5 Best Practices for Improving Your Hospital's Revenue Cycle

When it comes to building efficient revenue cycles, some of the most common challenges facing hospitals today are filing claims to payors without having them denied and collecting bills in a timely manner.  Here are five of some of the best practices to tackle these and other issues related to revenue cycles.

1. Make sure claims are clean and systems are set up optimally. The first thing Rayanna Moore, system director of revenue cycle for Appalachian Regional Healthcare System in North Carolina, did after discovering accounts receivable were outstanding for 77 days was root out the cause of the problem.

"Only 1 percent of our claims were going cleanly out the door [to payors] without coming back denied, so the first thing we had to do was find where our errors were and why we couldn't get claims out the door," she says. "We actually took every claim that was produced out of the system, wrote down every error and counted them for two weeks. We found old CPT codes in the system that were not valid and incorrect revenue codes that didn't fit the claim. Settings in the HIS system simply weren't set correctly."

After fixing the billing system settings, Appalachian was able to reduce the percentage of claims rejected by payors from 99 percent down to 35 percent.

2. Educate and work with the staff. Educating the staff on how to properly input information for any department in the revenue cycle – whether it be billing, collections or scheduling – is critical to ensuring accounts are up-to-date and accurate and bills are clean before being sent to insurance companies.

"For the most part the staff wasn't really good at it, and it's because we didn't educate our staff well," Ms. Moore says. "We worked on front-end collections and started having that department ask patients up front for co-pay and deductibles. We also had to re-educate staff on why it's important to get charges on patients' accounts [in a timely manner]. Sometimes charges were forgotten about, so we implemented a new 'point of use' tool that allows staff to use a gun and click on a sticker that will charge automatically to patients' account."

3. Form an efficient organizational structure. Kathy Pope is the regional director of revenue cycle business services for CHRISTUS Schumpert Health System in Shreveport, La., which was one of ten hospitals that won the 2010 MAP Award for High Performance in Revenue Cycle. Ms. Pope attributes much of the hospital's revenue cycle efficiency to the adoption of lean six sigma, a model used in the automotive industry to cut waste and streamline processes.

"We implemented high-performance work teams, which are groups of associates working together in the same area to eliminate waste and re-work errors [in their department]," Ms. Pope says. "Desks are laid out to promote a flow of activities. Departments now also report to the same senior leader."

4. Establish processes and use tools that improve revenue cycle efficiency. Appalachian implemented centralized scheduling and uses QuadraMed’s Affinity Revenue Cycle Management solution to help them achieve better efficiency.

"We didn't schedule some appointments effectively, but now that we have centralized scheduling we have a cleaner schedule," Ms. Moore says. "We're able to see ahead of time how many staff members we need, make sure insurance companies and patients know what they owe, pre-register patients before their appointment so that it's a quick check-in and have them pay for the services up-front. Many things are taken care of ahead of time, and patients are happier because they don't have to wait."

Kim Hollingsworth, a partner at IMA Consulting, has worked with hospitals in various capacities, including finances and accounting. She also says processes can be streamlined by providing a pre-encounter service. "What pre-encounter service does is take care of the financial issues beforehand so patients come straight in to see a physician without any problems," she says. "No one should have any surprises with financial responsibility because insurance has been verified and the hospital knows how much the co-pay is."

5. Set goals and monitor performance. Another way to improve revenue cycles is setting periodic measurable goals in place. CHRISTUS Schumpert has a pay-for-performance initiative set in place that establishes goals and rewards for work teams.

"The top-level, overall goal is 'net-to-cash 120 over 120,' and that is what percentage of the net revenue generated 120 days ago is collected within 120 days," Ms. Pope says. "There are also team goals based on their department, such as time-of-service collections. The work groups, which are based on type of payor, will set a certain percentage of collections as a goal to collect within 120 days. If they achieve the team goal in addition to the top-level goal, they get a team bonus."

Ms. Hollingsworth also says managing denials goes hand-in-hand with releasing clean claims. "You want to monitor how often your bills are getting denied and what they're getting denied for," she says. "You want to see denials less than 2 percent of the net revenue. So if a hospital has $1 million in net revenues, you want to see less than 2 percent of that being denied."

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