How Well are You Managing the Last Part of the Revenue Cycle?
August 31, 2018
Written by: Lesleigh Sisson
Many practice owners and managers spend a lot of time developing policies and processes to maintain and control their company’s finances. Cash flow is considered to be the best measure of a company’s financial health, so understanding and managing it is critically important. As we think about cash flow, it is easy to see it as a cycle…money comes into the business from its operations, and money goes out of the business to fund the operations. In this blog, I want to focus on the inflow or revenue side of the cash flow. We call it “Revenue Cycle Management” or “RCM.”
There are many elements to a successful RCM model and those elements cross all facets of an O&P operation, from intake, through l-code selection and justification, to collections. As policies and procedures are developed around the revenue cycle, the tendency is to focus on collections. While collections are a vital part of any successful business, that’s not where the revenue cycle management ends. Without attention to the last piece, evaluation and measurement, there’s no opportunity to truly grow and help your bottom line reach its full potential.
Chances are, you may have policies in place that cover the issues stated below, but, are you monitoring, auditing, or adhering to them?
PATIENT FINANCIAL AND HARDSHIP POLICY– Do you have a policy about this? Do your employees know this policy? Are they following it? How is it being communicated to staff and patients? Is it working or does it need to be revised?
WRITE OFF POLICY– Do you have a procedure in place for approving write offs? Are things going according to plan?
CLAIMS AND APPEALS FOLLOW UP– Do you just accept denials, or do you actively appeal them? (We highly recommend appealing them.) When claims or appeals are rejected, how to do you incorporate the reasons for the denial into improving your processes? Not repeating the same mistake can help you avoid wasted time in the future.
PATIENT ELIGIBILITY– Are you following “best practices” for determining eligibility? Are you checking at the time of service AND at the time of delivery to ensure your patient has appropriate coverage? There are online resources available to check eligibility, benefits, authorizations, claim history and status, and appeals. Are you using them to your full advantage?
CORRECTING ERRORS/MISTAKES– There should be someone in your practice who actively audits your billing and claims processes to correct mistakes and train staff on preventing them in the future.
CONTROLS FOR DEPOSITS– Is your staff adhering to procedures for check, credit card and cash deposits? Do you have a firm procedure for reconciling to ensure accuracy? Are you reconciling your payments posted with your banking records?
PURCHASING– You probably have clear procedures for who is allowed to authorize purchases. But, are you using tools, such as reconciliation through OPIE Purchasing & Inventory, to evaluate cost of materials and purchasing trends? Are you making adjustments based on what you’ve learned?
One of the best ways to make sure that you are on top of the revenue cycle is to close batches daily in OPIE or run the daily close in Futura. The reporting that is generated can help you evaluate sales, collections, and any adjustments. If there are mistakes being made, or if there are red flags, the reporting will help highlight what needs to be addressed.
Reviewing vital reports with your team, at least monthly, provides clues as to how claims are being developed, paid or denied and what follow-up is necessary. Important reports to review are summary reports, accounts receivable aging, denials or zero pay EOBS, collection percentage rates, and DSO.
Don’t let history repeat itself unless things went perfectly the first time! Use the tools available to you to evaluate and measure your day-to-day practices. If your policies and procedures aren’t proving to be effective, rewrite them so your entire team has a better opportunity for success going forward.
Lesleigh has more than 25 years experience in orthotics and prosthetics. She is committed not only to helping the practice thrive, but also to make a difference for the people she encounters daily. She loves traveling, cooking, the outdoors, and her growing family.