Read this guide if you have transitioned your thoughts from “medical billing” to revenue cycle management. To maximize your practice’s revenues, you need to start thinking of medical billing as a team effort.
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Why is revenue cycle management important in healthcare?
As you can understand, the revenue cycle is truly a “cycle”. Each step feeds the other and the success, efficiency of each step depends on other steps of the revenue cycle.
There is no one that does this perfectly. MGMA typically has KPIs and guidance around RCM performance. We use the same with our clients.
You can also follow the same guidelines as MGMA and HFMA suggests. MGMA actually announces “MGMA better performers” each year as well.
If you incorporate revenue cycle management processes as part of your overall business strategy, this is almost guaranteed to improve reimbursements, accurate billing, compliance and more often than not, greater clinical outcomes.
What is KPI in medical billing?
KPIs are Key Performance Indicators (KPIs). That’s about it – buzzwords.
KPIs help you, the physician leader or you, the practice management staff understand your revenue cycle’s strengths and weaknesses.
As you are well aware of, unless you measure something, you cannot improve that “thing”.
KPIs in medical billing help you measure and help guide your future decisions.
Once you have medical billing or revenue cycle KPIs in place, you will be able to prioritize your staff, your resources and understand / identify the drivers for success and higher reimbursements.
How can hospitals increase their revenue cycle?
First and foremost – understand that revenue cycle management needs a front end AND a back end team. Have KPIs for both front end revenue cycle management and also for for the backend revenue cycle management team.
Employ software or technology to get a better (and easier) grasp of your performance data. Do not get into a situation where you cannot have the necessary decisions at the touch of a button. We have seen that when we ask most healthcare businesses for performance data, they scramble to print out reports from their practice management system and then divert their already busy staff to do analysis. Not only are their staff not qualified to do analysis, but this also usually affects other business processes that soon become overdue. Do not let this happen. Use technology to your advantage. Do not be scared of technology or data.
There’s always going to be payer and patient financial responsibilities. Make sure that your front end revenue cycle management team collects patient financial responsibility upfront.
Try to automate prior authorizations and eligibility as much as possible. Not all of it is really possible and it depends from payer to payer, but even if you automate 30% of all your prior authorizations and eligibility checks, that’s better than zero.
As a side note – do NOT depend on the eligibility checks that most EPMs provide you. Dig a little bit deeper. We have found that many a time, a patient might be eligible, but their benefit does not pay for the CPT proposed by the provider.
Have a dedicated revenue cycle manager and a revenue cycle analyst on your team.
Because you need to analyze your revenue cycle management performance constantly.
Based on the analysis, you need to make changes accordingly. Assisting the team to handle all the moving parts of the revenue cycle is a mature team leader /manager’s expertise.
The manager’s expertise is to understand the data that is provided to them. More often than not, data analysis is not their expertise as this requires a completely different skillset.
Invest in these two roles and you will reap the rewards.
What does a revenue cycle manager do?
As mentioned above, your Revenue Cycle Manager will be the overall manager of your revenue cycle. This person will manage all functions of your organization’s billing and revenue cycle. They will be responsible to partner with your revenue cycle analyst and understand the data presented to them.
They will be directly responsible for maximizing your healthcare organization’s cash flow.
The revenue cycle manager will also be responsible for maintaining and improving internal relations, interactions between the frontend and backend revenue cycle teams.
Your revenue cycle manager will also be responsible for external relations with patients and payers.
This is a senior position and requires having experience by having served in both the frontend and the backend revenue cycle teams.
What does a revenue cycle analyst do?
Your revenue cycle analyst is also a key team member.
Healthcare organizations are usually inundated with data. There’s payer related data, patient accounts related data, denials data, claims submissions data, and many more.
All these sources of information are brought together by your practice management system.
However, data is just that – data. Unless you are getting actionable intelligence out of your revenue cycle analytics system, there’s really no point in gathering all that data.
Analysis of business data is a revenue cycle analyst’s job.
Healthcare data is almost always a moving target. Payers, payments, coverage, rules, regulations change all the time. This directly impacts the revenue cycle data and the associated analysis.
Your revenue cycle analyst is directly responsible for partnering with your revenue cycle manager.
