In this episode, we are joined by BESLER’s Olga Barone-Allan to discuss what’s changing and evolving in the revenue cycle process.
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Highlights of this episode include:
- Background on the revenue cycle process from scheduling patient services until payment of those services.
- How the revenue cycle process looks from a patient’s perspective.
- What phase of the revenue cycle process is often identified by providers as very vulnerable.
- What are some best practices related to technology that providers can follow?
- And more…
To view the transcript of this podcast episode, click HERE
For more insight from BESLER’s experts on revenue cycle, listen to our podcast episode “Strengthening the healthcare revenue cycle” which discusses how creating cross-functional initiatives can improve the revenue cycle.
Revenue Cycle process explained
The healthcare revenue cycle process is the financial oversight and management of patient services, from scheduling until payment.
Revenue cycle management (RCM), in simple terms, refers to the process of identifying, collecting and managing the provider’s revenue from payers and patients based on the services provided. A successful revenue cycle management process is essential for a provider to maintain financial viability and continue to provide quality care for their patients.
The only way to achieve an efficient process is with collaboration among the administrative, business and clinical departments. The support of Information Technology (“IT”) department is critical to streamline tasks into automated algorithms within the department information systems.
Conceptually, this seems simple. However, it is a struggle to keep up with the constant regulatory changes, budget restrictions, departmental disconnects as well as system limitations while juggling financial viability and delivering quality care.
Let’s step into the revenue cycle process to understand the many facets impacting an RCM team. For purposes of this article, we’ll focus on a typical Medicare patient case.
The beginning of the revenue cycle process
It all begins when the provider receives notification (either from the physician or from the patient) of the need for services.
The Scheduling Department contacts the patient to coordinate the time and date for prescribed services. During this process, a scheduler obtains all patient and insurance information and verifies with the payor that the services are covered and identifies patient responsibility. Communicating patient responsibility as early as possible provides the patient with enough time to prepare for out-of-pocket expenses or seek an in-network provider if the current provider is out-of-network.
The information system platform used at the time of scheduling could be different than other platforms utilized during the rest of the revenue cycle process. Systems must “talk” to each other to ensure accurate and concise transfer of information throughout the entire revenue cycle process.
During the pre-registration visit, insurance information is again verified to ensure the patient and the provider are in sync in terms of reimbursement coverage and expected out-of-pocket costs. It is imperative to verify the patient’s eligibility for each service being provided each time they come to the provider. Eligibility denials represent the most common cause for delayed payment, causing re-work on the back end.
The following questions should be considered before the care is provided to a Medicare patient:
Is the patient covered by Traditional Medicare or Medicare Advantage?
For Traditional Medicare patients,
As of 2020, providers will only be able to bill Medicare claims with Medicare Beneficiary Identifier (MBI). Therefore, it is important for Registration to obtain a copy of the patient’s Medicare copy with the assigned MBI#.
Obtain patient’s supplemental insurance to ensure proper crossover balance billing is done immediately when the primary payor’s payment is adjudicated.
If the patient does not have supplemental insurance, screen the patient for Provider CarePayment Assistance Program (Charity Care) or Medicaid.
Set up a payment plan if patient responsibility isn’t covered by another means or if the upfront payment wasn’t made.
For Medicare Advantage, (whose population is steadily increasingly), it is important to note the provider can obtain additional benefits for these cases if the mainframe is able to properly identify them at the time of billing and drop a “Shadow bill”. This allows the organization to receive additional reimbursement or cost reporting benefits.
Is the service being provided covered by Medicare?
If services are non-covered, was an Advanced Beneficiary Notice (“ABN”) form presented and explained to the patient and signed? Not doing so can cause the provider to lose reimbursement.
Is there any patient responsibility?
Collecting this patient responsibility upfront maximizes collections and the risk of non-payments is avoided completely. This can also cause low patient satisfaction ratings and patients seeking other facilities for future services.
The next action in the revenue cycle process for inpatient admissions cases is utilization review. The Utilization Review (“UR”) and Case Management team examines and determines the necessity of medical services, the appropriate care setting and quality of care before or during the patient services while Utilization Management (“UM”) focuses on the same aspect as UR but retrospectively. The goal here is to avoid denials. Constant contact and communication with the assigned physician and the insurance company is needed.
