How to take control of your revenue cycle

Revenue cycle management has a reactive problem. Denials spike, cash flow tightens, and practices find themselves chasing issues that could have been prevented weeks earlier.

Kem Tolliver, CEO of Medical Revenue Cycle Specialists, works with physician practices and health care organizations to build proactive revenue cycle strategies grounded in data, payer relationships and a clear-eyed look at where money is quietly walking out the door. In a conversation with Physicians Practice, she covered everything from denial root causes to the metrics that give practice leaders a false sense of security.

The following transcript has been edited for clarity and length.

Physicians Practice: When you say “strategic revenue cycle work plan,” what does that look like in real life?

Kem Tolliver: The way I envision a strategic revenue cycle work plan is the alignment of all of your revenue cycle priorities with your overall business plan. It's fascinating when Taya and I conduct this workshop, because we're usually working with folks who do not oversee a revenue cycle but are the COO or CEO of a health care organization. It gives them insights into the activities we want to align within their revenue cycle departments for the entire organization.

What that looks like is internal auditing. What are you auditing? You're auditing your denials, your cash flow, inefficiencies, your documentation and the processes your team is using to manage relationships with payers. That's what a strategic revenue cycle work plan looks like at its core.

But I also like to break it down by quarter. You can't eat an elephant in one bite. You have to take it one piece at a time. So I break that work plan down by quarter. In the first quarter, for example, you want to think about what's really important right now. We have new codes. We want to look at our fee schedules, our contracts and audit our credentialing. The goal is to align that work plan with the overall business plan. Many health care organizations, and medical practices in particular, developed their business plan years ago, and health care has evolved so much since then. We want to make sure the revenue cycle work plan reflects where the organization is going.

Physicians Practice: If a practice has 30 days to get control of the friction they have with payers, what are the first three moves you would make?

KT: The first move is to understand what is driving your denials. You want to look at those denial drivers two ways: volume and dollars. That combination is super helpful, but you also want to look at complexity. When I was a biller working accounts receivable, my co-workers and I would sometimes gravitate toward the easiest accounts to clear them out. What we really want to encourage our teams to do is look at denial drivers, identify root causes and dig into the complex accounts too. So: volume, dollars and complexity.

The second area I would look at is where your cash is getting stuck. Is it stuck in the zero-to-30-day bucket? The 90-day bucket? The over-120-day bucket? That tells you a lot. If it's getting stuck in the zero-to-30-day bucket, there's often something going on with your EDI, your electronic data interchange. You want to work with your clearinghouse to address that.

The third move is to understand your payer escalation processes. We want to make sure we have sound relationships with our payers. Waiting in a queue with an insurance company is not a strategy, it's a reaction. We want to build those relationships so you know what it takes to escalate an account and you have someone available and willing to help you when it's necessary.

Physicians Practice: What is the biggest mistake practices are making when they try to engage with payers?

KT: Part of our relationship with payers is that they have something we want: We want to get paid. So when we approach them, we're usually approaching them with a complaint or a grievance. That's the reality.

One of the biggest mistakes I see is not having data. When you approach a payer, data is what really matters to them. If we provide them with data, give them examples, show them why something should have been paid, give them justification, that's what is going to break through and lead to a correction on a claim.

Yes, we know we're frustrated, but frustration is not a strategy for a solution. Strategies for a solution mean providing them with data, having examples of your claims ready before you make those calls and showing them trends. That's what is going to matter to them.

Also, let them know you need guidance on what corrective actions they need from you. Make sure you document when you're engaging with payers. Get your reference numbers, get the first name and last initial of who you spoke with, and get your dates in order. Complaints and frustration don't move the needle. They're getting loads of calls all day. Come with data.

Physicians Practice: When denials are spiking, where do you start first to find the real root cause? What data should you be pulling right away?

KT: I break the revenue cycle into four categories. You have the front end, which is patient intake before the visit, before the patient has their encounter with the provider. Mid-cycle is the documentation of the visit and coding, where we're preparing to submit the claim. The third category is the communications we're having with our payers. And the fourth is the data that's in our system.

When denials are spiking, the first thing you want to do is identify which of those four categories the denials are originating from. Are they coming from the front end? From documentation and coding? You need to understand where within your revenue cycle the spike is coming from.

Then you want to understand your denial reason codes. X12.org is where you can go to access all of your CARC and RARC codes with interpretations. You want to understand those reason codes, and you also want to identify whether these spikes are a result of authorizations not being captured, coding edits or clearinghouse rejections.

Group those denial codes so you can identify where the root cause is coming from, make those corrections, and then go back and do the training, education, and any workflow realignment that's necessary. I'd also recommend making sure your practice management software has customizations, edits built in, to help prevent those denial types from continuing to spike.

Physicians Practice: What is one denial type you see again and again that practices could prevent with a simple workflow change?

KT: I'll say CPT, because I'm a certified coder and it's always top of mind for me. There are two ways to look at CPT coding. When I was getting my coding certification over 15 years ago, I came to the course with a reimbursement mindset, and that threw me off because I was being trained on how to code regardless of payment. But that's not the real world.

