Revenue Cycle Management

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The revenue cycle begins when the patient appointment is made and only truly ends when the services rendered during that appointment are paid for by the responsible parties. For many physicians and practice executives, managing the revenue cycle is a constant struggle of cost over return and making the most out of the resources available. Whether you have the best resources to draw upon or those less desirable, here are a few ways to improve your collections, increase staff efficiency, and, ultimately, enable physicians to keep an eye on this portion of the business side of their practice.

Front Office

1. Gathering and Verifying Quality Data: The adage, "Good Information = Good Results," is true, and without current patient demographic and insurance information, the ability to get paid correctly and on time is impossible.

2. Point of Service Collections: With increasing patient co-payment amounts, medical savings accounts, and health savings accounts, it is imperative to ensure every practice has policies and procedures to collect patient due amounts at time of service. Not only will this decrease accounts receivable, but it ensures that your staff has the time necessary to collect the "hard-to-collect" dollars from insurance companies and patients.

3. Capturing Billable Charges: One of the worst possible things is not capturing and billing all possible charges. Three important aspects to this are:

• Making sure your fee schedule is set appropriately so you can get reimbursed the maximum amount available through your contracts with all payors.
• Review coding trends to make sure all CPT codes are selected and billed for all services rendered. It is well worth the cost to use a certified coding expert if you do not have such a resource internally.
• Make sure you incorporate simple, easy-to-use audit trails and points of reconciliation so that you can make sure all charges are posted and billed. This might include reconciling: superbills to patient appointments; surgery logs from hospitals, ambulatory surgical centers, and nursing home or SNF visits.

Back Office

4. Measuring Productivity: Different people have different strengths and weaknesses and, as such, billers and collectors may vary in quantities of work each employee accomplishes. Having said that, it is vital to ensure you have enough staff to do all the necessary tasks so that charges, payments, and follow-ups are done without creating backlog or undone tasks. Creating benchmarks or productivity standards allows you to make sure you have proper staffing for your practice volume and allows you to measure efficiency of existing staff. Quality standards are equally important, so monitoring or periodic auditing staff work is vital to analyzing revenue cycle management.

5. Accounts Receivable Metrics: Using industry standard benchmarks or metrics allows you to understand your practice AR as well as identify problem areas for further review and to correct problem areas before they get out of control. There are many metrics to use, and we recommend these at a minimum: (you must exclude capitated services and payments from this analysis to accurately assess your data) (formulas for these and other metrics are widely available from SDCMS, CMA, MGMA, or other healthcare professional organizations):

• Average Days Charges in AR
• Average Months Charges in AR
• Percentage of AR over 90 days (aged based on date on billing or responsibility, not date of service)
• Net Collections Percentage

6. Monitoring Cash Flow: Creating a simple spreadsheet or table to track daily receipts or deposits allows you to know where you are at any time during the month. The benefit here is to be aware of and react to cash flow problems before the end of the month. Some practices create separate columns for time of service, insurance, and patient payments received in the mail.

7. Denials/Underpayments: By tracking types of denials (eligibility, bundling/coding, non-covered services) as well as by provider, practices can use this information to identify and resolve problems in the revenue cycle. The key point is then taking that information and incorporating modifications into the point in the revenue cycle to effect positive change. Doing nothing with that information will have a corresponding effect.

8. Analyzing Payer Contracts: The best staff using the best technology can still only produce the best results based on your current contracts. Clearly this is a challenging point to improve upon because certain payors or contracts are non-negotiable. However, if you clearly understand your key (top 15-20) payors based on patient volume, charges, or payments (all three are best to know) and then comparing reimbursement of top 15-20 procedures, you should be able to intelligently identify those payors and procedures which affect your collections.

9. Use the Best Resources Available: Too often we see practices emotionally or financially attached to existing practice management systems and/or staff without regard to how much those resources are actually costing the practice. Clearly there should be an expectation to make best use of investments in systems and training staff, but at some point by avoiding hard questions practices will loose staff moral and potentially thousands of dollars. "Righting your ship" doesn't necessarily mean cleaning house, but is does mean that you should always be looking for ways to "clean up" your practice to give you the best possible chance to survive for you as physicians, your staff, and your patients as well.

10. Use the Best Resources Available: This one is so important it is worthy of reiterating.