RCM

Some businesses don’t realize how much cash flow is available in their balance sheets. It’s important for providers to periodically review their organization’s revenue cycle for any inefficiencies or improvements that may be holding the company back from growing. You can eliminate manual data entry errors and reduce transaction times by automating processes. However simply cutting costs is not enough to build a successful practice. Creating a positive patient experience is also crucial for the long term financial success of any practice. Below is a brief overview of medical revenue cycle management along with some best practices for improving revenue cycle management in healthcare.

 

What is Revenue Cycle Management in Healthcare?

It’s difficult to define healthcare revenue cycle. There’s a lot of overlap between the revenue cycle management process, practice management, and medical billing; all of which involve managing the relationship between patient, payer and provider. Depending on your specialty or practice, the definition of healthcare revenue cycle management consists of systems and procedures built to reimburse doctors for time and resources spent on patient requests. The typical healthcare revenue cycle flowchart consists of the following steps:

• Clinical Operations- RIS, LIS, EHR/EMR, or any system used to manage the schedule, registration and demographic information of patients
• Medical Coding- translating procedures into CPT, ICD and HCPCS codes. Claim scrubbing, data validation, and submission
• Payer Contracting- reconciliation and remittance with the insurance company, payer or clearinghouse
• Patient Billing- payment posting, statements, billing methods, and collections
• Reporting- data mining, forecasting and practice analytics using financial and performance data

Best Practices for Improving Healthcare Revenue Cycle Management

Despite the challenges associated with revenue cycle automation, it’s important for billing offices, practices and hospitals to adopt smart and flexible billing methods. If done thoughtfully and utilizing the right technology partner, the benefits will quickly outweigh the cost of training and implementation.

1. Build charge capture and verification into the revenue cycle. On average, hospitals lose around 1 percent of their potential net revenue due to missed charges and loss of productivity. Electronic claims processing takes 30 percent less time compared to manual processing. Today, charge capture and file transfers can be performed using automated timers and natural language processing with little to no manual intervention.
2. Automate and collect patient financial responsibility upfront. The more information you can provide up front to help patients understand and manage costs, the fewer write-offs you’ll have to manage in the end. Administrative costs can increase if organizations use manual processes to check prior authorizations and eligibility. CAQH’s 2016 Index showed manual prior authorization can cost providers an average of $7.50 per transaction, while electronic prior authorization can cost as low as $1.89 per transaction.
3. Streamline your office’s front-end and back-end responsibilities. There's a large grey area between clinical modalities and revenue cycle operations. It is in this space where payments get lost in translation. This disconnect between front-end and back office systems and the resulting manual data entry is an invitation for errors. Electronic eligibility (or e-eligibility) along with fully integrated clearinghouse promotes more transparency into the status of a claim while minimizing denials.
4. Use data to benchmark and forecast medical revenue cycle performance. Keep your finger of the pulse of your practice’s financial health AND staff performance. Each step in the revenue cycle should have its own set of KPIs. Setting KPIs and tracking over time will unveil bright spots in your revenue cycle and show you how to manage resources better.
5. Treat billing and payment as one unified system. Today's technologies provide a tremendous opportunity to merge billing and payment into a single, cost-saving process. Since many customers already perceive billing and payment as one thing, the technology should be set up to reinforce that. When connected, billing managers can recognize patient payments faster, while a paperless billing process can deliver a better patient experience.

Sometimes realizing additional revenue takes more than new processes. So where to begin? Start by identifying two or three inefficiencies or challenges preventing your company from growing, either through a loss in revenue or patient satisfaction. Then identify opportunities and technologies that can improve operational efficiency as well as the ability for patients to understand and pay their bill. Consider the above revenue cycle management healthcare best practices and you will be well on your way to building a stronger business case for improving your revenue cycle performance.

In this article, we’ll cover the current realities of the revenue cycle management process in medical billing (RCM) from beginning to end. We’ll outline some key issues affecting medical billing workflows along with steps you can take to improve your company’s IT systems and financial performance.

Let’s face it: medical billing is fraught with problems. Decision makers and billing managers face a myriad of challenges, from transitioning from manual processes and maintaining compliance with various rules and regulations to reducing errors and costs. However, some of the biggest issues are the easiest to address.

What is RCM in Medical Billing?

Revenue cycle management in medical billing (RCM) is a process through which clinical management systems interact with medical billing systems. These billing systems exchange information between clearinghouses, patient statement systems and patient payment vendors to complete a financial transaction between healthcare patients, providers and payers.

