With hospitals and small practices facing the transition to value-based healthcare reimbursement, they face the need to develop policies and processes that will keep them afloat financially. At the end of the day, hospitals are still businesses in need of profit if they are to continue delivering services to patients. Revenue cycle management (RCM) is the process that tackles the financial side of running a hospital or practice.
The Healthcare Business Management Association (HBMA) defines RCM as the “process that manages claims processing, payment and revenue generation. It entails using technology to keep track of the claims process at every point of its life, so the healthcare provider or medical billing company doing the medical billing can follow the process and address any issues, allowing for a steady stream of revenue.”
In a way, RCM is the financial lifeblood of a healthcare organization. An effective RCM makes use of the latest tools and technology to keep track of claims, collect payments, and deal with any denied claims. Ideally, RCM enables a healthcare organization to prevent denials of claims and maintain an efficient billing process. To achieve this, organizations will need to invest in technologies to ensure optimum accuracy and efficiency.How does the process go?
Revenue cycle management begins once a patient visits a healthcare provider to seek medical services and ends once all claims and patient payments have been collected. While the process may seem straightforward, organizations will have to follow these basic steps:
- Point of service registration counseling collections
- Encounter utilization review and case management
- Charge capture and coding
- Claim submissions
- Third party follow-up
- Remittance processing and rejections
- Payment posting, appeals and collections
Ensuring that the process goes well from the very beginning will be vital in achieving a frictionless revenue cycle. Pre-registration, in particular, guarantees that the provider will receive the most accurate information. This will then result in claims being billed and collected in the most effective manner possible.
After receiving the necessary information, providers will then identify the treatments received and their corresponding ICD-10 code in the form of a claims submission. The claim will then be sent to the private or government payer for reimbursement, though the provider still needs to oversee back-end office tasks associated with claims reimbursements. These tasks include statement processing, payment posting, and even handling claims denials.
Unfortunately, most bills and claims are processed over a long period of time. Claims tend to go back and forth between payers and providers until the issues have been resolved, while patients cannot always pay for their medical bills up front. Given these, it is the ultimate goal of an RCM to create a process that allows healthcare organizations to receive their due for their services in the shortest amount of time possible.What are the key metrics for Revenue Cycle Management (RCM)?
Healthcare organizations have a responsibility to monitor their RCM if they want to maintain profitability. Keeping track of specific metrics will be instrumental in gauging the financial growth of these organizations.
For one, providers can look at their first pass recovery rate, which measures their success in receiving full payment for insurance claims the first time they are submitted. Net collection rate, on the other hand, measures their effectiveness in collecting maximum reimbursement.
Cost to collect must include the expenses associated with functions like transcription and coding, eligibility and insurance verification and clinical documentation improvement. Organizations must also look at their over-the-counter and self-pay collections, along with their referral patterns.
Measure, Apply, Perform (MAP) Keys to compare their revenue cycle performance against their competitors. Aligning to the standards set by the HFMA’s MAP Keys, healthcare organizations can improve their financial performance by measuring their performance, applying evidence-based strategies to improve their current process and performing to the highest standards.
Meeting the industry standards will also require investing in innovative tech solutions in the following areas:
- System Integration. Healthcare organization need integrated software and hardware systems that are able to combine patient accounting, billing, collections and electronic health records.
- Billing and claims management. Technology will be vital in reducing denials and rejected claims while improving point-of-service collections. Organizations can also use the latest tools to train their staff on denial management processes.
- Contact analysis. Healthcare providers can make use of data and the proper strategy to leverage negotiation sessions.
- Coding. Using the correct code is indispensable to a healthy revenue cycle. Mistakes in coding, regardless of their size, can cause overbilling and failures to audits.
- Clinical documentation demands. Revenue systems can also benefit from systems like meaningful use and other electronic documentation solutions.
Achieving the ideal RCM is not without its challenges. In fact, the most recent survey conducted by the HFMA revealed a number of problems healthcare organizations face that hinder them from optimizing their RCM.
Collections is named the top concern among hospital CFOs, and it is mainly due to the fact that collections cycles can leave a huge amount of unpaid dues for months. Denials, on the other hand, continue to hound providers, as they are often caused by lack of information. A lack of a proper prior authorization system also prevents these healthcare providers from determining which procedures will require prior authorization from a patient’s health plan.
Overcoming these challenges will require the participation of a team of well-trained staff members. They can be valuable in ensuring that healthcare organizations continue to receive revenue. By being knowledgeable in all facets of the revenue cycle, staff members can disclose which processes are effective and which one must be reevaluated.
Apart from a well-trained team, making use of big data analytics and health IT solutions will be instrumental in driving improvements to revenue cycle management programs. Given that most payments are tied to value-based care models, healthcare organizations will need the means to measure quality care, patient satisfaction and healthcare costs – something that big data analytics can provide. Other than managing large amounts of medical information, data analytics can also aid in predicting claim results.
Health IT solutions have already been helping providers address the most common issues with RCM, particularly in ICD-10 codes, payer-provider communications, and medical billing processes. These solutions are also useful in handling both value-based reimbursement arrangements and traditional fee-for-service claims, which can benefit organizations that are yet to transition to the latest payment models. By making use of these solutions that track claims, collect payments and address claim denials, healthcare organizations continue to receive a steady stream of revenue.
As the healthcare environment continues to evolve, providers are challenged to examine their current processes if they are to collect revenue for their services. With an efficient revenue cycle management in place, hospitals can worry less on their revenues and focus more on delivering quality services to their patients.
To learn more about improving your revenue cycle management, contact ADEC Innovations today!