Healthcare organizations have many functional areas to work upon, but the two main areas that affect the hospital’s sustenance are Billing and collections. Billing influences a hospital’s revenue for the future and collections impact the financial health of the organization. There are some aspects of healthcare financial management if reworked and technologically updated, it can multiply the prospects of success in billing and collections.
An article on Becker’s Hospital Review discusses how a six-hospital health system that serves more than 2 million patients per year uses a customizable online financial engagement platform to evaluate billing process issues and find solutions for the same.
This financial engagement platform is one of the hundreds of products available that help hospitals prevent billing and/or collection bottlenecks.
Let’s look at some of the billing and collection issues faced by hospitals
Billing and collection bottlenecks:
1. Information Technology (IT)
Information technology has been enabling healthcare organizations to restructure staffing models, speed up billing process, increase collections and also communicate with patients quickly and efficiently. IT has been indirectly responsible for securing steady and good inflow of revenues. Using a good billing software or a collections module or an EHR that has some part of the billing process integrated into it can increase the efficiency of billing cycles.
Every healthcare organization is different and has different needs from peers in terms of EHR requirement. It is better that you as a CFO is familiar with your organizational type as this knowledge will help you make a good choice of EHR. Some EHRs offer technical support even after implementation, some provide training and some can have billing or scheduling integrated into their system; depending on your needs you can choose an EHR software. According to a news report on EHR Intelligence, Dana-Farber Cancer Institute reported operating losses and decreased revenue as a result of using a popular EHR software. It is very important that you pick a software that works well for your organizational set up because failing to do so affects the coordination between teams and the hospital’s billing process.
Revenue Cycle! A mid-sized urgent care hospital based in Dallas found out that their revenue performance was steadily declining after implementing an EHR. The system wasn’t architected to manage and resolve the hospital’s Revenue Cycle gridlocks.
The urgent care hospital aimed to liquidate its receivables, accelerate RCM processes and improve patient access functions. Instead of phasing out the implementation process to implement revenue cycle specific business application workflows or exploring integration options they forged ahead and it was back to the drawing board after a little less than a year.
The hospital was forced to switch over to another EHR which proved to be expensive and time-consuming. An EHR that facilitates easy document and data sharing is essential to improve collections. It is vital that EHRs allow clinical information and revenue cycle data to be accessible.
2. Operational budgeting and forecasting
Hospital CFOs are now under immense pressure to contain costs and manage uncertainty. As the industry transitions towards a more service and population-centric space, financial budgeting has become more complex. It is important for CFOs to have a department focused approach when it comes to budgeting and financial planning.
The revenue cycle is in most hospitals fragmented and opaque. As it is a huge process involving multiple teams focusing on where to spend money on is mission critical to improve profitability and reduce cost-to-collect.
Having a professional medical billing team is crucial to seeing success in collections. A hospital CFO needs to analyze the productivity metrics of each department and allocate funds accordingly.
Every team like transcription, coding, charge entry and claims preparation need to be individually monitored for their performance and productivity. If you choose to have an in-house medical billing team it’s better to use a performance analytics system, that way a CFO can decide on the allocation of budget to each department and mitigate revenue stream risks.
3. Streamlining patient access functions
Revenue cycle intelligence mentions in an article that according to a TransUnion report 68% of patients with medical bills of 500$ or less did not pay their bills in full in the year 2016. A healthcare organization’s revenue cycle gets affected as a result of late or no payments from their patients. The organization only ends up spending more money on AR and AR staff to collect money that they may or may not receive.
In order to avoid such mishaps hospitals should start training your front-desk staff’s to collect fees immediately after their appointment. They could use scheduling software to send reminders to their patients about upcoming appointments, collect patient information and check for insurance information using an eligibility management software.
4. Improving physician productivity
The valued based reimbursement model has drastically changed physician compensation models. Exploring ways to measure and improve physician productivity is the need of the hour. Running periodical physician productivity reports will result in improved revenue.
As the rainmaker of your organization, using a productivity tracking tool can help you easily track and manage the performance of physicians within a practice.
It can also help you achieve and set benchmarks. The productivity reports will also serve as a springboard to develop future physician compensation models.
An anesthesia hospital based in New Jersey wanted to create a more coordinated and result-oriented economic environment in its organization.To contain costs and improve care outcomes they tied quality-of-care measures into physician compensation.
A data analysis and decision support tool that tracked the number of new patient visits, number of established patient visits, visit times and work RVUs of individual physicians enabled the organization to improve physician productivity.
5. Implementing a collections module
When a hospital has the successful patient and/ or payer collections they are financially safe. To monitor and keep track of payer and patient wise collections, it is better that large healthcare organizations use a software or a tracking tool. This tracking tool can be integrated into your hospital’s information system.
Using a tracking tool can result in good billing practices and in improved and timely collections.
