3 easy methods can streamline your business processes beyond your wildest expectations.

Kaizen, Six Sigma, and DMAIC -- What's so "easy" about these three terms? What do they mean?

In short, "kaizen" is a Japanese word. It's derived from "kai," which means "change," and "zen," which means "good." The English translation is "continuous improvement." The term refers to a system of productivity improvement, often relating to manufacturing.

Six Sigma is a methodology originally developed by Motorola in the mid-1980s that aims to give businesses the tools they need to improve the capabilities of their processes.

DMAIC is a methodology of Six Sigma designed to enhance existing business processes. Its five steps -- define, measure, analyze, improve, and control -- together make up an incremental method of achieving structured problem solving. The DMAIC approach is systematic, scientific, and fact-based

Six Sigma seeks to increase profits by eliminating the variability, defects, and waste that can undermine customer loyalty. It's often defined as a method of decreasing "defects per (one) million opportunities." But before your eyes start to glaze over, rest assured that you can use Six Sigma to achieve best practices without having to dig out your old notebook from that statistics course you took too many years ago. Simply focus on the philosophy at the heart of Six Sigma: Reduce variation in your business, and make customer-focused, data-driven decisions.

When implemented correctly, well-designed business processes can virtually ensure efficient operations. In effect, they tell your staff "how" to run your practice. But you already have a procedures manual at your office, you say. Have you really looked at those documents lately? It's likely that they've become very complex as you've tried to account for every variation and possibility that could arise in your office. And as you've attempted to combine procedures to gain a wider view of what it takes to complete a full process cycle, it's likely that inconsistencies have emerged. Even if your staff consists of only your receptionist and you, you have different styles of working that you apply to the same tasks -- leading

Lessons learned

What do we know about better-performing practices? They develop efficient processes and often incorporate technology solutions into those processes. In the MGMA report, "Performance and Practices of Successful Medical Groups: 2006 Report Based on 2005 Data," Digestive Health Specialists in Winston Salem, N.C., tells its success story, the roots of which are in its approach to challenges and opportunities.

For example, in the practice's billing operations, it breaks its processes down by function because it is not large enough to break them down by payer. By defining its billing objectives, measuring results, and analyzing alternatives, the practice has improved its processes and controls that improve with continuous benchmarking. DMAIC!

Continuous improvement is the Americanization of kaizen, which centers on teamwork. Too many claim denials led another practice in North Carolina to compose a group of a variety of employees to improve its processes. The practice's multi-disciplinary group made a change in the office's patient insurance verification process that resulted in 50 percent fewer denied claims. That's defect reduction at its best! Imagine what such a vast improvement could do for your profitability and employee morale.

The methodology to achieve incremental improvement, along with the team initiative required to put that methodology into action, can get you to the top of your game. Lean management is another element in your training regimen. Whether you want to capture all the patients in your market or hold tight at a controlled level and deliver the best services in the most efficient way, "going lean" can help you streamline operations, enhance customer service, bring new services to market, and deliver a competitive edge.

Lean programs -- a concept closely related to kaizen -- work to eliminate waste in each step within a process, including customer relations, service design, supply networks, and operations management. The goal is to require less human effort, less inventory (no gaps in the schedule), less time for service delivery, and less space. This gives a business room to be highly responsive to customer demand while also producing top-quality services in the most efficient and economical manner possible.

Grow with your business

Transforming your practice's management into a more efficient machine depends upon these basic business process re-engineering theories.

Your office's original processes were most likely created by someone without training in process engineering. As your business has grown increasingly complex, you've probably tacked on additional processes rather than redesign the ones that already existed. This approach often results in inefficiencies that take their toll on your employees and the quality of care you provide.

The pace of progress means that the nature of medical practices continually changes, and new technologies alter the feasibility of what you do and how you can accomplish your everyday tasks. To reach the top of your market and become a better performer, your management team must embrace the lessons of kaizen, Six Sigma, and DMAIC. In my experience, better-performing practices have three common traits:

• An effective physician-administrator management team (kaizen);
• Budgeting and control systems that monitor performance (Six Sigma and DMAIC); and
• Clinical staff, a business office, and physicians who focus on customer service (the whole package).

Apply these tools to your practice, and you can reach the top too!

