How to Improve Your Revenue Cycle Processes in a Clinic or Physician Practice
Janice Crocker, MSA, RHIA, CCS, CHP
Reimbursement for medical practices has been impacted by various trends and healthcare industry changes over the last five to ten years. Medicare and Medicaid have started reducing physician reimbursement. Third-party payers (Aetna, Cigna, etc.) have negotiated fee-for-service contracts with physicians resulting in reimbursement at less than 100 percent of charges. The Administrative Simplification provisions of the Health Insurance Portability and Accountability Act (HIPAA) have tightened claims data submission requirements. The government’s emphasis on healthcare fraud and abuse, and compliance have heightened the importance of accurate billing. Because of such issues, medical practices are striving to improve their revenue cycle processes.
Foundations of the Revenue Cycle
Without a good base on which to build revenue cycle processes, medical practices will not be able to achieve optimum functioning of revenue processes. The foundation includes common sense and basic tools for the medical practice. Great guest relations practiced by the providers and staff will go along way in attracting and maintaining a loyal patient base. Ongoing physician and staff education regarding all processes in the revenue cycle and their interrelatedness will help reduce problems in the revenue cycle. A good practice management system that suits the needs of the practice is critical. In addition, having at least two staff members thoroughly trained (including ongoing training when the system is updated) and knowledgeable about the functionality of the system is a must. The staff members can serve as the liaison with system support and provide training to all staff members who need to enter or retrieve data, or generate reports from the system.
Another basic support for the revenue cycle is the medical practice’s financial policy. It is important that the financial policy is in writing, has been reviewed by legal counsel, and the patient signs and receives a copy of the policy. The financial policy should provide guidance to patients regarding collection of co-payments and unpaid balances, patients’ responsibilities regarding insurance requirements and supplying insurance information, the medical practice’s accepted payment (cash, credit card, etc.), financial arrangements for unpaid balances, charity care or sliding scale payment arrangements, method of paying for services not covered by insurance, and a description when prepayment of services is required.
Finally, the importance of building files into the practice management system cannot be overlooked. Loading and maintaining accurate payer and patient information in the system will alleviate many revenue cycle problems. Building in Medicare, Medicaid, and certain fee-for-service contract fee schedules into the accounts receivable module will help monitor accuracy of payments. Using must-fill fields helps avoid errors of missing required data.
Revenue Cycle Processes
Front-end of the Revenue Cycle
The revenue cycle starts with scheduling the patient. Medical practices should use a check sheet or script guide to be sure all pertinent information is collected at the time of scheduling. At a minimum, the type of insurance the patient has will help the scheduler know what information to collect from the patient. The patient should be informed if the providers are not in the insurance network. Additional items to discuss with the patient include explaining what information the patient should bring to the appointment, the expectation of payment of co-pays at the time of the visit, and the arrival time of the patient if certain paperwork and registration work needs to be completed.
Registering or updating the registration of the patient is the next revenue cycle process. At each visit the basic demographic information should be confirmed. New patients, and at least annually for established patients, a patient information form should be completed by the patient. The patient information form should capture all demographic and insurance information. In addition to making copies of both sides of the insurance card, it is helpful to have a copy of the patient’s driver’s license to help locate certain patients. Once a patient has completed the patient information form, a staff member should immediately review the form for completeness and signatures.
If the medical practice sees Medicare patients, the Medicare Secondary Payer questionnaire should be completed or updated by the Medicare patients at the time of registration. Co-pays can be collected at the time of registration, before the patient goes back to see the provider. This helps improve the patient flow.
Depending on the type of medical practice, it may be necessary to have a staff member designated to complete pre-certification and prior authorization work. Usually this position is beneficial in surgery, orthopedic, and neurology practices. If the medical practice performs tests or procedures that must meet specific medical necessity or frequency limits, a written policy and procedure should be in place to provide advance beneficiary notices to Medicare patients. A script should be followed to present the notice to the patients. The notice must be completed thoroughly in order to be valid. A modifier is needed on the claim to signify if the notice has been offered or not.
Medical Record Documentation
Although a provider must be comfortable with the method used to document a patient visit to a medical practice (handwritten, dictated, electronic medical record), it is good to have a written policy that addresses key issues such as timeliness of completing the records, recording the patient’s name on both sides of a double sided form, dating and signing each entry, recording all procedures performed (blood draws, immunizations, injections, lesion removals, ear lavages, etc.), and recording a diagnosis for each visit in the medical record. The policy should address what the nursing staff will be responsible for documenting and should provide general guidelines on what an office note and an office consultation should include. Using templates may assist the provider in better documentation.
