The Revenue Cycle Management process encompasses all aspects of financial management in a healthcare organization related to patient care. It is a vital function in the success of any healthcare organization and as such, should be monitored and evaluated regularly for improvement. However, due to the complexity of each facet in the revenue cycle, it may be difficult for the leaders in a healthcare organization to pinpoint the most beneficial place to improve.
There are 3 steps an organization can take to improve their RCM workflow: overseeing, preventing, and collecting.
One of the largest roadblocks that practices seem to run into when aiming to enhance their revenue cycle is the inability to easily pull and review the data. This is the most important step in locating the areas that need the most improvement, yet a considerable amount of organizations seem to experience some level of difficulty in this arena. A practice should implement some sort of financial dashboard. Rather than constantly pulling data into excel, an RCM director or CFO should have a financial overview that uses graphs comprised of both custom and traditional financial KPI’s - In one place. Even if the billing is being outsourced, there should be direct access to any reports, with no need to request it. This opens up the ability to analyze processes efficiently and at any time necessary.
Preventing RCM errors can be addressed in two different areas: patient payments and claim submissions.
Over the past 5-10 years patient payment responsibility has increased a noticeable amount. Payers aren’t covering as much and patients aren’t inclined to pay their bills in a timely fashion. A TransUnion analysis stated that in 2017 68% of patients with bills under $500 did not pay their balance. Furthermore, the analysis projects that by year 2020, the percentage of patients not paying their bills in full will rise to 95%. This trend is resulting in a large portion of valuable resources being dedicated to collecting on the back-end, which isn’t the most efficient or effect use of time for any practice.
This in mind, groups should make a conscious effort to concentrate on the front-end. Having an open dialogue regarding balances prior to an appointment greatly increases the chances of collecting and if applicable, is also a great time to talk about payment plans. An increase in payments on the front-end leads to a decrease in work on the back-end, which will improve the performance of your revenue cycle.
Even with a large shift to patient payment responsibility, accurate claim submission still plays a pivotal role in successfully managing the revenue cycle. Minimizing the amount of claim denials and rejections has a direct impact on your revenue. According to the American Medical Association (AMA), inefficient claims processing, payment and reconciliation costs anywhere from an estimated $21 to $210 billion. For a physician practice, this expense comprises 10-14% of practice revenue. The best way to properly manage this process is to utilize technology on the front end before claim submission. A claim scrubber can identify potential rejection errors before submission so your team can make quick corrections. In addition, a few outsourced RCM companies use a rules engine. It acts as a supplemental tool to a claim scrubber and is more customized to the unique requirements of your business, like specific payer contracts. Implementing technology like these will result in a higher rate of clean claims going through on first submission which means being reimbursed much faster.
Even with a heightened focus on the front-end, practices still experience challenges on the back-end of their revenue cycle. Although you can mitigate these challenges, eliminating them entirely is not realistic. Healthcare has become a consumer market and medical providers need to be certain they are adapting with their consumers. Becker’s Hospital Review observes that about 72% of consumers would prefer to pay their medical bills electronically. Introducing convenient ways for patients to pay their outstanding balances is a great way to do this and can help tremendously in the collection process. Eliminating the paper process and providing e-statements is beneficial as well. This can be made possible through the use of a patient portal. Doing extensive research on vendors is crucial to ensuring the compliance, security and ability to utilize these options, but the ROI is substantial.
In any industry, properly managing finances is a top priority. It holds even more weight in healthcare. Due to the intricacies and constant changes in rules and standards, the healthcare revenue cycle remains one of the most challenging financial processes. As such, leaders in any healthcare organization should consistently evaluate and enhance their approach to maximizing revenue. Understanding the challenges is vital, not only to your revenue cycle, but to the health of the organization as a whole.
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