The economy, health reform, payer regulations and other sweeping industry changes are dramatically affecting practice revenue. The uncertainty has many healthcare leaders feeling overwhelmed, especially because a number of these factors are outside their control. However, while change is inevitable, there are many opportunities for practices to take control of their revenue cycles.
This article will explain five steps to optimizing the revenue cycle and preparing proactively for industry changes.
Step 1: Adopt integrated electronic health record (EHR) and practice management (PM) solutions
Whether in the form of accountable care organizations (ACOs), patient-centered medical homes (PCMHs) or other pay for performance programs, health insurers are transitioning to quality-based reimbursement rather than volume-based compensation. Practices in which EHR and PM systems are integrated will have an advantage when these new payment structures become widespread.
Currently, most practices have electronic PM systems that manage billing and accounts receivable. When it comes to medical records, however, there is much disparity. Some practices still use paper charts. Others have adopted EHR systems to varying degrees, but still allow providers to submit paper superbills that require separate data entry.
Not only is this inefficient, it prevents practices from accelerating the revenue cycle. With an integrated solution, physicians or medical assistants can capture charges at the point of service. The information then can flow directly into the PM system, where billing staff can review the charges and submit the claim.
Integration helps practices reduce the risk of data entry error and decrease the time to claim submittal. The result is a more accurate, quicker reimbursement. Perhaps more importantly, though, it allows for better quality reporting. By more closely linking clinical and financial workflows, practices can more easily begin to participate in quality-based reimbursement models.
Step 2: Manage denials
Effective denials management is all about being proactive and diligent. Engaging in eligibility verification prior to a patient's visit, for instance, is one front-end strategy to reduce denials. On the back-end, practices must develop a routine system for denials monitoring.
Denials come in many forms: Perhaps a patient is ineligible for a given service, or a claim has been miscoded. Payers typically don't make it easy to decipher the reason for a denial, either. It costs practices roughly $25 just to re-work denied claims, according to an estimate by the Medical Group Management Association (MGMA). It may not seem worth the effort to appeal a denial if the return is small, but even small amounts can add up to thousands of dollars of lost revenue.
Using an electronic claims clearinghouse that not only scrubs claims but also monitors them and delivers tools to help practices more easily manage denials can speed reimbursement. Some clearinghouses alert practices in minutes about potential claim errors or patient eligibility problems so that they can be fixed before submission to the payer. By contrast, a payer may not deny a claim until days or weeks after submission.
Yet a clearinghouse cannot do everything. Denials management is not a "one-and-done" effort; it must be ingrained in daily, weekly and monthly workflow. The key is to capture, analyze and act on denial information. If similar mistakes occur frequently, practices must determine the origin of the errors - whether at the front desk, in the exam room, or with the payer - and take steps to prevent their recurrence. Denials management requires diligence, but technology can help provide essential data analysis. The goal is to eliminate the root cause of denials through improved workflow and technology - resulting in optimized revenue and minimized re-work.
Step 3: Improve patient collections
Patients are shouldering an increasingly larger portion of their healthcare bills - a trend that is only expected to grow as more employers and patients attempt to control costs by choosing health plans with larger deductibles and co-pays. With some co-pays as high as $50 for an office visit, practices cannot allow patient-owed revenue to walk out the door.
Determining patient responsibility at the time of service - co-pays, deductibles, outstanding balances - through technology solutions gives practices the opportunity to ask patients for payment at check-in. Collecting co-pays must be a priority. Consider offering incentive bonuses for check-in staff tied to collections, for example. Institute policies that require payment before a patient sees a provider.
The same kind of kiosk technology now ubiquitous in airports offers another familiar way to improve upfront collection of patient co-pays and outstanding balances, as well as increase check-in efficiency. Practices opposed to that idea might instead consider adding a bill payment module to their online patient portals. Patients could then view their bills and pay with a credit card, eliminating the need for costly letters or phone calls.
Step 4: Use analytics
Whether future compensation comes through an ACO or another shared risk payment structure, practices will need to track, measure and report cost containment efforts and improvements to patient outcomes. Analytics capabilities are essential in the changing healthcare market.
Cost-conscious payers increasingly are scrutinizing the diagnostic tests, imaging and procedures provided for medical necessity and evidence-based outcomes. Practices must be able to justify the care provided.
This, again, is where technology can help. Practices with the right integrated PM and EHR solution can chart patient improvements with diabetes, high blood pressure and uncontrolled cholesterol, for instance. Procedure or consultative-based practices also can monitor improvements through follow-up visits, or by linking to patients' primary care organizations' EHR systems or a community health information exchange.
Data is powerful and will be essential for providers to successfully navigate the new healthcare reimbursement models. Access to data is just the beginning, however. Providers also must have access to qualified resources that can successfully analyze the data to drive meaningful results.
Step 5: Transition to 5010 and ICD-10
The transition to HIPAA Version 5010 is already here, and organizations still are struggling with translating the claims to the new EDI format. (For more information, see 5010: It's Here! in the April digital edition of Executive Insight.) The MGMA reported in February that its membership has noticed a significant increase in claims rejections since the switch at the beginning of this year, resulting in lower reimbursement despite successful tests last year. As with claims denial management, working with the right clearinghouse can help your practice with the 5010 transition.
If that were not enough, the transition from ICD-9 to ICD-10 is coming Oct. 1, 2014. The American Health Information Management Association is urging its members to start preparing for the transition.
For the ICD-10 update, practices should ensure their EHR and PM systems are ready. That process starts with checking with their vendors. Technology vendors should provide upgrades that will handle the influx of thousands of new codes. Vendors should offer educational tools to help coding and billing staff prepare for the transition.
If your practice does not employ a coder, perhaps it's time to consider hiring an ICD-10 trained coder, or outsourcing the function before the deadline hits. The massive increase in coding scenarios may be too much for time-strapped physicians to handle alone.
Bringing About Real Change
Many facets of optimizing your practice's revenue cycle are in your control, regardless of what happens in the economy or healthcare industry. Technological tools will help you manage the data, but they can't do the foundational work for you.
The real change must come from your team. You, your providers and your office staff must acknowledge that the barrier between the financial and clinical sides of the practice is gone. Government and commercial payers are making strides toward quality-based compensation. When you're getting paid for outcomes, you had better be able to measure them. Your revenue cycle will depend on it.
Monte Sandler is executive vice president of practice solutions for NextGen Healthcare Information Systems, a provider of healthcare information systems and connectivity solutions.