A HOLISTIC APPROACH TO REVENUE CYCLE MANAGEMENT: UNIFYING DISJOINTED PROCESSES ASSOCIATED WITH BILLING

by James M. Denny, Jr.

Much progress has been made in recent years to streamline processes that are associated with the revenue cycle. New Web-based systems are emerging that not only help generate higher levels of profit, but also provide tools that can be used to enhance operational efficiency and evaluate payer performance.

The conversion to automated billing gained momentum in the late 1990s when federal legislation and market forces focused attention on the advantages that electronic data interchange (EDI) could offer the healthcare industry. Medical groups quickly realized the benefits of EDI, which enabled them to improve cash flow and enhance revenue because they could:

1. Check eligibility before seeing patients to confirm that services they were about to provide were actually covered;
2. Submit claims electronically for faster payment; and
3. Download and print rejection reports so they could immediately correct and resubmit errored claims.

As welcome as these advances were, early EDI services were undeniably limited and could be viewed merely as precursors to the full complement of benefits that revenue cycle management (RCM) can now provide. EDI is unable to generate summary level reports, for instance, and lacks sophisticated tools to analyze practice performance. The advent of Web-based automation, however, offers the ability to interface disparate functions related to RCM in a central database—furnishing practices with tools to measure and improve their performance at each step in the process.

In other words, this next generation of RCM expands upon the tactical opportunities introduced by basic EDI—providing a strategic advantage and enabling practices to adopt a holistic, enterprise-wide approach that unifies the full range of disjointed and manual processes traditionally associated with billing.

Emerging Systems Offer Strategic Benefits

Advances in RCM applications support practices interested in automating the revenue cycle well beyond conventional EDI and clearinghouse functions. In fact, practices can reap the benefits of RCM from the moment a patient schedules an appointment or arrives at the registration desk, until all payments are posted.

Eligibility Verification and Claims Processing

The first revenue cycle challenge, for instance, may be related to verifying that the patient is eligible for service. If there is a problem, practices may never receive appropriate payment for services. To avoid opening-bell issues like these, RCM systems run real-time eligibility verification reports each evening on patients scheduled to be seen the following day, confirming information like benefit ceilings and coverage dates. This provides front-office staff with the information they need to expedite check-in—asking for updated insurance information and collecting co-pays, for example—and alerts clinical staff to any reimbursement issues affecting services or procedures that might be performed. These issues can then be resolved before the provider even enters the exam room.

The next step comes immediately after the visit when the claim is loaded into the application. Claims are scrubbed against a broad range of payer specific and general edits like frequency limitations, medical necessity and ICD-9 rules, National Correct Coding Initiative (CCI) edits, local restrictions, and private payer directives. This ensures that claims are submitted correctly the first time, minimizing delays and denials, and reducing the amount of time and resources a practice invests in the appeals process.

Identification of Costly Recurring Errors

In addition to checking for payer edits, advanced RCM systems help practices keep an eye on other problems that could slow a claim down—incorrect insurance identifiers or errors in essential demographic information, for example. Coding, billing and accounts receivable staff are able to monitor claims in real time, immediately correcting administrative errors that would otherwise impede timely payment.

When practices employ a holistic approach to RCM, they are also able to identify recurring problems and track error patterns that may arise at any stage of the revenue cycle. Perhaps staff members at a particular office consistently enter information in one specific demographic field inaccurately—overlooking a key prefix, or adding unnecessary spaces to a data set. With today's RCM systems, the group can identify which staff member is responsible and intervene to correct the problem.

Similarly, the applications can analyze coding patterns, isolating providers who consistently over- or under-code specific services. Additional training and education can be supplied to resolve the issue, helping the practice avoid fraud and abuse allegations, ensuring comprehensive charge capture, and generating revenue that accurately reflects the level of service provided.

Automated Secondary Claims Submission

Some of the most valuable tools offered by RCM applications go well beyond claims management and reporting. Today's systems can automate the submission of claims to secondary insurers—saving billing staff the aggravation associated with this process and generating added income for the practice. Many practices simply choose to write off crossover claims because the effort is so time-consuming. In addition, outstanding balances are often relatively small, and practices figure they're not worth pursuing.

Advanced RCM applications render these arguments moot. Added functionality allows them to generate a summary of all checks, and provides an overview of detailed patient, claim, provider and transaction data. With this information, the applications can generate EOB header information and print patient-specific data to create EOBs for more efficient secondary paper claim filing. These automated processes eliminate the need for staff members to retrieve and copy the paper remittance, manually highlight the relevant patient data, and cross out information unrelated to the secondary payer.

Timely Electronic Remittance Advice

Holistic RCM systems can streamline claims payment, as well, by automating the process of receiving and posting payment information (835 ERA files) from participating insurance companies into a practice's practice management system and accounting packages.

