Healthcare evolves rapidly, which is why it is critical to continually examine your practice’s revenue cycle management processes. In fact, inefficient RCM processes cost the healthcare industry billions each year. Conducting basic annual maintenance (like revisiting fee schedules and cleaning up aging accounts receivable (A/R)) can have a significant impact on your practice’s financial health and longevity. This should be in addition to more fundamental process innovations, like augmenting your staff with contract experts and incorporating technology to automate manual processes.
As a leading provider of technology-driven RCM solutions for healthcare over more than two decades, we have helped countless healthcare, ambulatory, and hospital-based groups and practices improve their financial health through best-in-class RCM protocols. In this post, we share our top tips for preparing for revenue cycle management success in 2024.
- Revisit Your Fee Schedules
Instituting an annual fee schedule review can help optimize your practice’s revenue, improve financial stability, and keep you in compliance with regulations. We suggest completing a comprehensive analysis of your charges every year to ensure your fee schedule is competitive and compliant in an ever-changing healthcare market.
Want to avoid leaving money on the table? Review updates to Medicare and Medicaid fee schedules (like those proposed here), changes in payor reimbursement rates, and news about inflation, new regulations, and other relevant market conditions. Involve key stakeholders such as clinicians, administrative staff, and your RCM team in your annual assessment by collecting their feedback and concerns. Based on findings from this annual fee schedule review, determine if adjustments are appropriate. Once you have completed your audit, plan to communicate fee schedule changes to staff and patients. We find that practices that do not prioritize an annual review often miss opportunities to increase fees when rates change. Conversely, they may set rates too low based on their current local market, resulting in unnecessary missed revenue.
- Clean Up Aging A/R
Many practices see a dip in revenue at the beginning of the year when patient deductibles reset. We suggest making it a priority to clean up your aging accounts receivable at the end of the year, because bringing in outstanding revenue helps offset this dip. We find that when it comes to A/R, helping our partners think several months ahead keeps cash flowing year-round. The reality is, the A/R cleanup process takes time, and it helps to plan in advance. When cleaning up aging A/R, we suggest starting with a comprehensive list of unpaid and delinquent claims. Review these claims by the amount of time elapsed since the patient or insurance company was billed. Divide them into the following buckets: 0-30, 31-60, 61-90, 90-120, and 120+ days overdue.
According to MGMA’s 2021 DataDive Cost and Revenue, the median total percentage of A/R over 120 days is 13.54%. In our experience, it can be a red flag if more than 35% of your aging A/R falls into the 90-120-day bucket and/or more than 20% of your aging A/R falls into the over 120-day bucket. This can mean that there is a significant issue in your collections process. If so, it is crucial to dig into your front desk, denials, and appeals processes to uncover what is delaying and/or disrupting collections.
However, even if your accounts with percentages in the 90-120 days or more overdue categories are lower than our “warning sign” benchmarks, any reduction in aging A/R is beneficial to your practice’s cash flow. Every year, we suggest examining your process for identifying and correcting claim errors, verifying insurance, managing denials, collections, and following up with payors.
Outside of cleaning up processes upstream, we also suggest making a concerted effort to address outstanding aging A/R every Q4. When taking care of aging A/R, we find that splitting staff into focused groups to tackle different segments of delinquent revenue is effective. For example, when supporting one of our client practices, we assigned newer staff to work on front-end denials, educated first-touch team members on best practices for clean claims, and assigned one team member to claims aged 60-90 days. From there, we had more experienced team members focus on the hardest-to-collect over 90-day claims. This approach helped their practice take their average aging A/R from more than 70 days to less than 30 and increase revenue by $79,000 per month.
- Look for Opportunities to Augment Your Staff
The previous two tips have one thing in common: they take a lot of time and resources to do well. Dialing in your fee schedule and cleaning up aging A/R can bring your practice thousands in otherwise-missed revenue, but not all practices have the resources needed to do so. In fact, many hospitals and ambulatory practices are struggling with staffing shortages. COVID-19 exacerbated already-prevalent burnout among physicians, nurses, allied health professionals, and non-clinical healthcare support staff. That burnout led to turnover and turnover led to staffing shortages. The resultant staffing gaps reduce healthcare practices’ opportunities to generate income.
The simple truth is this: the less qualified staff you can dedicate to billing and collections, the less you collect. Without dedicated billing staff, aging A/R piles up. However, fully outsourcing RCM to experts can be cost-prohibitive. As a result, many healthcare leaders are turning to staff augmentation on a temporary or permanent basis as an alternative to hiring full-time employees or fully outsourcing RCM.
If you are new to the concept of staff augmentation, we’ll start with a brief overview of how it works in relation to healthcare revenue cycle management. Staff augmentation refers to the practice of supplementing your existing RCM team with temporary or contract staff to address specific needs or workload fluctuations. Increases in patient volume, employee absences (like parental leave), or backlogs in A/R are examples of issues that may prompt the need for staff augmentation.
Typically, practice leaders identify RCM needs and resource gaps to address those needs. For example, a practice may need more specialized expertise or support to handle billing, coding, claims processing, or denial management. Augmenting staff with contract support is attractive to healthcare practices because it gives practices more control than full outsourcing, allows them to flexibly scale during a peak season, and gives them access to dedicated expertise that they may not be able find locally or afford to employ full time.
We suggest examining your revenue cycle to identify bottlenecks and consider investing in staff augmentation to release clunky or broken aspects of your billing and collections processes.
Get Prepared for Financial Success in 2024 with a Healthcare RCM Expert
When patient care is your priority, wading through the intricacies of coding and billing processes—as well as keeping up with fee schedule changes—can make cleaning up aging A/R take a backseat. However, not tending to your revenue cycle health can have a significant impact on your practice’s revenue and long-term sustainability.
Head into 2024 with a billing expert in your corner to make sure you are not leaving money on the table. Take the administrative burden of billing and collections off your plate. Contact Resolv Healthcare today to learn how we can help you put these best-practice RCM tips into practice.