Revenue cycle management refers to the business side of your practice—from verifying patient insurance eligibility to submitting claims to receive health plan payments and billing patients for their share of service costs. Although patient care will always be your top passion and priority, an efficient revenue management system is critical for your practice’s financial health and sustainability. Electronic methods can streamline revenue-related processes, such as eligibility checks, claims submissions and payments, all allowing your practice to maximize the amount of time available for patient care.
1. Select a practice management system (PMS) that fits your needs:
As with any technology selection, the “right” PMS for your practice is the one that will best meet the needs of you and your staff. Whether you are purchasing your first PMS or changing to a different product, first turn your attention inward to your practice. A thorough analysis of your practice’s revenue cycle process and workflow will provide valuable insight into your system’s requirements. Additionally, this type of analysis will help to identify opportunities for automation through the PMS that will improve the efficiency of your practice.
One important factor to consider when selecting a new PMS is how well the product will integrate with your electronic health record (EHR). In many cases, physician practices choose to replace both their PMS and EHR at the same time. Identifying an integrated PMS/EHR product from the same vendor may provide the most seamless collection and use of administrative and clinical data. Practices simply replacing their PMS should ensure that this new software can appropriately be integrated with the existing EHR.
2. Verify insurance eligibility electronically before every patient appointment:
Insurance eligibility check should be performed electronically. Although most health plans allow patient eligibility to be verified over the phone or via a health plan web portal, these methods are often inefficient and may not provide you with all the necessary information.
Using the information from the patient’s health plan member card, submit an electronic eligibility request by entering patient data (often some combination of member ID, last name, first name and date of birth) and a service date into your PMS. The electronic eligibility request can be used to request either high-level benefit information or more specific data, depending on your needs. A general health plan coverage inquiry will return information about a patient’s medical, chiropractic, dental, hospital, emergency services, pharmacy, physician office, vision, mental health and urgent care benefits. In addition to indicating the patient’s coverage, the electronic eligibility response also provides information regarding any co-pays, co-insurance or patient-specific remaining deductibles. This information is crucial to collecting payment from patients at the point of care (see Step 8).
3. Reduce prior authorization burdens through electronic transactions:
Your practice has no doubt experienced the administrative burdens and delays in care associated with health plans’ prior authorization requirements. Recognizing that health plans will continue to use prior authorization for the foreseeable future, the AMA urges the health care industry to move towards automated processes. Newly available electronic pharmacy prior authorization transactions enable physicians to complete prior authorization requirements as part of the electronic prescribing workflow. Ideally, a physician will be aware of drug prior authorization requirements before sending a prescription to the pharmacy, which minimizes the chances of patient medication non-adherence. Electronic prescribing system vendors are in various stages of implementing electronic prior authorization technology. Find out your vendor’s time frame for electronic pharmacy prior authorization implementation and request this new technology for your practice.
4. Submit claims electronically to save time and money:
Health care claim submission used to require a cumbersome, manual process of completing a paper form, mailing it to a health plan and waiting—sometimes weeks—for a response. Practices that submit claims electronically save time eliminate postage and other mailing expenditures and can more easily track a claim’s status. In addition, electronic claims submission often speeds health plan adjudication and payment.
After you’re PMS generates an electronic claim, your practice can either submit it directly to the health plan or, more commonly, indirectly through a clearinghouse or billing service. Your PMS, clearinghouse and/or billing service may pre-audit or “scrub” claims prior to submission to the health plan to check for missing or incorrect information. These built-in checks allow any potential issues to be addressed before the claim reaches the health plan’s adjudication system and reduce payment delays and denials—another advantage of electronic claims submission. Contact your vendors for more information regarding the specific issues for which they screen as part of their claims pre-audit process.
5. Determine the status of your submitted claim:
Typically, practices do not know if their claim has been received by the health plan until it is paid, pended or rejected. While some health plans and some clearinghouses offer an acknowledgement transaction to confirm that a claim has been received, this is not currently required by law. To address this issue, many practices utilize an electronic claim status inquiry to confirm receipt of submitted claims, as well as to determine claim status.
Health plans are required to support real-time claim status processing. Similar to electronic eligibility inquiries, practices can also send “batch” transmissions to health plans to check the status of multiple claims at the same time. By law, the practice must receive a response by the next business morning, although some practices report receiving these responses much sooner. Rather than waiting two or more weeks before taking action on a submitted but unadjudicated claim, utilizing the electronic claim status request provides the practice with an immediate status report on the claim.
6. Leverage electronic remittance advice (ERA) to simplify processing of payment information:
Reviewing and interpreting paper-based claims remittance information can be a real challenge for physician practices. An ERA is an electronic version of a paper explanation of benefits (EOB). Like a paper EOB, an ERA details the amount billed, the amount being paid by the health plan and the reasons for any differences between the billed and paid amounts. Manual reconciliation processes and sifting through stacks of paper EOBs can be sizable administrative hassles. The standardized ERA offers a way for practices to reduce these burdens, more quickly identify those claims that require reworking and generally have staff spend more time on higher-value activities.
The ERA uses standardized codes to express everything from the status of a claim to messages about reductions or increases in payment. This allows practice staff to review an ERA from any payer and understand the message without needing to look up the meaning of each payer’s proprietary codes. It also enables a vendor to program the PMS to automate ERA processing across payers.
7. Review electronic payment options and make an informed choice for your practice:
Paper checks require your practice to spend time opening envelopes, manually posting payments, endorsing checks and traveling to the bank. There is also a risk of lost checks and higher potential for fraud. Utilizing electronic payment can simplify your practice’s revenue cycle and lead to faster payment from health plans. However, you should be aware of the benefits and risks of various electronic payment options so you can make the best choice for your practice.
Automated Clearing House electronic funds transfer (ACH EFT) is now the standard method of EFT used by the health care industry. Similar to direct deposit of employee paychecks, ACH EFT moves funds electronically between the financial institutions of health plans and physicians. Recent regulations require the health plan to include a “trace number” that enables the ERA and the related EFT payment to be reconciled. Practices can maximize the benefits of payment automation by implementing both ERA and the standardized EFT capabilities.
8. Maximize collection of patient payment:
The growing prevalence of high-deductible health plans means that many patients bear additional financial responsibility for their treatment. In the past, most patients typically had a co-payment due at the time of an appointment; today, many patients owe significantly more for their care due to high deductibles. These trends underscore the importance of your practice’s processes of charging for and collecting patient payments at the time of the appointment.
Collecting payments at the time of service—when the patient is still in your office—is the vital first step in any effective patient collections strategy. Doing so will increase your practice’s cash flow, decrease accounts receivable and reduce billing and back-end collection costs. To bill your patients at the time of service, you or your staff will need to know the correct amount to charge. Completing an electronic eligibility check before the appointment (see Step 2) will provide information about the patient’s financial responsibility for care, including co-payment, co-insurance and patient-specific remaining deductible. You can then use this information, along with the health plan’s current fee schedule, to calculate the amount the patient owes at the time of service. In cases where deductibles and co-insurance cannot easily be determined until the exact services to be provided are known, practices may shift collection activity to the patient check-out process. Be sure to check your health plan contracts for any restrictions on collecting from patients prior to claim adjudication.
