As patients absorb more and more of their healthcare expenditures, hospitals are feeling the sting of decreased collections and increased operating expenses to chase those receivables. With the roll out of the Affordable Care Act, this margin squeeze is expected to get tighter, not looser. But while hospitals can’t affect the consumer-driven and regulatory pressures that are driving this trend, they may be able to find considerable savings by changing some existing processes and creating new processes.
Here are five ways to improve your hospital’s revenue cycle
1. Create sound point-of-service policies and procedures
The most important step to improving your cash flow is to develop, share and enforce sound policies for all points of your revenue cycle. When developing your policies, ensure you are addressing such things as the discounts/payment terms offered, how you’ll process charity care, what happens if a patient cannot or refuses to pay, and the consequences for your staff if policies are not followed.
As you share policies with employees, take the time to explain how important their role is to the overall financial success of your organization. Also, take advantage of training opportunities through your staff meetings, automated systems, vendor relationships and online webinars to educate staff.
A policy that is not followed is of little use. It is critical that you monitor compliance, reward it and take action for non-compliance.
Lastly, ensure your policies are shared with and applied to all areas including the front office, back office and collection agencies.
2. Reduce returned mail
While we may not think of returned mail as a high priority, it can have a direct impact on your cash flow. Undeliverable invoices that are returned slows down your cash flow…and many are never paid. At an estimated cost of $6.80 to manually handle, process and update databases for each piece of returned mail, how much money is currently lying around in your mailroom?
Ensure you have systems in place to verify the correct address is entered at registration, and educate your registrars on the cost of careless errors.
3. Eliminate rejections and denials
The American Medical Association’s Insurer Report in 2014 listed the top 8 payers and the most common reasons for denials in claims. Of those denials, a minimum of 23 percent would not have occurred had there been proper systems, policies and staff education in place. If you could immediately reduce your overall denial rate by 23 percent, imagine how much cash you would recoup for your organization.
4. Understand and comply with medical necessity requirements
According to statistics provided by YEI Corporation, Availity’s Advanced Beneficiary Notice (ABN) partner, once a claim is denied by CMS for medical necessity, the average staff cost to gather the information related to the denied claim ranges from $53-$117. Factoring in the average physician and outpatient facility per-claim denial write-off costs, the annual hospital revenue lost due to medical necessity without an ABN program averages $960,000.
In addition to revenue losses, failure to perform medical necessity on Medicare claims can result in exorbitant fines, exclusion from federal and state programs, and even criminal prosecution.
To eliminate medical necessity denials and penalties, always be aware of your cash impact, ensure you are educating your physicians, have effective processes in place, and closely monitor your organization for compliance.
5. Collect patient responsibility upfront
With the increase in patient responsibility due to high deductible plans, increased co-pays, and health care exchange programs, organizations are now focused on upfront patient collections. According to a 2015 article in Becker’s Hospital CFO “5 Thoughts on Revenue Cycle Management”, the chance of collection drops by 50 percent once the patient is seen. The article also states that front-end collections are directly linked to customer service.
To address this critical shift in patient payment, many providers are taking action by incorporating patient access solutions that include collection-focused tools such as payment estimators, patient capacity-to-pay features, and sample scripting to help guide collection conversations with patients. Hospitals should engage internal and/or external subject matter experts to identify and implement the best tools and workflows to transform collection processes and train staff to encourage rapid adoption and utilization of the tools.
Want to learn more?
Take advantage Availity’s training courses to learn how to resolve your toughest claims and payment challenges. Join us for a live webinar on the Five Opportunities to Improve Your Hospital’s Cash Flow on September 17th, from 2-3 p.m. ET. Availity is also offering a hospital RCM e-learning course which breaks down each step of the revenue cycle to uncover best practices.