A successful business depends on a well-managed revenue stream, making effective revenue cycle management a key priority for any practice. Even more, the challenges of managing insurance claims and contracts give medical accounts receivables an added dimension of difficulty that most businesses don’t have to face. Healthcare business office professionals are a talented and dedicated bunch to manage it all, but even they need to take a moment from time to time in order to assess the efficiency of their revenue management practices.
Accounts receivable review—a short period of big-picture assessment and honest evaluation—should be practiced regularly. For some, this may be practiced every month, every 3 months, every 6 months, etc., but the more frequently the review can occur, the better.
To conduct a comprehensive, honest review of your revenue cycle management process, start with the following steps:
- Assess actual revenue vs. expected revenue for a given time period. Usually this assessment would occur on a yearly basis, but sometimes breaking it down to assess each month in order to understand trends can benefit the practice greatly.
- Consider the difference in actual revenue vs. expected and compare the data to the same month in the previous year or to the previous year as a whole. Have your accounts receivable practices been effective in ensuring that payments are received and actual revenue is within an acceptable range? Your practice should be running daily and monthly reports anyway, but comparing that data to previous years is essential to understand where changes have occurred.
- Isolate the areas of greatest concern. Are the greatest gaps between actual and expected revenue from insured patients whose claims were denied? Is it from patients who were uninsured and have missed payment arrangements?
Once you have the hard data in front of you, the time has arrived to consider your options for improvement—and let’s be honest, almost every business has at least one or more areas of revenue cycle management that could be improved. Obviously, the changes you’ll want to consider will revolve around your problem areas, but there are some tried and true best practices that every health practice should follow:
Review accounts regularly.
Someone should be assigned the daily task of following up on payments, from both insurers and uninsured patients. This individual’s goal should be to poke, prod, and otherwise constantly remind the responsible parties of their commitments. Often, just a little reminder can go a long way. Additionally, regular review of submitted claims and resubmission of denied claims are absolutely essential. A significant chunk of potential revenue is lost every year due to claims that have not been followed up on. Do not let your practice lose money due to missed deadlines.
Keep accounts receivable below 30 days, where possible, but no more than 50 days where necessary.
Payments from individual patients (copays for the insured or payment plans for the uninsured or in the case of a gap in coverage) must be received on schedule. Where they are late, make every possible attempt to reach the responsible party. Phone calls, emails, and snail mail are all encouraged.
Offer a variety of payment options.
Making it easy for your patients to make their payments is essential. They should be able to pay online, set up recurring payments, call to make payments, or pay by cash and card to meet their obligations. Having multiple options to make payments and keep up on their required payments will take away many of the excuses patients will offer for not meeting their obligations.
Offer incentives for meeting regularly scheduled payments.
While it shouldn’t be necessary to further motivate patients to meet their agreed payment schedule, good revenue cycle management sometimes depends on being creative. Especially in a case where a large balance is involved, offering payoff incentives or early payment discounts can ensure that your patient feels doubly obligated to making regularly scheduled payments.
Sometimes good revenue cycle management means anticipating that your patient might need a reminder about an upcoming payment. Sometimes, just a simple email can mean the difference between coming up short on your expected revenue and hitting the mark.
While revenue cycle management, especially for healthcare practices, is a complicated task that requires a great deal of vigilance, ensuring that your practice is running its accounts receivables with efficiency can make a huge difference on your bottom line. Before you look at cutting costs or employees due to budget issues, consider reviewing your accounts receivable practices and you may find that the problem solves itself.