Everything you need to know about the changes the pandemic has had on RCM and what you can do to improve.
COVID-19 has had far-ranging consequences for medical practices, especially on finances. With patient volumes in flux, it’s important to understand how revenue cycle management has changed due to the pandemic and what adjustments need to be made going forward. Medical Economics spoke with Anurag Mehta, president and co-founder of Omega Healthcare, about the impact of COVID and how practices should adapt.
Medical Economics: What effects has COVID had on revenue cycle management for medical practices?
Anurag Mehta: Back in April, when pretty much everything shut down with regards to elective surgeries, certain things were just were zeroed out, and office visits were getting affected in the initial parts of the shutdown. Overall, as an industry, people saw and we did as well, about a 40 to 50% drop in our volume. But then, slowly things started coming back. The country started opening up again, and I think, by and large, the industry has gotten back to about 90% overall volume, but when that next 10% comes back and how it comes back is completely up in the air. It'll help as the country gets more vaccinations, and there's more of a herd immunity happening in the U.S. I think we'll get back to reasonable numbers, back to where we were pre-COVID. Interestingly enough, there's some industries that have done really, really well. There are a lot of companies that have popped up and started to handle things around COVID. Labs were inundated with COVID tests, and a lot of labs that never did tests like that pivoted, because they had the infrastructure and started handling lab tests around COVID testing. And then urgent cares have done a phenomenal job there; their growth and their number of things that they're handling in locations is a lot. If you have an urgent care right now, you're a very happy camper, because your volumes are probably through the roof.
ME: What are some best practices that should be followed for revenue cycle management as we emerge from the effects of the pandemic?
AM: I think it's very important from a documentation standpoint. Everybody went to work from home, so revenue cycle management went from being handled mostly in an office setting or in a facility setting, if it's centralized, to being more of a remote setting. If you lose people, and people decided that they didn't want to work, or they took another job, you don't have that infrastructure easily to train, you don't have that infrastructure to easily onboard new people. If you don't have really good documentation and training and everything set up in place, that could be a problem. Some companies did really well and they said, we're going to spend this time creating a lot of that documentation, a lot of the training, a lot of the standard operating procedures, and whatnot, just to really get things in order in case anything were to happen again. If you lose people, you lose a lot of tribal knowledge and understanding of doing things in your revenue cycle operation the moment you lose those people, because a lot of times things aren't written down, a lot of times things are in people's head. And if you don't do a good job of really documenting well, and being able to train the next person to come in and handle that, it can be an issue and I think a lot of companies did see that as being an issue and suffered.
ME: Do revenue cycle problems typically start small and snowball, or are they the result of major errors where you see the effects immediately?
AM: If you're talking about the front end, like medical coding, most organizations are certainly spending a lot of time and money and effort doing quality assurance and ensuring that the claim that's going out is properly documented. All of those things have to happen. And you measure where your coding was month to month and you take random audits. So there's a lot of that rigor that's in place maybe on the front end, but that's not as easily put into place on the back end. And what I mean by back end is you have denied claims denied by insurance companies, there's no-response claims, there are partially paid claims or underpaid claims. And that's where I think there needs to be more rigor and systems and processes, and really education, put in place to help in those areas. I think the front end is pretty well covered, and most organizations are very good at, “Hey, I'm doing this front end documentation, coding work, and it's being audited, it's having all of those things in place, but on the back end, not as much. And the back end is where denied claims could be 20% to 30% of your overall claim volume, whether they are underpaid, no-response or whatever. And if you don't have really good processes in place, you are leaving a ton of money on the table. And I think that can be the difference between making a good margin in your business and leaving everything to the insurance companies.
ME: Who in a practice should be involved with overseeing and reviewing revenue cycle numbers?
AM: The practice administrator, the head person, and frankly, anybody whose income is derived from the revenue cycle. Because look, if all of your money is tied into the claims that are being generated, and the money that's coming back, if you are large enough practice, where you have a practice administrator, it is very important to make sure that everything is being tended to and is being looked at, you have the proper reporting, you have the proper dashboards. A lot of systems that are out there, practice management systems, lack in very good reporting and the ability to run your business better, and run it more efficiently and be able to look at more like what I would call a CEO view or a practice administrator view, where the data elements like how many people are canceling appointments just before they were supposed to come are visible? And how much lost revenue do we have because of that? All of these types of things, while they are maybe somewhere there in the system, is somebody really assimilating all of that data, along with your revenue cycle data, all of the practice administrative data that's out there, with somebody bringing it all together? And providing it really in-depth to run your business better? Do they have the proper tools? Do they have the proper reporting to get it done and get it done? The biggest gap area is the data and how to make decisions with the proper data.
ME: Are there ways to streamline the revenue cycle management process?
