On the positive side, it could lessen the impact of healthcare costs on household budgets and ultimately strengthen the country’s fiscal health. For example, if Medicare spending grows only 1 percentage point faster than the total economy, the long-term deficit for the United States could fall by more than 33%. On the other hand, reduced spending means less income for hospitals, physician practices and other healthcare organizations. In a time when cost margins are already tight, lessening income could be potentially damaging for many organizations.

Keeping revenue up as income flattens requires improved efficiency and reduced costs. The revenue cycle is a logical place to seek opportunities to achieve these goals. Automating insurance verification, eliminating claim errors, streamlining claim submission and speeding response to rejections and denials, for example, can free up possible dollars to offset any decreases in income.

While no one knows for certain what the next few years will bring and whether the current slowdown in healthcare spending will continue, practices that have strong, efficient revenue cycle processes will be better prepared to navigate the uncertainty and ensure a healthy revenue stream over the long term.

The goal was to proactively address any trends in the revenue cycle that were negatively affecting the number of rejected and denied claims. The practice believed that uncovering the root causes of rejections and denials would have a powerful impact on the entire revenue cycle.

As it turns out, they were right. Putting a vigorous analysis tool to work recently helped one of the practice’s locations pinpoint an uptick in rejections. The practice traced it back to a new staff member who was incorrectly entering insurance information on certain claims, which caused those claims to reject—and then required a back-end fix. By working with the staff member to correct the problem upfront—as well as making a small adjustment to the group’s practice management software— Texas Retina Associates has been able to avoid similar rejections.

As a result of this and other improvements enabled by the analysis tool, the rejection rate at Texas Retina Associates has dropped nearly 20 percent. The practice saves a lot of time, too. Practice managers now use the tool to prepare professional, easy-to-read reports full of valuable information—in some cases information that couldn’t be accessed before—with a few mouse clicks.

At the staff level, employees have greatly reduced the time spent fixing unnecessary rejections, for instance, because they can efficiently locate and resolve problems prior to claim submission. Claims go out faster and are processed faster because front-end demographic and insurance errors have been reduced. As a consequence, the group’s days in A/R have been trending down. Even factoring in the conversion to 5010, average A/R has been hovering at around 21 days.

Texas Retina Associates attributes much of its new fiscal efficiency to analysis tools that have helped it gain an appreciation for the root causes of previous problems. Now the group looks forward to launching well-targeted improvement efforts, and responding quickly to ever-changing trends.

FAQ 1: What is the common practice for establishing “charges”?

While it is up to each individual practice to determine how it chooses prices, a frequently used approach is to set charges at 200 to 400 percent of Medicare reimbursement, with the low end of this range for office visits and the high end for surgeries. Outside of that, the main “rule of thumb” is to set charges higher than the highest commercial reimbursement. If your practice chooses to offer discounts for upfront payment, a 30 percent rate is common.

FAQ 2: How do we determine which patients are considered “self-pay”?

Self-pay patients fall into two categories: 1) the patients without insurance who are responsible for their entire bills; and 2) insured patients who have financial responsibility after their insurance pays a portion of the claim. Because the latter type of patient isn’t identified until after insurance has adjudicated the claim, patient receivables often are much higher than a practice realizes.

FAQ 3: How long should a practice allow a patient to be in a payment plan?

While a maximum of six months is a good benchmark, practices may want to consider asking patients how much time they need to fully pay a bill. This can allow a patient to define his or her own workable timeframe. Since each circumstance is unique, your practice should be flexible in this area. For example, if it takes a patient two years to pay his or her balance but payments arrive regularly, then allowing this extended timeframe is more than acceptable.

FAQ 4: What is the minimum dollar amount appropriate to send to collections?

Although the costs associated with different collection agencies vary, it is reasonable to send balances over ten dollars to collections. Balances less than ten dollars can be written off; however, if the patient returns to your practice for care, you should be sure to attempt collections. Practices should write off bad-debt on a monthly or even weekly basis.

