5 Tips to Boost Your Revenue Cycle Management
You’re working diligently, patient volumes are up, and staff are more productive than ever before. So why is your revenue suffering?
Something is clearly amiss with the practice’s revenue cycle management (RCM) strategy, said Dixon Davis, MBA, MHSA, CMPE, senior consultant at BSM Consulting in Incline Village, Nevada who spoke during AAPC’s HEALTHCON event held April 8-11 in Orlando, Fla. HEALTHCON offers educational sessions and networking opportunities for medical coders, billers, payer representatives, practice managers, attorneys, physicians, and other healthcare business professionals.
Davis told two real-life stories that underscore the importance of RCM. The first was about a practice that had recently implemented a new practice management system. Although productivity increased by 10% over a six-month period, revenue had only gone up by 2%. Without RCM, the practice wouldn’t have discovered that fee schedules hadn’t been entered into the new system correctly, meaning claims were sent to payers with zero dollar amounts for certain services.
The second story was about a practice that had noticed a significant decrease in revenue and a spike in commercial accounts receivable older than 90 days since contracting with an outsourced billing company. Without RCM, the practice wouldn’t have realized that the vendor wasn’t running a denied claims report. Instead, it was simply resubmitting erroneous claims after 30 days of nonpayment.
RCM is important because it not only protects the cash flow of the practice, but it also informs business transactions (e.g., acquisitions, mergers, or loans) and supports provider and staff earnings, said Davis.
Davis provided these five tips to help practices drive effective RCM:
1. Set the Tone
Everyone in the practice must understand the importance of revenue integrity. This requires a top-down approach from the physicians and practice administrators. When managers emphasize the importance of timely and accurate claims, staff respond accordingly, said Davis.
2. Map Out Your RCM Process
Practices can’t drive RCM process improvement if they don’t understand the underlying process itself, said Davis. Take the time to outline each step in your practice’s RCM process, such as:
- Scheduling (e.g., collect patient demographics, obtain and verify insurance, and obtain prior authorizations and approvals)
- Visit (e.g., collect copayments and deductibles, document visit, and assign diagnosis and CPT/HCPCS codes)
- Checkout (e.g., collect any additional fees, schedule follow-up appointment, capture and enter charges in the EHR, and enter charges into the practice management system)
- Claim submissions and management (e.g., submit claims through the practice management system, scrub claims, transmit claims to payers via the clearinghouse, and send patient statements)
- Payment posting (e.g., receive EFT postings, post payments manually, and review explanation of benefits for accuracy)
- Accounts receivable management (e.g., review insurance/third-party accounts and patient accounts; record adjustments, write-offs, and refunds; and follow-up with denials or slow payments)
- Financial reporting (e.g., review accounts receivable and run monthly financial reports)
3. Create a Detailed Billing and Collections Policy and Procedure Manual
“To me, the greatest value in this isn’t actually the document itself,” said Davis. “The value is in creating the document. That’s where we find all sorts of things in our billing process that may not be going as well as we thought.”
4. Create a Dashboard With Key Metrics
Review the data for 10-15 minutes a few times a week to keep a pulse on what’s happening in the practice, said Davis. Look for billing software that helps you build these snapshots of revenue health, including patient visits, gross charges, collections, and accounts receivables. And if the system offer more robust analytics capabilities, practices can even see their payments broken down by CPT code, payer, payer scenario, date of service, payment posting and other filtering options that help you identify revenue roadblocks.
5. Dig Into the Data
“Dashboards don’t tell us the whole story, but they point us in the right direction,” said Davis. For example, does the dashboard reveal a significant amount of outstanding accounts receivable older than 120 days? If so, what’s driving this? Is it mostly patient accounts receivable? If so, the practice may need to focus more effectively on collecting copayments and co-insurances up-front before services are rendered, he said.
If it’s mostly third-party accounts receivable, is there a credentialing problem? Are claims going out incorrectly? The bulk of a practice’s revenue—at least 70%—should be between 0-30 days, said Davis. The chances of collecting outstanding revenue decrease significantly over time, he added.
Payer mix is another important metric to monitor, said Davis. “What you get paid depends on the contracts you have with payers,” he said. “If the payer mix changes, it could have an effect on your revenue stream.” For example, if the volume of your top payer has gone down over the last year, revenue may go down as well even despite steady or increased patient volumes. Having this insight allows practices to plan ahead financially or make other operational changes to sustain them through periods of financial uncertainty, he adds.
“As we understand processes, we use our reports, and ask the right questions, we’re able to lead process improvement efforts which lead to a better bottom line,” said Davis. Also, take the time to figure out What Type of Medical Billing Company You Need.