Revenue Cycle Management Best Practices
A 2011 National Health Insurer Report Card revealed 19.3% of claims paid by commercial insurance companies are incorrect.
In this Pulse article, we'll help you learn how to:
- Capture all non-office charges automatically
- Audit successful and denied claims to optimize coding and documentation
- Collect patient balances efficiently with compressed post-service timelines
The 2011 National Health Insurer Report Card revealed that 19.3 percent of claims paid by commercial insurance companies are incorrect. This alarmingly high rate of "mistakes" is coupled with the fact that patients – also pinched in this turbulent economy – owe larger portions of their medical bills these days. Add to these challenges the cost increases and revenue squeezes facing medical providers and there's little doubt that prioritizing the revenue cycle has never been more important.
Success in the current economic environment hinges on consistent management of the revenue cycle, at a more granular level than ever before. Fortunately, medical practices have an array of tools, including an electronic medical record (EHR) integrated with a practice management system. Successful revenue cycle management takes more than software and hardware, however; it also requires an energized well-trained staff, efficient processes, and careful monitoring.
Here are some of the processes in your practice's revenue cycle where innovation – re-invention, if necessary – can pull your practice out of the revenue-cost rut to actually get ahead of the game.
Attention to detail offers the best starting point for performance improvement, and there's no place better to begin than renewing your efforts to capture all charges. Typically, practice management systems are programmed to alert you of patients who were arrived but not charged, but the real opportunity lies in monitoring the services that aren't necessarily tracked in your management system.
These might include ancillary services provided in addition to the office visit such as lab tests, imaging studies or injections. These services might be ordered and performed, but are they recorded? Within many practices, the answer is ‘almost always' instead of ‘always'. Charges might also escape capture if a ticket was never created for the consultation at the hospital or a procedure you performed at the surgery center.
The best candidates for this area of revenue leakage are cases you are called to handle after hours or on weekends while on call. Many charge systems still rely on a manual process that requires you to remember to record the services at the time they are provided.
The solution? Focus on automation by using an electronic health record, for example, to capture your orders and submit charges for all in-office ancillaries. Develop a systematic method to capture all non-office charges. Couple it with a retrospective audit process that compares each source document (e.g., operating room logs) to your billed charges. Even if it means implementing a few extra steps into the charge ticket process, it will quickly pay off by catching important details – and revenue – for claims that would have otherwise been missed. Even if it's just a handful of cases caught, the effort pays off.
Coding rules are complex, and with the introduction of ICD-10 only a short time away, you may be tempted to just to give up trying to understand this complex new system. Although employing or contracting with a coder can offer value to your practice, don't simply leave the coding to someone else.
The coding system – Current Procedural Terminology® (CPT) to describe services, and the International Classification of Diseases (ICD) to outline diagnoses - is a critical step in translating your time into a billable service. It's foolish to become completely reliant on someone else to accomplish this accurately for you, each and every time.
While you may allow your staff to perform the coding, it pays to sit down every month to discuss coding nuances with them. Start by selecting three to five patient encounters to review carefully for the choice of codes based on your documentation. Then, assess another three to five claims, this time select some that were denied for coding issues. If you have concerns, expand your sample size. Sit down with the staff members involved in coding to review those charges.
To educate yourself, look towards coding education offered by your specialty society. Societies offer written material on their websites, as well as courses via webinars or live training. Even though there are nearly 25,000 procedure and diagnosis codes, most physicians routinely use only a few hundred. Although you don't have to be an expert, do recognize and understand how your services are being coded. Not only do you want to ensure that you're maximizing your reimbursement, you also want comply with coding guidelines.
Your collections effort will be most successful if you start it at the right point in the revenue management cycle. Thinking about collections only after the service is provided is too late; the collections cycle actually begins well before the service is rendered.
Start by conducting financial clearance for all patients when they are scheduled for appointments. The clearance process entails confirming insurance coverage, determining eligibility for benefits, as well as identifying financial responsibility. Pre-service clearance also is a necessity for patients who are scheduled for procedures and surgeries.
With current, accurate information about the patient's financial responsibility, a financial agreement can be formulated for each patient to receive when their surgery is placed on the appointment calendar. Collections success also depends on timely and accurate execution of processes, including:
- Presenting patients with a copy of the financial responsibility reports you receive from payers during the financial clearance process;
- Revealing on the financial agreement form your full charge for the procedure or surgery, as well as what the patient will owe for their insurance allowable. Be sure to highlight the difference between those two amounts and label it as the "patient discount" (instead of the common term "contractual adjustment"). Emphasize the patient discount amount by also showing the percentage of the discount on the financial agreement form.
- Shortening your statement cycle to three months; if you want to send more than three statements, shorten the time between statement mailings to 14 days.
