Revenue cycle management in medical billing is the process by which healthcare service providers process claims, collect payments, and generate revenues. It is an elaborate process that entails identifying, managing and collecting revenue from patients and insurance companies. Needless to say, without this key financial process, healthcare organizations won’t be able to make the money needed to run their operations.
A successful revenue-cycle management process provides healthcare providers with the opportunity to upgrade and streamline operations. This is critical to service efficiency and profit making. On the contrary, a faltering RCM implementation can make things go horribly wrong for a provider. If not nipped in the bud, it can terribly impact the efficiency levels thereby impacting a provider financially leading to losses and even closure.
It is therefore important for every healthcare provider to be on top of the RCM process. And the best way to do it is by considering the most-common problem areas no sooner than they arise and address them at the root level. But before we delve into the basic mistakes committed by most providers, it is important to understand the basics of revenue cycle management.
The Basics Of Healthcare Revenue Cycle Management
The process begins when a patient makes an appointment to seek medical services and ends when all claims and patient payments have been collected. In between the process has to undergo several critical steps that need to be handled with great accuracy.
To start, when a patient arranges an appointment, the front office staff must handle the scheduling, patient identity establishment and insurance eligibility verification. This is the pre-registration stage and, in many ways, sets the revenue cycle management process in motion. At this stage, the hospital staff create patient account details that covers the patient’s medical history details along with insurance coverage.
From a revenue cycle perspective, this stage is very critical because any mistake in the collection of information can lead to delays and denials at the later stage of the process. The fact that these mistakes mostly pass undetected makes it all the more critical. In other words, this is the stage when the groundwork for billing and claims happen.
After the pre-registration is completed, the patient is examined by the doctor. Once this is done it is time to create a claims submission. At this stage of the RCM process the healthcare staff or coder identify the nature of the treatments delivered and map it with proper ICD-10 code. These codes tell the reimbursement amount for the specific treatments. This again is a very critical stage of the process because payment is made only against appropriate code selection. Any mistake can lead to denials and even runs the risk of being misinterpreted as an attempt to commit a fraud.
After the claim is created, it is sent to the government or private payer for fee reimbursement. Once the payments are made, there are several back-end office tasks associated with revenue cycle management and it falls upon the provider that they are carried out properly. These include payment posting, statement processing, follow-ups, and handling claims denials.
What Happens When There Are Errors With The Basics Of Healthcare Revenue Cycle Management
When there are errors with the claims submitted to the payer, the claims may either get rejected or denied. Claims Rejections happen when the claims do not meet payer specific guidelines or data requirements. Sometimes, they may be even rejected for issues such as basic formatting which in fact is a part of the guidelines set by the Centers for Medicare and Medicaid Services. When claims get rejected they are not processed by the insurance companies or in other words not keyed into their computer systems.
These claims are sent back to provider with the reasons for rejections. Once the provider addresses the issues and resubmits the claim the payer will entertain it once again. The only hardship that claim rejections entail for the provider is a delay in processing the claims. These delays can be very pinching if it happens for issues such small issues such incorrect keying in of patient insurance id or change in address.
Unlike rejected claims, denied claims are altogether a different issue. These claims are received and processed by the payer and the payments are over-ruled for issues that go against the guidelines of the payer. A rejected claim cannot just be resubmitted, and the only option left with the provider is to challenge is the legal recourse. However, if the provider feels the claim was rejected on wrong or unclear grounds it can send a reconsideration request to the payer. Some major reasons for claims denial are benefits for a service have already been included within another service or procedure or the patient is not eligible for the treatment or procedure, the time limit for filing the claim has expired etc. Denied claims are usually losses that have to be borne by the provider. Besides, it amounts to wastage of time and efforts.
Major Reasons For Errors In Revenue Cycle Management And Best Ways To Bypass Them
Some of the major and common reasons for errors in revenue cycle management in medical billing are:
Failure to Monitor Claims Process
Medical claims generation entails such meticulous details that it needs to be monitored at every stage of the process. Failure to do so, will make it impossible to find out where things went astray. By the time the error is spotted, it may get too late. Besides, it always leads to wastage of time as lot of time needs to be dedicated to find out where things went wrong. Yet another reason to have strong monitoring in place is the evolving nature of healthcare guidelines. This makes claims all the more complicated and prone to errors.
There are two possible ways to steer clear of errors. Having a strong quality control team in place always helps. A multi-level quality control team can be more beneficial in checking errors. However, maintaining such teams can be too expensive. An easy way out is to leverage affordable tools that can generate proactive and timely alerts. There are plenty of automated tools available, and identifying the one that best fits your needs can ease the rigors of process a lot.
