Giving Your Revenue Cycle an Annual Checkup
The financial side of the practice appears to be running smoothly. Claims are submitted timely and paid relatively quickly. However, no one really knows whether the revenue cycle management system is functioning at its peak potential. In such cases, a checkup of the practice’s system may be advisable.
Is Your Performance in High Gear?
A good way to approach a system review is to first schedule out the steps in your existing system, noting areas where you believe processes are working well and where improvements can be made. Next, compare your processes to the components of a top-class system to see if changes make sense for your practice. This analysis should be done at least once a year to assess your practice’s strengths and weaknesses in the various functional areas of the revenue cycle.
For example, many practices struggle with patient collections. Ask yourself questions such as: Does the practice determine patient eligibility consistently and accurately? Does it collect from patients all appropriate co-payments, deductibles and overdue balances? To accomplish these tasks, the practice must have clear staff policies that are uniformly enforced.
Are You Maximizing Revenues?
The goal of the coding process is to maximize revenues without committing compliance violations. Close communication between the doctors performing the medical services and the staff assigning codes to them is required to achieve this goal. Does your practice know how well the physicians and coding staff interact?
When your practice learns that a claim has been denied or that a payer has taken adverse action, you must take corrective measures to reverse the denial and prevent similar issues in the future. Does the practice have a systematic appeals procedure that is triggered automatically and addresses the denial problem effectively?
One of the most effective ways to prevent claim denial is through up-front, electronic verification and monitoring. Most payers allow for prior authorization, claim submission, status inquiry and verification of eligibility and benefits by electronic means. Additionally, most are enabled for electronic payment and remittance, which speeds the receipt of claims. Every practice should work to take advantage of these opportunities to increase accuracy and productivity while reducing costs.
How is Your Overall Performance?
In a modern medical practice, business performance is measured with precision by gathering and analyzing the right kinds of data. Analyzing your practice’s metrics will point to the causes of both problems and successes.
To keep revenue cycle functions operating at peak effectiveness, it is essential to gather data, summarize the information and analyze the performance. For the practice as a whole, these data points are critical:
- Gross and net collection percentage;
- Accounts receivable (days over 90 days);
- Collections percentage by payer;
- The percentage of co-payments collected at time of visit;
- Number and percentage of patients with accounts receivable balances;
- How quickly visits/procedures are billed;
- Average days between claim submission and payer reimbursement;
- Percentage of insurance eligibility verifications vs. total scheduled patients;
- Average number of missing charges vs. services rendered (actual and CPT mistakes);
- Percentage of denials vs. total claims filed;
- Percentage of denials appealed successfully vs. total denials; and
- Average days between receipt of payment and payment posted.
This information should be reported on a monthly basis using a simple dashboard format. This will allow problems to be identified and corrective action taken in a timely manner.
Do You Have a Culture of Success?
Successful management of the revenue cycle also depends on fostering a culture of respect and awareness of the practice’s finances. If you are able to change both employees’ and physicians’ mentalities to understand that their actions affect the practice’s financial position and incentivize them to act appropriately, the practice will thrive.
Each individual will understand that their role contributes to the common financial purpose of the practice. They will envision a single, integrated system that serves patients, collects compensation and efficiently manages revenue and they will understand that they will be rewarded for this performance.
Are You Ready?
Ultimately, a strong revenue cycle depends on practice leadership that’s ready and willing to continually evaluate its performance, candidly acknowledge problems and take bold steps to eliminate them.
Sidebar: Ensure Your Providers Abide by Their Contracts
Payers make regular changes to their contracts with providers. Some are significant, others more superficial — however, every revision has the potential to impact your practice. Whenever a contract change occurs, study it carefully and project how the alteration will affect your operations. In some cases, you may need to adjust your processes.
Of course, your payers also have obligations under their contracts ― the most important of which is the reimbursement schedule. Yet, payers have been known to stray from that schedule to the provider’s disadvantage. To protect your revenue cycle, maintain a constant awareness of your contracts’ payment terms, track the accuracy of payments you receive and challenge any payer that violates its terms.
If you would like additional information about how to analyze your financial systems, please contact Greg Koelling at firstname.lastname@example.org, or call him at 312.670.7444. Visit ORBA.com to learn more about our Health Care Group.