Revenue Cycle Management For Medical Practices
This comprehensive guide provides you with essential insights to streamline your billing department, conduct internal audits of financial collections, and identify growth opportunities to optimize your revenue cycle. Although each practice has its specific requirements, this guide offers you a framework to improve your practice’s revenue cycle management.
Improving Your Practice’s Revenue Cycle
Medical billing and claims creation are important components of the revenue cycle, but they only represent one phase of a complex process. Each stage of the revenue cycle plays a critical role in generating revenue, and any errors can have a significant impact on your practice. In this guide, we will provide a detailed overview of each stage of the revenue cycle, including the challenges and complications you may encounter, and offer solutions to address them. While each practice has its own unique circumstances, this guide will provide a comprehensive understanding of how to establish and manage a billing department, conduct an audit of your financial collections process, and ultimately, increase your revenue.
Finding the Perfect Candidates
The 9 Steps: The revenue cycle can be broken down into different stages, and in this guide, we will focus on nine key stages that are crucial for any billing department. These stages are:
- Information verification: This stage involves finding and verifying patient and insurance information relevant to the billing process.
- Fixed balance collection: Collecting fixed balances, which are usually owed by the patient at the time of service.
- Creating Claims: Creating claims based on the information gathered during the verification stage and sending them out to the payer or clearinghouse.
- Processing Denials: This stage involves receiving denials from the payer, correcting them when resubmitting the claim, and gathering any additional documentation required by the payer.
- Follow-up: Contacting payers to determine reasons for rejections and missed or delayed payments.
- Patient statements: Sending statements to patients to notify them of their balance due.
- Payment receipt: Receiving payments (with remittance advice) from insurance payers or patients.
- Payment posting: Posting received payments to keep track of your practice’s claims status and revenue, along with other important data points.
- Reviewing Analytics: Using data from the payment posting stage to get a better understanding of your practice’s overall financial situation
Information Verification: An Overview
When a patient arrives at your practice, it is essential to verify their insurance status and demographic information to ensure proper billing. A reliable eligibility verification service can help streamline this process and provide you with accurate and up-to-date information.
Challenges in Eligibility Verification
While eligibility verification may seem simple, there are several challenges that can impact the revenue cycle if not addressed. One common issue is a lack of verification prior to the appointment, leading to confusion about copays and fixed fees. This can result in additional work for staff and delays in the revenue cycle.
Another challenge is the volume of appointments that need to be verified. If staff are unable to keep up with demand, important information may be missed, leading to errors and delays in the billing process. Additionally, changes in insurance or situations involving multiple insurance payers can create manual work that slows down the revenue cycle.
Automation and Training: Solutions for Improved Eligibility Verification
To address these challenges, many revenue cycle management programs offer automation for parts of the eligibility verification process. Investing in this software can improve productivity and accuracy while reducing manual errors and delays. However, it is important to carefully evaluate the costs and benefits before deciding.
In addition to automation, staff training and support can also be helpful in improving eligibility verification. By ensuring that staff have the necessary skills and resources to complete this stage efficiently, practices can reduce errors and delays in the revenue cycle.
Fixed Balance Collection
Collecting fixed balances from patients is an important part of the revenue cycle. Usually, this involves collecting a copay from patients on the day of their appointment. This stage is relatively simple but can lead to complications if not handled properly.
Possible Issues:
If there is no established protocol to handle patients who cannot pay their copay or if eligibility verifications are not done in a timely manner, payment for fixed balances can be delayed or lost in the revenue cycle. Delays in collections can lead to difficulties in revenue collection.
Recommendations:
It is crucial to have a clear procedure in place for staff to follow when patients are unable to pay their copay. These charges should be transferred to another stage of the revenue cycle to ensure that collections are still received. If this problem persists, it is essential to ensure that eligibility verifications are being done in a timely and effective manner, even if you have a solid procedure in place.
Creating Claims
Creating Claims is a vital stage in the revenue cycle that has a significant impact on your collections. Proper coding is critical to ensure that the services billed for match the ones provided. Additionally, modification codes, bundling codes, and special service codes must be used correctly to maximize your revenue.
What could go wrong?
The most significant challenge practices face here is coding errors. With numerous codes available to bill, frequent updates, and varying codes for different features of the service provided, mistakes made in the claim’s creation stage will affect your follow-up process, and you may not detect them until it’s too late. To avoid this, conduct periodic audits of your claim’s creation process, especially if there are upcoming coding updates.Once a claim is complete, it’s either sent directly to the payer or to a clearing house you work with. Problems may arise at either of these stages, especially if the clearing house can’t handle your practice’s needs.
How to make it better:
If your billing team struggles to keep track of coding updates or consistently makes coding errors, outsourcing your billing can be beneficial. This ensures that coding mistakes won’t be an issue and will pay off financially in the long run. Proper training and keeping your staff up to date is also crucial to minimize rejections and denials and maximize revenue.
Processing Denials
Processing denials is an essential part of the revenue cycle management process. Denials may occur when claims are sent to a payer or clearinghouse, and can be due to a variety of reasons, including missing or inaccurate patient information, coding errors, or insufficient documentation.
What could go wrong?
Coding errors are a common cause of claim denials and can lead to significant financial losses if not addressed promptly. When coding regulations change, it’s important to stay informed and ensure that your staff is up to date on the latest coding practices. If coding errors are a significant source of denials, consider retraining your staff or outsourcing your billing.
Other reasons for denials include clearinghouse errors and informational errors caused by improper record-keeping or data transfer. It’s essential to track and analyze your denial data to identify trends and target areas for improvement.