Denial Management Accelerates Cash Flow

We must manage denials to boost reimbursement.

In the past, many practices didn't give much thought to their revenue cycle. They assumed that low A/R days and a high net collection percentage accurately reflected a healthy billing process. And if a denied claim fell below a specific dollar threshold, they simply wrote it off.

But as reimbursements continue to decrease and payer regulations multiply, practices are finding themselves scrambling to adapt to an increasingly harsh economic environment. In today's market, only those practices that take every available step to ensure they're being paid fully and promptly for services rendered can hope to prosper in the long run.

• Pro-Active Denial Management - Revenue leakage stemming from a below average or outdated process can average between 3 - 5 percent of total collections for many practices. According to industry experts, 30 percent of total claims filed are denied, although any rate over 10 percent should be reviewed closely.
• Demographic Information - Effective denial management starts with detailed, accurate demographic information. Patient data provided by the hospital information system must be carefully organized in the billing system so individual patient accounts can be sorted and accessed both by payer and plan.
• Dictated Reports - Prompt and accurate dictated reports received from the hospital likewise are a critical element in accurate claims submissions, because appropriate medical histories and medical necessity documentation are the lifeblood of proper coding. A mechanism should therefore be in place that allows coders to exchange feedback to the physician any documentation that is inaccurate or incomplete.
• Payer Specific Guidelines - Populating the billing system with continually updated, payer-specific guidelines helps prevent the submission of claims that will be denied for lack of medical necessity. In addition, payer and plan specific billing parameters - which define submission requirements and timelines for initial claims, re-filed claims, patient statements and pre-collection letters - should be inputted according to payer class.
• Clearinghouse Reports  - Once the claim is submitted to the carrier, the next line of defense aimed at mitigating the impact of denials involves daily or weekly reports provided by a claims clearinghouse. In the past, physician groups often had to wait weeks before learning that a carrier had denied a particular claim, which slowed cash flow and often made remediation difficult or impractical.
• Pending Insurance Claims - All claims, whether submitted electronically or not, should be monitored closely until payment is made. Thus, the practice's billing system should be set up to generate regular reports on the status of all outstanding claims. The system should allow for the inclusion of denial codes, denial appeal codes and detailed notes to ensure the status of all claims and/or denials is understood and tracked.
• Back-end Processes - By mapping patient accounts and claims to specific plans and carriers and incorporating detailed notes, denial codes and denial appeal codes in the system, practice managers are able to access a wealth of information about denial occurrences and trends.
• Payment Verification - Another key automation component involves confirming that payments made for specific procedures are consistent with the terms contracted with the payer. Carriers typically are more likely to respond to a report showing numerous deviations from the fee schedule than they would if the erroneous payments are presented to them individually.
• In-house or Outsource? - Developing an end-to-end denial management system is not a simple task. It requires commitment, resources and cooperation across the physician practice. Practices must therefore carefully weigh the costs and benefits of establishing a denial management system internally vs. contracting with a billing vendor capable of providing a complete array of denial management services.

Regardless of the course that's ultimately taken, one fact is clear: Most practices can no longer afford to accept the status quo when it comes to revenue cycle management. Only by systematically managing denials to maximize and accelerate cash flow can practices hope to survive the difficult economic times ahead.

“12 Things Good Bosses Believe”

Here are 12 Things Good Bosses Believe.

1.  I have a flawed and incomplete understanding of what it feels like to work for me

Yep.  Give an anonymous satisfaction survey to your employees if you think you know what they are thinking.  As managers, we create our own little world based on what we think employees need and want and what we are doing in response to our perceptions of them.  It’s a beautiful world we create.  It can be a rude wake-up call when we find we don’t really understand what our employees think about us, our decisions or our management style.

2.  My success — and that of my people — depends largely on being the master of obvious and mundane things, not on magical, obscure, or breakthrough ideas or methods.

My mentor taught me “Take care of people’s paychecks and their vacation time – get it perfectly right or fix it quickly, and you’ll be fine.” Anyone who has ever done payroll or staff scheduling can tell you that these “mundane” tasks are two of the most complex and frustrating, yet critical jobs in management.

3.  Having ambitious and well-defined goals is important, but it is useless to think about them much. My job is to focus on the small wins that enable my people to make a little progress every day.

