As we enter the second decade of the 21st Century, medical practices face a host of financial challenges. Whether a practice aims to maintain physician compensation at desired levels, keep up with overhead expenses or invest in new technologies, the critical factor for success is efficient management of the revenue cycle.
The revenue cycle comprises the numerous tasks of the billing and collection process – namely, gathering and entering data about professional services rendered and ensuring that bills are paid in full.
Unfortunately, many medical practices don’t take firm control over these tasks. Opportunities to interact with patients and payers are missed and, as a result, the revenue cycle does not operate at peak efficiency.
While dozens of steps can speed up the revenue cycle and avoid missed collections opportunities, here are the 10 most common prospects for improvements.
1. Recognize where the cycle starts
The revenue cycle starts as soon as the practice defines the terms of its relationship with an insurer – or the practice’s policy regarding patients who have no healthcare coverage. When the patient makes contact with a practice, the revenue cycle wheel begins to turn. The cycle’s beginning includes stating the practice’s financial expectations, collecting from patients without insurance and verifying insurance coverage and benefits from those who do.
Medical practices historically viewed their billing offices as wholly separate units from the day-to-day activities of scheduling, registering, arriving and treating patients. This state of affairs is no longer tenable in today’s fast-paced financial world, an environment where medical practices’ profit margins have grown ever narrower due to falling reimbursement and rising practice costs.
2. Focus on accuracy
An efficient revenue cycle results in faster throughput, but that doesn’t mean haste. To ensure speed and accuracy, focus attention equally on improving the precision of the data submitted by clinical, administrative and billing office staff.
3. Submit claims daily
Send claims to payers as soon as they are ready. Use software or clearinghouse services to help identify problems in any denied claims so that corrected claims can be resubmitted as soon as possible. Send billing statements promptly to patients who don’t have insurance or who are covered by an insurer with which the practice does not participate.
4. Employ technology
As insurance deductibles, copayments and out-of-pocket costs continue to rise, a front office employee who knows how to obtain accurate information about patient financial responsibility is a tremendous asset. However, employees’ efforts to request time-of-service payments require the support of both information technology and operational design. For example, appointment schedulers should be able to quickly research patient balances and take credit card payments by phone. Deploy technology appropriately, and don’t overlook staff training.
5. Stay current
When it comes to billing and collections in healthcare, rules seem to have been created just to change. Many claims denials and lost billing opportunities occur because medical practices don’t set aside time each year to track the annual changes made to the CPT, HCPCS and ICD-9 coding systems. Each annual Medicare fee schedule also brings a host of new rules for covered services and reimbursement.
6. Leverage payer contracts to improve billing performance
To resolve the frustration of an insurer engaging in unfair payment tactics or creating inordinate delays, look to the contract. Shrewd negotiation during contract talks can make the document an ally. Ideally, the contract contains clauses that disallow bad insurer behavior – just as it will prohibit a practice from taking certain actions. Contracts with payers deal with many common issues, such as provider enrollment, take-backs and fee schedules. Keep tabs on each payer’s potential ‘hassle factor’ by creating a folder for each insurer.
7. Involve patients
Because a medical practice bills the payer on behalf of its patients, it’s only natural to ask for the patient’s help when something goes wrong in that process. If, for example, a payer denies a claim based on insufficient information from a patient, contact the patient immediately to prompt him or her to respond. Copy patients on any appeal letters sent to payers for services that were rendered to them. Seeing this information will likely stir patients to pick up the phone and call their insurers. Of course, always send statements to patients when bills are their financial responsibility, and hold them accountable for payment.
8. Prioritize
Billing office employees are generally detail-oriented. Therefore, they may lose sight of the big picture and need help prioritizing their work. Encourage staff to work insurance invoices and patient balances in hierarchical order. Set a floor amount for second-level appeals. A $10 floor, for example, may reflect the cost point at which a practice ends up spending more on the secondary appeal process than the claim would be worth if paid.
9. Follow through
Whether it’s an appeal letter or simply a patient’s promise to pay off a balance, make sure to monitor the progress of pending issues. Set up electronic reminders – ticklers – for information requests and appeals. It’s the only way to guarantee results. Furthermore, follow through when threatening to report a payer to the state insurance commissioner or turn a patient’s delinquent account over to the collection agency.
10. Monitor payments closely
Monitor key performance indicators by payer. At a minimum, for each payer, review the days in receivables outstanding, credits, aged trial balance and adjustments by category. Perform quality audits at least once a quarter by reviewing a number of accounts – say, 10 per physician – chosen at random.
To catch lower-than-contracted reimbursement, set up an automatic query in the practice management system to track each payer’s allowables for filed claims. Flag every invoice for which the insurer reimburses 100 percent of the charge – that’s a sure sign that the practice is charging less than the allowable it is due.
Keep these tips in mind when looking for ways to boost a practice’s ability to collect the revenue it’s due. Collecting revenue is the “revenue” in the revenue cycle, and the key to staying on budget.
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