Overcoming Common Problems In Your Revenue Cycle Management

Those of us who have been in the health care revenue cycle management (RCM) field for some time know there is no such thing as perfection. Unless your business is 100% cash up front, it is impossible to achieve a 100% payment rate. The reality is, by allowing insurance companies to comprise most of your revenue, risk of nonpayment is a given.

Remember the arcade game Whac-A-Mole? The RCM game is a never-ending game where the “mole” is payment issues from specific insurance companies. This week it’s Blue Cross Blue Shield incorrectly denying claims for documentation that’s already been provided. You contact your rep and ask them to reprocess the claims in-bulk that were denied in error. The moment you hang up the phone, the mole is back! Now UnitedHealthcare is denying authorization on items that were previously verified as not requiring it. Back to the phone. This time you’ve got call reference numbers and recordings to prove the authorization denials were in error. They relent, you resubmit, and, pow, there’s the mole again! This relentless cycle of problem identification, problem solving, clean up and repeat is frustrating and demoralizing, leading to home medical equipment (HME) teams experiencing high burnout and turnover in key RCM roles.

What’s the Solution?

That’s just the thing: There is no solution. The game isn’t likely to change. What’s needed is a paradigm shift. Rather than seeking perfection, seek incremental improvement. Celebrate wins as they come, knowing that tomorrow there will be more.

To preserve your sanity, establish a pattern and cadence, using triage to identify the most important issues, and focusing your attention on those. At Prochant, we like to set up a quarterly pattern for major changes and initiatives and a weekly pattern for incremental improvement. Each week, we review what happened the previous week, and then strategize about what can be done to prevent those issues going forward. We have found that it is useful to analyze the following information on a weekly basis so you can rapidly act:

• Top five preventable denials
• Top five write-off reasons
• Days ahead or behind for billing and cash
• Key performance indicator (KPI) data on days sales outstanding (DSO), 90-plus accounts receivable (A/R) balance and net collections rate

1. Identify problem areas
2. Brainstorm preventative solutions
3. Update SOPs & systems
4. Assign cleanup projects

Break It Down

Start with last week’s top five preventable denials. Break them down by payer and procedure to identify problem areas. Brainstorm ways to prevent those denials going forward, updating wherever possible your standard operating procedures (SOPs) and other work guides as well as information systems (such as the contract file for the relevant payer). Next, identify the affected population of claims/orders and assign projects to the appropriate team members to get them resolved either one at a time, or in bulk where possible. Repeat this process with the top five write-off reasons for the past week

This pattern establishes a key feedback loop from your back office to your front office, ensuring constant incremental improvement.

Days ahead or behind for billing and cash tells you, as of today (e.g., the 14th of the month), how much should you have billed to hit your monthly goal, and how much have you actually billed. The same thing goes for cash.

When you identify discrepancies, can you explain them? For example, perhaps you closed the previous month later than usual, so you didn’t start posting cash in the new month until several days in and now you’re backlogged. As a result, your cash days show you’re significantly behind. However, you can see that you have outstanding deposits pending cash posting that make up the difference. Since this has been identified, you can approve overtime for the weekend to catch up, bringing your cash days back in line with expectations. You will incrementally improve this week so that next week, when you look at the numbers you’ll see a different story and can act accordingly.

The strategy behind reviewing KPIs is similar. Typically, providers only review these numbers after closing a month; however, this can lead to nasty surprises and uncomfortable questions from your boss. Continuing the previous example where you have a cash-posting backlog: When reviewing KPIs, you may see that your 90-plus A/R balance is higher than expected, and your net collections rate is lower than expected. Now you understand why—the unposted cash is causing your A/R to be inflated and your collections to look artificially deflated. Had you not uncovered this and approved the overtime for weekend work to catch up the backlog, you might be standing in front of your boss unable to explain why you just posted bad KPIs following an end-of-the-month close. Instead, those incremental improvements allowed you to address the issues during the month so that when it closes, the KPIs show a much more realistic picture.

How to Stay There

Will it ever stop? No. Next week will bring a new set of moles for you to whack, and that’s okay. What you will achieve doing this is industry-leading metrics and KPIs—a DSO in the 30s or 40s, a 90-plus A/R balance in the teens or low single digits, and a net collections rate in the high 90s are the best you can hope for.

How do we stay there? Incremental improvement—every single week, month and quarter. What happens if we stop? The numbers will slide in the wrong direction until get back on it, and if we’re not careful we’ll end up with a big mess to clean up.