7 min read
Authored by Kumar Shwetabh, Desmond Jackson
In this article, we will help you gain a better understanding of:
How to improve the revenue cycle
The KPIs that you should focus on
How to plug revenue leakage due to improper documentation
The role of automation in the revenue cycle
“Think of your revenue cycle as a workflow and ensure that you have the right tech, processes, and people to manage each element of this complex workflow.”
Exceptional healthcare organizations recognize the importance of a healthy and efficient revenue cycle.
The health system revenue cycle is a multi-functional environment with a lot of nuance and many steps - it is no wonder things can become very complicated! There is room for error at every stage of the cycle. The opportunity for error begins before the patient walks into the waiting room and doesn’t end until the claim is paid and settled.
When claims have missing pre-authorizations, missing or incorrect data, or incorrect codes, claims are denied, payment is delayed, and costs are increased. Due to the revenue cycle being the lifeline of any healthcare organization, it is easy to see why the most successful organizations have a strategic eye on their revenue cycle performance.
You must have an exceptionally functional revenue cycle management system to be exceptional.
So, what tangible actions can you take today to make your revenue cycle even more exceptional?
Streamlined workflows: Streamlining your workflows and aligning your staff's time to focus on high-value activities can immediately impact your bottom line.
Investment in automation: If you are not already automated, now's the time to do it. Entrusting your revenue cycle to a service provider with deep automation capabilities can be a great strategy too.
Visibility into KPIs: You must have the right analytics and reporting processes.
Resolving your A/R Backlog: High denial rates, lack of collaborative revenue cycle workflows, lack of policies on handling bad debts and write-offs, and manual processes can create messy A/R backlog situations.
Consider outsourcing: Outsourcing and offshoring your revenue cycle can be a solid strategy to reign in your revenue costs and boost efficiency parameters.
Let’s take a deeper look at these strategies.
Streamlined Workflows
Streamlining your workflows and aligning your staff's time to focus on high-value activities can have an immediate impact on your bottom line. Categorizing your team's activities daily, weekly, and monthly gives you the benefit of increased productivity [1]. To do this, make a list of each one of your team's manual tasks, then categorize them by the urgency in three buckets: daily, weekly, and monthly. For example, you will likely need to keep eligibility verification daily (multiple times per day) tasks, add billing as a weekly task, and enter all reporting activities as a monthly task. A better strategy would be to deploy an automated workflow tool that enables your staff to focus on daily tasks and keeps them aligned on the goals [2].
Remember: A revenue cycle platform is only as good as its implementation. Structured processes, analytical tools, and experienced resources must complement your revenue cycle software capabilities to bring in the efficiency you seek.
Invest in Automation
In addition to streamlining workflows, you should consider the possibility of automating some of those workflows. Currently, there are computer-assisted coding tools, robotic process automation, and machine learning/AI tools that can help you achieve twice the amount of work coupled with cost savings. If you are not already automated, now's the time to do it. Automation can reduce manual, repetitive work processes by over 50%.
If you would like to learn more about how automation can help you create a better revenue cycle, reach out to us.
Increase visibility into KPIs: Choosing the right reports and tools
The revenue cycle can be a statistician’s delight. However, with multiple parameters and benchmarks defined by organizations such as HFMA and MGMA, it is imperative that you have the right analytics and reporting processes. Structured reporting will help you understand leading and lagging indicators that can help you spot issues before hitting the bottom line. In addition, the right analytical platform should prompt you to take decisive action by creating user alerts and workflows.
Often, increasing visibility into your KPIs means using your current technology's reporting capabilities to the fullest and addressing any gaps in that platform with additional reporting tools as necessary. For example, while most revenue cycle platforms have embedded reporting capabilities, the game is now shifting to prescriptive analytics. Analytical platforms today present the data well and create workflows and lead the RCM staff in a tight swim lane to help you achieve market-leading business outcomes.
The most impactful KPIs to track:
You should keep your average days in A/R below 30-40 days. If your claims exceed 30 days in A/R, it indicates an issue in your revenue cycle. Therefore, it is imperative that you pinpoint the causes for the delay.
Key questions to ask are:
Are payer’s requirements not being met?
Does your team need additional training?
Is your pricing transparent, and do your patients understand their costs upfront?
Are you filing claims on time?
This measure, in conjunction with the rest of your KPIs, can tell you a complete story.
The HFMA, through the MAP keys initiative, has developed a definition for costs to collect. Simply put, the cost to collect is a performance indicator that defines the overall efficiency of your revenue cycle and the productivity of your personnel. For example, suppose your cost to collect is too high as a percentage of total cash collected. In that case, you may need to conduct a thorough examination of your revenue cycle processes and identify and address issues.
