At the 2011 MGMA annual meeting, Cass Shaedig gave a presentation that many medical billing professionals are likely to find interesting and illuminating. Shaedig, president of Trellis Healthcare, a business-intelligence firm focusing on group physician practices, showed how you can use data analysis in your practice to drive business decisions.
This comes, of course, at a time when data is more available, more powerfully analyzed and more vital to practices’ business success than at any time previously. It should also come as no surprise that much of the data that’s critical to practices’ business intelligence falls squarely within the purview of medical billing staff, including coding, collections, reimbursement and more.
Measure, monitor & succeed
In her presentation, Shaedig spoke about how practices can get useful data from practice-management software systems and incorporate it into business analysis along with data from external sources, particularly comparative “benchmark” data. In fact, Shaedig listed benchmark data as a key area of metrics/indicators to include in business-performance analysis. Payer reimbursement, provider productivity and the success of marketing (especially the development of referrals) are the other key measures Shaedig mentioned.
How do you measure a practice’s performance?
When it comes to a practice’s business performance, there are several areas that should be monitored and measured. The first is productivity, which includes:
- patient volume,
- new-patient volume,
- procedure volume,
- gross charges and revenue,
- days worked and
- relative value units (RVUs, covered later in this article).
Coding is also a vital metric, including evaluation and management curves and CPT/ICD-9 coding patterns. Shaedig stressed that coding metrics should be evaluated against Medicare and all-payer data sets in order to know how a practice stacks up against other practices.
Another key area to measure is marketing. What are the trends? How much money is being generated by marketing and referral-development efforts? What is the demographic profile of the practice’s patient base? Where are patients coming from? Practices should also know who their referrers are and how many patients they refer. Shaedig was careful to cite the importance of knowing referral value vs. volume.
Of course, the financials are critically important. What are the total collections? Collections as a percentage of charges? What are the guarantor collections? What percentage of charges are denied? What is the time lag between when charges are posted and paid? Shaedig was also very specific that she believes the best indicator for collections success and performance of payer contracts is “revenue per RVU.”
Understand RVUs & include them in the data analysis
In the world of practice management, RVUs have become — and are increasingly becoming — an important way to measure provider productivity, assess payer performance and determine how practice overhead is distributed. There are three types of RVUs: “Work,” “practice expense” and “malpractice” RVUs. But total RVUs are also important. (See “Understanding the RVU in Practice Management: Getting the Most Out of Using It in Your Practice” previously published on our blog.)
RVUs are a standard unit of measurement for productivity. CPT codes are assigned a specific RVU value that is “payer-blind” and disconnected from the dollars it earns. Work RVUs make it possible to measure the productive contribution of providers whose services have very different levels of reimbursement dollars. In this way, work RVUs “level the playing field” between providers, as dollars collected — while essential to measuring business success — are not a true measure of productivity.
Analyzing practice expense RVUs makes it possible to see how costs are allocated throughout the practice. This permits, as does all business-intelligence analysis, making business decisions that are informed by a thorough understanding of the practice.
Dividing total RVUs by RVUs generated, said Shaedig, allows the practice to see how well it is being reimbursed. Be sure to use only fully adjudicated services, include denied services and patient/guarantor payments, and don’t include services with no assigned RVU value.
Tips for analyzing a practice’s business data
Shaedig stressed that practices should develop standard performance measurements based on those that already exist. Practices need a standard to which they can compare their performance. She said that practices must identify the metrics, make them known to the providers, consistently report the findings and patterns to providers and keep an eye on how that reporting changes provider behavior and coding patterns.
Practices must also make sure to incorporate changes to CPT codes into the analysis of business data, Shaedig said. For example, the elimination of consult codes does not truly mean a drop in patient visits, as it might seem to indicate. These visits now have different codes. Similarly, combined codes may seem to indicate patterns that are false. Adjust for these.
Ultimately, Shaedig advised that distilling the available ample data into manageable information is central to practices’ success… and sanity. But practices must define their own goals and identify which markers/metrics they want and need to track. At the same time, she recommended keeping it simple and, if possible, including an analysis of RVUs.