The past few years have proved challenging for hospital and health system CFOs and revenue cycle leaders. Shrinking reimbursement rates, government funding cuts and increasing costs keep these leaders constantly seeking strategies to improve the financial health of their organizations. However, many leaders see these efforts fall short because they lack the tools and insights necessary to drive results.
This content is sponsored by McKesson
The hospital revenue cycle has become even more complex in recent years due to several factors, including more complicated payer contracts and greater regulatory demand. In this environment, it is more important than ever for hospitals to boost revenue cycle performance to ensure financial viability as reimbursements dwindle and operating costs grow.
How can hospital and health system finance leaders optimize their organizations' revenue cycle? Experts from McKesson suggest focusing on the following areas:
1. Track claims through the entire life cycle. The financial health of a hospital or health system is dependent upon claims being processed and paid as quickly as possible. Therefore, reducing mistakes that cause claims to be denied or payments to be delayed should be a top priority for every hospital's revenue cycle team, according to Yen Nguyen, PharmD, vice president of products and services at McKesson RxO®.
Regular and consistent training for revenue cycle staff is an important part of reducing billing errors. If even one team member fails to perform his or her duties correctly, it could mean significant revenue losses for the organization.
Minimizing billing mistakes also has a technology component. Dr. Nguyen recommends hospitals implement a revenue cycle technology platform that enables them to track claims through the entire life cycle. With claim lifecycle visibility, hospital finance and revenue cycle leaders can see when a claim is submitted for payment, when the payer accepts it and whether it was denied or paid. This allows them to easily troubleshoot issues throughout the process to keep the claim moving and help ensure the hospital receives timely payment.
2. Identify missed revenue. Because of declining reimbursement and other financial headwinds, it is critical that hospitals are appropriately reimbursed for the services they provide and the supplies they use. "It's important that they don't lose out on revenue," Dr. Nguyen said.
Health insurance companies and government payers are not looking for ways to increase payments to hospitals and health systems. Therefore, it is up to provider organizations to identify under-reimbursed claims and improve coding accuracy to ensure revenue is not left on the table. However, it may be difficult to notice under payments in a timely manner due to the volume of claims submitted.
Dr. Nguyen said drug reimbursement is one area hospitals should examine for under payments due to the complexity of drug purchasing and billing processes. If hospitals submit claims to insurers that are missing codes or include incorrect codes, it could lead to significant revenue losses for the hospital.
3. Centralize data. To determine if drugs are billed and reimbursed correctly, provider organizations need to aggregate data from clinical and financial systems to identify billing trends and outliers. Being able to pull and compare data from all sites of care has become more important as resources shift from acute-based care to outpatient settings.
"More and more we're finding that 70 to 90 percent of spending on pharmaceuticals is occurring in ambulatory settings," said Mark Eastham, senior vice president and general manager of McKesson RxO.
Provider organizations of all sizes use numerous software systems to monitor and manage clinical care and financial metrics. These systems are not typically interoperable, which makes it impossible for providers to access the information they need to efficiently track revenue cycle performance. To overcome this challenge, hospitals and health systems are partnering with McKesson to create data repositories.
"Instead of trying to link all of these systems that they purchased separately … what they're looking at is being able to dump this data into one central database that then makes it much easier to create an output that gives them the information they need," Mr. Eastham said.
4. Be proactive rather than reactive. Hospitals and health systems will only fully benefit from establishing a central database if these organizations are capable of analyzing the data. However, it is not necessary to have an expert on staff. Many provider organizations are partnering with outside companies, such as McKesson, who can help them understand the data and pinpoint problem areas.
"We're able to pull all of the data … have a platform to analyze all of the data … and give the hospitals insights they can act on," Dr. Nguyen said.
It will become increasingly important for hospitals to have the ability to pull data from various disparate systems and draw actionable insights from that data as payers and providers enter into innovative relationships and payment models become more complex. By analyzing data from medical billing statements and patient records, hospitals can identify trends and outliers sooner and make more informed decisions.
"It's important … to take the data and be able to leverage it in a predictive way," Mr. Eastham said. "Be prepared for what may be coming down the road rather than always being in a reactive mode."
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