Impact Insights

Revenue Cycle Best Practices

Scott Pillittere

Anytime I meet a new client to discuss Revenue Cycle best practices, I am quickly reminded by the client that “they are different than other organizations” and “what worked with your past client will not work here.”  The more I think about this, the more I realize that this is true.  For example:

  • Their organizational structure is unique (legal structure, academic medical center, stand-alone facility).
  • Their EHR configuration/Revenue Cycle tools and level of automation are most likely different than other “similar” organizations.
  • Their payer mix and patient mix are very unique to them and the communities they serve.
  • Their revenue cycle staff (with unique or lacking skills) only work for their organization.
  • Their mission and desire to provide a certain level of uncompensated care is set by their leadership team.

One Size Does Not Fit All

Each hospital’s mission, internal and external environment, and the markets they serve will result in very different Revenue Cycle operational and financial results. But does the argument “we are different” preclude an organization from focusing on and achieving best practice?  It shouldn’t. I agree that no matter how hard you try to find “like organizations” to compare yourself to, you will always find differences that make the comparison difficult.  However, there is a process organizations can use to migrate from current state Revenue Cycle to best practice.

Step 1:  Measure to improve:  Each step of the Revenue Cycle has unique measures or key performance indicators that provide your organization with the health of your Revenue Cycle. You can utilize any of the healthcare Revenue Cycle professional organizations such as HFMA, NAHAM, HARA, MGMA, AMGA and Becker’s Hospital Review to obtain a list of best practice KPIs. By capturing these metrics, you will have a starting point for comparing how well your client is performing compared to industry best practices.

A few examples:

  • Percentage of scheduled accounts where insurance is verified
  • Discharged, but not final billed (by number of accounts and dollar value)
  • Clean claim percentage
  • Number and dollar value of accounts not worked

Step 2:  Understand the metrics/key performance indicators and their definitions:  Each metric has a published best practice. Take each metric a step further and define how the metric is calculated and what the metric truly means. Look for different ways organizations are calculating these metrics.

One example is days in AR. If you see a days in AR number of 40 Days – is this good or bad? You don’t know until you dig deeper. Ask yourself: Is this a gross days in AR number, a net days in AR number, what are they using to calculate net AR, what is their payer mix, when do they start aging their accounts? Each of these questions and its corresponding answer will paint a very different picture for how well an organization is performing when they are at 40 days in AR.

Step 3:  Understanding the metrics/key performance indicators for your organization:  Research each metric to understand why an organization is performing at a certain level.

Hypothetical Example:  HFMA states that the best practice for the clean claim rate is 98 percent. Your client is running a clean claim rate of 90 percent. At first glance, this tells us that your client is running 8 percent behind best practice, but as we start to research the 8 percent difference, we notice there is payer-specific requirement for this client that causes 8 percent of their claims to be held for a manual edit to be made to the claim. The payer has asked for additional information for research purposes and is paying a 1 percent premium if the information is provided.  An edit has been built into the client’s claims scrubber system to cause these claims to fail – allowing the staff to edit the claim before submission.

In this situation, a 90 percent clean claim rate IS best practice for this client.

Step 4:  Continuous improvement:  Once you have reviewed each key performance indicator for the Revenue Cycle, conduct your due diligence on what best practice is for your organization and develop a daily/weekly/month scorecard or dashboard to monitor these metrics, you now have the tools to drive your organization to best practice.

For each area that is performing below best practice or goal, target these areas with your Revenue Cycle team to remove barriers, improve technologies and automation, train staff to improve their productivity and quality, improve processes and reduce hand-offs, and ultimately collect the cash that is owed to the hospital.

Summary

We are finding that the comments we receive from our clients “we are different” and “that won’t work for us” – may actually be true. Until we are able to understand each of their key performance indicators coupled with what makes them unique, we will not have a clear understanding of what best practice means for their particular organization.

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