These days, we’re all being asked to do more with less. One silver lining? The creative solutions healthcare organizations are deploying to streamline RCM workflows and maximize resources.
We’ll share five tips that can help you improve your first pass payment rate and reduce unnecessary touches in your business office.
What are RCM workflows?
RCM workflows are the processes necessary for a physician or healthcare organization to get paid for the care they provide. RCM workflows include activities like eligibility verification, claim submission, payment capture, and denial management, to name a few.
Effective RCM workflows are an essential ingredient in a healthy balance sheet. Ideally, they should be automated and streamlined as much as possible. This reduces the number of manual touchpoints and shortens the timeline between providing care and collecting the appropriate payment for it.
How to design RCM workflows for the biggest impact
1. Divide A/R tasks
A/R tasks fall into four primary categories: billing, which includes pre-billing activities, claim edits, and attachments; insurance A/R, which includes denials, rejections, and appeals; cash posting, which includes payment posting, reconciliations, and balances/refunds; and self-pay A/R, which includes incoming calls, financial counseling, and bad debt processing.
Categorizing A/R tasks in this manner makes it easier to create more precise workflows, enables more meaningful data analysis, and ensures that staff are able to fully “own” the work within their category.
2. Analyze staffing
Do you have the right number of people to manage the workload in each A/R area? Do some simple math to find out.
Let’s say you typically handle 30,000 claims per month. Your goal is for 10% or fewer of those claims to require follow up. This means insurance A/R employees will need to manually follow up on 3,000 claims.
If your productivity standard for insurance A/R is 10 claims per hour, that means it will take 300 hours each month to follow up on the 3,000 claims. 300 hours equates to approximately 2.4 full-time employees.
Of course, the numbers we’ve used in this example are variables. Adjust them as needed based on your actual claims load and KPI targets. Then, repeat this formula for each of the four A/R categories we defined in step 1 to see how your actual headcount compares to the optimal headcount.
3. Balance workloads
Now that you have an idea of how many staff members you need, it’s time to analyze the hours your employees are actually working.
Here’s a look at the typical task division compared to the optimal task division in an average organization.
Typical time division
50% Billing
30% Insurance A/R
10% Self-pay A/R
10% Posting
Optimal time division
50% Insurance A/R
25% Self-pay A/R
15% Posting
10% Billing
As you can see, a disproportionate amount of time is typically spent on billing.
When RCM workflows are fully optimized, billing should be mostly automated. This means using technology to handle tasks like routine claim changes.
When claim edits are required, the responsible department should work its own edits. A dive into your claims data can show you where those edit needs are originating.
4. Optimize insurance follow-up
Insurance follow-up eats up a huge amount of labor. We can reduce the burden by taking an aggressive approach to denial management and maximizing first pass yield.
First pass yield measures the number of claims paid upon first submission. Focusing on first pass yield as a KPI forces us to also focus on denial prevention, since denials are what prevent claims from getting paid the first time around. Minimizing denials improves first pass yield, which means faster cash flow.
By using technology to analyze denial data, we can drill down to the root cause of denials and better focus our mitigation efforts.
5. Track productivity and outcomes
There are many ways to analyze your claims data, and each one offers valuable context that can help you continuously improve your RCM workflows.
For example, you can analyze by employee, tracking productivity based on the action taken and comparing different workers against one another. You can analyze by payer, assessing the proportion of denied claims and the reasons for those denials. Both of these views (and others you configure) can inform the design of your RCM workflows.
Additionally, tracking revenue-related metrics like collection rate, resolution rate and appeal success rate will help you make better decisions about where your RCM workflows can be improved.
Reducing not only the number of denials, but the number of touchpoints each denial requires will improve your first pass yield and ultimately put you in a more comfortable financial position.
We take a deeper dive into the analytics mentioned above in our recent post on improving revenue cycle KPIs with analytics.
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