Here’s what we've taught healthcare CFOs about revenue management
Battling reimbursement challenges, shrinking margins, and compliance hurdles hospitals are exploring options to cut back on costs and increase revenue. The decision to work with professional revenue cycle management companies can be tied back to the bottom-line pressures healthcare organizations face. A survey by Black Book reflects this trend.
According to the survey, 54% of healthcare CFOs believe outsourcing will help them improve their financial health. And that the outsourced RCM market is growing at a 27% rate. 49 percent of hospital CFOs said outsourcing, including offshoring, is becoming an extremely viable option in 2017.
But there is a blip in the bubble…
Okay. So moving RCM functions out of the office seems to be just what the doctor ordered. But the disturbing and recurrent pattern of healthcare CFOs, routinely switching RCM systems and offshore companies brings to light the fact that an ill-informed decision is akin to flying from the frying pan to the fire.
Before taking the quantum leap it is imperative that the revenue cycle management directors and CFOs conduct a thorough revenue cycle audit. Why? Because the revenue cycle of a hospital has a lot of moving parts and identifying poorly performing areas enables CFOs to know what to outsource and when and to whom.
Case in point
Okay. So moving RCM functions out of the office seems to be just what the doctor ordered. But the disturbing and recurrent pattern of healthcare CFOs, routinely switching RCM systems and offshore companies brings to light the fact that an ill-informed decision is akin to flying from the frying pan to the fire.
Before taking the quantum leap it is imperative that the revenue cycle management directors and CFOs conduct a thorough revenue cycle audit. Why? Because the revenue cycle of a hospital has a lot of moving parts and identifying poorly performing areas enables CFOs to know what to outsource and when and to whom.
A thorough revenue cycle audit should consist of…
1. Medical coding audit
2. Contract performance audit
3. AR audit
4. Denial prevention audit
5. Compliance audit
1. Coding Report- A dashboard for better coding practices
Medical coding errors when left undetected pose significant financial and compliance risks to a hospital. An independent assessment of medical coding processes will bring to the surface coding inconsistencies and errors. This will in turn equip hospital CFOs to select a revenue cycle company that has an expert coding team on board. Or outsource their coding process alone instead of their entire RCM.
For more information on Part A and DME, please visit CMS
Don’t end up with binders full of useless information. The code auditing report should provide actionable data and not just lame, random numbers.
Your coding report should:
- Lists out CPTs, DRG/HCC/APC, and the code auditor’s accuracy ratings
- Surface the dollar differences spotted between payer contracts and reimbursed codes
- Give clear recommendations for remediation based on audit goals
2. A complete audit of contracts- Seal the cracks
Negotiating better-yielding contracts is half the battle won. An across-the-board audit of payer contracts will enable hospital CFOs to urge off-site medical billers to focus on building stronger contracts as they’re the foundations of the revenue cycle.
An Atlanta-based multi-specialty practice recovered 21.3 million dollars in 8 years and reduced patient bad debt by 31.1% by screening their contracts and putting in place more effective contract management strategies. Drive up net collections by analyzing payer contracts. An external audit will enable your healthcare organization to improve contract performance by weeding out contractual inconsistencies and underpayments.
3-point checklist:
- The contract audit report should consist of a detailed payer matrix
- It should list various contract elements
- Offer data that will help in payer contract negotiation leverage
Your customizable contract management audit report is just a click away
3. AR audit- Know the story behind the numbers
AR calling and management is a taxing process that is most commonly outsourced. An external retrospective audit will help you to prioritize and stratify your entire receivables management process.
After studying the 90 days pending claims of a hospital an external auditor found several errors that could have been rectified easily. The finding of the audit helped the hospital to directly reduce claims in the bucket, prevented recurrences, and resulted in a permanent fix for most of the AR issues the hospital faced.
Know what your AR audit report should consist of:
- The AR management audit report should examine historical AR valuation activities
- The AR auditing team should clearly evaluate current AR reserve estimates
- A concise AR audit report helps revenue cycle managers to identify positive and negative AR trends
Manage your AR effectively and seal cracks with this free AR audit report
4. Denial audit- Because data matters…
Most hospitals are plagued by an unwarranted number of denials. An extensive assessment of denials and predominant trends lights the way for effective denial management strategies. And help RCM heads of hospitals, to select denial management vendors who specialize in the acute pain areas of the organization.
“We were struggling with a high denial rate. We requested an audit of our denials and a business improvement plan from an external auditing company. Glad we took the right decision”, says Maria Trevos, CFO of an orthopedic and spine care center in New Jersey. The audit helped her in proactively reduce the occurrence of denials and helped in retrospective appeals of denied claims.
Here’s what to look for in your denial audit report:
- The denial audit should help you to increase denial management efficiency
- It should categorize denials by denial code/payer/dollar value and other vital denominators
- Determine the reasons behind untimely follow-ups
Handle messy denials with ease with this concise denial audit report
5. Compliance audit- Mitigate compliance risks
Monitoring compliance is no longer an option for hospitals in the current climate of steep penalties and strict regulations. It is imperative to conduct a thorough compliance audit prior to working with an offsite revenue cycle management company to set stringent compliance standards.
Non-compliance threats hang like a Damocles sword over the heads of healthcare professionals. The office manager of a physical therapy center based in Connecticut recalled being unable to fill out the sample risk assessment template given by an insurance company. “That’s when I realized a compliance audit was needed to get us to a starting point and simplify the complicated process of assessing and correcting compliance risks”, shared Matthew Sudweeks.
Know what your compliance auditor should do:
- The compliance auditors should perform risk assessment checks and determine the level of risk
- Check compliance with internal policies/payer guidelines and federal regulations
- Audit and report the highest-risk areas
Are you ignoring compliance rules? Find out with our free compliance audit report
