The key drivers of the revenue cycle for most healthcare practices are the reimbursement of covered services from health insurance payers and co-pays, and insurance deductibles from patients. The more efficient the healthcare provider’s revenue cycle management (RCM) is, the more profitable they will be. Mismanagement of either insurance reimbursements or patient collections can seriously impact a provider’s financial solvency.
Fast insurance reimbursements are critical to revenue cycle management
Claims reimbursement from health insurance companies is the lion’s share of revenue for most providers. The speed and efficiency at which a provider files claims may determine if the practice thrives… or not. Effective claims management – and the revenue cycle itself – depends on the medical billing staff’s familiarity with the complex and proprietary rules of each insurance company, knowledge of accurate coding, charge capture, remittance processing, timely submissions, and experience with appealing rejected claims.
When insurance claims are paid below contracted rates, are not accepted by payers because they don’t meet specific requirements, or services are not billed correctly or not billed at all due to billing inefficiencies, revenue is impacted and the revenue cycle lengthened. Refiling costs and claims adjudication can become very expensive, especially for healthcare providers billing hundreds of thousands or millions in services each month. It’s in every provider’s best interest to have a finely tuned claims submission department to improve payment rate and shorten the revenue cycle.
To collect the maximum amount allowable under your payer contracts, medical billing staff must monitor outstanding accounts receivable aging for each insurance company. This requires staff with a thorough knowledge of the claims adjudication process, denials management, and the practice’s contractual terms with every payer. Staff must also identify claims that are outstanding beyond a typical time frame and analyze the root cause of denials, identify underpaid claims, handle appeals, follow up with payers, and apply benchmarking techniques to keep the practice profitable. This detailed knowledge of each payer’s reimbursement policies is essential to any healthcare provider’s revenue cycle management.
Best practices in collecting patient point of service payments
While the lion’s share of revenue comes from insurance claims reimbursements, the share of contribution from patients has been increasing in recent years. New healthcare policies are increasingly asking more of the patient via higher co-pays and deductibles before claims will be covered. This trend is predicted to continue as healthcare companies shift more of the payment responsibility to patients.
Patient deductibles on health insurance policies vary widely from hundreds of dollars to upwards of $10,000, with some patients who are 100% self pay. And frequent changes in insurance policy status lead to confusion among both patients and medical office staff about what is owed at the time of visit, what percentage of services is covered, and what will be owed by the patient later. This means that at any given time, a practice may have many patients who carry outstanding balances. How efficient a provider is at collecting patient balances is critical to shortening the revenue cycle.
More and more frequently, patients struggle with paying medical debt and more than 36% report having a past due balance on medical bills of more than 60 days. Additionally, up to 60% of the amount owed by patients is never collected, which can deny a practice a considerable chunk of revenue.
To reduce risk, practices must collect as much as possible at the time of the visit to mitigate post-insurance debt collection. The problem is, roughly half of providers do not have the ability to calculate a patient’s financial responsibility at the time of service beyond co-payment, until after claims are submitted and processed. This can put the doctor-patient relationship in jeopardy.
To ensure that patients are aware of what they owe, healthcare providers should institute best practices for collecting what a patient owes at time of visit:
- Insurance eligibility verification
- Collecting co-pays at the time of visit
- Prior authorizations
- Managing referrals
- Clearly communication payment policies to patients.