How To | Revenue Cycle

Practical Tips for Maintaining Control over the Revenue Cycle

How To | Revenue Cycle

Practical Tips for Maintaining Control over the Revenue Cycle

Using technology to prevent denied claims and providing patients with price transparency are just two ways healthcare organizations can improve their revenue cycle performance.

By using technology and services to streamline workflows, provide visibility, and prevent denials, providers may be able to reduce the $315 billion spent annually on managing all aspects of the revenue cycle.


As evolving market trends shape healthcare payment, providers continue to face real-world, day-to-day challenges that contribute to unpaid claims, unnecessary denials, workflow inefficiencies, and rework. By implementing the recommendations outlined here, providers can obtain the necessary visibility and control over their claims payment processes that can help them not only sustain a healthy revenue cycle, but also enhance their patients’ overall experience.

Get Ahead of Denials

Claim denials cause delays in payment and often result in unnecessary write-offs for providers. Reworking denied claims can require significant time and effort, costing providers $25 per claim, on average. a For a large health system with thousands of patient visits per year, this figure means the administrative costs to rework denied claims can amount to millions of dollars. It also has been reported that the Centers for Medicare & Medicaid Services (CMS) denies as many as 30 percent of claims on first submission, which also adds to the high cost of reworking denials. b

A primary reason for denials is eligibility. Ensuring that all patients are screened for eligibility, prior to service, is the single biggest and most important step a provider can take to avoid costly denials down the road.

Improper coding is another leading contributor to denials. Each payer has its own nuances that coders need to understand. Yet billing departments too often manage this issue by relying on “tribal knowledge,” where one individual within the department becomes the expert for a specific payer. Between the regulatory environment and the onset of new payment models, providers must shift from relying solely on staff for managing nuances in claims and denials to also using tools and automated process to the extent possible to ensure coding is performed properly.

Providers also should pursue visibility into their claims process to be able to clearly observe what’s going out and what’s coming in, and to lay the groundwork for efficient workflows. Providers should regard their claims process as a closed-loop, inventory-management system. They should be able to run reports that disclose the location and disposition of every claim in the process. Billing staff often spend inordinate amounts of time making phone calls, faxing, or emailing just to determine the status of a claim. Leveraging commonly available tools to automate this part of the revenue cycle can enable providers to shift this time and effort to focusing on exceptions. 

Have a Plan to Treat Patients as ‘Payers’

With the rise of high-deductible health plans over the past 10 years, health care has experienced a significant change in how claims are paid. Where insurance companies historically paid most of each claim (up to 100 percent for some individuals), patients now commonly pay one-third or more of their own medical expenses. In 2014, out-of-pocket payments reached $329.8 billion—approximately 11 percent of total healthcare expenditures. c   With patient deductibles often resetting in January, the first quarter tends to be the most challenging for providers to manage, because of the need to collect more payments directly from patients. 

As patients increasingly share responsibility for payment with insurers and patients, providers must find better ways to predict and smooth cash flows. Providers need to fully understand this shift in their payment mix and implement tools and best practice patient-payment processes that can help them collect efficiently from patients.

Leverage Technology to Benchmark Performance and Streamline Work

Providers should know how their organization’s performance compares with that of peers in the same market segment by benchmarking. Looking at key performance indicators (KPIs) can help identify issues to address and set goals for meeting or exceeding benchmark standards. KPIs for comparative benchmarking are available from a variety of sources, including through billing system and revenue cycle management service providers and trade associations such as HFMA, MGMA, the National Association of Healthcare Access Management, and the Healthcare Information and Management Systems Society.

Providers also will need to leverage technology and services that enable them to manage the revenue cycle process more efficiently, including supporting the required visibility into the process and disposition of claims cited previously. Diverse solutions are available—ranging from “a la carte” software to enterprise solutions—that enable any size organization to manage its revenue cycle. 

Provide Price Transparency for Patients

Patients who understand their bills are more likely to pay their bills.  However, patients typically do not know how much their out-of-pocket expenses will be until they are billed. When patients don’t understand why they owe what they owe or don’t have the necessary funds readily available, they are less likely to pay. But health care is rapidly evolving toward a retail mindset, in which patients will expect at least to be provided with estimates of their out-of-pocket expenses prior to receiving the services.

Some integrated solutions are beginning to offer functions similar to those outlined in the HIMSS Revenue Cycle Improvement Task Force’s vision of the “Patient Financial Experience of the Future.” d In the spirit of this vision, providers can use transparency tools with patients, explaining balances due and offering an easy means of collecting those balances. 

The crux of this issue is, again, that patients who are more informed about their services and associated expenses will be more inclined to pay. Ultimately, this transparency also can promote higher satisfaction among patients, because they understand what’s expected of them and aren’t surprised when they receive their bills.  

Have a Plan to Protect the Bottom Line

The relationship between providers and commercial payers historically has been perceived as being adversarial. However, the evolving market is beginning to recognize that the relationship is more symbiotic, as both providers and insurers save time and resources when claims and payments are timely and accurate. Yet if providers lack an effective denials-prevention strategy and a clear and accurate view of their claims process, they could end up chasing their dollars—which is both costly and time consuming.

The strategy also should be focused on improving self-pay collections from patients through initiatives aimed at improving the patient financial experience by helping them to understand their financial obligation, providing price transparency, and making it easier to meet their obligation (e.g., through payment plans tailored to their circumstances).  

By using technology and services to streamline workflow, provide visibility, and prevent denials, providers may be able to reduce the $315 billion spent annually on claims processing, payments, billing, bad debt, and other aspects of managing the revenue cycle. e   Moreover, they might also be able recover more payments—from both health plans and patients—ultimately helping to protect cash flow and the bottom line.


Eric Arnsonis senior vice president and general manager, Change Healthcare, Nashville. 

Footnotes

a. Graham, T., “ You Might Be Losing Thousands of Dollars per Month in 'Unclean' Claims,” Insight Article, MGMA, accessed on Feb. 12, 2019.

b. Doyle, D., “ Where Your Clients Might Be Losing Money in Their Practices,” HBMA Billing, Feb. 21, 2013.

c. Centers for Disease Control and Prevention and National Center for Health Statistics, Health, United States, 2015: With Special feature on Racial and Ethnic Disparities , U.S. Department of Health & Human Services, May 2016.

d. HIMSS Revenue Cycle Improvement Task Force, A Roadmap to The Patient Financial Experience of the Future: Part I of a Five Part Series, March 2016.

e. HIMSS Revenue Cycle Improvement Task Force, Rethinking Revenue Cycle Management , April 2015.

About the Author

Eric Arnson

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