How to make it better:
The key to reducing denials is ensuring that you’re coding and billing processes, along with your eligibility verifications, are functioning effectively. Working with a reputable clearinghouse and maintaining accurate record-keeping are also essential. Regularly reviewing and updating your coding practices and staff training can help keep denials low and revenue flowing.
Follow Up
Following up with payers after a claim has been rejected or denied is essential to ensure maximum payment for your services. The follow up team needs to correct and resubmit the claim, and then use various strategies to negotiate with the payer to receive payment.
What could go wrong?
The success of this stage of the revenue cycle relies heavily on the knowledge and expertise of the follow-up team. If they lack knowledge about the intricacies of claims processing or don’t have a strategic approach to prioritizing follow up, it can lead to an overwhelming number of denials and rejections. The follow up team should have a comprehensive understanding of insurance practices and regulations, timely filing requirements, and effective contact methods for different types of payers. Any gaps in this knowledge can directly impact your revenue.
How to make it better:
Since the effectiveness of the follow up team is crucial, outsourcing your follow up may be a viable option if you’re unable to find qualified candidates. A strong follow up team can significantly increase your revenue by reducing denials and rejections. Even if your denial and rejection rates are currently low, having a competent follow-up team is vital to maintaining those numbers.
Patient Statements
If a patient has an outstanding balance such as a deductible, coinsurance, or any other fee, you need to notify them about it by sending a statement either electronically or on paper. To accomplish this, you must have current patient information and a system in place that can generate and deliver the statement promptly after their date of service.
What could go wrong?
The determination of outstanding balances is based on remittance advice sent by payers with their payment and inputted into your system by the payment posting team. If payment posting is delayed or not properly done, some patient balances may not be paid. Furthermore, if the schedule or process of sending patient statements is inconsistent or time-consuming, your collections may decrease as patients become harder to track down and revenue becomes harder to collect.
How to make it better:
To ensure timely collections, patient statements should be sent out according to a regular schedule. The longer you wait to notify patients of their balances, the harder it may be to collect payment. Creating patient statements can be complex or cumbersome in some older laboratory management programs, which can be time-consuming. Simplifying the process of creating and sending statements and ensuring it is done regularly can improve your collections.
Payment Receipt
After a payer accepts a claim, they will issue payment for the services rendered, which may be sent electronically or via check. Additionally, they will send an explanation of benefits (EOB) or electronic remittance advice (ERA) detailing the payment amount, the services covered, and reason codes that explain any discrepancies between the billed and paid amount. Payers may also indicate coinsurance or deductible payments that the patient owes, which you will need to collect.
What could go wrong?
Payment receipt processes can be complex and varied, so it is important to have an accounts receivable (A/R) team that is proficient in processing all payment types. In addition to processing and depositing payments, your team should be able to interpret payment data and use software that can organize and analyze payment information effectively. Failure to do so can result in slow, inefficient payment processing and inadequate analytical capabilities.
How to make it better:
To improve payment processing, it is essential to distribute payment receipt tasks among your staff effectively. Payment processing tasks may include accounting, analytics, payment posting, and billing, and each task should be handled by staff with the appropriate skills and training. To streamline payment processing, consider reorganizing your workflow to optimize the distribution of tasks and eliminate any unnecessary steps. Doing so can reduce the time and effort required to process payments and improve the efficiency of your payment processing system.
Payment Posting
Payment posting involves inputting payment information and remittance advice received from the payer into a record keeping system. While electronic remittance advice can be automatically processed by some programs, paper-based explanations of benefits may require manual input.
Potential issues: Some payers may use unique ways to organize their remittance advice or uncommon reason codes, making it difficult for the payment posting team to decode and input information into the system accurately. Inefficient payment posting can result in lost revenue and make it challenging to improve collections in the future.
How to improve: An electronic payment and remittance agreement with high volume payers can streamline payment posting, reducing the workload of the payment posting team. Investing in payment posting software that can process various formats of remittance advice can also help improve efficiency and accuracy. Regularly evaluating and updating the software can ensure that the payment posting process remains streamlined and effective.
Reviewing Analytics
Analytics is the process of interpreting your payment data from the payment posting stage to gain a broad understanding of it. An effective payment posting software should allow you to export your data for analysis using Excel or similar programs or provide an analytics engine within the software itself. Without proper analytics, you won’t know the status of your claims, which claims are generating more revenue, which payers are paying faster or more, or the expected revenue within a given period. This information is crucial when making important business decisions such as investing in high-cost additions to your practice or new laboratory equipment.
What could go wrong?
Analytics can take different forms, ranging from an overall view of your finances over the past few years to analyzing the revenue from a specific procedure of a particular insurance payer last week. If your posting software doesn’t provide detailed data about each transaction, you will be limited in your analytics options. Moreover, if your analytics team lacks knowledge about the revenue cycle or lacks the technical skills required to create analytics reports, you may miss out on vital information that can streamline your business operations and help you negotiate better agreements with payers.
How to make it better:
Effective analytics requires a significant investment of time and resources. Inaccurate analytics can have severe repercussions on your practice, so it’s essential to get it right. As analytics requires problem-solving abilities and is less automated than other stages of the revenue cycle, it is vital to hire experienced professionals or outsource your analytics to a trustworthy third party. You should also ensure that you or your team understand what analytics are useful for your practice. Analytics can provide valuable insights, especially when you’re entering into agreements with new practices or payers or introducing new procedures.
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Branden Riggs
22:38 03 Aug 23
I spoke with Brian today from Sharp Management Solutions. He was a pleasure to chat with and he seems very knowledgeable. Having your medical billing handled by specialists seems like a great way for medical offices to spend less effort and collect more money from their patients at the same time.
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