Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

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Exploring Key Components of the Healthcare Revenue Cycle

From registration to claims management, the healthcare revenue cycle contains several independent, but connected parts that are separated by front and back end.

Healthcare revenue cycle by front and back end functions

Source: Thinkstock

By Jacqueline Belliveau

- The healthcare revenue cycle encompasses “all administrative and clinical functions that contribute to the capture, management, and collection of patient service revenue,” according to the Healthcare Financial Management Association (HFMA). But the cycle traditionally contains distinct areas that oftentimes function separately from each other.

A traditional healthcare revenue cycle includes two components: front-end and back-end. The front-end manages the patient-facing aspects, whereas the back-end handles claims management and reimbursement. Each component includes its own departments, staff, and policies to drive revenue through the cycle.

In the following primer, RevCycleIntelligence.com examines the key parts to healthcare revenue cycle and strategies for improving front and back-end processes that prevent healthcare dollars from flowing freely through the process.

Front-end revenue cycle

Front-end healthcare revenue cycle represents the face of a hospital or medical practice. When an individual decides to seek services from a healthcare organization, she first encounters departments and staff associated with the front-end.

Key front-end functions include scheduling, patient registration, eligibility and authorization, and upfront patient collections.

READ MORE: What Is Healthcare Revenue Cycle Management?

Scheduling

Healthcare organizations rely on patients seeking their services to stay open and scheduling is critical to ensuring physicians see patients in a constructive manner. Schedulers in the front office should book patient visits to minimize wait times and ensure patients come in at the appropriate time for their needs.

Long wait times and limited care access could jeopardize business. Patient satisfaction relies on seeing the right physician at the right time, explained Ellen Smith, Summa Health Vice President of Business Development and Access.

“Long wait times can also create out-of-network types of care,” she said. “Then you lose that care coordination and the ability to communicate effectively with the primary care provider who should be the patient-centered medical home for the individual.”

Schedulers also ensure that patient no-show rates remain low. As part of their responsibilities, most schedulers use multiple communication methods, included phone calls, text messages, and emails, to remind patients of their appointments.

READ MORE: 4 Revenue Cycle Management, Claims Reimbursement Strategies

Patient registration and eligibility checks

Once patients are scheduled, the revenue cycle moves to registration and eligibility verifications. In this front-end function, staff use the EHR or practice management system to record patient data, including demographics and insurance information.

Ensuring that staff gather accurate information before a patient walks through the doors is crucial to helping revenue flow seamlessly throughout the revenue cycle, stated Gary Marlow, Vice President of Finance at Beverly Hospital and Addison Gilbert Hospital.

“That provides the groundwork by which claims can be billed and collected in the most efficient and effective manner possible,” he said. “The last thing you want is getting a claim submission kicking back to them then having to work their way through the institution.”

Front-office staff can also prevent claim denials on the back-end by performing eligibility and authorization verifications. To ensure patients are registered correctly and their health insurance plan will cover services provided, staff should ask the following questions:

READ MORE: Top Revenue Cycle Management Vendors and How to Select One

• Is the patient covered?

• Is the patient covered by other insurance plans?

• Is the registration information accurate?

• What is the number of maximum allowable visits?

• What portion of total costs will be the patient’s financial responsibility?

While these questions may seem routine, surveys have shown that front-end staff frequently fail to verify the information. A 2015 ClaimRemedi survey found that while 79 percent of practices checked patient eligibility, only one-quarter verified the data during subsequent visits.

Consequently, eligibility issues top the list of common reasons for claim denials, with missing or incorrect patient information and services being two of the five most claim denial reasons, according to MGMA.

Front-end staff can avoid a claim denial on their end of the revenue cycle by verifying information and completing prior authorization requirements. Payers are increasingly asking providers to contact their offices prior to a patient visit to ensure that services are reimbursable.

Upfront patient collections

Another key component to the front-end revenue cycle is upfront patient collections. As high-deductible health plans increase in popularity, patients are responsible for a significant portion of healthcare costs.

However, hospitals only collect financial responsibility at their office or within their organization from 35 percent of patients, accounting for just 19 percent of owed costs, a 2015 Availity study showed.

Enabling front-end staff to collect copayments and deductibles may alleviate patient collection struggles on the backend, especially since collection rates for patients who incurred balances over $5,000 were four times lower than patient accounts with low-deductible health plans.

Key ways that front-end staff can boost point-of-service patient collections are to develop payment plans that allow patients to pay off balances over time, implement credit card readers at the front desk, and provide patients with financial estimates prior to service.

