Cincinnati Children’s Hospital increases net cash collections by more than three percent and accelerates $21.8 million in cash flow using MedAssets Claims Management Solution

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According to a Kaiser Health News report issued in September 2011, even in tough economic times, pediatric hospitals remain on sound financial footing. The nation’s 39 largest children’s hospitals reported $22 billion in net revenue from combined hospital and outpatient operations. Children’s hospitals in Boston, Cincinnati, Houston and Philadelphia, specifically, took in more than $1 billion each.

That strong footing could change, however, as all healthcare organizations face the health reform challenge of an expected increased volume of Medicaid patients—a demographic that accounts for almost half of all pediatric patients. In fact, the National Association of Children’s Hospitals and Related Institutions (NACHRI) estimates that Medicaid only pays 75 percent of the actual cost of providing pediatric care, leaving children’s hospitals to foot the other 25 percent of the bill.

One children’s hospital in particular, Cincinnati Children’s Hospital Medical Center located in Cincinnati, Ohio, found a solution to help drive in more cash.

Ranked as one of the largest children’s hospitals in the nation with 467 beds, Cincinnati Children’s set out to mitigate revenue loss by accelerating billing and resolving aged claims. In addition, it was undergoing a facility-wide conversion to an Epic patient accounting system with the ultimate goal to improve cash flow.

Recognizing that the facility’s current patient account system could not meet all of its needs, Michael Taylor, vice president, Revenue Cycle, Cincinnati Children’s Hospital Medical Center, was ready to upgrade its claims management system to a next-generation, Web-based technology. According to Taylor, the facility’s previous system lacked an edit advisory. Cincinnati Children’s was responsible for manually creating all of its edits, which led to an increase of aged claims extending more than 60 days and delays in the re-submission of claims.

“We were looking for a solution that had the ability to improve our revenue cycle effectiveness while enhancing overall operational efficiency and accountability,” said Taylor.

In its search, Cincinnati Children’s found that MedAssets Claims Management system was the best fit. It had a proven track record of ability to improve billing accuracy and compliance with extensive provider and payor specific editing capabilities. According to Teresa Louis, Applications Specialist, Hospital Billing Operations, for Cincinnati Children’s, one of the biggest advantages to enlisting the help of MedAssets was the suggested payor edits provided by the company’s daily edit advisory. MedAssets Claims Management provides claims editing based on regulatory and payor-specific updates to increase first pass claim acceptance rates and prevent claim rejections, improving accounts receivable (A/R) days.

“One of the system’s key features is the daily payor updates,” Louis said. “This was extremely beneficial for us and allowed us to build rules into Epic to improve data quality overall, increase our clean claim rate and reduce payor denials. Once we received the edits from the MedAssets team, we took a proactive approach to implement the suggestions to address incoming claims.”

Within the first 45 days of implementing Claims Management, Cincinnati Children’s saw a 20 percent improvement in their clean acceptance claim rate, with average rates in the 90 percent range. In addition, the facility achieved a decrease of 6.5 month-end average days in A/R, achieving 43.6 days in fiscal year 2010 (July 2009 to June 2010), down from 50.1 days in fiscal year 2009. Perhaps the greatest accomplishment in fiscal year 2010 was an increase of 3.1 percent in net cash collection over the prior year.

“We saw similar results in 2011,” according to Charlie Baverman, assistant vice president, Billing Operations. “The reduction of 6.5 A/R days translated into $21.8 million in accelerated cash flow. This was a direct result from MedAssets Claims Management. Cincinnati Children’s is a firm believer in MedAssets Revenue Cycle Management products, and we have the results to prove it. Implementing Claims Management was a major component in our rapid Epic go-live recovery and helped us gain substantial operational improvements.”

Since implementation in 2008, Cincinnati Children’s averages clean claim rates between 96 and 97 percent.

“The MedAssets Claims Management suite is by far the best system I have had the pleasure of working with.” Taylor added. “Through utilizing this user-friendly solution, we not only improved our clean claim rates and reduced our A/R days, but we also were able to improve staff workflow due to the customizable features of the technology.”

MedAssets (NASDAQ: MDAS) helps healthcare organizations to improve financial strength through innovative revenue cycle, spend and clinical resource management solutions that enable improved margins, cash flow, quality of care and patient satisfaction. More than 4,200 hospitals and 100,000 non-acute healthcare providers currently use the company’s Web-based technologies and evidence-based solutions to help capture revenue, control cost, increase regulatory compliance and optimize operational efficiency to improve the care delivery process. For more information, please visit www.medassets.com.