When the patient is registered on the day of service, there should be NO unknowns. At this point the most accurate information should be in the system, providing the basis for the insurance claim. Common errors that can be addressed include:
outdated pop up tables
Incorrect or low quality data causes future delays, such as denials or partial payments, complicating the entire expected reimbursement.
Charge Capture and Coding
Each clinical department is responsible for posting charges related to the services provided, so the system can convert them into billable fees. Capturing charges in a timely manner and maintaining the charge master codes and cost can be challenging. It is critical for the clinical departments to be part of the RCM education to minimize late charge or charge master denials.
Coding is performed by the Health Information Management (“HIM”) department by staff who identify the nature of the treatment received and select the appropriate ICD-10 code(s). Properly coding diagnosis and procedures can prevent denials and ensure the facility will be reimbursed based for the services provided. Rejections or denials can impact or delay reimbursement.
Claim generation and bill drop
Input from the various departments results in the business office creating a claim (UB04), which is the form accepted by all insurance companies for reimbursement. The UB04 is populated with the data elements entered from all the departments and is a story of the patient’s visit during his/her services.
At this point the claim is reviewed through a “billing scrubber” to identify any last-minute edits or billing requirements based on insurance payor. If a claim is considered a “clean claim” (no edits or missing information), the claim is sent to the insurance company for review immediately without staff intervention.
The goal is to have the clean claim rate percentage as high as possible for a robust revenue stream. The RCM team should review clean claim reports by payor regularly to establish algorithms or provide education to avoid future delays of the same nature. On average providers transmit 95% of their insurance payors electronically.
If all goes as planned, the final stage of the revenue cycle process relates to remittance/payment posting. The payment is posted to the patient’s account in the mainframe system, leaving a patient responsibility on the account or bringing the total owed to zero. If a claim is denied or partially paid by the insurance company the claim should then recycle back into the revenue process for follow up communication between the business office and the payer. This prolongs the process of the claim and impacts the overall receivables causing an increase of the cost to collect and accounts receivables days.
As previously mentioned, spending more time with Information Technology (“IT) to ensure all the systems communicate and all the information transfers into the business office’s mainframe system is critical. Some organizations have one comprehensive system covering the entire revenue cycle from beginning to end.
Occasionally, the business office mainframes may not be able to create claims based on type of service. Some examples include billing services for Observation, Two-Midnight Rule, Same Day Services, Add-Ons, Pass throughs, Shadow Billing, etc.
Technology is essential for tracking claims throughout their lifecycle, collecting payment, and addressing claim denials. Some providers have invested significantly to incorporate in-house technology solutions to:
service specific billing,
work queues for known missing information before a claim is submitted to the payor,
automate staff assignments,
reporting on common problems and
tracking revenue goals.
Providers continue to struggle with increased performance and limited resources. They must strive for efficient and effective workflows. Greater collaboration and communication between the Clinical and Administrative areas can increase a higher quality of reimbursement delivery, enhance patient communication and quality of care.
The goal of the healthcare revenue cycle is to develop a process that helps organizations get paid fully for services, as quickly as possible. Healthcare professionals should monitor claims processes closely in order to pinpoint errors. Revenue may potentially be lost if providers cannot identify where issues originate and resolve those errors quickly.
Transcript for “Revenue cycle process explained”:
Mike Passanante: Hi, this is Mike Passanante. And welcome back to the award-winning Hospital Finance Podcast®.
On today’s show, we’re going to be diving into the revenue cycle. Not only looking at the steps that are involved there but what’s really changing and what’s evolving and what might need to change in your facility to stay one step ahead. And joining me on the program to talk about this is Olga Barone-Allan, who is the Senior Manager of Client Onboarding and Reporting here at BESLER. Olga, welcome back to the show.
Olga Barone-Allan: Thank you, Mike. Thank you again for inviting me.
Mike: So, when you say the revenue cycle process, what do you mean when you think about that term?
Olga: So, the revenue cycle process is pretty much the lifeline of a patient’s experience at a facility, at a provider facility. And it really impacts the financial oversight and management of patient services. Not only does it tie into the financial viability but at also the quality of the patient’s experience throughout the beginning to the end. And we can go into a little bit more detail as we go further into the process.
Mike: Yeah. A lot to unpack here. So, the first thing that happens typically is that the provider is going to receive notice that some type of a service is needed. And what happens from there?
