If you’re reading this blog post right now, chances are good that you’re a DPT, PT, PTA, OTD, OT, OTA, SLPD, SLP, or SLPA—and if not, you probably work with several of these professionals. You may even be a member of the APTA, AOTA, or ASHA, and you most definitely use CPT and ICD codes. In other words, you’re no stranger to initialisms. Every industry has them—us marketers bandy about abbreviations like B2B, CTA, and MRR all the time. But, the healthcare industry has hundreds, maybe even thousands (I didn’t count). And tucked near the end of the alphabet is this three-letter gem: RCM, which stands for revenue cycle management. We know you’ve at least heard—if not used—this term before. But do you really know what it means—and how important it is to the success of your practice? Read on to learn more.
What is it?
The Healthcare Financial Management Association (HFMA) defines the revenue cycle as the the “administrative and clinical functions that contribute to the capture, management, and collection of patient services revenue.” According to Oregon Health and Science University (OHSU), this “includes the entire life of a patient account—from creation to payment. Revenue cycle processes flow into and affect one another.” Thus, so long as “processes are executed correctly, the cycle performs predictably. However, problems early in the cycle can have significant ripple effects. The further an error travels through the revenue cycle, the more costly revenue recovery becomes.”
As a result, proper revenue cycle management (RCM) is crucial—even more so given the state of our current healthcare landscape. The authors of this Greenway Health document write that the “critical role of effective revenue cycle management (RCM) is unprecedented in healthcare. As multiple regulatory initiatives converge with existing demand for faster billing cycles and cost containment, provider organizations are facing a perfect storm of clinical and financial challenges.” In other words, RCM was important; now, it’s mission-critical.
The same resource notes that private practices across the nation are struggling to collect. Due to gaps in training, improper coding, or bad collection management techniques, those practices are leaving lots of money on the table. In fact, almost 40% of practices don’t even review overdue claims—and less than 60% of secondary claims ever get filed because of “back-office time-constraints.” The fact that an increasing number of patients are using high-deductible health plans (HDHPs)—and thus taking financial responsibility for their own healthcare costs— only compounds the issue, because old RCM models don’t sufficiently address patient collections. Most pigeon-hole RCM into a function of the back-office, but successful revenue generation requires everyone’s participation.
3 Keys to Successful RCM
1. Front Office: Revenue Generation
You can’t manage what you don’t have, so the first step to successful revenue cycle management is maximizing the revenue you’re generating. This starts at the very first interaction your clinic has with a patient, which means whoever manages your front-office must also understand the important role he or she plays in the practice’s success. As WebPT’s Lauren Milligan details in this article, front-office best practices for improving revenue generation include:
- Requesting that patients complete their intake forms online prior to their first visit. This way, you’ll have all the information you need—as well as enough time to verify any missing information—before the patient arrives.
- Intentionally scheduling patients to avoid gaps that translate into missed revenue opportunities.
- Implementing automatic patient reminders to decrease costly no-shows and cancellations.
- Regularly verifying insurance and confirming:
- patient eligibility,
- coinsurance or copay,
- benefits cap,
- where to send the claim,
- specialized forms or additional documentation requirements, and
- the authorization process, if applicable.
- Keeping a copy of the insurance card on file for reference.
- Confirming patient demographics.
- Having the benefits conversation with patients before services are provided. (Ideally, you’ll confirm that patients understand their financial responsibility in writing, too.)
- Collecting the coinsurance or copay. (And continuing to collect the patient’s balance at each visit. It’ll be easier to collect what’s due before providing services than it will be to chase down an unpaid balance after the patient leaves your office.)
2. Clinicians: Revenue Capture
In the realm of rehab therapy billing, if it’s not documented, then it didn’t happen—which is why you must correctly document everything that occurs during a therapy session in order to accurately capture payment that’s commensurate with your services. That requires correct, specific, and complete diagnostic and procedural codes supported by defensible documentation that not only tells the patient’s story, but also justifies your therapeutic intervention and details its effect.
To successfully capture revenue, all clinicians must understand:
- the requirements outlined in their state practice act as well as those enforced by their payers;
- CPT and ICD-10 codes; and
- therapy-specific documentation requirements and quality data programs, including functional limitation reporting (FLR), the 8-Minute Rule, and Correct Coding Initiative (CCI) edit pairs.
Good thing there are great therapy-centric EMRs designed to incorporate all of this into an intuitive, guided workflow.
3. Back Office: Revenue Collection
According to the Greenway Health resource, the last phase in the revenue cycle management process includes all of the “steps associated with billing, posting, and collection of payments”—everything from submitting clean claims and following up on denials to staying up-to-date on regional regulations and fee schedule changes. There are several metrics relevant to this phase of the RCM process, including:
- Days in accounts receivable: the average amount of time it takes to receive payment on a claim.
- Clean claims ratio (a.k.a first-pass ratio): the number of claims that are paid on the first submission divided by the total number of claims submitted.
- Net collections ratio: the total dollar amount of reimbursement received divided by the allowed reimbursement amount.
Once you’ve assessed where you clinic is currently, you can use this information to set appropriate goals and track your team’s progress toward them. If you’re not where you want to be, don’t despair. There are several things you can do to improve the health of your revenue collection process, including hiring more back-office staff, providing more continuing education, or implementing an RCM service. As WebPT’s Courtney Lefferts writes in this post, “an RCM service can offer some major peace of mind.” After all, “the service literally handles your billing for you.”
You’ll get even more our of your RCM service if it’s integrated with that therapy-centric EMR we mentioned earlier. For example, if you use WebPT’s EMR and RCM service—a totally random example, we assure you—you’ll get a full-service billing solution that connects you with a team of dedicated billing experts with regional specialization who will work tirelessly to ensure your claims are clean and submitted promptly. That means you’ll never need to submit another insurance claim again—yup, you read that right. And, if you ever experience a denial or rejection, the team will help you investigate, appeal, and correct it. They’ll also work with you on a regular basis to discuss your billing process and make suggestions and recommendations to improve your overall revenue cycle. Oh, and one more thing: Great RCM services also give you real-time access to a myriad of reports, so you have total transparency into every aspect of your billing.
If you’re ready for a better way to manage your practice’s revenue cycle, request a free consultation with an RCM expert today. Have RCM questions? Hit us up in the comments section below.