Current Revenue Cycle Management Workflow

The RCM workflow from beginning to end consists of the following eight medical billing cycle steps:

Step 1: Eligibility Check and Demographic Verification: Ensuring patients have valid insurance coverage prior to scheduling an appointment

Step 2: Collection of Co-pay/Balance: Collecting a fixed amount from a patient at time of service as well as the amount owed from a prior visit that wasn’t covered by a patient’s insurance

Step 3: Claim Creation, Validation and Submission: Manually or electronically creating claims and submitting them to the insurance provider, a clearinghouse or another type of claims vendor

Step 4: Correcting Errors/Denials: Determining if a claim needs to be corrected and resubmitted or if additional documentation is required. Some insurance providers also have a specific appeal process, deadlines or a timely filing limit you must meet to be successfully reconsidered.

Step 5: Claim Follow-up: Reaching out again to the payer via phone, email, letter or online. When done correctly, following up can substantially reduce days in A/R and ease unnecessary financial burden on patients.

Step 6: Statement to Patient: Sending the final costs to a patient as a printed or electronic bill, including demographic details, the amount owed, date of the procedure and transaction descriptions

Step 7: Collecting Payment from Patient: Mobile and online payment are two methods used today to simplify patient collections. It’s important to consider the needs of your staff to fulfill basic requirements, such as automatic posting and reconciliation.

Step 8: Analytics/Data Analysis: Processing and aggregating data into meaningful insights to improve business operations in the form of increased collections, reduced days in A/R and stable financial performance

Are you still relying on a manual billing workflow? Learn how new technologies are being used for greater efficiency in our ebook, "How Automation Could Improve Your Revenue Cycle."

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Key Issues and Corresponding Steps for Improving Medical Billing in RCM

Understanding the key issues in improving medical billing in RCM is the first step in improving the process. By identifying these issues and implementing a solution to fix them, you’ll experience improved revenue, quicker reimbursement and other advantages.

Issue #1: Siloed Steps in Your Revenue Cycle Process - Almost 70 percent of healthcare organizations use multiple vendors for their RCM processes, and 30 percent of hospitals and health systems are unable to successfully handle their revenue cycle automation efforts without at least two vendors. In the confusion of managing multiple vendors, though, some organizations overlook duplicate features available in their current software.

• How to Improve: Spend some time auditing your current RCM services. Look for opportunities to integrate systems, which enables your clinical experience to communicate with your billing management software, which in turn communicates with your clearinghouse, patient payment system and statement vendor. Connecting your patient electronic health records (EHRs), billing information, clearinghouse, patient payment portal and statement vendor can help you reclaim lost revenue.

Issue #2: Backed Up Medical Billing Workflow During Admission, and After a Patient’s Visit - Time-consuming paperwork and manual processes are two of the largest contributors to inefficient claims management.

• How to Improve: Switch from paper to electronic statements (e-statements) while still giving patients who prefer paper statements the option to receive one. Just make sure that you’re only sending the number of paper statements necessary to receive payment from patients who are most likely to pay.

Issue #3: Denied and Rejected Claims Management - Average claim denial rates range from 6-13 percent, and 65 percent are never resubmitted. An estimated 90 percent of denials are preventable. Common causes of claim denials include missing or incorrect data, duplicate or late submissions, improper or outdated CPT or ICD-10 codes and lack of documentation or prior authorization.

• How to Improve: Employ a three-pronged approach. First, optimize processes for insurance verification and eligibility. Second, train your staff on crucial conversations regarding patient payment obligations and payment options. Third, transition to better IT software to reduce unnecessary delays between claim filing and patient billing.

Issue #4: Adapting to Changes in ICD Codes - There are five times the number of medical diagnosis codes in ICD-10 - roughly 69,000- as there were in ICD-9. Traditionally adapting to changes in ICD codes relied almost entirely on continual training, resulting in staff turnaround and additional overhead. Challenges will increase with value-based requirements for more robust clinical documentation.

• How to Improve: Utilize automated coding and machine learning software, which can learn from past diagnoses codes compared to their rate of successful claim submissions. Auto-populate new claims with the same information, thereby ensuring a higher success rate in a fraction of the time.

Issue #5: Revenue Data Loss, and a Lack of Healthcare Analytics - Measuring outcomes is interesting, but not always actionable for improving productivity in your revenue cycle process.

• How to Improve: Use business intelligence in the form of roll-up reporting, real-time data processing and intelligible dashboards. It’s great to know your percentage of clean claims, but it’s even better to know your top sources of denied claims. One metric shows you how well your company has performed in the past. The other metric displays how your company could perform better in the future.

The Benefits of Selecting ImagineSoftware

We offer the first intelligent, multi-specialty medical billing software. Our ImagineBilling™ solution simplifies billing processes, automates charge and claim management, monitors productivity and more. Plus, our claims management solutions enable healthcare organizations to quickly create, send and track claims within an approval system configured to employees’ preferred workflows. Contact us to learn more!

