Declining reimbursement, higher patient financial responsibility, and ever-increasing regulatory requirements – some of which are now delivering penalties – are eroding the bottom line of physician practices. To gain ground and remain viable, many organizations are looking to optimize their revenue cycles, implementing targeted strategies to boost cash flow and efficiencies. Despite a commitment to elevate financial operations, some practices struggle with where to begin. Let’s face it, it can be overwhelming to tackle the revenue cycle beast while trying to navigate a myriad of other practice management priorities.
The following sections explore different revenue cycle management (RCM) trends, sharing best practices and real-world examples that illustrate the benefits of a concerted RCM improvement approach.
The rise of automation
As with other practice management areas, technology can make the revenue cycle more accurate and efficient, helping organizations reliably verify insurance, reduce missed appointments, ensure precise coding, and limit denials. Automated eligibility verification tools, for example, can verify patient insurance coverage in batch mode, allowing the practice to verify insurance in minutes and focus staff time on working exceptions that “fall out” of the system. Not only does this prioritize staff workflow, but it also prevents eligibility denials – the single largest cause of denials – thus better preserving revenue.
Similarly, claims scrubbing tools can significantly affect both revenue and denials, optimizing the former while decreasing the latter. Scrubbing technology ensures that claims are as clean as possible before the practice submits them to a clearinghouse or payer, supporting predictable cash flow and reducing the likelihood of denials. The first pass clean claim rate – or the rate of first-pass claim acceptance at the clearinghouse – is an indicator of how often a claim is correct the first time it’s submitted. Organizations that leverage technology have the potential to achieve a 90 to 95 percent first pass clean claim rate, which is certainly a best practice.
Despite the benefits that automated solutions can bring, many practices are still hesitant to accept them. According to a recent survey conducted by NextGen Healthcare, RCM technology adoption is not where it should be. For example, less than half of surveyed small to mid-sized practices use automated eligibility verification tools, and just over half rely on coding technology. While claims scrubbing solutions are more prevalent, only 65 percent of surveyed practices use them. Possibly, the most concerning statistic is that more than seven percent of practices do not use technology at all. Although adoption has improved in the past five years, there is still room for growth.
Dealing with denials
Payers continually find reasons to deny or delay payment, and practices should stay on top of their denials management process to make sure they receive appropriate reimbursement in a timely fashion. Once again, practices often fall short in this area due to limited resources or focusing on other priorities. The NextGen survey shows that merely 15 percent of respondents rated their denial follow-up and resolution as “excellent”, despite the fact that 45 percent have two to five people working denials, indicating it is a resource-intensive exercise. While some organizations are focused on denials management, others are not as aggressive as they could be. For instance, 47 percent of surveyed practices do not re-submit a denied claim, missing the opportunity to reap that earned revenue.
When done well, denials management can keep revenue moving, boosting cash flow in the process. The optimal approach involves rapidly “working” existing denials to uncover reasons, resolve issues, and resubmit claims, as well as proactively searching for trends and root causes that, if addressed, could limit future denials. In addition, implementing some of the previously discussed technology, such as eligibility verification tools and claims scrubbing solutions, can further curb denials.
As mentioned before, robust denials management can be resource intensive. To overcome this roadblock, some practices are outsourcing the effort, relying on a partner with denials management expertise and resources. Consider the example of Urological Associates of Southern Arizona (UASA) – a full-service, 12-physician urological group based in Tucson that began outsourcing its denials management function in 2012. The organization worked with its RCM partner to focus on specific current procedural terminology (CPT) codes, diagnosis codes, and adjustment types, aiming to quickly resolve any issues. For the most part, the outsourced vendor automatically addresses any denials that arise; however, they contact the practice with questions or concerning trends. By working to reduce denials to only unavoidable matters, the practice has expanded both cash flow and revenue.
Prioritizing patient payments
With patients assuming more financial responsibility for their healthcare, physician practices must look beyond just the payer side of revenue cycle operations. High deductibles and copays are not going away, and organizations must find ways to consistently collect patient payment. Depending on the organization, this may involve retooling the patient statement to make it clearer, offering patient estimates to increase transparency, educating front-desk staff to enable better financial conversations, and/or offering different payment methods so patients have options when it comes to paying their bill.
A possible method for capturing patient payment is a credit card on file (CCOF) program. This is exactly what it sounds like: the patient’s credit card is securely stored and used to automatically pay for co-pays, co-insurance, deductibles, non-covered services, and balances after insurance processing. Organizations may also choose to set up payment plans using a CCOF program, automatically charging the card for a predetermined payment at a mutually agreed-upon time. When designed well and implemented effectively, a CCOF program can accelerate and optimize patient payment.
For example, Sierra Pacific Orthopedics – a multi-physician orthopedic medical center located in Fresno, California – saw almost immediate results after it began a CCOF program, improving both collections and cash flow. The organization was also able to enhance office efficiency with faster patient check-ins and checkouts. Patient satisfaction with the program is high, as patients indicate they like the convenience and accuracy of having their credit card on file.
The option to outsource
While proven best practices, the strategies discussed above for fine-tuning the revenue cycle are not always easy to implement, especially for smaller practices with limited resources. In these cases, an organization may want to think about outsourcing to a vendor for all or some of their RCM work.
Collaboration is key to an effective outsourcing relationship. Practices cannot just hand over the reins and expect industry-leading results. Instead, they should work with their outsourcing partner to identify concerns, revamp processes, and streamline existing workflows, relying on the vendor’s resources to support improvement. Looking back at UASA’s outsourcing efforts, the organization actively sought an RCM partner that valued team collaboration and showed a willingness to work with the practice, not just for it. The outsourced vendor uses robust reporting to share data and highlight issues, helping the practice uncover root causes and implement revenue-enhancing strategies. UASA was also able to increase the gross collections rate despite seeing Medicare reductions across the board.
The power of strategic metrics
Whatever approach an organization uses to ramp up their revenue cycle, it’s important to keep an eye on key performance indicators (KPIs) that demonstrate whether new initiatives are working. While there are many such metrics to consider, at the very least practices should be watching days in accounts receivable (AR), the net collection percentage, patient revenue collection rates, and the clean claims rate. When the revenue cycle is performing to potential, days in AR should hover at 30 days or less, net collections should be 90 to 95 percent (the higher the better), and the clean claim rate should be 90 percent or above. High-performing organizations track these metrics on a daily, weekly, and monthly basis, sharing information with all staff to drive performance. Monitoring and quantifying metrics month to month and year over year provides valuable insights, as does benchmarking these metrics against peers in the same specialty and across the industry. Keeping watch on KPIs allows you to consistently identify and address any process or payment problems.
There’s no time like the present
Although it may be tempting to put off revenue cycle optimization until there aren’t as many competing priorities to take care of, organizations that delay could find themselves scrambling to catch up. As practices embrace value-based reimbursement models and collaborative care arrangements, they should be working to shore-up revenue cycle performance, and make sure it can support practice growth and change. By committing to technology, relentlessly pursuing denials management, consistently collecting patient payment, and monitoring KPIs, practices can begin to see real improvement in revenue and cash flow, building the foundation for a profitable future.
