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How to check the health of your revenue cycle to target what matters most

* This content was originally published prior to N. Harris Computer Corporation’s 2022 acquisition of the Allscripts Hospital and Large Physician Practice business segment. Our business is now known as Altera Digital Health.

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Gone are the days when practices submitted a claim and the insurance companies paid without hesitation. In today’s environment, there are hundreds of reasons why claim payments get delayed or denied.

According to a 2019 MGMA poll, some of the most common reasons cited for denials are: prior authorization not conducted, incorrect demographic information, non-covered procedure, coordination of benefits, bundling and the patient no longer being insured. Unfortunately, an estimated 25% of total denied claims never get paid. Depending on an individual organization’s denial rate, this could represent significant losses.

The good news is that 90% of these denials are preventable and organizations can greatly decrease their denial rates by assessing their revenue cycle. This assessment should include a detailed review of the following:

  1. Key performance indicators
  2. Current processes
  3. Tools utilized to support the team
  4. Staffing levels

Start with a review of the organization’s key performance indicators and benchmark them against best practices, published by professional associations like MGMA or HFMA. Evaluate the net collection rate, days in accounts receivable, aging over 90 and 120 days and denial rates. These numbers show organization where to look more closely to identify opportunities. If warranted, consider running the reports by location, business line, provider and/or insurance category.

The next step in the assessment is evaluating the current processes and tools being utilized to support them. Get a group of key individuals, including front line staff, to describe in detail how the revenue cycle is being managed, from initial registration all the way to insurance follow up. This is the opportunity to gather as much information as possible about the workflow and how staff members feel about their processes and tools. Also determine how many resources are being used for each individual task. On average organizations need a 0.57 FTE per full-time provider to support revenue cycle processes or 1 FTE per 10,000 claims. Needless to say, these averages are directly affected by specialty, patient demographics and technology.

Once the organization has identified opportunities, it can determine if it has the resources, expertise and bandwidth it needs to implement the changes. When implementing new processes, consider using a methodology such as the Deming’s PDSA cycle to track success. If outside expertise is needed, consider partnering with a reputable organization. While there is a cost to bringing in a revenue cycle management firm, these types of engagements do typically pay for themselves in the long run.

Want to learn more about how to conduct a revenue cycle assessment with tips to identify common opportunities? Join me May 2 at the 2020 National AAOE Conference in San Diego. I will be presenting the session about rev cycle health and how to improve it.

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