Exploring Front-End Revenue Cycle, How to Optimize Its Performance

August 29, 2023 - The healthcare revenue cycle is broken down into three parts: the front-end, mid-cycle, and back-end. Much focus goes into mid and back-end functions, such as coding and billing, claims management, and denials management. However, what happens before a clinical encounter can have a major impact on revenue cycle efficiency.

Front-end revenue cycle processes include patient scheduling, insurance verification, financial counseling, and upfront patient collections, to name a couple. These functions are critical to accurate and timely claims generation and revenue collection.

Yet, healthcare providers encounter many challenges with front-end revenue cycle processes. For example, incomplete or inaccurate patient data collected during registration can lead to errors on claims, which can result in reimbursement delays and claim denials. Many providers also still rely on manual processes to complete front-end revenue cycle tasks, bogging down the revenue cycle.

Understanding what constitutes the front-end of the healthcare revenue cycle, how to track efficiency and performance, and key strategies for optimization are crucial to the financial success of healthcare providers.

In the beginning: front-end revenue cycle steps

The front end of the healthcare revenue cycle refers to the initial steps and processes involved in capturing and managing patient information, verifying insurance coverage, and collecting patient payments for medical services. It is essentially the beginning stage of the financial workflow in any healthcare organization.

The key components of the front-end revenue cycle include:

• Patient Registration: This involves collecting patient demographic information, contact details, insurance information, and any necessary authorizations or consent forms.
• Scheduling and Appointment Management: This is the process of booking appointments and managing the timing of patient visits. It may also include referral management. Proper scheduling ensures that patients are seen by the appropriate providers and that the services provided are correctly billed.
• Insurance Verification: Healthcare organizations need to verify each patient’s insurance coverage and benefits to determine the extent of coverage for the services provided. This step helps avoid claim denials and billing issues later in the revenue cycle.
• Prior Authorization: In some cases, certain medical procedures or treatments require prior authorization from the patient’s insurance company. Front-end staff may need to work with physicians to obtain these authorizations before services are rendered.
• Co-Pay and Deductible Collection: Patients are often required to pay a portion of the healthcare costs through co-pays or deductibles. Front-end staff collect these payments either before or directly after the services are provided.
• Financial counseling: Front-end staff help patients understand and navigate the financial aspect of their medical care, such as insurance coverage, financial assistance, and payment options. More recently, it also involves cost estimation and other efforts to increase price transparency for patients seeking medical care.

Because each of the front-end revenue cycle steps involves the patient, this part of the revenue cycle is often included under the umbrella of patient access. However, patient access can also include care coordination, patient engagement, prescription drug accessibility, and patient education, to name a few core functions.

The front-end processes play a crucial role in ensuring accurate and timely revenue collection for the services provided by healthcare providers. The efficient execution of these front-end processes helps to streamline the revenue cycle, minimize billing errors, and ensure a steady flow of revenue for healthcare organizations. It is a vital aspect of the overall financial health of a healthcare institution.

Measuring performance with KPIs

With front-end revenue cycle contributing so significantly to financial health, healthcare organizations need to track accuracy and efficiency to ensure a smooth revenue cycle. Key performance indicators (KPIs) are essential metrics that can help healthcare organizations assess front-end revenue cycle performance.

There are several KPIs for front-end revenue cycle processes developed by the Healthcare Financial Management Association (HFMA). These HFMA MAP Keys are strategic KPIs that establish a standard for revenue cycle excellence across hospitals, ambulatory providers, physician organizations, and other healthcare provider types. The KPIs draw on data from various financial and revenue cycle monthly reports.