The performance and success of your revenue cycle manager depends on the analytics and insights that the revenue cycle analyst provides them.
What is Revenue Cycle Analytics?
Revenue cycle analytics are just a way for you to monitor your revenue cycle processes’ performance, issues against the key process indicators that you have defined. More often than not, this is a dedicated technology solution that you purchase from your practice management system or a separate vendor.
Most practice management systems have decent revenue cycle analytics data but what they lack is actionable intelligence. They tell you the data – and that’s it. You need a few levels deeper than that. You need to know why those numbers look the way they do, where those numbers are originating from and finally, how to fix those issues.
Start with denials. That’s what you are trying to reduce the most and the first.
How do you reduce your denials?
You see the effects of the problems in your revenue cycle in the form of “denials”. But that’s the effect.
Get to the root cause of all those denials.
Why are those denials happening? This is where data analytics starts to help you.
The first step is to analyze your denials data for the past 12-24-36 months.
OK, so you can export the denials information from your practice management system. Then you run those via a google sheet or a spreadsheet (if you have a small amount of data). So, you run some pivot tables (if you are technically advanced enough) or run some denial data aggregation, grouping etc.
You are finally able to categorize all those denials into buckets (groups). That is, only if you have a limited amount of data that a spreadsheet or google sheet can handle.
You are not going to be able to fix all of them in one shot, but you decide the easiest one first – preventable denials.
Maybe you decide to fix the eligibility issues first.
So, your revenue cycle analyst tells your revenue cycle manager the information and the revenue cycle manager decides to get the team together to fix the eligibility issues in this quarter.
But, exported spreadsheets are stale the minute you export them.
Your billers fixed the eligibility issues and resubmitted the claims. They got paid. The minute they got paid, your initial analysis is now obsolete as those numbers have changed.
Hopefully, you put together a great workflow at the frontend revenue cycle team level that prevents these eligibility related issues moving forward.
How would you know whether your decision was correct?
How would you know that the frontend team is doing their job well?
The only way for you to understand this week after week is to run reports every single week. Isn’t it?
This is a moving target. Relying on spreadsheet data just gets you to analytics at a point of time. It is not real time, it doesn’t update itself all the time to provide you constant feedback.
What you need is daily feedback.
Top Revenue Cycle Key Performance Indicators – Nearterm
There are several key performance indicators to monitor in your revenue cycle.
However, it is also very easy to get overwhelmed with all the moving parts and all the KPIs.
Start small. Here are some top KPIs to start tracking today (even if you do nothing about them for now).
- Days in total – discharged not billed. This tells you about your charge lag from when the patient was seen vs when the claim was submitted.
- Look at your clean claims rate. This will tell you the percent of claims submitted that are clean in the first pass itself (i.e. not denied).
- Monitor your cash collections at the front desk. This will tell you if you are leaking revenues right at the front desk. This will also help you stay compliant with your payer contracts and MOUs.
- Track your total A/R and days in A/R. Most practice management systems will come with this information built-in.
Industry standard revenue cycle benchmarks
If you and your team are truly dedicated to being the best revenue cycle team, you will ultimately be looking for industry benchmarks and industry standard key performance indicators.
You can look at both MGMA and HFMA. We like both and you can glean really good information from both. Go ahead and become members of both please.
Keep in mind that HFMA is a membership organization for healthcare finance leaders.
We like their KPIs and their goals – they help to maintain fiscally healthy healthcare organizations.
Check out their certifications CHFP/CSBI/CSAF.
Meanwhile, MGMA is a professional association for medical practice administrators and executives. MGMA is also the source of medical practice economic data and data solutions. They have very resourceful DataDive content. Check out their certifications – CMPE /ACMPE
HFMA has something called MAP Keys.
We use the MAP Keys established by HFMA.
“MAP Keys are industry-standard metrics or KPIs used to track your organization’s revenue cycle performance using objective, consistent calculations.”
From HFMA website
MAP keys are broken down into 5 main areas. There are (as of writing), a total of 29 MAP Keys.
- Account Resolution KPIs
- Financial Management KPIs
- Patient Access KPIs
- Pre-Billing KPIs
- Physician Financial Management KPIs