Revenue Cycle Management " The Pillars of Success"

What is the Revenue Cycle?

The Healthcare Financial Management Association (HFMA) defines revenue cycle as "All administrative and clinical functions that contribute to the capture, management, and collection of patient service revenue." This process starts with patient access, to information technology and the complete administrative procedures (detailed below), ending with account collections for all services rendered.

The basic components of the revenue cycle are interdependent parts, which work synergistically to enhance the full RCM process. Each component, from eligibility verification, charge coding, claims scrubbing, accounts receivable (AR), and denial management, directly affect the RCM process.  For instance, poor verification of insurance eligibility, can lead to services being provided even though the patient is not covered. That will create problems on the back end when a claim is denied and the practice has to collect from the patient.

 What does Revenue Cycle Management Mean?

Revenue Cycle Management (RCM) is the process that manages claims processing, payment and revenue generation. The entire healthcare revenue cycle process includes everything from determining patient eligibility, collecting their co-pay, coding claims correctly, tracking claims, collecting payments, following up on denied claims and financial reporting. RCM is the most critical component of a practice’s business and requires effective and efficient management if the practice is to survive in healthcare’s ever changing landscape.

Why is Revenue Cycle Management important?

Medical practices today face an unprecedented economic challenge. Reimbursement from third-party payers continues to decrease while self-pay soars as a percentage of accounts receivable. In this evolving landscape, effective RCM has become more important than ever. A physician group that manages its billing and collection operations properly can significantly boost its profitability, even in this current payment reimbursement environment.

 Over the years, medical billing and collections has become immensely complicated and labor intensive. Revised health regulations and guideline plans are constantly changing; claims are being denied for a of myriad reasons, benefits often change as employers seek to cut costs, as it becomes increasingly difficult to resolve patient collection issues. These same patients are also now held to pay a larger portion of the bill than ever before.

 While this makes sense intuitively, actual execution of effective revenue cycle management is a challenge to the average Practice Administrator or Physician. The U.S. health care payment system seems designed to work against them. Many practices are faced with time constraints; they may lack the expertise or have limited internal resources to ensure they get paid the maximum owed in a timely fashion. Having appropriate technology, adequate workflow and experienced billing personnel are important steps on the path toward a prosperous and efficient practice. The more they can integrate these assets into their billing function, the stronger influence they can have over their financial outcomes.

 What are the key indicators of RCM?

 For any practice, the most critical functions are its financial condition and operations. The best method is to conduct a data benchmarking overview of the practice. Very few practices collect all of their billed revenue and even fewer do so through an efficient billing process. Billing metrics are among the most important to understand and manage within a practice. Whether the current processes are internal or outsourced, the measurements remain the same.

•  Net Collection Rate overall should be greater than 95 percent.

• Days Sales Outstanding (DSO) should average less than 45 days.
• Accounts received over 120 days from date of service should be less than 15 percent on average. 
• Days from service to bill (Billing Lag) should average less than 3 days, with most claims billing within one day.
• Claim denial rate should be less than 5 percent monthly.

 A current billing manager or service provider should be familiar with these benchmarks.  If they are not familiar with what they are or cannot produce them for the practice, there is definitely a problem.

 What are the most common road blocks to success?

 For some practices, the responsibilities of the revenue cycle can become overwhelming and conflict with other office duties (managing employees, keeping up with government programs like Meaningful Use and PQRS or other administrative tasks). However, that shouldn’t keep the office from becoming financially efficient. There are many issues that could be effecting each individual situation differently; below are the most common road blocks:

•  Staff has not been properly trained or educated - Optimizing your revenue cycle is like a supply chain; if one person in the chain does their job incorrectly, it will affect the outcome of the rest of the chain.  Coding errors, incorrect data entry (insurance information, patient demographics, etc.) or simply a failure to understand how their job affects the revenue of the office can result in staff making costly mistakes.

