What causes most organizations to close following an unexpected economic disruption? Usually it is cash flow. Many organizations don’t have enough cash on hand—or access to enough working capital—to survive a temporary revenue downturn and/or the costs of restructuring their business models and bringing them to profitability.
That is why a cash management plan is an essential part of any crisis management program (see Strategy In Uncertain Times: Planning Resources For The New Normal). There are a few key elements to cash management— negotiating extended payments to vendors and more speedy payments from customers where possible, streamlining operations to reduce costs, discontinuing unprofitable service lines, and improving the speed of payments. For most provider organizations, the last item is their revenue cycle management (RCM) function. Under the best circumstances, an organization’s RCM functions are working well and only need a tweak for any crisis-related issues. But if RCM functions aren’t working well—and billing and collections are not producing maximum revenue—an emergency that interrupts cash flow should be a driver for getting those processes operating optimally.
My colleague and OPEN MINDS senior associate Joe Naughton-Travers is our resident RCM expert and he always asks a management team four questions to determine how their RCM systems are working:
- Are you collecting 98% or more of net revenues?
- Can you detail your bad debt losses year-to-date, by reason, at a moment’s notice?
- Do you have an RCM team that meets at least monthly (preferably weekly) to review claims held, the aged trial balance by payer, write-offs, and bad debt reasons – and the days in accounts receivable?
- Are you billing claims at least on a weekly basis (preferably daily)?
If the answer to any of these questions is no, now is the time to get “best practices” for RCM in place. Those best practices were the focus of a presentation, Rethinking Revenue Cycle Management: How To Optimize Operations For A Value-Driven World, that Mr. Naughton-Travers conducted with Vanessa R. Lane, MBA, vice president of revenue cycle management/data analytics, Grafton Integrated Health, at the 2020 OPEN MINDS Performance Management Institute. They spoke about the four phases of RCM and how to optimize them for better payment collections.
Of the four phases of RCM best practices—referral and intake, service delivery, billing and collections, and monitoring and process improvement—Mr. Naughton-Travers pointed out that the first phase—referral and intake—is the most critical. Why? Because if we don’t handle the admissions part of our operations correctly with regard to billing, the other phases won’t matter. If we don’t confirm insurance coverage, obtain service authorization when needed, and assign the case to appropriately credentialed and privileged clinical professionals, payment is likely to be deferred or denied.
Referral and intake—This step, which happens prior to service delivery, can be expedited with web-based tools and portals. It requires staff knowledge and interpretation of plan benefits. Caution: If authorizations were not attempted, health plans can deny services that must be written off by agencies as an “administrative denial.” Additional steps that streamline the process: Team members should review benefit eligibility with a client prior to service delivery to identify copays, deductible status, and address any other questions. Authorizations are unique to each payer and should be tracked through electronic health records that show know how many services have been approved and how many remain.
Service delivery—To ensure that agencies are paid for the work they do, team members should verify and document credentials when clinicians are hired, research which provider networks require certain credentials for various services and document it in the HRIS and EHR to assign or align consumers with approved services and clinicians. Check systems regularly for changes. Tips: Complete required documentation for services (goal plan and other assessments) prior to service and consider standardizing a charge capture form in the EHR to expedite the process.
Billing and collections—This step, which includes claims submissions, denial management, and payment receipt and posting, requires research to identify which payers cover services. Tips: Provide clinicians with a boiler-plate charge ticket with commonly used CPT codes (90791, 90834, 90837); follow an established process to review services rendered; and use EHR billing edit features to check for required documents, dates, workflows, before submitting a claim. Provider organization systems must handle up to six types of reimbursement models at the same time, and all team members—not just the billing team—need to understand what services are needed and approved for reimbursement. “It’s difficult to get clinical staff to understand multiple reimbursement models,” Ms. Lane said, “but it’s an essential part of ensuring we don’t overserve” consumers.
Monitoring and process improvement—This is an ongoing process that includes analytics and continual process improvement activity (see Why You Should ‘Marie Kondo’ Your Organizational Process Clutter) to identify areas of vulnerability and make necessary changes.
One unique twist on the revenue cycle management function right now is that more services are being moved from face-to-face to telehealth. While most payers are planning to pay for telehealth services, some of them might not have yet set up billing codes or systems to accommodate the billing, said Mr. Naughton-Travers. “It’s important to reach out directly to all key payers as soon as possible to understand the rules and ensure payment,” he said. A few questions to ask:
- What services are covered under telehealth?
- What billing codes are used and are the rates the same as face-to-face services?
- Are the same clinical professionals privileged to provide services or are the rules more stringent? And, if so, how?
- Is the payer’s system ready to process claims with the telehealth billing codes?
Get more tips on RCM with these resources in the OPEN MINDS industry library:
- 7 Opportunities To Get More From Your Current Contracts
- A Revenue Cycle Management Primer
- Financial Optimization—Getting Paid For What You Do
- Best Practices In Financial Optimization: A Provider Checklist For Maximizing Revenue
- Improving Your Back Office Collections: Steps For Better A/R Practices
- The Collections Conundrum
- Ready Or Not: Value-Based Reimbursement Is Here
- A Beginners Guide To Value Based Reimbursement: Five Things You Should Know
- How To Build Value-Based Payer Partnerships: An OPEN MINDSReading Book On Best Practices In Marketing, Negotiating, & Contracting With Health Plans
- Navigating the Path to Value-Based Care: The Journey to Improved Clinical Outcomes
As you navigate cash flow and other pressing challenges in a time of crisis, you are not alone. We are launching The OPEN MINDS Executive Blueprint For Crisis Management – Building Organizational Sustainability & Success In A Disrupted Health & Human Service Market. This new program—a combination of education, use case training, and a suite of ‘how-to’ management tools—will help you navigate the business, organizational, operational, and culture changes of a market in disruption. You may be especially interested in our April 16 web briefing offered as part of the Executive Blueprint, Short-Term Cash Management – To Assuring Continued Operations In Times Of Disruption: Overview & Introduction webinar with OPEN MINDS Senior Associate Ken Carr.