Every physician and office manager knows the importance of proper revenue cycle management, or at least they should. A faulty revenue cycle opens the possibility of your practice not being paid properly for its services.
If you don’t receive proper payment once, it’s probably no big deal. But it can’t happen continuously.
Unfortunately, due to denied claims, underpayments and patient failure to pay co-pays, practices are continuously losing money. These leaks in the revenue cycle are like a syphon slowly draining profits from your practice.
Reading this article should help you plug these leaks, ensuring better revenue cycle management.
Continuous claims denial by payers is a hidden expense to your practice, even if the payments get approved when you resubmit. According to MGMA, the average claim denial costs practices $25 to $30 each.
The first step to reducing costly claims denials is checking patients’ insurance eligibility prior to their visit. When they call to set up an appointment, gather all of their insurance information. You can then check their eligibility before their visit and warn them about costs they may not be expecting to pay.
The next step is ensuring that your staff is submitting claims correctly. They may need to slow down and be more careful when filling out forms, and they should be double-checking their work before submitting each claim.
For a speedier solution, make the switch to revenue cycle management software. A good system will catch many of the errors that cause denials prior to submission. It’s also cheaper – the American Medical Association found that the average cost of processing a clean manual claim is $6.63, but only $2.90 for an electronic claim.
Underpayments by insurance providers can go unnoticed for long periods of time due to the high amount of payer contracts practices must keep track of.
Conceivably, each payer contract you have might pay a different amount for the same procedure. That’s why it’s imperative to revenue cycle management that you review contracts at least twice a year and confirm each payer is abiding their terms. Pay close attention to the most popular payers.
Also, keep track of your payer contracts using a contract matrix that lists all of the renewal dates for your current contracts. Many contracts renew automatically, meaning your rates stay locked in. By keeping track of when your contracts expire, you’ll be able to negotiate new terms that are more profitable for your practice.
Patient failure to pay co-pays
There’s no better time to collect patient co-pays than when patients are in the office. Once they leave, the chance of actually receiving payment decreases and the cost of collections increases, considering all the calls and statements you’ll have to send out to collect payment.
Before patients leave the office, ask them how they would like to pay their co-pay that day. Not if, but how. Asking a patient if they’d like to pay their co-pay before leaving the office will predictably lead to plenty of rejection.
To increase the effectiveness of this strategy, prepare patients for what they can expect to pay out-of-pocket by providing price estimation. Create estimates based on what services cost other patients.
No one enjoys owing money, so if patients have the funds to pay and are prepared ahead of time, it’s likely you’ll receive payment when they visit.
Effective revenue cycle management is key to maintaining a successful practice. By plugging these leaks in your revenue cycle, you can create additional revenue without increasing your patient base.
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Salvador Lopez is a CareCloud content writer focusing on practice marketing, practice management, patient treatment and practice workflow. His work can be found on PYP and the CareCloud blog.
Photo attributed to Dschwen via Creative Commons license.