5 Most Common Hospital Revenue Cycle Management Challenges

Since the Affordable Care Act, the task of hospital revenue cycle management has changed significantly. Between ICD-10, MACRA, and accountable care, it has become a hospital’s best interest to have an effective revenue cycle management system in place so they can handle the financial pressures that come from regulation.

Overall, the healthcare revenue cycle is dynamic and continues to evolve. As a result, healthcare professionals involved in revenue cycle management tend to face a number of challenges that range from billing errors to failure to have certain processes and policies in place. It’s vital for providers to look at ways they can improve their organization’s revenue cycle.

Here are the top five most common pain points for the hospital revenue cycle and tips for providers about how to avoid financial trouble.

Billing and collections errors

Inattention to a billing process can hurt hospitals to the tune of tens of millions of dollars, and may also shock patients with huge debts that they cannot pay.  

As patients become increasingly responsible for out-of-pocket costs, hospitals will need to ensure that they aren’t leaving uncollected revenue on the table - but also that they are not squeezing their patients so hard that they seek care at other facilities the next time they need care.

Not all providers have mastered the art of collecting the maximum amount of revenue at the point of service, yet 85 percent of organizations say that collecting payment from patients after they have left the campus is a very difficult task, a survey found.

“The conversation with the patient has to start early – at or before the point of service – if providers are to reduce the amount of bad debt they’re currently experiencing,” said Availity CEO Russ Thomas.

Hospitals need to develop a better understanding of patient responsibility and devise more streamlined methods of collecting payments from their customers if they are to maintain financial stability in a quickly changing landscape.

It’s good practice for a provider to have a competent medical billing process in place. This can help ensure that payments are received without delay. It’s also beneficial for a provider to employ an efficient, well trained medical billing staff that understands the importance of the quality and integrity of the data that they deal with daily.  

Health information technology challenges

Revenue cycle management requires healthcare professionals to use information technology to keep track of claims through their entire lifecycle. This is necessary to ensure payments are collected and denied claims are addressed. However, some hospitals struggle to put information technology and billing infrastructure in place in a way that successfully manages claims as well as large outpatient networks. In today’s healthcare environment, effective health information technology is essential.

Unfortunately, not all hospitals and clinics have the capital or infrastructure to invest in new technologies or even required technologies, such as EHRs. Many times, this factor applies to small rural hospitals particularly.

As a result of not being able to implement required technologies, some providers end up consolidating, while others turn to outsourcing. Others end up shutting their doors altogether.

“Generally speaking, in order to strengthen the revenue cycle management, embracing technology within the revenue cycle is key,” said Chad Sandefur, Director and Healthcare Analyst at AArete. “Having the platforms to seamlessly facilitate provider-payer interactions are really integral. In many cases, it’s mostly about bad debt avoidance.”

Other types of new technologies may offer medical benefit but require providers to make substantial capital investment. It can be challenging for an administrator to determine which technologies to use and how much to send. Providers should turn to information technology consultants to help aid them in decision making. It’s even better if a healthcare facility can have an IT expert onsite at all times to handle any IT-related issues.

Lack of staff training

If healthcare staff members are not trained effectively, they might not bill correctly or capture patient data correctly. Healthcare staff who are responsible for billing need to know how to properly capture a patient’s demographic information on the front-end, and how to translate that data to successful insurance claims after that.

“From a revenue cycle perspective, getting the most accurate information up front starts with patient scheduling and patient registration,” said Gary Marlow, Vice President of Finance at Beverly Hospital and Addison Gilbert Hospital.

“That provides the groundwork by which claims can be billed and collected in the most efficient and effective manner possible,” Marlow stated. “The last thing you want is getting a claim submission kicking back to them then having to work their way through the institution.”

Although training might be costly and time consuming, it can save a healthcare organization money in the long run. Coding errors can equate to medical error, which cause unnecessary spending. For example, in 2015, twenty-three hospitals in New Jersey paid a $500,000 penalty for medical errors, a previous report noted.

The ICD-10 transition may be more or less complete, but coders will need to stay sharp with the new skills they learned if they are to continue to contribute to the bottom line.

Coding staff should complete a 60-hour long training session in four hour increments in order to learn how to code effectively. A well trained staff can reduce billing errors and make the whole process of billing more efficient.  

Failure to monitor the entire claims process

The claims process should be monitored closely at every point of its lifecycle. This is another important aspect of a provider’s revenue cycle management processes. If healthcare professionals do not watch claims closely, they won’t be able to figure out when an error was made. Additionally, they won’t necessarily be able to identify a coding issue. As a result, revenue can be lost.

It’s a good practice for providers to receive automated alerts as to why a payer is routinely denying claims for a given procedure or code. Otherwise, healthcare professionals may spend hours researching the issue. This takes time away from other important duties.

A streamlined and efficient claims process can improve a revenue cycle and help a healthcare organization run smoothly.

Failure to have a financial policy

Some healthcare facilities fail to have a financial policy documentation in place available for employees. These types of policies are an important part revenue cycle management. They should be available to employees electronically or in writing. They should also be reviewed by legal counsel.

Financial policies should also provide guidance to patients regarding collection of copayments and unpaid balances, patient responsibilities regarding insurance requirements and financial arrangements for unpaid balances, charity care or other payment arrangements, according to The American Health Information Management Association.

A financial policy can serve as a helpful tool for healthcare professionals involved in billing. A financial policy could include processes for analyzing the financial capabilities of a patient. It could also include steps for determining a patient’s balance. Additionally, a policy could contain information regarding denied claims and how to address them. It’s best to have a process for tracking and resolving denied claims.

Dig Deeper: 

• Revenue Cycle Management Success is About the Fundamentals 
•  Defining the Top 10 Terms of Healthcare Revenue Cycle Management