Furthermore, RCM applications allow the practice to compare payment for individual services against the negotiated rate. With this documentation in hand, practices can approach insurance companies and ensure they receive payment in full on a claim-by-claim basis.

Analysis of Payer Contracts and Relationships

Advanced RCM solutions allow practices to scrutinize the overall value of individual payer relationships, as well—like monitoring payment patterns and compliance with contracted rates during a specified period, as well as investigating the level of claim denials. These reporting tools generate data to guide practices when managed care contracts are negotiated and help them determine with whom they wish to continue working. For instance, analysis may indicate that a specific payer consistently denies claims and pays below contracted rates, which greatly increases the amount of human and financial resources the practice invests to receive its rightful reimbursement. This information can help practices quantify the bottom-line value of each payer relationship and make advantageous decisions in the future.

The applications also assist practices committed to reducing the days each claim spends in accounts receivable (A/R). While every state in the country has prompt payment laws on record—usually ranging from 15-30 days—few practices report they receive reimbursement as quickly as the law requires. RCM applications can help practices set a target for days in A/R, monitor payer patterns and work with individual insurers to eliminate bottlenecks—ultimately resulting in quicker payments.

Optimal Use of Staff Resources

Equally important are the opportunities RCM provides to better utilize internal staff resources. Instead of devoting time and talents to labor-intensive billing, accounting and collections processes, staff members can be deployed in more productive areas.

For the most part, groups find they don't have the capacity to assign staff members to analyze the flow of patients and paper through the practice. But advanced systems eliminate the need for staff members to perform mundane billing tasks manually. Automated RCM applications free up resources that can then be devoted to assessing how efficiently and effectively the practice functions. Staff members can be reassigned to uncover strategies for streamlining operations and optimizing revenue—and, subsequently, to actually initiate these process improvements.

Selection and Implementation Require Enterprise-Wide Commitment

Successfully adopting a holistic approach to RCM requires that multiple departments within a practice carefully assess their needs and collaborate to identify a system that exhibits the range of functionality required. As a practice undertakes this process, it should:

1) Appoint a "champion" from among practice leadership who recognizes the benefits of a holistic approach and is able to communicate well with various stakeholders throughout the practice to facilitate the changes that adoption will require.

2) Establish quantifiable goals and objectives for the project. For example, a practice might aim to reduce its A/R days to fewer than 30; increase the percentage of claims that are accepted by payers the first time to 90 percent; or reduce write-offs by 5 percent.

3) Select a project team that represents all of the areas that will be served by the selected RCM application, including practice management, coding, accounting, IT, etc. Members should be selected based on their area of expertise, as well as their ability to consider ramifications to the organization as a whole.

4) Provide adequate time and resources for the team to identify priorities and functionality essential to the practice. These can be recorded on a matrix or grid that will later be used to track areas in which specific RCM systems excel or disappoint.

5) Evaluate potential vendors and their products against identified practice requirements. This process should include an initial search using the Internet, attending relevant conferences and soliciting product information from a comprehensive list of companies offering the necessary systems.

6) Identify a "short list" of vendors based on the initial assessment and request comprehensive demonstrations of products. Practices that ultimately report the greatest satisfaction invest a great deal of time in this stage of the process. For instance, they devise scenarios typical of their practice's workflow and ask vendors to respond to challenges actually encountered—instead of simply allowing companies to present pre-established hypothetical situations that might be designed to highlight only their product strengths. By challenging the vendor, practices can learn the true breadth of functionality and may expose limitations that would otherwise go unidentified. Representatives of the group's IT department also play a pivotal role in this stage, evaluating the technology to confirm that it is compatible with other systems and that it will perform according to vendor claims.

7) Investigate the financial stability of the top candidates to ensure they will be around to support the application ultimately implemented, and that they will continue to develop their product to meet future needs. In addition, the team should scrutinize each vendor's commitment to customer service. How available are representatives? How quickly do they respond to phone calls and emails? What is their turnaround time when issues arise?

8) Continue working closely with the vendor throughout planning, implementation and roll out. Automating so many disparate functions within the revenue cycle is a challenge. Staff members will be asked to look at their jobs in new ways, while workflow will be evaluated and most likely changed. Open communications, adequate training and preparation, and continued vendor support during implementation, ensure the transition will go as smoothly as possible.

In short, a holistic approach to RCM can offer tremendous benefits to group practices—ranging from streamlined workflow and enhanced use of human resources, to improved cash flow and profitability. These applications supply tools that allow practices to evaluate their most vital functions—and uncover ways to improve their business operations while improving the lives of their patients.

James M. Denny, Jr. is president and chief executive officer for Navicure, which provides automated, Web-based revenue cycle management solutions to physician practices.

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