With only a few months left to ICD-10 implementation, a huge shift is being detected in the healthcare revenue cycle. Third-party vendors have abandoned the traditional fee-for-service arrangements and adopted a value-based reimbursement model. It is evident by now that the sudden shift to ICD-10 in the healthcare industry will largely affect the revenue models of hospitals and other healthcare facilities after October 1. Many healthcare practices and facilities have started restructuring their revenue model for 2015 and are focusing more on mid-revenue cycle. The mid revenue cycle is a part of the complete cycle, starting from the entry of a patient to a healthcare institution to the phase where his or her chart reaches the office. New regulations of CMS regarding ICD-10 implementation like extensive reporting are the main reasons behind the sudden shift of third party vendors and clearinghouses to new value-based revenue models.
Even though the effort towards restructuring revenue cycles is a fitting step for healthcare facilities and practices, it should be noted that not all revenue models may turn out to be effective. In some models, physicians may focus too much on improving the mid-revenue cycle phase that they unintentionally ignore the reimbursements that are being lost through flaws in their billing process. Likewise, some practices may still not be following up on the rejected claims to identify the errors that they can possible correct in their future claims
Here are some signs that indicate physicians and practices that their Revenue Cycle Management model requires changes.
1. Prolonged claim payments
The ideal time for a claim to be paid or rejected by the insurance company, once it’s submitted is 45 days. If your claims are taking longer than this time period, further investigation is required in your claim submission and follow up process. An Accounts Receivable (A/R) Aging report helps break down claims on the number of days that have not been paid.
2. Variation in Patient Collections
Physicians may face a sudden drop in collections during a certain period or if they increase their charges. To avoid this imbalance, a Key Performance Indicator Report must be prepared that records the total number of patient encounters, procedures, charges, Patient Collections, and any outstanding A/R or adjustments, if available. This way, physicians can identify the main reason behind that unexpected variation.
3. Insurance Ineligibility
Not all vendors offer to verify patients’ insurance eligibility before the procedure. Physicians and staff members must be aware of the services that the insurance does not cover in order to prevent any fraud or claim denials.
4. Lack of staff training
Despite modifying the revenue cycle, some practices may still receive denied claims due to simple coding errors. If the practice has updated RCM technologies like data scanners and billing automation, then it’s possible that the error may be on the staff’s end. Staff members require adequate training to understand the revenue cycle and reduce the number of simple errors to a minimum so that any future reimbursements don’t go down the drain.
5. Claim denial rate
Claim denial rate plays a vital role in helping physicians determine whether the new revenue cycle model is effective or not. The main purpose of RCM is to increase reimbursements and reduce the number of claim denials. If a claim is denied by the insurance, third party vendors should immediately run a follow up to identify the reason and inform the practice regarding it so that they can recheck their next claims before submission.
6. Fault at insurance’s end
So far we have aware all that errors made in claims and normally from the staff, biller or physician’s end. However, sometimes the insurance is at fault too. By mistakenly reimbursing practices for some other procedure or paying them less than the required amount, insurances also make errors in claim reimbursements. However, if a practice’s RCM model is not that effective in follow-ups, such errors may pass by ignored. The best course of action for physicians is to have a datasheet with reimbursement rates for each procedure or having it stored in their practice management system to compare the received reimbursements with the expected payment.
The signs mentioned above and their solutions can help physicians make the required changes in their revenue cycle to receive maximum reimbursements and increase practice revenue. Third party vendor plays a key role in improving a practice’s revenue cycle. So if physicians and medical practices figure out that their vendor is not suitable to solve the problems mentioned above, the best strategy would be to replace that vendor with another party that has a better experience in revenue cycle management.
