Healthcare Revenue Analysis: Gaining Insight and Perspective
Time is valuable as a provider. You may only have a few moments between patients or with the office administrator. Therefore, why spend an endless amount of time peering at reports for your medical practice. Transparency is defined as when a medical practice firm supplies your healthcare practice with a comprehensive performance report. With an emphasis on value-based healthcare, most medical practices are overextended in many aspects, including keeping up with practice financials and performance. Gaining insight and perspective on your medical practice by comparing practice metrics against peers as well as national, state, and regional averages is imperative to the revenue stream of the practice.
How does a practice measure billing performance?
By analyzing or giving your medical practice a “check-up”, you can measure the practice’s current performance and manage its outlook for the future. While it’s relatively easy to determine profitability (revenue-expenses=profit), it is critical to measure your medical practice performance which directly affects the revenue stream. If you were to buy a new car, you would research and compare which model and features you would like to have as well as the actual cost of the vehicle. So, why would you not do the same with your medical practice?
I sat down with CEO and owner of Global Health Management Services, Jim Malloy, an expert in revenue cycle management. He has expert knowledge on benchmarks and performance analysis in accordance with national and regional measures. I had the opportunity to ask a few common questions that many providers are asking regarding their medical practice revenue.
Q: What should be done to promote transparency within a medical practice’s billing department?
Jim: Finding an effective and efficient way to observe the practice’s key performance indicators, such as how many charges and posted payments are accomplished in one day. Tracking how the payments are being posted within the medical practice system and assure they are being accurately reflected on the insurance contracts. Keeping an eye on Accounts Receivable (A/R) by buckets and payer. Also, utilize executive dashboards to visually see the ins and outs of the revenue cycle per day, per week, per month. At the minimum, a practice should have a revenue analysis done every six months.
Q: What does healthcare benchmarking consist of today? What are the key things benchmarking should accomplish?
Jim: Benchmarking is the continuous process of measuring and comparing performance over time and against others. In my experience, people hear benchmarking, and automatically think of the Medical Group Management Association (MGMA). I think of benchmarking your medical practice. How is the practice doing today, yesterday, last week, last month, last quarter? Then use comparative analysis by measuring your practice benchmarks against MGMA, better yet against your specialty. MGMA days in A/R are a little under the best medical practices. Being significantly lower than the median of MGMA indicates there are revenue issues within your practice needing to be addressed. Your practice goal is to achieve 10% better than MGMA benchmarks.
Q: What are the benefits of a fee schedule comparison?
Jim: First thing, being paid according to your insurance contracts is imperative. Many billing management systems do not detect if a medical practice is being paid accordingly, and if the system does detect the fee schedule, it is usually being done poorly. The first thing to look for is to spot check a certain percentage of the higher paid cases as well as the top procedure codes within the medical practice system. Look at the top insurance carriers and see if the practice is being paid accordingly. Medicare pays correctly 99% of the time. However, you want to look at the other insurance companies as well, such as Blue Shield, Blue Cross, Aetna, United Healthcare and the third-party administrator insurance companies.
Q: How does billing according to the fee schedules gain insight?
Jim: Posting payments is done by staff or 80% or better is being done by electronic remittance advice (ERA). That means adjustments are being made automatically according to the insurance explanation of benefits (EOB) within the medical practice system. Therefore, if the practice is being paid under the contracted amount, and the practice’s staff is not actively seeking the information, money is being left on the table. Most medical practice office administrators are not actively seeking this information due to time constraints or from the lack of retrieving the data within the medical practice system.
Q: What Accounts Receivable (A/R) average days do you see within a practice?
Jim: Most practices are slower in the A/R department. The problems within a medical practice are always reflected in the A/R. By looking at the A/R buckets, I can quickly determine if the medical practice’s finances are effective or not. If the bucket number is high in the 30-day bucket, medium in the 90-day bucket and low in the 120-day bucket that is a good medical practice. However, if your number of accounts are high in the 90 or 120-day buckets, you are having issues within your medical practice. Maybe front desk issues regarding insurance eligibility, authorizations, or even human manual errors are occurring. Keep in mind that the average A/R days in a hospital are 40-50 days versus an Ambulatory Surgery Center (ASC) . Most medical practices, depending on the specialty, are 18-22 days. If your patient base is not overabundant with self-pay or Medicaid, the average A/R would be 25-37 days.
Jim: Denial Management tells the story of the mistakes. Medical Practice Management systems should contain a protocol (scrubber) that can identify issues before submissions to the insurance. Some can find local and national policy determinations. Once received by the insurance, a payer scrubber is done whereby the claim is reviewed again before processing. Finally, denials after adjudication can and should be trended. The practice goal is to prevent denials and master sending out a clean claim on the first attempt. Example, if the front desk staff is transposing patient insurance policy numbers each time a patient is seen for service, that claim will be denied each time due to ineligibility. A simple correction from that human error can be corrected and resubmitted to the insurance for payment. But as a medical practice administrator, you need to find the root cause of the repeat in denial and have it corrected for payment. Without trending or denial management, this simple correction can continuously be overlooked, leaving money behind.
It is essential to have an outside revenue analysis done to check on the practice. Transparency, benchmarking, fee schedules, A/R, denial management/prevention, comparative analysis are all needed pieces to be a successful revenue producing practice. Without all pieces working effectively, there is money that is not accounted. It is crucial to have each and every penny accounted for in today’s healthcare. Costs are high, and providers cannot afford to leave money on the table.
In an increasingly transparent and competitive healthcare practice, providers cannot deliver a value-based care model if they are not able to track progress and assess their rate of improvement. As I stated earlier, without researching and comparing cars that you would like to buy, you would not find the best deal with all the high-tech functions you are seeking. By properly using comparative analysis and getting a practice “check-up”, a practice is finally gaining the expert knowledge of their practice’s revenue. Why drive a lemon when you can have a Ferrari?
Article author, Amy Yorke, has over 25 years of experience in healthcare revenue cycle management, health care administration and operations in primary care, multi-specialties and facilities, and consulting. As a seasoned practice administrator and Certified Medical Manager (CMM), Amy has excelled in many areas of healthcare expertise.
Amy has outstanding strategic and problem-solving skills coupled with the ability to translate solutions into practical and profitable applications for clients. Amy develops and implements excellent business strategy planning and issue identification and resolution and is proficient in marketing and creating new lines of business for clients.
Amy is an active member of MGMA, the Professional Association of Healthcare Office Management (PAHCOM) and holds the office of Vice-President of the Pennsylvania Osteopathic Administrators Association (POAA).