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Revenue Cycle Management in a Time of Transition

Monday, April 9, 2018   (0 Comments)
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Written for AAOE by John Martin, Managing Director, Healthcare Consulting, Katz, Sapper & Miller

Learn more by attending John Martin's AAOE 2018 Annual Conference session "Managing Your Revenue Cycle: What You Need to Know" on Tuesday, April 17.

Managing the transition from fee-for-service to value-based reimbursement is tricky and complex, and revenue cycle management is no exception. Healthcare providers and IT developers are trying to navigate the transition between two very different reimbursement methodologies, balancing the tested, proven design of legacy fee-for-service systems against the new compliance requirements for MACRA, MIPS, and value-based reimbursement.

Compounding this challenge, providers may still be learning the new ICD-10 coding system (which increased the number of medical diagnosis codes by a factor of five). Furthermore, many healthcare providers are implementing new practice management and electronic medical records (EMR) systems and attempting to make the new systems conform to their current workflows. Success in the new value-based reimbursement world will require that healthcare providers embrace additional change and alter their workflows – whether it is adapting to the design of the EMR system or adjusting their care processes.

To gain a clearer understanding of their organizations’ financial health, it is recommended that providers commit to a continuous four-step process:

  •  Create and monitor relevant benchmarks.
  • Assess current workflows and adjust to the EMR system requirements.
  • Commit to continuous process improvement.
  • Consider utilizing a third party for annual revenue cycle oversight.

 

Benchmarking

Many providers are familiar with the concept of benchmarking and find that it is a useful tool to help gauge and track the performance of their practice. However, there are several common benchmarking pitfalls to avoid. For example, all too often, benchmarks are internally generated but not compared to external national and regional metrics. Additionally, as new benchmarks are added to dashboard reports, existing benchmarks often are not reviewed to determine if they are still relevant and/or useful. To be useful, benchmarks must be current, relevant to the environment, and identify problems that lead to positive change. Comprehensive benchmarking reports should not be limited to financial metrics but should also include clinical and quality metrics that are relevant to the financial health of a provider organization. Metrics typically fall into two categories: monitored and process improvement.

Monitored metrics are metrics that are commonly reported and should be monitored to determine if changes occur over time. Examples include net patient revenue, days in accounts receivable, net collection percentage, and average collections per patient. Monitored metrics that change suddenly or gradually over time indicate an area of the organization that may be experiencing a new problem.  Variations should be assessed immediately, and process changes should be implemented to correct the problem.

Process improvement metrics are established when the organization believes a problem exists but needs to identify the source of the problem. These metrics are designed by the revenue cycle improvement team and are evaluated closely to determine if and where problems exist. Once a problem is identified, a solution is implemented. When the metric falls into the desired range, the metric is then moved to a monitored status.

 

Workflow and EMR Systems

An ideal time to evaluate and redesign workflows is when a new EMR system is being established. To efficiently use EMR systems, the organization needs to adjust its workflows to meet the demands of the system. Because of all the change in healthcare, this is not popular but still very necessary.

Providers should also weigh the costs and benefits of centralizing versus decentralizing revenue cycle functions. Centralization allows the provider organization to potentially reduce cost, but they also lose the personal touch of a decentralized system. Having revenue cycle staff closer to clinicians and patients often improves charge capture and patient satisfaction, but potentially at a higher cost.

Workflows may be subdivided into three categories: front office, patient encounter, and back office. 

There are several ways to assess these workflows. Front office and patient encounter workflows may be assessed by staff involved in the processes, or an organization may consider a “secret shopper” program. Back office workflows may be assessed by staff involved in the processes, or they could use an outside consultant to conduct a more thorough assessment. The goal is to generate the most user-friendly, efficient systems possible to enable high quality care and patient satisfaction.

 

Process Improvement (Revenue Cycle Improvement Team)

The revenue cycle improvement team is similar to the finance committee of any medical practice or hospital – only its focus is exclusively on revenue cycle challenges and concerns. This is a team of staff that should include managers/directors, revenue cycle staff, and clinicians (physicians, extenders, and other patient caregivers).

The goal of this team is to identify key benchmarks for improvement, monitor existing benchmarks for changes, improve financial and clinical information gathering, and improve metric reporting. The team should also be focused on improving the efficiency and accuracy of data gathering as well as improving patient/payer interactions.

It is important that the revenue cycle improvement team is comprised of individuals who are involved in the processes since they will know more about stumbling blocks than anyone else in the organization. Equally important is having clinicians involved since they enter information into the EMR system that will be used directly in the claim generation process. Their involvement will not only ensure a thorough view of the revenue cycle; when the team identifies a process that needs to change, the clinicians on the team will have instant credibility and influence with other clinicians who may be affected.

 

Annual Revenue Cycle Assessments

Although process improvement is continual, an organization should consider auditing their revenue cycle every year. This will enable the identification of revenue cycle weaknesses and the development of an action plan to correct them.

Additionally, providers should consider having a third party assess their revenue cycle every year or two. A third-party consultant can often serve as a fresh set of eyes, recognizing areas of opportunity that have been overlooked by those who are engrained in the processes.

A revenue cycle assessment typically begins with a detailed dive into practice data to analyze various metrics and benchmark them against national averages. Consultants will also interview various stakeholders to get a comprehensive view of the revenue cycle. Based on the initial data analysis and feedback from stakeholders, the consultants will identify specific areas of the revenue cycle for deeper review. This could involve an EMR performance assessment, coding standards review, MIPS/MACRA readiness assessment, technology infrastructure review, or another area of the cycle.

Since revenue cycles vary from practice to practice, there is no one-size-fits-all solution. But by following the four-step process, providers can help ensure optimization for value-based reimbursement and that they are keeping their revenue cycles healthy.

 

About the Author

John Martin is Managing Director of Healthcare Consulting with Katz, Sapper & Miller's Healthcare Resources Group. With 25-plus years of industry experience in executive and consulting roles, he leads a team of healthcare consultants at KSM who provide a full range of financial, strategic, and operational services to hospitals, health systems, and physician groups. Previously, Martin served as Chief Executive Officer of OrthoIndy and the Indiana Orthopaedic Hospital (IOH) in Indianapolis, where he oversaw the opening of a physician-owned 42-bed, 10-operating room hospital facility. While he was CEO, IOH won several awards from HealthGrades, the nation’s leading healthcare ratings company.


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