Your staff wants to know that the group is moving forward, but ultimately they don’t relate the big projects to their day-to-day job.  What they want (just as you and I do) is to have the small irritations, the glitches, and the bugs to be fixed.  They want to be able to stop wasting their time doing workarounds because the manager won’t take the time to fix something.

4.  One of the most important, and most difficult, parts of my job is to strike the delicate balance between being too assertive and not assertive enough.

One of my Mary Pat-isms is to say that the only time I tell people exactly what to do without getting their input is when the building is on fire.  This is a bit of an exaggeration, but I do think employees get tired of me asking “What do you think?” when all they want is for me to tell them what to do.  If I tell them what to do though, how do I know that their input might not produce a better answer? I also want them to think about solving the problem themselves or getting input from others.

5.  My job is to serve as a human shield, to protect my people from external intrusions, distractions, and idiocy of every stripe — and to avoid imposing my own idiocy on them as well.

I interpret this as my effort to make it safe in the organization to make mistakes and to be human. The tricky part is walking the line between making it so safe that people feel that mistakes don’t matter, and making it safe enough to stand the pressure of healthcare every single day. I tell the staff that my job is to free them to do their job.

6.  I strive to be confident enough to convince people that I am in charge, but humble enough to realize that I am often going to be wrong.

An employee once told me that she really likes a boss who says “I don’t know the answer, so let’s see if we can find the answer together.”

7.  I aim to fight as if I am right, and listen as if I am wrong — and to teach my people to do the same thing.

I would amend #7 to say that I tend to rely on my experience to guide my decisions,  but I often want to hear what others’ thoughts are to make sure the best solution is achieved.

8.  One of the best tests of my leadership — and my organization — is “what happens after people make a mistake?”

See #5.

9.  Innovation is crucial to every team and organization. So my job is to encourage my people to generate and test all kinds of new ideas. But it is also my job to help them kill off all the bad ideas we generate, and most of the good ideas, too.

Innovation is crucial in delivering healthcare.  One of my favourite techniques is to see how problems are solved in other fields and try to apply them to healthcare.  Teaching others to seek inspiration and to be comfortable with test-driving solutions is critical to giving a practice the competitive edge.

10.  Bad is stronger than good. It is more important to eliminate the negative than to accentuate the positive.

I agree.  I hate it, but it’s true.

11.  How I do things is as important as what I do.

Or maybe more important.  How I speak to staff, how I speak to patients, how I demonstrate compassion, how I deal with frustration, how I relate to someone who is going through something tragic, how I talk about my boss, how I ________ (fill in your answer here.)

12.  Because I wield power over others, I am at great risk of acting like an insensitive jerk — and not realizing it.

Being a manager carries with it an almost bone-crushing responsibility for doing the right thing for the organization AND the right thing for the employee.  Trying to achieve a win/win in as many situations as possible is a noble calling, but one that can wear you down to a nub, which is when most of us may be accused of acting like insensitive jerks.  Acknowledging this state (apologizing is good) and taking a time out is the right thing to do.

If you describe what you want in a boss, and you’re not describing you…think about it.

