Some Modern Issues Impacting Hospital Revenue Cycles

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By Carol S. Miller RN CPM MHA

By Dr. David Edward Marcinko MBA CMP™

Carol S. Miller “Collectively the healthcare industry spends over $350 Billion to submit and process claims while still working with cumbersome workflows, inefficient processes, and a changing landscape marked by increasing out-of-pocket cost for patients as well as increasing operating costs.”

The Norm Continues Downhill

For many years hospitals and healthcare organizations have struggled to maintain and improve their operating margins.  They continue to face a widening gap between their operating costs and the revenues required to cover not only current costs, but also to finance strategic growth initiatives and investments.

Faced with increased operational costs and associated declines in rates of reimbursement, many healthcare hospital executives and leaders are concerned that they will not achieve margin targets.  To stabilize the internal financial issue, some hospital have focused on lowering expenses in order to save costs – an area they control and an area that will show an immediate impact; however, that is not the best solution.

Beware Cost Reductions

Hospital executives are concerned with the effect that these reductions may have on patient quality and service.  Finding ways to maximize workflow to lower operating costs is vital.  Every dollar not collected negatively impacts short- and long term capital projects, lowers patient satisfaction scores and possibly affects quality of patient care.

Status Today

Hospitals, healthcare organizations and all medical providers are under great pressure to collect revenue in order to remain solvent. And so, here are some of the issues impacting the modern hospital revenue cycle as Obama-Care, or the PP-ACA of 2010, is launched next month?

Issues Impacting the Revenue Cycle

Several of the major leading issues facing the revenue cycle are:

  • Impact of Consumer-driven Health – This process has emerged as a new approach to the traditional managed care system, shifting payment flows and introducing new “non-traditional” parties into the claims processing workflow.  As market adoption enters the mainstream, consumer-driven health stands to alter the healthcare landscape more dramatically than anything we have seen since the advent of managed care.  This process places more financial responsibility on the consumer to encourage value-drive healthcare spending decisions.
  • Competing high-priority projects –Hospitals are feeling pressured to maximize collections primarily because they know changes are coming down the pike due to healthcare reform and they know they will need to juggle these major initiatives along with the day-to-day revenue cycle operations.
  • Lack of skilled resources in several areas – Hospital have struggled to find the right personnel with sufficient knowledge of project management, clinical documentation improvement, coding and other revenue cycle functions, resulting in inefficient operations.
  • Narrowing margins – Declines in reimbursement are forcing hospitals to look at their organization to determine if they can increase efficiencies and automate to save money.  Hospitals are faced with the potential of increased cost to upgrade and adapt clinical software while not meeting budget projections.  There are a number of factors contributing to the financial pressure including inefficient administrative processes such as redundant data collection, manual processes, and repetitive rework of claims submissions.  Also included are organizations using outdated processes and legacy technologies.
  • Significant market changes – Regardless of what happens with the Patient Protection and Affordable Care Act, hospitals will have to deal with fluctuating amounts of insured and uninsured patients and variable payments.
  • Limited access to capital – With the trend towards more complex and expensive systems, industry may not have the internal resources and funding to build and manage these systems that keep pace with the trends.
  • Need to optimize revenue – There are five core areas hospitals have to examine carefully and they are:
    • ICD-10 – This is an entirely new coding and health information technology issue but is also a revenue issues
    • System integration – Hospitals need to look at integrating software and hardware systems that can combine patient account billing, collections and electronic health records.
    • Clinical documentation – Meaningful use will require detailed documentation in order for payment to be made and this is another revenue issue.
    • Billing and claims management – Reducing denials and reject claims, training staff, improving point-of-service collections and decreasing delays in patient billing can improve the revenue cycle productivity,
    • Contract analysis – Hospitals need to focus more on negotiating rates with insurers in order to increase revenue.



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6 Responses

  1. A Medical Practice Necessity
    [An Active Line of Credit]

    Many consultants now believe that an active line of credit helps guarantee that a medical practice’s cash flow needs are met.

    So, be sure to have one in place.

    Hope R. Hetico RN MHA CMP™
    [Managing Editor]


  2. Revenue Cycle Management Shake Up

    Revenue cycle is experiencing a shake up. Industry analysts aren’t sure what lies ahead, but they know one thing: This new book is big.

    There are many changes on the horizon, including Medicaid expansion, health insurance mandates, increased self-pay patients and more.

    Financial Management Strategies for Hospitals and Healthcare Organizations: Tools, Techniques, Checklists and Case Studies

    This book will teach you how to build a financial foundation for the future of your organization, how to improve the patient experience with clinical and financial integration, and key steps to successful data-sharing.

    I just got mine!



  3. Medical Groups Fear ACA Grace Period Will Lead to Unpaid Claims

    Physicians are calling for real-time patient information regarding insurance coverage eligibility status from health plans purchased on new exchange marketplaces, citing a potential loophole that could leave doctors holding the bill.

    Doctors, practice administrators, and hospitals have continued to express concerns to the Centers for Medicare & Medicaid Services about claims for services going unpaid when patients stop paying premiums but still retain insurance coverage.

    Beneficiaries delinquent on their premiums are given a 90-day grace period before their coverage is dropped. During the final two months of that grace period, health plans are instructed to designate claims submitted for physician services as pending, but the services ultimately could go unpaid.

    The health plan would be responsible for paying claims during the first 30 days after a patient enters the non-payment grace period. If the enrollee continues to be delinquent in paying premiums, practices and hospitals would be left to collect payment directly from the patient when claims during the final 60 days of the grace period are rejected. MGMA-ACMPE, an organization for medical practice managers, has urged CMS to pay claims during the entire grace period.

    Source: Charles Fiegl, Amednews


  4. Hospital CFOs seeking revenue rescue

    Business pressures are forcing hospital CFOs to re-evaluate their revenue cycle management solutions.,22



  5. RCs,

    In spite of the generally universality of the medical practice revenue cycle process, each health care practice, clinic, hospital, etc., probably has its own unique set of variable. As I ponder how a medical practice might enhance its cash conversion, one thing is obvious. Transforming requests for payments from a third party payer for health care services into cash using mandated billing codes is a complicated process.

    However, a simple approach, in addition to understanding the process and targeting the core of the revenue cycle, might be to first establish a goal. For example, what percentage of claims does a practice want to have accepted on the “first pass?” Well, to accomplish the example goal, the present situation must be defined.

    If the present situation is less than the desired goal the aids to and barriers to the goal must be identified. Finally, a plan or set of actions for reaching the goal should be developed and monitored constantly.

    Leroy Howard MA CMP™ candidate


  6. Fixing healthcare revenue leaks

    Small and medium size physician practices have to adjust a suite of business practices to the new healthcare landscape.



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