Emergency departments face special challenges when it comes to managing the revenue cycle. Not only are many of their patients uninsured, but the documentation requirements for coding to the appropriate level of service typically are more rigorous and complex in the ED than in other specialties.

That means emergency groups must be at the top of their game if they’re going to maintain optimal cash flow and profitability, according to Bill Simpson, vice president of client management for McKesson Business Performance Services (McKesson).

To help groups stay sharp, Simpson has identified some key performance targets that all emergency medicine groups should strive to achieve:

  • Chart Completion Percentage: End of Month-95% and at Month 2-100%
    “There really isn’t any more fat to cut from a lot of practices,” Simpson said. As a result, he said, it is critical that charts be completed as accurately and as quickly as possible.

    “It’s easy for clinicians to miss documentation due to the chaotic nature of emergency medicine. But you want to make sure that you’ve accounted for every patient that has presented and that every chart is completed.”

    Groups should develop a systematic process for monitoring patient charts to make sure that all necessary documentation is included. McKesson, for example, has developed a proprietary platform that collects data needed to file claims and flags practices regarding any open issues.

    “What you’re trying to avoid are charts that are sent back from coding because they’re missing critical information. That can really kill timely reimbursement and consistent cash flow,” Simpson said. 
  • Left Without Treatment (LWOT) as a Percentage of Census: < 2%
    Patients who elect to depart a crowded emergency room before being treated represent a lost revenue opportunity. Groups should therefore strive to keep wait times down, and work with hospitals to ensure that beds and nursing staff are available. Tools for reducing wait times can include initial patient triage and quick registration, team evaluation of higher acuity patients and bedside order entry.
  • Down-codes: < 2%
    Clinicians need to be cognizant of the level of care they’re providing and document the details needed to substantiate what they did and why. They should also establish a method for monitoring the process. Each month, McKesson provides clients with detailed reports that indicate which services were coded to a lower level of service due to Failure to document necessary information. If the number of down-codes exceeds 2%, in-services aimed at improving documentation should be scheduled with the providers responsible for the down-codes.
  • Enrollment Holds: < $20,000
    Working to ensure that all new-hire credentialing with public and commercial payers is completed as quickly as possible is essential to steady cash flow, Simpson said. Enrollment holds are an important marker that can reflect problems with the onboarding process.

    “A lot of time groups don’t pay attention to onboarding and that can have major cash flow implications, particularly if the new physician is covering multiple shifts for colleagues who’ve taken time off,” Simpson said.
  • Year-to-Date Cash Performance versus Same Period Prior Year:
    Seasonality can have a major impact on emergency medicine. Volume in Arizona, for example, tends to pick up in the winter when snowbirds arrive, and fall off in the summer due to the heat. Similarly, seasonal flu cases can have a significant impact on ED volume throughout the country. That’s why it is important to measure cash performance against the year-earlier month, as opposed to the previous quarter. This will help practices identify seasonal trends and in so doing, make more accurate projections.
  • Registration Denial Percentage: <10%
    This metric provides insight into the effectiveness of the front office by tracking registration accuracy. If denials stemming from registration problems exceed 10%, groups should look closely at the registration process to determine how it can be strengthened.
  • Collection Agency Recovery: Between 4% and 7%
    Agency recoveries should average between 4-7% of bad debt submitted for collection. If the number is greater than 7%, an audit needs to be done to make sure there’s nothing wrong with the demographics on the front end or that other problems don’t exist on the back end. If it is under 4%, there may be a problem in the exchange of information with the collection agency or some other performance-related issue.

Other Tips for Sustaining Profitability

  • Make sure your demographic feeds from the hospital are sending accurate insurance updates to the billing company. The billing company also needs to have direct contact with the hospital billing department to address registration problems or bad data.
  • Get rid of paper: Any process that is manual needs to be automated.
  • Make sure your billing company has access to both lockbox deposits and electronic fund transfers. This way, billing staff can balance bank statements to confirm that all of the claims have been posted.
  • Work with your physicians and coders to make sure that even the smallest details of care are captured, including call to floor, EKGs, fracture care, tobacco counseling, after hours charge and the like. Measure these fee-generating services as a percentage of volume and then monitor monthly.
  • Make sure manage care contracts are paying correctly. Develop a matrix that lists payers, contract terms and rates for all EM levels and use it to make regular comparisons to paid claims. Equally important, don’t be passive and let contracts that come up for renewal roll over year after year. Take action each year and ask for an increase.
  • When negotiating contracts with payers, try not to get too focused on procedure reimbursement, since in most cases, 95% of the total revenue comes from evaluation and management (E&M) codes.

Finally, Simpson says it’s important to keep the revenue cycle in perspective and remember that the perfect can be the enemy of the good.

“If your doctors are close to hitting their numbers, tell them they’re doing a good job and don’t use reports to beat them up,” he said. “Reports can be important learning tools, but remember that billing patients is not the same as treating them. No one is going to die if a mistake is made. So give them a break.”


About the author

McKesson Business Performance Services offers services and consulting to help hospitals, health systems, and physician practices improve business performance, boost margins and transition successfully to value-based care.