Cost to collect is calculated by dividing the total revenue cycle costs (salaries and benefits of your team members in front/middle/backend revenue cycle/outsourcing costs, software and IT costs, and allocated cost of facilities) by Total Cash Collected (Total reimbursements – Insurance, patients, and bad debt recoveries). Top strategies to reduce your costs to collect include outsourcing/offshoring of your revenue cycle.
The higher the number of claims paid on the first submittal, the better it is for your organization. The Medical Group Management Association (MGMA) estimates that the average cost to re-work a claim that has been rejected or denied is $25 for each claim. Therefore, the Clean Claim Rate is the percentage of claims that are successfully processed and reimbursed upon the first submittal.
The denial rate is the percentage of claims denied by payers during a given period. A low denial rate indicates cash flow is healthy, and fewer staff members are needed to maintain that cash flow.
The industry average denial rate is 5% to 10%, but the desired rate would be below 5%.
Resolve Your Backlog
High denial rates, lack of collaborative revenue cycle workflows, lack of policies on handling bad debts and write off, and manual processes can create messy A/R backlog situations. System transitions can also create a backlog of A/R on the old system, and any system migration should include an associated well-thought-out project plan.
Steps to take to solve the backlog
Training and retaining your revenue cycle staff. Train your staff on understanding revenue cycle KPIs with a focus on improving clean claims rate and reducing denial rate.
Plug Revenue Leakage. Often the cost of revenue leakage is so high that it can pay for the costs of the entire revenue cycle team. Consider hiring clinical documentation specialists to understand unbilled procedures and focus on reducing the discharges not fully billed (DNFB) rate. A strong team of coders and clinical documentation specialists can help you identify gaps in your billing and coding processes and work with clinicians to help them recognize documentation gaps and understand their role in achieving higher reimbursements.
Creating a policies and procedures framework. Clear processes for analyzing revenue cycle KPIs, defined revenue cycle workflows, and addressing bad debt/write-offs on time, will go a long way in improving the health of your revenue cycle. Revenue Cycle CFOs must work with CIOs and COOs to define clear SOPs and measurement processes to improve productivity, efficiency, and reimbursement rates.
Consider Outsourcing
Outsourcing and offshoring your revenue cycle can be a solid strategy to reign in your revenue costs and boost efficiency parameters. Outsourcing gives you access to a qualified labor pool and efficient workflow processes that will shift your focus from transactional process management to strategic management of the revenue cycle through KPIs.
For more information on how outsourcing can help, watch this on-demand webinar, “Get in the Outsourcing Game.” Revenue cycle leaders from Johns Hopkins Hospital and Holy Name Hospital talk with Access Healthcare leaders on how outsourcing has helped them improve their revenue cycle outcome.
Conclusion:
Recognize that Revenue Cycle is a team sport. Clinicians, Billers, Coders, technology, and call center personnel are in it together. Whether you are outsourcing your revenue cycle or relying on internal resources, ensure that you are managing your revenue cycle by industry standard KPIs, leveraging automation, and creating a coordinated workflow across multiple team members. Understanding the underlying cause of claim denials can help you involve everyone and align them towards preventing denials and improving the clean claim rate. Getting the right reimbursements and getting reimbursed on time can boost your organization’s financial performance and help you focus on creating great patient experiences.
About the Authors
Kumar Shwetabh, President of US Operations brings 18+ years of experience in healthcare revenue cycle management in the disciplines of sales, account management, transition, and operations management. Kumar is responsible for developing and leading Access Healthcare's direct market strategy for hospitals and health systems.
Desmond Jackson, VP of Solutions has over a decade of experience working in the healthcare industry specializing in revenue cycle management. Desmond holds a doctorate degree in business administration specializing in finance management from Northcentral University and an MBA from Strayer University, Information Technology.
ABOUT ACCESS HEALTHCARE
Access Healthcare provides business process outsourcing, applications services, and robotic process automation tools to healthcare providers, payers, and related service providers. We operate from 19 delivery centers across the US, India, and the Philippines. Our 14,000+ staff is committed to bringing revenue cycle excellence to our customers by leveraging technology, emerging best practices, and global delivery. Based in Dallas, we support over 300,000 physicians, serve 80+ specialties, process over $50 billion of A/R annually, and ascribe medical codes to over 300 million transactions annually. To learn how Access Healthcare can help your organization boost its financial performance, visit accesshealthcare.com.