We’ve already discussed improving upfront collections; perhaps it’s now time for you to also look at finding an expert to help you with your revenue cycle management. Finding a partner who can accelerate payment and ensure you are receiving the full amount of insurance reimbursement to which you are entitled will remove that stress from your practice while yielding bottom line benefits.
You know that performing regular maintenance on your car will improve performance and help it last longer. But who does that maintenance? Do you change the oil in your car, tune up the engine and rotate the tires? Or, do you take it to a mechanic who has the tools and knowledge to take care of these chores quickly and cost effectively?
Your first decision will be whether to find a comprehensive service provider who can manage all aspects of the revenue cycle, or to split the activities up among individual firms which will handle components of RCM, medical billing and accounts receivable. Consider that:
- If you split up functions among different companies, you still have to manage multiple entities;
- A single vendor/partner will be able to take a comprehensive view of your functions and optimize each component within the revenue cycle.
Do You Know Your Benchmarks?
Once you decide if you want a single partner or multiple, you’ll need to generate and track financial and performance metrics to determine potential areas for improvement and to measure the success of RCM initiatives.
The Healthcare Financial Management Association (HFMA) has developed MAP Keys for both hospitals/health systems and for physician practices. These detailed, industry-standard metrics can be used to measure your organization’s revenue cycle performance. Among the metrics that you should be closely monitoring are:
- Net days in A/R
- Net collection ratio
- Cost to collect
- Denials rate
- Lag Days (for hospitals)
Each metric has an individual impact on your financial well-being. For example, claim denials are one of the biggest problems facing providers. According to data released in 2017, insurers initially deny $262 billion per year, a figure representing 9% of the estimated $3 trillion in medical claims submitted by hospitals. Reworking each denial costs approximately $118 per claim.
Do You Know Where You Are Going?
Regardless of whether you choose to DIY or work with a partner to improve your revenue performance, there are certain best practices that will yield higher returns, including:
- Ensuring integration between your front and back office software to increase efficiency
- Managing the aging and outstanding A/R report to reduce A/R days outstanding
- Increasing collections through more efficient A/R management
- Reducing denials with better claims and fewer errors
- Regularly reviewing your metrics and billing reports to optimize revenue
If you are seeking a partner for RCM, be sure to look at their performance for other practices around average days outstanding for A/R, how long it takes to submit claims versus the industry average, and how many claims are successfully adjudicated on the first submission. Another determinant should be whether your potential partner has RCM experts on staff and if they are located in the U.S. or are off-shore.
Following these guidelines will help keep your bottom line healthy while you work to keep your patients healthy!