at BCH is part of $2,000.00
the finance division, and has a significant role in revenue cycle $1,200.00
$1,000.00
management. BCH has implemented several strategies to more closely
$450.00
align case management with revenue cycle management and overall $
hospital goals. The resulting outcomes have demonstrated that
HOSPITAL PROFIT (LOSS)

$(1.000.00)
understanding this key financial concept increases case managers’ $(1,200.00)
effectiveness through expanded awareness of how daily case $(2,000.00)
management functions produce financial outcomes, which in turn
$(3,000.00)
generates new strategies and opportunities to improve processes.
$(4,000.00)
HOSPITAL REVENUE CYCLE DEFINED $(5,000.00)
$(5,000.00)
The revenue cycle is the process through which patient services are
delivered, coded, billed, and then payment is received or written off to $(6,000.00)
1 2 3 4
bad debt/collections. For an acute care hospital, this cycle begins with
PATIENT LOS (IN DAYS)
each new patient visit and is completed when that patient’s bill is
finalized. The revenue cycle reflects all of the processes in this continuum: FIGURE A

• Patient registration/admitting – Creates an account and record Time is also a critical element of revenue cycle. The length of
of the visit, collects initial patient information, and admits the the revenue cycle includes two primary components: The patient’s
patient to the facility length of stay (LOS), and the time necessary to finalize billing and
• Medical treatment – Performs the billable services that are receive payment. A long revenue cycle increases both risk and cost.
delivered to the patient The risk increases due to longer inpatient LOS are familiar to
• Coding – Charges are added to the patient’s account for the case managers, such as increased possibility of adverse events, falls,
services performed or hospital acquired infections. In addition to these risks, increased
LOS incurs greater cost – and decreases profit – due to the high
• Preauthorization/ “Most identify costs of providing healthcare and the environment of fixed
Pre-certification/Continued
Stay – Payment arrangements
Revenue Cycle reimbursement by DRG. Figure A represents a hospital’s estimated
Management at profit and loss per day for a Medicare patient with a diagnosis of
with insurance companies are chronic heart failure (CHF). This figure demonstrates how rapidly
secured for procedures, and their organization the hospital’s profit decreases as the patient’s LOS increases.
continued stay reviews continue as the process Longer time from discharge to collection of final payment also
the initial authorization and components incurs additional costs. Operational processes that delay resolution
• Self-Pay Deposits/Payment behind the of the final bill increase “Days in Accounts Receivable,” – the time
Arrangements – Money organization from billing to actual payment. Extending the period from the
collected and/or payment getting paid.” completion of services to receipt of payment generates additional
arrangements made for administrative costs that offset the revenue received, increasing
applicable patients prior to 2007 HIMSS Analytics Report: administrative cost per payment and decreasing the value and
Care-Based Revenue Cycle Management Report2
service or while in-house profitability of the revenue when it is ultimately received. Therefore,

