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Managing the revenue cycle: available technologies can help an organization improve its bottom line.

The financial situation of most behavioral health organizations (BHOs) is changing rapidly. Although changes vary from state to state, the trend toward more and complex funding and billing requirements is clear. Payer pressure around funding and payments is reaching a critical stage in many organizations. As one of my colleagues frequently says, "The days of doing good works and getting paid are gone." In addition, grant-based funding soon will be a thing of the past, and BHOs will need to deal with some of the difficulties that private-sector acute-care providers have dealt with for many years.

To handle these changes, BHOs can use a concept called Revenue Cycle Management (RCM), a series of activities that helps healthcare organizations manage their business processes more efficiently. These can range from simple organizational changes to high-end technologic solutions that automate difficult-to-perform functions. This article aims to make senior managers, especially those responsible for their organizations' financial well-being, aware of how technology can improve RCM.

Verifying Information

The revenue cycle starts when a potential client first contacts a BHO. This could range from a call to an access center to someone in crisis entering a treatment center. At this point, the BHO has to collect the client's information and verify its accuracy. Under a grant-based funding system, this is generally a casual process often performed by the triage clinician. Yet several technologic tools can be used to improve financial performance starting from the first encounter with the client.

Early and accurate verification of the client's information is step one toward improving the ability to recover payment for services. Software is available that allows administrative staff to conduct real-time eligibility checks with almost all payers nationally. Using a Web browser, administrative staff can make real-time inquiries into dozens of payer systems to validate the client's insurance information, including if the insurance covers the potential services, if coinsurance and deductibles and/or spend-downs will have to be collected, and if prior authorization is required for service delivery. Software programs also can help verify other data, including the client's address and employer.

Verifying all this information is the first phase of the revenue cycle. Many healthcare finance professionals believe that this phase is the most critical because if not done correctly on a day-to-day, hour-to-hour basis, an organization can suffer great financial harm. Some organizations do not perform well in this phase because clinicians perform these functions or because organizational leaders believe that they can make up for these weaknesses at later phases in the revenue cycle, which is a mistake.

It is not uncommon for an organization to do a good job of gathering data during the initial contact with the client but leave it to the client and clinician to update the information. That process often does not work. Instead, organizations can use automated electronic eligibility tools to constantly verify client information, allowing organizations to identify problem areas earlier and stop or limit revenue loss. After all, providing services to someone whose insurance is no longer valid often translates into providing free care for most BHOs. Without grant funding to support free services, a BHO is financially hurt.

Recording Service Data and Ensuring Compliance

The next revenue cycle phase involves the clinical process and service recording. This is the phase in which revenue is generated. An organization can be very effective in generating revenue or easily can lose large amounts of money.

To more accurately capture services provided (and the resulting revenue), more and more BHOs are adopting electronic health records (EHRs), in which information systems "force" compliance in many ways. For example, an EHR system can remind clinicians to update treatment plans and to ensure that current assessments support the treatment plan. Provided services that do not meet compliance requirements ultimately can cost the organization much revenue, and adverse audit findings can be devastating, if not terminal, to an organization.

Paper forms can be created to support compliance requirements, but it is fair to say that the track record of most paper-based BHOs is not good. EHRs more accurately capture all the services clinicians provide. An EHR system can incorporate a quality improvement process to review charts for compliance and tie progress notes directly to the service recording process. Therefore, using EHRs to measure compliance with payer requirements has a direct impact on RCM. EHRs provide data that allow a BHO to reduce or limit revenue lost.

Billing and Claims Management

Billing is the area most readily identified with the revenue cycle. Most BHOs have software that can produce the billing and claims documentation necessary to get paid, but technologic tools can be used to do much more to ensure full revenue recovery.

For example, electronic tools can be used to identify denied or pending claims as early as possible. Using HIPAA 276/227 transactions, tools can use claims files to create a HIPAA276 (Claims Status) transaction and proactively send that to payers around seven business days after the claims have been submitted. Without using this technology, a provider has to wait for remittance advice from the payer. Most BHOs still receive paper-based remittance advice.

Such claims status checking provides business office staff advance warning of denials and, more importantly, information about claims awaiting additional information. Receiving this information days, if not weeks, earlier can positively impact revenue recovery and cash flow.

Technologic tools also can be used to compare detailed remittance advice with the original service line items. The HIPAA 835 (Electronic Remittance Advice) transaction specifically was designed to allow providers to automate this critical function. There is simply no excuse for not posting cash and adjustments and maintaining an accurate and up-to-date accounts receivable. For most healthcare organizations, the outstanding accounts receivable is the single largestasset. Not having absolute control of accounts receivable is unacceptable business practice.

After claims have been billed and payments posted, the remaining accounts receivable still may contain recoverable revenue. Even at this late stage in the revenue cycle, revenue can be found by making a final check for retroactive eligibility or other insurance coverage that was missed during previous steps in the RCM process. Even well-run operations routinely have found 5 to 10% additional revenue in remaining balances. This can be done with advanced automation tools to send out HIPAA 270 transactions to an area's primary payers to search one last time for coverage. The most hits are with Medicare and especially Medicaid, in which clients new to a BHO's system end up on Medicaid and obtain retroactive coverage to the onset of their illness. Behavioral health has a significant number of these retroactive eligibility situations, but it is very labor intensive to manually search for these cases. Automating this process is an easy way for BHOs to recover lost revenue.


By using RCM technology, organizations can bring in additional revenue to meet operational needs--and perhaps improve and expand services. RCM technologies, if applied correctly, can make a huge difference in your organization. Thus, when selecting software for your BHO, make sure the package includes RCM technologies.

Stephen A. Wood, FHIMSS, is Vice-President for Business Development at UNI/CARE Systems, Inc., as well as a Partner at Healthcare Perspective, LLC. He is a Fellow of the Healthcare Information and Management Systems Society and a Fellow of the Healthcare Financial Management Association. To send comments to the author and editors, e-mail


UNI/CARE invites readers to attend its full-day symposium on Revenue Cycle Management in Behavioral Healthcare on March 25 at the National Council for Community Behavioral Healthcare Annual Conference in Las Vegas. Leading experts will address all aspects of the revenue cycle and discuss the various approaches and technologies available to the behavioral health community. For more information, go to (page 17).
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Author:Wood, Stephen A.
Publication:Behavioral Healthcare
Geographic Code:1USA
Date:Jan 1, 2007
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