Just like focusing on providing quality care to patients is critical to a health care practice, bottom line management can make the difference between successful claims handling and a battle of denials and errors.
As a revenue cycle management firm, time and again we hear clients express frustration that collections are down, and more often than not it's due to time spent dealing with inefficiencies and mistakes in the back office. Because successful office operations go hand in hand with high collection performance, we work closely with organizations to reduce these difficulties and further streamline the billing process.
Most often, we engage forward-thinking practice managers who are instrumental to this operation and should work closely with the billing office to ensure maximum efficiency, if they are not already. While this sounds easier said than done, there are a few ways that practice managers and providers can easily perform a profitability check-up against best practice benchmarks.
These points should serve as a guideline to help you streamline your office procedures and avoid leaving money on the table:
1. Know your ideal goals for maximum profitability
According to James Larson, FACMPE, director of revenue cycle management for Cincinnati-based The Consult, LLC, "A solid benchmark for revenue cycle effectiveness is by aiming to receive 98% of the collectable money."
A good way to keep tabs on this efficacy is by monitoring the net collection ratio (NCR.)
This NCR is measured by the difference between your charge and the payer's allowed amount. It's a key indicator of how much money is truly collectable, minus any contractual discounts that have already been negotiated.
2. Become best friends with your key performance indicators
After establishing profitability benchmarks for your organization, you'll be able to more easily determine what key performance indicators are most appropriate for your business. We recommend paying close attention to the following four revenue factors: gross collection ratio, net collection ratio, bad debt and bad debt ratio.
With these metrics consistently monitored, you'll be able to more quickly identify and correct signs of trouble before they become major issues. Create a monthly audit routine to compare your key performance indicators against accepted benchmarks. For more information about what those benchmarks should look like specifically for your organization, TCI and other revenue cycle management partners can create a custom plan tailored to your size and goals.
SEE ALSO: Optimal Revenue Cycle Management
3. Be aware of current and upcoming policy changes most relevant to your business
Larson also advises to pay close attention to high-deductible insurance plans, which have gained rapid popularity and proven to be very disruptive within the healthcare marketplace. "For many practices 'patient responsibility,' or self-pay, is soon going to be their number one payer, if it isn't already."
Collecting from patients has always presented a hurdle, which will be further complicated by those patients who are not versed in insurance benefits and those with an inability or unwillingness to pay.
Patient education of these new high-deductible - including most 'Obamacare'- plans will prove to be an increasing challenge for organizations of all sizes.
4. Audit your denials and self-pay balances
As we mentioned, self-pay plans are going to demand an increasing amount of time from health care providers and revenue cycle managers.
Mark improvement by proactively keeping tabs on your denials and self-pay balances. These are the two most common areas in which health care providers leave money on the table.
While seemingly time consuming, this is a critical aspect of revenue management and worth dedicating top resources and expertise towards converting denials to payment and collecting patient balances.
If a practice doesn't have the in-house resources to keep up with these tasks, there are a variety of outsourcing options available to organizations of all sizes.
Given that 2015 is a particularly tumultuous year for healthcare organizations, there are many outstanding questions about how ICD-10 and Medicare changes will impact client revenue. These concerns are as important as any of the recommended regular checkpoints, and an outsourced revenue cycle management partner has already developed processes to help These experts will prove to be a valuable resource in helping you to prepare for the coming changes, and can help you to identify the most relevant key performance indicators for your business.
James Larson is TCI Director of Revenue Cycle Management, and Nancy Henry, CPC, CPC-I, CEDC, is TCI Coding Manager.