Olga: So, and right now, we’re specifically speaking in-patient but please keep in mind there are different types of services at a facility. But for in-patient purposes, we’ll use that as an example, a patient goes to a doctor and the doctor says “You need surgery or some kind of procedure.” So, you’re handed a script, the doctor calls in the service at the facility and then, the ball begins to roll.
Mike: Got it. So, let’s talk about how that looks from the patient’s perspective because probably at that point, they’re going to be encountering the scheduling system or a scheduler and of course there’s some difficulties that can be encountered in that part of the process as well.
Olga: That is correct. And different facilities use different methodology. So, the ideal facility would have a scheduling department. And what they would do is the physician would provide the schedulers a list of all the procedures that are being scripted or being written out to be performed and the schedulers would contact the patients and get all the information needed. And starting with insurance information, address, demographics, and so-on, so-forth. So, they start preparing the visit and the charts to build on for the patient and then schedule the date for the procedure.
Mike: And of course, there’s a lot that goes on there. And expectations are changing too. And people are looking for online scheduling, right? Not just talking to a human.
Olga: Absolutely. Online scheduling is a big thing and not all facilities do provide that. The other thing is now a lot of hospitals are stressed with the fact of collecting deductibles and co-pays upfront before the service is even provided, depending on the insurance. So, after the scheduling is performed, it goes through another pre-certification with the insurance, depending on the insurance. And we can focus really on Medicare. But just for today’s podcast, so you have your deductible, your co-pay so you know what the patient already has to prepare. So you have to prepare the patient either to have a credit card. And that’s very difficult because the patient is, at that point in time, it’s a bit stressed about the whole procedure. The patient may have a secondary insurance to Medicare. Patient may not have a secondary insurance. They may have to be screened for charity care or Medicaid. So a lot goes involved in the eligibility. So after being scheduled, pre-certified, then the eligibility process begins also. And that’s all in preparation for the upcoming procedure.
Mike: So let’s talk about that. Say, we’ve successfully gotten the patient scheduled at this point. What happens next in the revenue cycle?
Olga: So usually what will happen is the patient will come in for pre-testing either 24 hours before or a couple of days before. And then the day of the procedure they will come in through registration or admission and again they are– there’re different schools of thought but most facilities they will ask for the demographics and the insurance information all over again. Just to make sure that they have– especially with the MBI coming into effect. The procedure could have been scheduled prior to the MBI being released to the patient. So they need to get a copy of the Medicare information. Also, they need to verify that the service is a covered service by Medicare. And if it isn’t, they need to get what’s called an Advanced Beneficiary Notice and have that signed by the patient. And that really is a non-covered service that the patient would have to pay out of pocket.
Mike: And let’s pause there because there are some other issues that can come up for Medicare patients. They could be Medicare Advantage – there’s other flavors. Right?
Olga: Absolutely, now there is more and more push with Medicare Advantage. There was just an open enrollment, I believe. It’s mid-January, open enrollment is closed. And Medicare has been pushing more and more to have patients go with Medicare Advantage. So it depends if the hospital is at a network. So if the procedure was scheduled prior to the Medicare managed care being effective, admission at that point would have to then go through the entire process of making sure that the procedure is covered or not.
Mike: Okay. So now we move along to if it’s an in-patient admission, utilization review. So tell us about that.
Olga: So utilization management and case management– although they seem that they’re the same, one is a retroactive prevention of denials and one is a concurrent prevention of denials. So while the patient is there they make sure that the services that the patient is receiving is covered. So what happens is they are in constant contact with the insurance company and with the physician to make sure that as services are being rendered, the insurance is up-to-date and that the physician is communicating through them to the insurance all the services that are provided so that there’s no surprises at the end when the claim is built for– and the service or the whole entire claim could be denied.
Mike: Okay. And now we’re getting into that phase what’s popularly known as the mid-revenue cycle. And we’ve seen in our own research where providers sort of freely say, “This is this is a very vulnerable area. This is an area that can cause material impact on our reimbursement. In this area, you’re looking at charge capture. You’re looking at coding. Tell us what’s going on there. What can go wrong?