• Lack of communication - While the typical office day can be very busy, it’s important that everyone understands their role in the office’s revenue cycle. Therefore, communication between physicians and office managers must remain open and weekly meetings should occur to review the financial reports including accounts receivables, collections and revenue.
• Poor workflow - Does a staff member consistently check patient eligibility and copay amounts before the patient arrives? Are they checking for missing charges against the practice’s charge slips? How long does it take the staff to follow up on claims? Without an established workflow, staff can end up missing steps and/or forgetting tasks, which ends up in increased errors and more delays in getting paid.
• Lack of resources - In today’s market, physician practices are very lean operations. The person that is doing the office billing has 3 or 4 job functions during normal business hours. They simply do not have the time to be efficient with the billing and collection process.
• Lack of technology - If an office does not have updated technology, they are more than likely to under perform. Even if they have the resources to perform the functions, it is taking 10 times as long to complete each step, making their efforts not as valuable in the long run.

•  Lack of Leadership – At the end of the day, who is responsible for the leadership and direction of the RCM? In most small to mid-size practices, there is a huge void in this area. Doctors and Administrators are doing their best to keep up with the clinical side of the business. Most practices do not have a director of Revenue or Reimbursement. Most don’t even have a dedicated billing manager.

 Why should I consider outsourcing?

 RCM companies focus solely on revenue cycle management, they are typically equipped with the technology necessary to automate processes and increase efficiencies, ensuring medical coding, billing, and that follow-up happens quickly—spurring faster physician reimbursement and minimizing lost revenue. A further benefit: Many RCM companies also provide value-added services including managed care contracting, credentialing/provider enrollment, insurance eligibility, and many other key areas that can help practices gain greater control over their revenue without expending more resources and manpower. While the concept of outsourcing may be a no-brainer, there are many misconceptions that have prohibited many practices from exploring the option. Below we have listed some common misconceptions.

 COMMON MISCONCEPTIONS

 1. USING AN OUTSOURCE PARTNER FOR RCM MEANS PEOPLE LOSE JOBS

 While overhead reduction can be a way to reduce cost, often times most offices will reallocate human resources to become more efficient in different areas. We have yet to visit a practice with 5 or fewer providers where ANY staff employee had only one function. Instead of producing average results on 5 functions, an office staff member can now performs 3 functions at peak efficiency.  That is a Win-Win for any practice!

 2. IF I OUTSOURCE THE RCM FUNCTION, I WILL LOSE CONTROLL OF MY PRACTICE.

 When a practice outsources to a top performing RCM, like Proximal, customers actually gain more control. While many practices believe “things are just fine,” they often do not have a true handle on their billing performance. That’s largely because they either don’t know the questions to ask of their billing staff, or do not receive accurate answers. Your RCM partner’s job is your revenue cycle and they should provide comprehensive performance reports monthly.

 3. PRACTICES DON’T UNDERSTAND OUR BILLING OR GEOGRAPHIBCAL AREA AND PAYORS.

 The greatest thing about outsourcing is the responsibility shift from the practice to their outsource partner to handle ALL functions of the revenue cycle process. This includes being the expert for the practice’s specialty from billing, coding, and collections. The core functions of billing and collections are the same from specialty to specialty and from payer to payer. Yes, there may be a few more or less steps to get to the end, but the core concepts are the same.

 Why Proximal?

 As a wholly owned subsidiary of Pulmonary and Critical Care Associates of Baltimore, we understand the issues and struggles of physicians and practices alike. Proximal focuses its expertise on meeting the needs of physicians in individual and group practice, practice administrators, hospitalists and hospital administrators who all face similar challenges responding to the demands of medical billing and collections.

We are a 100% U.S. based company that operates in one centralized location to make sure that anyone from any practice can reach us when they need us!

 We believe that Proximal is unique in its personalized approach to medical billing. The long-term relationships that we have forged with our clients have been a direct result of the extraordinary individuals who make up Proximal. We have grown our company selectively and deliberately over the years, in order to attract the best individuals to join our team.

 While the evolution of our company has strengthened our foundation, it is the unique individualized solutions we offer that really sets us apart from the competition. We have evolved from a practice setting, making sure to address all the outlining factors that are affected by the revenue cycle (i.e., people and cost).

 There is no question that RCM is one of the most important functions for any practice and theses challenges will continue to multiply on an annual base. You no longer have to settle for average results and suffer the consequences of lost revenue annually! Proximal can help and in most cases there is little to no upfront cost for the practice.

 Call us today for a complimentary consultation