An Exploration of the Home Health Revenue Cycle Process Using Modern Business Intelligence Tools
By Kalon Mitchell
10/13/23
I have borrowed a variation of the title of a book from 1974, Zen and the Art of Motorcycle Maintenance by Robert Pirsig. In this book, he describes a fictional trip on a motorcycle he took with his son and the philosophical discussions that took place along the way. In this blog, I will share my experiences from over 35 years as the founder of a software company that produced revenue cycle tools for healthcare providers and their vendors. Over the last five years, I have focused on applying business intelligence tools to the data created by the revenue cycle process in an effort to gain insights and a better understanding of the components involved. I plan on using this blog to share these findings. In particular, my focus will be on revenue cycle issues for home health agencies. I hope that people who read this information will share their insights with me so I can benefit from their knowledge and perspective as well.
Over time, I will share what I have learned and together we can explore how these insights might be leveraged to explore opportunities in this process that might benefit home health providers collectively or might be used to improve the financial health of individual agencies.
This blog will not focus on staffing shortages, quality of patient care, treatment plans, patient satisfaction or other clinical and operational issues that are important to delivering quality healthcare in the home. There are many other sources for this information delivered by people much more qualified to do so.
Instead, I am going to focus on money. This is the fuel that makes the revenue cycle process run and it influences all of its participants. In our discussion, at the most basic level, the revenue cycle components include the patient, the home health agency providing services to the patient, and the health plans reimbursing these agencies for their services. In my opinion, there is a significant lack of understanding of the entire revenue cycle process by these participants and very little resources for them to rely on to improve this understanding. I hope that this blog will be a step toward improving this situation.
Unlike many of the clinical issues, money can be accurately measured. We can measure revenue, cost, units of service and profit margins. I have found that many people in our business are uncomfortable with this perspective. It renders a point of view that might portray the revenue cycle participants as cold, uncaring institutions that put money over the welfare of patients. This is particularly true regarding the relationship between home health agencies and the health plans that provide their revenue. Both are suspicious of each other's motives. Both portray a picture where they are the voice of reason while the other side represents goals motivated more by money than patient welfare.
There is no better example of this than the relationship between CMS (Center for Medicare and Medicaid Services) and the home health industry.
For those of you still reading this, you are most likely someone who deals with numbers presently. You are responsible for the financial performance of your organization or you support someone who is. You know that numbers tell a story. You can look at financial data over time and see risks and opportunities. You can translate this data into actionable strategies that might make the difference between survival and success for your business. You view your agency as a business first, because someone has to. A business that must survive and thrive in order to accomplish any mission you might have in support of patient care, your people, your community, or your shareholders.
I know many of you. You have been my clients, my co-workers, my vendors and my partners. We have connected on projects involved in leveraging data like this, sometimes successfully, sometimes not, but we both believe that decisions based on data are more likely to benefit us than decisions made without it.
Most of you spend a significant amount of time managing data as it relates to your organization. You most likely depend on spreadsheets combined with output from your business software to create most of the data you need. Although this process produces results, for the data we will be exploring, we will need something more.
Annually, agencies provide cost reports to CMS, detailed financial data regarding their business and statistical metrics like revenue, visits and census by financial class (Medicare, Medicaid and Other commercial insurance). As the title implies, they include detailed descriptions of costs including salaries, benefits, overhead and operational expenses. If you are involved with agency financials you are already aware of these reports and the data they contain. You might prepare them yourself or work with a vendor to do so.
These reports are prepared by agencies annually after the end of their fiscal year. They are submitted to the MAC (Medicare Administrative Contractor) for review. Those that are accepted are transferred to a CMS database. CMS finalizes this data and publishes it quarterly. It is then available for download to anyone, in addition to CMS, that might be interested in exploring it. The data includes a record for each report and a related table for each specific cost report data item, numeric or alphanumeric, referenced by the cost report number, worksheet, line number and column number.
For 2020 - 2022, this works out to 27,326 cost reports for 10,723 agencies. These reports contain 3.33 million alphanumeric data items and 9.95 million numeric data items. To reconstruct the cost reports, you have to be able to load these items into a database and then recombine them by agency and report. You then have to have tools to visualize this data not only for individual agencies and reports, but for groups of agencies or the entire home health industry, in order to gain insights on what the data means. You need to be able to change how the data is sorted and filtered to view how the outcomes might be affected by individual data elements or time. You may need to relate this data to other external data from other data sources and you need to update this data easily when these data sources are updated.
This can’t be done with spreadsheets. This can best be achieved using (BI) business intelligence software. This software is designed to deal with these data sets and those much larger. It can be used to explore data on the fly, as we will do with this blog, or to develop applications to provide data to end users. It can do this much faster than applications designed to access the same data through conventional databases and programming languages.
There are many of these products out there, just like spreadsheets. Each has its strengths and weaknesses. I have used several of them. I prefer Sisense. I have been using it now for over four years. Of the BI software vendors I have been exposed to, they provide the best product and support.
Using Sisense, I have loaded these cost reports into a data model and I have been exploring the data through dashboards containing charts and tables. In my first few blog articles, I will leverage this cost report data to support my own perspective on CMS conclusions regarding their home health reimbursement model, PDGM, and the data foundation it is built on. We will find that my perspectives are sometimes in conflict with what is presented by CMS looking at the same data. We will also discover that this data provides other actionable insights not directly related to Medicare reimbursement.
As you follow this blog, think about the data you have access to. Do you think it has the potential to provide similar actionable insights? If so, reach out to me, I can help you get there.
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