Is your revenue cycle in dire straits? The solution is simple: take a deep breath, start at the front end, and troubleshoot your way to improvement. One of healthcare’s greatest long-term challenges is balancing the economics of healthcare. There are initiatives under way by the federal government and various payors, such as pay for performance, attempting to get it straight, but many view P4P as a set-up for pay for compliance—putting rules in place for physicians to follow and penalizing them when they don’t get it right. 

In a perfect world, physicians would be paid for results, but the transition from where the industry is now to where it needs to be will require a bit of finagling. Rather than looking for a broad-sweeping solution, experts agree that healthcare organizations and providers should start by learning how to manage their revenue cycles, making the process, from scheduling to payment, as efficient as possible.

According to Frank Marshall, COO of healthcare technology and revenue cycle management solution provider MedSynergies, those efficiencies should come from technology, developing the right processes, and leveraging those processes with the right people. 

“We spend a lot of time developing the front-end process all the way through the lifecycle of a claim,” Marshall said. “We determine how we can deploy technology to make those processes more efficient, but we also look at what level of skill people need to have to maximize efficiency.”

To start, healthcare organizations need to look at each step in their revenue cycle process, beginning with data charge entry. How long does it take for a provider to get the charge from the patient encounter into a practice management system or a claims production system? In the years he’s been with MedSynergies, Marshall said this is typically the first indication of the how efficient a business is. “If the process is tight, they’ll get all the charges in,” he said. 

The next piece to analyze is appointment reconciliation. For every appointment a provider or healthcare organization has in a day, is there a charge? How many days from the point of service was there a data charge entry for the appointment? In a perfect world, companies should be handling this at point of service. The longer it takes, the greater the chance of problems snowballing further down the revenue cycle. 

“We like to see appointments reconciled immediately, but for a hospital, it can take anywhere from two to seven days, depending on the department,” Marshall said. “Regardless, companies should have 99.5% of all of their appointments reconciled to ensure the rest of their cycle improves.”

Front-end focus

Healthcare is a team sport and, as such, requires an enormous amount of collaboration to ensure the provider, payor, and patient have an efficient and effective experience. Where this often breaks down in the revenue cycle is claims rejection. 

Depending on the source, the numbers for claims rejection rates range from 2% to as high as 15%. Although there is no crystal ball that will tell patients and providers if a claim will go through, there are ways to reduce the pain of the process and the number of surprises that might occur after a claim is submitted. 

Look at the reject rate of the claims when they go to the practice management or claims production system and out the door to the payors. “We do scrubs on those to understand if the claim has all the correct information,” Marshall said. “Was it coded correctly? Companies should strive for a less than 5% reject rate on the front end.”

The speed at which a claim is sent out the door is just as important as its accuracy. Once the charge entry happens, the claim should be out the door within 24 hours. Once it goes out to the payor, companies need to get the payment, denial, or adjustment back into their systems as quickly as possible, with a goal of posting it back through their own systems between 24 and 48 hours. 

Companies can add some simple steps to their revenue cycle process to achieve a timely turnaround. Verify the insurance before the appointment or procedure and screen for pre-authorization requirements at the start of the process. Marshall said he sees roughly 45% of the denials coming back through the pipeline are due to issues regarding benefit verification. 

“Benefits verification should occur before service is rendered, especially on surgeries, expensive drug treatments—large dollar items,” he said. “For an regular office visit, it’s not as important, but it can become expensive if you don’t verify benefits before the encounter.”

Once the claim comes back from the payor, it should be immediately reconciled. To do that, it’s important for organizations to look at the number of line items a person can review and reconcile per day, as well as the speed and efficiency of getting the payments back. If there is a bottleneck, look to see whether additional manpower or a technology solution is needed.

If the claim has to go to self-pay, it’s important for companies to understand when it’s paid in the self-pay collection cycle, who is calling back to change and update the information, and the time frame in which that happens. “If a practice is getting a large number of phone calls back, you can derive that the front-end process is not being efficient because they’re not getting the right information,” Marshall said.

Set goals

Technology can break these processes down, from payment posting and payor processing to self-pay collection cycle and patient services, but it’s important for companies to understand what they are capable of handling inhouse and what needs to be outsourced to ensure efficiency. It’s also important for companies to understand that there is no one strategy that will transform the cycle overnight. 

“It’s a matter of understanding what you’re trying to accomplish as a healthcare organization,” said Marshall. “You have to understand where you want to go, focus on pieces, outsource the parts an outside company can do better, and then focus on your front end, contracting with payors, and managing your physicians.”

It’s also important for healthcare organizations to regularly revisit their revenue cycles, looking for ways to improve. After reaching the first milestones of improvement, set another long-term plan and continue to make progress on a regimented time frame. 

“We set control limits with our customers and meet with each one on a quarterly basis to understand where their business is going and to make sure the processes and solutions will meet the company’s needs going forward,” said Marshall. “Companies should be regimented about meeting the metrics. If something goes out of whack again, put a plan in place to get it back on track.”

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