5 Early Indicators of Billing Issues and Ways to Improve Your Revenue Cycle Management
Identifying Opportunities to Improve Efficiencies and Client Satisfaction
For behavioral health organizations, it’s challenging to manage payment, reimbursement, and billing for the continuum of services that can span from community-based outpatient care to extended inpatient care. Behavioral health billing is further complicated by an industry shift from fee-based services to more complex billing models like bundled and capitated payments. Yet, an efficient revenue cycle is essential to delivering high-quality care to clients and ensuring optimal financial performance for your organization. In this article, we’ll share five early indicators that can signal potential issues—and offer opportunities to improve revenue cycle managment and client satisfaction.
Declining Clean Claims Rate
A decline in clean claim rates, or the percentage of claims submitted without errors or missing information, can lead to a host of issues, from delayed or denied payments to unhappy clients. You should monitor this important metric closely and most experts recommend aiming for a clean claim rate of 90% or higher.
Actions you can take:
Common causes of declining clean claim rates include incomplete documentation, inaccurate information, coding or other errors, insufficient staffing or insufficient staff training. To identify the cause of poor clean claim rates:
- Review all client information to ensure that it is accurate and up-to-date, including demographic information, insurance details, and medical history. Automated client registration processes can streamline this process and reduce errors, while ensuring the information is always current.
- Revisit payer guidelines to make sure you are submitting claims before the specified deadline; update any processes affected by payer guideline changes
- Always review denied claims to identify and fix issues that lead to costly claim rework.
Increasing Initial Claim Denial Rate
By some estimates, nearly 20 percent of all claims submitted are denied, and as many as 60 percent of returned claims are never resubmitted. The cost to rework claims or appeal denials can impact your organization’s bottom line, averaging $25 per claim for practices and as much as $181 per claim for hospitals. Decreasing your initial claim denial rate will also improve your clean claim rate, and high-performing healthcare organizations regularly contrast their clean claim rate with their initial claim denial rate to pinpoint issues and optimize performance.
Actions you can take:
Much like a decreasing clean claim rate, an increasing initial claim denial rate can result from inaccurate or missing data, ineligible or non-covered services, missing authorizations or documentation, and coding or other errors. To identify the root causes:
- Automate claims processing to significantly reduce claims denials. More than half (52 percent) of healthcare leaders in a recent Experian Health survey have already upgraded or replaced previous claims process technology to significantly reduce claims denials.
- Review denial rates over specific periods and with specific payers. Pinpoint whether the denial rate has been steadily increasing or if there are specific spikes at certain times.
- Look for evidence of errors and missing information, such as use of the wrong code, inaccurate client demographics, or incomplete documentation.
- Review payer policies. Stay informed and up-to-date on billing and coding news and payer updates.
Increasing Payment Reconciliation Time
In behavioral health, payments are often made at different stages of treatment; settlement can be provided by multiple payers, third parties, and clients. Delayed payment reconciliation can lead to unposted cash and impact revenue reporting. It can also make it difficult to understand your organization’s true financial situation. Common KPIs related to payment reconciliation include the average time taken for payment reconciliation, the percentage of payments delayed beyond a specific threshold, and the rate of payment discrepancies.
Actions you can take:
Typically, delays in payment reconciliation result from administrative bottlenecks or payment processing errors. To identify the cause of delayed payment reconciliation:
- Look for common issues like underpayment, insurance denials, and pending bills.
- Identify opportunities to automate processes wherever possible.
- Analyze payment posting workflows to improve posting accuracy and timeliness.
- Review posting policies and procedures, including how claims are matched to payments, how discrepancies are resolved, and how payments are posted to ensure accuracy.
Increasing Days Receivables Outstanding (DRO) Time
Days Revenue Outstanding (DRO) measures the average number of days it takes to collect payments from the time a service is provided. Also called Days in Accounts Receivable (DAR) or Days Sales Outstanding (DSO), this is a crucial metric to track because, if the timeline to get paid extends too far, you can risk lost revenue. Extended DRO times can also complicate aging and reporting, leading to issues with filing and collections that impact revenue.
Actions you can take to address an increase in DRO:
- Start by analyzing your DRO by payers. You may find that some larger payers have longer cycles or that claim submission requirements for a specific payer have changed and your process needs to be updated to reflect that.
- Minimize initial claim denials (see above). Double-check claims before submitting to reduce the need for resubmissions and delayed payments.
- Collect client payments at the time of service and send all statements promptly. A best practice is to send a statement on the day of service or within one week.
- Use your EHR platform’s claim tracking capability to monitor claims status over time.
Increasing client complaints
For many clients, navigating the healthcare revenue cycle can be confusing and challenging. Frustrations with inaccurate bills, unclear statements, delayed payments, and poor payer communications can become so overwhelming that 36% of clients in one survey said that a poor billing experience would make them consider switching providers altogether. If the complexities of your revenue cycle make it hard for clients to see providers and pay their bills, an increase in client complaints can quickly become an issue of declining revenue.
Actions you can take to reframe the revenue cycle as an aspect of high-quality client care and experience, you should:
- Communicate with clients often and at every stage of the revenue cycle so they understand the services provided, the costs, their financial obligations, and the process.
- Actively seek feedback on your clients’ billing experiences.
- Prioritize addressing billing-related concerns.
- Monitor feedback to identify any opportunities for process improvements.
Proactively identify billing issues to maximize revenue cycle impact
No matter how complex your billing model may be, monitoring your revenue cycle KPIs can help you identify hidden billing issues before they impact your business. Adopting a proactive approach to identifying billing issues early can help you not only increase efficiencies and reduce bottom-line impact, but also improve client satisfaction and your organization’s financial health and sustainability. Learn more about how Qualifacts’ Revenue Cycle products and services can help you improve your revenue cycle management.