COVID-19 has stretched our nation’s healthcare resources to the brink, also having a significant impact on the economic health of medical practices. New challenges because of the pandemic have forced practices and health systems to take a closer look at their financial health. More specifically, providers have been seeking to identify new ways in which improvements to internal processes can be made to ensure practice viability, and to overall continue delivering the high level of quality care that patients haveob come to expect.
There are many moving parts in the revenue cycle management (RCM) process. However, one area that is not always completed correctly is the payment posting process. When optimized for efficiency, payment posting is the lynchpin for simplifying billing, alleviating many administrative burdens and identifying new revenue opportunities to strengthen the bottom line. Because payment posting gives a clear view of the daily revenue stream, it can help practices proactively address errors that otherwise complicate the billing process and impact other aspects of the business. Days in Accounts Receivable (A/R) and net collections are also fundamental KPIs for practices to track, which are related to payment posting. But if practices are not tracking these elements accurately, they often do not understand the financial health of the practice, nor do they know where they need to improve.
An Effective RCM Strategy for Meeting Practice Financial Goals
More than half of U.S. medical practices saw a decrease in revenues of 25% or more in 2020, as patient volume for basic medical care dwindled and costs rose because of COVID-19. In fact, one in five practices experienced drops of 50% or more, severely impacting their long-term viability, unless dramatic action was taken.
As pandemic-related restrictions have eased and more individuals are now seeking care that was once put off, practices are seeing patient volumes rebound — whether via in-person appointments or through virtual care offerings. Even still, it’s critical for practices to look at how to further stabilize their cash flow and grow revenue beyond pre-pandemic levels. Rapidly growing the patient base or placing freezes on hiring aren’t the only methods of saving cash flow that should be leveraged. Rather, practices must put greater focus on RCM.
There are many important administrative and clinical steps that contribute to capturing, managing, and collecting patient service revenues that can help practices maintain better control over the revenue cycle and overcome their most pressing financial challenges.
Most medical practices deal with a large number of claims every day, and if they’re not accurate, more time is required to fix the problems, which means, the longer it takes to get paid. Oftentimes, practices are saddled with a backlog of payments to post, or they lack electronic remittance advice (ERA) file enrollments and do not have clear insights into why claims are getting denied.
This is where payment posting comes in. By having a strong process in place, practices can identify payer problems – such as medical necessity denials, services that are not covered or when prior authorization is required – from the start. These issues can then be quickly addressed before they delay care or result in costly billing mistakes. It can also help with reconciling data from explanation of benefits (EOBs) and ERAs to ensure it matches actual payments.
Payment posting can also eliminate billing problems and enable your staff to be more efficient in a number of ways. When not done correctly, for example, payment posting can extend the number of days bills are in accounts receivable, and requires more staff to fix errors, contact insurance companies or patients, process write-offs and make adjustments — all of which results in higher labor costs and lower efficiency rates that cut into practice profitability. Further, if payments are not posted in a timely manner, billing systems may send statements to patients who have already paid, causing confusion and frustration among patients, and forcing refunds or credits to be issued.
A variety of functions in a medical office – from front office and patient services to billing and claims – are impacted by payment posting. By putting a greater focus on this critical part of RCM in the post-COVID era and working to improve these processes, practices have a great opportunity to positively impact their overall revenue cycle. A focus on daily payment posting will allow practices to catch and correct billing and coding errors before they become more problematic, further streamlining billing procedures to improve cash flow, and taking unnecessary pressure off staff. The end result is overall improved financial performance.