Originally published January 21, 2019

Healthcare providers face multiple revenue cycle management (RCM) challenges, from billing and collections inefficiencies and complex reimbursement models to inaccurate charge capture and changing government regulations. Plus, conducting RCM tasks, including registration, charge capture, claim submission, insurance follow-up and patient collections, is typically expensive and time-consuming.

Failure to maintain an efficient revenue cycle often results in an increased number of billing errors, lost revenue and unnecessary administrative time and expense. Revenue cycle risks consist of reimbursement delays, poor cash flow and an overall weak financial performance.

Are you still relying on a manual billing workflow? Find out how automation could improve your revenue cycle.

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Approximately fifteen cents of every healthcare dollar in the United States goes toward RCM efficiencies, making it a costly issue. But, by streamlining their revenue cycle functions, healthcare providers can standardize payment processing, reconciliation and denial management. Also, by identifying and addressing the components of the revenue cycle that pose the biggest challenges, providers can better learn how to overcome them in ways that are beneficial for their employees, patients and bottom line.

In this blog, we’re focusing on five primary parts of the revenue cycle, including billing and collections, charge capture, coding, denial management and patient access. Although these five functions don’t comprise the entire revenue cycle, they serve as a good starting point to form a picture of the overall process.

Billing and Collections

The Challenge:

Because there are so many moving parts throughout the billing and collections processes, the smallest inefficiency can lead to costly rework, denials and lost reimbursement. Many providers look to outsourced billing to handle these functions, but oversight of third-party vendor relationships must be managed to ensure operational and financial success. The major revenue cycle risks in billing and collections include completeness and accuracy of billing, lost revenue, inadequate denials management and lack of third-party control visibility.

The Solution:

1. Utilize an analytics tool to track medical billing key performance indicators (KPIs) and areas for improvement, which is an important part in tracking the financial health of your business, both operationally and financially. KPIs help physicians and management understand the strengths and weaknesses of their revenue cycle to help guide future decisions and help prioritize resources and help recognize key success drivers. To make sense of this data, use a business intelligence reporting and analytics tool that will improve your ability to identify trends and patterns and increase awareness around what variables impact your practice.
2. Automate patient registration to collect accurate patient information upfront, which sets the groundwork for efficient billing. Without it, denied claims and lost reimbursement typically follow. Each unique visit should be validated by staff under the patient billing system, and the patient’s demographic information and insurance eligibility should be determined upfront. This can be done manually, but it’s laborious, time-intensive and leaves room for human error. Supplement staff workflow with as much automation as possible to improve billing registration accuracy. Software solutions like ImagineAI™  validate when a patient is eligible for primary insurance listed on the visit and/or your list of top payors before the claim is sent to insurance. Once you receive the positive eligibility response, the solution will add a note to the visit with the patient’s identified payment information.
3. Communicate clearly with patients, and never underestimate the importance of being transparent. It’s necessary for providers to train their billing staff to answer questions about pricing over the phone and in person. Billing staff must learn that communication with patients is not a “soft skill” but something that must become second-nature. This is especially crucial during time of service, when staff is face-to-face with patients. Explain financial policies right away, follow up with the patient if there is any confusion and be sure to use an appropriate tone. How you engage in conversation with a patient is just as important as what you say.
4. Demand third-party visibility. Outsourcing parts of the revenue cycle process has its benefits, but lack of visibility can lead to micromanagement, which defeats the purpose. Medical billing companies and other third-party vendors should be able to supply you with performance reports automatically or upon request, providing you with much more visibility into your billing operations.

Charge Capture

The Challenge:

Managing charge capture and maintaining an accurate charge description master (CDM) serve as the starting point for billing patients and payers and form the heart of a healthy billing cycle. Providers must accurately load and regularly update pricing for services while also billing in accordance with the charging and billing guidance provided by Medicare and other payers. Without the correct training on documentation and metrics, the accuracy and completeness of charges becomes a major revenue cycle risk.

The Solution:

Any quality medical billing software should automatically flag incomplete charges, but there are several strategies that providers can adopt to ensure that charge capture is accurate and complete.

1. Employ proper training to educate staff on existing rules and regulations, including Centers for Medicare & Medicaid Services (CMS) and payer-specific rules and your current procedural terminology (CPT) codes, which change frequently. Consistent training helps to ensure charge accuracy.
2. Leverage your existing resources before implementing new policies. Use your electronic medical record (EMR) to identify missing and inaccurate charges and alert your team. Try setting up work queues to flag patterns of missing charges and high-quantity errors.
3. Review lag times for both date of service to billing/coding and service date to posting date and claim submission. Compare to industry benchmarks to identify areas for improvement. Build the billing team and physician relationship - improving charge accuracy can’t be accomplished only by the billing team. Establishing a strong relationship between the billing team and physicians will ensure more collaboration to correct the process in a way that’s mutually beneficial.
4. Perform charge capture audits. If your practice management system has the proper reporting functionality, it will be incredibly helpful for this task. Charge-capture audits are necessary to ensure that internal procedures have been properly implemented and carried out. The information included is up to the practice; the key is to perform audits consistently.

