How’s Your Revenue Cycle?
How’s your revenue cycle?
Do you know whether your practice’s revenue cycle management system is functioning at its peak potential? If not, your practice might be headed for trouble. To keep your practice financially healthy, you may want to assess the system’s strengths and weaknesses to make sure it’s operating in a way that will maximize revenue and minimize waste.
A system review
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 all appropriate co-payments, deductibles and overdue balances? To accomplish these tasks, the practice must have clear policies that are uniformly enforced.
An ideal coding process
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.
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 aging, including accounts 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.
Report these numbers monthly in an easy-to-understand format (dashboard, for instance) so you can identify and correct problems. Most of the problematic data points will be obvious, but certain trends can indicate more serious underlying issues.
Culture of financial awareness and respect
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 person’s role contributes to the common financial purpose of the practice. Employees envision a single, integrated system that serves patients, collects compensation and efficiently manages revenue.
Assess and evaluate
There’s no possibility of improving your revenue cycle unless you’re willing to periodically examine it and test it for possible weaknesses and potential problems. Only then can you make the necessary changes to ensure the system is working optimally. A professional financial advisor can assist you in making this evaluation and developing solutions.
For more information on our services, please visit our healthcare services page or our general services page. If you have any questions, please contact Deirdre Hartmann or Harlene Stevens at (973) 298-8500.