Strategies for elevating internal revenue cycle operations

The revenue cycle is the lifeblood of any business, providing necessary means to sustain current operations as well as long-term viability. Although a healthy revenue cycle is something for which every business strives, it is especially important for healthcare organizations in the current industry environment, due to declining reimbursements, shrinking margins and evolving payment models.

Maintaining a well-oiled revenue cycle can be challenging given the many moving parts and constant state of flux inherent in today’s healthcare financial operations. However, by continuously reviewing performance and tackling opportunities for improvement, an organization can realize a high-functioning system.

This article, the third in a four-part series examining ways to optimize the revenue cycle, focuses on assessing and improving internal operations to ensure peak revenue cycle performance. Click here to read the first article in the series.

Consider the following strategies for looking inward to analyze and enhance the revenue cycle.

Assess the current state

Closely studying internal processes helps an organization identify chances to work smarter, better and faster across the revenue cycle, from eligibility verification to claims scrubbing and denials management. One way to evaluate the current state is to review front- and back-end processes asking specific questions, such as:

• Is A/R aging appropriately, or is a disproportionate amount being aged?
• What are claims rejection and denial rates, and how are they trending?
• What is the collection rate on gross charge dollars?
• What point-of-service collections are being missed?
• How many patient accounts are sent to collections?

These questions can point to potential problems with claims submissions, payer payments and patient collections. By getting a sense of baseline performance, an organization can not only identify specific areas in need of work but also determine a starting point for change, allowing the organization to verify the effectiveness of any future improvement strategies. 

Establish metrics to measure performance

In addition to asking the aforementioned questions, organizations should establish and monitor several key performance indicators, which can provide a clearer picture of revenue cycle efficiency and accuracy. For example, an organization can look at monthly charges, payments and adjustments in comparison to averages and historical data to assess whether the organization is regularly receiving full and timely payment for services rendered.

Likewise, the organization can look at charge entry lag times to get a sense of provider efficiency or A/R aging by insurance carrier to gauge the timeliness of payer payment.

Create a dashboard

Once an organization decides what measures to monitor, it can create a dashboard of key indicators that helps staff and leadership see how the revenue cycle is performing at any given time. For instance, the dashboard can include a metric that monitors the gross and net collection rates to demonstrate how effectively the organization collects money.

In addition to determining which metrics will be included on the dashboard, an organization should establish who will update the metrics and in what timeframe. Depending on the metric, this may not be the same person or the same frequency. For example, a front desk staff member might be tasked to update eligibility verification metrics daily while a revenue cycle director may be in charge of keeping information on days outstanding current each month.

Develop partnerships with payers

Working with payers to streamline claims processing is a win-win for both parties. For instance, using technology to automate eligibility verification, claims submission and claims status checks improves accuracy and efficiency for the provider and also reduces administrative costs for the payer, such as those involved with opening paper claims and performing manual adjudication.

As organizations begin pursuing new payment models, they especially need to have an established relationship with payers that allows the two parties to optimize processes, discuss potential issues and work collaboratively. 

Zero in on denials management

While assessing performance and responding to shortfalls is important across all revenue cycle functions, it can be particularly beneficial in the area of denials.

For most organizations, resources are spread thin trying to keep up with the many healthcare initiatives underway—implementing EHRs, attesting for meaningful use, readying for ICD-10, just to name a few. As a result, many providers tend to overlook the opportunity to engage in robust denials management. In fact, the Medical Group Management Association (MGMA) estimates that only 35 percent of providers appeal denied claims.

Leveraging technology that tracks denials and identifies trends and patterns, providers can correct processes to avoid future denials and reduce the cost and time of claims rework. This level of business intelligence and analytics requires qualified staff that can segregate the data, interpret it and apply it to ongoing process improvements.

Knowledgeable denials management staff will be even more critical going forward as providers likely will see increased denials with the onset of ICD-10.

Look for coding expertise

Coding is another area ripe for improvement. Although accurate coding has always played a significant role in optimizing revenue, it will become even more important with the October 2015 ICD-10 transition.

With the increased size and scope of the new code set, organizations will have to be sure their coding efforts are comprehensive, accurate and timely in order to safeguard cash flow and revenue. Depending on the organization, this may mean hiring additional certified coders or outsourcing some or all of the coding effort.

Revenue cycle review never stops

Reviewing the revenue cycle should not be a “once and done” effort – it requires constant analysis. Staying vigilant to key metrics and focused on implementing targeted improvement strategies will ensure your organization remains nimble and responsive to emerging opportunities. 

Part four of this series will show how one provider organization adopted revenue-driving practices for long-term success and the results they’ve realized from the approach.

Monte Sandler is the executive vice president of RCM services at NextGen Healthcare.