In addition to working in the healthcare industry, I have had the privilege of working in non-healthcare industries. My friends from those industries often ask me why I refer to healthcare revenue cycle as being very different and more complex than other industries.
Here's why: in healthcare, the payment model is complex, as part of the payments comes from patients, then payers. And of course in all of this, there is government role in terms of Medicare and Medicaid. All of the payment activities in healthcare revenue cycle management (RCM) fall under three broad categories:
- Pre-visit: managed care contracting, scheduling, pre-reg and pre authorization, insurance verification, patient access and registration
- During visit: financial counseling, case management, charge and clinical documentation and health information management
- Post visit: billing and claims submission, 3rd party and guarantor follow-up, cashiering, refunds and adjustments, denials and collection
Every step of the way, there are considerations for patient privacy and security adding to the complexity. By the time I finish my explanation, my friends get it.
Revenue Cycle Management & IT
New regulatory requirements, increasing numbers of self-pay patients and the growth of high-deductible health plans are but a few changes in this game, keeping healthcare providers and payers on their toes. Additionally, the move toward pay for-performance reimbursement models has prompted revenue cycle issues that emerge from the back office to take a seat in the waiting room.
Implementing the programs and technologies that lead to bottom-line success is imperative in an industry besieged by change. Revenue cycle management has a key role in addressing shifting industry practices in response to three major trends: real-time processing, consumer-driven healthcare and changes in regulations and reimbursement structures. Health IT is critical to the successful management of the revenue cycle.
A look at the strides made in RCM, the current challenges facing healthcare organizations and emerging innovations sheds some light on just how important it is for healthcare organizations to continually fine-tune revenue cycle operations using innovative technologies. Justifying RCM information system investments can often be easier than justifying larger clinical systems because the one-to-one ROI (return on investment) relationship is much clearer.
Today's best practice revenue cycle management systems, however, are not just billing systems. These systems typically cover pre-service financial clearance through post-service financial settlement functions, including registration, bill estimation, case management, discharge billing and post-service billing reconciliation, among many other functions.
At Facey Medical Foundation, we're using the technologies listed below to make a difference to the top line, bottom line and, most importantly, our patients.
- By implementing integrated scheduling, registration and billing and account receivables system and EDI 835/837, we have improved our collection rate to 63.8 percent, AR days to 36.9 days and percent of credit balances to AR 0.8 percent. EDI 835/837 has improved the productivity in our revenue cycle departments.
- By implementing insured services and contract management system, we increased our revenue by 1.5 percent.
- By implementing patient statement, patient portal, patient reminders and EDI 270/271, we improved the collection rate, no-show rate and patient satisfaction.
- Planned implementation of a coding natural language processing software, we are projecting to improve our coding compliance as well as revenue.
- Risk management and capitation processes help us manage our processes, which account for 70 percent of our revenue.
- Implementing a patient reminder for appointments, our no-show rate is 6.1 percent, which is well aligned with the industry standard.
- As part of data warehouse efforts, we are working towards a performance dashboard to provide information for AR, time to bill, payer scorecard, bill holds, billed charges and remits, etc. The information can be drilled down to invoice and payers level, which will help in further improving the collection rate, AR days, denial rate and better negotiation with the health plans, in turn making our revenue cycle more efficient.
In today's environment, where insurance deductibles, copayments and out-of-pocket costs continue to rise along with tremendous cost pressure to healthcare organizations, effective management of revenue cycle is a must. IT can play a very significant role toward improving the revenue cycle. To some organizations, it can be overwhelming, so a roadmap-driven IT plan and strategic goals and priorities are required to start and sustain the journey of IT for revenue cycle management.
Shashi Tripathi is the vice president and CIO for Facey Medical Foundation, Mission Hills, CA.