The CRO: On Reimbursement Watch

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Sometimes I joke with people who ask me what I do for a living. “I am a crow,” I reply. I recently joined the administrative team of Inland Imaging in Spokane, Washington, and fill a slightly different and (hopefully) value-added role for the company. While most Spokanites have heard of Inland Imaging and many industry insiders across the country know Inland for its progressive use of technology, most are unfamiliar with the title CRO, which is the acronym for chief reimbursement officer.

This emerging position in the large medical practice was born out of the observation that the business office holds many keys to the organization’s financial success. Effective health plan contract negotiations, maximally correct coding (not to be confused with up-coding), efficient back-office operations, and, of significant importance, comprehensive data analysis with clinical and financial relevance —increasingly referred to as informatics—are all critical to the success of a practice.

Contract Negotiations. Effective contract negotiations can be one of the most significant characteristics of a thriving practice. Profit margins in health care today are small. If the practice can negotiate rate differentials even as small as 1%, profit margins can be increased by 50% or more, and in more competitive markets deliver a positive margin where none previously existed.

Traditional infrastructures are often rich with accounting numbers but are unable to fully differentiate themselves from competitors. Because of this, health plan negotiations are often little more than, “So, tell me what to expect from a rate adjustment next year.”

If armed with the full knowledge of the practice’s value to the patient and therefore to the payor, a skilled negotiator can obtain rates in excess of the plan’s standard rates, often by a significant margin. This knowledge must come from internal sources as well as external, and the skilled CRO will know where and how to look for, evaluate, and sell a practice’s value to each of its contracted payors.

Maximally Correct Coding and Reimbursement. Actual clinical utilization is often left unbilled, either (correctly) because it isn’t documented, or (incorrectly) because of systems issues that somehow preclude the service(s) actually ordered, provided, and documented from being correctly billed.

Because reimbursement is impacted directly by accurate coding, this also falls under the CRO’s responsibilities. Practices will frequently send coders, technologists, and providers to coding conferences or other educational sessions, and even bring in an outside consultant or two. As the new CRO, I am implementing a year-round audit program that is designed to systematically review the effectiveness of these educational activities and processes by assessing if what was actually performed was documented in full and then was translated into the correct CPT and ICD-9 codes billed to payors. Inconsistencies—or gaps—between operations and coding, IT interfaces and coding, and coding and charge posting will be fixed by having a dedicated senior administrator at the table who’s role it is to facilitate cross-functional solutions to these types of systems issue.

This same process will also evaluate the actual payments remitted for services billed against the payor’s contractual allowable, and will resolve underpayment issues as identified. Every practice should have some form of audit process—concurrent and/or retrospective—as claims submission and payment with 100% accuracy is very rare indeed.

Efficient Back-Office Operations. The size of the business office measured in terms of percent-of-payroll varies by practice and business model, but in Inland’s case, it is the largest single department and commands close to a third of its payroll expense.

For a practice as large as Inland’s, one or two extra billing office staff is not a make-it-or-break-it proposition. But, too few staff or staff not efficiently working to capacity can have a significant negative impact on the fiscal performance of the practice, if not in terms of wage expense, then in accuracy of claims billed, correct collections, accounts receivable (AR), and cash management.

Part of my role is to ensure that the business office is performing its role as efficiently and accurately as possible.

Informatics. I think the key to the position of CRO is that he or she understands many forms of relevant data, including financial, clinical, and other external