In a typical primary care or other office-based practice, prompt payment from insurers and patients is essential to smooth operations. When providers mismanage the revenue cycle, the financial impact may seem relatively small on an individual claim, but when multiplied by hundreds of visits a week, the effect on the bottom line is the equivalent of death by a thousand paper cuts -- slow, agonizing and certain. The good news is there is a remedy.
Let's begin with some common revenue cycle management mistakes providers make.
1. Not staying current with payer requirements
Just reading your insurer's newsletter isn't enough. In many instances -- such as a change in structure of provider identification numbers -- you can't just resubmit the claim. Your system must be updated first to support the payer's modification, which requires administrative time and further delays payment.
Bottom-line impact: sluggish cash flow, high claim reject rates and administrative expense.
Solution: Due to the thousands of payers and even more claims policies, partnering with a revenue cycle management vendor can greatly simplify your claims filing processes. These partners must always maintain current policies and you can take advantage of their expertise.
2. Failure to monitor the entire claims process
If you can't manage the claims process at every point in its lifecycle, you can't identify where it went astray and resolve the issue. Without automated alerts as to why a payer is routinely denying claims for a given procedure or code, your staff will spend countless hours researching the issue.
Bottom line: lagging accounts receivable and high administrative costs. According to a recent study by James Kahn, MD, from the University of California, "Billing and Insurance-Related Administrative Costs: Burden to Health Care Providers, practices typically spend 8 to 14 percent of overall revenue on clerical follow-up on rejected claims.
Solution: Claims are complicated and ever-evolving regulations ensure mistakes are easy to make, yet hard to track. To help lighten -- or even eliminate -- this burden, implement a business process for timely, thorough follow-up. Take the time to research affordable tools that can help to generate proactive alerts. There are plenty of options available, so make sure to identify the right system for your organization. With the right tools, the ROI will happen quickly.
3. Not resubmitting rejected claims
When claims are rejected due to coding errors, many providers are reluctant to resubmit to certain payers because they lack access to data that can support the challenge.
Bottom line: lost revenue.
Solution: Online research tools are available; you just need to know where to look. The most valuable tools stay up-to-date with the latest information and help you to defend your claims with confidence. They can identify not only where the denial occurred, but also help automate the process of filing corrected claims and appeal letters.
4. Failure to verify patient eligibility
A study performed by Capario showed that one-quarter of practices never verifies patient eligibility and copay amounts. Further, another one-quarter don't bother to check until the patient has left the office. As copays climb and patients make multiple office visits, verifying eligibility is a critical step to managing your revenue.
Bottom line: reduced revenue and increased bad debt write-offs.
Solution: Real-time automated tools afford providers the ability to check patient eligibility and accurately determine copay at check-in. The better solutions can take a direct feed out of your billing system to seamlessly verify eligibility on tomorrow's patient schedule. These tools allow your organization to ensure full payment from patients and monitor for correct reimbursement from payers.
5. Not recognizing trends
Busy practices with heavy administrative workloads tend to process claims one at a time. When claims are addressed individually, administrators often fail to see high-level, macro trends and make the same processing error repeatedly.
Bottom line: slow payment and increased administrative time and expense.
Solution: Workflow tools that flag repeated, routine denial of claims for a certain procedure or code can greatly improve a provider's short-term and long-term revenue cycle. By understanding common mistakes, your team is able to proactively adjust their processes for cleaner first time claims submission.
Best practice: avoid errors and rejections in the first place
If your practice is making any of these common revenue cycle management errors, chances are you're experiencing both delayed and lost revenue.
To eliminate initial data errors and improve first-time payment rates, consider implementing a payer-specific claim editing and eligibility verification solution. Research vendors carefully and choose one with established payer relationships, proactive reporting and audit tools, up-to-date coding information and online claim correction functionality. By doing so, you'll be providing your staff with the tools to streamline daily revenue management and improve overall practice performance. Ultimately, they'll spend less time chasing down the sources of claim issues and more time maximizing collections and preventing payment issues before they occur.
Jim Riley is the president of Capario, a provider of revenue cycle management solutions.