Today’s Challenges for Revenue Cycle Management in Healthcare Systems

June 28, 2021
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Good revenue cycle management is as essential as it is complex in the healthcare industry. Whether it is a large hospital that has multiple functions/departments within the revenue cycle or a smaller facility, the challenges are the same: ensure revenue is captured and collected while addressing bottlenecks along the way.

All healthcare organizations must keep up with changes in industry rules around clinical documentation coding and billing and d codes, and constant errors can lead to frequent denials and delays. The lost revenue and time spent reconciling issues add up.

Here’s a look at some of the primary challenges healthcare organizations face when it comes to efficient revenue cycle management.

1. Knowing where to begin optimizing technology.

In the healthcare industry, it can be difficult to determine whether you’re getting the most out of your technology systems and Electronic Health Records (EHR) processes. Your systems may allow the bare minimum, or they may not be helping you at all. It’s hard to know what your technology is already doing for you, how it can better serve you, what optimizations you need, and where you might need entire upgrades.

2. Determining why accounts receivable (AR) days are increasing.

When AR days are going up, it’s challenging for healthcare organizations to identify the causes and take action if they’re not maximizing data analytics. With data analytics, they can more readily pinpoint issues causing the increase and solve for them more quickly and efficiently. However, many still struggle to use data analytics because they have limited experience with it, don’t feel their processes are sophisticated enough for it, or don’t have enough resources to dedicate to it.

3. Keeping current on staff education and training.

With tight education budgets and constantly evolving rules around things such as provider and facility enrollment, changing payer coverage and billing policies, and changes in clinical documentation and coding, it’s difficult to keep staff up to date. At Eide Bailly, during our assessments we often find that tasks aren’t being performed correctly and certain charges aren’t captured correctly and/or set up properly in the hospital’s chargemaster due to lack of training and education. However, this isn’t for lack of people wanting to perform them correctly—it’s simply that they don’t have the information and/or cannot keep up with all of it timely.

For example, there are specific rules around initial preventive physical exams (IPPE), annual wellness visits (AWV), and routine physicals. Organizations and providers often struggle with what each means from a Medicare perspective and how to document and charge for them, if appropriate. CPT codes change annually, which requires that someone be tasked with identifying what relates specifically to their organization, as well as a process to ensure changes are made to their chargemaster and charge screens before the implementation date. Keeping up on provider and facility enrollment can be a challenge within hospitals, and errors with that information can cause havoc on claims processing and reimbursement. The new Evaluation and Management (E/M) codes that went into effect January 1, 2021, as well as price transparency rules are examples of significant changes that impact coding, providers, and revenue integrity staff within an organization and require training and education resources.

4. Designing and delivering relevant reporting.

Many healthcare organizations have difficulty identifying the appropriate metrics and Key Performance Indicators (KPIs) with which to measure their performance and to use in their reporting. They should ask themselves if the KPIs and benchmarks being used are helpful to them and/or do they need to be tweaked periodically to move the goal posts, if you will, because success has been achieved and they need to raise the bar. It is one thing to measure, but when things continue to perform outside of the established performance measures, do they have the tools to understand the trends and get to the root cause of the poor trend?

The revenue cycle management team should work closely with the CFO to determine the KPIs and benchmarks that are most relevant and useful. They should also determine which metrics to include in their reporting at the board level.

5. Making good use of data.

Organizations struggle with taking the wealth of information they have available to them and making it actionable, especially with electronic systems. They have more data than ever with such systems, but they must put it in a format they can easily use and understand. Making better use of their data will translate to efficiencies that save money and improve operations.

Consider the effort it takes for a billing manager to manually identify the reason behind an increase in AR days. They must dig into reports, talk with staff, determine the error, then deliver that information to a staff member who can follow up with the payer for a resolution. By incorporating and utilizing data analytics of a health system’s aged accounts receivable, you can reduce staff hours, drilling down into the data to quickly identify the contributing factors related to the spike in days in AR.

Another great application of data analytics in healthcare is analyzing denials and assisting in the organization’s overall denials management function. With analytics, you can focus on the preventable denials and see not only what the denial type is but also the stratification of the denial types by payer and ultimately to the claim detail level. Whether they’re happening because of categories such as missing information, medically unnecessary, coding error, or no prior authorization, analytics allows you to pinpoint why denials are happening by working with the departments who potentially contributed to the denial and identifying the root cause and corrective action. The ultimate goal would be to implement processes/actions that were lacking in order to correct and ensure a similar denial cause does not happen going forward. Consider that a medically unnecessary denial begins far before it reaches the business office. Everyone plays a role in the revenue cycle.

6. Operating with limited resources.

Regardless of the size of the hospital or healthcare system, all organizations struggle with having enough individuals dedicated to various aspects of revenue cycle management. If staff go out on a medical leave or submit a resignation and there is no backup plan or enough resources to backfill, there simply won’t be enough resources to focus on the day to day. 

One consequence of this might be that certain items sit in AR for extended periods (i.e., credit balances). Another may be a backlog in coding. Many systems deliver daily work queues, and staff may be inclined to take care of the easy fixes first, leaving the more complex tasks to sit. These take more time to research and if left untouched for long periods of time can lead to lost revenue due to timely filing deadlines. They can also result in potential compliance issues as with credit balances.

7. Managing services and changes related to COVID-19.

COVID-19 impacted the industry dramatically, imposing a great deal of change. One can argue there wasn’t a facet of healthcare that was not impacted by the public health emergency put in place as a result of the virus. Going forward, healthcare professionals, especially in the revenue cycle, will have to closely manage the various waivers and billing rules and regulations for services related to COVID-19. Awareness of Pre – During – Post pandemic coding and billing rules and how they impact the healthcare organization presents challenges throughout the revenue cycle. Juggling billing for various visit settings throughout the cycle, such as telehealth visits, is an example of one of these COVID-19 challenges. Documentation of actions taken throughout this time period is key to helping a healthcare organization keep it all straight.

Benefits of Better Revenue Cycle Management in Healthcare

As a healthcare industry professional, these challenges are likely familiar to you. In fact, most have long been issues in revenue cycle management for healthcare organizations. However, due to advanced technology, more bountiful data, changing regulations, and added stresses due to the COVID-19 pandemic, they’re more complex now than ever.

Yet, the benefits of getting a better handle on your revenue cycle management process are many:

  • A well-oiled revenue cycle
  • Improved charge capture, coding, and reimbursement, leading to improved financial performance and improved cash position.
  • Ability to fix and then avoid errors and missed steps in your processes
  • Ability to catch issues sooner with real-time data
  • Improved reporting and performance analysis for relevant parties
  • Improved internal processes 
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