February 25, 2004
Not sure why your organization has problems turning receivables into cash? In the February issue of hfm, HFMA member Diane Palmer, CPA, consulting service vice president, Park City Solutions, describes some tools you can use to find clear and measurable evidence of where opportunities for improvement exist. The following excerpt addresses some of those tools.
Evaluating Your Revenue Cycle
When you first suspect a problem, you should determine whether the two to three weeks of work required to evaluate the revenue-to-cash cycle are warranted. The checklist below can help you quickly determine whether your revenue cycle needs a methodical and objective evaluation. If you answer "Yes" to any question, you need to take a closer look.
Bill Test
A bill test is one way to incorporate objective data within your qualitative review of revenue-cycle performance. A bill test involves testing a sample of accounts for key information about how and when they were processed through the revenue cycle. This test will show whether accounts were preregistered, insurance was verified, and precertifications or preauthorizations were obtained. A bill test also can identify the time elapsed between key dates, such as the time between discharge date and coding date and the time between coding date and billing date.
One key advantage of performing a bill test is that the conclusions of the accounts receivable performance review are supported by actual claims. If key supervisory personnel cannot identify how results occurred based on existing departmental procedures, you can provide them with the sample claims from the bill test. You can also use statistical analyses based on the sample to estimate the problem's impact on the entire population. Bill test results also will help you prioritize actions based on dollar impact.
To perform a bill test, you will need to determine the test population, select the sample, design the data capture worksheet, collect the data (typically, someone familiar with your organization can collect the necessary data in two to four days), compile the data in a spreadsheet or database, and analyze the results.
Designing the data capture worksheet
Because deciding which information to capture can determine how long the bill test will take to complete, you'll want to carefully consider the data that are available in the system, patient files, imaging, and other sources. A fairly comprehensive list of test items is included in the sample data capture sheet below; however, a test that captures even limited information, such as the discharge date to bill transmission date, can be useful. When listed by patient type and payer, these data can provide excellent clues about where to focus improvement efforts.
Using the Tools
Finding ways to turn receivables into cash doesn't have to be a mystery. By employing the bill test and understanding your organization's people, processes, and systems, you will best be able to estimate the dollar value of opportunities disclosed for improving revenue-cycle operations, track your performance with appropriate industry benchmarks, and develop a focused plan for reaching your organization's goals.
SOURCE:
"Key tools for turning receivables into cash," by Diane Palmer, consulting service vice president, Park City Solutions, February 2004 hfm, pages 62-67.
Additional Resources
- HFMA resources on revenue cycle issues
If you have questions or comments about HFMA Wants You to Know, contact editor Laura Noble.
HFMA Wants You to Know ISSN: 1540-0697. Volume III, Issue 4. Copyright 2004, Healthcare Financial Management Association. All rights reserved.