These non-traditional KPIs have a significant impact on collections and cashflow.
In 30 years of running revenue management the usual suspects come up in a Key Performance Indicator (KPI) Dashboard such as Charges, Payments, Adjustments, Net Collection, Gross Collection, Days in AR, AR over 90 Days and Bad Debt. Then you have the breakouts for each category by payer, CPT Code, Location, or ICD Code.
There are 3 other KPIs that I track that may not be traditional KPIs, but they have a significant impact on collections and cash flow.
You probably notice the C codes related to denials such as CO 11 – Diagnosis Inconsistent with Procedure, CO 22 – Coordination of Benefits, CO 167 – Diagnosis is Not Covered, etc.
I take the time to program a listing of denial codes that make sense to the practice. The C Codes are very generic and can only go so far to alert you of denial patterns and potential issues. I always ensure I have a listing of denial codes that correlate with the C codes and provide more pertinent information. For example, if I receive a denial of CO11 I would have several categories such as Need additional medical information from physician, diagnosis not covered with procedure, need additional modifier.
Getting the denial and correcting the issue for that claim is not enough. Many times, I notice repeated instances of correcting the same issue on multiple claims. Once you identify the denial, seek to place a rule in your billing system that would correct this denial before the claim is sent out. The goal is to prevent the denial from ever happening.
I seek to quickly capture trends in the denials before they result in a bulge of denials that become difficult to manage and get paid due to volume. Payers may have different denials for specific procedures and diagnosis in accordance with their policies or your contract. Weekly I review any denials to ascertain if there is a trend or an accumulation of denials before it becomes an acute issue.
Always remember, the goal is not to correct the denial quickly but to prevent it from ever happening.
Number of touches
The Number of Touches indicates the number of times a specific claim has been worked. The claim may have been resubmitted, identified as still in process, in appeals, additional information being submitted, etc.... I will look for claims that have been touched multiple times, usually more than 3 and then I drill down. It is not infrequent to see claims that have been touched 15-20 times. The objective when working the Accounts Receivable is to get the outstanding claims resolved, not to solely perform an action that may perpetuate the unpaid claim. Sometimes incentives are misaligned and incentive the number of accounts worked as opposed to number of accounts paid. I am always looking for a claim to get paid within 3 touches.
When it gets beyond the 3 touches, I tell my team not to hesitate about ringing it up the ladder. Sometimes if claims are denied by a payer, it could indicate there is an underlying issue such as the status of the provider, a failure to update a new policy, a contract not being uploaded or a glitch in the system. Creating a culture of rewarding the right outcomes and encouraging communication when there is an issue is imperative in running an effective revenue management department.
I have weekly meetings with my revenue management team. Usually these take about 30 minutes. To the outsider it may seem simple and common sense. However, I find this practice vital. Establishing the amount each month you are expected to bill out and collect and comparing to actual charges and collections is a quick gauge of how collections and charges are doing throughout the month. You will be able to quickly identify any issues with this simple review. My teams found trend in denials, issues with the payment cycle of a payer or missing charges from this simple review. It is not uncommon to find organizations where their Accounts Receivable and financials are in disarray because they have not implemented a forecast even in its simplest form.
I utilize a Waterfall analysis in estimating the amount of collections in any month. A Waterfall analysis is a report that indicates the percentage of collections contributed by each month. For example, if you are running a Waterfall analysis in June you may find 20% of the collections come from charges in that month, 35% come from charges entered in May, 20% come from charges entered in April, etc.... I find this along with modifications made for specific events such as seasonal differences or temporary closure of a location provides a decent estimation of collections.
Incorporating these 3 KPIs into your analysis will help you identify issues in a timely manner and improve collections and cash flow.
Jonathan Friedman, MBA, is CEO of PRN Advisors.