Revenue cycle management-part 1 - Practice Management

Physician Executive, May-June, 2003 by Rick E. Weymier

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