Charge Capture (Encounter Form or Charge Ticket)
In this portion of the revenue cycle, the charge capture can be viewed from the angles of ensuring that all encounters are captured and all the services and procedures provided are captured. The medical practice should use pre-numbered encounter forms for office visits and other encounters. Most practice management systems have the capability of producing customized encounter forms and have an encounter form tracking capability within the system. The medical practice should insist on having editing capabilities for the encounter form(s) if generated from the system. This saves system support costs and permits more timely edits to the encounter forms.
Again there should be written policies and procedures that identify who will be responsible for marking the various services and procedures on the form. For purposes of capturing the diagnoses, the encounter form may include pre-coded diagnoses, usually the top 25 to 50 for the medical practice. The encounter form should be updated as often as needed to reflect correct, current diagnoses, services, and procedure codes. If the practice can customize the encounter form on the practice management system, the provider should be consulted regarding a design that will be easiest for accurate capture of information. In identifying new patients versus established patients, preventive visits, and consultations, the medical record visit note should document this information.
It is important that the diagnoses, services, and procedures marked on the encounter form can be supported by the documentation in the medical record. Depending on how and when the physician documents in the medical record will determine the ease in confirming that the encounter form reflects the documentation in the medical record. Nonetheless, internal audits reconciling the documentation in the medical record to what has been captured on the encounter form (five to ten records per provider per month at a minimum) should be completed and the written results maintained. Findings from the audits should be shared immediately with the providers and education provided as identified by the audits.
It is more difficult to track charge capture of a medical practice’s non-office encounters. Inpatient and outpatient encounters at the hospital as well as nursing home visits account for the majority of non-office encounters. Charges can include hospital inpatient care, observation stay care, consultations, surgeries and other procedures, and test or study interpretations and reports. It is important to work closely with the providers and personnel in the non-office setting to develop a method to capture non-office charges. Hospital computer systems can generate a provider’s surgery schedule, ancillary outpatient schedules, and inpatient census. Constant monitoring is necessary to avoid losing non-office charges.
The medical practice must establish who will be responsible for coding or verifying the correct codes for the diagnoses, services, and procedures. Those responsible for coding must receive ongoing education regarding coding and have access to various coding resources, such as Evaluation and Management (E&M) guidelines, CPT Assistant, and Coding Clinic. Since coding of certain services or procedures may be payer influenced, a coding compliance policy and procedure should be available in writing emphasizing compliance with official coding guidelines. When payers demand certain coding requirements that may not comply with official coding guidelines, the requirement should be well documented to demonstrate the rationale for noncompliance with the official coding guidelines. When feasible, the medical record should be used as the source for identifying appropriate diagnoses, services, and procedure to be coded. In particular, an operative report should be used to identify and code surgical procedures.
Practice management systems frequently have an “encoder” that can help in the selection of the diagnoses codes. It is important to verify the accuracy of the encoder information. It is not unusual that the codes in the encoder have been entered by various staff members of the medical practice and may not reflect the most appropriate code or most specific code. Capturing all the diagnoses codes that were addressed by the provider during the visit can help support the level of service selected for the visit.
Networking with similar practices for coding issues can be helpful, with an appropriate amount of caution. For difficult diagnoses or surgical procedures, query the physicians showing them the code descriptors to help determine the appropriate code. In addition to the coding resources already mentioned, the provider’s specialty society or academy may also provide coding guidance. Be sure modifiers are appropriately identified and appended as needed. Check carefully for when units must be captured in order to code appropriately. J codes for drugs would be an example. Similar to the documentation audits previously mentioned or in conjunction with those audits, coding audits should be completed.
Even though the medical practice may have coded thoroughly and correctly, unless the charge entry process is completed accurately and in a timely manner, reimbursement can be impacted. Verifying demographic information and insurance numbers could be the difference in getting paid or having a claim denied. With electronic billing, practice management systems may have a front-end edit capability that will check for required data elements and coding edits. When errors are identified, the information should be immediately corrected and shared with those entering the data to help avoid similar errors in the future.
Frequently clearinghouses are used to electronically transmit claims to third-party payers. Reports are generated that will alert the practice if the claims were rejected by the payers. The rejections should be worked immediately; and if the errors were the result of data entry or there are trends in the errors, staff members should be informed of the errors and steps taken to implement processes to avoid similar errors in the future.