6. Outdated fee schedule
Every hospital is stuck with a plethora of fee schedules that are different multiples of Medicare allowables. It is essential to audit fee schedules periodically to avoid underpayments. Keeping your fee schedule updated can prevent loss of revenue. Reviewing fee schedules regularly will help you ensure that your billed charges are higher than your allowed amounts.
Recently, during an audit of the fee schedules of a hospital-based physician group, we found out several instances of fee-schedule non-compliance. This led to not only overbilling but also posed a huge risk to the group practice.
As payments come under the scanner of federal agencies it is vital to revisit fee schedules to avoid inconsistent payments, penalty risks, and underpayments. Failing to do so will have a strong impact on the revenue stream of hospitals.
7. Coding Audits
Coding plays a crucial role in deciding how much money is paid to the provider for a particular service provided to the patient. Using a code that is accurate and also current is necessary for a claim to be successfully processed. To ensure this happens, it’s important that physicians employ certified and trained coders as part of their billing team.
Another way of evaluating your hospital’s coding process is by conducting audits. There are third-party organizations that can do this for you. An audit can identify the use of deleted or inaccurate codes, improper use of modifiers and point out down coding if any.
An urgent care practice based in Tampa was struggling with a high denial rate, and most of the denials were related to coding issues.
After teaming up with a third party medical coding audit provider they realized that their medical coding team was repeatedly coding external injury codes as primary codes. The extensive audit also brought to the surface several underlying coding issues.
To maintain a healthy collection rate it is essential that to conduct periodic coding audits.
8. Achieving economies of scale by externalizing RCM functions
With the help of an RCM vendor, patient information is available to the certain group of staff at the hospital. As mentioned these vendors offer automation, making it easier to generate custom reports, view account balances, etc.
An article in Becker’s hospital review mentions that physicians are seriously considering outsourcing RCM functions to align clinical and financial outcomes according to Black Book’s 2016 RCM survey. Hospitals can reduce costs by outsourcing their RCM process as RCM vendors deliver reports and even offer visibility into their process.
Most of the CFOs consider either outsourcing their full RCM process or a portion to an RCM vendor when it comes to cutting down costs. If you think, outsourcing alone would help CFOs to save costs, then the answer is definitely, No. There are factors involved in RCM vendor selection: They are as follows:
- Experience in processing claims through the hospitals EHR
- A complete flawless RCM workflow
- Automation tools to capture data from the healthcare organization’s EHR and assigning it to the right teams (AR and denials).
- Analytics platform which offers day to day RCM reports.
- Software to know whether your practice is on the right track or not
- Effective bi-directional communication system.
- Must be experienced in handling revenue management solutions to various specialties.
- Complete contract negotiation support
- Certified coders should be part of the RCM team to get the right reimbursement.
- The revenue cycle management company should be compliant with HIPAA regulations.
9. Billing vendors not meeting the SLAs
CFOs cannot just relax after handing over their hospital’s billing process to third-party billing vendors. It is important that practice owners check for adherence to SLAs by their billing vendor.
A vendor who does not meet his SLAs can land the practice in trouble as a result of the poor billing process. Using a software that can offer visibility into every part of the billing process can ensure safety and control for CFOs.
Lindsay is a practice administrator at a podiatry group based in Florida. When the group practice decided to outsource its RCM functions, she did the groundwork and helped the organization partner with an RCM firm that met their expectations.
But, when it came to verifying whether the RCM vendor met service level agreements, the practice manager drew a blank. She wanted a system that could track the SLA signed by the vendor and the work reports given to check whether they were keeping up their end of the bargain.
A lot of many practice administrators like Lindsay are looking for software that auto check SLA compliance.
Being in the dark about SLA compliance can have a negative impact on collections. Because what cannot be measured, cannot be managed.
10. Losing the common thread with RCM vendors
It is important that medical billing teams or RCM vendors and the hospital management work in alignment towards a common goal. If every team or group working towards a specific but different goal, the organization’s success will be a question mark.
In order to streamline the process and keep all teams coordinated and informed all the time, hospitals can use the software. This can not only can serve up to date information to all teams concerned but also help the CFO keep track of the healthcare organization’s performance.
Instead of long email threads that go unread, it is imperative that hospitals install the software that puts different teams involved in the revenue cycle on the same page. There is smart task management software around that serve as a bridge between the CFO and their revenue cycle team. Users can assign tasks, raise tickets, resolve queries and manage events, within the software. It is a wise decision to invest in one.
Billing and collection bottlenecks:
- Information Technology
- Operational budgeting or forecasting
- Streamlining patient access functions
- Improving physician productivity
- Implementing a collections module
- Outdated fee schedule
- Coding audits
- Achieving economies of scale by externalizing RCM functions
- Billing vendors not meeting the SLAs
- Losing the common thread with RCM vendors
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