Back-end revenue cycle

Once providers conduct a patient visit and perform clinical documentation and coding responsibilities, the revenue cycle continues to the back-end. As part of the back-end, revenue cycle management staff engage in claims management, medical billing, and final patient financial responsibility collections.

Claims management

After a patient visit, back-end employees perform charge capture responsibilities. Charge capture is the process of translating services and physician time into billable charges.

Healthcare organizations employ a chargemaster that links clinical codes to a price. But inadequate clinical documentation can result in inaccurate charge capture and revenue leakage.

Organizations oftentimes employ several staff members to flag charge capture issues and rework the charges. However, using a system that trends charge capture data may improve back-end revenue cycle processes, explained Harriett Johnson, the Assistant Director of Revenue Integrity at Novant Health.

“Being able to trend the data, have a conversation with our clinical teams to understand what their workflow was, work with our IT team to understand what potential opportunities we had within the solution itself, and then move that into production really shows that full circle of how trending information has been extremely helpful for us,” she stated.

With trending capabilities, her system identified $8.5 million in net revenue improvements.

With billable fees, back-end staff can then create and submit claims to payers. From ICD-10 and Healthcare Common Procedure Coding System (HCPCS) codes to patient data and health coverage information, staff must ensure all necessary information is on a claim prior to submitting it to payers.

Back-end staff also manage claims for a wide range of payers. The complex web of different payer requirements can make claim submission a challenge.

Clean claims are ideal, but oftentimes staff must scrub submissions to prevent denials. Staff should verify clinical documentation and charge capture accuracy, ensure patient and health insurance information is correct, and check that appropriate codes and modifiers are present.

Inevitably, a share of claims will come back to back-end staff as denials. Employees should review denials and attempt to rework the claim to recoup reimbursement.

About 90 percent of claim denials are preventable and can be corrected for payment, the Advisory Board reported. However, over one-half of claim denials are never resubmitted to payers.

Medical billing teams may not be prioritizing claim denials management because they are focused on new claims, explained Michelle Tohill, Director of Revenue Cycle Management at Bonafide Management Systems.

“Make it standard procedure for your team to work on denied claims every single day,” she wrote. “Just because a claim was denied once does not mean it will be permanently denied. Your billers should be able to make the necessary adjustments and capture the reimbursement with attention and perseverance.”

For claims that qualify for reimbursement, back-end revenue cycle management staff should ensure that payers correctly paid the organization according to their contract.

Payer contract management is a crucial back-end function. Assessing payer performance and payment accuracy can help organizations negotiate better reimbursement rates and improve medical billing compliance.

Medical billing and patient collections

Once claims are adjudicated, any remaining balance on a patient account should be sent to collections. Medical billing staff should create and send bills to patients as well as work with patients to collect the full financial responsibility.

Back-end patient collections can be a major challenge for providers. Not only do providers only expect to collect between 50 and 70 percent of a patient’s balance after a visit, about 70 percent of providers also stated that it takes a least a month to receive payments from their patients.

Providers can improve patient collections by offering electronic payment options through their patient portals.

“One thing that we’ve heard repeatedly – and these are anecdotes, but they’re anecdotes that come up a lot in conversations with clients with high portal adoption – is patients even without a ton of emphasis from practice staff will often choose to pay online,” said David Clain, Manager at athenaResearch.

“It’s easier in a lot of cases, especially for tech-savvy patients, to get a bill electronically, to go online, see what they owe, see why they owe that amount, what visit it’s from, and pay by credit card right there rather than having to submit a check in the mail.”

As back-end staff collect payments from payers and patients, they complete the healthcare revenue cycle by posting payments to the patient case and closing patient accounts.

While the front and back end handle very different parts of revenue cycle management, breaking down the siloes between the two components can improve an organization’s financial performance, explained Rebecca Wright, Vice President of Strategic Planning at Iroquois Memorial Hospital in Illinois.

“The biggest thing I noticed was - and it’s not just here, it’s everywhere - the entire revenue cycle was, prior to the changes we’re seeing, a very segmented process,” she stated. “People only were familiar with their role whether it was registration or scheduling or billing. They only understood what their role was.”

As a result, revenue cycle management staff suffered from a “lack of understanding on what the big picture was, including how patient responsibilities were calculated and what was actually needed to process a claim.”

By fostering collaboration among front and back-end staff, revenue cycle management became a smoother process and patient collections increased 300 percent.

Healthcare revenue cycle is a complex process of managing revenue as it flows through an organization. Reimbursement and patient payments touch a myriad of departments. Therefore, revenue cycle staff from the front and back ends should partner and constantly communicate to ensure revenue flows smoothly.

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