Insights
Healthcare

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Optimizing RCM Yield in Healthcare Organizations

Virginia Williams
Director, Healthcare

Revenue Cycle Management (RCM) has historically not been a focus area for optimization within healthcare organizations. With the onset of the pandemic, Healthcare providers have taken a serious hit financially due topreventive medicine visits and elective procedures declining. This decline has accelerated the need to streamline operations due to having to lower staffing and decreases in cash flows.

Revenue Cycle Management (RCM) is the set of operations used by health organizations ensure financial closure on accounts and staffing to support these processes has become increasingly important for Healthcare organizations to achieve their optimal financial yield. To improve efficiencies, Healthcare organizations will need to look beyond the normal KPIs and identify opportunities for improvement in their processes. These process improvement opportunities and automation of manual tasks will increase efficiencies and improve financial parameters.

We will now look at various phases within the RCM workflow in a healthcare organization and review key KPIs being measured and the typical IT interventions that can be done to address them. 

Scheduling and Pre-registration Process:

  • Scheduling:
    Tracking and measuring the percentage of fulfillment in the patient schedule allows healthcare organizations to understand current resource utilization and provides insights to increase marketing for inbound referrals, maximize revenue and reduce lost opportunity cost. For example, analyzing no-show and cancellation rates can provide the necessary information to reduce lost time and, in some cases, implement fees for no-shows and cancellations. These fees, along with proactive appointment reminders, can decrease the overall no-show and cancellation rates, reducing lost opportunities of time and revenue. One automation possibility includes automatic cancellation notifications to Schedulers providing an opportunity to fill that slot with another patient.

  • Pre-registration:
    Pre-registration rates, insurance verification rates, and prior authorization rates indicate how effectively the scheduling and pre-registration staff are increasing the probability of higher clean claims rates and reducing denials. Collecting benefit eligibility coverage information prior to the visit can assist in increasing the upfront collection of deductibles and co-pays. Automating eligibility coverage prior to the visit would allow the registration staff to be notified if a patient’s insurance eligibility has expired and if any remaining deductible or copay remains on their plan. 
     

Patient Access/Registration: There are multiple steps involved in the patient check in and documentation collection:

  • Once the patient arrives, eligibility, authorization, and any calculated patient responsibility are typically verified. If any of these have been missed, the registration staff can verify insurance coverage, obtain the authorization, or collect any outstanding balance from the patient. Copies of insurance cards and other documentation critical to the patient visit are collected. It is a best practice to ask patients to upload the documents prior to the visit Verifying demographic information also prior to the day of service will help streamline the process for both the patient and the registration staff and ensure the right information is sent to billing as a part of downstream activities. This is the final checkpoint for most of these activities before the patient is seen. If any items are missed, there is an increased likelihood of a claim delay or denial. Automation of insurance eligibility and patient estimation during check in increases efficiencies and reliability.  For example, alerts to the staff at the end of this process would ensure the steps are not missed and eligibility issues and/or patient responsibility are collected.

Charge and Diagnosis Capture: Within practice management organizations, charge and diagnosis capture occur during the clinical documentation phase of the revenue cycle. 

  • The matchup between the CPT code for the charges and the ICD 10 diagnosis codes is an important final step to determine coverage based on authorization and medical necessity rules. Any mismatch in these could delay billing or cause claim denial.  Notifying the provider of the mismatch during this phase will allow them to correct it before sending the account to billing. Lastly, by measuring acuity levels and trending revenue, future reimbursement opportunities can be identified by evaluating coding and documentation procedures. These can be trended and analyzed for predictive and prescriptive analytics.

Billing: This is where claim filing and reimbursement are critical to financial performance. The largest area for automation opportunities lies within the billing component of revenue cycle management. 

  • Metrics such as clean claims rate are valuable, but we need to reach beyond the core KPIs. The first pass payment yield measures payments made from the first claim filed on a healthcare visit and the expected payment yield. It calculates the rate of actual vscontracted payments from payer contracts. This percentage is significant because it enables the practices to recoup amounts that are practical where the recoupment amount exceeds the cost to capture the remaining amount due on underpayments. Just as important, it allows practices to be armed with all necessary information when renegotiating their contracted rates with Payers. By applying analytics to measure billing yield, claim notifications can automatically be sent to biller if a combination of charge codes, diagnostic codes, and insurance plan codes appears in the high denial or reduced payment category. The biller can carefully review those at-risk claims before filing them to the insurance carrier.

Accounts Receivable (A/R) Management. This is the final process in the RCM life cycle before the process loop begins again.

  • A/R days is the typical KPI utilized to measure this resolution. However, one can also look at aged A/R as a percentage of the total billed. This metric is a good indicator of the healthcare organization’s effectiveness at liquidating A/R. Drilling down by Payer will allow the practice to compare payment resolution for each Payer within each aging bucket. By analyzing trends, practices can identify Payer categories where account liquidation is the slowest and put processes in place to reduce >30-day aging buckets for that Payer. 

    Net collection rate and write-off rate are two KPIs that can help measure the collection of patient responsibility fees. By reviewing the net collection rate, practices can measure how effective upfront collection processes are working and identify better methods for collecting patient responsibility fees up front. Finally, write off rate can help practices review by Payer how much patient responsibility the practice is writing off to bad debt. Examining this rate by Payer can assist the practice in contract negotiations. Automating notifications when any of these KPIs are trending negative would be extremely beneficial to Accounts Receivable staff. This would free up their time from manually reviewing reports and dashboards to proactively start collecting outstanding balances from patients and ensuring prompt reimbursement from insurance payers.

There are many options available for monitoring revenue cycle performance. While we have reviewed a few additional KPIs to expand monitoring, the future is firmly centered around providing predictive and prescriptive analytics. These analytics will allow practices to see where the business is headed financially and come up with remedial measures, as needed, thus increasing the overall revenue cycle financial yield.

 

About Virginia Williams

Virginia Williams is Director – Healthcare at Accolite Digital, a leading provider of cloud and digital product engineering services across the banking and financial services, technology, healthcare, communications and media, and logistics industries. Headquartered in Addison, Texas, Accolite helps its customers successfully navigate their digital transformation journeys by providing digital product engineering, cloud services, data engineering, DevOps, customer experience, and design services.

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