Olga: So the patient is discharged, hopefully going home to heal. And behind the scenes, the machines are in motion. Each department, clinical department, the lab, x-ray, pharmacy is required to submit all their charges, post their charges into the mainframe system. And usually, and again, everybody has a different school of thought, but for an inpatient, the best practice is to hold the claim for 10 days to allow all these various departments to be able to post their individual charge and to capture everything. Making sure the chargemaster is always current. That the pricing is always current. That is a constant. That’s part of the revenue cycle in general, a huge responsibility. So to make sure that all these charges are on the claim within the 10 days is very tedious. You have to go through the charts. Make sure that every single Band-Aid, aspirin, lab work, pre, post-procedure is posted to the account. If this isn’t done, and the bill is not held up within the system, what could happen is what we refer to as late charges. Late charges could have a huge impact to the reimbursement. In certain cases, those late charges, it wouldn’t matter because an inpatient is assigned a DRG, so the calculation of that late charge wouldn’t really make an impact on your final reimbursement. But there are times that a late charge could impact the DRG assignment and cause a financial loss to the facility. The other thing is referred to DNFB, discharged not final billed. If the claim is on hold for either a code or a modifier, that becomes an aged trial balance in itself. That DNFB can grow. The receivables could grow. You risk timely filing. So it’s a whole record keeping of this hidden receivable, not hidden so much, but a receivable that has to be managed by the various departments, HIM, lab, PFS, Patient Financial Services, Admission. Anything that can be prevented, and usually hospitals that are on top of that and run that type of an aged trial balance, coordinate weekly meetings to discuss what is preventing that bill from dropping from the main system.
Mike: Assuming we get the bill out the door, now we’re posting the payment. So how should that work?
Olga: So it’s funny you say that, but there is a step in between. So the DNFB is one process of claims being held up, and that’s in the mainframe. Once the bill does drop from the mainframe, then it goes into what’s called the billing scrubber. And the billing scrubber which is the mechanism or the system that bills out to the providers could have its own unbilled pocket. And it’s much more– it’s more related to the billing that the system mainframe does not have. So there could be conditioning goods that are needed. That wouldn’t be so much in the mainframe; it would be in the billing scrubber. And Patient Financial Services is mainly involved in that. And they have to monitor that on a daily basis and route those claims back to HIM or the lab or the pharmacy for J codes. So there is a lot of monitoring. And then the bill goes out. After all that is done, the bill goes out. If we’re lucky, Medicate, Medicare, they’ll pay quickly, but then you have the insurance plans that are much more on a delay process, you would hope 15, 30 days.
And then a payments are received. Payments are usually received electronically, but there are times that they are not. Some facilities still receive them by voucher and then cash posters are posting them manually. But if it’s automated, they will receive the electronic check with the detail and upload it into their mainframe system and then post it against the patient’s account. And it reconciles. And then if there’s a balance, a partial payment, those kick out to a follow-up. Or if there’s a denial, those are routed to denial management and so on.
Mike: So that was a quick spin around the revenue cycle. And as we’ve gone through this, you did note some best practices related to technology, so I wanted to ask you to share those recommendations with our audience.
Olga: So in my experience, Information Technology, IT, is the patient accounting’s best friend. Getting them involved in Patient Financial Services and working together with IT and automating a lot of the processes and also working with the departments, but mainly with IT to ensure that they are automated algorithms that there are workflows within the mainframe that will create reports based on reason and route them back to the responsible department so that they can clear up whatever’s preventing a claim from dropping. And sometimes there are also limitations at the mainframe Epic or Meditech is not capable of handling, so those are what needs to be filled in with the billing scrubber and IT is usually a big support network in trying to get those codes translated into the billing scrubber.
Mike: Excellent, Olga. Well, as good as hospitals have gotten their revenue cycle processes, certainly none are perfect, I’m sure, and most would freely admit that to you. So if you are in the provider community and if you’re interested in looking at things like underpayment recovery, whether that relate to DRG validation or transfer DRG or any number of other items along the revenue cycle. Drop us a line at email@example.com and we would be happy to have that discussion with you. And if you’d like to read a blog post that gets into even more depth around this topic, you can go to BESLER.com, head up to the insights tab and look for revenue cycle and you’ll see a blog post with associated content around this particular topic. Olga, thanks so much for joining us again today on the show.
Olga: Thank you, Mike. I really appreciate the opportunity.