Dwindling resources, mounting regulatory hurdles, declining payer reimbursement and increasing patient financial responsibility are all taking a toll on physician practices’ bottom lines. With these factors in mind, practices must find ways to optimize revenue and reduce costs.
Doing so will help protect their income, mobilize them to respond to emerging payment models and be able to invest in new technology—all bolstering future growth potential and viability. So, how can physician practices enhance their revenue cycle? What should they do to make the process more efficient and ensure payment of all monies due?
Proactive management for constant improvement
For many practices, using a comprehensive checklist approach in which the organization regularly and systematically reviews performance is a good place to start. Fully leveraging such a method allows an organization to engage in continuous performance improvement, keeping the revenue cycle crisp and responsive to evolving reimbursement changes.
Following are three key activities to include on any revenue cycle management checklist.
1. Assess potential billing weaknesses.
As a first step, organizations should thoroughly evaluate current billing and collections processes, systems and technology. This detailed analysis can pinpoint where operations are falling short and where improvements are necessary. As part of this assessment, practices should ask if the existing revenue cycle management strategy will meet future industry demands, regulations and changing reimbursement models. After identifying potential weak points, practices can consider workflow changes, technology upgrades and/or outsourcing possibilities that might create greater efficiency and effectiveness.
2. Minimize and proactively manage denials.
Next on the checklist should be a thorough examination of how the practice handles claim denials. Without a finely-honed strategy, many organizations find themselves wasting valuable staff time and resources. More importantly, denied claims represent lost or delayed revenue. For too many practices, denials are left to languish and are ultimately written off as bad debt. In fact, a recent national survey conducted by NextGen Healthcare found that 47 percent of participating provider organizations never re-submit a denied claim, missing the opportunity to generate earned revenue.
If after review a practice determines that its denials management strategy is subpar, there are many ways to make improvements. Probably the most effective is to prevent denials in the first place, making the claim as accurate as possible on the front end. Technology can be a valuable asset in this work. For example, claims scrubbing solutions use a rules-based engine to identify problematic claims prior to submission. The rules run against every step of the claims cycle to ensure they are clean before heading out the door. Not only does this contribute to a lower denial rate, but it also speeds time to revenue.
Practices can also look to eligibility verification technology to avoid lack of coverage denials—the single largest denial reason. Using such technology allows a practice to confirm patient insurance in batches, letting front-end staff work only the exceptions. Automated tools can also check whether uninsured patients qualify for Medicaid or other insurance options, shifting patients to coverage and thus avoiding potential bad debt situations.
In addition to embracing denials avoidance, practices should still regularly analyze any denials that do occur, searching for patterns and root causes. This helps the organization to resolve and resubmit claims on the short term and also make long-term changes to proactively head off issues in the future.
Depending on the practice, denials management can be a daunting task. For organizations with limited staff or expertise, outsourcing to a partner with denials management experience and resources can be a viable and efficient choice. If a practice chooses this option, it should expect to work collaboratively with the partner’s resources to identify problems, re-design processes and workflows and employ technology to support continuous improvement.
3. Measure against key performance indicators.
Achieving success in revenue cycle management is an ongoing process that practice leaders need to view in a cyclical fashion. To keep tabs on any improvements and sustain performance over time, organizations should collect and monitor key performance indicators (KPIs) that clearly demonstrate revenue cycle health.
While there are many possible KPIs to measure, some critical metrics include days in A/R, net collection percentage, clean claims rate and denials rate. These measures highlight the revenue cycle’s efficiency, accuracy and effectiveness by illustrating how fast clean claims leave the facility and how quickly payment is received. Organizations should strive to keep A/R days at 30 days or less, with some variance according to payer mix, specialty and state. Net collection percentage should be 90 to 95 percent, although achieving a higher percentage represents best practice. The clean claim rate should be at least 90 percent.
To stay on top of potential revenue cycle changes, organizations should consider reviewing these metrics on a weekly and monthly basis and reassessing their revenue cycle accordingly to continually improve.
Start now to boost revenue
While every physician practice would prefer to focus on clinical operations, they must still operate as a business—and ensuring full payment for services rendered is a fundamental tenet of business operations. By consistently and continuously assessing your organization’s ability to effectively capture payment, you can make adjustments proactively, avoiding major disruptions to revenue and limiting the need to play catch up as the industry rapidly evolves.