continued on page 11
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 w w w . a c m a w e b . o r g
COLLABORATIVE SUCCESS
Regarding POA reporting, CMS stated “…a joint effort between the
healthcare provider [physician] and the coder is essential to achieve
complete and accurate documentation, code assignment, and
reporting of diagnoses and procedures. The importance of consistent,
complete documentation in the medical record can not be
overemphasized.”1 While collaboration between physicians and coders
is always necessary, the usual processes of Health Information
Management (HIM) query may be inadequate to efficiently manage
POA reporting. Case managers, through adding documentation
integrity screening to their usual UR activities, can provide tangential
support of documentation integrity. Such support from case
management can effectively manage the initial challenge of collecting
and submitting accurate POA indicators without developing extensive
new processes or requiring significant additional resources.
As POA reporting matures to include revenue impact, it will be
especially important that hospitals develop resources to assist
physicians in providing complete, accurate and specific clinical
documentation and meet reporting requirements. While case
managers are well suited to efficiently provide this support by adding
a documentation integrity perspective to their existing UR functions,
this additional responsibility must be considered with respect to case
Hospital Revenue Cycle and Case Management (continued from page 3)
bills that are finalized and paid quickly bring “more valuable”
money into the organization.
REVENUE CYCLE MANAGEMENT AT BCH
To manage the organization’s revenue cycle, BCH utilizes a
Revenue Cycle Committee that meets monthly and includes leadership
from all the key processes previously mentioned, as well as Accounting,
Contracting, Compliance and, on occasion, Public Relations. A Revenue
Cycle Dashboard serves as the primary tool utilized by the committee
to monitor the various involved elements. The committee also uses a
Denials Dashboard, and committee reports ranging from Medicare
issues to Point-of-Service collections and Denial Management.
At BCH, case management has added a valuable perspective to the
Revenue Cycle Committee. While many financial professionals have
broad understanding of the financial impact of care delivery, many lack
the operations perspective that is gained from working on clinical
units. Case managers’ experiential knowledge can contribute a
perspective on the clinical and practice ramifications of strategic
decisions and help clearly define the root causes of identified
challenges. For example, it can be difficult for financial and accounting
professionals to recognize the complexity of a case where a patient
requires dialysis and an expensive medication to treat an MRSA
infection, and how this makes a skilled nursing facility (SNF)
placement very difficult or impossible. Without a perspective that
incorporates clinical practice, time can easily be wasted in seeking to
assign accountability for this discharge delay to a particular service or
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managers’ other accountabilities to ensure that the department’s
primary objectives such as LOS and avoiding delays in care delivery
and discharge are not negatively impacted.
Kathleen Hawkins, RN, MSN, ACM, is Care Management Specialist
at Catholic Healthcare West (CHW) in San Francisco, CA, a position she
has held for four years. She earned her BSN in Public Health Nursing
from California State University at San Bernadino, CA, and her MSN in
Nursing Administration from University of California at Los Angeles, CA.
During her 30 year nursing career, she has experience in case
management and clinical documentation education, and experience in
both acute care and managed care settings.
1
Department of Health & Human Services (DHHS), Centers for Medicare & Medicaid
Services (CMS). “Present on Admission Indicator.” CMS Manual System; Pub 100-04
Medicare Claims Processing; Transmittal 1240; Change Request 5499. May 11, 2007.
http://www.cms.hhs.gov/Transmittals/Downloads/R1240CP.pdf .
2
Bowman, RHIA, CCS, Sue. Leon-Chisen, RHIA, Nelly. “Present on Admission
Reporting.” AHIMA 2007 Audio Seminar Series. February 2007.
3
Department of Health & Human Services (DHHS), Centers for Medicare & Medicaid
Services (CMS). “Medicare Program; Changes to the Hospital Inpatient Prospective
Payment System and Fiscal Year 2008 Rates.” August 2007. http://www.cms.hhs.gov/
AcuteInpatientPPS/downloads/CMS-1533-FC.pdf.
4
Medicare Program: Changes to the Hospital Inpatient Prospective Payment Systems
and Fiscal Year 2008 Rates. Federal Register 2007; 72:47379–47428.
group. The operational perspective, in this example, can demonstrate
how the problem is related to deficiencies in the process, and the group
can begin seeking more creative solutions such as evaluating
purchasing beds in a SNF facility or cost-sharing with a downstream
provider to provide care in the appropriate setting for these patients.
It is also important to present case management’s role in the
organization clearly and in a common language that holds meaning for
financial personnel. An analogy that has proven useful to develop this
common ground for some at BCH is to compare case management’s
role to that of a project manager. The case manager becomes the point
person in making sure that the care plan is followed, and that barriers
to care are resolved as expeditiously as possible to reduce the risk of
denials and unnecessary delays.
Part 2 of this article will be featured in the Winter issue and will present
several strategies that more closely align case managers’ daily practice with
revenue cycle outcomes, producing positive fiscal and patient-care outcomes.
Val Kraus
Kraus, MBA, is the Director of Case Management and Admissions at
Boulder Community Hospital in Boulder, CO – a position he has held for
two years. Val earned his MBA from Keller Graduate School of
Management in Denver, CO. He has 11 years of experience in healthcare.
ACMA. 2007 ACMA National Hospital Case Management Survey.
1
2
HIMSS Analytics. 2007 Health Information and Management Systems Society
(HIMSS) Analytics Report: Care-Based Revenue Cycle Management Report, sponsored
by QuadraMed Corporation.