What is Revenue Leakage and How to Stop It?

Interested in Stopping Revenue Leakage?

Firstly, Let’s Define Revenue Leakage

“Revenue leakage” describes circumstances wherein a healthcare provider has supplied care to a patient but doesn’t collect payment. In general, it happens when accounts receivable (AR) continue to be unpaid for too long and are inadvertently overlooked.

The longer an account receivable remains outstanding, the less likely healthcare providers are to retrieve payment, even in part. If the AR cycle goes on more than 120 days, providers can usually hope for no more than a dime on the dollar reimbursement rate.

No one solution tackles the reasons for leakage, as blame may fall to the provider’s practices, its patients or its payers. That said, a more wide-ranging approach or outsourcing to a revenue cycle management (RCM) company may help reduce revenue leakage and the accompanying financial harm.

AR Cycles and RCM

Healthcare providers look at accounts receivable and revenue in terms of a cycle that begins with the patient’s initial appointment scheduling and remains open until that care provider receives payment.

Revenue cycle management takes aim at reducing inefficiencies that affect ARs being rejected by payers, put off by patients and growing old without notice or follow-up. A more far-encompassing RCM boosts the provider’s process flow from the moment the front desk collects the patient’s information.

Top Causes of Revenue Leakage in Healthcare

Revenue leakage may be ascribed to any number of sources, but recognizing the chief reasons allows healthcare providers to discover solutions.

The good news here is that providers can tackle many of these causes of revenue leakage by simply assessing their processes, pinpointing inefficiencies and aiming for improvement. 

Unverified insurance coverage persists as the chief supplier of claims denials. Coding errors are the principal reason for Medicare and Medicaid claim denials.

Merely cleaning up ordinary clerical errors will reduce claim denials centered on incorrect insurance and billing information.

Several of the primary strategies healthcare providers can rely on to help them minimize or eliminate revenue leakage are:

Process Optimization

Incidents that lead to revenue leakage can occur the moment the revenue cycle begins with a patient. Should staff incorrectly record info about the patient and their insurance plan, providers run the risk of payers denying claims right from the beginning of the cycle. Making mistakes when adding line items of services rendered and the equipment used for claims likewise contributes to a higher chance of denial.

More Payment Options

Many practices inadvertently put limits on their ability to be paid by patients by failing to offer various payment methods. This often takes place with the types of credit cards accepted or when practices lack payment plans. Patients who walk out the door without putting down a payment are 50 percent more apt to dodge paying their medical bills in the future. Finding ways to help boost collecting the patient’s responsibility up front will help stop major revenue leakage.

Don’t Write off Patient Balances

Healthcare providers routinely write off patient balances. But besides being counterproductive, it could also breach the terms of an insurance contract. Medicare expects healthcare providers to collect patient co-insurance, and private carriers assume the same with copays and deductibles. Providers run the risk of violating their contract and of the insurance company reducing allowed amounts to match what the healthcare provider accepted as payment in full when they wrote off the patient balance.

Search for Hidden Insurance Coverage

Patients often qualify for new of different coverage without notifying your intake staff. Make it a policy to at least verbally ask about insurance changes with every patient at every visit. Another tip is to confirm active Medicaid coverage at ever visit and check for Medicaid coverage for self-pay patients and Medicare patients with no supplemental coverage. Medicaid covers medical services up to three months prior to the patient’s coverage date, so don’t forget to check your system for qualifying charges.

Underpayments

One of the highest sources of revenue is knowing exactly what your services cost. Underpayments can be avoided by planning and revising your fee schedule as per the various insurance companies promptly. Seek expert assistance in defining your fee schedules.

Patient Centricity

As a healthcare provider, your primary responsibility is patient care and satisfaction. You might want to consider forming a customer service team that maintains consistent communications with your patients.

When to Outsource Your Revenue Cycle Management

Healthcare providers that grapple with revenue leakage may want to contemplate outsourcing their revenue cycle and accounts receivable management.

Outsourcing can also help your practice surmount the challenges of ever-increasing regulations and decreased reimbursement levels. When it comes to making your practice more effective and as profitable as possible, Medwave can help. Let us know how we can lend a hand in plugging your revenue cycle leaks.