Effective revenue cycle management begins with recognizing it is a process, and understanding the process and its key components, said Jeffrey T. Gorke, MBA, Senior Vice President of the Coker Group.
Revenue cycle management requires ongoing review and documentation. Staff input is essential to an effective process, and staff members should be educated about the components of the process and about their role in ensuring the success of the program. Above all, responsibility and accountability must permeate an organizational approach to managing the revenue cycle as opposed to the view that a single individual is responsible.
“The whole revenue cycle is a system, a little ecosystem within the practice,” said Mr Gorke. “Your front-desk people play a role in the revenue cycle. It’s start to finish.”
He described the roles of individuals in the revenue cycle of the practice, calling the front-desk staff the first raindrops in the system.
“No individual raindrop considers itself responsible for the flood. Responsibility, teamwork, and defined processes are the first steps toward improving the billing and collection process.”
“Everyone who works on bringing money in the door plays a role in the revenue cycle,” he added.
Signs of Revenue Cycle Problems
Regardless of a practice’s size, several key indicators serve as common warning signs in the revenue cycle, including:
- Shrinking cash flow
- Diminishing collections percentage
- Growing volume of accounts receivable
- An increasing number of patient calls to the billing department
- A rising number of claim denials
- The proportion of “aging” claims (>90 days) is increasing.
“These pieces needed to be monitored and managed on an ongoing basis,” said Mr Gorke. “This can be difficult in a small practice, where one person has to deal with all of these issues.”
Reimbursement cuts and quality-based payments are inevitable, and practices must anticipate the changes and respond appropriately. Developing and implementing a plan to deal with a shrinking cash flow can be difficult and painful, but is necessary, he said.
The revenue cycle manager or office manager should develop a diagram or flow chart to document the steps involved in taking an account from “cradle to grave.” The diagram should include internal and external functions.
The manager should gather as much information as possible about every function. In particular, the manager should solicit input from and listen to employees who actually perform the jobs or steps involved in the process. The information can provide a basis for determining benchmarks, establishing baselines, and developing reports essential to effective revenue cycle management.
A manager should create incentives for employees to improve collections. Incentives can come in many forms. In some cases, merely establishing a goal for collections or improvement in collections and providing recognition for achieving the goal is sufficient motivation, said Mr Gorke.
Often overlooked, patient education has a key role in effective revenue cycle management. Patients have a responsibility to know about their insurance, particularly changes in coverage that can affect revenue management.
Managing Your Revenue Activities
Claim denials should be monitored carefully. The reason for every denial should be determined and documented to avoid a repeat. If denial relates to a physician action, the physician should be informed. A related activity is monitoring collection rates by each carrier. Outliers should be identified and the reasons determined.
The process of revenue cycle management comprises 6 “buckets” of related activities. Each bucket and each activity within the bucket requires ongoing evaluation and monitoring. These buckets include:
1. Professional qualifications
“I am still amazed at the number of offices who will see a patient when the provider is not credentialed,” said Mr Gorke. “I have a client with significant financial problems right now, and they still have uncredentialed providers rendering care. They have a few that have been there for a couple of years and still aren’t credentialed. They are giving their charity care right there,” he said.
“If you don’t know where your payer contracts are, you probably are not the exception,” he said. “Many practices sign a contract, put it wherever, and then the contract is evergreen, just keeps rolling. Some are tied into Medicare rates, so if Medicare cuts 10%, you’re going to take a 10% cut on your commercial contract. That’s something that’s really dangerous.”
3. Point of service
“Coding and documenting are huge, and your physicians play a big role in this,” said Mr Gorke. “Everything they do and document goes out, and you get paid based on that. If they’re not putting enough into the chart or note, and you’re billing all level 2 when you should be doing level 4, or doing all level 4 service and billing level 2, a little education might be in order.”
Claims processing and submission, claims scrubbing, clearinghouse edits, and claims reconciliation and resolution.
