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UVA-OM-1214
MAYO MEDICAL TRANSPORT
Background
Mayo Medical Transport (MMT) provided a full spectrum of medical transport services on the ground and in the air. MMT ensured that patients were transported with the right level of medical expertise in the most appropriate vehicle that met the patients’ healthcare needs in an economical manner.
Dispatchers at the MayoEmergencyCommunicationsCenter allocated all MMT services from its base in Rochester, Minnesota. They assisted in evaluating the patients’ needs, helped determine the appropriate medical staff, and dispatched the vehicles. The business office invoicedpayers and patients for services,and provided and collected payment.
In the 1990s, MTT purchased 12 additional ambulance services to create a comprehensive Emergency Medical Transport System for Minnesota and southwestern Wisconsin. As a part of this strategy, the call dispatching center and the business office were centralized.These two centers were charged with coordinating dispatch and billing for all of the 15 locations.
The consolidation of the dispatch and billing centers revealed the degree of nonstandard practices throughout the organization.Dispatchers were required to maintain separate policies and procedures manuals for each of the 15 different sites.The billing office received ambulance-run reports that had been developed locally.Billing specialists were required to map the incoming information to standard invoices required by the payers. Because of the intricacies of healthcare billing and insurance practices, the billing office was not able to support the incoming flow of run-reports, anduncollected receivables grew to about 50% of annual revenues.
Days Revenue Outstanding (DRO), a key financial indicator used in the industry, rose from 80 days to an unacceptably high 200 days. Each year MMT was writing off about 15% of their billings and had operated at a loss for the previous three years.Employees and managers alike were frustrated by their inability to resolve the situation.Attrition rates rose, which complicated the situation even further.By June 2001, MMT management knew they had to reduce DRO back to 80 days to get the business back on track, but it was not clear how to achieve that with the existing resources.
The Claims Process
The claims process had evolved under these pressures to create a situation where “everybody did everything.” Billing specialists were assigned to each of the 15 sites in the system.They were responsible for receiving all run reports, billing the appropriate payers, and managing collections and bookkeeping.The billing system software was also organized by site, which made it difficult to measure performance across the system.
The claims process was further complicated by the growing error rate in the invoices sent to payers and patients. As an easy fix, a system had been adopted where an incomplete invoice was submitted to a payer.Then the payer waited for the response that was needed to identify the information required inorder to submit a corrected invoice based upon the payers requirements. The delays and the reworking added by this approach served to continually drive DRO up and increase the backlog of unresolved claims.
Management implemented the “clean-desk policy” in an attempt to get current.According to this policy, billing specialists were required to have all invoices for their sites submitted by the end of each month.In addition, a goal was set for billing-cycle time, defined as the number of days to submit invoices. A five-day turnaround for all invoices was required of all billing specialists. In the current system, the practical result was to submit even more incomplete claims in order to “get the invoice in the pipeline.”The net effect of the management initiative was to increase DRO and the backlog of unresolved claims.
Redesigning the Billing and Accounts Receivables Processes
MMT engaged a consultant to assist with turning the situation around.The first task was to identify the required roles and accountabilities within the business office that would improve and then maintain performance.The tasks required of the business office were grouped into four major steps: collecting claims information, filing claims, sending invoices, and receiving payment. Measurements were defined to track performance in these four areas. Delays and errors in these process steps were identified and addressed. In the receive-payments part of the new process, for example, the following business rules were put in place:
Table 1. Receive-payments process.
Claims not paid in: / MMT action1 to 28 days / Remind patients with claim statements
29 to 42 days / Call patients once
43 to 56 days / Call patients twice
57 to 70 days / Notify patients of the intent to refer to collection agency
71 to 84 days / Transfer to collection agency (CA)
The new measurement system tracked these payment activities and helped develop a picture of how uncollected claims flowed and were distributed through the receivables pipeline.
Process managers were selected to monitor key measurements from each of these four major steps and determine how to best allocate the existing staff.The managers were to be trained in continuous-process-improvement methods to adjust the process to address problem areas..
Creating a Shared Understanding
The next step in the consultant’s assignment was to provide management with a way to help them arrive at a shared operational understanding of how to use the new management system to reduce the DRO indicator from 200 days back to 80 days as quickly as possible. To accomplish this task, the consultant was asked to develop a systems map and simulation model of the activities at MMT. The goal was to provide a means for managers to identify the leverage points for improving overall process performance. The model would be packaged in a simulation-learning environment to help all employees develop their understanding of the underlying performance dynamics.It was decided to focus initially onstaff resource-allocation strategies among three different day to day activities: claims processing, fixing errors, and continuous-process improvement.
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UVA-OM-1214
Exhibit 1
MAYO MEDICAL TRANSPORT
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UVA-OM-1214
Exhibit 2
MAYO MEDICAL TRANSPORT
DAta are illustratIve AND NOT ACTUALS