Set up electronic remittance with payers when feasible. With such a remittance process, staff members only need to work the exception report. If payer contracts and fee schedules are built into the system, payment posting can be more accurate. Medical practices should establish an automatic small balance write-off amount. This will save time in cleaning up small balance accounts. The total payments received should be matched to the total payments posted per batch in the system. Zero payments, partial pays, and low pays should be identified and determined if they are a result of an incorrect payment or a denial. Such accounts should be worked in a denial management process.
Broadly, denial management can encompass any aspect of the revenue cycle that may result in no or low reimbursement. The reasons for the denials can include incomplete or inaccurate insurance information, lack of pre-certification or prior authorization, not capturing all of the tests or procedures, diagnoses and procedure coding errors or omissions, past filing limits submission of claims, or a denial due to lack of meeting medical necessity. Best practice is to trend and track the denials at the time of posting the payments. Denials should be tracked by payer, type of denial, and provider. Staff members must be assigned to work denials on a regular basis, daily for a large medical practice. When trends in the denials are identified, providers and/or staff members should be informed and processes put in place to avoid the denials in the future. By working the denials in a timely manner, processes can be corrected on a timely basis.
Third-party payers have specific instructions for appealing denials. The instructions should be appropriately followed and claims should not be haphazardly re-transmitted, since this can result in duplicate claims. Medical practice staff members that are responsible for denial management should develop a first-name relationship with provider representatives at high-volume payers. Reimbursement generated from successful appeals can be tracked to demonstrate the value of monitoring and working denials.
To prevent denials, specific staff members should be assigned to monitor correspondence, instructions, bulletins, etc., from high volume payers. Information should be shared with the appropriate providers and staff members so claims can be completed and transmitted according to the payers’ specifications.
Working Accounts Receivable
Most practice management systems have collection modules. The modules automate the accounts receivable process and can generate statements with messages and progressive collection letters. Staff members responsible for managing accounts receivable should be well versed in using the collection module.
Third-party payer accounts receivable should be worked within 15 to 30 days after the claim has been transmitted depending on the payment requirements of Medicare, Medicaid, or third-party payer fee-for-service contracts. Identifying a staff member to serve as an accounts receivable liaison with high-volume payers facilitates the accounts receivable process. Use all of the collection management reports available in the practice management system. For example, the account receivable aging reports by payers can be used to identify possible payment issues, such as third-party payers holding payment beyond established payment limits. Establishing priority collection criteria, such as high dollar accounts and older accounts, helps the medical practice to better manage accounts receivable.
The medical practice should establish when in the process the account will be changed from insurance to patient pay in absence of a payment from the third-party payer. A common practice is to automatically convert to patient pay at 30 or 45 days after the claim was initially transmitted to the third-party payer. If the accounts receivable system is automated, it is a good idea to confirm that statements are being sent. Sending a statement to the patient at 30 or 45 days can result in the patient working with the insurance company to expedite a resolution to any coverage issues. Beware of using manual holds with a collection module when working patient-pay accounts. It is better to explain to the patient that the system will automatically produce statements rather than manually holding any statements and then forgetting about the account.
In completing the patient-pay collection process, follow the medical practice’s financial policy. Staff members can use scripts to be sure the message in collection calls to patients are consistent. A best practice is to document all collection efforts and the outcomes of those efforts in the financial notes section of the practice management system. Good documentation in the financial notes allows staff members to know the status of the account and to respond to questions from the patient regarding the account.
The medical practice should establish an internal collection time frame in which the account will be worked internally before the account is written off and/or turned over to an external collection agency. A policy should be developed that provides guidance to the practice regarding which accounts will be turned over to an external collection agency. The policy should be followed consistently. The internal collection period is generally 90 or 120 days in best practice examples. The medical practice should consider using two external collection agencies so that results of the two can be compared. A method of tracking the success of the external collection agency should be implemented in the medical practice. If the external collection agencies are collecting 40 percent or more of the accounts, this may be a sign that the internal collection efforts are lacking. The medical practice can use benchmarks to evaluate the effectiveness of internal and external collections. The most common benchmarks are days in accounts receivable and write-off percentage. A best practice benchmark for days in accounts receivable is 39 days or less.
Managing the revenue cycle appropriately in a medical practice is critical to the practice’s success. As reimbursement from government payers is projected to continue to decline, and third-party payers with fee-for-service contracts gain more leverage, managing the revenue cycle effectively will be paramount to the practice. In order to be comfortable that revenue cycle processes are managed appropriately, the medical practice must continuously monitor all aspects of the revenue cycle from scheduling to zero balance on the account.
Centers for Medicare and Medicaid Services Internet-only Manuals, available at http://www.cms.hhs.gov/Manuals/.