5. Billing and collections
“Often what we see in small private practices is that people just don’t have time to do the follow-up on claims,” said Mr Gorke. “Your staff member might get the payment that is for a level 3 recheck, and the payment comes in below the fee schedule, and she just says ‘okay’ and writes off the difference. Ensure that you have policies in place for accounts receivable follow-up, any claims follow-up, where the fees and reimbursement don’t match the fee schedule.”
6. Reporting and benchmarking
“I’m a big fan of dashboards, because it shows people data and gives them something they can hang their hats on,” said Mr Gorke.
“A lot of what we do in staff evaluations tends to be fairly objective,” he added. “Putting dashboards in place wherever you can will allow you to measure what your staff members are doing, and build an objective piece into their evaluation. You can do that in the clinical areas, too.”
Office staff and clinicians can learn from simple dashboard-based reports. As an example, he cited improvements in revenue cycle management by asking patients for office visit copayments upfront.
“I recently wrote a paper on how much money would come from collecting copays on every patient, every day,” said Mr Gorke. “It’s thousands of dollars of cash money.”
People tend to look at such issues in isolation, but they need to be educated in the big picture perspective of the revenue cycle, he added. One of his practice clients will collect $1 million more in the coming year simply by asking for the money that is due.
In the evolving reimbursement climate, patients are being asked to pay a greater share of the cost of their care. Moving forward, collecting larger amounts from individuals will prove to be a bigger challenge that requires advance planning and development of effective strategies.
Mr Gorke said practices should develop a collection and billing timetable, organize delinquent accounts by dollar amount, identify a customer service representative within the practice and define that person’s role, create an information package for patients that addresses the patient’s financial responsibilities, and conduct a billing audit.
“It’s going to require a lot of TLC,” he said. “I would suggest having someone who can take patients to a confidential area, away from the front desk, and counsel them on financial issues, as it warrants. If you have patients with chronic illnesses that require a lot of visits and services, they are going to be challenged to make all of their payments.”
Coding, Billing, and Collections
Additional strategies include monthly analysis of accounts receivable, exception reports, tracking of payment levels and withholds, evaluation of managed care collections versus self-pay, and periodic coding and billing audits. As an ongoing process, staff and providers should receive regular reports and education about revenue cycle management, and their active involvement should be encouraged.
Mr Gorke acknowledged that placing collections responsibility on the front-desk staff is asking a lot, and the personnel put in that position should have adequate and appropriate support. Examples include education sessions, displays to show the practice accepts credit cards, development of payment plans for selected patients with a history of slow or nonpayment, designation of a staff person as the financial counselor, and establishment of a designated counseling area. A practice also should have an aggressive plan for noncovered services.
Practices must also work to cultivate relationships with payers. Identifying a key contact for each payer can be helpful. Understanding payer tactics and common reasons for denials is essential.
“Try not to be adversarial, even when you’re getting shafted by the payer,” said Mr Gorke. “If you can develop a relationship with them and someone in their office, that goes a long way. They want to have a nice relationship, and they don’t want to have you breathing fire down their neck. It does help. I can’t guarantee results, but it’s certainly better than beating them over the head every time you call them about a denial or some other issue.”
Every practice should establish cash collection goals, educate staff about the goals, and maintain reports on efforts to attain goals. The goals should be meaningful and realistic. Progress toward the goals can be used as an objective measure during annual performance reviews.
The ICD-10 Challenge
The launch of the International Classification of Diseases, Tenth Revision (ICD-10) on October 1 increases the level of clinical detail required of providers when reporting their services. The new coding system has the potential to create cash flow issues for a rheumatology practice.
“The transition to ICD-10 will touch almost everything in your office, from check in to check out,” he said.
Calling the transition “monstrous,” Mr Gorke said extensive physician education will be essential to minimize the disruption to revenue management. ICD-9 comprised 13,000 codes, which expanded to 69,000 with ICD-10.