The Seven Steps of Revenue Cycle for a Healthcare Practice
By KATHI CARNEY, LBMC Physician Business Solutions
Revenue cycle management tracks patient revenue from the initial encounter with the healthcare system to payment of balance. Getting the seven steps of revenue cycle right helps providers avoid missteps that are costly to the bottom line.
The first and most vital step in the revenue cycle process, preregistration allows the medical practice to capture demographic information, insurance information and eligibility in real time through a clearing house, often while the patient is still on the phone. Information goes to the patient's insurance carrier and flows through the provider's practice management system, then tells the provider the patient's coverage, deductible, co-insurance, co-payment, and in certain instances, if a referral is needed.
During preregistration, the practice can discuss financial expectations of the patient, including time of payment and no-show/cancellation policy. The preregistration process allows a practice to set the financial tone at the beginning and prevents questions about payment. Check your preregistration process to get your revenue cycle process off to a strong start.
Registration solidifies the process of ensuring the patient's information is accurate from start to finish. During registration, the provider makes sure the patient's address, phone number, date of birth, guarantors, and insurance information are correct, and it is critical they secure this data each time a patient is treated.
During registration, the provider collects co-payments, and if you are a specialist, you will ensure a referral or authorization is in place to treat the patient. If that step is missed in a specialist's office, it is unlikely you will get paid in the end. During registration, financial forms are signed, and insurance benefits are assigned. In the event these steps are missed, and the practice is audited, there's the risk of financial repercussion.
Often, I recommend a practice hire secret shoppers to help assess the efficacy of the front desk process. This gives the practice an independent view of how your patients experience your practice and how the entire process is functioning.
Charge capture can be done a couple of different ways. It can be automated - where the information automatically flows into the practice management billing side based on what the provider puts in their documentation - or done the old-fashioned way with front desk or billing staff manually keying in the information. There are advantages and disadvantages to both approaches, as there are charges that can be missed either way. One commonly missed charge is ancillary services, which results in revenue left on the table.
If you are concerned that you might not be accounting for all charges, review your charge capture process. As part of a revenue cycle audit, an experienced auditor can follow a charge from start to finish to uncover missing charges and identify miscoded charges.
The revenue cycle team should look at the charges, the CPT code, and the diagnosis code. They will ask whether the diagnosis will support the procedure performed. If two services are provided, those need to be separated and coded correctly. Claim scrubbing is the process of making sure claims are clean and going out the door correctly. If a claim gets to the insurance carrier clean, it will get paid a lot faster. The process includes sending claims from your practice management system to a clearing house, which acts as a mail room, taking in the claims and sending them to the different payers.
The transmission report shows claims sent, claims coming back in and claims dropped, while the rejections report identifies incorrect codes. Make sure you review both reports. The sooner errors are identified, the sooner they can be fixed, and the sooner the claims will get paid.
Once a practice's claims have gone out, remittance processing begins. The explanation of benefits shows the practice what they were paid for the services provided. During this process, allowables - a provider's contracted prices with the payer - are determined.
One common mistake during the remittance process is "post and go." As electronic posting has become the norm for revenue cycle, a practice can encounter problems when they post remittances and never look at them again. For example, if carrier does not pay or something is set up incorrectly in the practice management system, the error could get missed in the "post and go" scenario. If no one is reviewing the process or the reports, a practice could miss the chance for an appeal and thus an opportunity to correct a mistake.
Another element of remittances are fee schedules, which are the amounts providers charge for each service. Providers should review their fee schedules on an annual basis to make sure they are in line with adjusting rates, contracts, and allowables. Evaluate your fees regularly to make sure you are not leaving money on the table.
The final piece of the remittance process includes write-offs, both contractual and non-contractual. Contractual write-offs are unpreventable, as they involve contracted rates with carriers and payers. On the other hand, non-contractual write-offs are avoidable - they include write-offs that would have not happened with a tight process in place. Avoidable write-offs are generally the result of a breakdown in the provider's revenue cycle process and can be identified by looking at reports. Red flags include no authorization, no referral on file, and claims not submitted in a timely manner. These reports are invaluable for a practice to pinpoint opportunities in the revenue cycle process and also can assist with financial controls.
In this stage, practices look at not only what has been paid, but also what has not been paid. What happens to the items that don't get paid? The accounts receivable (A/R) report shows everything that's sitting in the insurance and/or patient buckets for a period of time. This report will show if insurance follow-up is broken and why it is taking so long to get it paid.
An important piece of insurance follow-up is determining the structure. Questions to ask include:
The most difficult part of the revenue cycle process is patient collections. The best time to get money from a patient is when they are in your office. For that reason, it's recommended front desk staff are trained to collect at the time of service. To prevent the collections backlog from snowballing, make sure you have a standard policy for collecting copayments and deductibles that sets the financial expectations for the practice.
Just has important is making sure routine patient statements go out. Best practice is a daily statement cycle - your patients will get one statement every 30 days, but statements to go out more quickly, allowing you to move your revenue cycle better and accelerate your cash flow. Cleaning up your patient collections helps reduce the need to bring in a bill collector.
Automation can certainly assist with the revenue cycle process. However, many practice management systems have numerous reports that can be cumbersome and ultimately don't provide the exact information required. Working with an outside source can help create a custom "dashboard" to keep your revenue cycle on track. A custom dashboard will incorporate all the reports you need into one place where you can view in real time.
If you are struggling with any part of your revenue cycle, consult with an expert to review the steps. Taking time to clean up your processes now will pay off in the long run.
Kathi Carney, CPC, CPMA, CPC-I, CHC, is director of LBMC Physician Business Solutions. A certified professional coder with more than 20 years of healthcare experience across multiple medical specialties, she currently serves as president of the Nashville Medical Group Management Association. Kathi can be reached at firstname.lastname@example.org.