The real world requires us to modify our coding based on payer reimbursement guidelines. That's not to say we should ignore correct coding initiatives, but we do need to follow each payer's guidelines. If a certain payer requires a modifier, or doesn't pay for a certain CPT code paired with a certain diagnosis code, we need to know that.

The workflow change I would recommend is building out documentation of payer reimbursement guidelines internally, and this applies to everything from coding to units to authorizations to referrals. It's really about understanding payer reimbursement guidelines and creating the internal workflows to follow them consistently.

Physicians Practice: What does a strong payer-specific action plan include, and who should own it on a day-to-day basis?

KT: The quick answer on ownership is the billing team. That's what we would normally expect. However, I do believe it's the responsibility of everyone in the organization to own some component of that action plan.

What the plan looks like: Start with understanding internally what your top denials are and which payers you're getting those denials from most frequently. Use that to create an action plan to mitigate those denials going forward. You also need to understand timely filing risks, which means making sure providers are closing their notes in a timely manner. When they do that, they are part of that payer-specific action plan, because it enables you to submit claims on time.

A strong action plan also means fixing root causes internally and being clear about who is responsible for each piece. For example, if you're consistently getting denials for patients with eligibility issues, and your EMR isn't capturing all the detail you need for a specialty like behavioral health, the action plan might require reaching out directly to those payers for benefits verification rather than relying on the software.

Look at your aging AR, because that is going to give you insights into where you're having trouble. Use it to identify your top denials, the reasons behind them and which part of the revenue cycle they're coming from. Then develop payer-specific strategies based on the reimbursement guidelines you've pulled together. That means working with providers on documentation, with medical assistants on authorization requirements, with patient access on coordination of benefits and eligibility, and with billing and collections on claim edits before submission.

Physicians Practice: When it comes to revenue cycle metrics, which ones actually predict cash flow and which ones give practice leaders a false sense of security?

KT: When we think about revenue cycle metrics, we're typically looking at days in AR and the time it takes to collect. Those are standard. But predicting cash flow is a whole other level of ensuring financial sustainability.

Aging AR is going to help you predict cash flow. The more money that's aging, the less that's in your bank account. Time-of-service collections at the front desk is a really important cash flow indicator. Think about it this way: if patients have out-of-pocket balances of $5,000 for the day and you're only collecting 60% or less of that, those are dollars that could be collected with no expense to the practice. No statement, no collections agency, just a person asking for the money. If your team is unable to collect at the time of service, that's a significant predictor of what your cash flow is going to look like.

Your clean claims rate matters too. What percentage of your claims are paid on the first submission? The lower that percentage, the harder it's going to be to collect. Denial rates by dollar amount are another predictor. If denials are ballooning in volume, that's going to affect your cash flow.

As for what gives practices a false sense of security: the gross collection rate. Just because you've collected a certain amount doesn't tell the whole story. You have to compare that to what was actually owed and what was adjusted off. If you wrote off collectible balances just to clean up your AR, that's a false sense of security. Total charges is another one. Just because you charged a certain amount doesn't mean you can collect it. The allowable is not always the charge. Be mindful of which metrics you're using, because they can really mask significant problems in your accounts receivable.

Physicians Practice: Labor costs and burnout are real. Do you have a rule of thumb for when to outsource, when to automate and when to add staff?

KT: For automation, my rule of thumb is this: anything that's repetitive, anything that has a defined rule that needs to be followed, anything that's high volume, get people out of the way and automate it. Appointment reminders using the same script every time, eligibility verification, claim submission. Those need to be automated. People should be used for more complex tasks.

For outsourcing, I outsource when I need expertise that I don't have in-house. Here's a good example. If you're about to switch EMR or practice management software, you're transitioning from one system to another. Assigning your current staff to work down old AR in the old system while they're also doing all the transitioning, training and build-out for the new system is too much. Outsource the old AR. Get someone else to work that down while your team stays focused on current collections.

For adding staff, if there are times when you need highly skilled individuals for specific projects, that's when I'd consider it. But before I add staff, I like to do a staffing ratio analysis using HFMA and MGMA benchmarks. I want to understand how many accounts my current staff can realistically work, how many patients they can handle and whether the ratio makes sense given the needs of the practice. I want to understand their capabilities and justify the need before I move forward.

Physicians Practice: What is one tip you would give a practice leader that they can implement next week?

KT: Look for areas of revenue leakage. Revenue leakage is something that is often hidden. It gets masked under other things and doesn't feel as urgent. But I think it is a serious threat to financial stability, because it has a way of becoming routine.

One area I see as a real threat is undercoding. But there are others: writing off balances that could actually be collectible, not charging interest for late payments from payers, accepting virtual credit card payments without negotiating, not going back to renegotiate fee schedule rates for higher reimbursement. These are all areas of leakage.

The tip I would give is this: Even though we know these leakages exist, we tend to push them to the side because they don't feel like fires. I suggest fixing them. They're not emergencies today, but they add up. If you don't want to invest the internal time, you can outsource some of that work. But stop letting it slide.