Your financial success depends on how well you manage the revenue cycle. Real-world efficacy points to a few fundamental strategies for reengineering the ways that your medical practice generates revenues. This article discusses analyzing payer contracts, establishing each patient's financial responsibility using EHR systems, and managing and preventing denials.
Analyze Payer Contracts
Most revenues originate from payers, so first analyze your practice's contracts with them. Learn each payer's allowable reimbursement by procedure code; then calculate the practice's cost for administrative headaches that the payer may cause through required preauthorizations and excessive denials.
Next, make one of three choices about the payer:
- Accept the payer relationship as is;
- Terminate the contract on grounds of irreconcilable incompatibility; or
- Meet with the payer to renegotiate the relationship. If you choose to negotiate with the payer, bring data to support the added value that the practice provides – such as prevention services and extended office hours.
Medicare denial rates are typically two to three times that of private carriers, so if your private insurance carriers are denying on the same level as Medicare, you may want take a closer look at your contracts with them and renegotiate.
Encourage Patient Responsibility
Introduce procedures to establish each patient's financial responsibility (verification of insurance coverage, copays and so forth) before the delivery of medical services. Also, be sure to explain the practice's financial assistance policy to the patient (i.e., payment at the time of service, etc.).
Procedures should lead to collections before or at the time of service. Staff in contact with patients must know how to ask for money and what to do if it is not forthcoming. At the time of a visit, collect from insured patients all copayments, due balances, coinsurance amounts and deductibles. For uninsured patients, collect a predetermined minimum down payment. This is especially important for small offices where the receptionist also handles collections. It is vital that you have the right person for the job.
Automate the Process
With the advent of EHR systems, it is much easier to automate much of the revenue cycle. These systems are initially acquired to serve clinical purposes, but they can be interfaced with a practice management system to perform fiscal functions.
EHR systems can, for instance, be used to verify a patient's insurance coverage and benefits eligibility in advance of a visit. They can also automatically collect codes for services delivered to capture the related charges. Moreover, you might use your EHR system to improve the accuracy of payments received, speed provider enrollment and credentialing, enhance charge scrubbing and conduct electronic remittance and fun transfers.
Manage and Prevent Denials
Even if you undertake the efforts noted above, your practice will still likely encounter some claim denials. The good news is denials can be managed and prevented.
First, identify the types of denials and their causes within the practice or the payer. The most common categories will be registration, medical necessity, timely filing, preauthorization, duplication, insufficient support information and coding. Try to act within 24 hours of receiving each denial. If the payer seems to be at fault, use prepared appeal form letters. Then track each denial by payer and provider until it is resolved.
The patient equivalent of payer denials is delayed payment of amounts owed. The best way to handle this is by following a strict collection style – typically completing the process within 90 days. Within that period, send two or three paper statements, culminating in a collection notice. Stick to the deadlines that are set. If necessary, use a collection agency. But develop a financial hardship policy for patients genuinely incapable of making the required payments. Communication of payment requirements and collection terms before delivery of services is key to managing patient responsibility receivables.
Know Where to Turn
Maximizing your practice's revenue cycle can be challenging, but it is an exercise that must be done continuously.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