FAQ 5: Is there a way to keep accounts that were written off to a collection agency from appearing on A/R aging reports?

This is a question you should ask your practice management system vendor because all practices set this up differently in their systems. Some practices have different payer categories that allow monies to be reported separately. Your vendor should be able to help you run reports about “inactive” A/R. The important thing to remember is that these debts must still be accounted for and reported.

Regardless of whether your practice is frustrated or relieved by the delay, the implications will be the same: You should anticipate some changes to your implementation plan. While the steps involved in completing the ICD-10 transition project will remain the same— for example, assessing your practice’s current ICD-9 use, mapping codes, upgrading software, educating physicians and staff, and testing—the deadlines for these efforts will change. Practices need to review and re-evaluate both internal deadlines and external ones, such as those agreed upon by vendors and payers.

When reviewing and revising implementation dates, practices will need to commit to an implementation strategy. Some may choose to keep on their previously established schedule and use the extra year as a cushion for more testing. Others may further delay getting started, choosing instead to focus on other large-scale projects like implementing a new electronic health record (EHR). Still others may commit to taking a slow and steady approach to implementation and recalibrate deadlines so the practice reaches the ICD-10 finish line in a calm and orderly fashion, as opposed to a break neck race to the end.

No matter what approach your practice takes, it will require some decisions. Spend time reviewing your current plan for implementation (or developing a plan if you don’t already have one) to see how timeframes will change. That will help you decide where and when to focus your transition efforts and ensure a successful end result.

Join us on Thursday, May 17^th at 1:00 pm EDT for the webinar, ICD-10: Evaluating the Impact on Your Revenue Cycle. Register Now.

During the one-hour webinar, Kim Reid, CPC, CPMA, CEMC, CPC-I, of the AAPC, will discuss how to:

•  Evaluate the potential financial impact of ICD-10.

•  Develop a transition timeline, including where to locate resources about ICD-10.

•  Prepare for potential cash flow disruptions.

Additionally, participants can earn 1.0 Continuing Education Units (CEU) from the AAPC by attending the live webinar.

Register today!

*This program meets AAPC guidelines for 1.0 Core A or 1.0 CPCO specialty CEUs.

• Planning for a successful EMR implementation.
• The return on investment from implementing an EMR.

To learn more about the revenue cycle benefits of implementing an EMR, click here to download this webinar.

This program meets AAPC guidelines for 1.0 Core A or 1.0 CPCO specialty CEUs. On Demand product requires successful completion of a Post-Test for continuing education units. Granting of prior approval in no way constitutes endorsement by AAPC of the program content or the program sponsor.

Evaluating and selecting the right clearinghouse is the first step to proactively managing your revenue cycle and maximizing profits. As the demand for physician services rises, profitability levels don’t always increase proportionately, which often causes the revenue cycle to suffer. Knowing what to look for when partnering with a clearinghouse can help you ensure your practice receives full, timely reimbursements.

Over the past two decades clearinghouses have evolved into sophisticated solutions that facilitate accurate, timely claims filing in addition to eligibility verification, payment posting and reporting capabilities. The newest generation of clearinghouses are web-based and can facilitate superior financial performance and ROI through advanced analytics, robust ROI monitoring and real-time claims status.

This advanced technology helps streamline the revenue cycle process, which ultimately leads to higher profits. With the help of the right clearinghouse, your practice can evaluate current workflow processes to determine the areas that need improvement and how to best improve those areas.

For example, you should evaluate the different steps in the patient encounter process from pre-encounter administration to patient-provider encounter and back-office administration to make sure every part of the workflow process is efficient. This includes assessing everything from scheduling, eligibility management and benefit authorization to coding, fee schedules and reimbursement management. The right clearinghouse can help you flag any issues and identify solutions to any problems throughout the entire process, which will ultimately help you maximize profits.

