Many Happy Returns

June 1, 2008

Two Colorado practices join forces on revenue cycle management to achieve new levels of revenue.

When two medical practices in Lakewood, Colo., began comparing notes in 2006, they discovered similar financial and operational challenges. In an increasingly competitive healthcare environment where costs were escalating while the pool of reimbursement resources diminished, leadership at each practice recognized the need for a re-engineered approach to revenue cycle management (RCM).

Two Colorado practices join forces on revenue cycle management to achieve new levels of revenue.

When two medical practices in Lakewood, Colo., began comparing notes in 2006, they discovered similar financial and operational challenges. In an increasingly competitive healthcare environment where costs were escalating while the pool of reimbursement resources diminished, leadership at each practice recognized the need for a re-engineered approach to revenue cycle management (RCM).

The innovative solution that the practices devised was to establish a common independent billing company — ATD Resources — that would focus solely on improving cash flow and performance. To support its efforts, ATD Resources would invest in claims management technology capable of providing the business intelligence necessary for streamlining workflow, improving productivity and bolstering the bottom line.

The Problem

It was two years ago that a critical care/pulmonary practice and an emergency medicine group in Colorado began to investigate strategies for improving claims management. Physicians from each practice had privileges at the same hospital, used the same billing company and, not surprisingly, shared the same frustrations regarding revenue generation.

Both practices believed that their current billing company and clearinghouse were not equipped to help them optimize revenue. Outstanding claims languished in accounts receivable (A/R) and many were rejected during adjudication. Even more disappointing however, was the fact that the practices were not getting the feedback necessary to effectively appeal rejections or make internal changes to correct error patterns. Leadership recognized that effective reporting and analysis could be used to train physicians and staff in order to eliminate problems that slowed reimbursement or resulted in non-payment altogether.

With both practices harboring similar complaints, these physician leaders began to ask themselves if they might not achieve better results on their own. If they were directly involved with RCM, they could ensure that their practices had systems and solutions in place to minimize problems and maximize income. And so, ATD Resources was born.

The Solution

As ATD Resources, we operate as an internal billing department for the two founding practices. Although our original plan was not to position ourselves as a billing company or seek new clients, we were recently approached by two additional practices and have taken on their billing as well.

After incorporation, we employed a staff of 21 — all of whom had experience in RCM processes and procedures. ATD Resources also made the move to a new clearinghouse, which ultimately proved to be a disappointment. Claims were falling into a black hole, and we had no way of monitoring them or finding out if problems could be fixed. During the first few months after the transition, our days in A/R actually rose.

The straw that broke the camel’s back came when we discovered that a large number of claims had been submitted with transposed digits in one provider’s identification number. The clearinghouse hadn’t notified us that all of these claims could not be processed, so we had no idea why we were not being reimbursed. It would have been a very easy error to fix, but we were not given the information that would have allowed us to do so.

About this time, we attended a conference and were introduced to the Navicure Claims Management solution. Because the solution is Web-based, staff would be able to monitor claims status in real time. Likewise, the vendor offered a wide array of reporting and analysis features, which we knew would help us make better management decisions.

Implementation and Training

As Executive Director, I worked with ATD Resources’ director of operations to evaluate the technology more closely. Navicure came onsite to present a more extensive demonstration, and we conducted a thorough cost analysis. We recognized that making this change would cost us more on a monthly basis. However, we anticipated it would ensure that cleaner claims would be sent to payers, which in turn would result in fewer rejections and faster payment. In addition, we believed we would be able to reduce staff devoted to billing and follow-up. It was clear that the solution would more than pay for itself via improved efficiency and cash flow.

There was no need to invest in any hardware or software, since the application is Web-based. To get started, we simply provided vendor representatives with our provider ID numbers and a list of payers to whom we submitted claims. They set the system up and established the connectivity necessary for the flow of data.

ATD Resources staff received online training, which was completed in just a couple of hours. It consisted of walking through the solution’s functionality, and gaining familiarity with the dashboards, scoreboards and reporting capabilities.

During this period, we also re-aligned individual staff members to better support our new approach to RCM. More work was being done on the front end (before claims were actually submitted to the payer), which meant fewer staff hours were needed for follow-up or re-working rejected claims.

The Process

Claims would leave our billing system where they had initially been scrubbed against standard payer edits. They would then hit the external edits engine, which is continually updated to reflect national and regional policies. We would automatically be notified about any problems before the claim was forwarded to the payer.

We assigned staff members on a payer-by-payer basis to monitor claims status. If the system identified a problem with an individual claim or batch of claims, the assigned staff member would immediately gather more information and make necessary corrections. All of this was done online and often completed in a matter of hours, rather than the weeks or months that might elapse while waiting for explanation of benefits (EOB) forms to arrive.

We likewise were able to dedicate a patient account representative to follow-up on outstanding balances. This is a vital function since 34 percent of our patient base is self-pay. We prioritize payments due by value, which means the staffer can invest more time on accounts that will yield greater amounts of revenue, rather than being submerged by large numbers of small balances.


We immediately began to see very positive results after the 2006 implementation with the emergency medicine practice experiencing a reduction of 19 days for A/R, while days for the critical care/pulmonary practice were trimmed by ten. Additionally, we saw a $1 million increase in self-pay collections within the first year. Because we now dedicate a patient account representative to our self-pay patient base, the volume of accounts forwarded to collections has decreased by 57 percent. Likewise, we enjoy 99.35 percent net collections from insurers (after contract rate adjustments, bad debt write-offs and self-pay billing).

Electronic remittance advice allows us to receive reimbursement electronically, which speeds payment and reduces paper-based processes. As a result, we were able to cut two FTEs in billing through natural attrition and re-assignment. Since implementing our RCM solution, cost for billing services for both founding practices is only 7.9 percent of net collections.

We have increased the number of secondary claims we submit, which yields even more revenue. We extract select information from primary payer EOBs and create a secondary claim that can be forwarded to the appropriate insurer. This eliminates a significant amount of manual labor and allows us to pursue balances we may have written off in the past.

Data Leads the Way

Qualitative improvements have also been realized. Available data allows us to analyze and pinpoint recurring errors. We initiated in-house training to reduce specific coding and billing problems, and include physicians in this continuing education so they have a better understanding of coding and reimbursement policies to subsequently improve documentation efforts.

Data availability also allows us to assess staff performance and productivity. Leadership is able to monitor where individual staff members spend their time, and how quickly they address and resolve problem claims assigned to them. We have instituted a program whereby staff members review each other’s claims after they have been entered into the practice management system, but before they are sent on. Because they know their colleagues will see any errors, staff members are highly motivated to be as accurate and concise as possible from the very beginning of the process.

Leadership at both practices is extremely pleased with our two-pronged approach to improving RCM. The establishment of a shared billing company has allowed claims to be managed more efficiently, while the implementation of advanced technology has maximized revenue and improved cash flow. We expect to continue strengthening the bottom line by further refining our workflow and expanding our reliance on automation. Our next step, in fact, is to integrate electronic posting with our practice management system to eliminate manual entry and allow us to purse outstanding balances in a timelier manner.

Bette Warn is executive director of ATD Resources. Contact her at [email protected].