Improve Your Revenue Cycle

Increase profits by managing the billing and revenue cycle of your practice.

By Deborah Walker Keegan, PHD and Elizabeth W. Woodcock, MBA, CPA | Financial Fitness | Spring 2010

 

THE CLINICAL PRACTICE AND BUSINESS OF MEDICINE intersect in the revenue cycle of a medical practice. In the revenue cycle, the patient’s diagnosis and the services you provide to the patient are translated into codes that permit you to be paid. It is this payment that allows your medical practice to keep its doors open to treat patients today, tomorrow, and in the future.

Changes occurring in today’s healthcare environment present a challenge to optimal revenue performance. With the increasing prevalence of high deductible health plans, patients are more financially responsible for their health care. In turn, this means that a greater portion of a medical practice’s revenue is derived from its patients. The change in financial responsibility— from the insurance company to the patient—means that your medical practice will have to adjust its revenue cycle to capture patient payments earlier in the billing process.

If you are seeking a new practice opportunity, ask questions regarding the practice’s revenue cycle and its financial health. If you are continuing in your current position, routinely evaluate the performance of your practice’s revenue cycle. In any situation, it is important to determine if the revenue cycle is functioning at its optimal level. Throughout this article, we’ll describe actions to help you take your revenue cycle to the next level of performance.

The Revenue Cycle

There are five key steps in a revenue cycle:

Step 1: Conduct Registration and Financial Clearance
Step 2: Provide, Document, and Code Clinical Service
Step 3: Submit and Edit Claim or Statement
Step 4: Follow up on Claim or Statement
Step 5: Post Payment and Manage Denial

Take action in each of these steps to ensure that your revenue cycle is aligned with changes in today’s healthcare environment in order to optimize revenue in your medical practice.

Step 1: Conduct Registration and Financial Clearance

Accurate registration and insurance information is required to begin the physician billing process. Today, medical practices are advised to take this step to the next level. Make sure that an error-free claim is submitted to payers and that you attempt to collect payments from patients at the time of service. The goal is to reduce the time to payment and billing costs.

• VERIFY INSURANCE AND ELIGIBILITY WITH THE PAYER. Patient registration should take place at the time of scheduling to obtain full demographic and insurance information. Confirm the status of the patients’ insurance, as well as coverage limitations and eligibility requirements. By performing the verification process before you provide care, you’re able to accurately communicate the patient’s
financial responsibility. Telephone, physician websites, and now software— that allows you to perform the process automatically through an interface with the scheduling system and payers, can confirm verification.

• COLLECT PATIENT FINANCIAL RESPONSIBILITY AT THE TIME OF SERVICE. Collect the patient’s portion of payment at the time of service. Instruct your staff to ask patients: “How would you like to take care of your account today?” instead of “Would you like to pay on your account today?” Consider collecting the patient’s portion of the payment prior to the service for elective services. Ask yourself if at each
appointment you were successful in collecting the most amount of money you could at the time of service to optimize time of service collections.

• SEGMENT PATIENT ACCOUNTS BASED ON FINANCIAL RISK. Implementing risk strategies may help you predict the success of collecting from your patients and establish follow-up processes based on this financial risk. A patient with a small balance, for example, who has not paid on a timely basis in the past, may be given two statements and one letter before being sent to the collection agency.
A patient with a large balance who has regularly paid on time might be given a telephone call as part of the follow-up process. Resources are more easily delegated this way with consistent probable return on your investment.

 

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