Re-engineering Your Practice’s Revenue Cycle

August 2013

Your financial success depends on how well you manage the revenue cycle. Real-world efficacy points to a few fundamental strategies for re-engineering the ways that your medical practice generates revenues. Here are just a few.
Most revenues originate from payers, so first analyze your practice’s contracts with them. Learn each payer’s allowables by procedure code; then calculate the practice’s cost for each code and compare them to the allowable prices. Make sure you factor in any administrative headaches that the payer may cause through required preauthorizations and excessive denials. And, at a time when bundled payments are beginning to gain traction, understand what is covered in a capitated services list.
Increasingly, payers are consolidating in the market, so make sure you know who the payer’s affiliates are in your market.
When contract renewal time arrives, make one of three choices about the payer: 1) accept the payer relationship as is, 2) terminate the contract on grounds of irreconcilable incompatibility, or 3) meet with the payer to renegotiate the relationship. If you choose to negotiate, bring data to support the added value that the practice provides — such as prevention services and extended office hours.
Institute procedures to establish each patient’s financial responsibility (verification of insurance coverage, copays and so forth) before the delivery of medical services. And explain the practice’s financial assistance policy to the patient.
Procedures should lead to collections before or at the time of service. Staff in contact with patients must know how to ask for money and what to do if it’s not forthcoming. A script of what to say to patients is helpful to train staff who are performing these duties. At the time of a visit, collect from insured patients all copayments, due balances, coinsurance amounts and deductibles. For uninsured patients, collect a predetermined minimum down payment.
EHR systems can be used to verify a patient’s insurance coverage and benefits eligibility in advance of a visit. They can also automatically collect codes for services delivered to capture the related charges. Moreover, you might use your EHR system to improve the accuracy of payments received, speed provider enrollment and credentialing, enhance charge scrubbing, and conduct electronic remittance and funds transfers.
Even if you undertake the efforts noted above, your practice will still likely encounter some claim denials. The good news is: They can be managed and prevented.
First, identify the types of denials and their causes within the practice or the payer. The most common categories will be registration, medical necessity, timely filing, preauthorization, duplication, insufficient support information and coding. Try to act within 24 hours of receiving each denial. If the payer seems to be at fault, use prepared appeal form letters. Then track each denial by payer and provider until it is resolved. Know the deadlines each payer imposes for claims appeal. The patient equivalent of payer denials is delayed payment of amounts owed. The best way to handle this is by following a strict collection cycle — typically completing the process within 90 days. Within that period, send two or three paper statements, culminating in a collection notice. Stick to the deadlines that are set. If necessary, use a collection agency. Develop a financial hardship policy for patients genuinely incapable of making the required payments.
Maximizing your practice’s revenue cycle can be challenging. But it is an exercise that must be done
continuously. The healthcare consultants at JPS can help you keep on track. Contact us with any questions or concerns you may have regarding your practice’s procedures.
To keep your revenue cycle operating at peak efficiency (see article), track a few key parameters. Useful metrics include:
  • Number of days in accounts receivable,
  • Dollar value of receivables over 120 days in age,
  • Adjusted collection rate, and
  • Percentage of claims denied.