Revenue Benchmarks Improve Finances During the Big Move

Monitor financial performance and mitigate risks associated with the pre- and post-transition to ICD-10.

By Ken Bradley

Now is the time for physician practices to get revenue cycles in order—not six months before ICD-10 implementation. If the transition is anything like the adoption of 5010 transaction standards and national provider identifiers, ICD-10 will lead to more frequent denials and reduced productivity, especially during the initial stages of implementation. According to projections from the Centers for Medicare & Medicaid Services (CMS), denials could increase anywhere from 100-200 percent, and days in accounts receivable (A/R) could grow by as much as 20-40 percent.

Source: “Readying Your Denials Management Strategy for ICD-10,”

By taking a proactive approach and establishing revenue cycle benchmarks to monitor financial performance pre- and post-transition, your practice can mitigate the risks associated with moving to ICD-10. These steps not only help providers adequately prepare for the new code set, but also allow them to identify strategies for achieving optimal financial health long after the implementation deadline has passed.

Consider the Past to Secure the Future

Before your practice has to deal with the complexity of ICD-10, identify any potential pitfalls that need to be addressed. By targeting operational inefficiencies now, your practice can eliminate a lot of extra work and prevent lost revenue down the road. There’s also no better time to automate and streamline manual processes related to eligibility, secondary claims, denials, and appeals.

Also consider conducting a historical review of your revenue cycles. Understanding what a typical September, October, or November looked like in previous years will help you know what to expect when the transition date arrives. For example, a pediatric group may discover they have more volume in autumn months, as children head back to school and catch colds or the flu. This means a practice might experience higher patient volume during the implementation time frame.

Whatever your situation, ICD-10 will likely create some disruptions. Correcting inefficiencies and having historical insight, however, will allow your practice to circumvent these obstacles and keep its revenue cycles on track.

Establish Benchmarks

As your practice tightens up the cycle processes, you would do well to establish benchmarks. Because ICD-10 affects every area of a medical practice, there are several benchmark categories that require monitoring. These include:

  • A/R: Some of the most important metrics you can measure are A/R days by payer and A/R days over 120 days. These indicators allow your practice to determine if claims are being paid in a timely manner.
  • Operational: Closely watch metrics for operations such as denial and rejection counts by category (e.g., prior authorization or medical necessity). Additional indicators, including first-pass rate, number of pending claims, workers’ compensation claims, and third-party rejections, should also be monitored and measured regularly.
  • Clinical documentation: To uncover any potential issues related to clinical documentation, monitor the number of physician queries, query response time, and coder accuracy, which can be measured as necessary re-coding.
  • Productivity: Track both coder and physician productivity. Office visits are a key indicator to watch for if your practice works under fee-for-service payment models. If your practice is making the transition to value-based care, you may also need to follow quality metrics as an additional indicator to measure success.

Measure Performance

After your practice decides which benchmarks to monitor, evaluate current performance to determine how frequently you need to measure metrics going forward. Many clearinghouses incorporate tools into their systems that can help your practice gauge its performance relative to industry standards.

If your organization operates below best practice averages, implement any necessary improvements and measure as often as possible until you reach the target. If you’re already operating at the desired levels, monitor and measure less frequently, but all metrics should be benchmarked at least monthly.

Immediately following the ICD-10 compliance date, consider checking benchmarks more often to ensure all installed changes are working as planned and that all external entities—including payers—are performing as expected. You should be able to predict how quickly your practice’s revenue cycle will recover by benchmarking A/R, rejection, and denial numbers, and by tracking productivity for clinical and coding staff.

Even with best preparation, however, external factors such as vendors and payers will play a major role in determining how quickly your revenue cycle will return to normal.

Strengthen Your Bottom Line

Your practice can’t prepare for the future unless you know what you’re facing. Revenue cycle benchmarks enable providers to understand where their revenue is today, so they can recognize how it’s changing and plan for the future. With the right combination of metrics, you can establish a framework for measuring revenue cycle performance to enhance revenue cycle efficiencies, avoid cash flow disruptions, and optimize your practice’s livelihood.

 

Ken Bradley is vice president of strategic planning and regulatory compliance at Navicure, a clearinghouse and revenue cycle solutions provider.

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Michelle Dick
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Michelle Dick

Executive Editor at AAPC
Michelle A. Dick has been executive editor for AAPC for over seven years. Prior to her work at AAPC, she was editor-in-chief at Eli Research and Element K Journals, and disk ad coordinator, web designer/developer, and graphic artist at White Directory Publishers, Inc. Dick has a Bachelor of Science in Graphic Design from the State University of New York - Buffalo State and is a member of the Flower City Professional Coders in Rochester, N.Y.
Michelle Dick
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About Has 134 Posts

Michelle A. Dick has been executive editor for AAPC for over seven years. Prior to her work at AAPC, she was editor-in-chief at Eli Research and Element K Journals, and disk ad coordinator, web designer/developer, and graphic artist at White Directory Publishers, Inc. Dick has a Bachelor of Science in Graphic Design from the State University of New York - Buffalo State and is a member of the Flower City Professional Coders in Rochester, N.Y.

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