Revenue Cycle Management By Automation
By Nina Pascucci
Consultant
Beacon Partners, Inc.

Your billing staff has just worked another long day, filled with far too many paper trails.  With denials swamping your staff in addition to their daily workload, it is easy to see that processes   become more and more inefficient as each day passes. Your staff doesn’t have the time to understand why denials are occurring, let alone the time to ensure that these problems are avoided or corrected throughout the revenue cycle.

Because of the difficulties intrinsic to hospital and clinical billing, automated checks and balances are necessary to avoid human error.  By finding an automated system for your revenue cycle, staff will spend less time on administrative tasks and more time on work beyond billing, perhaps in monitoring and understanding key reports, updating fee schedule changes or making sure that payer contracts remain compliant. An automated system will benefit your organization by allowing for lower A/R days and dollars, increased compliance, immediate error correction, improved reporting and a happier staff.  Whether the decision is made to process in-house or to outsource, the overall goal remains the same: get paid for each claim the first time it is sent out. 

KEY INEFFICIENCIES
Implementing a new system or upgrading your current system is the ideal time to examine processes and to redesign or modify them to take full advantage of automated revenue cycle management.  It is vital to understand where key inefficiencies first began in order to reach full potential.

Errors Aren’t Usually Caught As They Happen
With manual systems it may be difficult to catch errors or missing information simply by reviewing a paper trail.  Nothing automatically tells your staff that they forgot to verify a patient’s coverage or marked a charge with an incorrect revenue code.  Even with an automated system, errors cannot be avoided; however, they can be caught sooner rather than later.  By catching errors as they happen, your system can create queues to be worked prior to patient discharge or payer billing.  Departments and end-users will begin to recognize recurring errors that lead to billing problems and make corrections in a timely manner.  Queues may be divided by all types of missing or questionable information and can help minimize errors, flag records with particular characteristics or check the work of end users.  These queues can be divided even further; for example, an error list may be created for a charge error but additionally divided into separate lists by payer or financial class and dollar amount.  This will allow billing staff to become more familiar with particular payers or financial class requirements as well as prioritize by dollar amount.

Patient Collections Are Often Ignored
Oftentimes organizations choose to concentrate primarily on payer collections; however, patient collections should not be ignored.  With a manual system it is not always apparent which services are not covered or partially covered, or the co-pay amount due at time of service.  An automated system can alert you to these issues.  An automated system can: calculate co-pays; show warnings that a particular service is not covered or requires a referral; or show patient liability for procedures and orders.  Payer and plan information must be collected and updated in order for this functionality to be effective; however, this allows your organization to become more successful in patient collections.  By understanding amounts due or not covered, the likelihood of patient collections at the point of care will increase, and patient payment follow-up will decrease significantly.

Denials Aren’t Given a Fair Chance
With manual systems denials are viewed as burdens, but it is imperative to view them as opportunities to improve financial operations.  An automated system will allow your organization to import denial codes from automated payment remittances easily and directly into your system, eliminating manual entry.  It will also allow you to re-work claims that have been denied, and, by making changes to your revenue cycle process, it will help reduce the volume of denials.  As an example, when a remittance code associated with a denial is received, your system will be able to take action automatically on the account or catch it in a queue that is associated by denial reason, balance due or other defining factors.  If a claim is denied for reason code #38 (not authorized), your system will be able to send this to a queue divided by balance due and/or payer.  Once reviewed by a staff member, easy actions can be performed automatically by your system to show that, if the denial were legitimate, the balance due should go to the next responsible party or, if the denial were illegitimate, the claim should be resubmitted.  By creating a proactive approach to managing your denial, your organization will benefit from fewer write-offs and a better understanding of what causes denials in the first place.  Hopefully, you will begin to see a pattern determining which areas need improvement, (e.g., verification, coding procedures, etc.) and you will be able to identify which payers or procedures are most often associated with denials. 

Reporting Is Not Understood Or Used At All
A quality automated system will assist you in gaining control of your receivables by providing valuable information that you can use.  Systems will provide you with a package of reports and the ability to customize reports; however, too many organizations do not use proper reporting tools to understand the success or failure achieved in particular areas.  It is important that your IT and Billing departments work together to determine which data should be extracted and monitored regularly.  By monitoring key areas of the revenue cycle, such as errors caught during charge capture or registration areas, it will become easier to see which areas need attention and which end users require additional training.  Information that an automated system will track easily are listed below; however, it’s important to understand and take action based on the information presented.

• Monitor A/R days and dollars: this allows your organization to understand when filing deadlines are approaching or where a large chunk of receivables exist by catching accounts in queues or specifically reporting on them.  You can also use your Aged Trial Balance Report, which will show the percentage of accounts falling into a particular sector (the number of days after claim was initially submitted: 0-30, 31-60, 61-90, 91-120, or 120+).  This report can usually be reviewed by either payer or patient.  The older the hospital account, the more difficult it becomes to collect the outstanding amount.

• Dig Deeper: analyze outstanding A/R by department, payer and procedure to determine which areas are successful or unsuccessful and why.

• Create Key Indicator reports that show the quality of the processes within your revenue cycle (e.g. charges entered, cash posted, claims produced, edits resolved, etc.)

• Create a denial report that shows the type of denial and which payer denied it.

OVERALL
An automated system will help to streamline billing and collection processes, reduce denials and decrease the days that accounts are in A/R.  Automation takes one of the most difficult processes within healthcare and makes it as simple as possible.  By understanding which areas are usually the least efficient, you can focus your concentration effectively and become stronger than ever.

About The Author
Nina Pascucci is a consultant with healthcare management consulting firm Beacon Partners, Inc.