Dealing With Claim Denials

Dealing With Claim Denials

The provider has rendered the services to the patient and the completed claim form has been submitted to the third-party payer. You await the processing of the claim and anticipate payment in a timely manner. The explanation of benefits arrives and states the claim has been DENIED. What do you do now? The Department of Labor estimates that about one claim in seven made under the employer health plans that it oversees is denied initially - about 200 million claims out of the 1.4 billion submitted yearly. According to the Kaiser Daily Health Report, on average, national health insurers paid physicians in 33 days and denied 9.2 percent of claims. The report states that the payers are overruled in approximately half of such cases. The number of denials overturned varies by state, from a high of 72 percent to a low of 21 percent. "Denial management" is the phrase used to describe the process of following up on claims that have been denied for reimbursement from the health insurance company. Denial management can consist of manual review of explanation of benefits (EOBs), utilizing medical billing software or employing a Web-based system that reviews claims. These systems help to reveal denied claims and identify the cause for denial. They can be very effective in tracking individual payer denials, determining common patterns, generating productivity and analysis reports, as well as routing claims to specific staff for research, correction and re-filing. A medical claim can be denied for various reasons. The most common reasons are: Lack of medical necessity Lack of pre-authorization Erroneous patient demographic information Erroneous provider data Incorrect subscriber identification number Invalid ICD-9-CM, CPT and/or HCPCS codes Invalid place of service codes How do you work smarter, not harder when it comes to managing your denied claims? 1.      Track information monthly, quarterly and annually. Prepare a spreadsheet documenting the following data: Percentage of claims denied Most common types of denials Which payers denied claims most frequently and why Net effect of denials on cash flow Use this information to confirm or rule out that staff and/or providers need additional training. Determine if there is a need to meet with individual payers, especially if the provider is not being paid correctly, according to the contracted rate. Assess whether you need to modify your claims filing process. Example of a "Denial Analysis" report: Denial Description Number of Denials Total amount denied Third Party Payer Claim denied for timely filing 3 $300.00 Humana Invalid place of service code 5 $500.00 Anthem 2.      Appoint well-trained employees in the distinctive position of denial management. Not all billers and coders have been trained to analyze and abstract data correctly from the EOB. If EOBs are interpreted incorrectly, there is the potential for loss of revenue through incorrect contractual write-offs on the patient's account, oversight of an opportunity to appeal a denied charge or improperly balance billing the patient. 3.      When the reason for the denied claim has been determined, timely action is required. Many payers have time limits on filing appeals. Sometimes the corrective action could simply be to call the payer. Be sure that the staff member calling is knowledgeable of the details of the reason for the denial, the medical necessity for the service(s) provided, and the original codes filed on the claim. This can help lead to a quicker denial resolution. 4.      If a phone call to the payer is unsuccessful, a written appeal letter may be necessary. The appeal letter should be professionally written, with clear communication on why the charges should be reconsidered for payment. Send this by certified or registered mail to ensure it is received by the payer. Be sure to attach any necessary documentation to support your appeal. Progress notes, operative reports, laboratory and/or test results are very helpful in substantiating your case. 5.      If after exhausting your appeal options, you do not attain a satisfactory outcome, contact your state insurance commissioner. Formal complaints against health insurance companies (with the exception of self-funded plans) can be filed with your state insurance commissioner. For additional information, visit the National Association of Insurance Commissioners at www.naic.org. 6.      If you need to submit a corrected claim because of incorrect demographic information, invalid identification numbers, place of service or ICD-9-CM, CPT or HCPCS codes, be sure to make the correction(s) and note on the claim "Corrected Claim," or send a letter with the claim stating what you corrected. Avoid resubmitting the claim without this information: It may get denied again as a "duplicate claim." 7.      Read and understand your managed care contracts. Be aware of each payer's appeal process. Many contracts require the provider to request a review of denied claims in writing. Specifically examine the contract language that relates to the timeframe for seeking reconsideration by the payer, the documentation required and the address and title of the person to whom to direct the appeal. Getting the right information to the right person often is the key to a successful appeal and obtaining payment quickly. 8.      Implement automated systems for obtaining, tracking and monitoring data. Automation is more efficient and saves time. Use scanning devices for obtaining copies of insurance cards. This will help decrease data entry errors. Be sure to train staff properly on how to use the equipment and software programs. Remember: Garbage in = Garbage out. 9.      Monitor results and report positive financial impact to the staff and providers. This will help to motivate everyone to continue to work on preventing future denials. 10.  Clearly, the way to work smarter and get paid promptly is to submit a clean claim the first time. A clean claim is defined as "a claim free of any errors." Double check claims, either manually or via your computer software, for any simple errors. Check for codes that are billed, but not supported by documentation, incorrect dates of service, missing provider or patient data, etc. Most electronic claims processing software and/or clearinghouses have the capability to perform these proofreading functions. This will allow corrections to be made before the claim is submitted to the third party payer. A recent study conducted by the Commonwealth Fund foundation and Robert Wood Johnson Foundation's heath care research organization revealed administrative costs stemming from interactions between providers and insurers are estimated to total $31 billion a year. With this alarming data it makes sense for providers to focus their attention on this very important aspect of their practice. Denial management is a weak area for many health care facilities. In this day of uncertainty of our healthcare system and reimbursement, it is imperative that we continue to be diligent in strengthening our efforts to collect the maximum reimbursement due for services rendered.