Revolutionize Your Business with Revenue Cycle Strategies

Published in Member Communities on July 31, 2024

In today’s challenging environment, rising labor costs and falling reimbursements leave little time to focus on crucial metrics. Discover the key performance indicators (KPIs) that are essential for businesses’ revenue cycle management, how to calculate them, and the root causes behind each KPI and how to influence them positively with Revenue Cycle Strategies.

Proactive Transformation: The Cornerstone of Business Health

Businesses are advised to initiate transformative actions proactively rather than reactively. Just as individuals undergo annual health screenings to establish a baseline for their well-being, businesses should also conduct regular operational assessments. These ‘business health checks’ act as preventative measures, enhancing performance and averting complex challenges before they arise, ensuring early detection and management of potential issues. When it comes to business health checks, it’s important to implement strategies to identify cost reduction opportunities, uncover untapped revenue streams, and achieve operational excellence by addressing root causes.

Optimizing KPIs Through Billing System Configuration

A fundamental determinant of key performance indicators is the structuring of the business’ billing systems. For operations to run both timely and efficiently, it is imperative for businesses to be well-versed in each insurance contract, including the delineation of covered versus non-covered items, authorization prerequisites, quantity restrictions, and allowable charges. Moreover, it’s important to diligently maintain price tables, ensuring they are up to date, as these directly influence the entire order cycle.

Key KPIs and Strategies

In order to set goals and improve performance, businesses need to master benchmarking. Find out where the business is today with each KPI and then set goals from there. Such KPIs and benchmarking standards include:

Days Sales Outstanding (DSO): Average number of days between the date of service and the date of payment. Potential root causes of DSO could include Certificates of Medical Necessity (CMN) and authorization delays, price table issues, order and confirmation delays, etc. The ideal DSO is less than 55 days.
Held Revenue: Identify and address issues causing revenue to be held, such as missing or expired documentation, ineligible policies, etc.
Denial Rates: Avoidable denials, no authorizations, inconsistent modifiers, and more can be managed by understanding insurance contracts and setting up price tables correctly. For example, remove the price record from that insurance if it’s a non-covered item, forcing it to be billed to the patient; modifiers can be hard coded into the price table; coverage limits can be set up for max allowables, etc. Aim for a denial rate of less than 8%.

These examples can be managed and measured by running consistent reports internally to track accountability. Those results can be used as a training resource for businesses and a reminder to update pricing tables when necessary.

Current Climate and Patient Empowerment

Despite the challenging landscape of insurance rate drops, the post-acute homecare industry remains steadfast in its commitment to patients. It is crucial to continue emphasizing the importance of empowering patients in the healthcare process and creating a fairer system for all parties involved. The goal should extend beyond merely meeting patients’ needs; it should also encompass empowering their desires.

By embracing proactive strategies, such as regular business health checks, automating existing processes to cut costs, and empowering patients, providers can navigate these challenges. The industry must not only adapt to the current conditions but also anticipate future changes, ensuring that both patients and providers are positioned for success.

This article originated from a presentation given at the 2024 VGM Heartland Conference by Kim Cuce', Director of Business Optimization for VGM & Associates. For questions, contact RCS@vgm.com.

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