Perhaps the biggest problem with antiquated claims processing methods is the wondering:

• Did the claim go through?
• Was it complete?
• Is there a hang-up somewhere?
• Where exactly is the claim?
• Will it be paid or will be it be rejected?
• When will the payment be made?

All of these questions arise when the financial operations staff doesn't have a window into revenue cycle machinations. Consequently, losing a claim in the pipeline results in lower productivity from time wasted chasing down information, rising days outstanding levels and higher costs.

Physician practices are especially vulnerable to claims processing snags, says Bill Gilbert, vice president of marketing for Warren, N.J.-based AdvantEdge Healthcare Solutions.

"The most important revenue cycle issue for most physician practices is preventing denials," he said. "It is hard work because denials represent the 10 to 20 percent of the claims that cause 90 percent of missed revenue opportunity. Some practices let denials accumulate, which obviously leads to missed collections and longer accounts receivable intervals. Other practices assign staff to work denials and get them turned around more quickly. However, the best approach is to analyze denials, determine their root cause, and implement action plans to eliminate the cause."

Most systems used for physician billing get the basic job done, Gilbert said, but in an era in which vendors are rapidly expanding system capabilities, "it is common to find revenue cycle workflows that are inefficient and, in some cases, ineffective."

Ralph Bernstein, senior vice president of Minneapolis-based U.S. Bank Healthcare Payment Solutions, sees the collection of patient receivables as the most important revenue cycle issue for providers.

"For years, providers have spent too much time and money chasing patient responsibility dollars that have walked out the doors of their practices, hospitals and clinics," he said "However, until relatively recently the amount of patient receivables was not great enough to merit much concern on the part of those providers. Things have changed - significant year-over-year increases in health insurance premiums have sent more consumers in search of lower-premium, higher-deductible, higher out-of-pocket health insurance plans. As a result, providers must now pay attention to an unprecedented level of patient receivables."

The need to collect patient receivables will only increase in the next few years, Bernstein says, as millions of consumers receive health coverage for the first time due to healthcare reform.

"Without some critical changes to provider workflow and revenue cycle management practices, providers will, in coming years, spend even more time and money chasing patient receivables and dealing with increased levels of uncollectible patient responsibility dollars," he said.