AM: always. And it goes back to what I talked about, which is around data. I think you can learn trends about your business, about your practice, if you have the right tools in place, if you have the right data elements in place that you can measure and make actionable. You get actual insights from that data and you take those actions. Every facet of the revenue cycle is important, getting your claims out the door quickly, not having the lag. I have seen this through the years of being in healthcare and in revenue cycle for almost 25-30 years now. I've seen where the gaps are, and the gaps are oftentimes in the fact that claims don't even get out the door quickly. And that's like step one. You don't want that lag payments, and if you wait five days, 10 days, 15 days, to send that claim, that's a problem. Things should be sent out immediately, within 24 or 48 hours after any encounter that's happened at a practice level. That data needs to be coded and needs to be sent out to the insurance companies. I've seen places where it's five, 10, 15 days, and then that just adds to your days outstanding. Your cash is very important, just like in any business, cash is important. But when you have a business where you're not going to get paid every dollar where you perform the service, and then you get paid well, after you perform the service for most of health care, cash is king. And if you're not efficient from a process standpoint, from a submission standpoint, and then from a quick-to-react standpoint, I cannot tell you how many companies we've looked at that have said, are aged AR is over 180 days, and we've not had people working on it, or they've not really been able to resolve those claims. And we're in shock, like, what were they doing? Why? Why did they not focus the time and effort and money on going after the old AR and getting after those claims? It's a resource issue. And if you're not staffing things properly, if you're not going after these kind of dollar claims that are very important for your cash, and very importantly, insurance companies love it; they don't have to pay those claims, because nobody followed up on them. It's really, really important to streamline each and every aspect of the revenue cycle. Otherwise, you're going to end up losing so much money.
One more thing I want to add: I still can't believe that companies receive physical checks. And then depend on people to sign them and deposit them into banks on a daily basis, or whatever, once a week basis, or whatever that is. To me, that is probably the most inefficient way of running a business—waiting for somebody to physically make sure that they're taking the check to the bank. That is something that should never be done. So many checks get put in drawers, somebody’s checks gets lost, something can happen to them. And if you set up a lockbox to the bank, and just say everything's going to go into the bank, and I'm going to get an image view of each and every check, we've moved into the 21st Century now. We should be doing things like this with technology that's at our fingertips. Certainly that is one thing that really baffles me on why companies haven't just gone to the bank that they want to work with. And it could be any bank, every one of them has this service. And say, I want all my images electronically, the day they come in, I want to be able to see those images, so I can post my payments on the checks that came in. And I know every dollar and I can match it to what came into the lockbox. So these are the things that I would suggest from an efficiency standpoint. If you're not running a practice and not doing that today, it’s a small price to pay for a very large efficiency game.
ME: Many practices are shifting to more value-based care contracts. Are there adjustments to revenue cycle management that will need to be made to handle these different contracts?
AM: No, not really. There's always changes in health care. You see regulations changing and modifiers changing from a state level to a national level, codes change, reimbursement changes. In a shift to value-based care, I think while there are going to be things that do affect the revenue cycle, I think that by and large, it comes down to documentation and capturing the right documentation at the point of care. And the better job that you do allows you to maximize what your reimbursements are going to be, and you're not leaving money on the table. So that's true, no matter what the system is or what we are moving to or what the latest trend is, upfront documentation and doing it right and making sure that you're capturing it so that you can bill the maximum amount is very, very important for anybody running revenue cycle or running a practice.
ME: How much difference to the bottom line can there be between a practice with a poorly managed revenue cycle management system, and a well-managed one?
AM: I've seen it through the years where a practice can be underwater and physicians can't pay their own expenses because the revenue cycle is very poorly run. I've always looked at it like, why would you do your own revenue cycle and rely on the people in your office when there are professionals and companies that do this for a living? I can understand the control component of it, because everybody wants to have control over things. But to me, I've always been the person that says, if that's not something that's my core business, that I don't do really well, I should outsource that to somebody that does it really well. It would be like me, a non-lawyer, trying to be a lawyer and marking up my own agreements, and certainly, I will miss something, and I leave something on the table. I kind of liken that same thing to would you do your own tax work, your own accounting work, your own legal work, when there are experts that do this and do it well? Find the right company that has the right reputation that does it very well. It is not your core business. It might be every dollar of what you need to earn is based on that, but hold whoever you outsource it to accountable. And make sure you monitor and make sure you follow up, and if you do all of those things, it will end up being the difference. And to answer your question, 20%-30% difference in cash in the door on a monthly basis between a revenue cycle that's run well, and one that's not is common.
ME: Are there any early warning signs that you might have bad revenue cycle management practices?
AM: Absolutely. I think if you see you have a lot of aging claims, and it continues to grow, it’s pretty easy to see, or you have a lot of denials that are related to coding, if you see that you have a lot of coding-related denials, then certainly something is an issue upfront. Those are some of the many telltale signs that will say why things are not running well or running smoothly. But you have to have the data and you have to be able to look at the data and so many times, practices are focused so much on the business of being a practice and being a doctor to a patient, that it's not focused on, and the numbers are not looked at carefully. And all I can say is, look, that's your livelihood. And that's where all the difference is being made. Pay attention to it. And if you're reliant on people in your office, and that person leaves, and you have very, very good documentation to bring somebody else in, trust is very, very important. You are basically giving the keys to your car, or to your house, to the person that's running the revenue cycle. Do you trust them in your home? Do you trust them with your car? That is how you have to look at it. And if they leave you, then what happens? So, it's part of the reason there's been a bigger shift through the years to more and more of companies looking for professional companies to do their revenue cycle. They know that it's tough to put that trust into people when it's not your core business. Your core businesses is running a practice,you’re your core business is not likely being a revenue cycle expert and knowing the best modifiers and codes and maximizing reimbursement and all the tricks of the trade to make sure you're getting the maximum reimbursement allowable under law.