A tactical approach: Measuring the health of the revenue cycle

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Tuesday, February 25, 2020

Over the last several years, HME has been transforming into a more technology focused industry. With the introduction of competitive bidding and the current narrow window of “any willing provider,” companies are forced to look at not just revenue, but also how much profit is being generated by all this “new” revenue.

The biggest hurdle in this newfound vision is making sense of the numbers. Specifically, how much does it cost, what is the profit margin, and most importantly, should I provide this product as part of my long-term strategy?

Providers can weather the storm by leveraging powerful workflow and revenue cycle tools. ACU-Serve’s Claims & Clarity tool, for example, arms providers with advanced analytics, artificial intelligence and queueing logic based on exceptions instead of just denials. ACU-Serve processed in excess of $1 billion dollars in 2019; only 60% to 65% was the result of a denial. The other 35% to 40% were queued up by ACU-Serve’s algorithm that uses timely filing, average days to post, etc., to get in front of the denial and proactively work claims.

The first logical step is identifying the Key Performance Indicators (KPIs) that will be tracked. The following outlines a high-level approach that allows providers to quickly find an issue and drill down to identify root cause.

1.   Allowable created (how much cash do I expect to receive)

2.   Collection percentage (how much did I receive)

3.   Write offs

4.   On-hold

5.   Adjustments (over/under booked revenue)

6.   AR metrics

a.   0-30 = 60% of total AR

b.   90-plus = less than 15% of total AR **

7.   Clean claim rate (no human interaction between releasing the claim to the insurance company and payment posting)

With the mantra of keeping the AR metrics in the tolerances above, we can analyze the claim data in the 31 to 89 day timeframe to identify easy fixes that will impact cash.

To define actionable items, you need to know why the claim needed to be touched, what the employee who touched the claim expected to happen and what actually happened.

For example, if a claim pays, but the dollar amount wasn’t the amount you expected to receive, a payment poster will need to adjust that payment to reflect the correct dollar amount. By looking at the historical data and seeing that the same action is happening over and over, you get a quantified starting point. In this case, the provider can identify the payer associated with the adjustment and verify if they are being paid according to contract. If the payment is correct, the pricing matrix needs to be updated to reflect the correct expected amount. If a provider overstates the amount expected, they are setting unattainable collection goals. If the payment is lower than the contracted amount, the provider can use this data as ammunition to correct the pricing on the payor side.

On the other end of the spectrum, it’s also important to identify issues with the intake process. Providers can keep finger pointing to a minimum by using data to identify the root cause of an issue.

For example, if a provider has an uptick in rejections from a specific payer, the initial reaction is that there must be an issue with that payer or HCPCS code. That’s not always the case. ACU-Serve has seen time and time again, after digging into the data, that there is a new or different employee that is performing the function and it turns out to be a training issue.

These are just a couple of examples of easy fixes that help providers eliminate touches and get a clearer picture of the revenue cycle. Once providers start to shift their thinking into a more tactical approach, they can start to eliminate the white noise created as companies grow and margins tighten.

These processes and procedures can be developed by providers of any size or business model. It doesn’t matter if they are currently doing their billing in house or with an outsourcing partner. No matter who is responsible for getting the claims out the door, the need for advanced analytics doesn’t change. Streamlining processes, identifying roadblocks and mining data will allow providers to not just survive but thrive in today’s competitive HME market.

John Stalnaker is the vice president of sales for ACU-Serve Corp. He can be reached at jstalnaker@acuservecorp.com or 800-887-8965 ext. 288.