To learn more about the specific features you should look for when selecting a clearinghouse, download this free white paper, Partners in Profitability: How to Choose the Right Clearinghouse for Your Practice.

Multiple provider groups had expressed concerns to HHS about meeting the original compliance deadline for ICD-10. The extra year would give these providers and other covered entities more time to test and prepare their systems to help ensure a smoother transition.

The announcement is part of a larger proposed rule that would establish a unique health plan identifier under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The regulations outlined in the proposal are estimated to save health providers and insurance plans more than $4.6 billion dollars over the next decade. Once published, industry organizations will have 30 days to comment on the proposal.

For more information on the complete proposed rule, you can view the press release issued by the CMS Office of Public Affairs.

What do you think about the delay – is it too much or too little time for organizations to prepare?

Simply put, days in A/R is a measure of the amount of time it typically takes for all responsible parties to pay the practice for a service; it represents the number of days that money owed to the practice is outstanding. The impact days in A/R has on your revenue cycle is pretty clear – the longer it takes to collect payment for services rendered the slower your cash flow is. This, in turn, influences how quickly you can pay all your other bills.

So how do you calculate days in A/R? The answer to that is pretty simple: begin by determining your current receivables by subtracting the current credit balance from the total receivables (in effect, adding the balance because you are subtracting a negative number). Once you have calculated that number, you will divide it by your practice’s average daily charge amount, which is found by dividing total gross charges for the last 12 months by 365 days. (Please note that some practices may prefer to calculate this on a three-month basis instead of a one-year period.)

Generally, those practices with days in A/R less than 35 are the best performers; average performers range in between 35 to 50 days in A/R; and those with A/R greater than 50 are poor performers.

After you’ve measured your days in A/R, it’s important to recognize that favorable figures can sometimes hide underperformance. For example, you need to address which specific insurance carriers have days in A/R that are significantly higher than your average days in A/R. You should also recognize the impact of credits and know how to appropriately treat payment plans to avoid having an overly positive impression of financial performance.

Days in A/R is arguably the best single indicator of the performance of the revenue cycle; to ensure that it appropriately reflects your performance, however, you must understand all of the inputs and nuances of this important metric.

To learn more about the nuances of measuring days in A/R and other key metrics, download this free resource guide, Key Metrics in Revenue Cycle Management: Measurements that Ensure Peak Financial Performance.

To have a successful ICD-10 implementation, practices are going to have to understand key operational revenue cycle metrics and what they mean to the practice’s bottom line. Here are some suggestions to help manage the business side of ICD-10:

Focus on the data. Benchmarking key business metrics such as average reimbursement rates, time to payment and denial rates is the first step to a smooth transition to ICD-10 from a revenue cycle perspective. Benchmarking both before and after the implementation will allow you to quickly spot any problems with ICD-10 that should be addressed.

Examine the most common codes and payers first. When starting to benchmark, practices should examine their most common diagnoses in terms of both revenue and volume. Your practice can define baselines for future comparisons by collecting data about your practice’s current reimbursement rates, timeframes and denials related to these diagnoses.

It will also be helpful to establish benchmarks for various payers – especially the ones that have the greatest impact on your revenue stream. By reviewing data on these payers, you can catch potentially costly issues before they drastically affect your revenue.

It’s never too early to start. It may seem a little early to begin benchmarking for ICD-10 since the 5010 transition isn’t officially over; however starting the process now will help you return to pre-5010 levels of productivity sooner. Since, most practice’s transactions are being sent to payers as 5010, now is the time to ensure your revenue cycle is back to, or hopefully better than, pre-5010 levels. Make sure benchmarks are stable and accurate as you begin preparing for ICD-10.

The more data you collect, the better picture you can develop of your current revenue and areas of opportunity. Setting up a process for continuously collecting, analyzing and comparing data across time will help you prepare not only for the ICD-10 implementation, but also all other large-scale transitions that are sure to follow.