Coding

The Challenge:

Because of growing compliance standards, it’s becoming more and more challenging for providers to code accurately. ICD-10-CM requirements for diagnosis documentation often lead to insufficient diagnosis codes and increased workloads, both major coding risks.

The Solution:

1. Provide ample training, especially for inexperienced coding staff who might lack the proper knowledge to accurately code for the highest possible reimbursement. Conduct up-to-date training for both physicians and other staff members on the most recent CMS guidelines. Physician’s Practice suggests having a coder shadow and scribe a visit along with the physician’s documentation to compare.
2. Utilize claim scrubbing. Medical billing software solutions with built-in claim scrubbing improve coding accuracy and remove manual workflows for coders.
3. Conduct regular audits. Although “audit” typically has a negative connotation, auditing coders on a regular basis will identify any issues in a timely manner. If done with the right intentions and frequency, it’s something that doesn’t have to be painful for anyone involved. Consider auditing for quality instead of only productivity or speed.
4. Subscribe to CMS updates, which include updates on modified codes, or check the CMS website on a regular basis.
5. Provide better decumentation for physicians. Along with coding-decision support for physicians, it can drastically improve coding accuracy, especially for highly-compensated encounters that require more rigorous documentation.

Denial Management

The Challenges:

Denied claims can be caused by numerous departments and workflows. The average claim denial rate across the healthcare industry is between 5-10 percent, costing approximately 20 percent of total revenue cycle expenses.

The Solution:

1. Track KPIs for denial and third-party payer reimbursement. By tracking KPIs such as claim submission performance, charge period revenue analysis and procedure reimbursement, providers can better identify areas for improvement in denial management and establish a payment variance process that helps determine whether payers are paying correctly based on the contracted rate. Receiving these reports on a daily, weekly and monthly basis will improve your ability to monitor financial reporting by leaps and bounds.
2. Break down denails by category to help identify specific processes that could be causing the greatest revenue loss. We recommend tracking areas such as credentialing, registration, preauthorization and charge entry.
3. Automate manual processes. According to the Healthcare Financial Management Association (HFMA), thirty-one percent of hospitals manage denials manually using spreadsheets. Preauthorization, electronic remittance and auto coding and charge posting are functions that can be automated to help staff save time and increase accuracy in claim submission. If your current medical billing software vendor or billing company doesn’t allow for this kind of automation, consider switching to one that does.

Patient Access

The Challenge:

The lack of control over patient registration is a major financial risk area for providers. There are a lot of scenarios where this goes wrong, from inaccurate collection of patient information to failure to collect copayments or coinsurance in advance. Providers need a solid strategy and ample training on the front end to minimize the risk of billing issues and increase patient satisfaction.

The Solution:

1. Leverage tools for estimation. Adopting an estimation tool gives patients a snapshot of how much they owe out-of-pocket. If you can inform patients about their financial responsibilities upfront, there’s a higher likelihood they’ll pay their bill.
2. Perform a data clean up. Although this is a time-intensive process, doing so can prove to be incredibly effective in wiping the slate clean and improving the accuracy of patient information.
3. Give patients the ability to pay through an online portal that’s integrated into your billing platform or that of the medical billing company you utilize. Patients are given more control over their payments and have the option to pay bills in one place at any time from anywhere. The patient’s responsibility is clearly communicated, making it easier for faster payment. Online patient portals have been found to improve efficiency and engagement, and patients who establish a relationship with their providers via a patient portal are more likely to return to that provider.
4. Offer payment plan choices. By promoting payment plans, providers enable patients to pay off medical debt a little at a time instead of all at once. For you, it’s another step in streamlining your collection process while obtaining more patient payments.

By employing these solutions to mitigate revenue cycle management challenges, healthcare providers are equipped with advanced metrics and comprehensive reporting capabilities that give them a real-time snapshot of their financial performance. Healthcare providers striving for a strong revenue cycle must employ best practice procedures and processes from the front end all the way to the back office. Without addressing top healthcare revenue cycle challenges, though, they may unnecessarily lose out on thousands of dollars in reimbursement from patients and payers.

We collaborate with physician practices in various specialties, from anesthesiology, to pathology, emergency medicine and urgent care.

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