United States

Identifying revenue cycle leakage and improvement opportunities

Optimize your revenue cycle management


In the ever-changing health care industry, providers face growing labor costs and contend with complex initiatives, such as the Affordable Care Act, Medicaid expansion and ICD 10 transition. As a result, it has become increasingly important for many organizations to optimally manage their revenue cycle and continuously look for ways to address leakage and improve performance.

Vendor management and KPI

Outsourcing is one way providers may look to right source their needs to improve efficiencies. Some of these potential outsourced operating and service areas include Medicaid conversions, insurance verification, transcription, coding, billing, denials follow-up, collections and more. There are important concerns to weigh, however, when outsourcing. What is the scope of the work needed? Is it a short-term project or a long-term initiative? What would the internal costs be versus the external costs of the outsourcing? And, how do you monitor progress and improvements within the program? In other words, what will your key performance indicators (KPIs) be for the project or long-range work you’re engaging a vendor for? Creating a vendor dashboard that captures this KPI is essential, so you can track progress over the course of the engagement and make adjustments if milestones aren’t met.

Improvement opportunities: Collections, charge capture and clinical documentation

Another area to enhance revenue cycle management involves improvement of collections. The rate of patients on high-deductible health insurance plans has increased year over year. These lower-premium plans are often favored by the public. With growing patient responsibilities, however, health care providers are also seeing their accounts receivable mix increased in the self-pay area. Improving collections efforts on the front end can help reduce overall costs often endured during processes performed on the back end of the revenue cycle.

Enhancements in charge capture and clinical documentation are other revenue areas in which to address cycle leakage. An effective charge capture strategy involves leveraging organizational data analytics, streamlining data collection, simplifying charge structure by making it consumer friendly, bundling services and more. Likewise, improvements to your clinical documentation improvement (CDI) program can revitalize revenue management. By initiating a review process that consists of preventing and reconciling inconsistent, incomplete and conflicting provider documentation prior to the final assignment of coding, billing and data collection, revenue management can be improved. The process ensures quality information in support of care management and also enlists appropriate protocols along the way. Key questions to assess your current CDI program effectiveness include:

  • How do you currently assess the effectiveness of your program?
  • How does your case mix index compare to like facilities – medical, surgical or both?
  • Are you reporting risk of mortality and severity of illness?
  • How do you provide education with regard to documentation improvement?
  • Do you report externally? What is that process?
  • Do you think you may need additional staff due to transition to ICD-10?
  • How might your processes change?

Denial prevention starts with tracking

Finally, denials prevention is an important area to address revenue leakage. Denials can include technical areas due to billing and coding errors, administrative missteps due to document errors around pre-certification authorization, for instance, and clinical denial, due to medical necessity. To implement a sound denial prevention strategy, it’s important to first identify and track the types of denials occurring, establish an appeals process with proper follow-up, note the root cause if the denial is legitimate and then address the core issue. For instance, if there is a continued pattern of denial due to coding errors, perhaps this might be rectified with improved ongoing staff training around coding changes.

For more information and discussion on revenue cycle leakage, listen to the entire webcast, Part 3 – Revenue cycle leakage, or contact your RSM health care consultant.


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  • August 27, 2020


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