Revenue cycle management is becoming increasingly challenging for specialty practices as health plans grow in variety and complexity. Benefit design variables like covered services, co-payment amounts, co-insurance responsibilities, deductibles and tiered drug benefits all demand that practices take a hard look at their current revenue cycle processes.
McKesson asked Amy Bigbee, a revenue cycle practice advisor for McKesson Specialty Health, about the impact health plan changes are having on two aspects of the revenue cycle management process for specialty practices: knowing what’s collectible from patients and first-time payment rates. We also asked her for advice on how practices can improve their performance in these two functions, which are critical to their cash flow.
Which plans have the biggest impact on revenue cycle management for specialty practices?
Bigbee: The two types of health plans affecting revenue cycle management the most at specialty practices are plans with high deductibles and plans with high co-insurance amounts. Deductibles are what patients pay out-of-pocket before insurance kicks in. Co-insurance is what patients pay out-of-pocket after insurance kicks in. Those out-of-pocket costs combined for one patient can be in the thousands, if not tens of thousands of dollars. We’re seeing that the amount owed by patients can represent 18 percent to as much as 35 percent of a specialty practice’s revenue. That’s a lot of money that needs to be collected directly from patients.
Why are specialty practices finding it more challenging to know what’s collectible from patients?
Bigbee: It’s the combination of caring for patients with so many different types of health plans and the increasing complexity of each type of health plan. Unless practices have the right processes in place, it’s difficult for them to quickly know the exact out-of-pocket financial responsibility of each patient. It’s not any easier for patients, either. Most patients don’t understand their insurance coverage because their plans are so complicated. When specialty practices don’t know what’s collectible, and patients don’t know what they owe, the impact on revenue cycle performance can be significant.
How can specialty practices close their knowledge gap and help educate their patients?
Bigbee: Knowing the level of financial responsibility of each patient shouldn’t be confusing for practices. Practices can verify patient insurance benefits electronically through their practice management system or their claims clearinghouse. There’s no need to look them up manually. That should be done as part of the insurance verification process at least 48 hours before a patient’s appointment. Having this information at their fingertips also gives practices the opportunity to educate patients on their financial responsibility before treatment. Electronic remittance advice or explanation of benefits forms confirm that financial responsibility after a claim has been filed.
How does that help specialty practices improve collections from patients?
Bigbee: We recommend that practices use financial counselors. The counselors can take the information on patient responsibility and meet with individual patients before treatment begins. It’s an opportunity to explain patients’ estimated out-of-pocket costs and learn about patients’ ability to pay for their share of medical bills. Doctors don’t want patients to avoid care because of financial reasons. Counselors can work with patients to make payment arrangements, set up a payment plan or identify patient assistance programs that may be available.
Even when specialty practices know what’s collectible and patients know what they owe, some practices continue to be challenged by first-time payment rates. Why?
Bigbee: My best explanation is garbage in, garbage out. When practices submit claims that aren’t clean, health plans likely will delay or deny payment. That forces a practice to resubmit the claim or appeal the denial. Either way, it will take longer for practices to get paid and that hurts cash flow and working capital. The first step in submitting a clean claim is making sure all the front-end patient information is verified and accurate—patient name, insurance plan, date of birth. That will help mitigate those simple, administrative denials.
What else can specialty practices do to submit clean claims and improve first-time payment rates?
Bigbee: Practices should be using a claim edits system, or “scrubber,” that scrubs claims clean. It does that by electronically reviewing claims for missing or inaccurate information and documentation before the claim is submitted to a clearinghouse for payment. Scrubbers can be customized for particular drugs, tests or procedures based on a health plan’s reimbursement rules or a practice’s medical specialty.
What other types of technologies can specialty practices deploy to improve first-time payment rates?
Bigbee: Practices can use technology for insurance verification and prior authorizations. In both cases, practices are using technology to remove two potential obstacles to accurate and timely reimbursement. A third technology many practices are using is called auto-charge capture. It identifies reimbursable services documented in a patient’s electronic medical record and sends that information directly into the practice management system where the claim originates.
What skill sets, competencies or mindsets does a specialty practice’s staff need to know what’s collectible from patients and to improve first-time payment rates?
Bigbee: Practices need to have a staff that understands health insurance and various types of plans—HMOs, PPOs, HDHPs, point-of-service and the newer value-based reimbursement plans. The staff must be willing to learn new things all the time, because the industry is changing all the time. They need to care about patients and understand their concerns about their medical bills. Yet, at the same time, they have to be good at dispute resolution, especially with it comes to dealing with payers. Practices should be tenacious with claim appeals and denials.
Related: Learn more about McKesson’s revenue cycle consulting services for specialty practices.