Prior to the COVID-19 pandemic, optimizing revenue cycle management sometimes took a back seat to competing priorities like interoperability and improving ambulatory access. Today, hospital executives’ priorities are different as the industry has seen sharp declines in revenue. Many patients are avoiding preventive care appointments and elective procedures. Some fear contracting the novel coronavirus, while others are worried about co-pays or other unexpected charges. Cash flow is now top of mind for healthcare organizations.
Becker’s Hospital Review recently spoke with an expert from Zotec Partners about the current environment and the importance of returning to the “ABCs” of revenue cycle management. Zotec’s Carrie Moneymaker discussed best practices for generating cash flow through end-to-end processes that emphasizes measurable outcomes and continuous improvement.
A clean, controlled and transparent revenue cycle management process is the key to cash flow
Effective revenue cycle management requires an end-to-end focus, from the time a patient contacts a provider to the time that payment is received. “Patients view a visit to the doctor as a single encounter. They don’t distinguish between the clinical and the financial pieces. We need to do the same from a revenue cycle management perspective. That means aligning and working together,” explained Ms. Moneymaker.
Strong revenue cycle management is the product of robust clinical workflows and clinical administration. Claims must be clean before they go out the door of the practice, hospital or health system. Considerable friction can occur, for example, during the scheduling and registration processes. It’s important for revenue cycle teams to implement a feedback loop that highlights opportunities for administrative staff to gather accurate information from patients.
Individual providers must also be actively engaged in the revenue cycle. According to Ms. Moneymaker, “This isn’t a message that’s been promoted, especially at large practices or health systems. It’s a paradigm shift that we need to make.” Many providers focus on volume generation, which means seeing and treating as many patients as possible. In some cases, providers don’t pay close attention to the CPT codes they are clicking and payment problems trickle downstream.
Provider education and support is an essential first step to avoiding problems. Health systems must reinforce that providers are responsible for understanding the codes they select in the EMR and what they bill for. Providers must list receive direct feedback from revenue cycle teams to enhance the quality of clinical information.
To prevent avoidable denials, claims may need front-end edits at the time of the care encounter and during charge capture. It’s important for organizations to pay attention to the volume of edits. “If you have to touch something twice in a claim, there’s either a problem that needs to be resolved or a process that can be automated,” Ms. Moneymaker said.
Once claims go out the door, health systems and practices need to monitor whether they have been held up with payers. If so, proactive intervention is required. Ms. Moneymaker describes revenue cycle management as “proactively reactionary” — teams work hard to create clean claims, but denials inevitably occur. Organizations must have a standardized process to address issues promptly.
Responses for most denials can be standardized and submitted electronically. Another best practice is feeding data from payers into a continuous feedback loop that informs providers and systems about ways to prevent avoidable denials. Tracking nonavoidable denials is also recommended. Further analysis can determine whether those issues may be preventable in the future.
“If you are using people to handle the majority of your appeals, you are using a process that is wasteful and expensive,” Ms. Moneymaker said. “It takes a human anywhere from 13 to 20 minutes to produce an appeal. A lack of standardization also puts organizations at risk.” Audits of organizational operations are a great way to identify opportunities to standardize and strengthen the revenue cycle management process. These audits tell the story of what organizations are doing on a day-to-day basis and helps decision-makers identify targets for improvement efforts.
When practices and health systems review claims, they often focus on follow-up and appeals. Contract variance is another important element organizations may overlook in claims’ audits. Calculating contract variance for payers must go beyond creating an Excel spreadsheet. The best practice is using a technology-based system that generates analytics. Organizations can use these data during negotiations with payers. Contract variance analytics shed light on guarantor responsibility outcomes, as well as who is presenting with higher deductibles for particular payer segments, locations, procedure groups or specialties.
Measurable outcomes are critical, but first identify your “true north”
When health system leaders have clear visibility into the revenue cycle, they understand where they need to intervene to correct mistakes and mitigate risks. Transparency helps revenue cycle teams define measurable outcomes.
For example, decision-makers should know how many encounters and claims they should be receiving from different locations and providers. They must also know how long it takes to create a claim. Claim turnaround time is another critical metric. Although many teams still calculate turnaround time manually, this approach doesn’t provide a 10,000-foot view of the revenue cycle. Leveraging technology enables practices and health systems to “slice and dice” information in a variety of ways, such as identifying avoidable denial reasons by provider, location or carrier.
“Organizations need revenue management systems that can ingest information from disparate clinical systems and transform it into real-time information and predictive analytics,” Ms. Moneymaker said. “What many systems are missing is the big picture that includes real-time information. Reporting back a month, six months or a quarter later is too late. By then, the payers have updated their rules and the organization has fallen behind again.”
As hospitals and health systems develop revenue cycle management metrics, they must first define their true north. Some organizations use collection rates as their main key performance indicator, but collection rates are easily manipulated. A better metric is collection of the allowable amount. From a revenue cycle perspective, perfection is collecting the allowable amount for all services. Organizations may choose to create additional KPIs related to collection of the allowable amount, such as how long it took to collect, whether bad debt was involved and whether the friction in the process stemmed from the payer, the provider or the patient.
“Metrics related to communication outreach are important, but many organizations aren’t looking at them,” Ms. Moneymaker said. “When you have a gap between your allowable amount and your KPIs, you can extrapolate back to where, how, and when you are engaging with patients. Strive to understand which patients are responding and how they are responding.”
Effective revenue cycle management focuses on continuous improvement processes
All too often, organizations don’t have a revenue cycle feedback loop from the back end to the front end which includes providers. Effective revenue cycle management systems use back-end information to fine tune front-end processes. This is essential for preventing avoidable denials. Feedback loops serve as a mechanism for continual improvement.
According to Ms. Moneymaker, “Everyone can make revenue cycle management process improvements. In my 20 years, I’ve never seen a practice with processes that are as clean and effective as they could be. Remember that it takes a tough skin to tackle revenue cycle management. Even when you do your very best, you can always do better.”