The KPIs for front-end revenue cycle processes, as identified by HFMA MAP Keys, include:

• Percentage of patient scheduled occupied: The KPI identifies opportunities to maximize utilization of scheduled availability by dividing the number of patient slots occupied by the number of patient slots available.
• Pre-registration rate: This is a trending indicator of timely and efficient patient access processes. The KPI equation is dividing the number of patient encounters pre-registered by the number of scheduled patient encounters.
• Insurance verification rate: By dividing the number of verified encounters by the number of registered encounters, healthcare organizations can derive how timely and efficient patient access functions are.
• Service authorization rate for inpatient and/or observation: This measures what is actually authorized compared to the total population requiring authorization for services. The equation divides the number of inpatient (IP) or observation (OBS) encounters authorized by the number of IP or OBS encounters requiring authorization.
• Service authorization rate for outpatient encounters: Similar to the KPI above, this indicator measures what is actually authorized versus the total population requiring authorization for outpatient services. The equation is the same but uses the population requiring authorization for outpatient services.
• Conversion rate of uninsured patients to third-party funding source: This takes the total number of uninsured patients converted to third-party funding sources and divides it by the total uninsured discharges and encounters.
• Point-of-service cash collections: To identify opportunities to accelerate cash collections and potentially reduce collection costs, healthcare organizations need to divide the number of patient point-of-service collections by the total self-pay cash collected to measure performance.

Monitoring these KPIs provides insights into the financial health of the organization, identifies areas for improvement, and ensures that the revenue cycle operates smoothly. These KPIs provide valuable insights into the performance of the front-end revenue cycle, helping healthcare organizations optimize processes, enhance patient satisfaction, and achieve better financial outcomes.

Key strategies to optimize performance

Nearly half of claim denials are caused by front-end revenue cycle issues tied to registration, eligibility, and authorization, according to “The Change Healthcare 2020 Revenue Cycle Denials Index.” Front-end issues have also topped the list of denial causes since 2016. Healthcare organizations should prioritize front-end revenue cycle optimization to prevent reimbursement delays and claim denials on the back end.

Staff education is one key strategy for optimizing front-end revenue cycle performance. Front-end staff need to understand how to communicate with patients to obtain accurate and complete information for billing purposes. As the healthcare industry aims to increase price transparency, front-end staff also need to know how to discuss the costs of care and help point patients to the best way to pay for out-of-pocket costs.

New hires should participate in orientation and onboarding programs to familiarize themselves with the organization’s specific policies. But ongoing training and education is crucial to optimizing front-end revenue cycle processes as situations evolve. In particular, front-end staff need to understand insurance policies themselves and be able to communicate them to patients. Hands-on workshops can help staff understand real-world challenges and allow them to practice problem-solving in a controlled environment.

Automating front-end revenue cycle processes is another key strategy for front-end revenue cycle optimization.

Many revenue cycle processes rely on manual work to some degree. On the front end of the revenue cycle, the manual nature of the revenue cycle can result in avoidable errors down the line. For example, front-end staff may miss key patient data elements that back-end staff will need to submit a clean claim. Simarily, failture to veritfy insurance may prompt payers to kick back claims because a service is not covered. This is one of the top reasons for claims denials, according to the Change Healthcare Index.

Additionally, IT systems that do not share data and communicate can also slow the revenue cycle. If technology cannot pull data from other IT systems, front-end staff may have to manually enter relevant data. Human errors are common and manual data entry slows the entire revenue cycle.

Healthcare organizations should implement digital pre-registration to reduce manual data entry and time spent registering patients. Patient portals can provide digital pre-registration that encourages patients to complete and verify information, including insurance coverage. These tools can also provide online appointment scheduling to streamline patient management.

Self-service kiosks at check-in can also support a streamlined registration process. Patients can input and verify their information while the technology pulls out the relevant data for revenue cycle purposes.

Additionally, automated insurance verification tools can streamline front-end revenue cycle processes. These tools integrate with payer databases to verify a patient’s coverage and benefits in real time. Implementing the technology can speed up the verification process and reduce the risk of manual data entry errors.

Finally, digital payment options can improve point-of-service cash collections by making patient payment convenient. Patients are demanding a more convenient, digital financial experience from their providers, and many are willing to seek care elsewhere to get the experience they want. Healthcare organizations should consider keeping credit cards on file for easy out-of-pocket payments or implementing one-tap payment options, like Apple Pay, using a secure patient payments system.

Leveraging technology can not only streamline front-end revenue cycle processes but also support staff as they navigate a complex cycle. Healthcare organizations need to focus on optimizing the front-end of the revenue cycle to reduce costly errors and rework. How the front end performs also impacts patients, who are more likely to pay their bills and return for care if the front-end revenue cycle runs smoothly.