HIM 510 Module 3 Final Project Milestone One Example

Final Project Milestone One: Where the Money Stops, a Revenue Cycle Assessment at Laurel Point Regional Medical Center

[Student Name]

Southern New Hampshire University

HIM 510: HIM Applications and Systems

Final Project Milestone One

[Instructor Name]

[Date]

The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.

Final Project Milestone One: Where the Money Stops, a Revenue Cycle Assessment at Laurel Point Regional Medical Center

Laurel Point Regional Medical Center's leaders know that revenue is slower than it should be, but they disagree about why. Finance blames coding, coding blames documentation and registration blames payers. This milestone replaces those opinions with measures. It maps the revenue cycle, defines eight measures with formulas and current values, analyzes the causes of claim denials by stage and identifies where health information management can act, laying the groundwork for the policy statement in Milestone Two.

The Revenue Cycle in Three Stages

The revenue cycle runs from the first contact with a patient to the final payment. The front end includes scheduling, registration, insurance eligibility checks and prior authorization. The middle includes documentation, charge capture, clinical documentation integrity and coding. The back end includes claim submission, payer edits, denial management, patient billing and collections. Health information management owns much of the middle and influences both ends, since coding and documentation determine what is billed and records support appeals.

Measures and Current Values

Table 1 defines eight measures used for the assessment, each calculated from the last two quarters of data.

Table 1. Revenue Cycle Measures

Note. Hospital revenue cycle reports for the last two quarters; composite data.

How the Measures Have Moved

The current values are more worrying in light of their direction. Two years ago, the initial denial rate was 8.9% and the clean claim rate 87%. Days awaiting final billing have risen from 4.8 to 6.1, largely because of two unfilled coding positions and slower physician completion of discharge summaries. Days in accounts receivable rose from 47 to 54 as more claims cycled through appeals. Only coding accuracy has held steady. Trends matter because they separate long-standing weaknesses from recent breakdowns: the rise in denials coincides with the growth of Medicare Advantage enrollment in the hospital's service area and with a registration staff turnover rate above 30%, both of which point to front-end and payer-mix causes rather than to coding.

Why Denials Happen

A review of 400 denied claims from the last quarter traced each denial to its root cause and stage. Front-end problems accounted for most denials: missing or incorrect prior authorization caused 31% and eligibility or registration errors 18%. Medical necessity disputes caused 22%, often reflecting documentation that did not show why a service was needed. Coding errors caused 14%, and the remaining 15% involved timely filing, duplicate claims and other issues. The pattern contradicts the assumption that coding is the main problem; it is one contributor among several.

Medical necessity denials deserve attention because they are rising. Schwartz et al. (2022) compared the medical necessity policies of government and private insurers in Medicare and found that private Medicare Advantage insurers often applied coverage policies that differed from traditional Medicare's, adding criteria that providers must document. Laurel Point's growing Medicare Advantage volume helps explain why medical necessity denials doubled over two years.

What Denials Cost

Denials cost more than the write-offs. Every denial requires staff time to research, correct, resubmit or appeal. Costing out billing work at a large academic system, Tseng et al. (2018) found that it consumed a considerable share of professional revenue for some visit types, especially brief primary care visits. At the national level, Himmelstein et al. (2020) estimated that administrative costs took a far larger share of health spending in the United States than in Canada, with billing complexity a major contributor. Patients bear costs too. Kyle and Frakt (2021) described the administrative burden patients face, including time spent disputing bills and navigating insurance, which falls hardest on those with the least time and resources. A denied claim that becomes a patient bill is a burden the hospital created.

Where Health Information Management Can Act

Health information management can directly address three of the denial causes. Coding errors, 14% of denials, respond to targeted audits and education. Medical necessity denials, 22%, depend on documentation that clinical documentation specialists can improve, especially for services with known payer criteria. And the time accounts wait for final billing, 6.1 days, depends partly on record completion and coding throughput. Health information also supports appeals, since overturning a denial requires the right records sent promptly and securely, and the 47% overturn rate suggests many denials are winnable if appealed. Front-end causes belong to patient access, but health information can help by making documentation of authorizations visible in the record.

Summary of Findings

Laurel Point's revenue cycle loses money at every stage but not equally. Front-end authorization and eligibility errors cause about half of denials, medical necessity disputes are growing with Medicare Advantage, coding errors are a smaller but real share and nearly half of appealed denials are overturned, which means many should not have been denied at all or could be prevented. A policy that treats the revenue cycle as a shared process across departments, with clear responsibilities and measures, would address these findings better than a coding initiative alone.

Limitations

The denial review sampled one quarter and may not reflect seasonal patterns. Assigning a single root cause to each denial simplifies cases with several contributing problems. Some measures, such as point-of-service collection, depend on registration practices outside the scope of health information management.

Conclusion

Measured carefully, Laurel Point's revenue problem is a process problem shared across the cycle. Health information management can lead on coding accuracy, documentation for medical necessity, record completion and appeal support, while partnering with patient access on authorization. Milestone Two will draft a revenue management policy statement built on these findings.

References

Himmelstein, D. U., Campbell, T., & Woolhandler, S. (2020). Health care administrative costs in the United States and Canada, 2017. Annals of Internal Medicine, 172(2), 134-142. https://doi.org/10.7326/M19-2818

Kyle, M. A., & Frakt, A. B. (2021). Patient administrative burden in the US health care system. Health Services Research, 56(5), 755-765. https://doi.org/10.1111/1475-6773.13861

Schwartz, A. L., Chen, Y., Jagmin, C. L., Verbrugge, D. J., Brennan, T. A., Groeneveld, P. W., & Newhouse, J. P. (2022). Coverage denials: Government and private insurer policies for medical necessity in Medicare. Health Affairs, 41(1), 120-128. https://doi.org/10.1377/hlthaff.2021.01054

Tseng, P., Kaplan, R. S., Richman, B. D., Shah, M. A., & Schulman, K. A. (2018). Administrative costs associated with physician billing and insurance-related activities at an academic health care system. JAMA, 319(7), 691-697. https://doi.org/10.1001/jama.2017.19148