Revenue cycle management-part 1. (Practice Management).

When discussing issues important to practice administrators and physicians, financial performance always is mentioned as one of the top three most important concerns for the medical group.

The ability to cover practice expenses and meet physician income expectations is continuously strained by pressures on reimbursement and ever-expanding costs of resources to collect the practice's revenues.

According to the 2002 Medical Group Management Association Cost Survey, there is wide variation between medical group practices in their performances related to revenue cycle management. The table below summarizes some of the key performance statistics for selected categories of physician practice types associated with the revenue cycle management function:

The table shows significant differences between the reported performances of physician practices. What do physician practices do that allow for excellent performance? What should the practice look at and focus on to ensure optimal performance of its revenue cycle management function?

Nearly every function in the practice has the capacity to impact either favorably or negatively on the group's ability to collect its revenues in a timely and accurate manner.

Let's take a look at five processes that affect the front end of the revenue cycle.

Patient registration

It all starts with the registration process. This includes what your staff does when new patients initially contact the practice for their first appointment through how check-in is handled for your long-term patients. Doing it right the first time and securing accurate information are the two most critical factors to success in this area: Every other function in the practice ties into how well this process is performed.

In many practices, staff tends to gloss over this function when they feel that they are stretched for time. However, if a practice looks carefully at the back-end processes that are required to fix errors, they will often find that this time exceeds the amount of time that is required to do it right the first time.

Better performers in this area:

* Ask for information at the time of making the appointment

* Remind patients of outstanding balances when they call for an appointment

* Verify insurance, eligibility and benefits prior to the appointment date

* Confirm that all existing information is correct when the patient arrives for the appointment

Better practices also have strong financial policies that are easy to understand and require that the patient acknowledge understanding of such policies by signing a document to that effect.

Charge capture

Many practices are not set up to capture charges at point of checkout due to office configuration, staffing levels, and information system functionality. The optimal set-up should allow the office to "close the sale" when the patient leaves the office by entering the coding and charge information at this time and matching it to payer contractual terms.

Capturing charges allows the office to determine the patient's financial responsibility, request payment and discuss payment options. The billing office will be able to submit claims quicker, as well.

Better performing groups capture charges on a real-time basis more than 95 percent of the time. Compare that to a typical practice that saves up its claims in batches with the goal of inputting charges within three to five days.

To achieve this high level of performance requires that the practice take time to update its system with information from its top payers, train staff to perform this operation and require physicians to remain timely on coding issues during the visit.

Time-of-service payments

Every physician practice should set up a practice management system to allow for easy access to patient account information when the patient calls in to schedule an appointment. It should be a requirement for the staff to always remind each patient that copayments, deductibles and coinsurance will be required at time of service and that there be some expectation for payments on any outstanding balances.

To perform this function in an efficient and courteous manner, staff should be trained on the proper techniques for obtaining money from the practice's patients. Better performers collect 100% of copayments and some portion of each outstanding balance at time of service.

Every year, new insurance plans shift more financial responsibility to the patients. In the near future, it will not be unusual for most patients to be responsible for a significant portion of their medical expenses, with deductibles ranging from $1,000 to $2,500.

This requires a practice to be aware of the types of plans that their contracted payers are selling.

History has taught us that the hardest portion of revenues to collect are those that are the responsibility of the patient.

Practices should also:

* Accept most forms of credit cards

* Be set up to collect money from the patient's checking account through electronic checks

* Be prepared to have the patient reschedule the visit if they do not make the required payment

* Implement family billing so that any access by any member of the family triggers an action by the practice's staff

* Have a "financial responsibility" brochure available for patients

* Provide each patient with an envelope with the practice's address for mailing in payments

* Have the ability to generate detailed and line-item statements on demand

* Provide each physician with a weekly list of patients who have not met their financial obligations

* Have a staff member who is trained in financial counseling

* Be prepared to set up reasonable, yet aggressive, payment plans

* Have a list of alternative resources for those patients who need financial assistance

* Have patient balances printed on the encounter form or super bill

Coding

The physician or other health care provider rendering the medical services is responsible for the coding. The practice should have processes in place that will allow the physicians and other health care providers the capability of coding for services at the time of service.

This can be achieved through a well-designed super bill or the use of hand-held devices that contain coding software. By completing the coding process at time-of-service, charges can be entered into the system real time and the patient will have the opportunity to settle up their account prior to leaving the office.

Many practices are not aggressive in collecting co-insurance and deductibles because of the uncertainty of the final amount prior to the claim being adjudicated by the payer. However, the practice can make it their financial policy to estimate co-insurance and deductibles, and communicate it in their patient education materials and discussions with their payers during contract renewal.

If a practice compares the amount of time it spends trying to collect from patients after-the-fact, and the time to issue a refund check, they will find that it is easier and less costly to issue the refund check.

To ensure proper coding, the practice should employ at least one person certified in coding, have proactive chart audits, receive regular training and have a well-defined compliance program.

Claims processing

Claims processing should be straightforward and simple. In every instance possible, claims should be submitted on a daily basis in electronic format. Additionally, if the payer offers electronic remittance, the practice should make sure that its practice management system is set up to receive payments electronically.

If this is in place, the practice will need to audit payer submissions on a regular basis to make sure that payments match the contracted fee schedule and that the payer is not systematically reducing the original codes to a lower level.

For those payers who accept claims electronically, the practice should request a record of receipt directly from the payer. This is different than an acknowledgement from your contracted claims submission company that the claim was sent.

Often payers and physician practices get into discussions regarding timely filing and payers are not always willing to accept information from your contracted claims submission company.

The practice should include information in its financial responsibility brochure that they will not submit claims for any insurance company that does not have a contract with the practice. Too often the practice assumes that a name-brand carrier will pay for services and the check ends up going directly to the patient.

Explain to patients that you require payment at time of service and you will be happy to provide them with the required documentation to allow them to file their own claim.

Category                                      Primary
                              Multispecialty  Care     General
                              Groups          Groups   Surgery

Percent 0 - 30 days (best)    22.27%          16.76%   34.52%
Percent 0 - 30 days (median)  43.90%          50.72%   52.60%
Percent 0 - 30 days (worst)   62.28%          62.44%   67.90%

Percent > 120 days (best)     10.68%          7.72%    3.29%
Percent > 120 days (median)   22.69%          20.94%   13.89%
Percent > 120 days (worst)    44.57%          48.21%   30.91%

Days in AR (best)             39.39           38.80    35.38
Days in AR (median)           58.19           50.99    51.67
Days in AR (worst)            93.05           110.38   67.44

Editor's note:

This is Part I of a two-part series devoted to revenue cycle management. Part II will address the seven issues related to processes once the claim has gone out the door. The articles will allow the practice to identify areas of opportunity in their organizations and provide them with specific ideas and guidelines for implementing changes.

Rick E. Weymier, MBA, FACMPE is director of clinical consulting and physician services at VHA, Inc., a nationwide network of community-owned health care organizations and physicians. He is based in Irving, Texas and can he reached at 972-830-0298 or at [e-mail].