Not Being Up to Date With Payer Requirements
Payer rules are complex and change constantly, making it difficult to follow them. And to top it, every payer has their own rule and they change almost at the same time. A big part of a providers central billing is trying to figure out the changing rules of each insurance company. The possibility of missing out on a changed rule or getting confused with different payer updates has an impact that can potentially derail the claims process by way of delays and worse denials. Therefore, it is very important to stay on top of them by being extra alert to all their requirements.
There are few proven ways to overcome this challenge. One is to sign up for policy change notifications through email updates from a payer’s website. This should be accompanied with regular reviews of payer websites. In other words, a procedure to monitor a payer’s website needs to be established and made routine. Another important step is to prioritize and follow payer changes. This means to follow the updates of high-volume payers Again while doing this it is important to focus on services that, if denied, can impact you the most. Lastly, it is critical to figure out who should monitor these changes. Besides identifying the right set of people there has to be a methodical approach to studying policy changes.
Failure to Verify Patient Eligibility
A surprising and stunning fact about medical billing, according to a recently released report, is that one-quarter of practices fail to verify patient eligibility and copay amounts. This mostly happens with small practices where there is a perpetual shortage of resources. In facilities having to deal with more patients, chances of errors run high. All these often lead reduced revenue and increased bad debt write-offs.
In a tech driven world relying on technology can be a provider best bet to eliminate the possibility of such errors. There are several real-time automated tools that can check patient eligibility accurately and determine copay at check-in. Some advanced solutions even take a direct feed out of a providers billing system and verify eligibility on the next day’s patient schedule. These tools eliminate human intervention in the eligibility verification procedure and thus ensure full payment from patients, besides monitoring for correct reimbursement from payers.
Failing to Identify Trends
Many providers still follow the age-old practice of processing claims one at a time. Such over reliance on a time-consuming method can have several negative effects and one such impact is missing out seeing high-level macro trends. As a result, billers tend to make the same processing errors a bit too often. The cost of this can be slow payment and increased time and expense on administrative functions.
Not Resubmitting Rejected Claims
Resubmitting rejected claims is very common among providers. But it is not always that providers resubmit claims. This happens mainly when providers lack access to data that can support the challenge. Leaving claims on the table because of lack of data is never a prudent practice and can at a point of time mount up to significant loss of revenue.
To overcome data accessibility providers can rely on online research tools. There are several such tools that provide the most update information at the click of a button. The information can help providers defend their claims with confidence. If providers do not pursue it because of lack of resources or time, they need to delegate the task to third party billing agencies. These agencies can focus on the rejected claim and have the know-how to settle the claim in your favor.
Besides the above-mentioned glaring errors, there are several other reasons that affect the revenue cycle management process of the client. One such reason is relying on existing staffing levels to manage rising volume of A/R activity. This is a common practice and is widely deployed primarily because of shortage of staff in the marketplace, and budget restraints. A smart solution is to partner with a specialized medical billing company and outsource additional volumes to them. The objective is to keep your current staff occupied with the most important and revenue generating aspect of your A/R process.
Revenue cycles also get impacted when providers send their patient a billing statement hoping that they will make the payment. The fact is even the most less taxing billing statements is not enough to get patients settle their dues. To ensure the owed money doesn’t get written off as bad debts, is to establish an outbound calling strategy. It is proven that an effective calling strategy can persuade most people to respond within the standard 2 to 3-month period. Outbound calling not only helps to increase payments, but it also makes patient experience all the better. Most providers outsource this task to third party agencies.
Sometimes it also pays to have multiple options to get in touch with patients. Some providers for instance use a payment IVR to give the patient more options to pay. This is seen as less intrusive by patients. Among the many other things an IVR can handle, patients can “Press 1” to make an automated payment or “Press 2” for “call later’ or “Press 3” for “talking to an agent”. Likewise, it pays to have a patient portal—that is simple and intuitive.
For providers, the need of the hour is to leave no stones unturned to ensure each of the above-mentioned aspects is maintained and ensure their revenue cycle management process in the pink of health at all times. The fact remains that there is no substitute for proactive reporting and audit tools, up-to-date coding information, strong payer relationships, and online claim correction functionality. If ensuring this as an independent function is difficult, outsourcing this critical task to a specialized and experienced third-party service partners can yield the best results.
Who We Are and Why Our Experience Matters?
This article is written by MedBillingExperts a pioneer in RCM outsourcing services. We have over a decade of experience in managing revenue cycle for several clinics and hospitals. We provide a comprehensive range of services such as AR management, denial management, insurance verification, medical claims processing, insurance claims processing etc to ensure you achieve the goal of increasing revenue throughout the various processes by identifying points of friction at an early stage and resolving them before them become a major issue. Our team comprises of professionals with experience in payer relations, appointment scheduling, registration, coding, billing and case management, denials management.