Giving Your Revenue Cycle an Annual Checkup
The financial side of the practice appears to be running smoothly. Claims are submitted and paid. Expenses are being paid on time, too. But 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 called for.
Is your performance in high gear?
A good way to approach a system review is to determine whether it includes all the components of a top-class system and how well they're working. At least once a year, assess the practice's strengths and weaknesses in a variety of revenue cycle functional areas.
For example, many practices struggle with patient collections. Ask yourself questions such as: Does the practice determine patient eligibility consistently and accurately? And 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 an ideal coding process is to maximize revenues without committing compliance violations. Doing so calls for close communication between the doctors performing the medical services and the staff assigning codes to them. So, how close to that ideal does your practice come, and how well do the physicians and coding staff interact?
When the practice learns that a claim has been denied or that a payer has taken any other adverse action, it must take corrective action to reverse the denial and prevent similar denials in the future. Does the practice have in place a systematic appeals procedure that's triggered automatically and addresses the denial problem effectively?
Nearly all payers allow claim submission, claim status inquiry, and eligibility and benefit verification by electronic means. Most enable prior authorization, claim payment and remittance advice via electronic transaction, as well. 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. If there are problems, correct metrics will point to the causes.
To keep revenue cycle functions operating at peak effectiveness, it's essential to gather, report and analyze numbers about their 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.
These numbers should be reported on a monthly basis, in an easily comprehended format (dashboard, for instance), so that problems can be identified and corrective action taken. Most of the problematic reports will be obvious, but certain trends can indicate more serious underlying issues.
Do you have a culture of success?
Successful management of the revenue cycle also depends on fostering a culture of respect for and awareness of the practice's finances. When this cultural value exists, the workplace is transformed. Employees see how their work supports and is supported by other staff members. Each individual's role contributes to the common financial purpose of the practice. Staff no longer think about the "front end" and "back office." Rather, they envision a single, integrated system that serves patients, collects compensation and efficiently manages revenue.
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. But you don't need to go it alone — your financial advisor can help you every step of the way.
Ensure Your Providers Abide by Their Contracts
Payers make regular changes to their contracts with providers. Some are significant, others more superficial — but every revision has the potential to impact your practice. So 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.
For more information, contact Deirdre Hartmann, CPA at (973) 328-1825.