Physician practices experienced significant patient care and operational challenges in 2020 across the nation. From scrambling to comply with PPE requirements and shifting to virtual care to simply trying to stay afloat, the focus for many was sheer survival.
One mid-year Harvard Medical School study projected that primary care practices would lose more than $65,000 in revenue per full-time physician in 2020—a cost of $15 billion nationally.
Consequently, the urgency to recoup losses and ensure capture of every dollar owed for services rendered is an imperative for future sustainability. Healthcare leaders who had to adapt to sudden changes in eligibility, the surge in telehealth and more now face a backlog of denials and mounting bad debt.
While 2020 left many providers simply burned out, 2021 is a new year, and the industry is well overdue for a revenue cycle management (RCM) spring cleaning.
A holistic approach that considers both front-end and back-end process-improvement strategies is a natural next step. Forward-thinking organizations will recognize the opportunity and consider three key risk areas to prioritize for optimal bottom-line impact.
1) Insurance Eligibility and Authorization
A fluid COVID-19 environment created a multitude of challenges related to insurance eligibility and pre-authorizations for providers. For example, changes in telehealth regulations and reimbursement, as well as delays resulting from health plans not having systems in place to address COVID and telehealth claims, have impacted operations and cashflow. In addition, the past year has produced complexities associated with keeping up with patients’ insurance coverage as individuals have become unemployed and re-employed.
The reality is that this area of RCM has always been a risk area for providers. Proactive approaches to insurance verification are a tall order for busy practices, characterized by front-end staff trying to confirm benefits in between checking in patients and ensuring all patient demographic data is correct. All too often assumptions are made by well-intended staff, and the bottom line suffers.
Today’s providers need systems in place that ensure real-time transparency into insurance eligibility before a patient arrives at an appointment.
2) Collection of Patient Responsible Balances
In recent years, strategies that promote collection of co-pays have become an industry priority. Amid rapid growth of high-deductible health plans, patient responsible balances have become a much larger share of physician revenue, yet this area of reimbursement all too often becomes a sizeable share of a practice’s bad debt.
As healthcare providers continue to operate within razor-thin margins, the ability to capitalize on all revenue is paramount. Thus, front-end staff must be equipped with knowledge of what a patient owes to ensure payments are collected before services are rendered.
The reality is that having this information readily available is also an important component of optimal patient experiences—consumers want more price transparency and a solid understanding of how their insurance works. As expected, the number of self-pay patient patients grew as unemployment rose in 2020, and most patients aren’t prepared to pay unforeseen medical bills. Implementing strategies that help circumvent the element of surprise can both help improve the bottom line as well as elevate patient satisfaction.
3) Claims and Denials Management
Addressing front-end registration and collections pitfalls are important steps to improving revenue cycle processes. On the back end, practices need a solid strategy for overseeing aging accounts receivable (AR) and managing denials in a timely fashion to eliminate bottlenecks and ensure optimal cash flow.
Leveraging automation and analytics to track trends with AR is a critical part of proactive denials management. Metrics such as days in AR—the figure that represents the number of days AR outstanding based on a practices daily charge volume—can help detect the health of claims. For example, an average-performing practice may carry 35-50 days in AR, and anything higher could suggest a problem. Equipped with the information, a practice can proactively reach out to understand and correct issues before denials start mounting.
Additionally, providers are wise to track trends over time. This way, they can detect anomalies, provide education or initiate process improvement strategies. For example, billing staff may be using incorrect codes or incorrectly upcoding claims.
Technology can be a game changer for improving RCM strategies, which by their very nature are data hungry. Automation and analytics can help practices arm staff with the information needed to move from reactive to proactive.
In addition, many practices find that engaging a third-party partner is money well spent. When resources are not available to continuously engage in pre-registration processes and back-end monitoring, providers often reap significant bottom-line benefits by seeking expert help.
Whatever strategy is engaged, providers must optimize RCM processes to elevate financial health and position for the future. This requires a strategic approach that prioritizes people, processes and technology and ensures oversight of key risk areas.