There’s a famous quote from Peter Drucker, author and management consultant, that will always hold true in business – “If you can’t measure it, you can’t improve it.” His words are especially true when evaluating the healthcare payment lifecycle and Revenue Cycle Management (RCM) systems.
The healthcare industry has an increasingly complicated reimbursement system that is unlike any other sector in business. With federal and state regulations and oversight, third-party payers—each with their own set of rules and adjustments—and a codification system that is multi-layered, intricate and complex, hospitals and physicians are challenged at every turn.
Five Key Areas for RCM Metrics
With the level of sophisticated automation available today, many different categories of information and performance indicators can be automatically tracked and routinely analyzed to tell the story of an organization’s financial health and wellbeing. Of the many metrics available for quantification, these five categories are preeminent:
- CodingHiring highly qualified and experienced coders is only part of the equation. With over 144,000 ICD-10 codes and well over 8,000 CPT and HCPCS codes, it takes a substantial effort to stay current and up to date. For example, there were 335 Level 1 CPT changes that took effect in 2019 alone. With the level of detail and autonomous decision making (often before all the facts are known), a thorough audit done at least quarterly ensures that coding is being done to the highest level to maximize reimbursement.
- Denial ManagementUnderstanding your denial rate, including reasons for rejection, is key in developing solutions. Whether the denials are happening because insurance is not being appropriately verified, prior authorizations are not being obtained, or the claims were submitted outside of timely filing requirements for a particular insurance carrier, 90% of claim denials are avoidable. With 49% of returned claims never followed up on, that is a lot of revenue left on the table, unnecessarily.
- BillingClaims submission and payment posting are key billing metrics well worth quantifying and monitoring. If you are struggling with lost revenue due to not meeting timely filing requirements, or the payment posting sequence is slow or continually interrupted, that will have negative consequences for the bottom line.
- Bad DebtStarting with strong and well-communicated payment policies and accurate patient pay estimations collected at the time of service, your bad debt metric should be low. In 2019 and beyond, this is a critical metric to monitor especially as patient responsibility continues to grow with the rise in high deductible health plans.
- Contract VarianceIn the day-to-day rush of business, it is easy to be complacent about insurance payers’ adherence to the contracted fee schedules that are part of every payer/provider relationship. To prevent or lessen shrinking margins, a key metric to monitor is contract variance in terms of dollars paid per procedure.
Having solid auditing and compliance procedures for these five revenue cycle metrics is a significant way to ensure that you are doing the best job possible and securing every dollar that’s owed to your organization. It’s also a great communication tool when working with providers or employees in setting expectations and creating accountability.
Schedule a demo today and evaluate your RCM Metrics.