Revenue Cycle Management Challenges
If a healthcare provider doesn’t set up an efficient billing process, it runs the risk of losing quite a bit of money. With high-deductible insurance plans becoming more widespread, patients are shelling out additional money out of pocket. Or, if the patient is uninsured or underinsured, problems arise since there’s not a surefire way of payment for the provider, short of arranging a payment plan, which may or may not be paid in full. Moreover, there is not a lot of price clarity, and if the bills patients receive are puzzling, they are much less disposed to pay in full.
Such issues produce revenue cycle management challenges to fall precisely onto the providers’ shoulders, who then run the risk of losing business if they place too much pressure on their patients to pay for care.
Moreover, the growth of bad debt is a risky but often inescapable consequence of ineffective medical billing. Lacking accurate and efficient collection methods, providers will be powerless to reach maximum revenue and might very well end up operating with negative margins.
To help guarantee financial stability, the ever-changing world of revenue cycle management notwithstanding, providers must have an efficient medical billing process manned by a competent staff.
Let’s look at some of the major challenges affecting the healthcare revenue management cycle.
The Challenge of Technology
Obviously, this is the age of technological innovation. For healthcare providers, this means offering effective electronic services. Having an ineffective or out-of-date IT system can do more harm than good. If no one understands how to use it properly, chances are, costly mistakes will be made. Such systems are necessary to track claims and payments. If that information isn’t being handled correctly, a lot of untracked or improperly tracked funds just might end up being left behind or wandering through a computer network. Even having as little as a quality patient portal and electronic bill pay with ease of access for the patient can make a world of difference. Employing an effective computer system also mandates that the provider have a person (or team) to monitor it and the staff properly trained on how to use it.
The Challenge of Untrained Staff
The technology issue leads us to the next challenge, which is how to instruct provider staff on how to best collect and process patient information. Patient data is traditionally collected upfront by staff, but if the staff member processes it incorrectly, improper medical coding, and inaccurate billing and insurance claim filing are usually the result. These errors add up to costly expenses and lot of bad debt. Furthermore, even if patient information is properly collected, staff members need to know how to track it and follow up. Unpaid and delinquent bills can easily get lost in the shuttle, even after only 60 to 90 days. Technologies such as card scanners to reduce data entry errors, and billing automation to provide reception access to patient financial information are helpful tools in capturing every available dollar.
The Challenge of Poor Communication Between Physician and Staff
If the lead physician in a medical practice is not engaged in the revenue cycle process, they can become disconnected from the financial state of the practice. Small problems can escalate into larger ones and considerable revenue can be lost because of unsound business processes linked to rejected claims, unaccounted payments and slow turnaround. On a recent evaluation by a third party, it was found that a group practice was losing $350,000 a year – 20 percent of the practice income – because of faulty business processes associated with rejected claims, unaccounted payments and timely turnaround. None of these problems were found to be uncontrollable in and of themselves, but over time they had gotten away from the office manager who was not communicating with the lead physician and led to the practice losing a significant portion of its overall revenue.
The Challenge of Ineffective Billing and Collection Processes
An ineffective billing and collections process will cost a healthcare provider thousands, if not hundreds of thousands of dollars each year. As previously noted, failing to gather accurate information upfront during patient scheduling and registration, mistakes in ICD-10 coding, and not verify insurance eligibility will all have a negative impact on the revenue cycle. The requirements providers must meet to collect revenues owed from payers are burdensome, to say the least. There are now around 140,000 code options for claims, meaning coders must have an entrance to wide-ranging documentation to code claims accurately. Insurers have also increased their scrutiny of claims, placing more emphasis on medical necessity as a precondition for payment. Considerable resources are necessary to produce the detailed medical documents, train coders on nuanced code selection, and deal with and respond to claim follow-up activity.
The Challenge of Cost Reduction
As with most U.S. businesses, healthcare is not exempt from the increase in pressure to reduce cost and increase margins. This places added pressure on healthcare providers to make sure their practices are getting wholly reimbursed for all services they deliver to their patients. A focus on denial management efficiency and payer contract compliance, among other issues, must be at the forefront of their revenue cycle process to make compliance and revenue capture possible.
The Challenge on Untimely Follow-up in A/R
It might seem surprising that many practices would leave money sitting on the table, but that is exactly what they’re doing when there is a lack of attentive A/R recovery. Lagging collection times, unreliable follow up and inadequate insurance coordination all contribute to a “slow leak” of revenue. In another recent third-party evaluation, by implementing thorough and consistent A/R processes, a practice was found to able to reduce A/R from $385,000 outstanding to $68,000. Physicians should also be alert in not taking unnecessary write-offs that make A/R look positive at the expense of overall income. If this is a current policy, or it is determined to be a current policy, this practice needs to be stopped immediately. While it might be an attractive stopgap answer, it’s not healthy for the long-term sustainability of the practice.
Revenue Cycle Management Services by Medwave
Your healthcare practice doesn’t have to walk through these challenges alone. Medwave’s revenue cycle management and eligibility experts are well qualified to pilot your practice across all revenue cycle management challenges.
Contact us if you have questions or are in need of revenue cycle management assistance.