- Paying your receptionist to work one evening a week until 6 p.m. to call patients with outstanding balances. Not only is the evening the best time for collections calls, the experience will sharpen that employee's time-of-service collections skills.
- Marking your statements "remit immediately" instead of "due in 30 days."
Starting the collections process sooner and compressing the time spent on it after the service will help you collect more balances, faster.
Most claims – typically 85 to 95 percent – either get paid on the first pass or prompt an action to redirect the collection to another party (a secondary payer or the patient). The remaining five percent to 15 percent of claims are the real opportunity to improve the revenue cycle.
The first key is to identify the denial. This initial step is crucial, but it's not uncommon for this to also be the final step for many practices. Staff members who are not adept at denial management will simply write off denied services as contractual adjustments, and move on to the next task. It's certainly tempting because not only does this mean less work to do, but because the money is off the receivables, it makes their job easier.
Sadly, you'll be none the wiser about these adjustments as they will be buried amid the thousands of dollars of legitimate contractual adjustments taken each day. Indeed, the key to denial management is identifying services that are denied at the charge level, and taking action to get them paid.
Insurance payers deny medical claims for many reasons: insufficient or incorrect information on the claim about the patient receiving the services, missing documentation about the service, an uncovered service, etc. Many denials can be corrected. Of course, the best approach is to never submit an incorrect claim. When it does happen, you must respond quickly and effectively if you want to get paid.
Try these denial management tips to improve your success of getting paid:
- When seeking reconsideration of payment, don't just resubmit the claim to see if it will get paid the second time around; write a compelling letter. Assist your staff by dictating a section of each appeals letter explaining why the services you performed were indispensable to the patient; this is particularly useful for overturning charges denied for lack of medical necessity.
- Maintain a library of appeal letters on your shared computer drive, so that you don't have to reinvent the wheel every time. Attach relevant sections from the CPT® Manual, policy statements from your specialty society, and medical literature to appeal letters. Carbon copy the patient on your appeal letters; put a note on the copy that you mail the patient, asking him or her to contact their insurer as well.
Denials are an often underestimated and poorly understood source of leaking revenue in an otherwise healthy revenue cycle. Managing and preventing them is a fundamental element of the highly functioning revenue cycle.
To motivate staff to improve performance, offer performance incentives and outcomes-based bonuses to employees who excel and go the extra mile. And don't just limit the incentives to the business office – everyone in the practice should know they have a direct and influential role in managing the revenue cycle.
In today's healthcare environment it is important to track down every source of leakage from your revenue cycle. Closely scrutinize how your revenue cycle works, set about refining the processes at every step in the cycle, and then regularly monitor its performance.
1. Eligibility Check
Determine insurance eligibility for all patients before the date of service by using payers' web-based databases of beneficiaries. Be sure to verify insurance coverage for the service date, not the date on which the appointment was scheduled. A patient's insurance coverage might change between the scheduling call and the encounter, do the checks two or three days before the date of service. Staff will be able to get recent coverage information, and have time to contact patients whose coverage does not match what's on their registration form. Ask these patients about alternative coverage and inform them of your practice's patient financial responsibility policy.
2. Benchmark the Numbers
Measuring and monitoring the revenue cycle allows you to compare key indicators of billing and collections performance from month to month, year to year and, importantly, in relation to industry standards for your specialty. Keeping key performance indicators at your fingertips also helps you find opportunities to improve your business performance or spot problems with payers. Indicators include aged trial balance, days in receivables outstanding, adjusted collection rate, and last, and certainly not least, cash.
3. Improve Collections
Reduce the costs and delays of billing patients via mailed statements by offering options to receive and pay bills online. Even patients who receive paper invoices by mail will appreciate the convenience of paying online, which also reduces your administrative processing costs. Reduce the expense of telephoning patients who have long outstanding balances by using a predictive dialer; so that valuable staff time is spent speaking with patients, instead of dialing numbers and leaving voicemails. When accounts are sent to collections, look for agencies that can receive and transfer patient payments to your practice electronically.
4. Reduce Denials
Consider using multi-payer software or a web-portal that consolidates and automatically updates medical policies, clinical guidelines, formularies, recertification requirements, and other insurance policy information. Supplement the efforts of in-house coders by using code editing software to prepare charges. Use a clearinghouse to review all claims before they are submitted to payers. Follow up on clean coding efforts by quickly re-circulating problem claims to the physician or other provider responsible. Establish a turnaround time in which physicians and other providers must complete and resubmit their corrections.
5. Set Expectations
Create a uniform financial policy, like a minimum deposit for procedures paid before the service is rendered. Reinforce your policy by posting it on your website, in written patient ‘welcome' packages, into scripts for schedulers and those making appointment reminder calls. Teach your staff the most effective ways to politely and directly ask for payment, including citing the patient's insurance company's requirements for payment of copayments at the time of service.